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The first carbon credit standard in the Middle East aims to issue 10 million offsets this year from carbon-cutting projects, including units that other standards won’t touch.
RGGI Allowance (RGA) prices fell from all-time highs over the week while speculators opted to sell off positions amid limited compliance demand, as California Carbon Allowance (CCA) values rose slightly on the front end of the curve.
Pennsylvania holds the legal authority to join the RGGI cap-and-trade scheme, according to public comments, but regulators should take steps to increase the stringency of the programme to avoid adversely impacting the Northeast US carbon market and align with possible federal climate mandates.
Quebec’s initial free allowance distribution for 2021 declined slightly from the previous year, with additional allocation due to industrial emitters by the end of 2022, according to data published by the province’s environmental ministry.
New Mexico Governor Michelle Lujan Grisham (D) on Wednesday identified a low-carbon fuel standard (LCFS) as one of her priorities for the state’s 2021 legislative session, adding to the state’s roster of possible market-based climate policies.
The US EPA this week will move to extend the 2019 and 2020 compliance deadlines for the Renewable Fuel Standard (RFS) as a result of an ongoing court case involving small refinery waivers and because the agency has not yet proposed blending quotas under the programme for this year.
New Zealand carbon allowances traded at record high levels on Thursday, as traders returning from holidays grappled with a reformed market.
EUA prices recovered from an early drop below €33 on Thursday, finding buyers near a key technical support as gas prices continued their retreat from lofty highs seen earlier in the week.
Emissions from global energy systems will peak in 2023, but the speed of decarbonisation remains off pace to put GHG output on a path in line with a temperature rise of 1.5C above pre-industrial levels, according to a report released Thursday.
BITE-SIZED UPDATES FROM AROUND THE WORLD
Pay up – The Bank of England told banks and businesses to start assessing the risks they face from climate change immediately, and brace to pay much more for polluting. According to Bloomberg, the regulator’s warning to businesses is a clear sign that the bank sees the price of carbon as a risk to companies as the world seeks to eliminate GHG pollution by 2050 in order to prevent catastrophic climate change. Sarah Breeden, who leads the central bank’s work on climate-related risks, said the cost of emissions allowances will need to rise significantly in order to achieve targets in the Paris Agreement. Carbon may even exceed $100/tonne if the transition to a low-carbon economy is abrupt or bumpy, she said. “I do think if risk is priced, it will drive the right behaviours,” said Breeden, who is also the central bank’s executive director responsible for the supervision of the UK’s banks, building societies and credit unions.
Paris can’t fail Paris – A Paris court on Thursday began hearing a landmark case brought by NGOs, accusing the French government of failing to act to halt climate change. The case began in Dec. 2018 when four NGOs accused the government of failing to reduce emissions in a formal complaint backed by more than 2 mln people in an online petition – a French record. Unsatisfied with the response, the NGOs, including Greenpeace France and Oxfam France, then filed their legal complaint in Mar. 2019 seeking symbolic damages of just €1 ($1.21) from the state. Jean-Francois Julliard, director of Greenpeace France, said he wanted the court to recognise that the state was not doing enough and urge to put France back on a Paris-aligned trajectory. (France 24)
Bad examples – A draft of Germany’s recovery plan from the COVID-19 pandemic promises that 80% of EU funds will go to climate protection and digitalisation, well above the bloc’s requirements. However, Green MEP Sven Giegold has complained that only a quarter will go to future investments and most of the money is earmarked for old projects. “Formally, everything is correct, but politically it is bad,” Giegold told Euractiv. Germany is “setting a bad example,” he said, because “we don’t want member states to use [the recovery fund] to pay off old debts, but to make a leap forward.”
Port support – A CCS consortium including oil firms Shell and ExxonMobil has requested $2.55 bln in subsidies from the Netherlands government for an offshore CCS project to capture Rotterdam port area emissions. A final investment decision is due early next year with a view to be operational by 2024.
Foot soldiers – British environment secretary George Eustice says the UK could set targets to reduce emissions that include the carbon footprint of consumer products and imports, the Telegraph reports, “in a move that would be a world first”. Speaking to the Environmental Audit Committee, Eustice said that “there’s a growing recognition that simply measuring emissions as a country isn’t necessarily the right thing to target and looking at consumption based measures, probably in the longer term, does make more sense”. Eustice added that the government had initiated the process to adopt consumption-based targets: “We’ve had some initial discussions with the Treasury. There’s an openness in government to over time moving towards more of a consumption based target.“ Eustice noted that the reason the government had not yet embraced consumption emissions targets was a lack of precise data to accurately calculate them. (Carbon Brief)
Shortlist – The European Commission today launched a 12-week consultation seeking views from the public, stakeholders, and public authorities on the merits of candidate projects for the fifth list of EU Projects of Common Interest (PCI) in the field of electricity and gas. The aim is to receive stakeholders’ opinion on the way these candidate projects contribute to market integration, sustainability, security of supply and competition from an EU energy policy perspective. Similar consultations for oil, smart grids, and cross-border CO2 networks projects will follow. The 5th PCI list will be adopted by the Commission by the end of 2021 under the existing regulation on Trans-European Energy Networks (TEN-E).
SCC steps – New analysis published Thursday recommends a two-step approach for President-elect Joe Biden’s (D) administration to immediately update the social cost of carbon (SCC). First, the report calls for using a discount rate of no higher than 2% and including global damages, which would increase the SCC to $125/tonne. Then, the analysis calls on the Biden administration to re-launch an Inter-agency Working Group to comprehensively update the SCC. The report was co-authored by Energy Policy Institute at the University of Chicago Director Michael Greenstone and Tamma Carleton, an assistant professor at UC Santa Barbara. Greenstone, notably, co-led the original Inter-agency Working Group that set a government-wide social cost of carbon while serving as chief economist for former President Obama’s Council of Economic Advisers. New York last month set a $125/tonne SCC for use in agency planning. (Politico)
Post-Trump team – Biden is also rounding out his White House climate policy team with policy hands who’ve spent President Trump’s era defending climate regulations, engineering new policy, and campaigning on the issue. David Hayes, deputy interior secretary under President Obama, will serve as special assistant to the president for climate policy. Most recently, he was executive director for New York University’s State Energy and Environmental Impact Center, where he helped state attorneys general fight the Trump administration’s environmental rollbacks. Maggie Thomas, a climate policy advisor to former Democratic presidential candidates Elizabeth Warren and Jay Inslee, will be chief of staff of the Office of Domestic Climate Policy. Sonia Aggarwal, co-founder of think-tank Energy Innovation, will be a senior advisor for climate policy and innovation. (E&E News)
Fever pitch – Venture capital investment into technologies aimed at combating climate change reached a record high in 2020, according to PitchBook, a private market data firm. In 2020, VC deals amounted to $16.4 bln, which barely surpassed 2018’s total of $16.3 bln. However, 2018 saw more deals (448) compared to 2020 (416). Venture capital investments in this space started increasing significantly in 2016 and 2017, despite President Trump’s dismissal of the problem, with PitchBook estimating that the entire climate technology market now amounts to around $2.5 trillion. (Axios)
New generation – US drinks firm PepsiCo aims to achieve net zero emissions across its supply chain by 2040. PepsiCo, which generated about 57 MtCO2e in 2019, said it would by 2030 cut emissions from its operations 75% and by 40% in its supply chain – outpacing rival Coca-Cola’s 25% Scope 3 goal. It said it would first focus on its agricultural supply system before turning to carbon sequestration. (Reuters)
Better late than never – Alberta Environment and Parks (AEP) on Thursday announced the Canadian environment ministry has confirmed the province’s large emitter programme, the TIER regime, meets the federal benchmark stringency requirements for 2021, despite the year having already started. TIER market participants expected the approval after AEP in November the regime’s excess emissions charge would rise by C$10/tonne to C$40 in 2021, aligning with Ottawa’s rising ‘backstop’ CO2 pricing mandate.
And finally… In hot water – The world’s oceans hit their highest temperatures in recorded history last year in what scientists say is a worrying sign of the advance of global warming, the Independent reports. Oceans absorb more than 90% of the excess heat from global warming, making them a key barometer of climate change. The team of 20-strong scientists from 13 countries around the world collected data on ocean temperatures dating back to the 1950s when reliable records began. All five of the hottest years have occurred since 2015, and the pace of change is accelerating, the scientists warned. In 2020, the world’s oceans absorbed 20 more Zettajoules of heat than in 2019 – equivalent to boiling 1.3 bln kettles. The study was published this week in the journal Advances in Atmospheric Sciences. Separately, new research suggests that the land’s ecosystems are approaching a “temperature tipping point”, beyond which they could switch from soaking up CO2 to releasing it to the atmosphere, the Independent reports.
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