AI data centre race energises quest for low carbon commodities
Tech industry is leading the charge into environmental attribute certificates (EACs)
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The tech industry's impact on carbon and other environmental markets is beginning to spread.
It began with carbon removal (Microsoft establishing a dominant position in the market for CDR credits), followed more recently by superpollutant mitigation (carbon credits for capping orphaned oil and gas wells), and now low-carbon commodities (using environmental attribute certificates, or EACs to catalyse supply chain decarbonisation).
In mid-September Google announced that it had struck an agreement with Stegra to purchase EACs connected to its near-zero emission steel plant, currently under construction in Boden, Sweden. The deal should provide much needed funding for the nascent green steel developer, while enabling Google to claim that it has reduced the embodied emissions of its new data centres.
To recap, EACs separate the specific environmental attributes of a green commodity from the underlying physical product. Based on a “book and claim” chain of custody market mechanism, EACs enable suppliers of low-carbon suppliers to “book” the environmental attributes of a good they have produced (power generated via renewables, emission savings, etc), and for users to “claim” those same attributes (see Book and claim - part 1 and part 2).
Importantly, the trade can happen even if there is no actual physical exchange between buyer and seller. By decoupling the environmental attributes from the underlying physical commodity, the buyer of the EAC can be located far from the physical source of supply. For green steel that's especially important since there are only a few places in the world where the right combination of natural resources and cheap, low-carbon energy add up.
