CP Daily: Friday October 9, 2020

Published 23:04 on October 9, 2020  /  Last updated at 01:24 on October 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

UK finance minister favours domestic carbon tax over trading -media

British finance minister Rishi Sunak is leaning towards implementing a UK-wide carbon tax when the country’s Brexit transition period finishes at the end of the year, The Times reported on Friday, citing unnamed officials.

EMEA

Access to Britain’s EU ETS trading accounts, Kyoto carbon credit holdings to be cut off at year’s end -UK govt

UK-based EU ETS trading accounts will be cut off from the end of this year due to Brexit, the British government confirmed this week, while any holders of Kyoto Protocol credits will lose access to those units for several months.

EU Market: EUAs sink to 7-week low as supply, COVID weigh

EUAs fell to a seven-week low on Friday as heavy auction supply continued to weigh and worries about new government coronavirus clampdowns hit the wider European energy complex.

EU to support Western Balkans’ early ETS accession and exit from coal

The European Commission will consider including six Western Balkan nations in the EU ETS before the countries formally join the 27-nation bloc, according to a new investment agenda for the EU accession candidates.

UK consultancy Redshaw Advisors hires offset project expert

UK carbon market consultancy Redshaw Advisors has hired a seasoned offset project developer, aiming to bolster its offering in voluntary offsetting and corporate climate strategies.

AMERICAS

Industrial manufacturers seek to nullify Virginia’s RGGI regulation

A business group is challenging Virginia’s finalised cap-and-trade regulation as it claims the state’s Department of Environmental Quality (DEQ) did not follow correct procedure when adopting changes earlier this year.

Numerous factors led to California’s August blackouts, report finds

A confluence of factors in mid-August led the California grid operator to issuing rolling blackouts to cope with rising electricity demand amid a heat wave, with resource planning for clean energy contributing, a preliminary report found.

Financial entities’ CCA length jumps by highest amount since early February

Speculators increased their net California Carbon Allowance (CCA) length by the largest amount since early February over the past week, as compliance entities reduced their allowance holdings, according to US Commodity Futures Trading Commission (CFTC) data published Friday.

Nodal Exchange to offer first-ever physically-delivered RINs contracts

US-based Nodal Exchange next month plans to list the first-ever physically-delivered Renewable Identification Number (RINs) futures and options contracts for the Renewable Fuel Standard (RFS), as it grows its suite of environmental products, bourse partner IncubEx announced Friday.

ASIA PACIFIC

Govt agency seeks to temper Australia’s Safeguard Mechanism crediting plans

Australia should impose clear restrictions if it moves ahead with crediting Safeguard Mechanism entities for emissions reductions, the Climate Change Authority (CCA) said Friday, aiming not to harm the offset market.

Australia Market Roundup: Issuance slows, CDM deadlock could shift voluntary dynamics

Australian carbon credit issuances slowed to just over 250,000 units this week, while a UN impasse over the future of the CDM could have major impacts on Australia’s voluntary emissions market.

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BITE-SIZED UPDATES FROM AROUND THE WORLD

Hardwired – British and EU negotiators have moved closer to enshrining the Paris Agreement in the new Brexit free trade deal, the Telegraph reports. Either side can cancel the deal if the other reneges on their 2015 promise to help limit global temperatures to 1.5C, under the terms of a potential breakthrough in the long-running negotiations. Britain had previously called for a climate agreement separate from the free trade deal that would affirm support for Paris, but it has since reversed that position. There is disagreement over whether the Paris commitment should be enshrined in the “provisions” of the deal, the UK’s latest position, or the agreement’s “essential elements”, where it would sit alongside rules forbidding crimes against humanity. If put in the essential elements, the whole trade deal could be suspended as punishment if either side leaves the UN accord. If the commitment is in the provisions, the punishment would be the triggering of dispute resolution procedures. EU sources claimed UK negotiators were preparing to give in to their demands for Paris to be in the essential elements chapter of the deal. “We don’t expect this to be a problem to resolve,” an EU official said. UK sources said there were still differences over how to reflect the climate commitment. EU diplomats accused the UK of being reluctant to enshrine their UN climate commitments into the trade deal before the details of the mooted compromise emerged.

Long-term banking – HSBC will target net zero carbon emissions across its entire customer base by 2050 at the latest, and provide between $750 billion and $1 trillion in financing to help clients make the transition, Chief Executive Noel Quinn told Reuters. The pledge is the strongest statement to date on climate change by Europe’s biggest bank, although it met with criticism from some environmental groups for not taking more immediate action to curb its fossil fuel financing. (Reuters)

Up and atom – Poland’s government has agreed on a nuclear energy strategy, the climate ministry said on Friday, calling the event a ‘milestone’ in the country’s aim for a stable, zero-emissions source of energy.  The coal-reliant country wants to build 6-9 GW of capacity in nuclear energy, with plans to build its first nuclear power plant by 2033, though it has not yet worked out a financing scheme. Warsaw had hoped the US would help it finance and provide technology for the project, but no binding commitments have yet been made. The updated plan now assumes that the technology will be selected in 2021, and the location in 2022 when contracts with the technology supplier and the contractor are also expected to be signed. Construction of the first plant is planned to start in 2026. As well, Polish state-run utilities will next year start separating coal assets from the rest of their business, which should make it easier to raise financing for green projects as banks shun fossil fuels, a deputy assets minister told Reuters. Separately, Romania and the US on Friday signed an agreement for the refurbishment and building of existing and new units at the Cernavoda nuclear power station. (Reuters)

Concrete interest – Swiss-based building materials company Holcim is registering rising demand for climate-neutral concrete. “We register big interest from many companies in climate-neutral construction who want to include this type of concrete in their call for tenders,” Thorsten Hahn, head of the company’s operations in Germany, told Hamburger Abendblatt. He said his company used a new formula to reduce CO2 emissions from concrete from 300 kg to 200 kg, and offsetting the remainder through wetland projects in Germany. Hahn said it would even be possible to cut emissions further, adding that current norms and regulations don’t allow this yet. The resulting concrete costs 20-30% more than conventional concrete. Hahn said the share of this climate-neutral concrete of total sales was still small, adding this was not surprising given that his company has only been offering the product for a few months. The plant is part of a pilot project to use hydrogen made with renewables, and to capture unavoidable emissions in cement-making to be used elsewhere. (Clean Energy Wire)

The Big Smoke cleans up – London’s financial district is planning to eliminate its CO2 emissions by 2040, investing £68 mln to tackle climate change and create 800 jobs over the next six years. The Square Mile will see more streets dedicated to walking and cycling, new parks, timed street closures, and the installation of flood-resistant road surfaces. The area is responsible for annual emissions of 1.6 Mt of CO2e, the City Corporation said, which is more than the yearly emissions of Barbados. (Bloomberg Quint)

Major unease – While European oil and gas majors are diversifying their portfolios to include more renewables, setting stricter climate targets and adjusting their oil price predictions, at least half of their operations won’t be competitive in a 1.6C world, a new report by Carbon Tracker claims.  Up to 90% of the ‘business-as-usual’ project portfolios of ExxonMobil, Equinor, and ConocoPhillips were judged incompatible with a 1.6C pathway, both in that they would push warming past this level and would not be supported by key investors. Chevron also fared poorly and failed to disclose its oil price forecasts. At the top of the table are Eni, BP and Repsol – businesses with net zero targets and oil price expectations at $60-68 per barrel through to 2050. (Edie)

Toothless –leaked version of the EU-Mercosur treaty negotiation text, published by Greenpeace Germany, has no provisions to ensure the Paris Agreement is enforced, leaving the door open to further deforestation in the Amazon, campaigners say. While the EU’s draft trade deal with South American nations mentions Paris, calling for its rapid implementation, there are no provisions related to enforcement or repercussions if the parties fail to implement it, Greenpeace said. Though parts of the EU-Mercosur trade agreement have been available since July 2019, the Association Agreement text has not been made public until now. While Germany is keen to get the treaty ratified quickly, France has insisted on inserting provisions to ensure the trade deal does not lead to further deforestation. (Euractiv)

Tax incentives – Even a $40/tonne CO2 tax in the US publicly supported by ExxonMobil, translating to around 35 cents per gallon of gasoline at the pump, is unlikely to impact the company’s oil business, a study has found. A number of energy companies, including ExxonMobil, have publicly supported the Climate Leadership Council’s carbon tax plan that proposes a $40 tax from 2021, rising at 5% above inflation per year. But if coal gets priced out of the electricity system once and for all under the tax, the natural gas business could well be re-energised, increasing gas prices and profits. And even with a $40 tax, the future of the internal combustion engine will depend on other factors, many linked precisely to the kinds of regulations that might be traded away in order to pass a tax. (Bloomberg)

Premium pollution – In its first analysis of the carbon impact of premium (first and business) class seating, the International Council for Clean Transportation estimates nearly 20% of emissions from commercial aviation were attributable to premium passengers in 2019, higher than the 15% coming from air freight transport. Premium seating was estimated to be up to 4.3 times more CO2 intensive than economy seating. The ICCT study for the years 2013, 2018, and 2019 also found global commercial air traffic increased nearly four times faster than fuel efficiency improvement between 2013 and 2019, with passenger aircraft CO2 emissions increasing by a third during the period. The three largest aviation markets – the US, the EU, and China – were together responsible for 55% of CO2 emissions in 2019. (GreenAir Online)

EV dreaming – California’s draft 2020 mobile source strategy will rely heavily on adoption of electric vehicles to reach long-term climate goals, with industry representatives, local air advisors and others saying it lacks detailed regulatory measures. The proposal focuses on zero-emissions technology penetrating across various vehicle fleets, with Governor Gavin Newsom’s (D) ban on gas-powered light-duty vehicles by 2035 accelerating that adoption.

And finally… Money loser – US Midcontinent Independent System Operator (MISO) coal-fired power plants lost an estimated $492 mln from 2016-2019, according to independent market monitor Potomac Economics. The report released Thursday showed generators lost $314 mln over the 2016-2018 period and additional $178 mln in 2019. The rising losses in 2019 were the result of stagnating coal prices and declining energy prices. Most of those losses in 2019 were from integrated utilities who can recover losses in pay rates. Union of Concerned Scientists’ Senior Energy Analyst Joe Daniel told Utility Dive a majority of the uneconomic operations came from “a handful of really bad actors.”

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