Carbon-removal credits are attracting increased attention.

  • This weekly round-up brings you the latest developments in the global energy sector.
  • Top energy news: Carbon removal credits attracting increased attention; Europe to revamp main climate policy; New coalition aims to speed up flow of climate-related finance to world’s poorest countries.
  • For more on the World Economic Forum’s work in the energy space, visit the Shaping the Future of Energy, Materials and Infrastructure Platform

1. Carbon removal credits in the spotlight

Companies in a range of sectors are spending hundreds of millions of dollars on carbon removal credits, as they bet on the development of the carbon capture industry, The Financial Times reports.

Carbon-intensive industries use carbon removal credits to compensate for their emissions, and demand for these credits is increasing. Four companies, including fashion retailer H&M and financial service firm JPMorgan Chase, have recently agreed to spend a combined $100 million on these credits by 2030.

Evolution of the CO2 capture project pipeline, 2010-2022

Evolution of the CO2 capture project pipeline, 2010-2022.
Carbon-capture projects have been increasing in number, particularly in the last three years.
Image: IEA

Another five firms have agreed to buy over 200,000 credits from 2025 via Mitsubishi-backed group NextGen, which will source credits from carbon removal systems that include direct air capture facilities.

Long-term carbon credit deals supported by new government subsidies mean carbon removal technologies are becoming more attractive to investors, companies have told The Financial Times.

Even individuals have been buying forward carbon credits, but not always for profit in the case of entrepreneur Craig Cohon, who is trying to reverse his carbon footprint.

However, critics say that carbon capture technologies are a way of potentially enabling oil and gas producers to avoid shifting to renewables.

2. EU approves revamp of main climate policy

EU countries have given their final approval to the biggest revamp to date of Europe’s carbon market. The reforms will make pollution more costly for sectors including cement manufacturing, aviation and shipping, and sharpen the 27-member bloc’s main tool for cutting carbon dioxide (CO2) emissions.

The EU Emissions Trading System has since 2005 forced power plants and factories to buy permits when they emit CO2. This has cut emissions from those sectors by 43%. But the changes to the carbon market seek a deeper cut of 62% from 2005 levels by 2030. This is intended to help the EU deliver on its emissions-cutting targets.

Change since 1990 in emissions in EU-27.
The EU is seeking a 62% cut in carbon emissions from 2005 levels by 2030.
Image: European Environment Agency

The changes will see heavy industries lose the free CO2 permits they currently receive by 2034, while airlines will lose theirs from 2026, exposing them to higher CO2 costs. Emissions from ships will be added to the scheme from 2024.

The reforms will raise billions of euros through CO2 permit sales, with national governments able to invest the proceeds in green measures.

EU members have also approved a world-first policy to phase in a levy on imports of high-carbon goods from 2026, targeting steel, cement, aluminium, fertilizers, electricity and hydrogen.

3. News in brief: More energy stories from around the world

The leaders of France, Spain, Barbados and Sierra Leone are among those who have backed a new coalition aiming to accelerate the flow of climate-related finance to the world’s poorest countries. The Power Our Planet: Act Today. Save Tomorrow campaign seeks to mobilize citizens to pressure leaders for a “seismic shift” in the way the world’s financial system works, to help developing countries fight climate change and poverty.

Australia’s biggest hydropower project faces a delay of up to two years, likely pushing its start-up out to 2028. The Snowy 2.0 project has been delayed because of a shortage of skilled workers, complex designs, soft ground and supply chain disruptions. The project is expected to replace capacity from three coal-fired power stations. Australia aims to get 82% of the east coast market’s power from renewables by 2030, up from 30% now.

A proposed Dutch government target to build 3 gigawatts of offshore power by the end of the decade is a “game-changer” for the fledgling industry, says a developer of solar farms. The Netherlands’ offshore goal is part of a €28 billion ($31 billion) package of climate measures that could help it reach its 2030 emission reduction targets, the website Recharge reports.

Progress in energy storage using lithium batteries continues, with a deal for a “long-duration” storage project signed in Australia this week. The clean energy arm of German utility RWE will provide the system, which will be able to discharge energy over a period of at least eight hours. It is the latest in a series of lithium-ion battery storage systems that can last longer than the four hours at which they were once seen to be economically competitive.

Global gas markets are gradually rebalancing after an 80% cut in Russian pipeline supplies to the EU, but supply is still expected to remain tight in 2023, the International Energy Agency (IEA) says. Mild weather, an increase in liquefied natural gas exports and a strong decline in gas demand helped to cushion the shock, leaving Europe’s storage 60% full. However, the IEA warns that the improved outlook is no guarantee against future volatility.

Energy giants Shell and Equinor reported higher-than-expected first-quarter profits, using the heft of their trading desks to offset lower oil and gas prices. Many energy producers have reported forecast-beating results for January-March.

Florida governor Ron DeSantis has signed into law a bill barring state officials from investing public money to promote environmental, social and governance (ESG) goals, and prohibiting ESG bond sales. The bill is one of the furthest-reaching efforts yet by US Republicans against sustainable investing efforts.

4. More on energy from Agenda

Funding climate technology to accelerate the green transition was under discussion at the World Economic Forum’s Growth Summit 2023 in early May. From financing a just transition to ending energy poverty, here are the highlights from the session “Growth Hotspots: The Climate Technology Boom”.

Wind turbines are a more sustainable and responsible alternative to fossil-fuel-based forms of power generation, but require a lot of carbon-emitting steel in their manufacture. Setting a standard for greener steel should benefit the wind turbine industry and other steel-intensive sectors.

Industry is the single biggest driver of climate change, accounting for nearly a third of global emissions. But it has a formula with the potential to knock out more than half of industrial emissions: renewable electricity + thermal energy storage.

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