Leaked hydrogen draft

Microsoft commits to Brazil’s voluntary carbon credit market

• Microsoft is entering Brazil’s voluntary carbon credit market as part of their goal to become carbon negative by 2030.

• They will purchase up to 1.5 million carbon removal credits from Brazilian startup Mombak Gestora de Recursos Ltda. through 2032.

• Mombak is reforesting deforested Amazon land with over 100 species of native trees.

• The deal is Microsoft’s largest for nature-based carbon credits while the financial terms of the deal were not disclosed.

• The focus is on projects that actually remove carbon, rather than avoidance offsets.

• Brazil is expected to become a major exporter of carbon-removal credits due to deforested land in the Amazon.

• The agreement is part of a project to grow 30 million+ trees in Para state.

• Investors like Canada Pension Plan Investment Board and Bain Capital Partnership Strategies support Mombak’s reforestation fund.

• Microsoft was attracted to Mombak’s use of technology like cloud, machine learning, and drones for selecting forestation sites.

Leaked hydrogen production tax credit causing controversy

• A leaked draft of Treasury Department guidance for hydrogen production tax credits under the IRA is causing concern.

• The drafted blueprint includes requirements sought by some environmentalists that would limit the $3-per-kilogram credit to hydrogen-production operations powered by wind, solar, or other clean-power projects built within the last three years.

• Environmentalists seek strict rules for hydrogen production to be supplied by new clean-power sources on the same grid, both annually and hourly.

• Lobbying and debates within the Biden administration have slowed the release of guidance, with differences of opinion between the DOE and the Treasury Dept.

• Synergetic, a green-hydrogen developer, resigned from the American Clean Power Association over disagreements on tax credit recommendations.

• Looser rules may incentivize low-tech electrolyzers from China over advanced US-made equipment, potentially impacting the industry’s development.

• Hydrogen is crucial for decarbonizing heavy industries, and tax credits are seen as essential for its growth.

Exxon’s low carbon plan

• ExxonMobil is actively pursuing over $20 billion in lower-emissions opportunities through 2027, representing significant growth from an initial $3 billion identified in 2021.

• The recent $5 billion Denbury expanded its carbon capture and storage capabilities through access to the largest CO2 pipeline network in the US.

• Exxon’s lower emissions portfolio includes investments in lithium, hydrogen, biofuels, and carbon capture and storage, with expected returns of ~15%.

• These initiatives have the potential to reduce third-party emissions by more than 50 million metric tons annually by 2030.

• Exxon is establishing a leading position in lithium production, with the first phase of lithium production is expected in southwest Arkansas by 2027.

• The company aims to produce enough lithium by 2030 to supply approximately 1 million electric vehicles annually.

• The company will also use low carbon capital to reduce its own emissions, supporting its 2030 emission reduction plans and 2050 Scope 1 and 2 net-zero ambition.

• In the Permian, Exxon is on track to achieve net-zero emissions by 2030 and will accelerate Pioneer’s net-zero ambition by 15 years.

ADNOC and SOCAR team up on energy transition

• ADNOC and SOCAR have signed a strategic collaboration agreement (SCA) to develop low carbon energy technologies.

• Both companies are founding signatories of the Oil and Gas Decarbonization Charter, committing to eliminate routine flaring and methane emissions by 2030 and achieve net zero by 2050.

• The collaboration aims to explore blue hydrogen, carbon management, and geothermal technologies to decarbonize energy systems in the UAE, Azerbaijan, and other key markets.

• ADNOC Executive Director Musabbeh Al Kaabi emphasizes the importance of industry collaboration in advancing low-carbon solutions.

• ADNOC holds a 30% stake in the Absheron gas and condensate field in the Caspian Sea and is involved in Abu Dhabi Future Energy Company (Masdar).

• SOCAR Vice President Afgan Isayev highlights their commitment to eliminating flaring, mitigating methane emissions, and achieving net-zero emissions by 2050.

• ADNOC has allocated $15 billion to accelerate lower-carbon solutions, reduce carbon intensity by 25% by 2030, and achieve net zero by 2045.

• ADNOC has also launched geothermal district cooling in Masdar City, the Gulf region’s first geothermal energy project.

WSJ piece on Venture Global LNG

• Venture Global LNG has rapidly become one of the world’s largest gas exporters, with ambitions to rival Qatar as a major exporter of liquefied natural gas (LNG) by 2030.

• However, a feud has erupted between Venture Global and its earliest customers, including BP and Shell, who claim the company is violating their contracts, jeopardizing the reputation of the U.S. LNG industry.

• The dispute revolves around the rights to Venture Global’s LNG, which is in high demand, particularly in Europe following the halt of Russian gas exports due to the Ukraine conflict.

• BP and Shell assert that under their long-term contracts, they should have received LNG shipments months ago, but Venture Global has been selling gas at higher spot market prices instead, accumulating over $14 billion in sales.

• Venture Global contends that it is only obligated to deliver LNG to these customers once its first plant in Louisiana, Calcasieu Pass, is completed, despite having already shipped over 200 cargoes from the facility.

• BP, Shell, and Italy’s Edison are pursuing arbitration against Venture Global, which could result in protracted legal battles.

• Venture Global’s rapid rise in the LNG industry was driven by its cost-effective approach to building LNG export terminals, offering attractive contracts, and securing deals with major buyers like Shell and BP.

• However, the dispute with its early customers has caused tensions, with BP and Shell accusing Venture Global of wartime profiteering and contract violations.

• Despite the feud, Venture Global is expected to generate significant revenue from LNG sales by the end of 2024 and remains confident in fulfilling its long-term contracts.

CIP launches $3 billion energy transition fundraise

• Copenhagen Infrastructure Partners (CIP) has announced the launch of its Growth Markets Fund II (GMF II), targeting a fund size of USD 3 billion.

• GMF II focuses on developing and building offshore and onshore wind, solar PV, energy storage, and Power-to-X projects in high-growth middle-income markets across Asia, Latin America, and EMEA.

• The fund is expected to enable over 10 GW of new renewable energy capacity, reflecting more than USD 10 billion of capital investment.

• GMF II aims to become the world’s largest fund focused on greenfield renewable energy investments in high-growth middle-income markets.

• GMF II’s existing portfolio of renewable energy projects has the potential to reduce greenhouse gas emissions by more than 10 million tonnes annually and power over 10 million homes with clean energy.

• The launch of GMF II (CIP’s 12th fund) follows the first close of its flagship fund ~EUR 6 billion, and the final close of the Advanced Bioenergy Fund I and Green Credit Fund I at a combined EUR ~2 billion.

Thermo Fisher commits to going 80% renewable

• Thermo Fisher Scientific establishes a 15-year virtual power purchasing agreement (VPPA) with ib vogt, an international solar developer.

• Thermo Fisher’s 91-megawatt portion of the Serbal solar project will provide around 192,000 megawatt hours of renewable electricity annually.

• Eurofins Scientific collaborates in the deal for a 36-megawatt share of the project.

• The Serbal solar project is expected to be operational in January 2025.

• Thermo Fisher’s share of the project will power over half of its European sites with 100% renewable electricity by 2025.

• The agreement will reduce both Thermo Fisher’s and Eurofins’ Scope 2 and Scope 3 emissions.

• Thermo Fisher commits to achieving 80% renewable electricity globally by 2030 and reducing Scope 1 and 2 emissions by 50% by 2030.

• Thermo Fisher plans to power all of its U.S. sites with 100% renewable electricity by 2026 and reach net-zero emissions by 2050.

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.