America consumes 79% fossil fuels

CARBON MARKETS

Nestle backs off carbon credits and opts for reducing emissions instead

• Nestle, the world’s largest food company, has abandoned its pledge to make major brands like KitKat and Perrier carbon neutral.

• The company is joining other corporations, including EasyJet and Gucci owner Kering, in moving away from carbon offsetting as a means to achieve net-zero emissions targets.

• Consumer groups argue that carbon offsetting can be misleading for shoppers and does not always result in emissions reductions.

• Nestle is focusing on in-house programs to reduce greenhouse gas emissions in its operations and supply chain, rather than relying on carbon offset programs.

• While Nestle aims to achieve net zero by 2050, it plans to do so through measures known as “insets,” such as supporting regenerative agriculture and habitat protection. However, there are concerns about the transparency and verification of these measures.

• Carbon neutrality claims can improve a product’s image, even without a guarantee of actual environmental benefits.

• Some companies have faced legal challenges over their carbon neutral claims, highlighting the risks of greenwashing.

• Despite Nestle’s change in approach, some of its brands continue to promote their carbon neutral achievements.

NATURAL GAS AND LNG

NextDecade announces Rio Grande LNG bank commitments and timeline

• NextDecade Corporation has announced that Rio Grande LNG has received binding commitments from lenders, along with expected equity funding, to support a positive final investment decision (FID) for the first three liquefaction trains at the LNG export facility in Brownsville, Texas.

• The lender group includes major project finance banks from Asia, Europe, the Middle East, and North America.

• NextDecade has secured long-term sale and purchase agreements for 16.2 million tonnes per annum (MTPA) of LNG from Phase 1, which represents 92% of the facility’s nameplate capacity.

• With the support of these binding debt commitments, NextDecade is targeting an FID for Phase 1 in early July, with subsequent FIDs for the remaining trains to follow.

HYDROGEN

Water shortage an obstacle for Corpus Christi hydrogen

• The Biden administration’s plan to create a clean hydrogen hub in Corpus Christi, TX, faces a challenge due to water scarcity caused by drought.

• A proposed seawater desalination plant is necessary to provide the millions of gallons of water required for the hydrogen hub, but it is being opposed by environmental groups, residents, and lawmakers.

• The production of hydrogen requires large amounts of fresh water, which is increasingly scarce due to drought.

• Many of the locations shortlisted for hydrogen hubs, including Corpus Christi, are in water-stressed regions.

• The Biden administration is offering significant tax credits and grants to companies and regions to build hydrogen hubs and reach clean hydrogen production targets.

• The DOE acknowledges the potential stress on regional water resources but has not commented directly on the Corpus application.

• Seawater desalination plants are expensive, energy-intensive, and can have negative environmental impacts on marine life and fishing industries.

• Corpus Christi has struggled to secure federal permits and local support for desalination projects.

• Some residents and environmental groups argue that the environmental costs of desalination outweigh the benefits of low-carbon fuel production.

• Proponents of desalination believe it can attract industry, create jobs, and contribute to the region’s tax base.

CARBON REMOVAL

Exxon joins the DAC race

• Exxon Mobil is working on an in-house pilot project to advance direct air capture (DAC) technology after ending its partnership with Global Thermostat.

• The company’s vice president of product development for Exxon Mobil Low Carbon Solutions stated that the DAC demonstration project is still in the early stages.

• Exxon has expressed interest in DAC technology, which is also being pursued by Occidental Petroleum, Chevron, and Shell.

• The challenge for Exxon is to understand and reduce the high costs associated with DAC technology.

• Exxon CEO Daren Woods referred to DAC as “the Holy Grail” and mentioned a technology program aimed at exploring its potential.

• The current cost estimates for Exxon’s DAC technology range from $600 to $1,000 per ton of CO2 removed, which is higher than the tax credit provided by the US Inflation Reduction Act.

• Exxon aims to cut the lower end of the cost estimate in half to make DAC technology more economically viable.

• Exxon believes that DAC technology could address the challenge of replacing existing infrastructure and contribute to solving society’s emissions problems.

• Exxon ended its partnership with Global Thermostat after a three-year collaboration but did not provide details on the decision.

• Global Thermostat has faced challenges in meeting technology milestones and reportedly had issues with timely bill payments.

• Sumitomo recently announced an investment in Global Thermostat, signaling ongoing interest in DAC technology.

POWER AND UTILITIES

CenterPoint proposes emissions reduction and clean energy in Minnesota

• CenterPoint Energy, Minnesota’s largest natural gas utility, has proposed a set of innovative projects to reduce carbon emissions and advance a cleaner energy future in Minnesota.

• The proposal is part of a five-year innovation plan submitted under the Natural Gas Innovation Act (NGIA), a state energy law that allows natural gas utilities to invest in renewable energy resources and innovative technologies.

• The plan includes projects to promote alternative gases like renewable natural gas and green hydrogen, as well as technologies such as a networked geothermal district energy system and end-use carbon capture.

• The proposed plan is expected to reduce or avoid 1.2 million tons of carbon emissions, create 3,000 jobs, and leverage $17 million or more in federal clean energy incentives and support for Minnesota.

• The plan includes 18 pilot projects and seven research-and-development projects, focusing on alternative gases, networked geothermal systems, hybrid heating, and industrial decarbonization.

• The total proposed budget for all projects is around $106 million over five years, with a minimal impact on residential utility bills.

• CenterPoint Energy is committed to a cleaner energy future and has set a Net Zero goal for Scope 1 and certain Scope 2 emissions by 2035. The company also aims to help customers reduce emissions from their natural gas use by 20-30% by 2035.

VISUAL OF THE WEEK

DISCLAIMER: None of this is financial advice. This newsletter is strictly educational and is not investment advice or a solicitation to buy or sell any assets or to make any financial decisions. Please be careful and do your own research.