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TOP STORY

ANALYSIS: Softer August WCI auction result seen after bearish market trend

Traders are anticipating another settlement below the secondary market for the quarterly WCI auction, as compliance entities look to take advantage of the programme’s recent bearish trend and scoop up allowances at discounted levels.

AMERICAS

Analysts lower near-term WCI price forecast on weaker fundamentals

More abundant hydroelectric power generation and stagnant fuel consumption should help depress WCI carbon prices in the near-term, but increased power demand from electric vehicle adoption could take allowance values higher over the next decade, analysts said.

North Carolina RGGI linkage may not drive deep CO2 cuts -report

Implementing a power sector ETS in North Carolina and linking to the Northeast US RGGI programme may not stimulate significant emissions reductions in the state compared to other policy approaches, according to a new government report.

RINs jolt on news that Trump may respond to recent biofuel waivers  

US biofuel credit (RIN) prices briefly surged on Tuesday on news that President Donald Trump may reassess his position on Renewable Fuel Standard (RFS) compliance waivers following a backlash in the Midwest over the administration’s recent issuances.

EMEA

Lufthansa adds clean fuel option in new offset platform

German airline Lufthansa has begun to offer passengers the option of offsetting any flight emissions with sustainable aviation fuel, despite it costing around 30 times more than traditional carbon-cutting projects.

EU Market: EUAs reverse gains, end lower as more weakness seen

EU carbon prices reversed course and ended lower on Tuesday after briefly climbing back above €27 on more bargain-hunting and technical buying, with experts predicting more weakness ahead.

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BITE-SIZED UPDATES FROM AROUND THE WORLD

Double standards – Japan has introduced strict environmental standards for newly built coal-fired power plants at home, but not abroad, according to a new Greenpeace study. The green group found that Japan – the only G7 country to still actively build new coal plants at home and abroad – builds plants in poorer nations that emit many times more air pollutants than those built domestically. Had they stuck to domestic emission limits, some 5,000-15,000 premature deaths could have been avoided annually. The new plants, being constructed in nations such as India, Vietnam, and Bangladesh, also add to the world’s CO2 problem.

All in favour – German industry association BDI has published a paper on measures for CO2 pricing, recommending that the government continues to advocate a scheme that is “as global as possible” while conducting thorough analysis on its possible effects and risks. Exactly one month from today, Chancellor Angela Merkel’s government is due to present a raft of measures to drastically cut emissions, with an extension of carbon pricing to non-EU ETS sectors via a market rather than a tax expected. The BDI organisation stressed that a carbon price was not a “cure-all” and would only have an effect if consumers had realistic, more climate-friendly alternatives to choose from. The BDI said that the introduction of a national carbon price is “conceivable and doable”, if it does not harm the international competitiveness of German businesses. The BDI did not come out in favour of either an ETS or a tax, but said it rejects purely raising taxes or introducing new ones. That the industry association was able to reach a consensus on the topic of CO2 pricing is in and of itself “remarkable”, according to Handelsblatt, as BDI’s members stand for a broad spectre of opinions in climate and energy policy. (Clean Energy Wire)

No quick fix – Separately, a study by the German Institute for Applied Ecology (Oeko-Institut) commissioned by think tank Agora Energiewende has found that introducing an ETS for transport and heating in Germany would take at least two to three years due to “long and complex implementation”. As a result, “emissions trading in the heating and transport sector is useless as a short-term climate protection measure before 2020,” said Agora Energiewende head Patrick Graichen. The introduction of new laws, national elections in 2021, possible amendments of related EU regulation and setting up a system to monitor companies would, among other factors, make fast implementation unlikely. Opting for an integration into the EU ETS could drag on even longer, with an expected implementation period of three to four years, the study estimates. Adjusting Germany’s existing energy tax system, on the other hand, “could be achieved in three months”, making it a “much easier” short-term option, Graichen said. The think tank therefore recommends that Germany adopt a two-stage approach, where an energy tax reform is implemented first and later replaced by an ETS. This way, the country would also be granted a pilot phase to identify design flaws. (Clean Energy Wire)

Costly inaction – Extreme weather events, cuts to worker productivity, and other effects of climate change could cause major global economic losses unless GHG emissions are significantly curtailed in the next few decades, reports the Washington Post. The new study, published as a working paper in the National Bureau of Economic Research, warns that under a high-emissions scenario, warming would cause a 7.2% cut to GDP per capita worldwide by 2100. In contrast, if countries were to cut emissions in line with the Paris climate agreement, then such effects could be limited to closer to a 1.1% loss in GDP per capita. A study author tells the Post that the US will be one of the countries that will suffer the most with as much as a 10.5% cut in real income by 2100. (Carbon Brief)

Coal for capture – CCS is now the centrepiece of the $360 billion global coal industry’s efforts to ensure its survival, but the sector’s lobbying has raised concerns among critics and investors, who say it is an unwise move to extend coal’s life amid ever cheaper renewables and claim CCS may be better suited to other industrial sectors such as oil and gas production. (Financial Times)

Psst… Do more, mate – The Guardian reports that the British government has privately appealed to senior Coalition government ministers in Australia to develop a more ambitious climate policy. The UK’s high commissioner to Australia, Vicki Treadell, has met with both emissions reduction minister Angus Taylor and foreign minister Marise Payne since the Australian election in May, “using the introductory meetings to convey Britain’s view that it wants all countries, including Australia, to increase their climate ambitions”. The meeting with Taylor discussed the future of Australia’s energy policy after the Coalition dumped its proposed national energy guarantee in the dying days of Malcolm Turnbull’s prime ministership. A spokesperson for the UK high commission in Canberra said the call for more ambitious action on the climate emergency did not just apply to Australia. (Carbon Brief)

Bolsonaro bypass – Brazil’s Amazon states want to negotiate forest aid directly with Norway and Germany following the countries’ suspension of cash due to the federal government’s dismantling of the process. The states have informed the countries’ embassies. (Reuters)

Northwest nudge – A bid to delay the Northwest Territories’ (NWT) CO2 tax failed in the Canadian jurisdiction’s Legislative Assembly on Monday, meaning it appears all but certain the C$20 carbon levy will be in force Sep. 1. While MLA Kieron Testart introduced a motion to delay the carbon tax until Jan. 1, 2020, support for the move appeared to dissolve after NWT finance minister Robert McLeod reviewed an email from federal environment minister Catherine McKenna’s chief of staff earlier in the day. That email confirmed the federal government would implement the federal ‘backstop’ CO2 price in the Northwest Territories on Sep. 1 if the territory was unable to pass its carbon tax bills by then. NWT’s carbon fee and complex rebate scheme was delayed from its original July 1 start date as lawmakers required more time to review the policy’s underlying legislation. (CBC)

Blue and Gold – Ontario-based mineral exploration company AurCrest Gold and North American offset developers Bluesource have signed an agreement to develop forest-based offset sequestration projects on behalf of First Nations that are pursuing their inherent stewardship role both on reserve and within their traditional territories. As announced previously, Lac Seul First Nation and the two companies will work together to assess the potential of forests to capture and store CO2 within the First Nation’s traditional territory in Northwest Ontario, along with exploring the monetisation of these offsets for the benefit of the First Nation and its business partners.

And finally… Discarded pie in the sky – British Airways and Royal Dutch Shell have submitted plans to build Europe’s first plant that converts household waste into jet fuel, the Telegraph reports ($). The duo will work with Velocys, a sustainable fuel specialist, on the site near to the Humber estuary in North Lincolnshire. It is hoped that around half a million tonnes of rubbish destined for landfill will be converted into cleaner burning aviation fuel.

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