CP Daily: Monday March 8, 2021

Published 23:46 on March 8, 2021  /  Last updated at 23:46 on March 8, 2021  /  Newsletter  /  No Comments

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

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TOP STORY

FEATURE: Commoditisation of voluntary carbon market risks eroding gender-sensitive projects

Efforts to scale up the voluntary carbon market (VCM) could pose a “huge risk” for certifiers embedding gender equality practices into offset projects, experts said in light of International Women’s Day on Monday.

AMERICAS

ANALYSIS: Texas power losses may have contributed to low RGGI auction settlement

Compliance entities likely deferred RGGI allowance procurement at the Q1 auction due to losses in the Texas power market, while some regulated parties hedged demand prior to the quarterly sale, participants said.

Quebec revises two offset protocols, shifts regulatory text out of cap-and-trade rules

Quebec released two new draft offset protocols for its WCI-linked cap-and-trade system on Monday, as the environmental ministry intends to facilitate the adoption of additional protocols by shifting the credit programme regulatory text out of the emissions trading scheme.

Commodity trading firm buys offsets from RGGI’s lone project

A RGGI speculator has purchased the only carbon offsets ever created in the Northeast US power sector cap-and-trade programme, the counterparties announced Monday.

EMEA

EU Market: EUAs inch up as observers eye re-test of €40 on technicals, compliance buying

EUAs inched closer to €40 on Monday as observers eyed a revisiting of record levels on technical strength, chillier weather, and the expectation that a number of emitters could be forced into the market last minute to cover their 2020 emissions.

Ukraine sets 2060 climate neutrality target amid carbon market planning

Ukraine aims to become climate neutral no later than 2060, according to the country’s long-term economic strategy approved by Kyiv last week that brings forward the goal by 10 years.

Shell receives Europe’s first carbon neutral LNG cargo as Brits seek out greener gas

Asia’s recent spurt of carbon neutral LNG shipments has spread to Europe, as British consumers spur efforts to green the country’s gas supply while direct solutions remain costly.

ASIA PACIFIC

NZ Market: NZUs steady below NZ$39 with all eyes on first auction

New Zealand carbon allowances have stabilised at a shade below NZ$39 ($27.93) in recent days, as traders show limited appetite to take major new positions ahead of next week’s inaugural auction.

VOLUNTARY

VCM Report: GEO futures climb during first week of trading

Voluntary emission reduction (VER) prices spiked this week as CME Group launched its CBL Global Emissions Offset (GEO) futures contract, while African project developers also noted that voluntary carbon market (VCM) prices and volumes have increased on the continent in recent months.

INTERNATIONAL

Carbon pricing cheapest, most efficient way to cut emissions, finds Amazon-led study

Putting a price on greenhouse gases is the cheapest and most efficient method that legislators can employ to cut climate-warming emissions, according to new research backed by online retailer Amazon.

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BITE-SIZED UPDATES FROM AROUND THE WORLD

Carbon Pulse has teamed up with CME Group to provide its clients with regular updates on the global carbon markets. Check out these briefs for the latest insights on pressing trends and events impacting markets, published every other week. Registration required.

EMEA

‘Nein’ to EU-Mercosur deal – Austria’s coalition government has confirmed it will block the landmark EU-Mercosur trade agreement, which should create the biggest free-trade area in the world, saying it goes against the EU’s environmental ambitions set out in the European Green Deal. “The extensive forest fires in the Amazon region […] in combination with the increase of intensive agro-industrial mode of agricultural production in Mercosur countries will exacerbate global warming,” Vice-Chancellor Werner Kogler wrote in a letter. “If we go on boosting trade and economic growth without taking the impacts on biodiversity, ecosystems and natural resources into account, we will inevitably be heading towards a climate catastrophe,” he added. For this reason, Kogler said, the government coalition has rejected the deal and called on the rotating EU Council presidency held by Portugal to avoid any political “manoeuvre” to bring the trade deal through the back door. (Euractiv)

Steel SOS – Specialist bank Greensill Capital, the principal financial backer of one of Europe’s largest industrial groups, has fallen into administration, the BBC reports. Greensill was the main lender to businessman Sanjeev Gupta’s sprawling empire, which includes Liberty Steel, one of the biggest steelmakers and emitters on the continent. A spokesman for Gupta said Liberty’s operations were “running as normal”, had adequate funding for their current needs and that the refinancing plans were progressing. The issue could impact the group’s ability to comply with its EU ETS obligations ahead of the end-April deadline to cover 2020 emissions – read Carbon Pulse’ article on how Liberty sold more than more than €100 million worth of EUAs last January and February, opting to offload the units only months after the expansion of its steelmaking division across Europe.

Berlin calling – Germany has called for greater co-operation with Russia on climate change in a contentious new effort to restore frayed EU ties with Moscow, the Financial Times reports. The EU should develop a “concrete and detailed strategy” on global warming as part of a broader attempt to “selectively engage” with the Kremlin, according to a document drawn up by Germany ahead of EU leaders’ talks on Russia this month. “While so far not a policy priority for Russia, environmental disasters and climate change effects felt in its territory become increasingly relevant for Russia’s population and thus for the government,” the document states, adding that the bloc should approach Moscow “at a time of our own choosing”.

Credit crunch – Rising carbon prices will benefit most European unregulated utilities, although the higher costs are unlikely to have a large impact on the sector’s overall credit quality, Moody’s Investors Service said in a report. Most utilities have diversified away from commodity-exposed activities, with a small percentage of their earnings directly exposed to wholesale power prices, limiting the positive business impact of higher power prices through 2021, the rating agency said. A sustained rise in CO2 prices could increase political risk should it lead to government intervention in the event of steep increases in retail electricity prices, Moody’s added.

Consultation time – Britain’s Financial Conduct Authority (FCA) has launched a consultation over how the watchdog will authorise and supervise certain firms intending to bid for emissions allowances in the UK ETS.  The FCA is consulting to restore (with minor changes for post-Brexit jurisdiction) rules for auctions, as the previous rules were deleted when the UK ended the 11-month transition period at the end of 2020. The consultation supports and supplements government legislation relating to bidding on the UK auction platform – hosted by ICE Futures Europe – and trading allowances in the secondary market, with the aim of maintaining transparency and integrity.  The consultation runs for four weeks and ends on Apr. 6 – a shorter period than the normal two months due to the rules needing to be in place ahead of the first UK ETS auction on May 19.

Morrisons makes it net zero – UK supermarket chain Morrisons, Britain’s fourth-largest after Tesco, Sainsbury’s and Asda, says it will source exclusively from net-zero British farms by 2030, largely by switching to renewable energy, reducing water and fertiliser use and embracing climate-smart agriculture. Offsetting will be posed as a last step and farmers will be encouraged to restore grassland, peatland, forest and hedgerows on their own estate or elsewhere in the UK rather than purchasing carbon credits that fund projects overseas, Edie reports.

ASIA PACIFIC

Big change coming – China Huadian Corp aims to close more than 3 GW of coal-fired power capacity in the next five years and increase renewables to make up half of its total power generation mix, the company chairman told Reuters. The move is the latest in a string of strategies to emerge from major Chinese emitters in recent months to align with president Xi Jinping’s ambition to make the country carbon neutral by 2060.

Fresh funds – The New South Wales state government in Australia on Monday announced a new A$750 million ($578 mln) programme that businesses in sectors where emissions are hard to reduce can use to help develop cleaner technologies, the ABC reports. The net-zero industry and innovation program will be separated into three different focus areas of high-emitting technologies, new low-carbon industry foundations and clean technology innovation.

More steel – Australia’s BHP Billiton and China’s HBIS Group on Monday announced an MoU with the intention of spending up to $15 million over three years to study and explore ways to cut carbon emissions from steel production. The main areas of co-operation will be hydrogen-based direct reduction technology, the recycling and reuse of steelmaking slag, and the role of iron ore lump utilisation. BHP has previously launched similar partnerships with China’s Bauwu Steel and Japan’s JFE.

AMERICAS

Back so soon? – Ontario’s New Democrats say they will create a new cap-and-trade programme if elected next year, the official opposition party announced Saturday in the environmental policy plank of its election platform. Party leader Andrea Horwath said the province needs the carbon pricing system to help fight climate change, and she added the system would generate C$30 bln in revenue. Ontario’s Progressive Conservative government abruptly scrapped the province’s WCI-linked cap-and-trade system in 2018, a regime introduced by the previous Liberal government. (Canadian Press)

AND FINALLY…

Frankly my dear, I don’t give a Graham – Republican Senator Lindsey Graham told Axios on HBO he intends to “lean into” climate change and that he has already discussed potential common ground with President Biden’s special climate envoy John Kerry. In a follow-up interview with Axios, Graham said Kerry called him in November, around the time Kerry’s new position was announced, to see if there were openings to work together. Over a decade ago, he negotiated for months on a cap-and-trade bill with then-Democratic senators Kerry and Joe Lieberman, but Graham abruptly walked away in Apr. 2010, dealing a mortal blow to the legislation that collapsed entirely months later.

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