Financial Times, May 4th,2023
Companies from banks and insurers to oil majors are placing bets on the development of a carbon capture industry and the resulting carbon removal credits used by buyers to compensate for their pollution that is expected to build into a lucrative market.
Four companies including the retailer H&M and leading fossil fuel financier JPMorgan Chase in recent weeks have agreed to spend a collective $100mn on carbon removal credits by 2030. At the same time, another five companies including Swiss bank UBS and insurer SwissRe have agreed to buy almost 200,000 credits on delivery from 2025 via NextGen, a new Mitsubishi-backed group. NextGen will source credits from carbon removal projects including a direct air capture (DAC) facility being developed by Occidental Petroleum’s subsidiary 1PointFive, at an average “target price” of $200 per credit.
1PointFive also secured a pre-purchase agreement last year with aerospace company Airbus for 400,000 credits linked to DAC. Private equity firm Partners Group also announced in April that it would buy 7,000 credits generated by the start-up Climeworks’ direct air capture facilities, which suck carbon out of the atmosphere, over 13 years. Climeworks, which sells small quantities of credits for about $1,000 each, and larger volumes for less, said it was expanding its US team to meet “increasing demand”. The EU-wide carbon price reached a high of €100 this year, as polluters bought up permits that allow them to emit a tonne of carbon. But long-term carbon credit deals, supported by new government subsidies in the US and elsewhere, meant carbon removal technologies were becoming more investment worthy, companies said.
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