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Base Carbon Receives First-Ever Article 6 Authorized Carbon Credits

Base Carbon Inc., operating through its wholly-owned subsidiary Base Carbon Capital Partners Corp., announced the receipt of an initial transfer of 717,558 carbon credits from its Rwanda cookstoves project. These carbon credits, designated by Verra with an “Article 6 Authorized” label, mark a significant milestone for Base Carbon. 

It signifies the transition of its second project from the development stage to active carbon credit generation. Notably, this also represents an industry milestone being the first Article 6 Authorized labeled carbon credits issued by Verra.

Base Carbon is a leading financier of projects in the global voluntary carbon markets. The company supports carbon removal and abatement projects worldwide by providing capital and management resources. It also aims to enhance efficiencies, commercial credibility, and trading transparency by leveraging technologies within the evolving environmental industries.

The company provides upfront capital to carbon projects, earning revenues from the credits they generate.

Business Model Base Carbon

What is Article 6 Carbon Credit?

Article 6 of the Paris Agreement talks about how countries can work together and trade mitigation outcomes, also known as carbon credits, with each other to help meet their climate targets (NDCs).

In November last year, the Supervisory Body overseeing Article 6 of the Paris Agreement published a draft document detailing proposed methodologies for carbon reduction projects.

The methodologies help ensure a cautious approach in calculating a project’s emission reductions or removals. This is crucial for ensuring the credibility of the credits and promoting greater ambition in global emission reduction efforts.

Base Carbon Pioneers Article 6 Authorized Carbon Credits

The Rwanda cookstoves project received a letter of authorization (LOA) from the Government of Rwanda in December 2023. This leads to Verra applying its Article 6 Authorized label to the project. 

This designation marks the first time Verra applied such recognition to a carbon project registered in its Verified Carbon Standard (VCS) Program.

BCCPC and the DelAgua Group, the project developer, have been in discussions regarding the implementation of the LOA. As per the LOA, a portion of the issued Article 6 Authorized labeled carbon credits will be immediately retired to offset global emissions. 

Additionally, a percentage of the carbon credits will be transferred to the Government of Rwanda for its emission reduction targets. Then a portion of the revenues from the remaining credits will go to the United Nations’ Global Adaptation Fund. 

The Clean Cooking Project is a voluntary initiative focused on distributing fuel-efficient improved cookstoves (ICS) to households. DelAgua will distribute these technologies to individual households and communities, following the VCS Methodology from Sectoral Scope 3 – VMR0006 “Methodology for Installation of High-Efficiency Firewood Cookstoves,” version 1.1 for emissions reduction calculations.

Before the project, households primarily used 3-stone fire and traditional stoves. These cookstoves have low thermal efficiency and require a higher amount of firewood for cooking.

By adopting DelAgua stoves, people can save time spent on cooking and collecting fuel, while also conserving fuel itself. The main benefit of these cookstoves is the significant reduction in health risks associated with smoke emitted by traditional stoves.

Plus, it also avoids the release of planet-warming emissions. The project is estimated to achieve an average annual and total emission reduction of 1,819,332 and 14,554,657 tCO2e, respectively, over the first 7-year crediting period. 

Base Carbon credits from Rwanda cookstove project

More details can be found on Verra’s website under project ID 4150.

Enhancing Article 6 Carbon Credits Implementation for Greater Impact

BCCPC and DelAgua have recently signed an amended and restated project agreement to facilitate the implementation of the LOA.

Under their revised agreement, BCCPC and DelAgua will split the 5% GAF remittance attributable to Article 6 carbon credits sold. This would be based on each party’s pro rata share of sales proceeds outlined in a revenue-sharing arrangement. 

  • Base Carbon anticipates its GAF remittance to be around $0.20 per credit for the first 1,925,000 Article 6 Authorized labeled carbon credits received.

Under the revised agreement of BCCPC and DelAgua, Article 6 Authorized labeled carbon credits from the Rwanda cookstoves project will be adjusted for the 12% volume reduction specified in the Government of Rwanda LOA. Thus, a new aggregate minimum of 6.6 million carbon credits would be subject to BCCPC and DelAgua’s revenue-sharing arrangement. 

Base Carbon is currently exploring various sales options for the initial 717,558 carbon credits. They expect the potential pricing upside of adjusted carbon credits will offset any volume reductions due to the LOA’s implementation.

Base Carbon’s receipt of the first-ever Article 6 Authorized carbon credits signifies a monumental leap in environmental stewardship. Through innovative financing and strategic partnerships, this milestone underscores the potential for carbon markets to facilitate meaningful change and pave the way for a greener, more sustainable future.

The post Base Carbon Receives First-Ever Article 6 Authorized Carbon Credits appeared first on Carbon Credits.

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CORSIA Carbon Credit Demand To Be 14x Larger Than Supply

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CORSIA Carbon Credit Demand To Be 14x Larger Than Supply

The surplus of CORSIA-eligible carbon credits is projected to turn negative by 2030 unless new supplies become available, according to an analysis by Abatable.

Currently, the aviation sector contributes about 3% of global emissions. As a sector that’s difficult to decarbonize, it’s exploring direct low-carbon technological solutions like sustainable aviation fuel (SAF) and electrification. However, these solutions face cost and technological hurdles and will take time to become widespread.

The Challenge of Decarbonizing Aviation

To mitigate emissions in the meantime, the International Civil Aviation Organization (ICAO) launched the Carbon Offsetting and Reduction Scheme for International Aviation (CORSIA) in 2016. CORSIA aims to offset any growth in aviation emissions above 85% of 2019 levels.

CORSIA entered its first phase in January this year, after a pilot period from 2021 to 2023. Phase 1, which runs from 2024 to 2026, is voluntary for participating states, while Phase 2 will be mandatory starting in 2027.

  • To comply, airlines can purchase SAF, enhance fleet efficiency, or buy CORSIA-eligible carbon credits.

However, the rollout has been challenging. In March, major carbon credit issuers Verra, Gold Standard, and Climate Action Reserve (CAR) were only conditionally approved by ICAO’s Technical Advisory Body. This status will be reconsidered in September following a resubmission process completed in April 2024.

Currently, CORSIA Phase 1 credits can only be acquired through the American Carbon Registry (ACR) and ART TREES standards. Additionally, CORSIA credits require Letters of Authorization from host countries, further limiting the supply.

As of now, the only recent issuance eligible for the scheme is 7.1 million Guyana ART credits. The ICAO Technical Advisory Body’s decision suggests that this limited supply situation may persist throughout 2024.

Demand to Outpace Supply by 2030

Abatable’s analysis indicates that, under current market conditions and without new supplies, demand for CORSIA credits will exceed supply by 2030. In Phase 2 of the scheme, demand is projected to outpace supply between 2029 and 2030.

In a conservative scenario, CORSIA demand does not exceed 100 million credits until after 2034. However, supply peaks in 2025 and can only meet demand until 2029. Without new projects, demand in Phase 2 could be 14x  larger than supply.

CORSIA carbon credit demand, supply, conservative scenario

In an optimistic scenario, aviation emissions return to 85% of 2019 levels this year, with CORSIA demand surpassing 100 million carbon credits in 2027. Supply, bolstered by projects likely to receive corresponding adjustments, meets demand until 2030. Without new projects, demand in Phase 2 could be 7x larger than supply.

CORSIA demand, supply, optimistic scenario

Abatable’s projections include existing projects expected to meet the Integrity Council for the Voluntary Carbon Market’s Core Carbon Principles and likely to receive corresponding adjustments. Supply from Verra, Gold Standard, and CAR is expected from 2025.

CORSIA’s design interfaces with the Paris Agreement’s Article 6, allowing countries to trade emissions reductions to meet Nationally Determined Contributions (NDCs). Corresponding adjustments ensure accurate progress toward NDCs and prevent double counting. These adjustments are required for CORSIA credits, allowing them to be transferred internationally.

However, delays in implementing Article 6 mechanisms could affect CORSIA. While details are being developed, projects receiving Letters of Authorization can list on voluntary market registries as Article 6 compliant. Biennial UN reports will confirm national accounting and the application of corresponding adjustments.

A significant challenge is the liability for the revocation of authorized credits. ICAO’s Technical Advisory Body suggests that standards or project proponents should assume liability, while standards argue it should lie with the revoking country. COP29 decisions may influence this issue, potentially causing even more delays.

Market Response and Developments

The market is reacting to these developments. New commercial structures and carbon insurance products are under conception to mitigate risks and encourage trading activity. These products aim to provide confidence to market participants and enhance liquidity, especially given the current market uncertainties.

So, what’s next for this development in CORSIA carbon credits?

Verra, Gold Standard, and CAR have re-submitted their applications, and the Technical Advisory Board will reassess these in September 2024. If they fail, new supply sources will be delayed until 2025, extending beyond current projections.

To mitigate supply issues, standards should work toward approval while also building capacity to help countries develop market infrastructure and governance for authorizing credits with corresponding adjustments. Large CORSIA participants might invest in upstream projects, although this would require market understanding and time to generate a credit stream and gain necessary adjustments.

Airlines are not required to purchase credits until Phase 1 concludes in January 2028. However, some may buy and retire credits in advance, based on projected obligations from historical emissions data. Final emissions reports and audits will be completed in 2027, indicating that the total credits needed, leading to an increase in credit retirements.

The availability of credits post-2027 will depend on decisions by ICAO, Article 6 negotiators, and governments, as well as the emergence of new supply sources. The actions taken in the interim will be crucial for ensuring there are enough carbon credits to meet future demand.

The future of the CORSIA carbon credit market hinges on increasing the supply of eligible credits. Abatable’s analysis underscores the need for new projects and corresponding adjustments to meet the rising demand by 2030. While pursuing low-carbon technologies, the aviation sector must rely on carbon offsets in the interim. 

The post CORSIA Carbon Credit Demand To Be 14x Larger Than Supply appeared first on Carbon Credits.

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Wired for Change: AI, Energy, and the Decarbonization Dilemma

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AI Energy

AI is a powerful force driving innovation across industries in today’s rapidly evolving technological landscape. However, as AI capabilities expand, so does its appetite for energy. This phenomenon has brought the intersection of AI and energy into sharp focus, particularly in the context of global decarbonization efforts.

The Interplay of AI and Renewable Energy

The rise of AI has spurred an unprecedented demand for computing power, much of which is supplied by data centers. 

These data giants consume vast amounts of electricity, prompting concerns about their environmental impact and contribution to carbon emissions. Some argue that these companies have the resources and the motivation to invest in cleaner energy technologies. They can also advocate for policy changes to support decarbonization efforts. However, others raise concerns about the environmental impact and the need for greater transparency and accountability in their sustainability initiatives.

Amidst the urgency to transition to renewable energy sources, the energy consumed by AI presents a significant challenge to decarbonization efforts.

On one side, the influx of demand from tech giants could provide a financial boost to investments in renewables, potentially accelerating the transition to cleaner energy sources. However, there remains a tangible risk that the energy demands of AI will be met using conventional, fossil fuel-based methods, such as natural gas or coal. This scenario would undermine progress toward decarbonization goals and perpetuate reliance on non-renewable resources.

Thus, navigating this decarbonization dilemma requires balancing the transformative potential of AI and mitigating its environmental impact. 

  • It calls for strategic investments in renewable energy infrastructure with AI technology innovation to optimize energy efficiency. 
  • Collaborative efforts between tech companies, energy providers, policymakers, and environmental advocates are essential to charting a sustainable path forward.

A Bloomberg analysis reported, that traditional energy corporations like PPL Corp., Alliant Energy Corp., WEC Energy Group Inc., Entergy Corp., Duke Energy Corp., NextEra Energy Inc., DTE Energy Co., CenterPoint Energy Inc., and Vistra Corp., are also deeply involved in navigating the challenges and opportunities presented by AI and data centers.

These companies face pressure to optimize their operations for efficiency, reliability, and sustainability. AI technologies offer opportunities to enhance grid management, predict demand more accurately, optimize energy distribution, and improve maintenance scheduling. Moreover, these corporations will likely explore AI-driven solutions to meet regulatory requirements and customer demands for cleaner energy sources.

As AI becomes increasingly integral to various industries, including energy, investors will evaluate companies based on their AI capabilities and ability to adapt to technological advancements.

The automation era in the energy sector

This futuristic vision is swiftly materializing – the AI in energy and power market is forecasted to surge at a CAGR of 24.68%, from a value of US$3.103 billion in 2021 to US$14.527 billion by 2028.

AI energy

AI-Growth Drivers Transforming the Energy Companies

From predictive maintenance to demand forecast, AI-powered solutions are revolutionizing traditional practices and reshaping the industry.

1. Predictive Maintenance: Preventing Downtime, Maximizing Efficiency

By analyzing vast amounts of data from sensors and equipment, AI algorithms can detect anomalies and predict potential failures before they occur. This approach not only minimizes downtime but also maximizes the lifespan of critical assets. It further leads to substantial cost savings for energy companies.

2. Optimized Asset Management: Maximizing Returns on Investments

AI-driven asset management solutions enable energy companies to optimize the performance of their infrastructure. Through real-time monitoring and analysis, AI algorithms can identify opportunities for efficiency improvements and asset optimization. AI empowers companies to make data-driven decisions that enhance profitability and sustainability.

3. Dynamic Demand Forecasting: Balancing Supply and Demand

Accurate demand forecasting is essential for energy companies to manage supply and avoid costly overproduction or shortages. AI-powered demand forecasting models leverage historical data, weather patterns, market trends, and other variables to predict future demand with precision. By optimizing resource allocation and scheduling, energy companies can minimize waste and maximize revenue, ultimately improving cost efficiency.

4. Enhanced Customer Engagement: Personalized Services and Solutions

AI technologies also enable energy companies to enhance customer engagement by offering personalized services and solutions. Data analytics and machine learning empower companies to customize offerings based on individual customer preferences and behavior.

AI energy

source: Data Dynamics

Moving on, we can see the top energy giants using AI in their operations  

Top Energy Giants using AI in their Operations  

These energy companies exemplify the strategic adoption of AI to enhance their operational capabilities, driving efficiency gains and ultimately contributing to their bottom line.

Exxon Mobil

Exxon Mobil integrates AI to enhance operational efficiency and reliability across its operations. It collaborates with IBM to use quantum computing in advancing AI-driven simulations. Additionally, they use AI for critical calculations to optimize CCS methods. 

  • Enhances its operational efficiency, minimizes downtime, and reduces maintenance costs with AI-driven predictive maintenance and process optimization. 
  • The AI-powered analytics enable the company to optimize supply chain management.
  • Subsequently, it ensures timely delivery of products to customers while minimizing transportation costs and environmental impact.

ABB

The Swiss technology leader in electrification and automation is a pioneer in AI usage. The company

  • Utilizes AI to identify faults like pipeline and machinery cracks through image analysis. 
  • Manages distributed energy resources for reliable green power.
  • Employs AI to analyze seismic data for optimizing oil extraction.

Schneider Electric

It uses Microsoft’s machine learning to remotely monitor and configure pumps in oil and gas fields. AI can detect pump failures, prevent weeks of downtime, and repair costs of up to $1 million.

BP

The London-based gas and oil giant leverages AI to enhance decision-making processes, optimize resource allocation, and improve safety standards. AI boosts the oil extraction and recovery process with high-end sensors. It further lowers the cost/ barrel, reduces risk, and ensures compliance. 

Notably, BP is one of Amazon’s most trusted cloud computing clients.  It has used its technology to enhance the performance of its lubricants ERP system with 40% faster response times.

Royal Dutch Shell

Shell implements AI technologies to streamline operations, drive innovation, and enhance overall performance. It utilizes Microsoft’s cloud-centric platform, Azure. By leveraging AI technologies, Shell aims to boost revenue, cut costs, and enhance operational safety, such as monitoring data from drill sensors deep underground.

Gretchen Watkins, President of Shell Oil Company, revealed at the CERAWeek energy conference that,

Shell employs AI algorithms for drilling in wells in the Permian Basin. These algorithms, driven by machine learning, facilitate safe, reliable, and cost-effective operations.

The Top 10 AI-powered solutions in the Energy and Power Sector and their Stocks to Watch Out

AI

The U.S. Department of Energy established the Artificial Intelligence and Technology Office (AITO) to elevate it into a global leader in AI

AITO is responsible for reliable AI governance and capabilities in energy infrastructure, advising on trustworthy AI/ML strategies. It fosters partnerships, policies, and innovations in AI and energy across public, private, and international sectors. AITO further supports Department of Energy program offices to implement AI/ML strategies. 

Overall, the relationship between AI, energy, and decarbonization efforts is complex and multifaceted, and addressing the challenges it presents will require collaboration across industries and disciplines.

The post Wired for Change: AI, Energy, and the Decarbonization Dilemma appeared first on Carbon Credits.

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Sustainability simplified II: Carbon units for beginners

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Welcome to a fundamental discussion in the sphere of environmental sustainability, focusing on the pivotal role of carbon units. This blog explores the key concepts of carbon units as discussed in our engaging webinar: Carbon Units for Beginners, where the host, Pedro Zimmer joined forces with Wienke Schouwink, an experienced Environmental Solutions Manager at DGB Group. Together, they unravelled the nuances of carbon units—a crucial tool in global environmental action. This dialogue was designed not only to enlighten but also to empower individuals and companies with the knowledge to make impactful environmental decisions.

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