Celebrating two years of Carbon Risk

"Don’t judge each day by the harvest you reap but by the seeds that you plant" - Robert Louis Stevenson

Writing a newsletter is a strange business.

I read hundreds of articles, capture loads of charts and pictures, listen to several podcasts a week to learn what experts are thinking, and brainstorm reams of article ideas. But when I click publish I really have no idea how my latest incarnation will be received. So when I get nice messages like the ones below from smart, knowledgeable people doing great things in carbon markets, I know I’m on the right path.

First, this from Valentin recognising my work on compliance markets…

…and last month, Rene was kind enough to recognise my VCM analysis.

I couldn’t do what I do without the Valentin’s and Rene’s of this world that have promoted my work. Special thanks also go out to

Doomberg

,

David Hay

,

Rory Johnston

,

Energy Flux

,

Marginal Carbon

,

Wicked Problems

and many other Substack’s that have helped grow

Carbon Risk

through their recommendations. Carbon Risk turns two today, and over 270 articles later, the total number of subscribers is closing in on 3,200.

It wouldn’t be a business though if it wasn’t also for the lovely people that have taken out a paid subscription. Substack recently rolled out a feature that enables new paid subscribers to add a note. The price of your subscription helps me continue to do what I do, but the messages make it all the more worthwhile.

Six articles that I felt had the biggest impact over the past 12 months

• Carbon credits have received plenty of bad press over the past twelve months, and at least some of it has been justified. However, the stakes are too high simply to abandon development of this market. In The signal and the noise: Pricing the carbon credit risk curve I consider how information asymmetry is priced in bond markets, and whether that could be a way forward to pricing the risk that a carbon project fails to deliver. Carbon markets are better served by embracing their complexity. It’s only then that capital can be allocated to where its needed the most.

• A $10bn market, or is it a $1,000bn market? Lots of big numbers are thrown around as to how big the verified carbon market could become. In Is the VCM a trillion dollar business opportunity? Without necessarily having all of the underlying assumptions underpinning these projections its impossible to know what’s realistic. In this article I looked at some of the key factors to consider, and the main sources of uncertainty. TLDR? A big market valuation is achievable, indeed its necessary if net zero is to be achieved, but it will require many economic, political and technological stars to align.

• In 2023 I created a number of deep dives into the most important engineered carbon removal technologies, including biochar, bio energy with carbon capture and storage (BECCS), direct air capture (DAC) and enhanced rock weathering (ERW). They all have their pros and cons. They will probably all be needed in some shape or form to help meet net zero. In Scrubbing the skies: Direct Air Capture (DAC) offers a scalable route to net zero I outline why the cost of DAC is likely to fall sharply over the next decade due to economies of scale and as the learning curve accelerates. Unlike, other forms of carbon removal DAC may be able to leverage a growing market for CO2 as an industrial feedstock.

• Capturing CO2 merely to store it permanently under ground seems like poor business, especially as for many industries (e.g., fertiliser, enhanced oil recovery, etc) it’s a valuable feedstock. In The emergence of the carbon economy I show that the market for CO2 is likely to expand significantly over the next couple of decades with construction materials likely to dominate future CO2 demand. Concrete has the advantage of being high volume, lots more of it will be needed in emerging markets as their economies develop, and it has the ability to sequester CO2 for hundred of years.

• The energy transition and decarbonisation faces many trade-offs, trilemmas, and paradoxes. One article I published in 2023, Aluminium's climate paradox highlights how aluminium is essential to decarbonisation, yet is highly energy and carbon intensive to produce. Reducing aluminium’s emissions requires an increased reliance on hydropower, but this means being exposed to the drought conditions that have become more intense under a warmer climate. One of many tricky pathways that government must tread over the next few decades.

• Two-thirds of global emissions could be covered by an emissions trading scheme by 2030, according to a recent estimate from the International Emissions Trading Association (IETA). In Carbon markets are going global I outline the journey to where we are today (~18% of global GHG emissions), and how things could evolve over the next couple of decades. In particular, Europe’s carbon border tax, the CBAM is accelerating adoption as countries seek to avoid their exports to the EU becoming uncompetitive.

The Carbon Risk referral program

In June I launched the Carbon Risk referral program. When you use the referral link below, or the “Share” button on any of my articles, you'll get credit (a complementary paid subscription to Carbon Risk) for any new subscribers you bring to the newsletter - either free or paid. Simply send the link in a text, email, or share it on social media with your friends and colleagues.

You can still benefit if you're already an existing paid subscriber to Carbon Risk. The complimentary paid subscription will be applied at the end of your current billing period. The more people who use your referral link to subscribe to Carbon Risk, the bigger the rewards.

• 🥉Get 1 month complementary access for 3 referrals

• 🥈Get 3 month’s worth of complementary access for 10 referrals

• 🥇Get 6 month’s worth of complementary access for 25 referrals

Once you've reached a referral milestone, you'll receive an email with the reward.

Looking forward to year 3 of Carbon Risk

Committing to a regular publishing schedule has been likened to Indiana Jones in “Raiders of the Lost Ark”, trying to outrun a gigantic boulder, each and every week. The pressure to publish has it’s drawbacks of course, but it keeps me focused on improving and refining my process.

And so taking the time once a year to pause and reflect how my newsletter has grown is invaluable. Every article I publish is a new seed planted. It’s only months later that I can appreciate what I’ve created, the attention I’ve harvested, and the impact my work has had on my readers.

I'm very grateful I that I get to write for a living about something I’m passionate about. There’s nothing I’d rather be doing, and I couldn't do it without you.

Thank you for your support.

Peter