ATOME Energy PLC (AIM:ATOM) was met with glee from analysts following its announcement on Wednesday that some half a million carbon credits could come from its project in Paraguay.
Backing the AIM-listed green hydrogen and ammonia company, Liberum analysts noted that ATOME’s Villeta project could generate tens of millions of Euros from the credits per annum.
This is based on European Union prices, which regularly trade between €80 and €100 per ton and sat at €93.08 on Wednesday.
“The carbon credit potential of the project is […] significant,” Liberum analysts added, given tougher rules in Europe from 2026 will likely boost demand for the credits.
AJ Bell analysts agreed, anticipating the green fertiliser project would likely generate “material carbon credit revenues,” given it receives third-party verification.
So how does it all work?
These revenues will essentially be governed by ATOME’s ability to displace carbon dioxide during the process of producing green calcium ammonium ntrate (CAN) fertiliser at the Paraguay-based plant.
Per ton of carbon displaced, ATOME could be eligible for one credit, so naturally for 500,000 tons of avoided emissions, it would get the same number of credits.
Ultimately, carbon credits aim to be a means of limiting the amount of carbon dioxide reaching the atmosphere by incentivising sustainable projects with another means to create revenue.
Carbon credits are granted to the likes of manufacturers such as ATOME or electric vehicle makers. They can then sell the offsets to others wanting to reduce their own emissions on paper.
Tesla is among companies that rack up billions of credits each year, meaning it scores significant income from selling these.
During the second quarter of this year, Elon Musk’s firm generated US$282 million from the practice, for instance.
In 2022, this figure stood at US$1.78 billion out of Tesla’s total revenue of US$81.46 billion.
Given ATOME aims to produce the CAN fertiliser using solely renewabl energy, the Villeta plant’s prospective offsets reference the emissions that would be created by manufacturing the substance with fossil fuels.
According to ATOME, over the project’s 25-year lifespan, this offset carbon could equate to removing 2.7 million passenger cars off the world’s roads.
