CP Daily: Monday November 16, 2020

Published 00:06 on November 17, 2020  /  Last updated at 00:10 on November 17, 2020  /  Newsletter  /  No Comments

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

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TOP STORY

PREVIEW: WCI participants see November carbon auction selling out under secondary market level

Traders anticipate the California-Quebec cap-and-trade auction on Tuesday will sell out after the last two consecutive sales went undersubscribed, with the current vintage price expected to settle at a discount to the secondary market.

AMERICAS

Quebec bans new sales of gas-powered vehicles by 2035, issues industrials free carbon allowances

The Quebec government on Monday announced that it will phase out the sale of new gasoline-powered vehicles on the same timeline as WCI partner California, as the province’s environment ministry handed out more than 4 mln additional V19 permits.

California should set carbon market caps in line with 2045 net zero target -IETA

California’s cap-and-trade programme should play a central role in the state reaching its carbon neutrality goal, with more stringent CO2 allowance budgets necessary to hit this long-term abatement target, business group IETA said in a report published Monday.

COVID-19, LCFS could influence future WCI supply-demand balance

California Carbon Allowance (CCA) values will rise off the WCI auction reserve price in the first half of the decade, with the state’s Low Carbon Fuel Standard (LCFS) and COVID-19 pandemic playing a critical role in the linked cap-and-trade programme’s future supply-demand balance, a conference heard Monday.

California regulated entities trim carbon allowance holdings before Q4 auction

Emitters slashed their California Carbon Allowance (CCA) position last week ahead of the Nov. 17 WCI auction and as prices increased on the secondary market, while speculators kept their holdings nearly unchanged, according to US Commodity Futures Trading Commission (CFTC) data published Monday.

RFS Market: RIN prices dive amid EPA chief comments, quota uncertainty

US biofuel credit (RIN) prices fell to a one-week low on Monday after EPA Administrator Andrew Wheeler suggested credit values were “out of control” and as market participants wait for details on next year’s Renewable Fuel Standard (RFS) biofuel quotas and pending compliance waiver applications.

EMEA

Global net zero commitments may render EU carbon border levy “less” necessary -Commission climate chief

Recent carbon neutrality and net zero pledges by some of the world’s most industrialised nations could render the EU’s proposed carbon border adjustment mechanism (CBAM) “less” necessary, the European Commission’s climate chief said Monday.

EU Market: EUAs leap to 6-week high on second batch of positive COVID jab results

EU carbon prices spiked to a six-week high on Monday on the second major announcement of positive COVID-19 vaccine results in the past week.

Swiss emissions trading registry, market to close for the holidays

Switzerland’s emissions trading registry will close for the holidays, effectively shutting down the country’s carbon market for almost a fortnight.

SHIPPING

Pacific Islands pin hopes on carbon pricing as ‘weak’ shipping emissions deal looms

Two Pacific Island nations urged the UN to advance carbon pricing plans for shipping on Monday, as nations were poised to endorse a global maritime deal that would allow the sector’s emissions to rise for another decade.

ASIA PACIFIC

NZ Market: NZUs extend record highs amid bullish momentum, supply dearth

New Zealand carbon allowances notched their second consecutive session of all-time highs on Monday, as a lack of available supply and expectations that the market will move higher keep pushing prices up.

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BITE-SIZED UPDATES FROM AROUND THE WORLD

Breaking… – Britain’s chief Brexit negotiator David Frost has told PM Boris Johnson to expect a Brussels trade deal “early next week”, The Sun reported late Monday.  Frost is said to have pinpointed “a possible landing zone”, that could be announced as soon as next Tuesday. But the talks could still collapse over fishing and red tape, with both sides urging the other to “get real”, The Sun said. The PM last night said he would not row back on his Brexit red lines amid claims cabinet members are pushing for a climbdown. Carbon pricing and the UK’s climate policy are understood to be among the remaining obstacles. Still, experts say any progress on a Brexit deal would likely inject positive sentiment into the EU carbon market and potentially lift EUAs further.

States within a state – Germany’s 16 state environment ministers back the European Parliament’s call for raising the bloc’s 2030 emission target to a 60% cut, arguing the step was necessary to achieve Europe’s contribution to the Paris Agreement. Germany currently holds the EU Council presidency and aims to get member states to agree a new 2030 target before the end of this year. The EU Commission proposed earlier this year to raise the 2030 emissions reduction target to “at least 55%” . (Der Spiegel, Clean Energy Wire)

10 from Number 10 – UK Prime Minister Boris Johnson is expected to unveil a somewhat delayed green 10-point plan on Wednesday but could be moved again, Bloomberg reports, citing anonymous sources. Johnson is weighing controversial proposals to bring forward the sale of new petrol and diesel cars by 2030, up from 2040, but with hybrid cars barred from 2035. Research by Greenpeace and Green Alliance shows that only a 2030 ban including hybrids would put the UK on track to meeting its 2050 net zero target. He is also expected to announce a new 2030 climate change target ahead of a Dec. 12 UN summit. Separately, The government on Monday revealed its first sponsors for COP26, naming utilities SSE and ScottishPower, bank NatWest Group, and grid operator National Grid as the first ‘Principal Partners’, which will support the delivery of a successful and ambitious COP next November and which have credible science-based carbon emission reduction plans that are in line with the goals of the Paris Agreement.

No deal – Poland and Hungary have blocked a deal on the EU’s €1.8 trillion seven-year budget and coronavirus recovery package in protest of conditions on rule of law attached to the funds. The move will delay the adoption in EU capitals to raise cash to repay the COVID-19 relief fund via revenues from auctioning EUAs and a prospective carbon border adjustment mechanism. EU decision-makers at the Parliament and Council reached an agreement last week over the bloc’s so-called ‘own resources’, but the deal needs to be ratified by EU nations unanimously.

Brussels bonus – The European Commission has approved more than €280 mln from the EU budget for over 120 new LIFE programme projects, a 37% year-on-year rise. Most went to biodiversity and circular economy activities, but over €60 mln was given to 34 climate change mitigation, adaptation and governance and information projects.

Risk reminder – Investors are pushing 36 carbon-heavy European companies including utilities E.ON, Iberdrola and Endesa, gas supplier Air Liquide, oil firm OMV, and miner Anglo American to make sure the “missing” costs of climate change are properly reflected in their financial statements. The 38 European and US investors, who manage $9 trillion in assets, have sent 36 carbon-heavy companies a document setting out how they should account for the likely impact of the Paris Agreement on their future profits, according to a copy of an accompanying letter here shared by the Institutional Investors Group on Climate Change, an industry coalition. (Reuters)

Shopping safely – Avoiding greenwashing and providing customers with more information about the sustainability of the products they buy is a key part of the European Commission’s new consumer agenda, launched on Friday. The agenda to 2025 will support the Green Deal and the Circular Economy Action Plan, which aims to halve municipal waste by 2030, by enabling consumers to more easily spend money on green products. (Euractiv)

Cutting it out – Shinhan Financial Group on Sunday became the first South Korean financial entity to announce a 2050 net zero target. Carbon heavy companies will gradually be left out of Shinhan’s investment plans, with the emissions in its asset portfolio is slated to drop 38% by 2030, 69% by 2040, before falling to zero by mid-century. (Korea Times)

Being judgmental – The Korea Exchange and S&P Dow Jones on Monday launched a Carbon Efficiency Green New Deal Index, which will track how companies contribute to the government’s target to become carbon neutral by 2050, the Korea Herald reports.

Just not that good – Australia’s government has been pushing hard for a ‘gas-led recovery’ to the COVID-19 pandemic, touting natural gas investments as a way to create jobs and reduce GHG emissions. But a new report from think-tank the Grattan Institute argues that the gas industry inevitable will decline for both economic and environmental reasons, and won’t be the job generator that PM Scott Morrison claims. (Guardian)

Hydrogen helper – The US Department of Energy (DOE) on Thursday released a new strategic framework directing federal hydrogen research, designed to “advance the affordable production, transport, storage, and use of hydrogen across different sectors of the economy.” Future research will target key barriers to the availability of hydrogen, including cost, efficiency, and transportation, according to the framework, which establishes both coal gasification and electrolysis as near-term research priorities. The fact that the DOE did not wait for the change of presidential administration to release the report raises questions about its staying power, but also suggests hydrogen enjoys broad bipartisan support at the federal level, according to observers. (Utility Dive)

Record ICE breaker – Intercontinental Exchange (ICE) – the main exchange operator in the European and North American carbon markets – on Monday announced record open interest across its environmental complex. Including allowances in the EU ETS, California, and RGGI carbon markets, as well as renewable energy credits (RECs), the bourse said it recorded OI totalling 2.65 billion contracts as of Nov. 12. “Alongside this record growth in liquidity, the number of participants trading ICE’s carbon markets has grown by more than 40% since 2017. Participants based in North America were the strongest contributor to this growth, increasing by more than 70% [during that time],” it added. Meanwhile, the number of participants trading both European and North American carbon markets at ICE has grown by approximately 85%.

And finally… Blessed divestment – Some 47 faith institutions on Monday announced their divestment from fossil fuels, making the largest-ever joint announcement of divestment among religious leaders. These include Catholic, Protestant, and Jewish institutions from 21 countries, 350.org reports. Participating institutions include the Commission of the Bishops’ Conferences of the European Union, American Jewish World Service, and Anglican and Methodist churches across the UK. The full list of participating institutions is here, and the announcement coincides with the fifth anniversary of the Paris Agreement. Faith leaders’ say their action puts pressure on government leaders, and their commitment to clean energy stands in stark contrast with many governments’ failure to deliver ambitious energy strategies.

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