CP Daily: Thursday May 28, 2020

Published 02:34 on May 29, 2020  /  Last updated at 02:34 on May 29, 2020  /  Newsletter  /  No Comments

A daily summary of our news plus bite-sized updates from around the world.

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TOP STORY

Quarterly WCI auction fails to sell out for first time since Feb. 2017

This quarter’s California-Quebec carbon permit auction failed to sell out for the first time in over three years as entities purchased roughly 21 million current vintage allowances at the joint sale, according to results released Thursday afternoon.

INTERNATIONAL

Global carbon market sees modest growth in 2019, strong interest in forestry -World Bank

Global carbon markets expanded marginally last year and saw modest growth in government revenues, but interest in offset projects rose with forestry leading the way, according to an annual report released Thursday by the World Bank.

UN accepts UK proposal to host COP26 in Nov. 2021

*FREE READ* – Governments have agreed to move the COP26 UN climate summit to Nov. 2021 as environmental groups urged the UK hosts and other nations to use the extra time to enhance their climate action plans and to ‘green’ their post-coronavirus recovery efforts.

AMERICAS

California business groups unite to lobby against ETS budget proposal

Three large business groups are opposing budget language that would require California regulator ARB to consider improvements to the state’s cap-and-trade scheme, saying the measure could increase costs on end consumers at an inopportune time.

NA Markets: California carbon rises on budget proposal, RGGI regains losses ahead of Q2 sale

California Carbon Allowance (CCA) prices gained this week as traders took a bullish outlook regarding a budget proposal to consider improvements to the state’s linked ETS, while RGGI allowances (RGAs) pared back losses suffered over the past two weeks.

LCFS Market: California finalises price cap package as credit values gap higher

A California agency on Wednesday approved the state’s Low Carbon Fuel Standard (LCFS) price ceiling and other amendments that will take effect this summer, as credit values continued to increase despite an auction taking place.

ASIA PACIFIC

Australia sets ERF auction date, moves to take out price manipulation risk

Australia’s Clean Energy Regulator on Thursday set dates for the next Emissions Reduction Fund (ERF) auction, while proposing changes to prevent gaming of the price the government pays for carbon credits.

NZ Market: NZUs hold as compliance deadline nears

NZUs have traded at or above the NZ$25 fixed price option (FPO) level all this week as Friday marks the last chance for ETS participants to buy any permits they might still need to ensure compliance for 2019.

EMEA

Parliamentarians push back on effort to raise EU’s 2030 GHG target

EU Parliamentarians from major parties have pushed back against efforts to raise the bloc’s 2030 emissions reduction target to 65%, despite that level being judged to be in line with the Paris Agreement and as providing a smoother path towards reaching net zero by 2050.

Coronavirus puts Denmark’s carbon tax increase on ice

Denmark will not consider raising its domestic carbon tax until this autumn at the earliest due to the current economic uncertainty from the coronavirus outbreak, the country’s climate minister said.

EU Market: EUAs hover around €21 ahead of supply bump

EUAs eased to hover around €21 on Thursday, extending their retreat from this week’s one-month high as energy markets also dipped.

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BITE-SIZED UPDATES FROM AROUND THE WORLD

Presumptive price – With former Vice President Joe Biden now the presumptive Democratic nominee in the upcoming 2020 presidential election, a better sense of US climate policy under a potential new Democratic administration is now taking shape, according to S&P Global Platts. While Biden has said that he would recommit the US to the Paris Agreement, additional domestic policies will be necessary to meet the GHG target that the country originally committed to – namely a 26-28% cut vs. 2005 levels by 2025. Biden’s climate platform includes a range of specific measures that were initially implemented in prior administrations, as well as new ambitious targets plus a more detailed implementation plan. The headline ambition includes a 2050 target for 100% clean energy and net-zero economy GHG emissions. More directly, Biden’s platform calls for legislation that establishes an “enforcement mechanism” and “milestone targets” to be enacted no later than 2025 – when his first term would end. The mechanism “will be based on the principles that polluters must bear the full cost of the carbon pollution” and must achieve “clear, legally binding emissions reductions”, implying some form of a carbon price. Biden’s platform also notes the importance economy-wide reductions rather than having “a few sectors carry the burden of change”, implying fairly broad coverage, perhaps like the WCI-linked California ETS. But S&P Global Platts notes that enacting such a proposal would require an act of Congress, and despite general support among Democrats in both chambers for comprehensive climate policy, a Republican-controlled Senate will remain a significant obstacle to passing any form of legislation.

You win some, you lose some – Shareholders of US oil major Chevron voted to adopt a proposal calling for additional climate-related lobbying disclosures, a win for environmentalists as other climate-charged resolutions failed at virtual meetings this week. The resolution gained a 53% approval from Chevron’s shareholders, and requires the energy giant’s board of directors to issue a report within the next year describing how the company’s lobbying activities “align with the goal of limiting average global warming” under the Paris Agreement. However, other resolutions calling on Chevron and fellow US oil company ExxonMobil to disclose climate change risks to petrochemical facilities failed on Wednesday at their respective meetings, with only 46% of investors backing the Chevron proposal and 25% supporting Exxon’s. Exxon shareholders also rejected calls, which were backed by environmentalists, to split the roles of chairman and chief executive. (Politico)

Freeze refusal – The US Court of Appeals for the Ninth Circuit delivered a major blow to the energy industry Thursday, refusing to freeze a lower court’s decision to block a streamlined permit for Keystone XL and other pipelines. The Trump administration and energy industry players lost their bid to sideline the ruling, which bars the Army Corps of Engineers from using a fast-track water permitting approach for new oil and gas lines. Although the federal government and its corporate allies are challenging the original ruling from the US District Court for the District of Montana, the decision means the prohibition on streamlined permitting will remain in place during the appeal, delaying pipeline work across the country. (Bloomberg)

The company you keep – US utility Southern Company on Wednesday announced a net zero GHG target by 2050 across its entire operations, adding that it now expects to achieve its existing goal of a 50% reduction from 2007 levels by 2030, and possibly as soon as 2025. Southern Company, which owns electric utilities and natural gas operations across the Southeast US, said its net zero approach will include pursuing technological solutions such as direct air capture as well as natural methods like afforestation. However, the company has not yet released specifics on near-term changes to its ongoing resource plans that could help accelerate its decarbonisation strategy, leaving shareholder groups waiting for more details on how it will adjust plans for gas-fired generation over the coming decades. (Greentech Media)

German quarter – Lower demand, especially in EU ETS-covered industries, amid a slowing economy, warmer weather, and the first effects of the coronavirus crisis have led to a 6.8% decrease in German energy use in Q1 2020, said energy market research group AG Energiebilanzen (AGEB). The group expects Q1 energy-related CO2 emissions to have dropped by almost 11% year-on-year compared to the first quarter 2019, as hard coal power fell 22%, lignite dropped 30%, and gas-fired output dipped 5.5%, all while renewables rose 6%. (Clean Energy Wire)

Chilling on coal – Enel will speed up the closure of its last coal plant in Chile, saying it will become the first power company to ditch the fossil fuel in the South American nation, the Italian utility announced Thursday. Enel said the last two units of its Bocamina coal-fired plant would shut down by May 2022, well ahead of a previous deadline of 2040. At the same time, the company said it would complete the roll out of about 2 GW of renewable energy capacity in the country by 2022. (Reuters)

A few more – In China, Guangdong’s provincial offset programme is up and running again after being shut down for a period from last year as the government was sorting out some methodology issues. This week, the regulator issued another 110,000 so-called PHCERs to three local forestry projects, according to an announcement by the Guangzhou carbon exchange. The scheme’s yield continues to be relatively modest with fewer than 3 mln offsets issued over the past three years, but the credits regularly fetch significantly higher prices in the local market than ETS allowances as they boast some co-benefits.

And finally… Ten years gone – Four more years of Donald Trump as president of the US could delay global emissions cuts by 10 years, according to a new study. The research, published in Environmental Science and Policy, said that a climate sceptic in the White House also means other countries would have to pick up the slack to stay within the Paris Agreement’s 2C limit, adding a percentage point of reductions to each of their emissions pledges for every Trump term. However, scientists not involved in the study said that simplistic assumptions in the modelling exclude crucial factors, such as “messy and unpredictable” domestic politics and the emissions cuts being made by individual US states. (Carbon Brief)

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