CP Daily: Monday March 29, 2021

Published 02:06 on March 30, 2021  /  Last updated at 02:06 on March 30, 2021  /  Newsletter  /  No Comments

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

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TOP STORY

Ontario approved to implement large emitter programme in 2022

The Canadian environment ministry announced on Monday it will stand down the federal ‘backstop’ output-based pricing system (OBPS) in Ontario in favour of a provincially-run scheme from next year, leaving industrial emitters in the country’s most populous jurisdiction to face their third CO2 pricing system in six years.

EMEA

Eastern EU nations demand to keep current national emissions targets for non-ETS sectors

The EU must maintain current national emissions targets for non-ETS sectors to ensure a “fair burden sharing” as Brussels moves to overhaul its climate policy framework, the leaders of five Central and Eastern EU nations said in a letter seen by Carbon Pulse on Monday.

Morgan Stanley raises EU carbon price outlook on positive political signals, investor demand

Morgan Stanley has raised its near-term outlook for EU carbon prices to above €50 on “positive” political signals and continued inflow of new investor capital into the market.

EU Market: EUAs inch up as bullish sentiment returns

EUAs lifted slightly on Monday as last week’s late comeback and a stronger auction encouraged to bulls that prices could re-test the record levels seen earlier this month.

Brussels launches consultation on transnational CO2 transport networks

The European Commission has launched a consultation on cross-border CO2 transport networks, which could get priority access for EU funding as the bloc intends to kickstart the first large-scale CCS projects by the end of the decade, while NGOs aim to expand the current scope to other modes of transport.

ASIA PACIFIC

China moves to bolster data weak spots for carbon market

China’s environment ministry on Monday released new rules designed to prevent false reporting of emissions under its national CO2 trading scheme, targeting dozens of state-owned enterprises that have tasked their own subsidiaries with verifying their CO2 output.

New South Wales govt seeks offset suppliers for vehicle carbon offset scheme

The NSW state government in Australia has issued a tender for the supply of domestic carbon credits to a voluntary carbon offsetting scheme for light vehicles it is planning as part of its efforts to reach net zero emissions by 2050.

Australia Market Roundup: ERF receives nearly 1.5 mln offsets, developer Climate Friendly gets fund injection

Developers have delivered close to 1.5 million new credits to the Emissions Reduction fund (ERF) over the past month, according to Clean Energy Regulator data, while a private equity firm has taken a majority stake in Climate Friendly.

New Zealand’s Z Energy warns of illiquid ETS, high prices under Commission proposals

New Zealand could face steeply rising carbon prices and an illiquid secondary market for NZUs if the government implements the recommendations from the independent Climate Change Commission as is, fuel supplier Z Energy has warned.

AMERICAS

RGGI stakeholders may seek revisions to interim cap-and-trade obligations

RGGI member states anticipate stakeholders will push for revisions to the Northeast US carbon market’s interim compliance requirement during the upcoming programme review, potentially increasing liquidity on the secondary market.

Increased driving, RD capacity could weigh on US biofuel credit prices -analysts

Rising US vehicle miles travelled (VMT) this summer and build-out of renewable diesel (RD) capacity in the coming years could alleviate pressure on RIN prices under the Renewable Fuel Standard (RFS), analysts with a major US investment bank said Monday.

VOLUNTARY

VCM Report: VER prices slide on lower volume, though renewables restrictions boosting long-term bullishness

Voluntary emission reduction (VER) prices dipped this week as market participants reported less activity in exchange-traded contracts, though restrictions on the eligibility of large-scale renewables projects are helping sustain voluntary carbon market (VCM) values across the spectrum.

INTERNATIONAL

World’s biggest asset managers sign up to net zero initiative

More than 40 asset managers, including the world’s two biggest, have added their signatures to an initiative seeking to align global investment portfolios with a target to achieve net zero greenhouse gas emissions by 2050 or sooner.

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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.

AMERICAS

Amendment action – The State Department on Friday handed the White House a “transmittal package” it can send the Senate to ratify the Kigali Amendment – the 2016 addition to the Montreal Protocol that requires a phase-down of the potent climate warming hydrofluorocarbons. Ratification requires 67 votes, so at least 17 Republicans will be needed if all Democrats back it. The measure enjoys significant bipartisan support, as 13 Senate Republicans in 2018 called on President Trump to send them Kigali for ratification, plus the backing of US manufacturers planning to sell next-generation technologies. Meanwhile, the EPA sent its proposed phase-down of HFCs to the Office of Management and Budget for review. The rule is required by the Senate’s December passage of the American Innovation and Manufacturing Act, and instructs the EPA to craft rules to reduce HFCs 85% by 2036. (Politico)

Shoring up – The White House rolled out initiatives Monday aimed at jump-starting development of large offshore wind farms that together would power over 10 mln homes, including a target of 30 GW of generating capacity by 2030. Other parts of Monday’s announcement will see the Interior Department plan more offshore wind lease auctions, including as soon as later this year for a region off the New York and New Jersey coasts, and launch a formal environmental study of a project that Danish wind giant Orsted hopes to build off New Jersey, which is a step toward permitting the plan. (Axios)

Council composition – The White House on Monday named members of its new Environmental Justice Advisory Council, which will work with other panels in the administration on efforts to reduce environmental inequalities. The council, created in January by one of a several climate-related executive orders signed by President Biden, includes sociologist Robert Bullard, known as the “father of the environmental justice movement” for his advocacy against environmental racism. Other members include LaTricea Adams, founder of the organisation Black Millennials for Flint; Maria Belen-Power of the Massachusetts-based environmental group GreenRoots; and Andrea Delgado, government affairs director for the charity arm of the United Farm Workers. (The Hill)

Sectoral stringency – British Columbia on Friday became the first province in Canada to set GHG reduction targets for major sectors of its economy, according to Minister of Environment and Climate Change Strategy George Heyman. The 2030 emissions reduction targets range from 33-38% below a 2007 baseline in oil and gas, up to 32% for transportation, and from 38% to 43% industry, Heyman said. The reduction targets for communities and buildings go as high as 64%, and would include making homes more energy efficient, retrofitting buildings, and improving landfills, Heyman added. (CBC)

Low-carbon combination – US-headquartered Citigroup will combine three of its investment banking groups as part of its push to help large corporate clients transition away from using carbon. Steve Trauber and Sandip Sen will oversee the new natural resources and clean energy transition group, which includes the energy, power, and chemicals franchises. The unit will work with other coverage areas, including industrials and technology, according to a memo to staff from Tyler Dickson and Manolo Falco, global heads of Citigroup’s banking, capital markets, and advisory unit. (Bloomberg)

EMEA

Saudi forestry – Top crude oil exporter Saudi Arabia has unveiled its “Saudi Green Initiative” aiming to reduce emissions by generating half of its energy from renewables by 2030. It also plans to plant 10 bln trees in the kingdom in the coming decades and plans to work with other Arab states on a “Middle East Green Initiative” to plant an additional 40 bln trees, in what would be the world’s largest reforestation programme. It did not elaborate on how the plan would be executed in a largely desert landscape with extremely limited renewable water sources. (AFP)

Giant (carbon price) of Africa – Stakeholders are lobbying for the inclusion of a carbon fee-and-dividend plan in Nigeria’s revised NDC under the Paris Agreement. Experts said this would boost the government’s plan to lift 100 mln people out of poverty within 10 years and ensure a post-COVID economic recovery, according to Nigeria’s Guardian newspaper. They argue that carbon pricing – or ‘carbon income’ in the case of a cap-and-dividend policy, where the revenues are shared with the public – is an idea whose time has come and cannot be left out of the oil-exporting nation’s future. Speaking at a webinar on ‘Understanding Climate Income’ organised by the Citizens’ Climate International, the Africa Regional Coordinator of the group, David Terungwa, said the policy is an opportunity for Africa and other parts of the world to eradicate poverty completely. “Nigeria remains one of the few countries in the world that flare gas. There have been regulations for years and penalties. But gas flaring has continued without any hindrance. Companies are taking advantage of our weak laws and enforcement to continually flare gas that our people are looking for, to cook,” he said.

The green glow of uranium – Experts tasked with assessing whether the EU should label nuclear power as a green investment will say that the fuel qualifies as sustainable, according to a leaked document seen by Euractiv. “The analyses did not reveal any science-based evidence that nuclear energy does more harm to human health or to the environment than other electricity production technologies,” said the report authored by the Joint Research Centre (JRC) – the European Commission’s scientific expert division. The Commission is attempting to finish its sustainable finance taxonomy, which will decide which economic activities can be labelled as a sustainable investment in the EU, based on whether they meet strict environmental criteria. EU expert advisors last year split over whether nuclear power deserved a green label, recognising that while it produces very low CO2 emissions, more analysis was needed on the environmental impact of radioactive waste disposal.

UK scrappage – The UK government is to scrap its £1.5 bln Green Homes Grant home retrofitting scheme a year earlier than planned following problems with its administration.  The scheme had been the centrepiece of PM Boris Johnson’s promise to ‘build back greener’ from the Covid-19 pandemic, the only major green stimulus policy yet announced by the government and originally expected to create tens of thousands of green jobs. (Guardian)

Two-horse race – The leadership contest at the Brussels-based Energy Charter Treaty Secretariat appears to be down to two candidates, the current secretary-general, Slovakia’s Urban Rusnak, and Guy Lentz from Luxembourg, Euractiv reports. The European Commission, which steers negotiations on the ECT modernisation for the EU, has already voiced formal objections to re-appointing the Slovak incumbent for another five years. Meanwhile, campaigners have criticised the ECT for hampering climate action. The treaty caught worldwide media attention last month when German energy giant RWE used it to claim €1.4 bln in compensation from the Netherlands over its planned coal phaseout.

A question of gas – Brussels has opened a consultation through June 18 on revising the EU’s Gas Directive in line with the European Green Deal, feeding into its preparations for a new hydrogen and gas markets decarbonisation package due at the end of the year. Key issues include how to foster a market for renewable and low carbon hydrogen.

ASIA PACIFIC

Time has come – Japan is considering putting an end to its support of exporting coal-fired power plant technology, according to Nikkei. The move would be one of the announcements PM Yoshihide Suga could bring to the climate change summit on Apr. 22, hosted by the US. Japan has previously indicated it will announce a more ambitious 2030 emissions target ahead of the G7 summit this summer.

Hip hip Kuraray – Japanese chemicals manufacturer Kuraray has adopted an internal carbon price of JPY 5,000/tonne ($45.50), it announced Friday. The price will be applied to calculate the cost of CO2 emissions for use as a criterion for decisions about capital investment plans, with the aim of promoting GHG reductions within the company. The Kuraray Group “will use the price to incentivise energy saving, identify revenue opportunities and risks, and inform investment decision making, aiming to realise a low-carbon society.” The measure comes as the Kuraray Group’s works towards its 2026 long-term vision to grow sustainably “by incorporating new foundational platforms into its own technologies”, while also aiming to “improve the natural and social environment while working to create value with society.”

INTERNATIONAL

Bogus bonds – In a booming global bond market, there are few segments that are growing quite like the money-minting machine for green bonds. So eager are investors to buy up these notes that they’re willing to pay a premium – and accept lower interest payments – for the privilege.  But according to Bloomberg, the risk is that in this mad rush they’re letting a feel-good label obscure the reality of their investments. At the forefront of concerns among a small but growing contingent of bond buyers is greenwashing: the possibility that governments and companies are exaggerating or misrepresenting their environmental credentials or sustainability bona fides to tap feverish demand, lower borrowing costs and boost their reputation. Any signs of deception could undercut efforts to marry making money with making progress in the fight against climate change and inequality at a critical time – and derail one of Wall Street bankers’ fastest-growing cash cows. So even as sales of green bonds and the related universe of debt tied to broad concepts of improving the world notch record after record, a nascent investor rebellion is finding its voice.

Dairy frustrating – The vast majority of the world’s largest meat and dairy companies have not made an explicit commitment to achieving net zero emissions by 2050, finds a new analysis by researchers at New York University. The study, which appears in the journal Climatic Change, examined the climate impacts of the biggest 35 largest meat and dairy companies around the globe as well as their influence in shaping political responses to climate change. Of the 35 companies studied, only Dairy Farmers of America (US), Nestle (Switzerland), Danish Crown (Denmark), and Danone (France) made commitments to achieve net zero.

AND FINALLY…

‘Taking back’ offsetting – British eurosceptic politician Nigel Farage has been appointed to the advisory board of Netherlands-based listed green finance firm Dutch Green Business Group (DGBG), in his first commercial role outside frontline politics. Farage opposed much of the EU’s climate policy during his 20-year career as an MEP, criticised climate campaigner Greta Thunberg for “alarmism”, called wind power “economic insanity”. Upon announcing his DGBG role, he said offsetting was “rapidly transforming the financial dynamics of the green arena”. “I know I can make a real difference to the speed and progress of this ambitious business which is delivering unique free market, nature-based solutions,” he added, The Guardian reported. Farage tweeted a video clip of his involvement, adding that “we need to take back the environmental agenda from the climate extremists”. DGBG lists the Miro Sustainable Plantation reforestation project in northern Sierra Leone on its website and last month it said it was partnering with forest carbon developer Quadriz, aiming to advance activities in Paraguay.

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