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TOP STORY
EU Market: EUAs hit new all-time peak above €42 as rally continues
EU carbon’s record-breaking run stretched to a third day on Thursday, with prices climbing above €42 amid supportive energy and equity markets as the bullish speculative mood continues to hold sway.
AMERICAS
RFS Market: RIN credits barnstorm toward all-time high
US biofuel credits (RINs) continued their recent torrid stretch on Thursday morning, closing in on record prices under the Renewable Fuel Standard (RFS) not seen since 2013.
NA Markets: RGGI prices slide following Q1 auction results, CCAs stagnate on few near-term drivers
RGGI Allowance (RGA) prices dropped to a six-week low this week after the Q1 auction settled significantly below the secondary market level, while California Carbon Allowance (CCA) values remained stagnant as traders shifted positions along the curve.
Massachusetts generators fully comply with GWSA carbon market obligations
All generators regulated under Massachusetts’ Global Warming Solutions Act (GWSA) power sector cap-and-trade programme complied at the Mar. 1 deadline for 2020 emissions, according to a state agency.
Colombian utility schedules March auction for 2 mln carbon offsets
Colombia’s Empresas Publicas de Medellin (EPM) will sell 2 million carbon offsets from hydroelectric and wind projects on Mar. 23, the residential public utilities company announced Wednesday.
EMEA
Poland sees its ETS-covered CO2 output falling 10% by 2030
Poland expects to reduce its EU ETS-covered emissions 10.3% by the end of the decade, according to an energy strategy published late Wednesday that would keep coal in use far longer than experts say is needed to curb global warming.
Brussels seeks views on whether to include EU carbon in collateral regulations
The European Commission is seeking views on whether EUAs should be added to the definition of financial instruments in the bloc’s Financial Collateral Directive, it said in a statement late on Thursday.
Scottish env. regulator restores ETS system access, while German trading agency email goes down
The Scottish Environment Protection Agency (SEPA) has restored access to Britain’s carbon market MRV system following a cyberattack, while the German emissions trading agency’s email system went down this week.
ICE to delist Phase 4 daily EUA futures, offer general spot contract from early May
ICE Futures Europe will delist its Phase 4 EU Allowance daily futures at the end of April as the current bifurcation seen in the European carbon market dissipates, with the bourse modifying its Phase 3 contract to offer trade in EUAs from either period.
VOLUNTARY
New net zero standard favours SBTi guidance on offsetting
The Institutional Investors Group on Climate Change (IIGCC) this week released the implementation guide for its net zero framework, building on the roadmap from the Science-Based Targets Initiative (SBTi) by intentionally downplaying the role of offsets to encourage absolute reductions over the long term.
Xpansiv launches nature-based carbon offset product
Spot commodities exchange and market data firm Xpansiv launched a nature-based version of its Global Emissions Offset (GEO) on Thursday, building on the firm’s spot and futures offerings of its CORSIA-aligned carbon credits.
ASIA PACIFIC
New Zealand adopts contested CO2 auction reserve price mechanism
New Zealand lawmakers have adopted a confidential reserve price mechanism for carbon permit auctions that observers say creates greater uncertainty and adds unnecessary risk of a failed sale.
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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.
INTERNATIONAL
Not building back greener – Less than one dollar out of five spent so far in governments’ $14.6 trillion in post-pandemic stimulus measures will help fight global warming and heal nature, according to a report by the UNEP and Oxford University that found about 2-3% of the spending is actually “dirty,” boosting use of climate-damaging fossil fuels. The report came out the same day that the US Congress approved a $1.9 trillion pandemic rescue plan engineered by President Joe Biden, who signed the bill Thursday. The report places the US in the “potential to act” category behind places like Norway, Germany, Finland, Canada, and France, but ahead of China, Japan, the UK, Russia, and Saudi Arabia in percentage of recovery spending that is green. (AP)
Ship happening – A number of maritime-minded countries are backing the shipping industry’s call for a $5 bln R&D fund to help decarbonise the sector, Splash 247 reports. The proposal was officially submitted to the International Maritime Organization (IMO) on Wednesday, backed by member states including Greece, Japan, Liberia, and Singapore with the aim of getting it ratified later this year. A number of environmental groups have lambasted the idea, saying the $5 bln figure is too small. Read Carbon Pulse’s article on the proposal, which features a mandatory levy of $2 per tonne on marine fuel.
Charges for barges – Separately, the IMO is facing a call to impose a $100/tonne levy on GHGs from ships, in what Lloyds List says the first ever concrete proposal for an carbon tax on shipping. The Marshall Islands and the Solomon Islands have made the proposal to the IMO’s Marine Environment Protection Committee in June. The proposal seen by Lloyd’s List would establish a mandatory and universal GHG emissions levy by 2025 with an entry price of $100/tCOe followed by “upward ratchets on a 5-yearly review cycle”. “The levy could either be levied at point of bunker or emissions but the co-sponsors note that most evidence reviewed suggests efficiency and ease of a levy on bunker,” the joint proposal to the IMO said. The two countries want it to be applied to all ships without exceptions.
Softer Shell – Oil major Shell’s total greenhouse gas emissions dropped 16% to 1.38 bln tonnes of CO2e in 2020 as oil and gas sales fell sharply due to the coronavirus pandemic. The data includes gases from the combustion of fuels Shell produces itself, plus the oil products its sells that are produced by another company, which as the owner of the world’s biggest fuel retail network is considerable. Shell’s net carbon intensity dropped 4% to 75 gCO2e/megajoule. (Reuters)
EMEA
Calling in a favour – The UK government is “calling in” a controversial plan for a new deep coking coal mine in Cumbria, according to a letter seen by The Independent. Local government minister Robert Jenrick has decided to intervene in plans for the mine following “increased controversy” surrounding the application, the letter says. The government, which is hosting the COP26 UN climate talks later this year, has come under fire for refusing to intervene in the plans, which have been approved by Cumbria County Council on three separate occasions. Last month, the council announced that it would review the plans again in light of “new information”. The letter, from a planning decision officer for the ministry, says that Jenrick plans to hold a public inquiry over the mine, and adds his decision to intervene comes in light of a recent report from the UK’s independent climate advisers.
Gas returns – The European Commission is reconsidering the position of gas in its sustainable finance taxonomy by recognising the fossil fuel’s role in keeping the lights on during peak electricity demand, according to a leaked document seen by Euractiv. The draft rules would enable gas plants which operate for less than 2,000 hours a year to fit into a “transition” category in the sustainable finance taxonomy because they would “guarantee the reliability of electricity supply” until their operating hours eventually fall down to zero by 2050. Critics argue the Commission is going too far in its concessions to pro-gas EU member states.
Bad burn – Rising EUA prices have almost halved the profitability of modern lignite-fired power plants in Germany beyond 2024, taking almost half of the country’s lignite fleet into loss-making territory based on current forward prices. Clean lignite spreads for a unit with an efficiency of 43% — the highest for this technology in the country — for 2024 were at €5.96/MWh yesterday, based on assumed lignite costs of €2.85/MWh and Argus’ OTC assessments of German power and EUAs. Germany has around 3.6 GW of lignite-fired capacity with this efficiency — units built in the 2010s. Generating margins for the most efficient lignite-fired plants have fallen by 48% since Dec. 15, as EUA prices have risen sharply. (Argus)
Due diligence – MEPs passed a resolution to tackle environmental and human rights issues in the supply chains of EU businesses on Wednesday ahead of the Commission’s proposal on corporate due diligence later this year. The report introduces mandatory due diligence to ensure supply chains do not include environmental or human rights violations and calls for fines and sanctions for those found breaching the rules. It also demands better access to justice for victims in third countries. (Euractiv)
Go long – A coalition of short-haul airlines, other aviation organisations and environmental groups are calling on the European Commission to ensure that long-haul flights are included in a forthcoming EU mandate on the use of sustainable aviation fuel. The group, which includes Ryanair and EasyJet, has written to the Commission urging fuel suppliers to be made responsible for ensuring that SAF is included in jet kerosene supplies, ensuing equal treatment for long- and short-haul carriers. It follows concern that policy proposals from the Commission could limit the EU’s ReFuel EU Aviation initiative to intra-European Economic Area flights, and oblige airlines to ensure a percentage of SAF is included in kerosene-based fuel. (FlightGlobal)
Test phase – Hydrogen project leaders are testing different ways to integrate hydrogen into the UK gas network and trying to demonstrate if their methods will work ahead of the expected regulations, S&P Global Platts reports. Projects are still in the “prove it” phase that typically comes ahead of government regulations, Antony Green, head of hydrogen for the UK’s National Grid, told the World Hydrogen Summit. The National Grid’s FutureGrid project will decommission existing parts of its extensive gas network for hydrogen blends at 2%, 20%, and 100% if the tests are successful.
Second coming – Vivid Economics will hold its second expert workshop on the EU ETS’ Market Stability Reserve on Mar. 24, as part of its agreement with the European Commission. The EU’s executive is required to conduct a review of the MSR within three years of its Jan. 2019 start of operation, and it is set to coincide with larger proposed reforms to the ETS due to be unveiled in June. “This work includes assessment, where relevant, of interactions between the MSR and other planned policies, including the European Green Deal, and their implications for EU ETS functioning,” the Commission said on its website Thursday. The first workshop, held on Dec. 3, gathered input on the functioning of the MSR, and the risks and considerations for development of the reserve in the future. The second workshop will present the initial findings of Vivid’s study, as well as more opinions from market experts. Read Carbon Pulse’s key takeaways from the first workshop
Locked up – Energy consultant Thomas Pilgram will go to jail for more than three years for carbon tax fraud after he did not appeal his sentence, a Leipzig regional court spokesman told Montel on Thursday. “No appeal was lodged, so the ruling will now enter into force,” said court spokesman Johann Jagenlauf, though he couldn’t say when Pilgram would start serving his sentence. The court handed down a sentence last week of three years and three months for the fraud which involved two cases and tax evasion related to EUAs.
AMERICAS
He’s right outside your door, now testify – FedEx Chief Executive Frederick Smith will testify before Congress on Wednesday as US lawmakers begin a push for a massive hike in infrastructure spending and push toward electric vehicles, congressional aides told Reuters on Thursday. The previously unreported testimony will come at a hearing before the House Transportation and Infrastructure Committee titled “The Business Case for Climate Solutions” and is also expected to include testimony from electric utility PG&E. Representative Peter DeFazio, a Democrat who chairs the panel, said in an interview that a massive infrastructure bill will create millions of new jobs and reduce carbon emissions.
I’ll retool you – Meanwhile, Senate Democrats are retooling energy tax reform legislation that was first proposed two years ago but which failed to advance in a Republican-led Congress. The Clean Energy for America Act could include technology-neutral incentives rather than wind- and solar-specific credits, and would aim to move beyond the current cycle of short-term incentive extensions to a more permanent approach, according to Bobby Andres, senior policy adviser to Democrats on the Senate Finance Committee. “We’re actively working on updating that bill for reintroduction and very much view it as a cornerstone of the efforts on energy tax this Congress,” Andres said Wednesday at the virtual American Council on Renewable Energy (ACORE) Policy Forum. (Utility Dive)
Nuke rebuke – Revenue from New Brunswick’s carbon tax is helping fund long-term nuclear reactor research instead of being used to help more low-income people quickly reduce their energy consumption, according to a Green Party MLA. Megan Mitton told provincial officials at a legislative committee hearing that she also can’t understand why C$10 mln in the provincial climate fund isn’t being spent at all this year. Additionally, of the C$25.9 mln being used, she argued much of it is going to projects that will have no impact on fossil fuel emissions for a long time, if ever, such as C$5 mln allotted to support the development of small modular nuclear reactors. (CBC)
Turning the tide – Tidewater Midstream and Infrastructure Ltd. says it expects to receive C$100 mln in provincial low-carbon fuel standard (LCFS) credits if it proceeds with a plan to build renewable diesel and renewable hydrogen facilities at its Prince George Refinery in British Columbia. The Calgary-based company says the 3,000-bpd stand-alone complex would cost between C$215 mln and C$235 mln to build, which means the credits would equate to about 45% of the cost. It estimates that the asset could generate over $75 mln of adjusted earnings in its first year of operation, which could come as early as 2023. (Canadian Press)
AND FINALLY…
Screened out – Corporate broadcast TV nightly news and Sunday shows devoted just 112 minutes to climate change in 2020, the shortest duration since 2016, according to an analysis from Media Matters. While last year saw the biggest-ever California wildfire, the most named storms in the Atlantic, the costliest thunderstorm in US history, and a presidential race in which climate change played a central role, coverage of climate change dropped in half from 2019 to 2020 across ABC, CBS, NBC, and Fox News Sunday. Even when including network morning shows, which gave 267 minutes to climate coverage last year, the climate crisis accounted for just 0.4% of total corporate broadcast coverage. (Climate Nexus)
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