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EU member states will need to resolve outstanding issues on the bloc’s seven-year budget and coronavirus recovery plan ahead of a key summit starting Thursday afternoon if they want to agree on a higher 2030 emissions reduction target, although signs of a preliminary compromise is building optimism.
EU envoys reached an agreement on Wednesday over the bloc’s €17.5 billion fund to support coal regions in transition, in a compromise that excludes all financing for fossil fuel investments.
European carbon prices briefly rose above €30 again on Wednesday, but failed to close above this key level despite today’s EUA options expiry and data showing a record build in investor interest in the market.
Brazil says it can reach net zero emissions by 2060 without needing to lift its near-term Paris Agreement emissions pledge, though campaigners questioned the credibility of goals set by an administration that has allowed Amazon deforestation to rise.
California issued more than 3.5 million new compliance offsets this week, as analysts revised their 2030 outlook for credits with direct environmental benefits to the state (DEBs) in light of greater projected supply.
California Governor Gavin Newsom (D) has selected California Public Utilities Commission (CPUC) Commissioner Liane Randolph to replace ARB Chair Mary Nichols, while naming three new appointees to the environmental agency’s board ahead of the 2022 Scoping Plan process.
Nova Scotia’s Dec. 2 cap-and-trade auction settled significantly above the programme’s annual floor price for the second straight sale, according to results published Wednesday.
South Korea sold 92% of the CO2 allowances on offer in Wednesday’s monthly auction, but the settlement price rose over 4% from the November sale amid a firmer secondary market.
One of the biggest companies due to participate in China’s national emissions trading scheme has announced it aims to peak its CO2 emissions seven years ahead of schedule, as major companies ramp up voluntary pledges in line with President Xi Jinping’s carbon neutral commitment.
New Zealand’s biggest thermal power generator on Wednesday announced new climate targets that could eliminate more than 2% of annual NZU demand by 2025.
BITE-SIZED UPDATES FROM AROUND THE WORLD
Hotting up – Global emissions reached a new high last year, putting the world on track for an average temperature rise of 3C and extreme climate change, according to UNEP’s annual emissions gap report measuring the discrepancy between anticipated emissions and the 1.5-2C Paris Agreement goals. Emissions rose 2.6% to 59.1 bln tonnes last year, above the 1.4% average for the past decade, partly due to a large increase in forest fires. Coronavirus restrictions are likely to lead to a 7% cut this year, resulting in only a 0.01C reduction in warming by 2050. (Reuters)
Getting smarter – The European Commission on Wednesday presented its Sustainable and Smart Mobility Strategy, aiming to bring at least 30 mln zero-emission cars and doubling high-speed rail traffic across Europe, make zero-emission large aircraft market-ready by 2035, and decarbonise the transport sector by 2050. Separately, the EU’s executive also launched a European Climate Pact, aiming to bring civil society together “to participate in climate action and build a greener Europe”.
Shell shock – Oil major Shell has been hit by the departure of the heads of its solar, storage, and onshore wind businesses and the leader of its energy transition strategy team amid a split over how fast it should make a clean energy transition, reports the Financial Times. Some executives have pushed for a more aggressive shift in the company’s new strategy due in weeks, but top management is more inclined to stick closer to the company’s current path, according to four people familiar with the matter.
LNG approval – The European Commission has approved Cyprus’ plans to issue a state guarantee for securing loans to support the construction of an LNG terminal at Vassilikos Bay. Cyprus is an isolated energy market with no interconnected generation capacity from other countries and with a high dependency on heavy fuels for power generation. The construction of the LNG terminal will contribute to market integration and reduce emissions from the Cypriot power sector, the Commission said.
A bigger chunk – The World Bank Group today announced an ambitious target for 35% of its financing to have climate co-benefits, on average, over the next five years. It replaces an earlier target of reaching 28% by 2020, which was in place over the last five years. The World Bank – IBRD and IDA – will also seek to ensure that 50% of this financing supports adaptation and resilience. The bank is already the biggest multilateral funder of climate investments in developing countries. The co-benefits target of 28% by 2020 was established as part of the World Bank Group’s First Climate Change Action Plan, covering 2016-20. The new 35% mean target will be embedded in the Second Climate Change Action Plan, which will cover 2021-25.
Sad state of affairs – US states and territories are broadly off track in reducing their emissions to levels in line with the Paris Agreement, according to new research from green group EDF. Using emissions data from the Rhodium Group, EDF looked at GHG reduction progress from the 25 states and Puerto Rico that make up the US Climate Alliance, which has vowed to uphold the country’s commitment to the 2015 pact and limit global temperatures to 1.5C. But collectively, these jurisdictions are projected to reduce emissions by 11% below 2010 levels, well below the 45% needed to reach their original goal by 2030. (The Hill)
Common ground – The New York State Common Retirement Fund on Wednesday pledged to reach net zero emissions across its investments by 2040, a decade before any other US pension plan, and may divest from the riskiest oil and gas companies by 2025. The $226.4 bln public plan, the third-largest in the US, said it will finish reviewing all its fossil fuel holdings and related businesses within four years. The fund is looking at its climate-related investment risks, how companies are preparing for the transition to a low-carbon economy, and selling shares in those that fail to meet standards. (Bloomberg Green)
Reject the review – The Trump administration has argued against a petition from oil refiners asking the US Supreme Court to review a lower court decision that undermined the legitimacy of the small refinery exemption (SRE) programme under the Renewable Fuel Standard (RFS). Department of Justice officials said the court should not review the case as it does not conflict with any other Supreme Court or appeals court decision, according to the brief submitted Tuesday. The officials argued that the court could review the decision after a similar case is completed in the DC Circuit Court of Appeals. At issue is a January decision by the 10th Circuit Court of Appeals that ruled that RFS waivers granted to small refineries after 2010 should only be approved as extensions. Oil refiners petitioned the Supreme Court to review the decision in September. (Reuters)
Biofuel build – Canadian refiners Suncor and Shell have partnered with Enerkem to build a biofuel plant in Varennes, Quebec, which will use non-recyclable waste as feedstock to make advanced biofuels and renewable chemicals. The proposed plant will support Quebec’s stated objective to reduce economic dependence on fossil fuels by 40% by 2030 while increasing supply of biofuels in the province ahead of Canada’s federal Clean Fuel Standard (CFS) set to begin in 2022. The new plant is expected to convert more than 200,000 tonnes of non-recyclable waste and wood waste to produce about 125 mln litres of biofuels annually, Local utility Hydro-Quebec will supply hydrogen and oxygen for the plant to be built in the greater Montreal area, where Suncor operates a 137,000 bpd refinery. (S&P Global Platts)
A lot of bull – Germany’s Berenberg bank has raised its 2022 forecast for EUA prices by 30% to €85, while maintaining a €65 mean view for 2021. The bank’s analysts – by far the most bullish in the market – predict that drivers including Brexit, the UK linking an ETS to the EU’s carbon market, a tightening of the EU’s 2030 emissions reduction targets, and a delay to the start of next year’s auctions will combine to push prices above €100 from Q4 2021 to Q2 2022. “We believe the crunch time is fast approaching,” they told Bloomberg, adding that they assume there will be “a subsequent political reaction” to the high prices, which will send EUAs back down to €50 by the end of 2022. “Thereafter, we expect a climb towards €75 by the end of the decade,” the analysts added. Berenberg had predicted EUAs would average €45 in 2019 and €65 this year, before potentially rising to top €100 shortly thereafter.
And finally… Sleeper cells – Four European rail companies from Austria, Germany, France, and Switzerland are planning more night train connections over 2022 and 2023, reversing a recent decline due to growing climate worries tied to the carbon footprint of short-haul flights. The target is to more than double passenger numbers to 3 mln across 26 routes later this decade, and the firms want EU cash and new policies to support this. Other countries such as the Netherlands and Sweden are also subsidising new night train connections, while private operators are running non-subsidised routes through Central Europe and between Sweden and Germany. (Politico)
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