A focus on our world

The world is undergoing rapid transformation. While individual perspectives on the pace and approach to the energy transition may differ, the need for change is both urgent and undeniable. At Mercuria, we recognize that the energy sector has a central role in this transformation, and we are committed to driving change from within. 

This transition represents a complex but essential shift from conventional fossil fuels to cleaner, more innovative energy sources. Several key factors are driving this momentum:

• Addressing climate change: Fossil fuel usage leads to greenhouse gas emissions which contribute to global warming. Less dependence on fossil fuels is needed.
• Enhancing energy security: Fossil fuels are not only finite but also prone to price volatility. A diverse energy mix stabalizes and strengthens our global energy systems. 

The energy transition comes with several challenges, the foremost being the cost of emerging technologies. While renewable energy sources like solar and wind power may currently possess a cost premium, their cost is reducing rapidly and we recognize their crucial role in the future. We actively invest in advancing these technologies to bridge the cost gap. Second, development of new infrastructure is required. We understand that there is a need for infrastructure tailored to manage the intermittency of renewable sources. Collaboratively, we find and implement efficient storage and distribution solutions. 

Beyond overcoming these challenges, we view the energy transition as an opportunity: 

• Competitive advantage: By offering new technologies and infrastructure, we position ourselves to thrive in the growing demand for clean energy and contribute to the economic potential of this transition. 
• Just transition: We recognize the responsibility to ensure a just transition, one that considers not only environmental impact but also the needs of affected communities and industries and the safety of workers. Agenda 2030 principles become central in guiding our strategy, alongside crucial questions: 

• • Evolving supply & demand needs: How can we anticipate and adapt to the energy requirements of tomorrow? 
  • Client service adaptation: How can we continue serving clients whose needs may not align with the evolving energy landscape, ensuring all people have access to energy? 
  • Financing shifts: How will financing dynamics transform, and how can we adapt to changing cost structures? 
  • Market evolution: What will the future market landscape look like, and how can we position ourselves for success? 
  • Leading the corporate evolution: Most importantly, how can we guide our own corporation effectively through this transformational process? 

At Mercuria, we are keen to embrace the complexity and significance of the energy transition. We are committed to playing a leading role in driving positive change and believe in ensuring a sustainable future and securing a competitive advantage for ourselves and our stakeholders.

The world’s quest for secure, affordable, and sustainable energy demands a fundamental shift, such as transitioning to lower-carbon sources. This transformation will reshape traditional energy commodity businesses such as power, natural gas, crude oil, and LNG, in the coming decades. 

Pricing these commodities effectively requires a clear understanding of the evolving environmental products markets. These markets are growing rapidly as nations and companies set ambitious carbon reduction targets.  

Mercuria actively participates in these global carbon trading markets, from voluntary offset programs to growing clean fuels initiatives. As more investors enter these areas, liquidity across various contracts will increase, fostering a robust marketplace essential for hedging physical obligations.  

We connect both new and existing counterparties with carbon-free or low-carbon products, fulfilling the increasingly urgent demand for environmentally conscious commodities. In the voluntary market, we’re building a robust portfolio of carbon offsets, anticipating growing corporate demand as Net Zero commitments come into focus. 

And as part of our commitment to assisting countries in achieving their Paris Agreement goals, we actively collaborate with national environmental agencies to operationalize Article 6 carbon trading provisions. Memorandums of understanding that we have signed pave the way for impactful international collaboration. 

Leveraging existing business strengths and fostering strategic partnerships, Mercuria drives the development and expansion of renewable natural gas (RNG) and biogas projects. Our participation in numerous clean fuels programs, like California’s Low Carbon Fuel Standard, exemplifies our commitment. 

We are also producing biogas for diverse end users, fulfilling both voluntary and compliance needs in domestic and international markets. As utilities prioritize long-term net-zero goals, these nascent markets are poised for significant growth. 

Building on this momentum, Mercuria has embarked on various projects aligned with the UN SDGs, addressing deforestation, increasing biodiversity, and supporting rural communities through cookstoves and solar power initiatives.

In the wake of the Paris Agreement, governments and companies worldwide have rallied behind the ambitious goal of Net Zero by 2050. We at Mercuria share this goal and recognize the dual imperatives: providing low-carbon energy within the energy transition, that we describe elsewhere, and protecting and restoring nature. Both are essential for achieving Net Zero, alongside the need for carbon credits as emissions decline and low-carbon solutions scale.

Demonstrating our bold commitment to nature, in 2023 we launched Silvania, a US$500 million investment vehicle dedicated to restoring and protecting land and forests. The initial target? To protect an area of 10 million hectares – almost twice the size of Scotland. Read more about Silvania in our Partner Profiles.

Silvania goes beyond mere investment. By injecting capital across the value chain and providing technical and financial support for diverse projects across several geographical regions, we will generate tangible environmental, biodiversity, and social benefits. These investments will yield high-quality carbon credits and co-benefits, reducing or sequestering emissions and enhancing biodiversity through Agriculture, Forestry, and Other Land Use (AFOLU) strategies. Silvania’s projects will deliver positive global climate change and biodiversity impacts while fostering local environmental and social improvements. Our focus areas include:

• North America: Innovative carbon sequestration projects with small landowners and restoration of degraded peatlands. 
• Latin America: Sustainable forest management, restoration of forests and degraded mangrove ecosystems. 
• Africa and Asia: Reduction of methane emissions from agriculture, avoided deforestation, and peatland conservation. 
• Australia and New Zealand: Forest restoration and conservation programs. 
• Globally: Supporting large-scale deforestation prevention through jurisdictional REDD programs. 

Nature-based solutions are vital to achieving the Paris Agreement’s climate goals and underpinning many UN Sustainable Development Goals, including the ambitious 30×30 initiative to protect 30% of Earth’s land and ocean area by 2030. However, the 2021 UN and World Economic Forum report highlights a significant funding gap, urging annual investments exceeding US$500 billion by 2050¹.

Mercuria is uniquely positioned to bridge this gap. Silvania will leverage the deep expertise of our Environmental Products team, active in over 15 countries across 6 continents. Investments will span various nature-based solution categories, including direct land purchases for existing forest management, reforestation, and restoration projects, or equity investments in project development and operating companies targeting avoided emissions, removals, and biodiversity benefits. Silvania will also utilize Mercuria’s cutting-edge technology and remote sensing capabilities for project identification, monitoring, reporting, and verification. Our digital innovation team has been developing specialized tools using remote sensing and machine learning, focusing specifically on nature conservation.

By spearheading the Silvania initiative, we hope to catalyze large-scale investment in nature through diverse project types. Achieving our ambitious restoration and conservation goals requires both capital and expertise, and Mercuria is perfectly equipped to deliver both.

¹ United Nations Environment Program May 2021: State of Finance for Nature