CP Daily: Tuesday August 18, 2020

Published 23:34 on August 18, 2020  /  Last updated at 23:34 on August 18, 2020  /  Newsletter  /  No Comments

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

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TOP STORY

UK climate ministry favours carbon price-linked support to fund CCUS

The UK’s climate ministry favours supporting domestic carbon capture projects with a contracts-for-difference (CfD) model tied to its post-Brexit carbon pricing system, it said in a report this week.

AMERICAS

TCI may wait until after November elections to release final ETS framework

The Transportation and Climate Initiative’s (TCI) final Memorandum of Understanding for a proposed fuel sector carbon market may not be released until after the November elections, numerous sources told Carbon Pulse.

Undersubscribed WCI auctions could boost California carbon prices in 2021 -analysts

Upcoming WCI auctions failing to sell out could push California Carbon Allowance (CCA) values upward next year as the outcome may tighten the supply-demand balance in the linked cap-and-trade market, analysts said in a report published Tuesday.

EMEA

EU Market: EUAs maintain upward drive towards €27 after stronger auction

EUAs continued to edge higher on Tuesday, with a stronger auction and buoyant energy complex helping to consolidate the previous session’s gains.

First batch of CERs cancelled against South African carbon tax

The first batch of CERs have been cancelled for use towards South Africa’s new carbon tax, UN data shows.

INTERNATIONAL

Verra offers proposal for tagging Paris-eligible carbon credits

Offset standard developer and manager Verra has released a public consultation regarding how to identify VCS credits that will be eligible for trade under the Paris Agreement, becoming the latest organisation to seek a differentiation based on whether or not host countries make corresponding adjustments to their emission inventories.

ASIA PACIFIC

Hubei CO2 permit number swells as more firms brought in

China’s Hubei province will issue 270 million CO2 allowances to its ETS participants for 2019, according to its newly released allocation plan, marking a significant jump from previous years as more than 30 new emitters are being brought into the scheme.

PODCAST

CARBON PULSE CONVERSATIONS 016: EDF and WWF on CORSIA

In the latest edition of our Carbon Pulse Conversations podcast, we speak with Environmental Defense Fund (EDF) International Counsel Annie Petsonk and WWF Director of Carbon Market Governance and Aviation Brad Schallert about recent developments regarding UN body ICAO’s global aviation offsetting mechanism CORSIA.

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BITE-SIZED UPDATES FROM AROUND THE WORLD

Social zero – An alternative to the social cost of carbon called the “near-term to net-zero” (NT2NZ) approach has been developed to estimate the CO2 prices needed in the near term for consistency with a net-zero emissions target, according to a study published in the journal Nature Climate Change. For a US 2050 net-zero target, a NT2NZ CO2 price would be $34-64 per tonne in 2025 and $77-124 per tonnes in 2030. These results are most influenced by assumptions about complementary policies and oil prices. To demonstrate how it works: first, you select the year in which you’re aiming to hit net-zero emissions. Next, you select the pathway you want emissions to follow between now and then. Perhaps you think you can make steady progress starting immediately, so you choose a linear downward slope. But if you think you’re going to need to invest in solutions that aren’t quite ready to take off yet, you might aim for initial slow progress followed by a rapid drop. Then, you simply plug this scenario into some economic models and solve for the carbon price that makes it happen. (Arstechnica)

Carbon weighting – Finance firm MSCI has published two climate change indexes that allow investors in Chinese stocks to lean toward companies with lower carbon emissions. According to Reuters, the move represents MSCI’s efforts to promote ESG standards in China, where the government seeks a difficult balance between reducing pollution and sustaining growth in a coronavirus-hit economy. The newly created climate change indexes were based on the MSCI China Index and the MSCI China A Index. Compared with their parent indexes, the new indexes allocate more weighting to less polluting companies. For example, internet giant Tencent enjoys an additional weight of 1.61% in the MSCI China Climate Change Index, while LONGi Green Energy Technology is awarded an extra weight of 1.4% in the China A Climate Change Index.

Second best – Creating a carbon border adjustment mechanism would not work as well as extending the EU ETS to reduce global emissions and to further integrate energy exporting countries into the European power market because it would not reduce emissions. That’s according to Zsuzsanna Pato of the NGO Regulatory Assistance Project and colleagues at the Regional Center for Energy Policy Analysis in an opinion piece comparing the two options for the power sectors in the West Balkan countries, as well as Ukraine, Belarus, Moldova, and Turkey. (EurActiv)

Changing tack – BHP will shrink its coal business and consider selling older oil and gas assets as the world’s biggest mining group prepares for a lower-carbon future. After months of speculation and pressure from investors, the Anglo-Australian company on Tuesday confirmed plans to exit thermal coal and to dispose of its 80% share in a joint venture with Mitsui that owns two lower-quality coking coal mines in Queensland. Thermal coal is used to generate electricity in power stations while coking, or “metallurgical” coal and iron ore are key ingredients in steelmaking. BHP also said it would look to sell mature oil and gas fields, starting with its operations in Bass Strait, which supply gas to eastern Australia. These assets accounted for about one-third of the earnings generated by BHP’s oil and gas division last year. (FT)

Bonding over green – Credit-rating agency Moody’s said global green bond issuance was modest in the second quarter of this year, hitting $47.8 bln. Moody’s said it expected those bonds, which fund environmental and zero-carbon capital projects, to “rebound gradually” in the second half of 2020, clocking in between $175 bln and $225 bln, Politico reports. Sustainable bonds, a broader category that also includes green bonds, hit a quarterly record of $99.9 bln in Q2 of this year.

Need not apply – The UK government will not accept sponsorship from fossil fuel companies for next year’s UN climate summit in Glasgow, Climate Home reports. Like in previous years, the UK hosts of the two-week event are seeking corporate sponsors to shoulder some of the cost, initially estimated at £250 mln. But unlike in previous years, which have seen large polluters use such deals to bolster their green credentials, sponsors of COP26 are expected to have a credible plan to cut their emissions to net zero by 2050, the official website states. Climate Home said it is understood that oil and gas majors will not be considered.

Last seven – Angola has ratified the Paris Agreement, leaving just seven nations to formally endorse the 2015 accord. Angola is heavily dependent on oil exports, and oil production and supporting activities contribute about 50% of its GDP, according to OPEC. Data for 2019 shows petroleum products accounted for more than 95% of its exports. Until the recent announcement, Angola was one of four OPEC countries not to have ratified the Paris Agreement. Iran, Iraq, and Libya are among seven countries yet to formally endorse the deal. Together, they account for around 4% of global emissions. (Climate Home)

Green exit? – Canadian Finance Minister Bill Morneau’s resignation Monday night may open an opportunity for his successor to embrace a green and just recovery as a cornerstone of the federal government’s COVID-19 recovery strategy, leading climate and energy strategists told The Energy Mix. Morneau quit during a meeting yesterday with Prime Minister Justin Trudeau, after speculation swirled that the two had disagreed on the importance of a green recovery and the level of financial support Ottawa should extend to Canadians in the initial phase of the COVID-19 pandemic. Deputy Prime Minister Chrystia Freeland was sworn in as Canada’s new finance minister on Tuesday, while Morneau will seek to lead the Paris-based OECD. Trudeau also on Tuesday received approval to prorogue Parliament until a throne speech on Sep. 23. The speech will lay out the government’s long-term plan to recover from the global pandemic, Trudeau said. He added it will also provide an opportunity for a vote of confidence in the House as his minority Liberal government reels from an ethics controversy involving the WE Charity. (CBC)

Final fuel five – California on Monday finalised fuel efficiency agreements with five automakers in an attempt to undercut President Donald Trump administration’s rollback of Obama-era standards. As part of the deal announced last year, BMW, Ford, Honda, Volkswagen, and Volvo agreed to annual fuel economy improvements that hew more closely to those required under the Obama administration, compared with the less stringent ones just finalised. The Trump administration in March announced it would require automakers to produce a fleet averaging 40 mpg by 2026 instead of the previous requirement under Obama to reach 55 mpg by 2025. The new agreements finalised by California regulator ARB give automakers until 2026 to produce fleets averaging 51 mpg. (The Hill)

And finally… Melting in the valley of death – What could be the highest temperature ever reliably recorded on Earth – 130F (54.4C) – may have been reached in Death Valley National Park, California. The recording is being verified by the US National Weather Service. It comes amid a heatwave on the US’s west coast, where temperatures are forecast to rise further this week. The scorching conditions have led to two days of blackouts in California, after a power plant malfunctioned on Saturday. (BBC)

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