Witten by Asier Aramburu, Climate Change RENEN Manager.
In order to effectively advance in reducing the emission of Greenhouse Gases (GHG), the way in which energy is produced and consumed in the world must undergo radical changes. Currently, three quarters of GHG emissions correspond to the energy sector, mainly due to the use of fossil fuels. Although various competitive technologies based on renewable energies have been developed, there are sectors in which their capacity to mitigate GHG is very limited. This fact makes it necessary to develop complementary solutions to decarbonise sectors and applications in which electricity is not cost-efficient, accessible or feasible.
One of the most promising alternatives is based on the large-scale production and use of hydrogen, a gas known and used since the beginning of the industrial era. However, the massive use of this molecule has not been viable until now, thanks to the green hydrogen, the one that is produced through the electrolysis of water. This process is based on the separation of the water molecule into hydrogen and oxygen through the application of electricity from renewable sources. For this reason, production costs are highly dependent on the price of energy. Thus, the massification of renewable energies has allowed the commercial exploitation of this technology to become viable.
On the other hand, it has multiple applications, from domestic natural gas networks to fuel replacement for buses, trucks or ships. Its main advantage: when it burns, it only leaves water steam as a residue. The mechanism is simple: hydrogen reacts with air, generating energy and releasing water.
Attracted by its multiple benefits, an increasing number of countries are betting on its development. Germany is one of the main leaders as it has already committed to invest US $ 10.6 billion to create a local production of green hydrogen. Spain has also joined this race through a National Strategy that seeks to build 4 GW of green hydrogen capacity by 2030.
These efforts will be also supported by the European Post-COVID-19 Recovery Fund that focuses on clean investments, including green hydrogen. This plan is transferred to Spain by using more than 1,500 million euros until 2023 to boost renewable hydrogen.
In Latin America, Chile is leading this development and has just published its National Green Hydrogen Strategy which aims to achieve 5 GW capacity by 2025 (built or developing) and 200 kton/year of production and an installed capacity of 25 GW by 2030.
ALLCOT also wants to lead this sector, so it is actively supporting companies that are developing pilot projects for the production and use of green hydrogen. Due to their innovative nature, these projects require alternative income sources to be able to reach the financial sector. ALLCOT can go hand in hand with these companies so that they can generate carbon credits from GHG emission reductions. Thus, it can be an essential support to enable green hydrogen projects that can then be scalable and replicable.
Thanks to these first projects, progress will be made to get economies of scale that allow reducing costs, encouraging the creation of innovative industrial value chains, promoting technological knowledge and generating sustainable jobs, contributing with all of these to the reactivation of a green high added value economy.
Hydrogen can be a key player in the complete decarbonization of the economy. Its application in sectors where electrification is not cost efficient makes it an extremely competitive technology that has already been included in many NDCs. ALLCOT, as a veteran company in developing climate change mitigation projects, is committed to develop this technology so that its full potential is reached, and progress is made in the fight against climate change and in the achievement of the Development Goals Sustainable (ODS).
Nationally Determined Contributions (NDCs) are a series of measures and actions which countries that are party to the Paris Agreement plan to take to reduce their greenhouse gas emissions and adapt to climate change.
Written by Casania Fometescu, ALLCOT Group Business Development
Earlier this month, Casiana Fometescu, international CO2 consultant and ALLCOT Group business development director on Eastern Europe attended the 19th Annual Workshop on Greenhouse Gas Emissions Trading, jointly organized by The International Energy Agency (IEA), the International Emissions Trading Association (IETA) and the Electric Power Research Institute (EPRI) in Paris.
The Conference shows the growing importance of the CO2 market worldwide. The number of attendees at the Conference doubled from last year’s, especially in terms of government representatives (e.g. United Kingdom, Switzerland, European Commission, China, New Zealand, Canada, etc.). This feeling was embodied by Mark Lewis from BNP who told the audience he feels “in the glory days of the carbon action”.
The international carbon market has become such an extended topic since national and regional governments, but also companies have developed policies to reduce emissions, and each of them has different technical details in implementation. The presentations held explained many sub-national trading schemes or carbon initiatives (Ontario, Quebec, California), national ones (New Zealand, China, Taiwan, Korea, Japan, Costa Rica, Columbia), and supra-national carbon markets (EU ETS).
The following talking points are worth highlighting:
- The representative of the World Bank, Celine Ramstein, recognized the importance of pricing carbon and mentioned that there are 46 national and 30 subnational jurisdictions that have already implemented either carbon trading or carbon tax schemes. Yet, all the emissions trading schemes (ETS) in the world (including China) comprise just 20% from the worldwide greenhouse gas (GHG). Therefore, there is still plenty of room to broaden the scope of these mechanisms.
- According to the World Bank report on the state of the carbon market, there is a diversity of carbon prices in different countries, ranging from €127/tCO2 in Sweden and €96/tCO2 in Switzerland, to €25/tCO2 in the EU ETS to less than €10/tCO2 in most countries covered by carbon pricing. Only 5% of the global GHG market has carbon prices between €40-80/tCO2.
- Worldwide carbon revenues by governments are also on the rise from USD 22 billion in 2016 to 33 billion USD in 2017, and 45 billion USD in 2018, according to the WB.
- Voluntary carbon trading volumes have been rising in recent years and companies are increasingly looking to set CO2 targets in line with the Paris Agreements, Sustainable Development Goals and EU targets for 2030 and 2050.
- The EU target of carbon neutrality for 2050 can be achieved only if governments reinforce their National Determined Contributions (NDCs), and set higher targets to achieve through carbon offsetting and investment in green technologies, renewable energy, and carbon storage measures.
- Germany would like to introduce a national sectoral trading scheme in addition to the mandatory EU ETS, which will comprise more activity sectors compared to the EU ETS. China has been moving forward on the implementation of the national ETS finalizing Phase I with the plan to realize Phase 2 “simulation exercises” before the end of this year.
- Article 6 negotiations of the Paris Agreement can represent an opportunity for private entities to contribute to global mitigation efforts through their participation in international market mechanisms, but also through voluntary cooperation in the implementation of the each country’s NDC. Yet, all pilot initiatives under Article 6 are government initiatives and not private ones.
- IETA’s 2019 GHG Market Sentiment Survey shows that 85% of respondents expect corporate voluntary action to increase over the next 5-10 years with businesses much more involved in reducing GHGs emissions and achieving their voluntary targets.
Written by Sergi Cuadrat, Chief Technical Officer (ALLCOT)
In 2015, leaders from the member states of the United Nations agreed on objectives to shift all economies and societies toward sustainable and decarbonised development through the adoption of the Agenda 2030 on the Sustainable Development Goals (New York, September 2015) and the Paris Agreement to limit climate warming to well below 2ᵒC (Paris, December 2015). There is enormous potential for co-benefits to arise from the mutually supportive implementation processes of the 17 Sustainable Development Goals (SDGs) elaborated in the voluntary 2030 Agenda and the Nationally Determined Contributions (NDCs) underpinning the legally binding Paris Agreement under its Article 6.
Both frameworks, although negotiated under different multilateral processes, promote the participation of all countries and are highly interlinked: the Paris Agreement emphasizes the need for considerations of sustainability in low-carbon transitions; at the same time avoiding dangerous climate change is one of the 17 Sustainable Development Goals (SDGs) defined in the 2030 Agenda on Sustainable Development. Thus, failure in one process could undermine the success of the other. The implementation of Nationally Determined Contributions (NDCs) –countries’ emissions reduction commitments– requires huge investments, which are more likely to be financed if embedded in and benefiting national development plans. While, vice versa, prospects for sustainable development depend on a limitation of global warming. This interdependency can be seen as an opportunity to move away from the discourse of two different agendas that are often perceived to be in competition, and instead pursue their implementation in a way to maximize mutual benefits.
Several carbon offset standards such as the Gold Standard and the Verified Carbon Standard are adapting their frameworks and requirements to better define a carbon mitigation project’s impacts beyond carbon reductions, and in some cases, this may lead to the creation of other tradeable instruments in addition to carbon credits. ALLCOT assesses project alignment with the SDGs to conduct a thorough analysis of the data currently being monitored and verified at the project level, to determine whether there are additional metrics that can be tracked for SDG reporting purposes.
ALLCOT is seeing an evolution in the way our clients think about carbon finance and the additional impacts their carbon investments can have. Businesses are able to articulate the benefits of their carbon project investments beyond the verified emission reduction. We believe that businesses can use carbon finance to deliver additional value through alignment with the SDGs, enabling the carbon market to extend beyond emission reductions, and play a vital role in driving a low carbon sustainable development throughout the world.