September 2023 Cleantech Roundup: A Tale of Two Carbon Markets | Social Cost of Carbon | Big Lithium
This month, we’re talking about both good and bad news for voluntary carbon markets, how to connect climate and procurement, transmission, minerals, and more!
A Tale of Two Carbon Markets
“It was the best of times, it was the worst of times, it was the age of wisdom, it was the age of foolishness, it was the epoch of belief, it was the epoch of incredulity, it was the season of light, it was the season of darkness, it was the spring of hope, it was the winter of despair.”
― Charles Dickens, A Tale of Two Cities, on carbon credits?
Is it the best of times or the worst of times for carbon credits? Depends on what you’re talking about. For those general voluntary market carbon credits, it’s not good! A recent report from The Guardian suggested that somewhere between most and nearly all of the credits they looked at could not be validated or were junk.
This news is bad but not surprising; it is not the first such reporting suggesting there were massive problems in this market. That said, it is not necessarily the end of the line for nature-based solutions in general. As Eileen Waris of Energize Capital highlighted at the recent Chicago Venture Summit: Future of Climate Tech, there is a lot of potential in the natural ecosystem, and it would be a shame if we completely rejected nature-based solutions as a result of the issues to date.
I think the answer is probably in better standards and regulation to better align incentives, as well as measurement and reporting.
On the other hand, real, durable, voluntary carbon removal is bigger than ever — from the DAC hubs we discussed last month to the Microsoft purchase announcement ($200 million for 315,000 tons of carbon removal from Heirloom over 10 years) to the Amazon purchase announcement (250,000 tons of carbon removal from Occidental subsidiary 1PointFive over 10 years).
It’s a strange barbell market, with a bunch of cheap stuff, much of it crappy, and very expensive durable stuff. Measurement and verification (and by extension, durability) will continue to play an important role as the market grows. And grow it will: a recent BCG report estimated that the market for carbon dioxide removal in 2030 would be between $10 and 40 billion with a “B.”
Social Cost of Construction
The Biden administration announced it was broadening the use of the social cost of carbon (probably the most important — least known US policy mechanism related to climate). This is both sort of boring/technocratic/obvious, and also potentially impactful in that it could eventually build climate costs into the government procurement process. This matters a lot of because the government buys a lot construction materials, and because buying low-carbon versions of certain building materials significantly drives up the cost of those materials purchases, but it isn’t necessarily that big a cost driver in the scheme of the overall infrastructure project.
One of the largest lithium deposits in the world was discovered along the Nevada-Oregon border. It’s in clay, so it may be extremely costly to extract… although as demand for lithium surges the value proposition may change over time.
Symphony of the Night
BMW, Ford, and Honda are collaborating on a joint venture looking to become the standard for orchestrating EV charging management for the grid (in a similar space to where startup Weavegrid is operating). EV charging is creating a big challenge and opportunity for managing our more dynamic grid.
Can you Dig it?
Canary Media highlighted the recent progress on building transmission lines (which will enable more cost effective renewables development). The TL;DR is that more is happening, but not nearly fast enough.
Closer to home, an innovative HVDC transmission line project running from Iowa to Illinois called the SOO Green Line received approval from the state of Iowa. Instead of acquiring new right of way the line will be buried alongside existing railroad right of ways.
It’s the Sun
The Solar Energy Industries Association projects US Solar installations to grow by more than 50% this year.
The Inflation Reduction Act didn’t end up including the Biden Administration’s proposed Climate Corps, but they were able to scrape something together out of existing authorities. This is essentially hiring young people to do jobs that support climate adaptation (repairing infrastructure, planting trees, etc…) — like the Civilian Conservation Corps from the New Deal Era. Very popular, hard to be upset about, meat-and-potatoes climate action.