According to the Global Carbon Capture and Sequestration Institute think-tank, the pipeline for projects that capture and store carbon emissions has expanded by 44% in the last year to 244 million tonnes per year. Carbon capture and storage (CCS) technology has been used for years to boost oil well production rates, but rising carbon pricing in countries such as Europe has raised hopes that it is likely to become a stand-alone business case in the future. According to some analysts, CCS technology, which acts as a filter on industrial smokestacks and stores carbon underground, is critical to achieving a net carbon-zero economy by 2050. The world would need 7.6 billion tonnes of CCS capacity per year to achieve this objective. Base Carbon Inc. (NEO:BCBN) (OTCQX:BCBNF), FuelCell Energy, Inc. (Nasdaq:FCEL), Occidental Petroleum Corporation (NYSE:OXY), Equinor ASA (NYSE:EQNR), and Schlumberger Limited (NYSE:SLB) are joining the global effort towards zero-net emissions by developing carbon reduction and capture projects.
On November 22, Base Carbon announced that it has signed a letter of intent (LOI) with the Danish Red Cross to scope, assess and potentially develop one or more mangrove-related blue carbon reduction projects in Southeast Asia. Blue carbon is the carbon stored in coastal and marine ecosystems, which sequester and store large amounts of carbon in the plants and sediments below.
Base Carbon is working with the Danish Red Cross to develop a community-based ecological project focused on the restoration of coastal and mangrove ecosystems. The potential blue carbon project is a nature-based solutions strategy located in Southeast Asia, aiming to restore a portion of highly degraded mangrove forest to generate voluntary carbon credits.
Base Carbon and the Danish Red Cross have committed to work together until at least October 2024 on potential projects in the region. Any projects are expected to be registered with Verra and follow the “Tidal Wetland and Seagrass” methodology.
The Danish Red Cross is known for being a leader in innovating new ways to invest in and back projects that help the environment, society, and climate. Potential projects related to the partnership will be funded collaboratively by the Danish Red Cross and other Red Cross affiliated entities. Dunant Re IC Limited, an insurance company founded by the Danish Red Cross and Replexus, is expected to insure any project. Base Carbon intends to provide regular updates as the parties collaborate.
“This partnership is consistent with Base Carbon’s mandate to work with leading organizations on carbon projects with strong economics and social benefit additionalities, said Philip Hardwick, COO of Base Carbon. “The Red Cross Movement, with its scale and breadth is ideally suited to execute carbon reduction and removal projects. Base will invest and contribute technology to materialize these projects.”
Earlier this year, Base Carbon Inc. also executed an agreement with Sustainability Investment Promotion and Development Joint Stock Company (SIPCO) as an in-country project developer to facilitate the development of a cookstove and water purifier carbon reduction project in Vietnam. Citigroup Global Markets Limited is the project’s carbon credit offtaker.
Base Carbon’s Vietnam project will distribute over 850,000 cookstoves and 364,000 water purifiers to participating homes in Vietnam, which will produce approximately 26.6 million voluntary carbon credits over an estimated ten-year period. Cookstoves and water purifiers are both recognized under well-established carbon reduction methodologies, with additional and extensive societal benefits.
“The Project is a core addition to Base Carbon’s project portfolio and our commitment to the development of the Project furthers our efforts to become the trusted developer, producer, and financier of carbon credits,” said Base Carbon CEO Michael Costa. “This capital commitment provides Base Carbon stakeholders with exposure to a carbon reduction asset with expected multiple of money capital returns, sized to Base’s balance sheet, with mitigated capital at risk through attractive payback periods, a partnership with our experienced in-country Project partners, SIPCO, and a contracted carbon credit offtake between SIPCO and Citigroup. We look forward to furthering our partnership with SIPCO as we collectively see the Project through to completion.”
SIPCO will buy back the first 7.4 million carbon credits from the project for offtake. Further to this, approximately 19.2 million additional carbon credits are expected to be generated which may be sold by Base Carbon to either SIPCO or into the open voluntary carbon credit market, or a combination thereof.
Base Carbon established a contractual project offtake arrangement for initial carbon credit generation, expected to result in a 2.75-year payback period on total capital deployed. The deployment of the devices in Vietnam is scheduled to be completed ahead of schedule by mid-2023, with around 710,975 units distributed to date. The production of cookstoves as part of the company’s inaugural carbon reduction project in Rwanda also exceeds expectations with 240,308 distributed to date, full deployment projected by the end of 2022.
As of September 30, 2022, the Company had total assets of $52.4 million, mainly comprised of $24.8 million in cash and cash equivalents, $14.2 million in investments into carbon credit projects, $0.7 million in prepaid and other assets, a $1.3 million equity investment in AirCarbon and a $11.3 million investment in associate company, Hardwick Business Climate Limited.
Energy Companies Are Progressing in Low or Zero Carbon Solutions
FuelCell Energy, Inc. (Nasdaq:FCEL) launched a new Carbon Savings Calculator for companies looking to understand better how the carbon dioxide (CO2) produced by their operations across Scope 1 and Scope 2 emissions can be recycled and used in their operations. This strategy offers an alternative to obtaining CO2 from far higher polluting sources, such as ethanol plants, as many firms do today, and can assist companies in avoiding the business risk of quickly rising CO2 prices and shortage of supply.
Occidental Petroleum Corporation (NYSE:OXY) and its subsidiary 1PointFive announced on August 25 that detailed engineering and early site construction for their first large-scale Direct Air Capture (DAC) plant will begin in Ector County, Texas, near Oxy‘s portfolio of acreage and infrastructure conducive to safe and secure carbon dioxide storage. The first stage of development, which includes site preparation and road work, is set to begin in the third quarter of 2022, with a planned completion date of late 2024. When completed, the first DAC plant will be the world’s largest of its kind, a significant step forward in Oxy‘s low-carbon ambition to supply large-scale carbon management solutions that expedite the transition to a net-zero economy. The facility, once operational, is intended to capture up to 500,000 metric tonnes of CO2 per year, with the ability to scale up to 1 million metric tonnes per year.
Equinor ASA (NYSE:EQNR) has confirmed that it has chartered the Seacat Columbia (completed in 2022), a new BARTech 30 crew transfer vessel (CTV) from Seacat Services, for operations at its Norfolk-based offshore wind farms. Seacat Columbia is a CTV developed, built, flagged, owned, and operated in the United Kingdom, and the contract with Equinor has supported 12 UK employment. The charter will cover servicing at the 317 MW Sheringham Shoal Offshore Wind Farm and the 402 MW Dudgeon Offshore Wind Farm, both of which Equinor operates on behalf of its partners from its Great Yarmouth operations and maintenance centre. Close engagement between developers and the UK supply chain remains critical to driving low-carbon innovation in all phases of offshore wind projects.
On October 24, Schlumberger Limited (NYSE:SLB) announced its new name, SLB, emphasizing the company’s vision for a low-carbon energy future and confirming its transformation from the world’s largest oilfield services company to a global technology company focused on driving energy innovation for a sustainable planet. The heritage Schlumberger brand and nearly all related businesses are merging under the new SLB brand, which delivers a revamped visual identity for the company, including a new logo—a symbol of where it is today and where it is going. The company has spent the previous three years setting the framework for its growing emphasis on low- and zero-carbon energy technology solutions while also driving innovation, decarbonization, and performance in the oil and gas industry.
Base Carbon Inc. combines the agility of a start-up culture with the experience of international institutional finance, generating tremendous possibilities for expanding carbon reduction programs.
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