CP Daily: Wednesday March 24, 2021

Published 02:01 on March 25, 2021  /  Last updated at 09:12 on March 25, 2021  /  Newsletter  /  No Comments

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

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TOP STORY

Beijing positions itself as hub for China’s voluntary carbon trade

Beijing plans to set up a trading centre for voluntary carbon trading, the municipal government said Wednesday, a move seen as positioning the capital as the key hub for the voluntary market after Shanghai landed the right to serve the national compliance market.

AMERICAS

RGGI may struggle to hold bankrupt entities accountable for CO2 obligations, sources say

RGGI states may struggle to find ways to insulate the scheme from bankruptcy filings, with New York aiming to examine all elements during the upcoming programme review process, regulatory sources told Carbon Pulse.

California offset issuance sinks to four-month low

California Carbon Offset (CCO) issuances hit a four-month low this week as state regulator ARB doled out fewer than 200,000 new credits, according to data published Wednesday.

LCFS Market: California prices slide on reports of Brazilian ethanol shipments

California Low Carbon Fuel Standard (LCFS) prices came off this week due to several possible factors, including entities reportedly looking to import Brazilian ethanol and abundant renewable diesel volumes weighing on credit values.

Proposed Quebec LNG terminal may have limited long-term climate benefits -gov’t report

A proposed Quebec liquefied natural gas (LNG) terminal may provide few long-term climate benefits if constructed, with declining future foreign demand potentially making the facility redundant, according to a government report published Wednesday.

EMEA

Polish power supply at risk from further carbon price hikes, warns utility PGE

Another surge in EUA prices risks Poland’s electricity supply if the EU fails to intervene, the country’s biggest power generator PGE warned on Wednesday as Polish and EU officials touted prospects for the bloc’s recovery funds to clean the grid.

EU Market: EUAs notch small increase after bouncing off technical supports

EUAs erased intraday losses on Wednesday as late buying kicked in once it become clear technical supports above €40 were holding firm, as trading data showed the number of participants in the market reached a new all-time high.

INTERNATIONAL

Moody’s to explicitly delineate climate risk in all credit ratings

Moody’s Investor Services (MIS) will begin explicitly breaking out environmental, social, and governance (ESG) risk factors and listing them alongside credit ratings this year, panellists at a corporate governance event heard Wednesday.

VOLUNTARY

VER suppliers still subject to unbalanced scrutiny on carbon credits -developer

Voluntary emissions reduction (VER) generators are still facing disproportionate levels of scrutiny compared to the behaviours of corporate buyers, despite efforts of project proponents to work with communities and incorporate more social and economic goals, a REDD+ developer said Wednesday.

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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

Brown lending – Banks provided $750 bln in financing to coal, oil and gas companies last year, according to research conducted by activists at the Rainforest Action Network, who concluded that while lending and debt-and-equity underwriting for the sector fell by 9% in 2020, this may be down to a COVID blip as the overall trend is still heading definitively in the wrong direction. The report finds that French bank BNP Paribas had the largest absolute increase in fossil funding, with a 41% annual rise to $41 bln, despite positioning itself as a leader in green finance. (FT)

Lenders’ leap – Global central banks should take a leap in fighting climate change, offering to use their core business of monetary policy to drive the financial sector’s green transition, according to the Network for Greening the Financial System, a group of 89 central banks and supervisors that includes the US Federal Reserve and the European Central Bank. The network’s report published Wednesday outlined options on how the institutions can prod nations to lower carbon emissions, including adjusting credit operations to shifting collateral policies and asset-purchase programmes. (Bloomberg)

There’s the beef – JBS SA, the world’s largest meatpacker, has committed to zeroing the balance of its global GHG emissions by 2040, the company said on Tuesday, amid criticism of its role in a Brazilian beef industry driving rainforest destruction. The 2040 target announced by JBS comes amid a growing backlash from consumers and investors threatening to boycott or divest from companies contributing to deforestation in Brazil. (Successful Farming)

AMERICAS

Stick to your Bruns – New Brunswick Premier Blaine Higgs would not rule out keeping some form of its provincial 4.2-cent/L carbon price if the Supreme Court of Canada finds the federal carbon tax unconstitutional on Thursday. Higgs noted a need for the energy transition is clear, and governments need to determine the right path going forward rather than reversing existing environmental policy. In a separate move, a Court of Queen’s Bench justice ruled last week that New Brunswick must share carbon tax revenues with the Wolastoqey First Nations. The First Nations saw an estimated C$4.7-4.9 mln reduction in tax revenue after the province imposed its carbon tax in 2020. The province had argued it was not required to share the carbon tax revenues under existing agreements with the First Nations. (CBC/The Bend)

Swing (voter) and a miss – Most Canadians say the federal government’s carbon pricing regime won’t influence whether they vote Liberal in the next federal election, even though most strongly disapprove of the plan, according to a new poll. In December, PM Justin Trudeau’s administration announced its plan to cap the national CO2 price at C$170/tonne by 2030, a change from their previous commitment of C$50/tonne by 2022. Given the increase, a new Mainstreet Research poll commissioned by iPolitics asked voters whether they would be more or less likely to vote for the current government. The largest number of respondents said they were neither more nor less likely to vote Liberal (40%). followed by much less likely (24%) and much more likely (12%). When asked whether they approve or disapprove of the federal Liberals’ new carbon pricing plan, the largest number said they strongly disapprove (27%), followed by those who somewhat approve (22 per cent), and strongly approve (21%).

Industry insight – With heavy industries employing 300,000 Canadians – more than oil and gas – and with 127 countries around the world now working toward carbon neutrality, the country needs a federal action plan for clean industry, according to a report published Wednesday by think-tank Clean Energy Canada. The report said a competitive action plan would include using the clean products the country produces in government infrastructure, a strategic focus on the materials Canada can competitively supply a rapidly transitioning global economy, and providing investment and support for these well-positioned industries.

Bipartisan Booz – Arkansas Sen. John Boozman, the top Republican on the Senate agriculture committee, says a bipartisan group of senators will soon introduce a revised version of legislation offered last year to facilitate voluntary carbon trading for farmers and foresters, setting the stage for what could be the first climate bill to win approval this year. Boozman told an Agri-Pulse climate conference Mar. 23 that he and Chairwoman Debbie Stabenow (D-MI) have been working on revisions to legislation introduced last year to help rural stakeholders voluntarily participate in carbon markets. (InsideEPA, $)

Shifting into a higher gear – Two groups of Democratic lawmakers on Wednesday urged President Joe Biden to reinstate tough Obama-era vehicle emissions standards through 2025 and do more to shift the US toward electric vehicles, according to separate letters seen by Reuters that are not yet public. A group of more than 70 US House Democrats led by Rep. Doris Matsui urged Biden to set tough emissions rules that ensure “60% of the new passenger cars and trucks sold are zero-emission by 2030,” while 10 US senators led by Democrat Edward Markey urged Biden “to set a date by which new sales of fossil fuel vehicles will end entirely.”

Climate committee complement – The US Federal Reserve is dedicating a whole arm to climate risks in the financial system, as Fed Gov. Lael Brainard announced the creation of a Financial Stability Climate Committee on Tuesday as the industry engages in more soul searching on its carbon footprint. The new organisation would complement the central bank’s previously announced Supervision Climate Committee, which focuses on how climate change endangers banks under the Fed’s supervision. (Politico)

Shifty business – Utility Southern California Gas announced plans on Tuesday to reach net zero emissions by 2045, aligning with the Golden State’s own decarbonisation goal for its power sector. The US’ largest gas utility said renewable natural gas, hydrogen, and CCS could help the company hit its emissions target, while it made no reference to the use of offsets. The company intends to spend more than $2 bln to modernising its infrastructure, though CEO Scott Drury did not rule out the use of natural gas by 2045. Environmental groups questioned whether the company would follow through with its goal as it requires a significant deviation from its current carbon-intensive business. (Utility Dive)

Pricing Nature – Yale University has introduced a podcast about the economics, politics, and history of carbon pricing. Pricing Nature is a limited series from the Yale Carbon Charge, the Yale Center for Business and the Environment, and the Carbon Pricing Leadership Coalition. Each episode features conversations with carbon pricing experts from government, academia, and civil society. In the latest instalment the hosts explore the obstacles preventing the passage of a national carbon price, and the argument for a different approach to climate action. They speak with Senator Sheldon Whitehouse (D-RI), Nat Keohane (Senior Vice President for Climate at EDF), Saya Ameli Hajebi (Sunrise Movement activist), Carlos Curbelo (Former Congressman R-FL 26), David Roberts (Author of the Volts newsletter on clean energy and politics), and Susanne Brooks (Senior Director of US Climate Policy at EDF). Listen/subscribe here

EMEA

No driller killer – The UK government’s North Sea transition deal will allow oil drillers to keep exploring the North Sea for new reserves if projects pass a checkpoint to be designed this year to determine whether each application is compatible with the UK’s climate change objectives. A £16 bln joint investment also aims to support 40,000 jobs while industry has promised to cut its CO2 emissions by 50% by 2030. The move dashed hopes among green campaigners that the UK would follow smaller producers Denmark and France by agreeing to ban new drilling. (Guardian)

Give us nuclear – Leaders from seven EU nations – Czechia, France, Hungary, Poland, Romania, Slovakia, and Slovenia – on Wednesday sent a joint letter to the European Commission demanding that the bloc’s climate and energy policy regards the role of nuclear energy in these countries, many of which intend to expand their nuclear capacities. The seven countries demand that Brussels enable “all paths to climate neutrality according to the technology neutrality principle,” Poland’s permanent representation to the EU tweeted.

Not us – European aluminum producers oppose use of a Carbon Border Adjustment Mechanism in the EU and don’t wish to be involved in any pilot scheme for its introduction, industry group European Aluminium said this week. Representing more than 80% of producers across 30 European nations, with some 600 plants, the group said it is united in fearing a CBAM may be difficult to calculate, disrupt value chains and encourage carbon leakage by driving downstream producers out of the EU, providing no incentive to their decarbonization. Crucially, Europe is a net importer of aluminum. Trade legislation, indirect cost compensation schemes and free allowances under the EU ETS are more effective ways to protect the European value chain against carbon leakage, group executives said. (S&P Global Platts)

New UKA contracts – Energy exchange EEX plans to introduce new contracts for the UK ETS, it said Wednesday. “With its strong expertise in operating and developing solutions for emissions markets, EEX plans to launch dedicated spot and derivatives products for the UK ETS in the course of the second quarter, subject to market readiness and regulatory approval,” the firm said by email. The products will be similar to those under the EU ETS, “which will make it possible to connect the two markets (UK and EU) in the future, if politically decided.” Rival bourse ICE Futures Europe is launching trade in UKA futures on May 19, as it hosts the first allowance auction under the scheme.

ASIA PACIFIC

Sunny days – The world’s largest coal mining firm Coal India Ltd could venture into solar panel manufacturing and wants to “aggressively” participate in the nation’s solar energy auctions, its chairman Pramod Agarwal has told Reuters. The firm plans to keep closing small coal mines and stay away from opening those that would involve large-scale hiring, noting “coal as you know, we’re going to lose business in the next two, three decades. Solar will take over”.

Tougher target – The Japanese government will set a new, more ambitious emissions reduction goal for 2030 before the next G7 summit in June, according to Nikkei Asia. The piece notes that this is “a step toward achieving net-zero greenhouse gas emissions by 2050”, a target announced by the nation’s leaders last year. It adds that the current goal of reducing emissions by 26% from 2013 levels by 2030 will “likely will not be enough for the country to achieve net-zero emissions”. The piece notes that PM Yoshihide Suga hopes to brief US president Joe Biden on his 2030 target during an upcoming trip to the US in early April, adding that “some within the Japanese government see coordination on the climate crisis as key to strengthening the country’s alliance with the US”. (Carbon Brief)

Getting into the game – Japanese utility Chubu Electric Power has announced it will next month issue its first-ever green bond, as consumer and investor pressure on Japan’s biggest emitters to reduce their climate impact continues to grow. The company will look to raise 10 billion yen ($92 mln), all of which will be spent on development, construction, operation, and renovation of renewable energy generation facilities.

AND FINALLY…

Ghosts of polluters’ past – Ali Zaidi, President Biden’s deputy national climate advisor, did legal work for a number of fossil fuel energy companies, E&E News reports. Zaidi listed in his recently released financial disclosure report that he provided legal services to clients from his old law firm Kirkland & Ellis, including several active in the oil and gas and coal power sectors. Zaidi did “legal services” for the now bankrupt entities Mission Coal Company and Murray Energy, both listed on his form as bankruptcy clients of his former firm. Zaidi also did legal work for Callon Petroleum and Midstates Petroleum Company, as well as energy private equity firms Cresta Energy Fund Management and Energy Capital Partners, according to his report. He also helped the Electric Reliability Council of Texas, the state utility grid operator that is now in crisis after this year’s winter freeze blacked out millions of Texas homes.

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