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TOP STORY
Absence of EU carbon market link “biggest risk” facing UK energy sector
Linking the UK’s new emissions trading scheme to the EU carbon market is the single most important issue facing Britain’s energy industry, sector representatives told lawmakers, warning that it presents the largest threat in terms of raising costs for consumers and preventing utilities from managing risk.
ASIA PACIFIC
Shanghai ETS shrinks by a third as coal plants exit for national market
Shanghai on Thursday released the 2020 allocation plan for its municipal emissions trading scheme, with the overall CO2 cap shrinking by a third as more than 20 coal-fired power plants are exiting to join the national market.
AU Market: ACCU prices rise as Qantas leads bump in voluntary cancellations
Australian Carbon Credit Units (ACCUs) rose past A$17/t this week, with a slight shift in messaging on climate change by Prime Minister Scott Morrison sparking greater voluntary interest and borne out by a bump in cancellations.
South Korea postpones monthly carbon auctions
South Korea will drop its planned monthly KAU auctions in February and March amid poor market liquidity and low prices, the environment ministry has said, pushing all the volume into the June sale.
EMEA
RWE makes compensation claim for Netherlands coal phaseout
German utility RWE has filed an arbitration claim against the Netherlands, seeking compensation for the effects of the country’s coal phaseout law.
EU Market: EUAs slip back from new all-time high after weaker auction
EUAs extended the previous session’s all-time high above €38 early on Thursday, before a much weaker auction caused prices to tumble.
Utility Vattenfall reports 28% drop in EU ETS-covered output as coal unit shuts
Swedish utility Vattenfall’s EU ETS-covered power output dropped 28% year-on-year in 2020, outpacing an overall drop in generation as a major coal unit closed and hydro power flourished, the company said in its full-year results on Thursday.
AMERICAS
NA Markets: RGGI prices recover during cold snap, as California allowances linger ahead of auction
RGGI Allowance (RGA) prices recovered on the secondary market this week as colder weather in the Northeast US prompted more carbon-intensive units to come online, while California Carbon Allowance (CCA) prices remained roughly unchanged.
RGGI adds five new general accounts, with three connected to compliance
Five entities have opened RGGI CO2 Allowance Tracking System (COATS) accounts over the past month as allowance prices skyrocketed to an all-time high in the carbon market before retracing much of those gains, data shows.
RFS Market: RINs retreat from eight-year high as import window shuts
US biofuel credit prices (RINs) retraced this week from highs not seen since 2013 as a gasoline import arbitrage closed and soybean oil prices held firm.
COMMENT
May you live in interesting times
Well, this has been an interesting week. In the space of 72 hours carbon has risen 14%, reached a new all-time record and if things keep going like they have been, it’s just a matter of time before the EU ETS starts becoming the subject of $GME-type memes. There have been a number of explanations for the nearly €5 spike in EUA prices; I’ll list them and if I missed any, please shout.
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BITE-SIZED UPDATES FROM AROUND THE WORLD
ASIA PACIFIC
Don’t call it a comeback – Xie Zhenhua, the retired public face of climate policy diplomacy in China for over a decade, is back. While not yet officially announced – these things rarely are in China – several people in climate policy circles on Thursday confirmed Xie has for a second time been brought out of retirement to act as China’s climate policy envoy. The relationship he developed with former US climate envoy Todd Stern is often cited as a key reason for the success of the 2015 climate conference in Paris, and observers speculated Thursday whether the move was designed to achieve a similar dynamics with new US climate czar John Kerry, even as the US-China relationship has soured in many other areas.
EMEA
Wider pricing – UK Prime Minister Boris Johnston has asked all his government departments for plans for a carbon pricing scheme across all areas of the economy, intending the proposals to be at the centre of the carbon reduction blueprint expected to be announced in the run-up to November’s COP26 UN climate conference in Glasgow, The Times reported, citing a government memo. The newspaper quoted an anonymous official saying the government wants other countries to do similar, giving a de-facto carbon price floor to encompass all the big competitive industries and potentially agriculture. Read Carbon Pulse’s article on expert calls for the UK to have wider, higher, and simpler carbon pricing.
Massive island deal – Denmark’s government has agreed to take a majority stake in a £25 bln artificial wind energy island, which is to be built 50 miles offshore, to the west of the Jutland province in the North Sea. The project will triple Denmark’s current installed offshore wind with 5 GW of new capacity, to be later expanded to as much as 12 GW. In the text of the agreement, the parties warn that the North Sea island might be difficult to complete before 2033, meaning it might not help Denmark reach its ambitious 2030 target of cutting GHG emissions by 70% from 1990 levels.
AMERICAS
Emergency move – US Representative Earl Blumenauer (D), along with Senator Bernie Sanders (I) and Representative Alexandria Ocasio-Cortez (D), introduced legislation on Thursday that would require President Joe Biden (D) to declare a climate emergency. The bill compares the action needed on the climate crisis to the wartime mobilisation during World War II and urges Biden to declare an emergency under the National Emergencies Act, thus unlocking more than 100 additional presidential powers to tackle the crisis. Sanders and Ocasio-Cortez introduced a similar resolution in 2019 that won support from many senators and representatives but never came up to a vote in the Democratic-controlled House. (Grist)
Byrd is the word – The US Congress can abide by the “Byrd Rule”, which limits provisions deemed “extraneous” to the budget, in the budget reconciliation process to implement Biden’s proposal for a national Clean Electricity Standard to decarbonise the grid by 2035, researchers argue in a new report published Thursday. Writing at Vox, assistant professor at University of California at Santa Barbara Leah Stokes and co-founder of Evergreen Action Sam Ricketts said that to stay within the Byrd Rule bounds, the federal government could create a system of zero emissions credits (ZECs) that live “on the books,” inside the federal budget. Utilities would earn ZECs by continuously increasing the amount of carbon-free electricity they deliver to customers, or else purchase the credits from the federal programme. Another approach would involve the federal government regularly buying a quantity of ZECs from power companies, through auctions. A third approach could involve a twist on either of the first two, but with utilities earning clean energy credits for every ton of carbon pollution that they reduce, rather than for every MWh of clean electricity that they deliver.
Nationwide goodbyes – US utility Alliant Energy on Tuesday announced it would retire its 1.1 GW Columbia Energy Center, making the company’s subsidiary Wisconsin Power & Light coal-free by 2025. The announcement leaves three coal plants remaining in Wisconsin without planned retirement dates. Meanwhile, Duke Energy on Tuesday also announced it would be shuttering a coal plant unit, as the utility notified North Carolina regulators it has plans to shutter its 270MW Allen Unit 3 by March 31. The Allen plant is a 1.14GW, five-unit facility, and will be fully retired by 2024. (Utility Dive)
Review restart – The Biden administration will resume permitting review for the 800MW Vineyard Wind project off Massachusetts, the Bureau of Ocean Energy Management announced Wednesday. Officials said the process will pick up where it left off after the Trump administration cancelled review in its final weeks. The project, which is the farthest along of the nearly dozen offshore wind farms under BOEM consideration, would generate enough electricity to power roughly 400,000 homes. (Climate Nexus)
Better biofuels – US Senators John Thune (R) and Amy Klobuchar (D), along with four of their colleagues, introduced legislation Wednesday that would require EPA to update its modelling on biofuel GHG emissions. With Biden’s EPA likely to tighten GHG requirements for cars and trucks, biofuel producers are desperate to prove that their product can be an alternative to electric vehicles for reducing carbon emissions in the transportation sector. But EPA’s current models only credit ethanol with being 20% lower emitting than gasoline, while recent research suggests that new farming and production techniques have cut biofuel’s emissions substantially. (Politico)
VOLUNTARY
Live well for emitting less – Sainsbury’s has unveiled a new ambition to reduce emissions from its supply chain by 30% by 2030, as it strives to become a net zero business by 2040. The supermarket giant announced last year that it wanted to achieve net zero 10 years ahead of the UK’s 2050 deadline, and it backed this ambition with a £1 bln plan. Sainsbury’s on Thursday announced new science-based, interim targets to underpin the delivery of this long-term goal, striving to cut its Scope 1 and 2 emissions as much as possible. Progress has already been made here, with Sainsbury’s fitting more than 1 mln Aerofoils – devices which stop cold air from spilling out – to its fridges in stores. It has also installed LED lighting, switched to battery-and-kinetic-powered pallet trucks, and begun integrating fully electric home delivery vans into its fleet. Overall, Sainsbury’s’ Scope 1 and 2 emissions respectively have decreased by 42% and 46% since 2004. (edie)
AND FINALLY…
No way, Norway – US automaker General Motors on Wednesday released its Super Bowl ad that promotes the company’s recent “aspiration” to only sell zero-emissions light-duty vehicles by 2035. It features actor Will Ferrell, beard shaggy from COVID-19 quarantine, smashing his fist through a classroom globe when he realises Norway has a higher number of electric vehicles per person than the US. This leads Ferrell and fellow actors Keenan Thompson and Awkwafina on a trip to Norway to “crush those lugers” at their own game. The US won’t be able to catch up to Norway anytime soon though, as 6.5% of the vehicles on the Scandinavian country’s roads are electric, compared with only 0.3% in the US. But despite GM’s recent environmental announcements, the company in 2019 sided with the Trump administration in a legal battle pushing back against California’s Clean Air Act waiver to set more ambitious vehicle fuel economy and GHG standards than the federal government. (Grist)
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