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Negotiators in Katowice reached agreement on a Paris rulebook late Saturday night, but Article 6 left a gaping hole as a decision on carbon markets was left for the next major round of negotiations in Chile.
Governments look set to resume talks next year on a framework for international emissions trade under the Paris Agreement’s Article 6, as negotiators seek to postpone the issue rather than risk collapsing the entire Paris rulebook, numerous sources close to the process told Carbon Pulse on Saturday.
A handful of governments and institutions are working to advance international emissions trading activities even as the rules remain unclear as to how those initiatives can be used to help meet the Paris Agreement.
New Jersey on Monday proposed an emissions cap of 18 million short tons for its re-entry into RGGI in 2020, but environmental groups and some traders thought the allowance budget was not ambitious enough.
The Canadian environment ministry will publish new draft regulations on the output-based pricing system (OBPS) for large emitters on Wednesday ahead of the scheme’s Jan. 1 start date, according to sources.
A Massachusetts commission has recommended the Northeastern US adopt a transportation-focused ETS and a clean fuel standard, while New York Governor Andrew Cuomo called Monday for the decarbonisation of his state’s electricity sector by 2040.
The New York Independent System Operator (NYISO) advanced a proposal Monday that would price carbon in its wholesale electricity market, but stakeholders continued to express reservations about how to set the level as the mechanism inched closer to a final vote.
Australia’s Clean Energy Regulator achieved record low volumes in last week’s Emissions Reduction Fund (ERF) auction, the agency said Monday.
The EU and New Zealand have agreed to strengthen their bilateral cooperation on emissions trading, their respective climate bosses announced on Monday.
European carbon prices extended their end-of-year rally into a fourth day on Monday, climbing to a fresh three-month high above €24, though some warned the market could be over-extending itself.
Switzerland has announced the dates for its next two carbon allowance auctions, which could be the market’s final sales before it links with the EU ETS.
The European Commission on Monday adopted its annual report on the functioning of the EU ETS, which covered the market’s developments in 2017 as well as summarising measures proposed or agreed this year. Here are a few of Carbon Pulse’s main takeaways from the report.
Job listings this week
- EU Carbon Market Analyst, BNEF – London
- Analyst, Climate Policy or Transportation and Urban Solutions, Pembina Institute – Toronto
- Finance and Administration Officer, Nexus for Development – Phnom Penh
Or click here to see all our job adverts
BITE-SIZED UPDATES FROM AROUND THE WORLD
A euro for your thoughts – The legal act to establish the EU ETS’ new Innovation Fund for breakthrough climate action has been published for public feedback until Jan. 11, 2019.
Stress to impress – The Bank of England is planning to include the impact of climate change in its UK bank stress tests as early as next year, in what would be an unprecedented move for a central bank of a major financial centre. Bank Governor Mark Carney told the Financial Times that he was weighing whether the risks – as well as the opportunities – from climate change should form a part of its exploratory scenario in 2019. The BoE tests the balance sheets of the biggest UK lenders every year against a doomsday scenario to ensure they have enough capital to withstand a shock without needing a taxpayer bailout. It has also introduced an exploratory scenario every two years. Banks cannot pass or fail this part of the exercise, but instead they are required to scrutinise whether they are doing enough around a particular issue.
Across the finish line – The EU agreed on Monday to a 2030 goal for cutting carbon emissions from cars, finally settling differences between vehicle-producing countries and environmentally-conscious lawmakers. The 28-nation bloc has been divided for months over how strict to be on CO2 emissions from vehicles as part of its push to reduce GHGs overall by 40% by the end of next decade. MEPs and member states finally struck a compromise after nine hours of talks to cut CO2 from cars by 37.5% and vans by 31% by 2030 compared with 2021. There was also agreement on an interim target of a 15% cut for both cars and vans by 2025. (Reuters)
Coal goals – While global coal demand looks set to rise for the second year in a row in 2018, it is forecast to remain stable over the next five years, as declines in Europe and North America are offset by strong growth in India and Southeast Asia, according to the IEA’s latest coal market report. Air quality and climate policies, coal divestment campaigns, phase-out announcements, declining costs of renewables and abundant supplies of natural gas are all putting pressure on coal. As a result, coal’s contribution to the global energy mix is forecast to decline slightly from 27% in 2017 to 25% by 2023. But coal demand grows across much of Asia due to its affordability and availability. India sees the largest increase of any country, although its current 3.9%/year growth rate is slowing, dampened by a large-scale expansion of renewables and the use of supercritical technology in new coal power plants. Significant increases in coal use are also expected in Indonesia, Vietnam, Philippines, Malaysia and Pakistan. Meanwhile, coal in China accounts for 14% of global primary energy, the largest around in the world, but the IEA forecasts demand there will fall by around 3% over the period.
Getting their Phil – Houston-based ConocoPhillips is now helping fund a multi-million dollar US political advocacy group that’s supporting a $40/tonne carbon tax. The company announced Monday that it will commit $2 million over two years to the Americans for Carbon Dividends group, which is co-chaired by former Senate Majority Leader Trent Lott (R-MS) and former Sen. John Breaux (D-LA). Conoco is also joining the connected initiative Climate Leadership Council, a policy forum organised by leaders from previous Republican administrations that includes corporate members like Total, Shell, BP, and ExxonMobil. Green group WWF also joined the council. (Axios)
Blue dawn – A Democratic majority in the US House of Representatives in January will mark the “dawn of a new era” in fighting climate change, according to Massachusetts Senator Ed Markey. Speaking with reporters outside of his Boston office on Monday, Markey outlined an agenda that includes items that have yet to become law in his home state, such as a transition to 100% clean energy and carbon pricing. Markey also expressed support for a Congressional resolution that would establish a Select Committee for a Green New Deal, and he pointed to Massachusetts’ success in implementing RGGI as a model to follow. (WBUR)
Cabinet whack-a-mole – President Trump on Saturday announced that US Department of Interior Secretary Ryan Zinke had submitted his resignation and will step down at the end of the year. The resignation follows a number scandals and ethics violations – including a potential conflict of interest with a land deal orchestrated with the chairman of Halliburton – that prompted the White House behind the scenes to pressure him to step down. In his place, Assistant Secretary David Bernhardt will become Acting Secretary until Trump considers this week who to permanently fill the post. Bernhardt spent a number of years in DC as a lobbyist for the oil and gas industry, and over 150 environmental groups signed a letter to the Senate on Committee on Energy and Natural Resources opposing his nomination in May. (Climate Nexus)
Reviewing for a review – A US federal district judge is weighing claims by Democratic states and environmentalists that the Interior Department must review the climate impacts of its coal leasing programme after outgoing Interior Secretary Ryan Zinke failed to do so when he lifted a moratorium on coal leasing imposed by the prior administration. (InsideEPA, $)
Cold feet – SSE and Innogy terminated plans to create the UK’s second-biggest utility, the latest sign of pressure on the industry from increasing regulation, Bloomberg reports. SSE’s board decided it wasn’t in the best interest of the company to proceed with the deal to combine its retail business with Innogy’s Npower unit after it emerged last month that more cash would be needed in order to obtain an investment grade rating for the combined company. Shares of Innogy and SSE both fell after the announcement. The deal’s collapse forced Germany utility Innogy to warn that profits this year would be lower than expected. The move reflects wider pressure on energy companies to adapt to quick shifts in both technology and the political landscape, upending the strategies executives set only a few years ago.
System of a down – The Western Climate Initiative’s Compliance Instrument Tracking System Service (CITSS) was temporarily down on Friday due to a technical error, a California official told Carbon Pulse on Monday. Officials did not respond to questions about the technical glitch. Traders said the system was temporarily halted after duplicate V17 allowance transfers were reported. Those allowances, however, were not deposited in entities’ accounts.
I’m eighteen – California regulator ARB will release three annual reports at noon Pacific time (2000 GMT) on Tuesday, Dec. 18 related to the state’s cap-and-trade programme. These annual reports will cover the compliance status of entities for the full 2015-2017 second compliance period, transfers of compliance instruments in CITSS in 2017, and a summary of vintage 2019 allowance allocation.
The wheels on the bus go emissions-free – Separately, the ARB on Friday also unanimously approved a regulation that all buses be zero-emissions by 2029. The mandate, the first of its kind in the US, will see the state build on the 153 carbon-free buses it already has on the road by converting the rest of its 12,000-strong fleet to electricity-powered and hydrogen fuel cell technologies. (AP)
And finally… Nice shirt, can I charge my phone with it? – Researchers at Nottingham Trent University have developed small solar panels which can be embedded in clothes and used to charge a mobile phone. The tiny panels are small enough to be placed into yarn and then knitted or woven into textiles. The team behind the technology said that in testing it was capable of charging a mobile phone and a fitness tracker. The solar panels are only 3mm long and 1.5mm wide and almost invisible to the naked eye, the researchers said. (Evening Express)
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