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Microsoft's mammoth carbon removal deal

PLUS: $500mm for CO2 transportation, TPG buys Olympus, Zanskar's $30mm raise, EPA oil and gas reporting

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  • Stockholm Exergi announced a contract with Microsoft for 3.33 million tonnes of permanent carbon removals from BECCS at Värtan, Stockholm.

  • The agreement is the world's largest permanent removals deal to date and will start deliveries of carbon removal certificates to Microsoft in 2028 for ten years.

  • The CEO of Stockholm Exergi, Anders Egelrud, sees this agreement as a significant step towards their BECCS project's recognition and a final investment decision in Q4 2024.

  • Microsoft aims to be carbon negative by 2030 and has set criteria for high-quality removals, pursuing financeable offtake agreements and reporting progress annually.

  • The carbon removals will follow strict quality requirements, including sustainable biomass sourcing and comprehensive monitoring.

  • The BECCS facility at Stockholm Exergi's plant will remove up to 800,000 tonnes of CO₂ per year, with construction planned to start in 2025.

  • Funding for the project relies on government aid, EU funds, and revenue from selling carbon removal units on the voluntary market, showcasing a public-private co-funding model for climate action.

  • The DOE's FECM announced funding of up to $500 million for projects aimed at expanding carbon dioxide (CO2) transportation infrastructure in the United States.

  • This funding is part of President Biden’s Investing in America agenda, which targets a net-zero emissions economy by mid-century.

  • Brad Crabtree, Assistant Secretary of Fossil Energy and Carbon Management, highlighted the necessity of infrastructure to transport the anticipated growth in CO2 volumes over the next 25 years, estimated to range from 400 to 1,800 million tonnes of CO2 annually.

  • The Carbon Dioxide Transportation Infrastructure Finance and Innovation (CIFIA) program will provide future growth grants to assist in designing, developing, and building CO2 transport capacity. This will support future carbon capture and direct air capture facilities, as well as additional CO2 storage or conversion sites.

  • The transport system funded by this program, which may include pipelines, rail, trucks, barges, and ships, is expected to connect two or more CO2 emitting sources to one or more conversion sites or secure geologic storage facilities.

  • Trailblazer CO2 Pipeline, operated by Tallgrass, announced a binding open season for commitments to transport customers' captured carbon dioxide gas from Nebraska.

  • The open season will offer incentive tariff rates and runs for 21 days starting on May 3, 2024.

  • TPG Rise Climate, part of TPG's global impact investing platform, is acquiring Olympus Terminals, a leading renewable fuels and refined products storage provider in Southern California.

  • The acquisition aims to reduce transportation-related greenhouse gas emissions by facilitating the import, storage, and distribution of renewable fuels in Southern California.

  • Olympus Terminals, majority-owned by investment funds affiliated with Davidson Kempner Capital Management LP and Intrepid Investment Management, LLC, operates two storage terminals in Long Beach, California.

  • The transaction is aligned with California's transition from conventional diesel to renewable diesel (RD), supporting cleaner fuel adoption and meeting environmental standards.

  • TPG Rise Climate's partnership with Olympus Terminals aims to strengthen the sustainable fuels ecosystem and contribute to the growth of cleaner diesel fuels.

  • RD penetration in California is expected to increase significantly over the next five years, driving the need for import and logistics infrastructure for renewable fuels.

  • Zanskar Geothermal & Minerals raised $30 million in new funding led by Obvious Ventures.

  • Previous investors Munich Re Ventures, Union Square Ventures, Lowercarbon Capital, Safar Partners, and First Star Ventures, along with newcomer Clearvision Ventures, also participated in the funding round.

  • The funding will enable Zanskar to scale its AI-led exploration technology for discovering new geothermal resources.

  • Zanskar aims to make geothermal the cheapest and most widely deployed firm renewable energy source globally.

  • Since its last fundraise in 2022, Zanskar has become a leader in geothermal discovery, winning contracts with the United States Department of Defense and collecting significant field data to accelerate geothermal exploration.

  • Zanskar plans to use the funds to accelerate technology development, advance greenfield power projects, and expand partnerships.

  • The EPA has announced a final rule to cut methane emissions and update greenhouse gas emissions reporting for the oil and gas sector.

  • The rule strengthens methane emissions reporting requirements for petroleum and natural gas systems under the EPA's Greenhouse Gas Reporting Program, mandated by the Inflation Reduction Act.

  • The revisions aim to ensure greater transparency and accountability for methane pollution from oil and natural gas facilities by improving the accuracy of annual emissions reporting.

  • The rule complements previous actions by the Administration, including nearly 100 measures in 2023 to reduce methane pollution from various sources.

  • EPA's actions include utilizing advanced technologies such as satellites to identify super-emitters, requiring direct monitoring of key emission sources, and updating calculation methods for emissions reporting.

  • The rule also allows for optional use of empirical data calculation methodologies and aims to improve transparency, accuracy, and completeness of emissions reporting from oil and natural gas operations.

  • EPA plans to gather further information on advanced measurement technologies and consider potential regulatory changes to encourage more accurate and comprehensive measurement strategies.

  • The final subpart W rule under the Greenhouse Gas Reporting Program will improve the quality of emissions data reported from oil and natural gas operations, incorporating advances in measurement technology and streamlining compliance with EPA regulations.

“When you think about how the grid operates broadly, most of the cost of the grid comes from peak demand. As opposed to airline seats, where folks can kick people off a flight if they oversell it, we can’t take anybody off of the grid. If people need power for life-sustaining work or whatever it is, we have to provide it.”

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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.

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