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France will set a domestic carbon price floor for power generators from next year, the country’s environment ministry said Tuesday, though it was unclear whether the country would also introduce measures to counter the resulting cut in demand for CO2 allowances.
EU carbon prices surged to a three-month high in volatile trade on Tuesday, with traders attributing the gains to speculative short-covering and utility buying amid large gains in the wider energy complex.
Australia’s main opposition party will on Wednesday pledge a tougher emissions target and present a carbon market plan that would potentially drive demand for millions of international credits by domestic industry.
Senior EU lawmakers will consider whether to impose faster ETS emission reduction cuts by deepening annual cap reductions as part of suggestions set out by Ian Duncan, the senior lawmaker steering carbon market reforms through the European Parliament’s environment committee.
New Zealand’s Climate Change Minister Paula Bennett is considering cancelling 122.2 million surplus Kyoto units, a move that might also spur the government to impose tougher targets on ETS sectors.
Australia will not chase volume at the expense of price in this week’s Emissions Reduction Fund (ERF) auction, the chair of the Clean Energy Regulator said Tuesday, as developers were finalising their bids.
BITE-SIZED UPDATES FROM AROUND THE WORLD
Modern talking – Poland has mustered the support of nine other EU nations over how to govern the post-2020 Modernisation Fund, which uses ETS auction revenues to help eastern states revamp their energy sectors. These eastern EU countries are united in wanting the European Investment Bank to have an advisory role, rather than full decision-making powers over what types of projects can get cash. (Biznes Alert, in Polish)
The current Modernisation Fund (under Article 10c of the ETS Directive) has allowed eastern EU states to invest up to €12 billion in coal-based power production up to 2019 because its rules are too loose to prevent locking in high carbon infrastructure, according to a report by environmental campaigners Carbon Market Watch. EU member state officials meet in Brussels to discuss the fund and other post-2020 ETS reforms on Wednesday as part of ongoing talks set to last all year.
Poland clinches coal lifeline – Poland’s government sealed a restructuring deal for its loss-making coal-mining industry with cash injections from state-owned power producers, cementing efforts to keep the country’s $545 billion economy running on the black fuel. (Bloomberg)
Sweden sour – A proposal by Swedish MEP Fredrick Federley to boost the size of the post-2020 EU ETS Innovation Fund by tapping unallocated allowances from the current trading phase drew fire from environmental campaigners Sandbag. While his idea was aimed at boosting clean technologies, Sandbag warned it could crash the value of the fund by swamping the market with EUAs that would otherwise be withheld in the MSR. Consultant Greg Arrowsmith, who runs NER400.com, pointed out that Federley’s proposal to remove requirements to cap the number of winning projects any member state could win would likely benefit his home country. He said Sweden would have gotten more projects than any other EU nation had there been no cap in the current phase.
Implementation COP – This year’s UN climate summit in Marrakesh will be an “implementation COP” focused on how to fulfill the Paris agreement’s commitments, Morocco confirmed at the Major Economies Forum in New York, Politico reported. November’s COP-22 will also focus on carrying out pre-2020 commitments and the Lima-Paris Action Agenda launched by the hosts of COPs 20 and 21, which aims to accelerate emissions reduction efforts by governments and non-state actors. At the MEF, ministers also agreed to create three working groups to improve access to climate finance, to provide financial tools and instruments, and to lay out a roadmap to increase climate finance before 2020.
The rat(ification) pack – The UN has confirmed that 12 countries have communicated an INDC and deposited an instrument of ratification, acceptance, approval or accession, making them the first nations to fulfil the criteria required for the Paris Agreement to enter into force. The dozen are all small emitters, and include Barbados, Fiji, Grenada, Maldives, Marshall Islands, Mauritius, Palau, Samoa, Somalia, St. Kitts and Nevis, St. Lucia, and Tuvalu. Meanwhile, Brazil’s government will ask legislators this week to ratify the treaty even as President Dilma Rousseff faces possible impeachment, Reuters reported, adding that it is unclear if the country’s Congress would back the pledges of a government that may soon lose its leader.
Palestine not an issue – Jonathan Pershing, the US State Department’s special envoy for climate change, said Monday that Palestine’s admission into the UNFCCC won’t prevent the US from supporting the organisation. As Politico reports ($), Pershing was responding to reporters asking about a letter from 28 Senate Republicans that cited a 1994 law blocking contributions to any UN organisation that admits Palestine. US Republicans were furious over the Obama administration’s $500 million contribution to the Green Climate Fund earlier this year, and they will likely seek to prevent any further funding.
No sacred cows at Uniper – The big-emitting power generation business being spun off by German utility E.ON said it would aim to sell at least €2 billion of its assets by 2018 and cut costs in its battle against weak markets, adding that no part of the business would be spared consideration. (Reuters)
And finally… Effect of a US carbon tax would be (micro)soft – Billionaire Microsoft founder Bill Gates says a carbon tax in the US would not be an effective way of confronting climate change. In an interview with the MIT Technology Review, he said the government and private sector should partner together to research more advanced and cleaner forms of energy. The Breakthrough Energy Coalition he founded with 26 other wealthy individuals last year hopes to raise up to $2 billion from institutional investors, such as universities and corporations, and to be up and running by this summer. (The Hill)
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