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Absolute Climate wants to grade all carbon credits the exact same way.
In the wake of a wave of scandals in the carbon credit market, a boatload of brokers arrived to mediate between buyers and sellers and improve the integrity of carbon claims. In came the consulting firms staffed by scientists to advise companies on which credits to buy, ratings agencies to assess individual carbon projects, and carbon credit registries with new business models that promised to be more scrupulous than those that came before.
But to Peter Minor, none of these players is getting at the root issue. So Minor, an alum of the carbon removal advocacy group Carbon180, is launching his own company, Absolute Climate, to solve what he sees as the two biggest problems in the carbon credit market: inconsistent accounting and conflicts of interest.
“If we don’t fix these things, the carbon removal industry may never get to the trust and adoption that it’s going to need to get to enough scale to actually reduce harms,” Minor told me.
Absolute Climate’s solution is a new standard, or set of rules, for accounting for the climate benefits of carbon removal projects that would ensure carbon credits from different projects are comparable on an apples to apples basis. That is, as long as it’s widely accepted by a market that’s fraught with divisions.
To date, the registries — the businesses that certify and sell carbon credits — have been the ones to create and oversee accounting standards. But the registries have an incentive to set permissive requirements, Minor said, because the more credits they certify, the more they can sell. This arrangement has resulted in standards that all use slightly different criteria to account for how much carbon has been removed. These differences show up not just across registries, but also within registries across different types of projects.
Here’s an illustrative example: Climeworks is a company that builds industrial-scale plants to suck carbon out of the air, compress it, and inject it underground. Under the carbon removal registry Puro’s standard, Climeworks must take into account the emissions related to clearing the land, building the plant, powering it, transporting the captured carbon, and injecting it before coming up with the net total tons of carbon the plant has removed and the number of credits the company can sell.
Compare that to Red Trail Energy, which owned a corn ethanol refinery and recently began capturing carbon emitted from the facility’s fermentation tank and injecting it underground. Corn absorbs carbon from the atmosphere as it grows, and Red Trail puts away some of that carbon permanently. But to calculate how many carbon removal credits Red Trail can sell based on this project, Puro does not require the company to account for the emissions associated with growing the corn, transporting it to the plant, or heating it up using a natural gas boiler. Nor does it require measurement of the emissions released when the ethanol is burned in a vehicle. If it did, all those emissions would exceed the amount of carbon Red Trail is storing.
On the Puro registry, Climeworks’ credits and Red Trail’s credits are identical, both advertised as carbon removal. But to Minor, the credits are fundamentally different — one is a truly net-negative process, the other reduces emissions to the atmosphere from an existing source. Once the world has cut carbon nearly to zero, only the first project could provide a counterweight to any residual emissions and help halt or even reverse warming. Minor worries that if both are called carbon removal, the difference won’t be clear until it’s too late.
“We might get to the point where we’ve scaled up the infrastructure and the political economies around certain projects because they were cheaper or more efficient in our minds, but actually it’s just that they weren’t net-negative,” he said. “So we may put ourselves in a position where we can’t actually meet our climate goals.”
Minor is not alone in this concern. Several recent peer-reviewed papers have identified this as a pervasive issue and proposed ideas for how to solve it. “Big picture, we want net flux of carbon out of the atmosphere into storage,” Anu Khan, founder of the non-profit Carbon Removal Standards Initiative, told me. “We want to set rules that motivate this and allow us to add it up over time.”
Absolute Climate’s solution is based on a framework developed by scientists from Lawrence Berkeley National Laboratory. Minor described it as a single standard that verifiers can apply in exactly the same way to every method of carbon removal and determine whether a given project is net-negative or not. Each type of carbon removal, like enhanced rock weathering or direct air capture, will still require individualized rules for how it should conduct physical measurements, he said. But the project scope — the question of what to measure — will be consistent.
In practice this doesn’t seem like a major paradigm shift. It requires project developers to identify all the activities associated with their project that either release or store carbon, measure each one, and add them together to get the net result. The main difference is that they can’t selectively ignore certain emissions in the calculation if, for example, those emissions are related to a co-product like ethanol.
To meet Absolute’s standard, a project must also be able to store carbon for 1,000 years, similar to the amount of time carbon emissions stay in the atmosphere. That’s in contrast to most standards, which have different requirements depending on the project type. For example, reforestation and soil carbon storage projects typically only have to store carbon for 100 years, while any project injecting carbon underground has to promise 1,000 years.
Any carbon credit registry can adopt the standard, and the company will earn a fee for each project certified under it, rather than for the number of credits certified. One registry, called Evident, which sells renewable energy credits, has already agreed to use it.
But it’s hard to imagine other registries that have invested significant time into developing standards — and certified credits using them — throwing those out anytime soon. When I wrote about the questions raised by the Red Trail Energy project earlier this year, Puro defended its rules. Marianne Tikkanen, Puro’s co-founder and head of standards, said the point of carbon credits is to pay for an intervention that wouldn’t have happened otherwise. In this case, that meant it was appropriate to isolate the carbon capture and storage part of the project when it came to certifying credits, she said.
Adding yet another layer between buyers and sellers could also increase costs. “There are market pressures that drive towards vertical integration of registries that do everything,” Khan told me. “Cost savings are a really big deal. Companies want to buy credits at the lowest cost that is good enough for the type of claim that they want to make.”
Absolute will face competition, both in the literal market and in the marketplace of ideas, from Isometric, a registry my colleague Katie Brigham wrote about earlier this year. Isometric has tried to address the conflict of interest problem by charging fees to buyers — not sellers — for verifying carbon credits.
In setting such a high bar, Absolute also risks having a chilling effect on the carbon removal industry by blocking promising projects that are working through yet-unproven science or have other early-stage growing pains from a key source of funding. As a solution, Absolute plans to designate some projects as part of an “innovative class.” One example Minor gave me is a new direct air capture company that can’t procure enough renewable energy to power its pilot plant and has to run using dirty power. “We can allow them to take those shortcuts where it makes sense, assuming their buyers or the governments that they’re delivering to are okay with that, but we’re going to be transparent about it,” he said.
In short, there will be two classes of credits under the Absolute standard — those that really, definitely, represent carbon removed from the atmosphere, and those that may or may not but support projects that maybe one day could.
This is all a lot to make sense of, and it’s possible Absolute could introduce more confusion into the market with all these new terms and definitions.
“This is most valuable, I think, for those people who care about whether or not what they are investing in can play that future role of being actual carbon removal,” Corinne Scown, a scientist at Lawrence Berkeley National Laboratory whose work influenced the Absolute standard, told me. But for those who just want to fund projects that help fight climate change, the distinction matters less, she said. “Mitigation is still really valuable. We do want people to have a way to pay for that.”
While there are some companies trying to do the former, most are aiming mainly to reduce the amount of emissions on their annual sustainability reports. Today, these reports are voluntary and companies can use whatever math suits them. But soon they will be required by governments such as the European Union and the state of California, which will have rules about how companies should calculate their carbon footprints. Depending on how those rules are implemented, the distinction between an Absolute-certified carbon credit and a Puro-certified carbon credit could matter a great deal.
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Current conditions: States left flooded from recent severe storms are now facing freezing temperatures • Firefighters are battling blazes in Scotland due to unusually warm and dry weather • Hospitals in India are reporting a 25% rise in heat-related illnesses compared to last year. Yesterday the country’s northern state of Rajasthan reached 115 degrees Fahrenheit, about 13 degrees higher than seasonal norms.
President Trump’s sweeping new tariffs came into effect at 12:01 a.m. on Wednesday, rattling the world’s markets and raising the risk of a global trade war. The levies, which include a 104% tariff on Chinese imports, triggered a mass sell-off in U.S. Treasury bonds, hiking yields as investors worry about a potential recession and flock to alternative safe-haven investments. The price of oil fell for the fifth day in a row to its lowest since 2021, with Brent futures at about $61 per barrel, well below the $65 level that oil producers need in order to turn a profit drilling new wells nationwide. As Heatmap’s Robinson Meyer explained recently, the tariffs are an outright catastrophe for the oil industry because they threaten a global downturn that would hurt oil demand at a time when oil cartel OPEC+ is increasing its output. Trump’s slate of tariffs will impact the cost of just about everything, from gasoline to e-bikes to LNG to cars. China imposed retaliatory tariffs, increasing them from 34% to 84% in response to the U.S. escalation. Meanwhile, the European Union will vote today on whether to impose its own retaliatory fees. European shares plummeted, as did Asian and Australian stocks.
As Heatmap’s Emily Pontecorvo reported today, a new study published in the journal Nature Climate Change finds that the transition to clean energy could create a world that is less exposed to energy price shocks and other energy-related trade risks than the world we have today. “We have such a concentration of fossil resources in a few countries,” Steven Davis, a professor of Earth system science at Stanford and the lead author of the study, told Pontecorvo. Transition minerals, by contrast, are less geographically concentrated, so “you have this ability to hedge a little bit across the system.”
The White House issued several executive orders on Tuesday aimed at boosting U.S. coal production and use, pointing to rising electricity demand from artificial intelligence. The series of orders direct federal agencies to:
Trump also said he plans to invoke the Defense Production Act to spur mining operations, “a move that could put the federal purse behind reviving the fading industry,” Reutersreported. Coal is the dirtiest fossil fuel, and its use has been in decline since 2007. As of last year, wind and solar combined surpassed coal for U.S. electricity generation.
President Trump signed a separate executive order on Tuesday that targets climate laws at the state level and seeks to remove threats to U.S. “energy dominance,” including “illegitimate impediments to the identification, development, siting, production, investment in, or use of domestic energy resources — particularly oil, natural gas, coal, hydropower, geothermal, biofuel, critical mineral, and nuclear energy resources.” The order references “state overreach” and suggests that some state and local governments are overstepping their constitutional authority in regulating energy through interstate trade barriers or fines on energy producers. It calls out New York and Vermont for their climate change superfund laws that require fossil fuel companies to pay for their planet-warming greenhouse gas emissions. And it mentions California’s carbon cap-and-trade system.
The executive order directs the U.S. attorney general to compile a list of all state and local laws “purporting to address ‘climate change,’” along with ESG, environmental justice, carbon taxes, and anything involving “carbon or ‘greenhouse gas’ emissions,” and put a stop to their enforcement. “The federal government cannot unilaterally strip states’ independent constitutional authority,” New York Governor Kathy Hochul and New Mexico Governor Michelle Lujan Grisham said in a statement. “We are a nation of states — and laws — and we will not be deterred. We will keep advancing solutions to the climate crisis that safeguard Americans’ fundamental right to clean air and water, create good-paying jobs, grow the clean energy economy, and make our future healthier and safer.”
Wood Mackenzie issued its annual U.S. wind energy report this week. It finds that 2024 marked the worst year for new onshore wind capacity in the past decade, with just 3.9 gigawatts installed. Through 2029, the firm expects developers to install another 33 gigawatts of onshore capacity, 6.6 gigawatts of offshore capacity, and carry out 5.5 gigawatts of upgrades and refurbishings. The five-year outlook marks “a 40% decrease quarter-on-quarter from a previous total of 75.8 gigawatts.” The report warns of enduring “uncertainty” thanks to the Trump administration’s attacks on the wind industry. “Growth will happen, but it’s going to be slower,” wrote Michelle Lewis at Electrek. “[Trump] has managed to get some projects canceled, and he’ll make things more of a slog over the next few years.”
President Trump has pulled the U.S. out of international talks to decarbonize the shipping industry and vowed to reciprocate against any fees on U.S. ships, Politicoreported. The International Maritime Organization's Maritime Environmental Protection Conference is unfolding this week in London, where negotiators are trying to agree on a policy to curb shipping pollution through carbon taxation. Shipping accounts for about 3% of global greenhouse gas emissions. Trump reportedly sent a letter to the conference saying “the U.S. rejects any and all efforts to impose economic measures against its ships based on GHG emissions or fuel choice. Should such a blatantly unfair measure go forward, our government will consider reciprocal measures so as to offset any fees charged to U.S. ships and compensate the American people for any other economic harm from any adopted GHG emissions measures.”
“What’s next, a mandate that Americans must commute by horse and buggy?”
–Kit Kennedy, a managing director at the Natural Resources Defense Council, in response to Trump’s executive orders aimed at revitalizing the U.S. coal industry.
Rob and Jesse get into the nitty gritty on China’s energy policy with Joanna Lewis and John Paul Helveston.
China’s industrial policy for clean energy has turned the country into a powerhouse of solar, wind, battery, and electric vehicle manufacturing.
But long before the country’s factories moved global markets — and invited Trump’s self-destructive tariffs — the country implemented energy and technology policy to level up its domestic industry. How did those policies work? Which tools worked best? And if the United States needs to rebuild in the wake of Trump’s tariffs, what should this country learn?
On this week’s episode of Shift Key, Rob and Jesse talk with two scholars who have been studying Chinese industrial policy since the Great Recession. Joanna Lewis is the Provost’s Distinguished Associate Professor of Energy and Environment and Director of the Science, Technology and International Affairs Program at Georgetown University's School of Foreign Service. She’s also the author of Green Innovation in China. John Paul Helveston is an assistant professor in engineering management and systems engineering at George Washington University. He studies consumer preferences and market demand for new technologies, as well as China’s longstanding gasoline car and EV industrial policy. Shift Key is hosted by Robinson Meyer, the founding executive editor of Heatmap, and Jesse Jenkins, a professor of energy systems engineering at Princeton University.
Subscribe to “Shift Key” and find this episode on Apple Podcasts, Spotify, Amazon, or wherever you get your podcasts.
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Here is an excerpt from our conversation:
Robinson Meyer: One kind of classical hard problem about industrial policy is selecting the technology that is going to eventually be a winner. And there’s a few ways to get around this problem. One is to just make lots of bets.
One thing that’s been a little unclear to me about the set of technology bets that China has made is that it has seemed to pick a set of technologies that are now extremely competitive globally, and it did seem to pick up on those technologies before Western governments or firms really got to them. Is that entirely because China just made a bunch of technology bets and it happened that these are the ones that worked out? Is it because China could look ahead to the environmental needs of the world and the clean development needs of the world and say, well, there’s probably going to be a need for solar? There’s probably going to be a need for wind? There’s probably going to be a need for EVs? Or is it a third thing, which is that China’s domestic needs, its domestic energy security needs, just happen to align really well with the direction of development that the world is kind of interested in moving in anyway.
John Paul Helveston: All of the above. I don’t know — like, that’s the answer here. I’ll add one thing that’s a little bit nuanced: There’s been tremendous waste. I’ll just put that out there. There’s been all kinds of investments that did not pan out at all, like semiconductors for a long, long time. Just things that didn’t work.
I think where China has had a lot of success is in areas where … It’s like the inverse of what the United States innovation ecosystem does well. China’s ecosystem is really driven around production, and a lot of that is part of the way the government’s set up, that local provinces have a ton of power over how money gets spent, and often repurpose funds for export-oriented production. So that’s been a piece of the engine of China’s economic miracle, is mass producing everything.
But there’s a lot of knowledge that goes along with that. When you look at things like solar, that technology goes back many, many decades for, you know, satellites. But making it a mass produced product for energy applications requires production innovations. You need to get costs down. You need to figure out how to make the machine that makes the machine. And that is something that the Chinese ecosystem does very well.
So that’s one throughline across all of these things, is that the technology got to a certain level of maturity where production improvements and cost decreases were the bigger things that made them globally competitive. I don’t think anyone would be considering an EV if we were still looking at $1,000 a kilowatt hour — and we were there just 15 years ago. And so that’s the big thing. It’s just production. I don’t know if they’ve been exceptionally good at just picking winners, but they’re good at picking things that can be mass produced.
Music for Shift Key is by Adam Kromelow.
That’s according to new research published today analyzing flows of minerals and metals vs. fossil fuels.
Among fossil fuel companies and clean energy developers, almost no one has been spared from the effects of Trump’s sweeping tariffs. But the good news is that in general, the transition to clean energy could create a world that is less exposed to energy price shocks and other energy-related trade risks than the world we have today.
That’s according to a timely study published in Nature Climate Change on Wednesday. The authors compared countries’ trade risks under a fossil fuel-based energy economy to a net-zero emissions economy, focusing on the electricity and transportation sectors. The question was whether relying on oil, gas, and coal for energy left countries more or less exposed than relying on the minerals and metals that go into clean energy technologies, including lithium, cobalt, nickel, and uranium.
First the researchers identified which countries have known reserves of which resources as well as those countries’ established trading partners. Then they evaluated more than a thousand pathways for how the world could achieve net-zero emissions, each with different amounts or configurations of wind, solar, batteries, nuclear, and electric vehicles, and measured how exposed to trade risks each country would be under each scenario.
Ultimately, they found that most countries’ overall trade risks decreased under net-zero emissions scenarios relative to today. “We have such a concentration of fossil resources in a few countries,” Steven Davis, a professor of Earth system science at Stanford and the lead author of the study, told me. Transition minerals, by contrast, are less geographically concentrated, so “you have this ability to hedge a little bit across the system.”
The authors’ metric for trade risk is a combination of how dependent a given country is on imports and how many trading partners it has for a given resource, i.e. how diverse its sourcing is. “If you have a large domestic supply of a resource, or you have a large trade network, and you can get that resource from lots of different trading partners, you're in a relatively better spot,” Davis said.
Of course, this is a weird time to conclude that clean energy is better equipped to withstand trade shocks. As my colleagues at Heatmap have reported, Trump’s tariffs are hurting the economics of batteries, renewables, and minerals production, whether domestic or not. The paper considers risks from “random and isolated trade shocks,” Davis told me, like losing access to Bolivian lithium due to military conflict or a natural disaster. Trump’s tariffs, by contrast, are impacting everything, everywhere, all at once.
Davis embarked on the study almost two years ago after working as a lead author of the mitigation section of the Fifth National Climate Assessment, a report delivered to Congress every four years. A lot of the chapter focused on the economics of switching to solar and wind and trying to electrify as many end uses of energy as possible, but it also touched on considerations such as environmental justice, water, land, and trade. “There's this concern of having access to some of these more exotic materials, and whether that could be a vulnerability,” he told me. “So we said, okay, but we also know we're going to be trading a lot less fossil fuels, and that is probably going to be a huge benefit. So let's try to figure out what the net effect is.”
The study found that some more affluent countries, including the United States, could see their energy security decline in net-zero scenarios unless their trade networks expand. The U.S. owns 23% of the fossil reserves used for electricity generation, but only 4% of the critical materials needed for solar panels and wind turbines.
One conclusion for Davis was that the U.S. should be much more strategic about its trade partnerships with countries in South America and Sub-Saharan Africa. Companies are already starting to invest in developing mineral resources in those regions, but policymakers should make a concerted effort to develop those trade relationships, as well. The study also discusses how governments can reduce trade risks by investing in recycling infrastructure and in research to reduce the material intensity of clean energy technologies.
Davis also acknowledged that focusing on the raw materials alone oversimplifies the security question. It also matters where the minerals are processed, and today, a lot of that processing happens in China, even for minerals that don’t originate there. That means it will also be important to build up processing capacity elsewhere.
One caveat to the paper is that comparing the trade risks of fossil fuels and clean energy is sort of apples and oranges. A fossil fuel-based energy system requires the raw resource — fuel — to operate. But a clean energy system mostly requires the raw materials in the manufacturing and construction phase. Once you have solar panels and wind turbines, you don’t need continuous commodity inputs to get energy out of them. Ultimately, Davis said, the study’s conclusions about the comparative trade risks are probably conservative.
“Interrupting the flow of some of these transition materials could slow our progress in getting to the net zero future, but it would have much less of an impact on the actual cost of energy to Americans,” he said. “If we can successfully get a lot of these things built, then I think that's going to be a very secure situation.”