CP Daily: Thursday August 6, 2020

Published 23:17 on August 6, 2020  /  Last updated at 23:17 on August 6, 2020  /  Newsletter  /  No Comments

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

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TOP STORY

South Korea ETS braces for impact from influx of international carbon credits

South Korean companies have cancelled nearly 800,000 UN-issued CERs from projects abroad over the past couple of weeks, with a view to having them re-issued as credits eligible in the already oversupplied domestic emissions trading scheme.

EMEA

Russia must clean up its industry amid EU border tax plans, says business group

Russia must take steps to clean up its big-emitting industry to avoid falling foul of the EU’s proposed carbon border adjustment mechanism (CBAM), a Russian business group has warned.

MSR has stabilised EU ETS during pandemic, but longer-term effectiveness a concern -study

The supply-regulating MSR has so far worked well to stabilise EU carbon prices during the pandemic, a study released this week shows, but the mechanism as it is currently calibrated may prove ineffective in dealing with longer-term demand shocks.

EU Market: EUAs hit two-week high above €27 amid industry pick-up, before reversing course

EUAs hit a two-week high above €27 on Thursday as improved industry data and bullish technical signals encouraged buying, before retracing those gains following a bearish auction and signs that recent market strength may be over-extended.

Lufthansa’s passenger capacity drops 95% in Q2 2020, as airlines reel from COVID

Airline Lufthansa has reported a 95% passenger capacity collapse in Q2 amid lockdown restrictions to contain the pandemic, with the company not expecting a full recovery from pre-COVID levels until 2024.

ASIA PACIFIC

China’s virus response raises concerns over climate role in 5-year plan -study

China’s response to the COVID-19 crisis has not been as carbon intensive as some had feared, but the backseat role given to environmental issues is raising concerns over the climate content of the forthcoming 14th five-year plan, according to a study published Thursday.

AMERICAS

Pennsylvania to participate in 2021 RGGI review, expects to be a net seller

Pennsylvania intends to be an active participant in the 2021 RGGI programme review as it aims to join in 2022, with the Keystone State expected to be a net seller in the power sector ETS, officials said Thursday.

Maine unanimously approves revised RGGI regulation

Maine finalised its post-2020 RGGI regulation on Thursday, leaving New York as the only power sector ETS member state left to advance the revised Model Rule.

NA Markets: RGGI allowances ease off highs while California prices slip ahead of Q3 auction

RGGI Allowances (RGA) dipped slightly on the secondary market this week as traders expressed wariness of future bullish support, while California Carbon Allowances (CCA) began to stagnate ahead of the August WCI auction.

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BITE-SIZED UPDATES FROM AROUND THE WORLD

Gassed up – After growing by more than 2% in 2019, global gas use is set to fall by around 4% in 2020 as the COVID pandemic reduces energy consumption across the global economies, according to the Global Gas Report 2020, published today by the International Gas Union (IGU), BloombergNEF (BNEF) and Snam. However, the resulting low gas prices, as well as clean air and climate policies, will promote further switching to gas from other more polluting energy sources, such as oil and coal. The report shows that medium-term growth will come from increasing cost-competitiveness and increased global access to gas. A particular growth opportunity exists in liquefied natural gas. LNG imports reached 482 billion cubic meters in 2019, up 13% from 2018, and while this figure is expected to fall by around 4.2% in 2020, it could rebound quickly to previous levels as soon as 2021, depending on the persistence and longevity of the pandemic.

Pit value plummets – Peabody Energy has written $1.4 bln off the value of the world’s largest coal mine, an acknowledgment of electricity generators’ shift towards natural gas and renewables.  The open-pit North Antelope Rochelle mine in Wyoming accounts for 12% of US production, and trains laden with its coal serve power plants across the country.  But cheap natural gas prices coupled with falling costs for renewable power and state-level clean energy mandates have accelerated the decline of coal-fired electricity. In the first six months of 2020, Peabody’s production in the Powder River Basin was down 18%. In the past decade, more than 100 US coal-fired plants were repurposed to burn gas, according to the EIA. (The Financial Times)

Off again, on again – A US federal appeals court ruled Wednesday the Dakota Access Pipeline can keep shipping oil while the court hears arguments over whether the Trump administration failed to conduct a proper environmental review of the project, Politico reports. The ruling reverses an order from a lower court finding that the pipeline would have to close by Aug. 5. However, the US Court of Appeals for the DC Circuit said it did not think the Army Corps of Engineers made a strong case that the district court had erred in an underlying ruling that it should complete an environmental review of the pipeline’s crossing over the Missouri River. The appeals court fasttracked the hearings by ordering the sides to wrap up briefing by Sept. 30, with oral arguments to follow in October or early November.

It’s all about that base – Presumptive Democratic nominee Joe Biden’s climate policy is finding support among voters in key swing states ahead of the November presidential election, according to a poll from think tank Data for Progress. The poll found voters in Arizona, Iowa, Maine and North Carolina are more likely to support candidates with bold climate action, with 41% of the voters in those battleground states believing Congress should make addressing climate change a priority. President Donald Trump has repealed numerous Obama-era climate policies, including exiting the Paris Agreement. Meanwhile, Biden has taken a stronger stance on climate issues.

Coal bounce  – Grid operator PJM may see coal-fired power rebound next year as a result of higher natural gas prices, according to S&P Global Platts Analytics. The analytics firm said rising gas prices could cause coal-fired generation to rise 22% year-on-year in the region. The 14-jurisdiction grid received 20% of its power from coal-fired sources, according to ISO data. PJM serves three existing RGGI member states. (Platts)

Deforestation defence – Brazil’s Environment Minister Ricardo Salles promised Wednesday to deliver results on slowing deforestation by the end of the year, fending off accusations of using his post to dismantle protections of the Amazon rainforest.  The country’s administration under President Jair Bolsonaro has been at pains recently to show a more aggressive stance on deforestation, particularly after international investment funds controlling $4 trillion in capital threatened to pull out of the country over the issue. Salles also repeated his criticism of wealthy countries that have dragged their feet on implementing emissions trading schemes set out in the Paris climate accord, which could be a lucrative market for Brazil. (AFP)

Inaugural investment – Scottish Widows has invested £2 bln of pension fund assets to become the inaugural investor in BlackRock’s authorised contractual scheme Climate Transition World Equity Fund. The initial investment reflects growing investor demand for asset allocations that incorporate an assessment of climate change-related risks and opportunities. The fund will use a data-driven investment approach to measure a company’s exposure and management to low-carbon transition risks and opportunities. (BusinessGreen)

Decarbonisation duo – UK-based CO2 capture and separation technology firm Carbon Clean Solutions Limited is partnering with the Marubeni Corporation, a major Japanese conglomerate to jointly support and develop CCUS projects, with projects in Europe set to start immediately. CCSL is investing in a “containerised” solution to achieve $30/t cost of CO2 capture by 2021, while Marubeni is targeting an increase in its “Green Revenue” from 700 bln yen to 1.3 trillion by 2023.

Planning out – Vietnam’s PM has approved an updated NDC for his country that increases its commitment from 8% to a 9% reduction in GHG emissions in 2030, compared to the BAU scenario. In absolute terms, Vietnam’s emissions are expected to more than double between 2010 and 2030, however. The 2030 target could be hiked up to 27% if the country receives international assistance to do so, according the environment ministry, which is responsible for implementing the plan from next year. Emissions from Vietnam’s energy sector have increased sharply as it has developed a number of coal power plants in recent years to meet the country’s burgeoning power demand, though the government is considering dropping around half the new facilities currently in the pipeline, according to domestic media reports.

Try harder – Amazon’s emissions increased 15% in 2019 despite efforts to reduce its carbon footprint.  The online retailer’s sustainability report released this summer revealed a sharp YoY rise in GHGs, though Trucost notes that it is outperforming its peers – including JD.com and Alibaba Group – when it comes to environmental disclosures.  Trucost gave Amazon a weighted environmental disclosure ratio of 72% for 2018, which is based on “Scope 1” data related to the company’s direct operations such as the fuel burned by Amazon’s delivery trucks.

And finally… We’re gonna need a bigger alphabet – The 2020 hurricane season is now expected to be the most active since at least the early 1980s, meteorologists at Colorado State University, a standard bearer for seasonal hurricane predictions, announced Wednesday. The revised estimates predict the 2020 season will see 24 named storms, including 12 total hurricanes and 5 major hurricanes. Each of those predictions are about double that for a normal season, and include storms that have already occurred. This year, which has already set numerous records for its early activity, still has about 90% of the official season ahead. And even if 2020 sees fewer storms than the new prediction — which is the most dire in CSU’s 37-year history — officials may still run out of letters with which to name storms and be forced to use the Greek alphabet for overflow since the letters Q, U, X, Y, and Z are not used. The only other time officials were forced to use the Greek alphabet was in 2005, which included five hurricanes (Dennis, Katrina, Rita, Stan, and Wilma) so destructive their names have been retired from future use. (Climate Nexus)

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