CP Daily: Friday February 5, 2021

Published 22:51 on February 5, 2021  /  Last updated at 22:51 on February 5, 2021  /  Newsletter  /  No Comments

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

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EU launches probe into Romanian utility, raising concerns about carbon permit shortfall

The European Commission launched an investigation into Romanian utility CE Oltenia’s restructuring plans on Friday, blocking funding that observers say the company was likely relying on to buy several million carbon allowances over the next two months.


Korean carbon market surplus likely far bigger than expected, analysts warn

South Korea’s carbon market surplus for 2020 could be almost 75% higher than previously expected, analysts said Friday, writing down emissions estimates and warning that KAU prices could near all-time lows as a result.


EU Market: EUAs extend record high, notch huge 16% weekly gain

EUAs extended their record high above €38 for the third straight day on Friday, holding on to most of this week’s gains as the market comfortably absorbed the first full week of 2021 allowance auctions.

South African carbon tax could be too low, too limited to cut emissions -report

South Africa’s carbon tax may be ineffective in cutting the country’s greenhouse gas emissions on its own, a report by a major consulting firm warned.

Macquarie carbon and power boss to join Goldman Sachs

Investment bank Macquarie’s head of environmental products and continental power in London has been hired by rival Goldman Sachs, Carbon Pulse has learned.


Pennsylvania Republicans refute legal analysis, claim RGGI regulation is illegal tax

Pennsylvania Republicans have pushed back against analysis by two state agencies and an independent group that claim the state has the legal authority to implement a RGGI-modelled cap-and-trade regulation without the legislature’s approval.

Speculators hit 1-year high on CCA length, as emitters reduce short positions on V21s

Financial entities increased their California Carbon Allowance (CCA) holdings this week by the largest amount in nearly a year, while regulated entities’ length potentially grew from short positions rolling off in January, according to US Commodity Futures Trading Commission (CFTC) data published Friday.

US farmers’ cooperative targets up to $20/tonne for soil-based carbon offsets

A subsidiary of US agriculture cooperative Land O’Lakes launched its voluntary carbon credit programme on Thursday that will pay farmers up to $20/tonne for CO2 sequestration, as soil-based offset initiatives continue to earmark payments on the high end of current global voluntary emissions reduction (VER) values.

Oregon LCFS posts first quarterly credit deficit in 1.5 years for Q3 2020

The Oregon Clean Fuels Program (OCFP) recorded its first credit deficit since early 2019 in the third quarter of last year, with a rebound in gasoline volumes and a crash in renewable diesel (RD) usage contributing to the draw on the surplus bank, according to state data published Friday.

US Carbon Pricing and LCFS Roundup for week ending Feb. 5, 2021

A summary of legislative and regulatory action on carbon pricing, clean fuel standards, and clean energy at the US subnational and federal level this week, including developments in Indiana, Maine, and Rhode Island.


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.




Got CBAM? – British PM Boris Johnson is considering using his G-7 presidency to try and forge an alliance on carbon border taxes, two people familiar with the matter told Bloomberg. As holder of the rotating G-7 presidency and host of COP26 in November, Johnson has said he wants to make cutting emissions a key priority for recovery efforts. As part of that, he wants to expand carbon pricing at home, and also wants to get G-7 countries to discuss carbon border adjustments, according to the people. The UK’s presidency is still in early stages and proposals are yet to be agreed, Bloomberg reports. A text would likely allow for an agreement in principle, rather than a binding commitment, one of the sources said.


Never had a chance – Separately, the UK government has “killed off” the idea of a carbon tax that “could have seen huge price rises for meat, cheese and gas”, reports the Daily Mail. Following reporting yesterday by the Times of a Whitehall memo on carbon pricing – which Channel 4 News “confirmed” – a government source tells the Mail that ministers would not be proceeding after PM Johnson blocked the idea. The source adds: “We have absolutely no intention of putting a carbon tax on meat or other food products.” Yesterday morning, the prime minister’s official spokesman declined to rule out the policy – as reported by the Independent – but “at 6pm the plan was ditched”, the Mail says.

ENVI’s got CBAM – The European Parliament’s ENVI committee on Friday by a 58-8 margin adopted a report on the CBAM, aiming to inform the European Commission’s proposal due in June. ENVI MEPs want the carbon border levy to be introduced from 2023 and cover a wide number of industrial sectors, and the measure must lead to the gradual phaseout of EUAs, the report said. Read Carbon Pulse’s latest on the ENVI committee’s CBAM report.

Plan B – France may need a plan B for state-controlled EDF as talks with the European Commission about restructuring the debt-laden nuclear utility are difficult and may not lead to an agreement, the environment minister said on Thursday. The French government wants to separate EDF’s capital-intensive nuclear power arm from other parts of its business and needs EU clearance. The EU has pushed for an even stricter split of the business, sparking disagreements with Paris over the plan and dragging out the uncertainty for EDF. A key element of the reform package is a review of the price at which EDF sells on nuclear power to its smaller competitors, which EDF says is too low and gives rivals an unfair advantage when market prices drop. (Reuters)


Forget it, part I – US Senator Joe Manchin (D) on Thursday vowed he would not be the 50th vote to back an aggressive carbon pricing proposal without a fuller conversation about how to transition the energy sector “in a responsible way”, as he drew red lines on energy policy and warned President Biden to rein in his base-pleasing progressive actions. “[If] they want to have a conversation on how we improve our climate and do it in a most responsible way, yeah, they’d have me in a heartbeat. [If] they want to talk about this as a penalty – forget it, as long as I’m here,” Manchin told an event hosted by the Bipartisan Policy Center. Manchin used the same reasoning to explain his ongoing scepticism about the Paris Agreement, in which each country sets its own nonbinding emissions reduction goals. Using an argument more often heard from Republicans, Manchin said the United States puts itself at a disadvantage by pledging to curtail fossil fuels while India and China continue to burn greater and greater amounts of coal. While the Senate’s filibuster rule requires most bills to cross a 60-vote threshold to receive a floor vote, some have hoped the budget reconciliation process, which only requires a simple majority, could lead to Congress enacting some form of climate policy. The Senate is currently split 50-50 between Democrats and Republicans, with Vice President Kamala Harris (D) able to cast tie-breaking votes. (E&E News)

Forget it, part II – Meanwhile, the Senate rejected an attempt by Texas Senator Ted Cruz (R) to cap the price of biofuel credits (RINs) at 10 cents as part of a proposed amendment to the COVID-19 stimulus bill in the wee hours of the morning on Friday during the upper chamber’s ‘vote-a-rama’. Cruz has been part of a group of oil state senators that tried repeatedly to influence President Donald Trump’s (R) administration to make changes to the RINs market, and on Friday Cruz argued a cap was necessary because of recent spikes in RIN prices are making it more costly for refiners to comply with the Renewable Fuel Standard (RFS). However, Midwestern Senators Chuck Grassley (R) and Tammy Duckworth (D) immediately fired back, saying such a move would hurt the biofuel and agriculture industry. Cruz previously floated a proposal to the White House in 2017 to cap RINs prices at 10 cents. (Progressive Farmer)

Include it, part I – In contrast to the RINs cap, the Senate voted nearly unanimously to adopt an amendment to the COVID-19 budget resolution from Wyoming Senator John Barrasso (R) that would create a new federal fund to help fossil fuel-producing states replace revenue for education that is lost following Biden’s pause on new oil and gas leasing on public lands and waters. Senators late Thursday also backed an amendment from Indiana Senator Mike Braun (R) that would bar the US EPA and the White House Council on Environmental Quality from issuing any regulations or guidance barring fracking, even though Biden made clear repeatedly throughout his campaign he would not pursue a wholesale ban on all fracking activities. Seven Democrats from fossil fuel-producing states voted with the GOP in support. (Politico)

Include it, part II – A federal judge blocked the expansion of Montana’s largest coal mine on Wednesday, ruling the US Interior Department failed to account for the social cost of the carbon (SCC) that would result from the additional coal extracted. The ruling criticised the Trump administration for “ignor[ing] more accurate scientific information when it is available,” referring to a 2017 executive order directing agencies not to account for the SCC. The decision could test the Biden administration’s willingness to undo permitting decisions made by the previous administration. On his first day in office, President Biden issued an executive order re-establish the Obama-era Interagency Working Group (IWG) on the Social Cost of Greenhouse Gases that was disbanded by Trump, and the order also directs the government’s issuance of an interim social cost of GHG schedule. (Climate Nexus)


Fuel focus – Australia has released a discussion paper on transport sector carbon emissions, and businesses will be encouraged to invest in plug-in hybrid and electric car fleets in an attempt to increase private uptake by flooding the second-hand market with new vehicle technologies at lower prices, reports the Sydney Morning Herald. The government ruled out offering taxpayer subsidies for the private uptake of plug-in hybrids and battery electric cars, arguing in that subsidies would not represent value for money in efforts to drive down carbon emissions.

Gong gone – The New South Wales Independent Planning Commission has rejected plans by South 32 to expand a major coal mine near Wollongong, citing a number of environmental concerns, including GHG emissions. Scope 1 emissions from the mine would amount to 17-22 MtCO2e over its lifetime, or 600,000-750,000 tonnes per year, while Scope 3 emissions would total some 236 Mt. The commission said the proponent had not done enough to limit GHGs, such as proposing to buy carbon credits to offset unavoidable emissions.

Auction prep The New Zealand government on Friday introduced legislation to parliament aimed at ensuring NZUs sold at government auctions don’t clear too far below prices in the secondary market. The bill stipulates that the auction operator sets a confidential reserve price for each quarterly sale. The introduction means the reserve price will likely be in place by the first NZU auction, scheduled for Mar. 17.

No walkover Japan’s prime minister has asked two different ministries to develop and propose a carbon pricing mechanism that can help the country meet increased ambition under the Paris Agreement. But while attitude in the leadership has shifted on the issue, winning the support of industry remains a significant roadblock. Nissho Mimura, president of the Japan Chamber of Commerce, has repeated his opposition to a carbon price, according to NHK. Mimura said only technology development could achieve net zero emissions, and that generous support should be provided towards that.


Fossils for forests – Moscow-headquartered Rosneft Oil Company and oil major BP on Thursday announced they have signed a Strategic Collaboration Agreement focused on supporting carbon management and sustainability activities of both companies. The companies intend to work together on opportunities for low-carbon solutions in downstream businesses, including the development of advanced fuel as well as evaluating the potential for the development of natural forest sinks and trading of forest-based carbon offsets. Rosneft and BP will also jointly evaluate new projects envisaging the use of renewables, opportunities for CCUS, as well as developments for hydrogen.

Indonesian investment – Indonesia-based restoration project developer Forest Carbon on Thursday announced it has secured an $11 mln investment from global asset manager AXA IM Alts, with technical support from the United States Agency for International Development (USAID). Forest Carbon’s first project, the Sumatra Merang Peatland Project, secured premium carbon offset buyers to restore a globally significant peatland forest with habitat for Sumatran tigers and other species, and the $11-mln investment will reduce the time required to bring new projects to market by leveraging technology such as machine learning and Internet of Things (IoT) sensors for real-time impact verification. Mirova Natural Capital, an environmentally focused asset manager, structured the deal.

VCS update – Offset standard developer and manager Verra on Friday published an update for the transition of carbon projects and GHG credits to its VCS Programme from other emissions reduction programmes approved under the VCS. Verra said it must update the VCS Programme from time to time to ensure that funding reaches those projects most in need of carbon finance to deliver real, additional emissions reductions.


Because of course it did – A new study published today in the journal Science of the Total Environment provides the first evidence of a mechanism by which climate change could have played a direct role in the emergence of SARS-CoV-2, the virus that caused the COVID-19 pandemic. The study led by the University of Cambridge has revealed large-scale changes in the type of vegetation in the southern Chinese Yunnan province, and adjacent regions in Myanmar and Laos, over the last century. Climatic changes including increases in temperature, sunlight, and atmospheric CO2 – which affect the growth of plants and trees – have changed natural habitats from tropical shrubland to tropical savannah and deciduous woodland. This created a suitable environment for many bat species that predominantly live in forests. The number of coronaviruses in an area is closely linked to the number of different bat species present. The study found that an additional 40 bat species have moved into the southern Chinese Yunnan province in the past century, harbouring around 100 more types of bat-borne coronavirus. This ‘global hotspot’ is the region where genetic data suggests SARS-CoV-2 may have arisen.

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