CP Daily: Tuesday March 2, 2021

Published 23:00 on March 2, 2021  /  Last updated at 23:00 on March 2, 2021  /  Newsletter  /  No Comments

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

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TOP STORY

Strong rebound risks cancelling out COVID-era emissions drop -IEA

A strong China-led rebound from last year’s coronavirus restrictions pushed global energy-related CO2 emissions above historical levels towards the end of 2020, International Energy Agency (IEA) data showed Tuesday.

EMEA

Brussels launches investigation into Germany’s compensation scheme for lignite plant closures

The European Commission has opened an in-depth investigation into Germany’s €4.35 billion scheme to compensate the early closures of lignite-fired power plants, to review if the programme complies with the bloc’s state aid rules, the EU’s executive announced Tuesday.

EU Market: EUAs rise 3.3% as bulls regain confidence following technical bounce

EUAs lifted back above €38 on Tuesday, reversing course after three straight days of losses as the market found support even after a weaker auction.

ASIA PACIFIC

China’s State Grid releases carbon neutral action plan, vows to accommodate ETS

China’s State Grid Corp. released a ‘carbon peaking and carbon neutral’ action plan on Monday, outlining a raft of measures it will take over the next few years, including making sure the national ETS can have a bigger impact on electricity emissions.

CN Markets: Pilot activity quietens as focus turns to national ETS, CCERs

Interrupted by week-long Lunar New Year celebrations, China’s pilot carbon markets saw a drop in activity in February as traders got busy tracking down potential sources of offset supply for use in the national emissions trading scheme.

Singapore companies target all of ASEAN for solar power CDM programme

The UN has registered a Programme of Activities (PoA) under the Clean Development Mechanism (CDM), with the initiative’s two Singapore-based proponents aiming to generate carbon credits across the entire South East Asian region.

AMERICAS

US to push countries for more ambitious Paris NDCs at April climate summit

US President Joe Biden’s (D) administration will urge nations to set more ambitious climate pledges during its spring climate summit, while the US will lay out its own revised nationally-determined contribution (NDC), Special Presidential Envoy for Climate John Kerry said at CERAWeek by IHS Markit on Tuesday.

California offset task force completes final report with few changes

A California task force finalised recommendations on Tuesday to increase the supply of compliance offsets with a direct environmental benefit to the state (DEBs), with state regulator ARB slated to examine whether to proceed with the suggestions.

RFS Market: RIN prices soar to near multi-year highs

US biofuel credit (RIN) values under the Renewable Fuel Standard (RFS) surged on Tuesday to threaten records not seen since the last decade on continued strength in the bean oil-heating oil spread, though some market participants were confounded by the new heights.

VOLUNTARY

VCM taskforce moves forward with working groups to inform core carbon principles

A private sector voluntary carbon market (VCM) taskforce on Tuesday moved into the second phase of its development with three working groups and a ten-member advisory board to provide input on increasing the quality of voluntary emission reductions (VERs) and develop standard contracts and governance principles.

Dutch traders Vitol to offer carbon-neutral LNG product

Energy and commodity trading group Vitol said Monday that it will use voluntary emission reductions (VERs) to offer carbon-neutral liquified natural gas (LNG) to its customers, building on a raft of similar approaches and deals from fossil fuel companies in recent months.

Offset developer Aera sells minority stake to help fund expansion plans

African offset developer Aera has sold a 35% stake to public-private infrastructure firm Arise, aiming to help fuel its expansion plans and tap Asian demand.

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BITE-SIZED UPDATES FROM AROUND THE WORLD

INTERNATIONAL

Change of tone – An Australian former minister, widely criticised by environmentalists, has made it to the final two contenders to lead the OECD, Climate Home reports. Mathias Cormann, who opposed climate pricing, renewable energy targets, and a green bank while in government, will run off against Swedish candidate Cecilia Malmstrom after the Greek candidate dropped out. Cormann’s record on climate change is seen as the biggest barrier to his selection. His campaign has fought back against criticism and he has pledged to address climate change if selected. “On the critical issue of taking ambitious and effective action on climate change, it is essential that the OECD provide global leadership,” he wrote in a statement published on LinkedIn on Tuesday. “Achieving global net zero emissions by 2050 requires an urgent and major international effort.” According to the Lowy Institute, the US is likely to back Cormann due to aligned positions on issues like digital taxes and expanding membership.

Ministers assemble – Countries that are most vulnerable to the impacts of climate change will be the focus of a summit hosted by the UK on Mar. 31, as part of the road to COP26 in Glasgow this year. The climate and development ministerial meeting will bring together countries and partners to focus on how to work together on mitigating the impacts of climate change, debt relief, and access to finance. The event, which will be co-chaired by COP26 President Alok Sharma and British Foreign Secretary Dominic Raab, will be convened virtually.

EMEA

Exit through the back door – The European Commission’s proposed Euro 7 emission rules on cars, vans, trucks, and buses would amount to “a ban through the back door” of internal combustion engines as of 2025 if implemented in their current form, industry has said, calling the proposal premature and “completely out of the question”. The ‘Euro 7‘ rules aim to ensure vehicles are clean over their entire lifetime, helping Europe to meet its European Green Deal targets. The exact details are still under discussion, but they are already creating jitters at VDMA, a German trade association representing mechanical engineering companies. “The planned obligation that new vehicles in Europe must be practically emission-free from 2025 onwards would be an ecological, economic and technological aberration,” VDMA said in a statement. VDMA argues that the introduction of e-fuels means the internal combustion engine will continue to play a role in the shift to green transport. E-fuels, such as liquid hydrogen, can be created from electricity provided by renewables, offering a green alternative to fossil fuels. However, these fuels currently have a much higher cost of production and require large amounts of energy to be carbon neutral. (Euractiv)

Polished recovery plan – Poland plans to invest €797 mln to develop the production and distribution of hydrogen, using the EU’s economic rescue fund to speed up its shift to clean energy. The bloc’s stimulus programme is centered around its Green Deal strategy, with more than a third of the funding required to be for climate-related projects. The overhaul of Poland’s energy mix will be “extremely costly” but in the longer term green technologies may become the driving force of the economy, according to the government in Warsaw. “The green transition will be a chance for the modernisation of the economy and the growth of Polish companies,” it said in a draft plan, which is currently being consulted with the public. (Bloomberg)

One tax to rule them all – British Chancellor Rishi Sunak will reveal a new budget on Wednesday, and one influential right-leaning think-tank thinks it could be a present an important opportunity for the UK government to abolish or consolidate a number of the country’s taxes. According to a briefing paper from the Institute of Economic Affairs, economic growth and simplifying the UK tax system – with Britain’s current tax code ranking as the world’s largest at over 10 mln words, longer than the Lord of the Rings trilogy – must be a priority for legislators. The authors called for a “tax system that has a low negative effect on welfare and efficiency, with small compliance and administration costs. A system that is non-discriminatory, avoids double taxation, and that is transparent and easy to understand.” In particular, they propose introducing a single, non-distortionary, environmental taxation system – either through an ETS or through a carbon tax – to replace environmental taxes such as the climate change levy or renewable obligations. As well, they suggest scrapping Air Passenger Duty, and wrapping it into the government’s general environmental policies and carbon pricing system.

Barc-ing up the right tree – UK investment bank Barclays faces a second consecutive year of shareholder pressure on its position as Europe’s largest fossil fuel financier, with a shareholder resolution filed for the bank’s upcoming AGM on 5 May calling for financing and exposure to coal, oil, and gas to fall in line with the Paris Agreement’s climate goals. Despite several alterations to policy related to climate change made after last year’s annual general meeting, Barclays “still has not demonstrated that its provision of financial services – particularly in regard to the coal, oil and gas sectors – is aligned with the Paris Agreement,” according to environmental lobby group Market Forces, which has initiated the motion. Barclays is also the seventh largest financier of fossil fuels in the world, financing just over $118 bln to those three sectors in the four years since the Paris Agreement. In the first nine months of 2020, Barclays financed another $24 bln to fossil fuels, an increase on the equivalent time period the previous year. Last week, a report found Barclays to be the fifth largest lender in the world to the coal industry over the past two years. (City AM)

AMERICAS

CBAM consideration – President Joe Biden’s administration said on Monday it would consider carbon border adjustment taxes to help cut emissions in global trade. Releasing a new administration trade agenda, the US Trade Representative’s office said the CBAM, which consists of import fees levied by carbon-taxing countries on goods manufactured in non-carbon-taxing countries, would be considered as part of an effort to explore and develop market and regulatory approaches to reduce GHGs. (Reuters)

Carbon pricing consideration – The American Petroleum Institute (API), one of the most powerful trade associations in Washington, is poised to embrace putting a price on carbon emissions as a policy that would “lead to the most economic paths to achieve the ambitions of the Paris Agreement,” according to a draft statement reviewed by The Wall Street Journal. “API supports economy-wide carbon pricing as the primary government climate policy instrument to reduce CO2 emissions while helping keep energy affordable, instead of mandates or prescriptive regulatory action,” the draft statement says. The API statement would mark a significant shift for the US’ top oil industry lobbying group, although the posture comes as the Biden administration and Congress have not prioritised CO2 pricing amongst their proposed suite of climate legislation and regulations. (Axios)

All about the cables – The US could cut emissions from its electricity grid in half within the next decade through investments in renewables and transmission, according to a research team backed by Bill Gates. At a cost of $1.5 trillion, the US could reach 70% carbon-free electricity and reduce its emissions by 42% by 2030. The new model comes from Breakthrough Energy Sciences (BES), a division of the Gates-founded organisation that works to promote innovation that will help eliminate GHGs. The research focuses on four options for a beefed up power grid that would help connect the country’s abundant but far-flung renewable resources to the people that need them. All require a massive scale-up of wind and solar farms; the main difference is how the clean energy that’s generated is distributed along power lines. And, crucially, decarbonisation of the grid will have to happen even as it has to be made more resilient to extreme weather events that will increase in frequency. (Bloomberg)

Pump dump – Petaluma, California – a city of 61,000 residents and 15 square miles in size – has become the first city in the US to permanently halt the construction of new gas stations. The legislation will also outlaw new pumps at existing stations and streamline the process for adding more EV infrastructure like electric charging bays and hydrogen fuel cell facilities. The new prohibition is part of Petaluma’s plan to completely phase out carbon emissions by 2030, though other environmental groups are pushing for a ban on the entire Sonoma County, which includes Petaluma and eight other cities. Last year, California banned the sale of new gas-powered cars by 2035 and will require 75% of heavy trucks sold locally to be electric by that date. There are also plans to build an electric highway along the Pacific Coast. (Seeking Alpha)

VOLUNTARY

Hy-flyer – UAE’s Etihad Airways, the first airline in the Middle East to announce net zero carbon emissions by 2050, is exploring the potential use of synthetic fuel — hydrogen mixed with carbon — on future flights and is working on boosting its offsets programme, S&P Global Platts reports. Etihad is working with Siemens Energy, Abu Dhabi-based clean energy firm Masdar, and Japan’s Marubeni Corp. to explore the production of synthetic fuel as part of a wider strategy to use sustainable aviation fuel (SAF) on future flights. The carrier also wants to work on its carbon offsets programme, which started off last year with 80,000 tonnes and was expanded this year with at least an extra 10,000 tonnes, and is expected to grow further as the year progresses. The expanded programme is being supported by Shell and Etihad is exploring adding other providers of offsets. Etihad has committed to net zero emissions by 2050, a 50% reduction in net emissions by 2035, and a 20% reduction in emissions intensity in its passenger fleet by 2025. In Oct. 2020, it sold a $600 mln Islamic bond linked to its carbon reduction targets.

AND FINALLY…

Carbon creations – A wide range of environmentally friendly products already exist, but a new Canadian online store is now offering items made, in part, using GHG emissions. Expedition Air sells an assortment of items manufactured from CO2 including concrete planters, yoga mats, crayons, and paintings, CBC reports. Those behind the new venture admit that buying a bar of soap or a pen isn’t going to make a big difference in tackling climate change, but it could push bigger brands to pay more attention to the materials they use. Expedition Air is a spinoff of Carbon Upcycling Technologies, a Calgary-based firm that is a finalist for the Carbon XPRIZEa global competition to create technology that converts CO2 into valuable products. The company has spent the past six years developing technology to capture emissions and use the material in making concrete and plastics, among other uses. Most of the emissions are captured from a natural gas power plant in southeast Calgary and turned into a powder that is then used as one of the ingredients for the products created. Carbon Upcycling’s latest piece of equipment can produce about eight tonnes of the carbon material every day.

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