The $1 Trillion VCM Market

January 28, 2023

The $1 Trillion VCM Market

A report says that the value of the carbon credits market can be worth $1 trillion in 2037. 

The UK government considers a climate bailout of a steelmaker worth $372 million. 

A global PC maker pledges to hit net zero emissions by 2050 while an e-commerce giant gets a go signal to trade renewable energy in India.

Let’s dive in!

The Trillion Dollar Question

A lot of projections were made about how much the carbon credit market will be worth in the future.

Some say it can be $50 billion or more, but under BloombergNEF estimates, the market’s annual value could hit a Trillion Dollars - as early as 2037. 

The research analyst based its projection on a removal-only scenario.

It means carbon credits from projects that actually remove CO2 from the air only count; avoided deforestation and clean energy projects are out of the equation. 

Rescuing a Giant

Once a giant steel manufacturer in the UK, British Steel has seen its worst days in recent years, courtesy of soaring energy prices.

Fortunately, the UK government will come to its rescue by bailing it out with a £300 million ($372 million) climate package. But there are some strings attached to the deal. 

The steelmaker has to protect jobs at the firm and its owner, the Chinese Jingye Group, needs to invest at least £1 billion in it by 2031.

Most of all, British Steel has to cut its emissions by shifting away from using dirty coal to electric arc furnaces. 

Buying a "Net Zero" Device

Revealing its goal to hit net zero emissions by 2050, Lenovo becomes the first PC and smartphone maker with an SBTi-approved decarbonization target.

The tech company has several near-term reduction targets validated by the SBTi, but overall it aims to cut emissions across all three scopes – 1, 2, and 3 – by 90% by 2050 compared to 2019 levels. 

Lenovo will employ a couple of strategies to achieve its climate goals. And one of them is working with other companies such as its recent carbon credits deal with Kuehne+Nagel.

The partnership involves developing a green logistics service that allows Lenovo’s customers to buy carbon credits to offset the CO2 footprint of shipping their purchased devices.

Amazon Goes to India 

When it comes to racing to net zero, Amazon has always been an early adopter, investing hundreds of millions to slash its massive carbon footprint.

Recently, the Indian government approved Amazon's license to trade renewable energy in the country, up to 4,000 million units each year. 

 

The e-commerce giant is building up a series of wind and solar energy projects in India. It has closed a total of 720 MW worth of energy purchasing agreements with large industry players e.g. Vibrant Energy, ReNew Power Global, Brookfield Renewable, etc.

All its energy trading transactions will be managed by its new subsidiary, AEI New Energy Trading Pvt. Ltd.

Carbon Fact of the Week

Producing steel is very carbon intensive. Making 1 metric ton of steel emits 1.8 metric tons of carbon dioxide on average.

Steel production also accounts for about 8% of global CO2 emissions.

The global demand for steel will rise in a modest percentage, about 10% higher in 2050 than in 2022. And that's if production shifts almost 100% to low-carbon steel. 

The capital needed to decarbonize steel production is about $4.4 trillion over the next 3 decades. This may increase production costs by around 30% by 2050.

Decarbonizing the industry involves the use of carbon capture and storage (CCS) and replacing blast furnaces with electric arc furnaces.

Source: https://carboncredits.com/