As the demand for electric vehicle (EV) metals grows across Europe, global mining giant Rio Tinto and UK-based refinery developer Green Lithium have joined forces to create a robust domestic lithium supply chain. This strategic partnership is set to boost the UK and EU’s automotive and manufacturing sectors, while also advancing decarbonization goals.
Rio Tinto – Green Lithium Partnership Sparks Hope for Europe’s Lithium Future
Green Lithium plans to construct a large-scale lithium refinery in Teesside, England. The facility will produce high-purity lithium chemicals, essential for batteries in the UK and EU automobile industry. What makes this project unique is its focus on sustainability. To reduce environmental impact, the company will use advanced technology to process low-carbon spodumene concentrate.
Philippe Bourdages, Vice President of Minerals Sales at Rio Tinto remarked,
“Rio Tinto and Green Lithium share ambitions related to decarbonization and today’s announcement is an important step forward in our journey towards unlocking the end-to-end battery metals supply chain in Europe. Alongside Green Lithium, we are looking to supply the global rollout of green battery technology to feed the significant European market demand.”
Rio Tinto will play a significant role in boosting lithium production. This initiative comes at a crucial time. Europe, despite being a key player in the EV market, lacks sufficient lithium refining capabilities. Currently, much of the global supply chain is controlled by Chinese companies.
This joint venture is expected to help reduce Europe’s dependence on imports, thereby securing a sustainable supply of battery metals.
Most importantly Sarah Jones MP, UK Government Minister for Industry and Decarbonisation applauded this deal, noting,
“This is great news for Green Lithium and Rio Tinto and will not only support high-skilled jobs in the North East but boost our critical minerals supply chains as we continue to build a cleaner, greener future for our automotive industry and drive forward our mission to net zero.”
Unlocking Green Lithium’s Sustainable Lithium Refinery in Teesside
Green Lithium’s lithium refinery in Teesside, North East England, aims to set new sustainability standards. With a low-carbon refining process, it will reduce emissions compared to traditional resource-heavy methods. This is possible due to its location in a region with abundant clean energy options.
The refinery will use renewable energy sources, including on-site solar and wind power. To further cut emissions, the facility will enter into green power agreements, ensuring its electricity comes from clean sources. By 2035, the plant also aims to fully transition to green hydrogen for gas needs, replacing natural gas.
Guy Hatcher, Head of Strategic Business Development and Co-Founder at Green Lithium highlighted that as per Minviro’s Life Cycle Assessment (LCA) report, the refinery’s emissions profile is set to outperform existing operations. It can potentially reduce the overall carbon footprint by 75% compared to current refineries. With these innovations, the refinery is on track to lead the way in sustainable lithium production for the growing battery market.
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Why Lithium is Crucial for Europe’s Net Zero Goals?
It’s a well-known fact that lithium is a key material for electric vehicle (EV) batteries and energy storage systems and would significantly reduce Europe’s dependency on fossil fuels in the future.
According to the EU’s Critical Raw Materials Act (CRMA) which is part of the Green Deal Industrial Revolution,
“Ensures EU access to a secure and sustainable supply of critical raw materials, enabling Europe to meet its 2030 climate and digital objectives.”
The CRMA emphasized that critical raw materials are essential to Europe’s economy but are vulnerable to supply disruptions. Demand for these materials is rapidly increasing due to global decarbonization efforts. Furthermore, the council has predicted:
- By 2030, the EU’s need for lithium will rise twelvefold, and by 2050, it will increase twenty-onefold.
However, Europe currently imports 81% of its lithium and lacks domestic refining capacity, relying heavily on suppliers from Chile and China. The CRMA tackles Europe’s supply vulnerabilities by building strong, resilient, and sustainable value chains. Additionally, it aims to enhance domestic extraction, refining, and recycling while lowering import reliance and monitoring supply disruptions.
CRMA’s 2030 Milestones for Domestic Capacities
The Act sets these benchmarks along the strategic raw materials value chain and for the diversification of the EU supplies
- at least 10% of the EU’s annual consumption for extraction
- at least 40% of the EU’s annual consumption for processing
- at least 25% of the EU’s annual consumption for recycling
- no more than 65% of the EU’s annual consumption from a single third country
Lithium Prices Stabilize While Cobalt Trend Low, A S&P Global Report
Passenger plug-in electric vehicle (PEV) sales rose 26.5% year over year in August, driven by growth in China, though Europe’s top markets saw a decline of over 60,000 units due to Germany’s end of subsidies.
With slowing PEV demand in Europe and the U.S., battery makers are delaying expansions, and automakers are pushing back electrification goals.
The key highlights of the S&P Global analysis were: Lithium prices stabilized shortly because of CATL’s mine shutdown and high seasonal demand, but the market was oversupplied. Conversely, cobalt prices fell 1.7% in September, and the excess supply is likely to continue until 2028, keeping prices low.
EU’s Quest for Reliable Supply Chains
To diversify supply, the EU is also forming global partnerships to secure domestic supply chains and boost sustainable economic growth. Significant deposits have been found in Serbia and Germany, However, challenges like environmental concerns and regulatory hurdles have slowed progress.
One major example is Rio Tinto’s efforts to revive its Jadar lithium project in Serbia. This project, set to be Europe’s largest lithium mine, had its license revoked in 2022 due to environmental protests. However, with legal approval in July 2023, the project’s resumption was on track. Rio Tinto estimates that the Jadar mine could produce up to 60,000 tons of lithium annually, which would meet nearly 20% of Europe’s demand for EV batteries.
We can infer that the partnership between Rio Tinto and Green Lithium not only supports the automotive industry but also aligns with wider efforts to achieve net zero emissions. Both companies are committed to decarbonization, and this project could significantly reduce the carbon footprint of lithium production in Europe.
Last but not least, Sean Sargent, Chief Executive Officer of Green Lithium, expressed himself by saying.
“The EV and battery revolutions are fundamental to reducing the carbon emissions that contribute to global climate change. By building our refineries, we will accelerate the adoption of EVs and sustainable energy storage through the increased supply of low-carbon, battery-grade lithium chemicals. Fulfilling this vision requires the right partners, and in Rio Tinto we have found an exceptional potential commercial partner.”
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The post Driving Decarbonization: Rio Tinto and Green Lithium to Boost EU Lithium Supply appeared first on Carbon Credits.
EU Directive: Empowering Consumers for the Green Transition (ECGT)
The EU Directive, Empowering Consumers for the Green Transition (ECGT), takes effect on September 27, 2026.(1) The goal of ECGT is to protect consumers by ensuring that environmental claims are fair, understandable, and reliable. This regulation does create a new compliance requirement for businesses, but it also provides sustainability and marketing teams with important guidance that helps create consistency in sustainability communications.
Key takeaways
- ECGT takes effect September 27, 2026, and prohibits claims that a product or service has a neutral, reduced, or positive environmental impact based on offsetting alone.
- Named example phrases the regulation prohibits include climate neutral, CO2 neutral certified, carbon positive, climate net zero, climate compensated, reduced climate impact, and limited CO2 footprint.
- ECGT does not want to deter investment in carbon credits. It wants companies to communicate the real benefits of the projects they support instead.
- SBTi’s guidance recommends framing carbon credits as taking responsibility for ongoing emissions, not as making a product or company neutral.
- Voluntary carbon projects deliver real climate progress: reducing super-pollutants, protecting and restoring ecosystems, and supporting communities.
Regarding carbon credits specifically, voluntary carbon projects deliver important climate progress and environmental benefits that provide many talking points for companies. They reduce climate super-pollutants by removing industrial emissions like methane, N2O, HFCs and others. They protect and restore valuable ecosystems and carbon sinks like forests, mangroves and grasslands. They help communities by reducing local pollution, creating employment opportunities, improving access to healthcare, and more.
The Science Based Targets Initiative (SBTi), a global leader in business climate action, concludes that alongside aggressive decarbonization, we should also use high quality carbon credits to take responsibility for our ongoing emissions. SBTi recognizes that carbon credits are important “to help limit temperature overshoot, mitigate transition risks, and support climate solutions.”(2)
ECGT language on carbon offsetting says that they do not want to deter investment in carbon credits. They just want companies to focus on communicating the benefits of the projects they support and avoid claims beyond the scope of carbon credits, which is good for everyone, companies and consumers alike.
The regulation reinforces that carbon credits do not change the sustainability of your products, so carbon credit buyers should not suggest that their products are more sustainable because of carbon credits. Instead, companies need to promote their climate contributions as a way to compensate or take responsibility for their carbon emissions by supporting projects that do great things like reducing global carbon emissions, reducing pollution, preventing deforestation, restoring forests, and more.
ECGT language related to carbon offsetting
The regulation is particularly focused on prohibiting claims, based on offsetting greenhouse gas emissions, that a product or service has a neutral, reduced, or positive impact on the environment in terms of greenhouse gas emissions. These claims are prohibited in all circumstances because they mislead consumers into believing the claim relates to the product itself, or to how it was made and supplied, or into thinking that using the product carries no environmental impact at all.
Named examples of prohibited claims include:
- climate neutral
- CO2 neutral certified
- carbon positive
- climate net zero
- climate compensated
- reduced climate impact
- limited CO2 footprint
These claims are only allowed when they rest on a product’s actual lifecycle impact, not on offsetting emissions outside that product’s value chain, since the two are not equivalent. This prohibition does not stop companies from advertising their investments in environmental initiatives, including carbon credit projects, as long as they present that information in a way that is not misleading and that meets the other requirements of Union law.(1)
SBTi also provides guidance on climate contribution language in its Corporate Net Zero Standard Version 2.0 Draft for Second Public Consultation, November 2025. While the SBTi language is fairly technical, it has a good framework for crafting a climate contribution message.
SBTi Language for Carbon Credits(3)
- Take responsibility for ongoing emissions by delivering mitigation impact contributions
- Carbon credits certify the mitigation outcomes of projects that reduce, avoid, or remove carbon emissions
- Activities that reduce emissions from emission sources not located within the company’s value chain
- Activities that conserve, protect, and enhance natural carbon sinks
- Activities that capture and store carbon in storage pools
SBTi’s draft standard also walks through sample claim language for this kind of contribution. In general, the samples move from a simple percentage statement, to naming a specific verified tonnage tied to that percentage, to a fuller statement that breaks the tonnage into reductions versus removals. Across all three, the framing stays consistent: a company took responsibility for a defined share of its ongoing emissions over a set period, by funding a specific, verified amount of mitigation, achieved through emission reductions or removals.(3)
FAQ: ECGT and Carbon Credit Claims
When does the ECGT directive take effect?
The rules apply across the EU from September 27, 2026, after member states transposed the directive into national law by March 27, 2026.
Does ECGT ban carbon offsetting?
No. It bans specific marketing claims that a product or service is environmentally neutral, reduced impact, or positive based on offsetting. Advertising investment in carbon credit projects themselves is still allowed if it is not misleading.
What phrases does ECGT specifically prohibit?
Named examples include climate neutral, CO2 neutral certified, carbon positive, climate net zero, climate compensated, reduced climate impact, and limited CO2 footprint, when those claims are based on offsetting rather than a product’s actual lifecycle impact.
How should a company describe its carbon credit purchases instead?
SBTi’s guidance recommends stating the specific verified tonnage of emissions reductions or removals funded and describing that as taking responsibility for a defined share of ongoing emissions, rather than claiming the company or product is neutral.
Does this rule apply to company level sustainability claims too?
ECGT is focused on claims about specific products and services in consumer marketing. Broader company level sustainability communication is a separate matter still governed by other existing rules.
While ECGT does add a new compliance burden for businesses, it helps create consistency in sustainability messaging that is important to building confidence in voluntary carbon projects and scaling the industry to help us achieve progress on global carbon emissions.
Disclaimer: Terrapass does not provide legal or regulatory advice. Any interpretation of regulation must be approved by your legal representative.
References:
(1) https://eur-lex.europa.eu/eli/dir/2024/825/oj
(2) https://files.sciencebasedtargets.org/production/files/Corporate-Net-Zero-Standard-version-2.pdf
(3) https://files.sciencebasedtargets.org/production/files/CNZS-V2-Second-Consultation-Draft.pdf
The post The EU’s New Green Claims Rules and Carbon Credits appeared first on Terrapass.
Most businesses that decide to act on their net-zero targets reach the same point of friction. Buying carbon credits has meant tracking down brokers, sitting through sales calls, and requesting a quote just to learn a price, sometimes with limited proof of what you are buying.
The earnings calls that quietly reframed climate from sustainability question to operating risk.
Three earnings calls in the last 18 months tell the story without any help from a press release.
Hershey, May 2024: cocoa price exposure compresses margin, and the company attributes part of the cost shock to West African weather. Olam, July 2024: coffee climate exposure quantified in the annual report. JBS, January 2025: supply chain climate disclosures expanded materially in response to investor pressure and regulatory expectation. None of these companies issued the announcement as climate news. They issued it as financial news. The climate-linked supply chain risk did not arrive with a sustainability framing; it arrived as a P&L line.
You are probably reading this article because you suspect the same thing is happening to your business. This piece walks through what is showing up on which earnings calls, how procurement and finance leaders are quantifying the exposure, and what serious corporates are doing about it before the regulator asks.
Where climate risk has already appeared in earnings
The pattern is consistent across resource-intensive sectors. A weather event compresses supply, the price spikes, the cost flows through the income statement, and the analyst on the call asks whether the event is anomalous or structural. Increasingly, the honest answer is the second one.
Cocoa is the cleanest example. The 2023 to 2024 West African harvest fell sharply on the back of erratic rainfall and disease. Cocoa futures more than tripled. Companies with concentrated West African sourcing absorbed the cost; companies with diversified sourcing absorbed less. The exposure was not climate as ESG topic. It was climate as cost of goods.
Coffee follows the same pattern. Brazilian and Vietnamese harvests have moved on weather more sharply across the last several seasons. Roasters with long-tenor supplier relationships and origin diversification have managed the volatility; roasters with spot-market exposure have not. Wheat, sugar, palm oil, beef: the same dynamic in different commodities, a pattern the IPCC AR6 Working Group II report projects will intensify across agricultural systems through mid-century.
What this means: climate risk is no longer a footnote in the 10-K. It is a line item the CFO has to explain on the call.
The three commodity exposures that hit margin first
For most companies with material Scope 3 exposure, three exposures dominate the near-term P&L risk.
- Concentrated single-origin sourcing in a climate-vulnerable region. If your tier-one supply for any material commodity sits in one geography, you have a concentration risk that climate amplifies. Diversification across origins is the obvious hedge, but it takes years to build and requires relationships you cannot acquire by tender.
- Supplier financial fragility under climate stress. Smallholder farmers, who supply a large share of the global cocoa, coffee, and palm oil market, do not carry the balance sheets to absorb yield shocks. When yields collapse, they exit. When they exit, your supply base shrinks, and the surviving suppliers raise prices. The risk is structural, not cyclical.
- Logistics and storage exposure to extreme weather. Hurricane disruptions to Gulf shipping, drought-driven Panama Canal restrictions, flooding in European inland waterways: each of these has moved input costs in the last three years, a pattern documented in Munich Re’s natural catastrophe data. The exposure shows up as a one-quarter event in the financial press but accumulates over time on the cost line.
TCFD and ISSB disclosure changes
The disclosure architecture has now caught up with the risk. The Task Force on Climate-related Financial Disclosures, whose recommendations are now embedded in the ISSB’s IFRS S2 climate standard, requires companies to disclose climate-related risks across physical and transition categories, with quantification where possible.
For physical risk specifically (the climate-linked supply chain risk you are reading about), the disclosure must address both acute exposures (extreme weather events) and chronic exposures (gradual changes in temperature, precipitation, and growing seasons). The disclosure must address the time horizon over which the risk is material, the parts of the value chain exposed, and the financial impact under different scenarios.
The CSRD imposes similar requirements under European law, with double materiality (both financial and impact materiality) embedded in the assessment. The practical effect: your auditors and your investor relations team now need a defensible answer to the climate-linked supply chain risk question, and the answer needs to be quantified.
What procurement and finance can do now
Three actions matter near-term.
Map your exposure. Most companies do not have a clear view of which tier-one and tier-two suppliers sit in which climate-vulnerable geographies. Without the map, you cannot quantify the risk, and without the quantification, you cannot disclose it credibly. The map is the foundation, and World Resources Institute climate risk research provides useful public tooling to start.
Diversify and deepen, in that order. Diversification across origins reduces concentration risk, but the deeper move is to invest in the resilience of the suppliers you already have. Regenerative practices, agroforestry, soil health interventions: these reduce yield volatility under climate stress and protect your input cost trajectory.
Embed the climate spend inside procurement, not outside it. Treating climate risk as a sustainability cost line subordinates it to the ESG budget. Treating it as a procurement and resilience investment puts it in the budget that matters, which is the cost-of-goods budget that the CFO defends quarterly.
Nature-based supply chain investments are the asset class designed for exactly this purpose. They sit inside the value chain, they reduce climate-linked supply risk, they generate verifiable Scope 3 reductions, and they produce the documentation an auditor and a regulator can both test.
If you are quantifying climate-linked supply chain risk in advance of the next earnings cycle or the next disclosure period, the carbon and sustainability experts at Carbon Credit Capital can help you map your exposure and structure a Dual-Value Model response that addresses reduction, resilience, and disclosure-readiness in a single program. Schedule a consultation.
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