JUNE 12, 2024

Hey, hey!

In today’s edition:

• Bill checks the pulse on the beleaguered carbon credit market.
• In our Lunchtime Reads, Anca rounds up key coverage of last week's European Union elections.
• We have a Voices article — with a map tracking hydrogen projects in Africa — reality checking progress on this front.
• In our Data Dive, Bill also does a reality check on the world's goal to triple renewable electricity.

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Send your energy photos, story tips and more to news@ciphernews.com.

Illustration by Nadya Nickels.

The carbon credit industry attempts a comeback

BY: BILL SPINDLE

Leaner and humbled, the carbon credits industry is attempting a comeback.

Over the last two years, the industry has faced a barrage of news stories, academic studies and lawsuits describing the carbon credits bought, sold and traded as all but synonymous with greenwashing.

But in recent weeks carbon credits — which allow greenhouse gas emitters to avoid cutting some of their emissions by paying for reductions by others — have received some big boosts.

Click here to read Bill’s full article on carbon market reforms.

Highlights here:

The moves have raised hopes that reformed and chastened voluntary markets, where companies and governments voluntarily buy and sell these credits, could still make good on their promise to channel tens of billions of dollars into projects to protect ecosystems and reduce the amount of greenhouse gases in the atmosphere.

“Voluntary carbon markets can help unlock the power of private markets to reduce emissions,” said United States Secretary of the Treasury Janet L. Yellen in a May briefing, before quickly adding, “that can only happen if we address significant existing challenges.”

The changes lay out clearer guidelines to try to ensure credits represent the emissions reductions touted by the project developers selling them, as well as the claims of companies buying them for their decarbonization plans.

On the supply side of the market — the wide range of projects from replenishing mangrove wetlands in Africa to removing carbon dioxide directly from the air in Iceland — an industry body issued a new set of principles that high quality projects must follow to get its stamp of approval.

The principles include ensuring projects issuing credits are effectively tracked by a third party and transparent with their data, that those projects wouldn’t have happened otherwise and represent permanent reductions in emissions.

On the demand side — the companies and individuals that purchase credits instead of reducing their own emissions — a complementary effort by another industry group has issued guidelines for how companies can utilize offsets to underscore different levels of ambition in their plans to reach net zero emissions.

The aim is to prevent greenwashing, where companies have wildly exaggerated the impact of the offsets in their decarbonization plans.

Advocates believe concerns about voluntary offsets can be addressed with a more vigorous approach to verifying credits while increasingly including them in tax and trading regimes overseen by governments or the United Nations.

Skeptics worry voluntary participation and self-regulation will always leave the market vulnerable to abuse, undercutting global efforts to reduce greenhouse gas emissions.

The recent reform efforts have been closely coordinated with what’s known as the Science Based Targets Initiative (SBTi), which advises companies and validates their net zero plans against what its science-based methodology determines is aligned with global climate goals. SBTi has also been embroiled in its own internal controversy in recent months.

Lunchtime Reads and Hot Takes

EU climate policies could be slowed in future after rightward shift in election — Reuters

Anca’s take: From all the coverage I've read so far on the European election, Reuters sums up the EU's position nicely: unlikely rollback of green policies, but tougher push for new ambitions.

Experts: What do the European elections mean for EU climate action — CarbonBrief

Anca’s take: I liked this approach! You get both the short form with key quotes right at the top and a more detailed analysis from each expert lower down.

How von der Leyen could still lose her job — POLITICO

Anca’s take: Good read for politics nerds who want to understand how this strategy could influence the ambition and speed of the bloc's future climate policy.

The Engineer With a Climate-Tech Portfolio — The Wall Street Journal

Amy’s take: The perspective from Fluor is really interesting, as is the chart showing increased mention of climate buzzwords in corporate statements.

Nuclear Power Is Hard. A Climate-Minded Billionaire Wants to Make It Easier. — The New York Times

Cat’s take: The Nuclear Regulatory Commission still hasn't approved TerraPower's application, which reporter Brad Plumer rightly mentions. Still, it's fascinating to see a coal town looking to nuclear to evolve.

U.S. Tightens Car Mileage Rules, Part of Strategy to Fight Climate Change — The New York Times

Amena’s take: Note, these standards governing gasoline or diesel use complement the ones issued earlier this year that limited how much carbon dioxide this class of vehicles can emit.

Exclusive: Major world economies seek to halt new private sector coal financing — Reuters

Anca’s take: It would be the first move by a multilateral institution to curb financing for coal. Key stat: Commercial banks' lending and underwriting to the coal industry was $470 billion between 2021 and 2023.

New BYD Hybrid Can Drive Non-Stop for More Than 2,000 Kilometers — Bloomberg

Bill’s take: Wow. BYD, the Chinese automaker that sells more EVs than any carmaker, is releasing an electric car that travels more than 1,200 miles on a charge and sells for less than $14,000.

More of what we're reading:

• EU to slap extra tariffs on Chinese electric cars in a bid to close competition gap — Euronews

• Carbon Removal’s Holy Grail Cost Cut Is Further Away Than It Seems — Bloomberg

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Africa’s clean hydrogen path must begin with clearing the hype

Illustration by Nadya Nickels.

BY: MERON TESFAYE

Tesfaye is a senior policy analyst with the Energy for Growth Hub. Meron can be reached at meron@energyforgrowth.org.

Africa has gained global attention as a prospective hub for hydrogen made with renewable energy. Ambitious models and optimistic leaders have fueled the notion that Africa, with its abundant solar and wind energy resources, has a special edge for low-cost, large-scale renewable hydrogen, resulting in upwards of 60 proposed projects across the continent.

Nearly all of the 95 million metric tons (Mt) of hydrogen consumed globally today is made from fossil fuels. However, a clean alternative that uses renewable power and an electrolyzer, a device that splits water into hydrogen and oxygen, is emerging. If produced at scale and low cost, renewable hydrogen can serve as a carbon-free energy alternative in heavy-industry and transportation sectors, where fossil fuel substitutes are hard to come by.

African countries have a lot to gain, and a lot to lose, from investing heavily in the nascent clean hydrogen industry. Jumping in too deep and too early may lock countries with emerging economies into high-cost and high-risk investments, while waiting too long could cause them to miss the window to shape the market as it emerges.

Finding the right balancing act must begin with an open-eyed discourse free from the hype.

At the Energy for Growth Hub, my team and I have developed an African hydrogen projects tracker to evaluate the promise of these proposed projects against reality. Amidst the buzz, here are six facts that keep us grounded. (And I dive into more details here on our site.)

1. Africa’s hydrogen footprint today is small but dirty, much like the rest of the world
2. Renewable hydrogen is not new to Africa.
3. Proposed projects have unrealistic deployment scales and timelines.
4. Projects require additional renewable energy sources, which face strong headwinds.
5. Projects lack a buyer or are in very early stages.
6. The export intentions of many projects add costs and uncertainties.

Source: Energy for Growth Hub, International Energy Agency • kt/year = kilotonnes per year. MW = megawatts. Location information is approximate. Click on the above map for an interactive version on Cipher's website.

Read the full article on Cipher’s website.

The world promised to triple renewable energy. It needs to get moving.

Source: International Energy Agency • "COP28 goal" refers to the annual net additions needed to reach 11,000 GW by 2030. China does not have an official total renewable capacity ambition for 2030. Renewable energy capacity ambition for 2030 in the figure is estimated based on various modeling results.

BY: BILL SPINDLE

It’s been six months since the annual United Nations climate conference (known as COP28), where much of the world assigned itself the task of tripling the planet’s renewable energy capacity by the end of the decade.

Besides China — which is at once the planet’s biggest greenhouse gas emitter and standout builder of renewable energy — nearly every country must significantly accelerate construction to meet that goal, according to the International Energy Agency.

And China, for its part, would still need to keep up its torrid pace of adding wind and solar power for the world to meet its collective goal.

In short, the goal remains achievable, but countries must move very quickly, or, in China’s case, keep moving very quickly.

The overall pace of renewable energy construction has accelerated dramatically in recent years. It grew 64% last year, reaching 560 gigawatts of new capacity. That sort of momentum, while unprecedented, puts the world on a trajectory to reach just under 8,000 gigawatts of total renewable capacity by 2030.

Still, that capacity would be 30% short of the at least 11,000 gigawatts the IEA says would be needed to meet the tripling goal.

To meet the goal, countries besides China need to deploy renewable energy 36% faster than they did last year. That means revising up their current plans as soon as possible and making policy adjustments accordingly. For the United States and Europe, accelerated deployment last year hints that upticks of 50% and 30% to 2030 are achievable, if challenging.

AND FINALLY...
SFO solar

Cipher reader  and head of business development at Noya John Greenfield snapped this photo of solar panels on the roof of the Harvey Milk terminal at the San Francisco airport in May. The panels were part of a renovation that included many other climate-friendly upgrades, he said, and it is the first airport terminal in the world to earn the LEED Platinum building certification.

Each week, we feature a photo that is somehow related to energy, the thing we all need but don’t notice until it’s expensive or gone. Email your ideas and photos to news@ciphernews.com.

Editor’s note: In addition to supporting Cipher, Breakthrough Energy also supports and partners with a range of entities working to tackle climate change, including nonprofits, corporations, startups and research firms. For more information on Cipher’s editorial policy, click here.