Disseminated on behalf of Alaska Energy Metals Corporation.
The electric vehicle (EV) revolution is unfolding at full speed. EV sales, battery factories, and electrification plans are all increasing rapidly across the world. But behind this clean‑energy success story lies a growing risk that few people fully grasp: the supply of high‑purity nickel — known as Class 1 nickel — is under increasing strain.
While overall nickel output appears large, the specific kind of nickel that powers EV batteries is far harder to secure. Add in rising geopolitical tensions and energy price shocks, and the result is a supply chain that is both fragile and critical.
Nickel’s Role in the EV Revolution
Nickel is a key ingredient in the lithium‑ion batteries that power most long‑range electric vehicles. Modern battery chemistries like NMC (Nickel‑Manganese‑Cobalt) and NCA (Nickel‑Cobalt‑Aluminum) use large amounts of nickel because it improves energy density, which helps EVs travel farther on a single charge.
- As a result, demand for nickel from EV batteries is soaring. IRENA data suggested that global demand for nickel used in EV batteries could reach more than 1.09 million tonnes by 2030 under current trends, depending on battery technology and adoption rates.
As per analysts and industry pundits, as EV markets grow across the U.S., Europe, China, and other regions, this nickel demand is only expected to rise further. What makes this particularly challenging is that EV battery producers only accept Class 1 nickel — nickel that is at least 99.8% pure and suitable for conversion into nickel sulfate, which is essential for battery cathodes.
Why Class 1 Nickel Is Scarce
On the surface, the global nickel supply seems large. Countries like Indonesia have rapidly increased production, and numerous mines operate in Asia, Russia, and Latin America. But most of this nickel is Class 2, a lower‑purity type used mainly in stainless steel production, which cannot easily or cheaply be turned into battery‑grade material.
This means the world may have enough nickel in total, but the kind that matters most to the EV industry is limited. This structural imbalance between total output and battery‑grade supply is now one of the EV sector’s biggest supply challenges.
According to McKinsey, Class 1 supply growth is lagging demand growth. Some analysts project that even by 2025, primary Class 1 capacity may only supply around 1.2 million tonnes, compared with demand closer to 1.5 million tonnes, indicating a shortfall right when EV adoption accelerates.
- MUST SEE: The Ultimate Guide to Nickel: Supply, Demand, and Nickel Prices for 2026 and Beyond
- CHECK: LIVE NICKEL PRICES
Global Conflict Adds Supply Risk
Geopolitics is also heightening uncertainty. Russia, historically one of the largest producers of high‑grade nickel, saw its exports disrupted after the Ukraine war began. Sanctions and shifting trade relationships have forced automakers and battery makers to look for alternatives.
Meanwhile, an analysis from S&P Global explained how instability in the Middle East may not directly affect nickel mining, but it does influence everything from energy costs to shipping routes. Critical passages like the Strait of Hormuz handle significant volumes of global oil and gas. Any disruption there can increase fuel prices, which raises costs throughout the mining, refining, and logistics chain.
Since nickel production and refining are energy‑intensive, rising energy costs feed directly into higher production costs. In this way, even conflict far from nickel mines can tighten the Class 1 supply chain.
Processing Bottlenecks Drive Hidden Risk
Another often overlooked factor is processing. Much of the world’s nickel comes from lateritic ores, especially in Indonesia and the Philippines. To turn these ores into battery‑ready nickel sulfate requires a complex High‑Pressure Acid Leach (HPAL) process that depends heavily on sulfuric acid and stable energy inputs.
Disruptions to sulfur supply — linked closely to global energy markets — can slow down or increase the cost of HPAL operations. Analysts have highlighted that future price swings in battery‑grade nickel could be driven not just by ore availability but by these processing input risks tied to sulfur and acid supply.
So even if mines produce enough nickel ore, the ability to convert it into usable battery material can become the real bottleneck.
A Two‑Tier Nickel Market
As a result of these pressures, the nickel world is dividing into a clear two‑tier market:
- A surplus of lower‑grade Class 2 nickel
- A shortage of high‑purity Class 1 nickel demanded by EV makers
This gap is expected to grow as EV battery demand rises more sharply than Class 1 production capacity. Data from IEA shows that demand for nickel in cleantech applications, mainly EVs, could more than double from around 560 kilotonnes in the early 2020s to over 1,349 kilotonnes by 2030.
Yet most new refining capacity is focused on processing laterite ores, and planned Class 1 expansions are relatively limited. This makes high‑purity nickel increasingly strategic.
Tight Battery Nickel Amid Shifting Market Trends
The same S&P report has emphasized this imbalance as a core structural challenge in the nickel market. While overall nickel supply may at times appear ample, the availability of battery‑grade nickel remains tight and vulnerable to both demand shifts and supply disruptions.
Furthermore, tracking the broader nickel market trends showed that industrial demand dynamics and tariff uncertainty have at times weighed on prices, even as battery‑grade demand continues to grow.
This mixed picture of soft prices amid growing strategic demand underscores how complicated the nickel supply story has become.
The Rising Value of Sulphide Nickel in North America
Not all nickel sources are equal. Sulphide nickel deposits — found in places like parts of Canada, Australia, and Alaska — are much easier to process into high‑purity Class 1 material than laterites. They also tend to have lower emissions and simpler refining paths.
Sulphide Nickel: Scarce but Strategic
Not all nickel sources are equal. Sulphide nickel deposits found in places like parts of Canada, Australia, and Alaska are much easier to process into high‑purity Class 1 material than laterites. They also tend to have lower emissions and simpler refining paths.
However, sulphide deposits are rare compared with laterite ores. Most of the easy‑to‑develop sulphide assets have already been mined. Discoveries are limited, making existing and new sulphide projects more strategically valuable.
This is why automakers and governments in Western countries are placing greater attention on domestic and North American projects as they seek to reduce reliance on geopolitically sensitive supply chains.
Alaska Energy Metals’ Nikolai Project and Cleaner Supply Chains
A high‑profile case is the Nikolai project in Alaska, developed by Alaska Energy Metals Corporation or AEMC. It contains not just nickel but also copper, cobalt, and platinum group metals — all important for EV batteries and broader clean energy technologies.
Projects like this offer several key advantages:
- Cleaner processing pathways
- Simpler conversion to battery‑grade nickel
- Stronger environmental, social, and governance (ESG) transparency
As of March 10, 2025, the nickel junior shows a major increase in contained metals. The resource estimate also confirms the presence of a treasure trove of energy transition metals: copper, cobalt, platinum, and palladium.
- The Indicated category now includes 5.6 billion pounds of nickel and 1.77 billion pounds of copper, and along with the value of the other metals equal to 11.03 billion pounds of nickel equivalent metal. This marks a 46% increase from the previous estimate.
- The Inferred category holds 9.38 billion pounds of nickel and 2.43 billion pounds of copper, and along with the value of the other metals equal to 17.98 billion pounds of nickel equivalent metal. This represents a sharp 122% increase, highlighting the scale of new resource growth.
As automakers push to decarbonize their supply chains, these attributes are becoming more valuable, not just economically but also in regulatory and brand terms.
Friendshoring and Supply Security
The concept of “friendshoring” — sourcing critical materials from politically stable and allied regions — is gaining traction. Governments in the U.S., Europe, and elsewhere are funding and incentivizing projects that can produce strategic minerals like nickel in safer jurisdictions.
This shift aligns with national security goals as well as corporate sustainability targets. Securing battery metals in friendly regions helps reduce exposure to conflicts and sanctions while supporting long‑term industrial planning.
Outlook: Quality Over Quantity
In the early days of the EV transition, the focus was simply on increasing battery production. Today, the conversation has shifted. It is no longer enough for the world to produce more nickel — it must produce the right kind of nickel.
High‑purity, battery‑grade nickel is becoming one of the most strategic materials in the energy transition. Its supply chain is deeply influenced by geopolitics, processing challenges, and shifting industrial priorities.
Conflicts like the Russia‑Ukraine war, energy price shocks, and sulfur supply vulnerabilities have all shown how fragile the nickel ecosystem can be. At the same time, demand projections through 2030 make it clear that EV adoption will continue pushing nickel demand higher.
DISCLAIMER New Era Publishing Inc. and/or CarbonCredits.com (“We” or “Us”) are not securities dealers or brokers, investment advisers, or financial advisers, and you should not rely on the information herein as investment advice. Alaska Energy Metals Corp. (“Company”) made a one-time payment of $90,000 to provide marketing services for a term of three months. None of the owners, members, directors, or employees of New Era Publishing Inc. and/or CarbonCredits.com currently hold, or have any beneficial ownership in, any shares, stocks, or options of the companies mentioned.
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More and more small and medium-sized businesses are hearing the same question from their larger customers: What is your carbon footprint? That question now travels down entire supply chains, and it arrives next to tender requirements, certification criteria, and rising customer expectations.
The accounting differences that decide whether your nature investment shows up in inventory, in BVCM, or nowhere at all.
The question reaches a procurement team about three weeks before the next sustainability committee meeting. Someone has read about insetting. Someone else has just signed off on an offset purchase. The CSO wants to know if the two are interchangeable. The answer is no, and the GHG Protocol Land Sector and Removals Standard is the reason why.
This article walks through what each term means at audit-grade specificity, what the standards actually say about how each gets counted, and how to decide which tool fits which target. The insetting vs offsetting question is one of the most-searched in corporate climate strategy, and one of the most poorly answered. By the end of this piece, you should be able to brief a committee on the difference without notes.
The two definitions, in plain English
Offsetting means buying carbon credits generated outside your value chain and retiring them against your residual emissions. The reduction happens somewhere else, financed by you, and the credit is the receipt.
Insetting means investing in emission reductions or removals inside your own value chain, typically with suppliers, where the reduction is directly linked to the products and services you buy. The reduction happens inside the boundary of your Scope 3 inventory, and the accounting treatment is fundamentally different.
The shorthand from the University of Oxford’s Nature-based Insetting Initiative is useful: insetting is what you do with the supply chain you have; offsetting is what you do with the supply chain you do not have.
What the GHG Protocol Land Sector Standard actually says
The GHG Protocol Land Sector and Removals Standard, finalised in 2024 after a multi-year pilot, sets the rules for how land-based emission reductions and removals enter corporate inventories. The Standard distinguishes between inventory accounting (Scope 1, 2, and 3) and project or intervention accounting (a separate methodology for crediting).
For insetting, the practical implication is that supplier-level interventions, when properly measured and attributed, can reduce your Scope 3 category 1 (purchased goods and services) emissions in your inventory. The reduction is not a credit retired against the inventory; it is a lower inventory number, period.
For offsetting, the credit is retired separately. It can be reported as a contribution toward a net-zero claim under the SBTi Beyond Value Chain Mitigation framework or as part of a VCMI Carbon Integrity claim, but it does not lower the inventory number.
A practical consequence: if your Science Based Target requires a 50% absolute reduction in Scope 3 emissions by 2030, insetting moves you toward the target. Offsetting does not. This single point of difference reshapes the procurement decision.
When insetting counts toward Scope 3 (and when it does not)
Insetting counts toward Scope 3 only when several conditions are met:
- The intervention must occur with an entity in your value chain.
- The emissions reduction or removal must be measured against a defensible baseline.
- The reduction must be attributed to your share of that supplier’s output, not double-counted with other buyers.
- It must follow the inventory accounting rules in the GHG Protocol Land Sector Standard, not the project accounting rules used to generate credits.
The most common failure mode is double counting. If your supplier sells the same reduction as a credit on the voluntary market and also reports it to you as a Scope 3 reduction, the math breaks. The Standard requires you to address this risk, typically by purchasing and retiring the supplier-issued credit as part of your inventory or by contractual provisions that prevent the supplier from selling the reduction twice.
When insetting does not count toward Scope 3: when the intervention sits with a supplier you do not buy from, when the baseline is not defensible, when the attribution is unclear, or when the documentation does not survive audit. Those cases default to Beyond Value Chain Mitigation, which is still useful but operates on a different ledger.
The procurement and supplier engagement question
Insetting is harder than offsetting. That is the unfashionable truth most buyers eventually confront. Offsetting is a transaction; insetting is a relationship.
To run an insetting program, you need supplier mapping precise enough to know which farms or facilities sit at which Scope 3 boundary. You need an engagement model that gets suppliers to participate, which usually requires multi-year commitments and shared economics. You need an MRV architecture that measures the right things and produces audit-ready documentation. And you need a contractual structure that prevents double counting and protects both sides.
The trade-off you receive in return is significant. Reductions count against your inventory rather than your residual. Supplier relationships deepen, which protects sourcing continuity. Yield and quality improvements often follow regenerative interventions, which reduces your input cost over time. And the regulatory file, under CSRD, CSDDD, EUDR, and the SBTi FLAG Guidance, is materially stronger.
Choosing the right tool for the right target
A practical decision rule. If your target is a science-based Scope 3 reduction and you operate in a FLAG sector or source FLAG commodities, insetting is the structurally correct tool. If your target is a net-zero claim that includes neutralising hard-to-abate residual emissions outside your value chain, BVCM via high-integrity offsets is the structurally correct tool. Most companies with material Scope 3 exposure need both, in different proportions, sequenced over time.
The sequencing matters. Insetting takes longer to stand up but produces a permanent reduction in the inventory. Offsetting can be transacted faster but does not change the inventory and now sits under tighter claim restrictions. Treat them as complementary tools with different jobs, not as substitutes. The Accountability Framework Initiative and the IUCN Global Standard for Nature-based Solutions both provide useful guardrails for the insetting side, with biodiversity, human rights, and benefit-sharing requirements that go beyond carbon math.
If you are mapping a Scope 3 reduction roadmap and need to scope which interventions count toward your inventory versus which sit in Beyond Value Chain Mitigation, the carbon and sustainability experts at Carbon Credit Capital can help you structure a nature-based supply chain investment program that fits your FLAG exposure, your target architecture, and your audit horizon. Schedule a consultation.
Net zero is often described as a balancing act: cut what you can, account for the rest, and reach zero on the ledger. That framing is useful, but it leaves something out. It treats every tonne of carbon as interchangeable and every route to zero as equally sound, while the science tells a more specific story.
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