Many of you are probably wondering what is a carbon credit and what is the relevance of these. One carbon credit is the equivalent to 1 ton of carbon and is represented in the form of a certificate that can be traded allowing whoever to emit 1 ton of carbon dioxide or whatever the equivalent is in the form of other green house gasses. Yes there is a big carbon credit market coming that will be offering a tradeable value.
Just to give you an idea Tesla made $2.76 billion from carbon credits in 2024 which was 54% more than Tesla earned in 2023. This is big money and why companies are starting to pay attention because the money is available especially if you are in on the ground floor.
Carbon Credits may not seem that important right now, but in the next few years they will explode as everyone will be wanting or needing them. We have heard the politicians talk about Net Zero and this will be forced on to manufacturers and business before 2030 or a start tracking Net Zero will have already started.
I have mentioned before that Amazon Web Services joined forces with the VeChain (VET) way back in July 2019. Not many saw the significance in this partnership, but this is big news if you understand the importance of this. VeChain is regarded as the gold standard of carbon credit tracking and why AWS partnered up as they want to run this as a new business. Amazons latest purchases or investments will make more sense.
The Spekboom is a succulent that acts like a sponge sucking in carbon emissions.
This all makes perfect logical financial sense when you understand the bigger picture.
Eastern Cape South Africa New Investment Project
Today there was a report that Amazon just invested $500 million on 50 000 hectares of derelict land where they will plant 180 million Spekboom shrubs. This will create in the region of 11 000 jobs and will be completed by 2030 so one would think how nice they are looking after the environment. This is Amazon though so not a company concerned about nature and more about profit.
A quick Google search tells you Spekboom is a carbon sponge and in the right habitat will suck up 10 tons of carbon per hectare per year. The maximum number is as high as 15 tons per hectare so you may be wondering what is this all worth as an investment and what is Amazons benefit?
Lets look at Carbon Credit prices as there is a scale depending on the projects involved. Prices can vary between $2 and $25 per ton for normal green carbon credits, but those who have done reforestation or in this case land rehabilitation the price rises $25-$50 per ton. The 50 000 hectares with a cost of $500 million represents $10k per hectare and 500 000 carbon credits. Amazon would recoup if we stick with the 10 tons per hectare average and a price of $50 totaling $500 per annum making a return of $25 million per year and would be paid off within 20 years. The carbon credit price should alos rise so who knows how much value is going to be generated from this one investment. The Spekboom plant can live for as long as 200 years so this investment will pay itself off many times.
The Spekboom shrubs being indigenous to the Eastern Cape will thrive and over time will be worth far more than the 15 ton per hectare the bigger the plants become. This along with the price of the Carbon Credits going up in value due to the much needed demand.
Amazon Web Services would be selling their own carbon credits offering a service knowing they have the buyers already so this investment is already going to be creating profits through their new business offering. This is how Amazon is increasing their revenue through reinvesting their profits.
Posted Using INLEO
