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Shell Nederland Raffinaderij B.V., a subsidiary of Shell, is pausing construction at its massive biofuel facility in Rotterdam. The 820,000tpa capacity site at Shell Energy and Chemicals Park will halt work temporarily to focus on other vital aspects of the company. So, what is the exact reason behind Shell’s massive decision? Will this impact its operations, global market value, and employees by large? Read and discover more…

Why did Shell take this Bold Decision?  

Explaining straightway, Wael Sawan, CEO of Shell wants to prioritize the company’s most profitable ventures, particularly in oil and gas. This approach has resulted in the company pulling out of less profitable renewable and hydrogen projects. The outcome of this decision is the temporary halt of the Rotterdam biofuels project. Shell is also conducting a thorough valuation review of this unit. The 820,000t unit was also set to produce sustainable aviation fuel (SAF), apart from renewable diesel. According to media reports, they aimed to start operations in 2025, but now it has been postponed to the end of the decade.

Another key reason for ceasing the unit is to slow down activities and reduce contractor strength for better cost control. They believe this will help optimize and streamline project sequencing. With this new amendment, Shell aims to reevaluate project delivery and maintain competitiveness in the current economic scenario.

Huibert Vigevano, Shell’s downstream head confirmed that,

“Temporarily pausing on-site construction now will allow us to assess the most commercial way forward for the project. We are committed to our target of achieving net-zero emissions by 2050, with low-carbon fuels as a key part of Shell’s strategy.”

UBS analyst Joshua Stone remarked,

“The pause was consistent with Shell’s strategy to focus on returns. The delays further highlight that the advanced biofuels market is not an easy one. The oil majors have dipped their toes and found it challenging.”

Shell Canada Greenlights Major Carbon Emission Cut

As this news came as a shock to many, there is a silver lining for our news readers. Meanwhile, Shell Canada recently achieved the final investment decision (FID) for CCS projects, including the Polaris project and the Atlas Carbon Storage Hub, in partnership with ATCO EnPower. The media release notes that Polaris (100% Shell-owned) can reduce Scope 1 CO2 emissions at Shell’s Scotford refinery by capturing and storing up to 40% and by up to 22% at the chemicals complex. The operations are slated to begin by the end of 2028.

Moving on, Shell Eastern Trading has acquired Pavilion Energy from Carne Investments, gaining 100% control. This is another significant milestone that happened last month. Pavilion Energy, based in Singapore, operates a global LNG trading business with 6.5 mtpa of contracted supply, alongside shipping, and gas supply activities in Asia and Europe. This acquisition manifests Shell’s LNG portfolio. It also provides strategic access to key markets, increasing flexibility to meet energy security needs in Asia and Europe.

Even though it might seem uncanny for companies to halt projects in progress, Shell is not the first company to announce it. Energy giant BP recently announced a pause on two biofuel projects in Germany and the U.S.

Media agencies like the Financial Times have reported that Biofuel prices have been under downward pressure recently. This is because of reduced demand in Europe following Sweden’s biofuel mandate cut, alongside increased supplies from the U.S. However, Shell shares increased by 1.3% at 1106 GMT, showing a rise of over 12.5% this year.

Shell has a market cap or net worth of $235.01 billion. The enterprise value is $277.77 billion. As of the most recent data, Shell’s stock price in the last 5 days was $73.25 per share, as shown in the image below.

Shell

source: stockanalysis

NYSE: SHEL · IEX Real-Time Price · USD 73.25

How Shell Uses Carbon Credits to Shape the Future

Shell’s carbon credits play a crucial role in their goal to become a net-zero emissions energy business. These credits help Shell and its customers offset emissions, adhering to the mitigation hierarchy: avoid, reduce, and compensate. Notably, Shell selects projects certified by the Verified Carbon Standard, Gold Standard, and the American Carbon Registry. In the ESG sphere, the company helps generate carbon credits from nature-based projects and technologies. In 2023, Shell’s net carbon intensity (NCI) included 20 m carbon credits, with 4 m linked to energy product sales.

Shell’s Net-zero emissions by 2050 (Scope 1, 2, and 3), reported by Shell’s Energy Transition Strategy, 2024

Emissions from internal operations (Scope 1 and 2)

  • Halve Scope 1 and 2 emissions by 2030 (2016 baseline).
  • Eliminate routine flaring from Upstream operations by 2025.
  • Maintain methane emissions intensity below 0.2% and achieve near-zero methane emissions by 2030.

Emissions from sold products (Scope 3):

  • Reduce the net carbon intensity (NCI) of the energy products we sell by 9–12% by 2024, 9–13% by 2025, 15–20% by 2030, and 100% by 2050 (2016 baseline).
  • Ambition to reduce customer emissions from the use of our oil products by 15–20% by 2030 (Scope 3, Category 11) (2021 baseline)

Global Market Insights reports that the European biofuel market size exceeded USD 26.5 B in 2023 and is likely to register a 6.7% CAGR from 2024 to 2032, owing to the rising concerns about climate change and demand for sustainable energy sources. The European government aims to boost renewable fuels to approximately 14% of transport energy by 2030, with substantial demand. With this prediction, we can hope the future of energy giants like Shell is promising, amid the biofuel boom.

The post Why Shell Hit the Brakes on New Rotterdam’s Biofuel Plant appeared first on Carbon Credits.

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Tesla Signs A Landmark Multi-Billion Dollar 15 GWh Megapack Deal

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Tesla Signs A Landmark Multi-Billion Dollar 15 GWh Megapack Deal

While Tesla’s energy storage segment is smaller than its automotive business, it has been experiencing significant growth. This segment has rapidly accelerated and expanded after maintaining consistent growth over the years, with recent massive Megapack contracts secured. 

Tesla and Intersect Power have signed a contract for 15.3 GWh of Megapacks, Tesla’s advanced battery storage system, for the latter’s solar and storage projects through 2030. This deal, along with previous agreements, positions Intersect Power as one of the top global buyers and operators of Megapacks. It has nearly 10 GWh of large-scale storage expected by the end of 2027.

Though the contract’s cost wasn’t disclosed, the massive energy involved says it’s a multi-billion dollar deal, depending on pricing. 

Tesla’s Megapack is a large-scale lithium-based battery energy storage system aimed at improving grid stability and preventing outages. Each unit has a storage capacity of over 3 MWh, sufficient to power 3,600 homes for 1 hour.

Tesla’s Battery Energy Storage Crazy Growth

Despite a decline in automotive revenues, Tesla has seen growth in other business segments, particularly in energy storage, which is becoming increasingly profitable. With the rising number of Megapack installations and an expanding fleet, Tesla expects consistent profit growth in this segment.

In Q1 2024, Tesla’s energy storage deployments hit a record high of 4.1 GWh. Revenue and gross profit from the Energy Generation and Storage segment also reached all-time highs.

In Q2 2024, Tesla Energy deployed 9.4 GWh of energy storage products, including Megapacks, Powerwalls, and solar products. That’s more than double the Q1 2024 deployment (132% increase) and up 157% year-over-year.

Tesla energy storage deployments Q2 2024

Tesla has previously supplied 2.4 GWh of Megapacks for Intersect Power’s solar and storage facilities, which are either operational or under construction.

The new agreement will see more than half of the Megapacks used for 4 major battery installations in California and Texas. They will begin operations by the end of 2027, including some of the biggest battery installations in the U.S. The remainder will be allocated to future solar and storage projects coming online between 2028 and 2030.

Mike Snyder, Senior Director of Tesla Energy, stated, 

“Intersect continues to be an exceptional partner, and their development expertise combined with the plug-and-play nature of Tesla’s vertically integrated technology enables the speed and scale needed to enhance grid resilience and support greater renewables integration.”

Amplifying Intersect Power’s Leadership in Clean Energy Storage

Intersect Power is a clean energy company focused on innovative, scalable low-carbon solutions. Established in 2016, the company develops, owns, and operates some of the world’s largest clean energy resources, delivering low-carbon electricity, fuels, and related products for both domestic and international markets.

Intersect Power is committed to advancing grid-tied renewables and large-scale clean energy assets, including battery storage, data centers, and green fuels. It has a portfolio of 2.2 GW of operating solar PV and 2.4 GWh of storage.

The energy company is known for its large and adaptable Battery Energy Storage Systems (BESS) at its solar and storage facilities in Texas and California. The Megapacks are set for delivery in 2025 and 2026 and will be produced at Tesla’s Megafactory in Lathrop, California.

Currently, Intersect Power has 2.4 GWh of Tesla Megapacks either operational or under construction. These include the 1 GWh at the Oberon solar and storage facility and 448 MWh at the Athos III solar and storage facility in California. An additional 1 GWh of Megapacks is being installed at the Radian and Lumina solar and storage facilities in Texas. Their full operational status are expected within the year.

According to the U.S. Energy Information Administration, battery storage capacity in the country has been on the rise since 2021. It is projected to increase by 89% by the end of 2024, provided that developers bring all planned energy storage systems online as scheduled.

US battery installed capacity 2024Current plans indicate that U.S. battery capacity could exceed 30 gigawatts (GW) by the end of 2024, surpassing the capacities of petroleum liquids, geothermal, wood and wood waste, and landfill gas.

Developers anticipate bringing over 300 utility-scale battery storage projects online in the United States by 2025. And about 50% of these planned capacity installations are in Texas.

Tesla Energy’s Power Gain Major Boost with Megapacks

Tesla Energy has also signed a $375 million contract to provide Megapacks for a major battery project in Australia. The agreement will support the construction of a 415 MW/1660 MWh battery, one of the world’s largest four-hour duration batteries.

The Megapacks will be used for Akaysha Energy’s Orana Battery Energy Storage System (BESS), located in New South Wales within the Central West Orana Renewable Energy Zone (REZ).

Tesla Megapacks have been making notable strides in Australia’s energy market. In October 2023, a 150 MW/300 MWh Tesla Megapack system was commissioned in New South Wales. 

Earlier this year, a 250 MW/500 MWh project broke ground in Queensland. Additionally, in April 2024, Tesla Energy was awarded a contract by Neoen to expand the Collie Battery, aiming to transform it into the largest battery in Australia, with a final capacity of 560 MW/2,240 MWh.

This Megapack agreement, alongside Tesla and Intersect Power’s significant deal underscore the growing demand for advanced energy storage solutions. These partnerships are set to enhance grid stability and support the transition to a low-carbon economy worldwide.

The post Tesla Signs A Landmark Multi-Billion Dollar 15 GWh Megapack Deal appeared first on Carbon Credits.

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Nickel Market in Turmoil: BHP to Halt Operations Due to Price Plunge

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Nickel Market in Turmoil: BHP to Halt Operations Due to Price Plunge

In recent developments within the global nickel market, the trajectory of prices has undergone a significant downturn. Consequently, nickel prices have plummeted from the highs recorded in recent years, primarily driven by a global oversupply. 

This has led BHP Group to suspend its operations in Western Australia, reflecting the economic challenges within the industry.

BHP’s Bold Move

BHP Group Ltd., one of the largest mining companies, announced the suspension of its Nickel West operations and West Musgrave nickel project in Western Australia. This decision was attributed to the inability to overcome economic challenges posed by the global oversupply of nickel. 

nickel supply and price

From October, BHP will halt mining and processing operations at several key sites, including the Kwinana refinery, Kalgoorlie smelter, and Mt. Keith and Leinster mines. The development of West Musgrave will also be suspended as the company begins its care and maintenance program.

Geraldine Slattery, BHP’s Australia president, cited substantial economic challenges driven by the oversupply of nickel as the reason for the suspension. BHP has flagged an underlying EBITDA loss of approximately $300 million for its Australian nickel operations for the financial year ending June 30, 2024.

Despite the suspension, BHP plans to continue supporting its workforce and local communities during the transition. The company will invest about $300 million annually in its Western Australian nickel facilities, enabling a potential restart of operations. BHP will review its decision to halt operations by February 2027.

Australia’s resources minister, Madeleine King, expressed disappointment over BHP’s decision, highlighting its substantial impact on the workers and communities of Kwinana, Kambalda, and Kalgoorlie. Western Australian Premier Roger Cook echoed these sentiments, noting that the move would affect thousands of workers. Cook emphasized the importance of diversifying the economy to build resilience in the resources sector.

The Rapid Growth Shaking Up the Nickel Market

The rapid expansion of Indonesia’s nickel industry has led to a market oversupply, resulting in significant price declines from the highs of 2022 and 2023. As of July 10, the London Metal Exchange (LME) cash price for nickel was $16,606.41 per metric ton, a 46.4% drop from the 2023 high of $30,958/t on January 3, according to S&P Global Market Intelligence data.

In 2022, nickel prices peaked at $48,241/t on March 10 due to a historic short squeeze and remained volatile, often exceeding $30,000/t. The current price is down 65.6% from the 2022 high.

nickel prices

The primary nickel surplus limits the potential for price increases, with LME stocks reaching a two-year high on May 29 as supply growth, particularly from Indonesia and China, continues to outpace demand, according to S&P Global Commodity Insights analyst Anna Duquiatan. While nickel prices rose earlier this year due to protests in New Caledonia and US and UK sanctions on Russian metal, they have since decreased but remain higher than at the start of the year.

Seizing Opportunity in a Challenging Market

While expected, BHP’s decision to suspend operations at its nickel assets in Western Australia is a significant blow to the local mining industry. This suspension will result in 1,600 employees being either redeployed or offered redundancies. Although nickel exploration and development will continue, Australia’s nickel mining industry is effectively coming to a halt.

While the market remains in oversupply, some industry players see opportunities amid the challenges. 

The adversity presents an opportunity for Lunnon Metals, which is eyeing the mothballed Kambalda nickel concentrator.

With BHP’s suspension of Nickel West operations and the West Musgrave project amid the global nickel downturn, Lunnon is now exploring other processing options for its Baker and Foster nickel deposits. The company is considering a larger role in the district.

Lunnon sees potential in capitalizing on the mothballed Kambalda nickel concentrator by “either purchasing, leasing or otherwise making use of” the plant and its associated infrastructure and utilities. Additionally, the company envisions the possibility of jointly or solely building a new concentrator in the future to “meet the needs of various local stakeholders in Kambalda or further afield.”

Despite the challenging sentiment surrounding nickel, Lunnon Metals remains optimistic about the future of the commodity in Australia and is charting a path forward. Market analysts also share the same sentiment.

nickel market outlook 2028

While short-term price movements are driven by speculative activities and immediate market conditions, the long-term outlook for nickel remains positive, primarily due to its critical role in the energy transition. Increasing demand from renewable energy technologies, EVs, and energy storage solutions will drive long-term demand growth for nickel.

As the nickel market grapples with oversupply and declining prices, BHP’s suspension of operations marks a significant impact on the industry. However, companies like Lunnon Metals are exploring new opportunities to navigate this challenging landscape. This highlights the sector’s resilience and adaptability.

The post Nickel Market in Turmoil: BHP to Halt Operations Due to Price Plunge appeared first on Carbon Credits.

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HSBC Opens New Unit For Low-Carbon Finance, Alongside $1 Trillion Pledge

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HSBC Opens New Unit For Low-Carbon Finance With $1 Trillion Pledge

Global financial services group HSBC is launching a new business unit, HSBC Infrastructure Finance (HIF), to focus on infrastructure financing and project finance advisory opportunities tied to the transition to a low-carbon economy. The bank has appointed former UK Member of Parliament Danny Alexander as CEO of the new unit.

HIF aims to secure a significant share of deals in major markets. It will also integrate elements from the bank’s Global Banking Real Asset Finance team.

Taking the Helm and Driving Infrastructure Finance in Transition Markets

The new unit plans to expand HSBC’s debt origination and distribution businesses by building new relationships with both public and private sector entities.

Greg Guyett, CEO of Global Banking and Markets at HSBC, remarked on the announcement, noting that: 

“We have a leading presence in the regions where infrastructure needs to be developed and financed to enable a just transition to a low carbon economy. We also look to support the UK government’s program to build critical infrastructure in Britain to grow the economy whilst decarbonizing it.”

Danny Alexander, currently the vice president for policy and strategy at the Asian Infrastructure Investment Bank (AIIB) and a former UK government minister, will lead the division. 

Alexander’s appointment is intended to accelerate collaboration with governments, multilateral development banks, and companies, including supporting the UK government’s new initiatives.

In his post announcing the appointment, Alexander expressed his excitement about leading HIF and pursuing significant infrastructure financing and advisory opportunities related to the low carbon transition in strategic markets.

HSBC’s Net Zero Plan

The launch of HIF follows HSBC’s release of its first Net Zero Transition Plan earlier this year, detailing its strategy to finance and support the transition to net zero. The bank set a 2050 net zero target in 2020, committing to align its financing activities with the Paris Agreement’s goals. 

In 2021, HSBC made the transition to net zero one of the 4 key pillars of our corporate strategy. Since 2020, the global financier has taken several steps to begin executing its net zero ambition and managing climate risks. The banking company’s net zero journey is below.

HSBC NET ZERO JOURNEY

HSBC net zero journey to 2050

The bank’s transition plan covers the HSBC Group and it focuses primarily on the sectors and customers where they anticipate making the most significant impact on emissions reductions. 

For each sector, the bank describes the necessary technologies, investment needs, and external dependencies for a viable net zero by 2050 pathway, and identifies where a 1.5°C-aligned 2030 pathway is most at risk. The company also outlines its related portfolio, aims, targets, and actions to support sector decarbonization.

HSBC’s emissions from its own operations and supply chain are relatively small compared to its financed emissions, but reducing them is crucial for becoming a net zero bank. 

HSBC Greenhouse Gas Emissions from Own Operations

HSBC GHG carbon emissions or footprint
Source from HSBC Net Zero Transition Plan

The bank aims to achieve net zero in its own operations and supply chain by 2030, including 100% renewable electricity and minimizing its direct impact on nature. This involves cutting emissions across energy consumption, travel, and supply chains.

In 2022, HSBC exceeded targeted reductions by achieving a 58.5% decrease in energy and travel emissions compared to 2019 levels. This accomplishment was driven by the bank’s three key efforts:

  1. A 24% reduction in energy consumption achieved through optimizing building use and strategically reducing office space and data center operations.
  2. Purchasing 48% of energy from renewable sources by leveraging renewable tariffs and engaging with landlords.
  3. An 85% reduction in business travel, primarily attributed to Covid-19-related international travel restrictions.

Looking forward to 2030, HSBC aims for a further 50% reduction in energy consumption. High-quality carbon removal or offsets will be used only for residual emissions that cannot be otherwise reduced from 2030 onwards.

The financier engages with market participants to develop carbon credits and support initiatives for a credible carbon market. Climate Asset Management, HSBC’s joint venture, is sourcing high-quality carbon removals. The bank also participates in HKEX’s International Carbon Market Council and advocate for integrity in the voluntary carbon market through initiatives like the Integrity Council.

It’s important to note that HSBC does not plan to use carbon offsets to meet its net zero by 2050 portfolio financed emissions target or related interim 2030 sectoral financed emissions targets.

The bank will regularly review emerging guidance from standard setters like the Greenhouse Gas Protocol and the Science Based Targets Initiative (SBTi) to assess and incorporate customers’ use of carbon credits into its customer transition plan assessment process.

Aligning Financing with Global Climate Goals

To achieve GHG emissions reduction targets and reach net zero, HSBC is implementing a plan, focusing on these three areas:

  1. Supporting Customers

HSBC is prioritizing the transition of its customers to net zero by providing finance, services, insights, and tools. The bank is engaging with corporate customers on their transition plans and offering products and services to facilitate this shift.

  1. Transforming Operations

In 2021, HSBC made the “transition to net zero” one of the four pillars of its corporate strategy. This integration into the corporate strategy has led to embedding net zero considerations into sustainability risk policies, risk evaluation, decision-making tools, and processes. The bank aims to be net zero in its own operations and supply chain by 2030.

  1. Partnering for Systemic Change

HSBC is engaging with stakeholders across geographies to support policies, regulations, and partnerships that facilitate the transition to net zero. The bank is a signatory of the Taskforce on Climate-related Financial Disclosures (TCFD) and advocates for climate risk disclosures.

The bank also pledged to prioritize financing and investment that contributes to the low carbon transition, aiming to support customers with $750 billion to $1 trillion in finance and investment by 2030.

HSBC’s launch of Infrastructure Finance underscores its commitment to supporting the transition to a low-carbon economy through strategic infrastructure investments. With a robust net zero strategy in place, HSBC aims to play a pivotal role in shaping sustainable finance globally.

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