Tesla didn’t become the juggernaut that it is based on its record EV sales1 alone. While sales rose once again in the latest quarter,2 Tesla continues to bring in substantial revenue from regulatory (carbon) credits3—having already seen its carbon credit sales jump by 116% earlier this year.4
Most people don’t realize that selling carbon credits substantially helped the company turn its first profit in 20205—and in 2021, it was reported that Tesla made more money from credits and bitcoin than cars.6
Tesla derives value from these credits through the soaring demand from major corporations seeking to “net zero” their greenhouse gas emissions—many of which to date have made little progress.7
Now, many analysts and researchers are predicting a significant price increase in the voluntary carbon credits market in the very near future.8,9,10
This is why you need to know about Base Carbon Inc. (NEO:BCBN) (OTCQX:BCBNF), an upstream commodity capital allocator which is financing and developing emission reduction projects to produce carbon credits for the voluntary markets.
Base Carbon’s strategy involves working alongside Fortune 500 corporations and international NGOs to mitigate project risk while maintaining optionality and upside exposure to carbon prices.
Base Carbon stands out in the booming voluntary carbon markets as a well-funded, well-led business with tangible projects and projected (2.5 years) short-term capital recovery.
And, in addition, these projects have drawn solid partnerships and lucrative off-take agreements with companies like Citigroup and SIPCO.11
This company is acting FAST and is further ahead of the game than most players in the space. So let’s take a deeper look into Base Carbon Inc. (NEO:BCBN) (OTCQX:BCBNF) and why they’re poised to make a big splash in a Net Zero world.
7 of the TOP Reasons
to Add Base Carbon Inc. (NEO:BCBN) (OTCQX:BCBNF) to Your Watchlist
High-Demand Voluntary Carbon Credit Markets Needs More Quality Credits: Demand for voluntary carbon credits are expected to grow 5-10x in the next 10 years, 8-20x by 2040, and 10-30x by 2050.12 But shortages are looming, and voluntary credit purchasers want more accountability in issuers—which is where experts such as Base Carbon Inc. (NEO:BCBN) (OTCQX:BCBNF) can succeed.
Robust Pipeline of Carbon Reduction Projects: Two executed projects with tangible assets (cookstoves and water purifiers) that will significantly reduce biomass fuel consumption, eliminate millions of tonnes of carbon dioxide emissions, and potentially transform millions of lives.
Well-Funded with Key Shareholders and Institutional Investors; Short-Term Capital Recovery: As of June 30, 2022, Base Carbon Inc. (NEO:BCBN) (OTCQX:BCBNF) holds +US$37M in Cash and Cash Equivalents. On top of that, they have completed lucrative offtake agreements that are anticipated to pay back capital spending in less than 3 years.
Strong Partnerships: Beyond its own projects, Base Carbon has a strategic agreement with Abaxx Technologies Inc. and owns 49.9% of Hardwick Climate Business Limited (HCBL), an emission reduction specialist firm.
Strategic Project Offtake Agreements: Citigroup has agreed to an arrangement to purchase the first 7.4 million carbon credits from the BCBN’s Vietnam cookstove project.
Exceptional Leadership: There are very few teams with carbon industry, financial and technological expertise to compete with Base Carbon Inc. (NEO:BCBN) (OTCQX:BCBNF).
Well-Balanced Capital Structure: Management, Directors & Founders (12.4%); Advisors (1.4%); Key Shareholders such as Abaxx Technologies Inc. (15.2%) and others (7.4%); Institutional Shareholders (27.7%); and Minority Shareholders (35.9%).
High-Demand Voluntary Carbon Market in Need of Quality Credits
Upon the conclusion of the COP26 conference in Glasgow, Scotland, 632 of the world’s largest 2000 public companies by revenue announced plans to achieve Net Zero greenhouse gas emissions.13
Even more corporations will likely sign on for these goals in the future as major financial superpowers that manage trillions of dollars, such as the US Federal Reserve14 and mega-funds such as Blackrock and Vanguard15 have signaled the utmost importance of taking climate goals seriously.
To meet these goals, at least two-thirds of companies will need to lean on voluntary carbon credits to get there.16
And because so many corporations will be chasing the same limited supply of high-quality carbon credits, we’re about to witness a true example of what’s known as a “Giffen Good”17—a very rare type of commodity whose demand rises when prices rise and falls when prices fall.
Corporations can’t exactly substitute an “oxygen credit” for a carbon credit when the latter is no longer available.
Many experts are already calling for significant price hikes in carbon to come very soon.
According to a recent Nature journal study,18 US carbon prices should be 3.6x higher than they currently are, with prices closer to $185.19
As demand for Voluntary Carbon Markets (VCM) credits increases, so does the price, further increasing demand… hence, we have a Giffen Good.
But not all carbon credits are created equal, and those that are buying VCM’s are seeking more transparency and tangible social development additionalities that go beyond nature-based projects.
Corporate buyers require additional transparency, standardization and accountability from VCM vendors.20
There have already been calls for restrictions on using older, lower-quality credits,21 including nations putting moratoriums on certain kinds of credits.22
Not to mention the number of scams taking place in the market from dodgy vendors slinging fraudulent credits.23,24
The fact is, in order to meet the demand for carbon credits, project development would need to ramp up at an unprecedented rate. And at present, most of the potential supply of avoided nature loss and nature-based carbon sequestration is within a small number of countries.
And these challenges are expected to cause a huge drop in the world’s estimated supply of carbon credits per year by 2030,25 which is where Base Carbon Inc. (NEO:BCBN) (OTCQX:BCBNF) comes in.
Base Carbon Inc. (NEO:BCBN) (OTCQX:BCBNF) has a clear path for scale and growth potential through household devices (cookstoves and water purifiers), afforestation, reforestation and blue carbon projects, as well as leveraging current and anticipated pipelines from proven biodigesters and bio-fuels and introducing new products and verticals such as biochar and capture/sequestration technologies.
The company also has made strategic acquisitions and alliances with AirCarbon, Abaxx Technologies, and HCBL.
Armed with all of this, Base Carbon is in strong first mover in an emerging public sector that only includes one other comparable company:
- Carbon Streaming Corp. IPO’d on July 27, 202126 after completing a US$104.9 million private placement, and went up +877% from C$1.70 on August 1, 2021 to a high of C$16.62 on December 26, 2021
Robust Pipeline of Carbon Reduction Projects
The main two flagship projects of Base Carbon Inc. (NEO:BCBN) (OTCQX:BCBNF) both involve fuel-efficient cookstoves and water purifiers.
As carbon “reduction” projects with strong social economic co-benefits BCBN is improving millions of human lives in their daily cooking and drinking activities.
In Vietnam, BCBN is working to facilitate carbon reduction through the distribution of 850,000 fuel-efficient cookstoves and 364,000 safe-drinking water purifiers.
Over a projected, Verra-certified27 10-year crediting period, Base Carbon’s household devices are anticipated to:
- Generate approximately 26.6 million carbon credits
- Significantly reduce CO2 emissions within the household and regional deforestation
- Reduce consumption of wood by up to 70%
- Remove 99.99% of bacteria from drinking water
Because 51.4% of Vietnam’s primary household energy is generated from solid fuel combusted within open fires or inefficient cook stoves for cooking or water sanitization, it’s anticipated the project will benefit over 1 million rural Vietnamese households.
Distribution of the devices is already underway, with approximately 285,000 having been distributed as of mid-August 2022, with full distribution expected by mid-2023.
Much like the other project, Base Carbon’s (NEO:BCBN) (OTCQX:BCBNF) Rwanda Cookstoves project (in partnership with developers DelAgua Group) is also Verra-registered and designed for drastically reducing fuel consumption.
With distribution already underway, the project is expected to deliver all 250,000 fuel-efficient cookstoves by the end of 2022.
It’s part of a greater Tubeho Neza project, which is the largest of its kind in the world, delivering a total of ~2.3 million cookstoves to rural Rwandan households.
Households in Rwanda rely nearly entirely on biomass for cooking and related purposes resulting in inefficiencies in fuel use and negative health impacts. Through continuous education and support, +99% of the stoves are still in use after two years.28
To date, DelAgua’s impact in the region has resulted in29
- 640,000 stoves distributed as of H1 2022
- +3 million lives transformed
- 8.9 million tonnes of CO2 avoided
- 73% reduction in household air pollution when using the stove outdoors
- 27.7% reduction in emission exposure among children
- 46% reduction in diarrhea in children under 5 when consuming boiled water
Well-Funded Company with Short-Term Capital Recovery Projects
Key to the value generation of the Vietnamese household device project is its short-term capital recovery. It’s predicted to have a 2.75 year payback on aggregate capital committed by Base Carbon Inc. (NEO:BCBN) (OTCQX:BCBNF) (from the first dollar deployed) irrespective of market-based carbon pricing.
This is accomplished by having the project’s first 7.4 million carbon credits already having been spoken for through a project offtake agreement between Citigroup Global Markets and in-country Base Carbon project partner SIPCO.
From this project alone, the Company is anticipated to deliver a pre-tax 66% Internal Rate of Return (IRR).
With the Rwanda project, the distribution that was initiated in mid-2022 is set to be completed within just six months.
Strong Partnerships and Agreements
Base Carbon Inc. (NEO:BCBN) (OTCQX:BCBNF) currently owns 49.9% of Hardwick Climate Business Limited (HCBL).
HCBL has been active in carbon markets since the beginning of the EU Emissions Trading Scheme (EU ETS), mostly in the business of client representation and advisory engagements.
Historically, HCBL has worked with major international corporations, sovereign entities and major financial institutions to identify and diligence large scale carbon reduction projects, drawing from a wide portfolio of investable opportunities around the world.
Going forward, Base Carbon Inc. (NEO:BCBN) (OTCQX:BCBNF and HCBL will jointly pursue the financing and development of projects for the voluntary carbon markets.
As well, Base Carbon Inc. (NEO:BCBN) (OTCQX:BCBNF) has the exclusive right to use financial software company Abaxx Technologies’ infrastructure and tools within the field of emission reduction, which further creates opportunities for Base Carbon to monetize technology developments.
Poised to become a key player in the VCM,30 Abaxx’s technology connects multiple disparate data sources for attestation and multi-party document management which are critical to addressing the need for transparency and to avoid double counting.
Management and Leadership Team
The team behind the operations of Base Carbon Inc. (NEO:BCBN) (OTCQX:BCBNF) are environmental, finance and technology professionals with decades of operating experience across the carbon upstream and downstream segments of the industry.
RECAP: 7 Reasons
Base Carbon Inc. (NEO:BCBN) (OTCQX:BCBNF) is Market Leader in the Carbon Credit Development Sector:
High-Demand Voluntary Carbon Credits Market Needs More High Quality Credits
Robust Pipeline of Voluntary Carbon Credit Projects
Well-Funded, with Key Shareholders and Institutional Investors in addition to Short-Term Capital Recovery
Strategic Project Offtake Agreements
Well-Balanced Capital Structure
Base Carbon Inc. (NEO:BCBN) (OTCQX:BCBNF) should be a strong candidate in this sector with the right team leading it, and an impressive portfolio of projects with near-term capital returns on deck.