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New Zealand will begin phasing out free allocation of carbon permits to emissions-intensive industrials in 2021, but only at slow pace initially, the government announced Wednesday along with decisions on access to averaging for forest-owners and Kyoto unit cancellations.
Market participants anticipate the California Carbon Allowance (CCA) spread to rise in the coming weeks as speculators and compliance entities look to shift delivery to the following year to maintain holding limit space, but it remains to be seen whether the rate will eclipse this year’s previous high.
Deficit generation exceeded credits under the California Low Carbon Fuel Standard (LCFS) during the first quarter of 2019, as renewable diesel and electric vehicle credit growth could not outpace the year’s more ambitious carbon intensity target.
California regulator ARB is planning to stay the course with its proposed maximum price for Low Carbon Fuel Standard (LCFS) credits, while floating further changes to the potential borrowed credits mechanism and existing Credit Clearance Market process.
The Czech government has established a commission to consider coal’s future role in the country’s energy mix and to make recommendations to manage its reduced production and use.
Poland has joined a growing list of member states opting to use the EU’s Modernisation Fund next decade to finance the decarbonisation of energy systems in various emitting sectors.
European carbon gave back its earlier gains on Wednesday to sink further below €28 before buyers came to the rescue, as EUAs again tested a key technical support ahead the start of a month of curbed supply.
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BITE-SIZED UPDATES FROM AROUND THE WORLD
These go to 11 – Climate change made up 11% of the questions asked at CNN’s first US Democratic presidential debate Tuesday evening, up from 6% at the NBC debates in June. Media Matters reports that eight of the 10 candidates on stage were invited by moderators to weigh in on topics including the Green New Deal and eliminating gas-powered cars, while the other two candidates were asked about the Flint water crisis. In keeping with the ‘progressives versus moderates’ theme seen in other topics at the debate, Media Matters notes that moderators directed their questions initially at some of the centrist candidates on stage, and the questions were structured around the feasibility of progressive proposals like the Green New Deal. However, other observers noted that little-known candidates John Delaney and John Hickenlooper got more speaking time than climate change has gotten in all three debates so far. The second round of debates featuring a further 10 Democratic candidates continues Wednesday. (Climate Nexus)
Real it in – Meanwhile, Obama-era US Energy Secretary Ernest Moniz is calling for a climate plan to counteract progressives’ Green New Deal, which he has dubbed the “Green Real Deal”. In an interview with Axios, Moniz said that building coalitions with large businesses is necessary to achieve significant GHG cuts over the next 30 years. His plan will likely include a price on carbon and support for controversial technologies such as natural gas and nuclear power. Despite the same name, Moniz’s plan is different from US Congressman Matt Gaetz’s (R) own “Green Real Deal” resolution introduced this year, which contained no emission reduction goal, did not address the largest-emitting transportation sector, and called for removing regulations that hinder “advanced energy”.
Deal the burn – If the UK leaves the EU without a deal, falling carbon costs won’t be enough for coal to displace gas in the merit order, based on forward prices, Argus reports. Carbon costs for generators could fall sharply if the UK under a no-deal Brexit, which would benefit coal more than gas. In that scenario, the UK will replace its participation in the EU ETS with an additional tax of £16/tonne, on top of the existing £18/t carbon price support for the power sector. With EUAs at about £26, this would reduce the total carbon price for utilities by about £10/t. That would cut the running costs of a 49.13% efficient gas-fired plant by £3.75/MWh and the costs of a 34% efficient coal-fired plant by £9.74/MWh. While this could boost coal-fired output, coal would still be less profitable than gas.
Nerves of steel – Chinese steel producers have been slower than others to implement energy efficiency and carbon compliance measures, according to a new report by CDP. This has given them some price advantages compared to their international competitors, but leaves them exposed to greater future risk, for example when China introduces its national emissions trading scheme next year, the report found. (Reuters)
Slow to comprehend – Developed nations lack comprehension, ambition, and commitment to solving the climate change crisis, Pacific island leaders said in a statement at the conclusion of a regional development forum. In a thinly veiled kicked at their neighbour Australia, they among others urged rich nations to not use carry-over credits from the Kyoto Protocol period to help meet Paris Agreement targets, the Guardian reports. Australia has around 370 million such credits and the ruling Coalition government has said it plans to use those for Paris.
My dog ate it – The Saskatchewan government is applying to have its Supreme Court hearing on the constitutionality of the Canadian federal carbon tax pushed back, CBC reports. The province says its lawyers were supposed to submit a factum for the appeal by the end of this month, but they have not done so. An email from the Ministry of Justice says a delay would help Saskatchewan co-ordinate its legal challenge with similar ones coming from other provinces. The top court was tentatively set to hear the case Dec. 5. Saskatchewan Justice Minister Don Morgan hosted a meeting Tuesday in Saskatoon with his counterparts from Ontario, New Brunswick, and Alberta, which are all suing Ottawa over its backstop. Morgan believes the Supreme Court will want to hear all of the various legal arguments or cases at once instead of one at a time because of their similarity.
California carbon classes – California regulator ARB will host three public workshops on Aug. 15-16 to discuss scenarios for achieving carbon neutrality by 2045 and evaluate and understand the impact of the carbon allowance surplus in the state’s WCI-linked ETS. The first carbon neutrality workshop on Aug. 15 will hear from experts that have constructed economy-wide deep decarbonisation scenarios, while the second on Aug. 16 will assess social cost of carbon estimates and affordability considerations in light of the zero-carbon goal. The final workshop on Aug. 16 responds to an ARB board resolution that directs staff to quantify and report by Dec. 31, 2021 on the the volume of unused carbon allowances, and how that permits surplus may affect the state’s ability to reach its 2030 GHG goal of 40% below 199o levels.
And finally… Consider the optics – The world’s rich and famous have this week flocked to a posh Italian resort to talk about climate change. The billionaire creators of Google have invited a who’s who of A-list names – including former President Barack Obama, Prince Harry, Leonardo DiCaprio, and Katy Perry – to the Sicilian seaside for a three-day event dubbed Google Camp that will focus on fighting climate change. “Everything is about global warming, that is the major topic this year,” a source told the NY Post. But according to Italian press reports, the attendees are expected to show up in 114 private jets, with 40 having arrived by Sunday. (Page Six)
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