You’ve likely heard references to your carbon footprint and that as a country, we are attempting to be carbon neutral, but what does this really mean? Your personal carbon footprint is measured by things like how often you drive your car, how much electricity you use, how much rubbish you throw away and even how many children you have.
Carbon Positive Australia states that the average Australian household of 2.6 people has an annual carbon footprint (Co2e) of approximately 15-20 tonnes. Basically, Co2e measures carbon dioxide emissions that we are told are bad for the environment. The UN tells us that we need to limit our per-person carbon emissions to two tonnes per year, which is around a third of our current output. While this may seem a lot, the carbon footprint for the mining, energy and transport industries is significantly more, which spells an opportunity for astute investors.
Let me explain.
Carbon capture and carbon credits are a growing market in which you have the opportunity to invest. Carbon capture involves capturing the CO2 from sources, such as power plants or even directly from the atmosphere. Once the carbon has been captured, it is typically stored underground in geological formations, such as depleted oil and gas reservoirs. Companies that undertake these projects can then be certified to create carbon credits based on the amount of CO2 captured.
What’s interesting is that these carbon credits are then sold or traded in carbon markets. Transport companies, such as airlines, can’t easily reduce their carbon footprint and are therefore major purchasers of these credits to offset their emissions.
If you ask me this is a pretty good deal for those capturing the carbon. So, you’re probably asking which ASX-listed companies are participating in this growing industry.
According to Worley Parsons, there are currently 20 commercial carbon capture and storage (CCS) facilities operating in the world, as the industry is facing challenges designing, engineering and constructing these facilities, not to mention their negative public perception. That said, Worley Parsons is already playing a major part in the investment, consultation and servicing of these projects.
One facility is being built in Australia and is on track for completion in 2024. The Moomba CCS project is being built 800 kilometres north of Adelaide and is being spearheaded by Santos Ltd (ASX:STO) and Beach Energy (ASX:BPT) Ltd.
This ambitious project is not only aiming to reduce the duo’s own emissions but also looking to reduce emissions from companies in other sectors. With the global CCS market projected to be worth a total of US$14.2 billion by 2030 with an expected compound annual growth rate of 21.5%, these projections certainly make this a space to watch.
Dale Gillham is the Chief Analyst at Wealth Within and the international bestselling author of How to Beat the Managed Funds by 20%. He is also the author of the bestselling and award-winning book Accelerate Your Wealth—It’s Your Money, Your Choice, which is available in all good bookstores and online at www.wealthwithin.com.au