CP Daily: Friday August 7, 2020

Published 22:58 on August 7, 2020  /  Last updated at 23:18 on August 10, 2020  /  Newsletter  /  No Comments

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

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TOP STORY

Big investors flag potential of carbon units to help green their portfolios

Carbon market allowances can be bought by financial institutions to help align their portfolios with the Paris Agreement, investors managing more than $16 trillion said this week in an endorsement that further boosts prospects for carbon as an asset class.

EMEA

EU Market: EUAs rebound from dip below €26 to eke out 0.5% weekly rise

EUAs briefly dropped below €26 early on Friday, but climbed back into positive territory after the auction and US monthly jobs figures to scrape a meagre gain on the week.

EU net zero goal brings competitiveness challenges, need for new incentives -study

The EU will need to overcome major competitiveness concerns and devise additional incentives beyond the EU ETS to help meet its 2050 net zero emissions goal, according to a recent study.

AMERICAS

Another California speculator opens account in RGGI ETS

A California-based speculator registered in the RGGI CO2 Allowance Tracking System (COATS) this week, becoming the eighth financial participant to do so this year, data shows.

Transmission line delays added bullish pressure to Nova Scotia ETS auction -trader

A delayed hydroelectric transmission line may have created tighter fundamentals in the Nova Scotia cap-and-trade market and led to the programme’s first auction settling 20% above the auction price floor, according a trader.

WCI regulated parties increase allowance holdings to highest level since early June

Compliance entities grew their position by the largest amount since late May as speculators made slight reductions to their net length in the WCI cap-and-trade scheme, according to US Commodity Futures Trading Commission (CFTC) data published Friday.

ASIA PACIFIC

New Zealand lukewarm on Australian carbon market links

New Zealand would need a number of preconditions met before linking its emissions trading scheme to Australia’s offset market or any other carbon trading system, Climate Change Minister James Shaw said Friday.

Australian regulator clears Shell carbon plan for new offshore gas field

Australia’s offshore energy regulator has approved Shell’s Crux gas project that will emit up to 9 MtCO2e a year over two decades, saying it is “reasonably satisfied” that the oil major is committed to a global low-carbon transition.

CN Markets: Pilot market data for week ending Aug. 7, 2020

Closing prices, ranges and volumes for China’s regional pilot carbon markets this week.

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BITE-SIZED UPDATES FROM AROUND THE WORLD

No cash, no control – A group of 11 Chinese facilities that earned millions of UN-issued CERs for cutting N2O emissions from nitric and adipic acid production until their credits were banned from the EU ETS in 2013 are likely no longer reducing GHGs, meaning those facilities will combine to emit around 125 MtCO2e in 2020, according to Inside Climate News. That development has been expected as there are no domestic regulations limiting those emissions.  The World Resources Institute last year urged China to include those emissions, as well as other non-CO2 output, in its national ETS as an easy and cheap way to abate, but Beijing has not heeded that advice. Meanwhile, producers of HFC-23 – the other Chinese CDM project type raking in huge amounts of CERs in pre-2013 era – have been receiving government subsidies to control their GHG output, though those subsidies are due to expire after this year.

Staying the course – Oil major BP is preparing to sell a large chunk of its oil and gas assets even if crude prices bounce back from the COVID-19 crash because it wants to invest more in renewable energy, three sources familiar with BP’s thinking said. The strategy was discussed at a BP executives’ meeting in July, the sources said, soon after the firm lowered its long-term oil price forecast to $55/barrel, meaning that $17.5 bln worth of its assets are no longer economically viable. But even if crude prices bounce back to $65-70/barrel, BP is unlikely to put those assets back into its exploration plans and would instead use the better market conditions as an opportunity to sell them, the sources said. (Reuters)

Underpaying yourself – The US Interior Department proposed a new rule on Friday that could potentially reduce royalties for the federal government from oil and gas drilling on public lands. The plan would index royalty payments to an average weekly benchmark for the commodities rather than the current policy of the highest weekly benchmark price. Supporters say the proposal will unlock additional energy potential and lower costs, while critics believe it would underpay taxpayers for public lands. (The Hill)

Upward trend – North American renewable power prices may rise in the coming months and years after largely declining over the past several years, according to LevelTen Energy’s second quarter PPA price index. The report found solar prices rose slightly year-on-year in Q2 2020, with wind prices increasing 13.5% over the same period in 2019. The wind uptick were mostly seen in California Independent System Operator and PJM grid regions. The report also found the COVID-19 pandemic had little impact on renewable power prices. (Utility Dive)

Supercomputing – GE will use one of the world’s fastest supercomputers to help advance offshore wind development in the US. The company plans to use IBM’s Summit supercomputer to simulate air currents to help influence design, control and operations of future wind turbines. That research may help the computer unlock available wind potential on the US’ east coast. (The Verge)

Licence revoked – South Africa is tightening environmental demands for new coal-fired power plants, after what campaigners called a ‘landmark’ ruling that licences for water use should consider the risks of climate change. Global warming is projected to lead to increased droughts and stress on water supplies in South Africa, which generates about 90% of its electricity from coal, one of the highest rates in the world. The nation’s Water Tribunal in Pretoria upheld an appeal by environmental campaigners to scrap two water use licences granted in 2017 by the Department of Water Affairs and Sanitation to Saudi Arabia’s ACWA Power for the development of the 600MW Khanyisa coal-fired power station. (Climate Home News)

Central European droughts – The risk of extreme droughts in Central Europe may increase sevenfold as result of climate change, the Guardian reports. The region suffered its most damaging droughts on record in 2018 and 2019, in two of the three warmest summer periods ever recorded in Europe. Researchers from Germany’s UFZ-Helmholtz Centre for Environmental Research, however, were able to forecast that moderate GHG emission reductions from their current levels would halve the likelihood of such extreme droughts and shrink the affected land area by nearly 40%. “The findings indicate that introducing measures to reduce future carbon emissions may lower the risk of more frequent consecutive drought events across Europe,” Rohini Kumar, one of the authors of the study, said. (The Guardian)

Delayed carbon fee – Senator Richard Durbin (D) introduced the America’s Clean Future Fund Act on Friday – a bill that would implement a delayed $25 per tonne carbon fee on upstream operations and which aims at easing the burden on communities and individuals as they transition away from carbon-intensive industries. The carbon fee mechanism would be delayed until the economic turmoil due to the current pandemic ends, and the fee would rise $10 per year above the Consumer Price Index. The bill would also provide grants to state and local governments for transition assistance and form an independent federal agency to finance and support job creation in clean energy sector.

Peat peril –  Peatlands are a natural carbon sink, and despite covering less than 3% of the Earth’s land surface they are estimated to contain 20% of all the carbon stored in soils worldwide. Research has shown that the drainage caused by building and maintaining wind turbines can affect the whole peatland, not just the area next to the farm and its tracks. One track in the Cantabrian Mountains separating the land into two separate peatlands is draining the bog and likely releasing carbon as the peat dries and breaks down. This release can be so significant that the climate benefit of generating clean energy is likely to be neutralised. In the UK, the CCC has also backed analysis saying peatland emissions could be cancelling out all carbon reduction achieved through new and existing forests. (The Conversation; BBC)

And finally…Emissions dip or blip? – The unprecedented fall in GHGs from lockdowns during the coronavirus pandemic will do “nothing” to slow climate change without a lasting switch from fossil fuels, an international team of researchers said on Friday. Global emissions from the burning of coal, oil, and gas could fall up to 8% in 2020 after governments moved to confine billions of people to their homes in a bid to slow the spread of COVID-19. But absent a systemic change in how the world powers and feeds itself, experts warned that the emissions saved during lockdown would be essentially meaningless. (AFP)

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