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The looming entry into force of New Zealand’s ETS reforms could spur new products and potentially draw new participants into the 12-year old carbon market, a conference heard Thursday.
Here is a summary of Carbon Pulse’s free side events at this week’s IETA-ICAP Carbon Markets Virtual Pavilion, along with links to the audio recordings. (Video recordings not available to due to file size considerations)
British businesses are unlikely to get clarity on the government’s post-Brexit carbon pricing plans until wider negotiations around a UK-EU trade deal are completed, the minister in charge of the brief said Thursday.
The rules that require EU nations to spend a share of the cash raised from auctioning CO2 allowances on climate action could be part of the revision of the upcoming ETS Directive next year, the European Commission official in charge of carbon markets said Thursday.
Belgium’s environment minister said on Thursday she will not present a proposal for a domestic carbon tax, with the measure meeting opposition among the federal government’s coalition partners when floated earlier this week.
EUAs dropped below €26 on Thursday to prolong this week’s fall-back, as rising coronavirus infection rates tested wider market optimism about vaccine prospects.
Germany-based utility RWE saw its ETS-covered thermal generation fall 26% year-on-year over the first nine months of 2020, the company said on Thursday, which along with an easing in hedging represents a bearish signal for EUAs.
“Trading carbon is going to be for real, and the demand for it is going to grow. So the question is how do we bring this together in one place,” said Goldman Sachs International CEO Richard Gnodde.
California’s WCI-linked cap-and-trade programme must go further to drive emissions reductions, and state regulator ARB will discuss potential options for doing so at its board meeting this month, agency head Mary Nichols said Thursday.
RGGI allowance (RGA) prices inched to a new four-year high this week on thin secondary market volume, while California Carbon Allowance (CCA) values rose by double digits on optimism about a COVID-19 vaccine and a federal administration under President-elect Joe Biden.
California’s 2021 carbon market floor price aligned with traders’ expectations on Thursday as federal data continued to show US inflation improving after the onset of the COVID-19 pandemic.
California Low Carbon Fuel Standard (LCFS) credits reached a two-month high on Thursday, while the Oregon Clean Fuels Program (OCFP) posted a small surplus during the second quarter of the year as gasoline usage plummeted during the coronavirus pandemic.
BITE-SIZED UPDATES FROM AROUND THE WORLD
Sticky coal – Almost half the companies involved in the thermal coal industry are expected to defy global climate commitments by deepening their coal interests in the coming years, according to a report led by NGO Urgewald, which revealed that almost 1,000 companies should be blacklisted by investors. Almost 440 of these companies plan to build coal plants, mines, or other infrastructure in the years ahead, while only 25 companies have set a date to phase out their coal use. (Guardian)
MPGA – French President Emmanuel Macron on Thursday welcomed the prospect of US President-elect Joe Biden rejoining the Paris Agreement, saying countries now had a chance to “make our planet great again”. Macron said having the US rejoin the pact, after officially exiting on Nov. 4, would vindicate faith in the agreement aimed at preventing catastrophic climate change and signed by nearly 200 countries. “It is proof that we had to stand firm against all the headwinds,” Macron said during an online summit hosted by the French government. Climate change was also on the agenda in calls Biden held Thursday with the leaders of Japan, South Korea, and Australia, according to summaries provided by his aides. However, in Brazil President Jair Bolsonaro this week criticised Biden’s call for the Latin American country to protect the rainforest with foreign help, or face unspecified “economic consequences”. (Reuters)
Bank limits – UN chief Antonio Guterres said he was “encouraged” by a joint declaration on sustainable finance by the world’s development banks, but that more was needed. The world’s 450 public development banks agreed on Wednesday to align their lending with the aims of the Paris climate accord. The banks’ declaration stopped short of a firm commitment to phase out fossil fuel financing, even if some, including a group of European banks, have pledged to do just that. (Reuters)
Green bank gets green light – The European Investment Bank’s board of directors on Wednesday approved the institution’s roadmap to become the EU’s climate bank. The EIB has committed to spend €1 trillion in climate action and sustainability investments by 2030, align all its financing activities with the Paris Agreement, and cease funding fossil fuel infrastructure and projects by the end of 2022, one year later than was initially proposed.
Refuel, but sustainably – The European Commission will soon unveil its ‘ReFuelEU’ initiative, aimed at ratcheting up demand for sustainable fuel used in aviation (SAFs), Euractiv reports. The scheme is eagerly awaited as cheaper access to greener fuels could help reduce aviation GHG emissions. SAFs have been touted as a ready-to-use, drop-in alternative, but according to the IEA, their uptake is constrained by higher prices compared with fossil fuels. Under the agency’s sustainable development scenario, low-carbon fuels need to supply 9% of aviation’s demand by 2030. However, in 2018 global use for SAFs topped out at just 0.01% and 0.05% in the EU alone, illustrating the immense challenge the sector faces.
It’s a gas – Germany’s gas demand is set to increase significantly from 90 billion cubic metres (Bcm) today to 110 Bcm by 2034 as the country exits both nuclear and coal, energy researcher and consultancy Rystad Energy said. Increasing consumption would be necessary as more gas-fired power generation capacity will be needed to meet demand and to offset the intermittency of renewable sources, it said. The company’s analysis showed that importing more Russian gas through the contentious and unfinished Nord Stream 2 pipeline under the Baltic Sea was the most reliable and cheapest option versus US LNG cargoes or other intra-Europe pipe routes. In addition, Rystad said that domestic LNG terminals would allow Germany to reduce dependency on a dominant source of supply, and gas buyers in the country could better optimise their portfolios. But Environmental Action Germany DUH said that the costs of getting such new LNG terminals up and running are much higher than widely believed. (Clean Energy Wire)
Keep on (reimbursing) truckin’ – The German government plans to reimburse freight forwarders using heavy lorries for the upcoming fuel price increases in Germany under the country’s new CO2 price, Reuters reports. The price, which is to be implemented as a key instrument to achieve Germany’s climate targets, will raise diesel prices by about 8 cents per litre in 2021 and increase thereafter. Ministries responsible for transport and environment say the fuel price increase should be offset against the planned new lorry toll from 2023. The exemption is meant to protect German freight forwarders competing in international markets from a double burden of the toll based on CO2 emissions and the CO2 price on fuel. According to estimates from industry circles, this should save freight forwarders around €400 million a year. (Clean Energy Wire)
Another day, another big one – AustralianSuper, the country’s largest superannuation fund, on Thursday said it would align its investment portfolio with a net zero emissions target by 2050. That came as the fund revealed it recently offloaded a major stake in coal firm Whitehaven, with passive coal investments up for review next, reports the Sydney Morning Herald.
Hey big spender – Australian iron ore mining firm Fortescue has revealed plans to build more than 235 GW worth of renewable energy, rivalling the country’s biggest oil suppliers in terms of energy produced, according to RenewEconomy. That’s more than five times the current capacity of Australia’s main grid, and more than the total energy output of Chevron and Total. Most of the capacity will be in wind and solar.
Head west – Oil major Shell on Thursday extended its Drive Carbon Neutral programme to Canada, allowing customers to pay two cents per litre to help it buy carbon offsets. When customers opt-in via the Shell EasyPay app, the company will calculate the amount of CO2 emissions that will be produced by the fuel they purchase and will buy the equivalent number of credits from the Nature Conservancy of Canada’s Darkwoods Forest Carbon Project in British Columbia. Shell also announced it will provide funding for a BC Interior reforestation project in partnership with Central Chilcotin Rehabilitation, a Tsilhqot’in forestry company, to plant 840,000 native trees. Shell Canada president Michael Crothers said funding for the project has been approved even though the current regulatory system doesn’t allow the company to obtain carbon offsets from it, although the hope is that could change in the future. (CBC)
Need for full speed – A coalition of more than 130 environmental, progressive, and Wall Street watchdog organisations laid out their criteria to determine whether the incoming Biden administration financial regulators and Treasury Department appointments are committed to “shifting at full speed into economic principles and practices which completely support renewable energy and fully divest from the fossil fuel industries”. The letter from Stop The Money Pipeline, a coalition that includes Sierra Club and 350.org among others, comes as environmental groups hone in on how the financial sector funds fossil fuels and the risks climate change poses to the broader financial system. The coalition wants nominees to agree that financial companies should be required to commit to an emissions pathway that will keep average global temperatures from rising 1.5C above pre-industrial levels, and to publish their plan for achieving it. The group also wants nominees to support excluding fossil fuel companies from federal bond-buying programs, such as the one offered under the Federal Reserve’s pandemic relief effort this year. (Politico)
State mistake – Former chair of the US Federal Energy Regulatory Commission Neil Chatterjee on Wednesday acknowledged that excluding state voices from FERC’s carbon pricing conference this fall may have been a “mistake.” The commission was criticised for not including state regulators within wholesale markets on any of the panels at the conference, as well as for lacking gender and racial diversity. President Donald Trump demoted Chatterjee last week after he voiced openness for the grid regulator to consider state-led efforts to incorporate carbon pricing into wholesale power markets. (Utility Dive)
Portland price – Portland, Oregon is seeking a city council vote later this year that would allow the city to tax GHG emissions from large emitters such as hospitals, colleges, and manufacturers, according to an Oregonian report. According to people briefed on the proposal, the CO2 tax would generate $10 mln per year, but the rate per tonne of CO2e was not disclosed. If approved, it would mark the second time in three years that Portland has implemented a climate fee. Voters approved a retail surcharge two years ago that pays for clean energy projects and supports jobs in disadvantaged communities.
And finally… TMI for FTI – Washington DC-based FTI Consulting, coordinated, staffed, and operated oil and gas front groups that purported to show grassroots support for fossil fuels, an investigation by the New York Times revealed. These operations included efforts to undermine the national #ExxonKnew campaign, creating fake social media accounts to spy on and disrupt protesters, and even flying banners behind airplanes thanking oil rig workers. FTI also produced work for Main Street Investors, a group that described itself as representing ‘mom and pop’ investors but was founded by industry organisations including the National Association of Manufacturers. Through a wholly-owned subsidiary, FTI produced a report critical of policies that enable shareholders to influence companies’ policies on matters like climate and the environment. That report and related work puts FTI in direct conflict with one of its largest shareholders, the investment firm BlackRock. BlackRock won praise earlier this year when it said it would put environmental sustainability at the centre of its investment approach. On Tuesday, Blackrock’s founder and CEO Larry Fink called on the US to require corporate reporting of all risk related to climate change. (Climate Nexus)
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