CP Daily: Tuesday April 6, 2021

Published 02:12 on April 7, 2021  /  Last updated at 17:14 on April 12, 2021  /  Newsletter  /  No Comments

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

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TOP STORY

EUAs soar to new record above €44 on supportive auction, wider markets

EUAs jumped to a new all-time high on Tuesday, with strong auction demand and gains in wider markets providing fresh impetus for carbon to surpass the previous record set last month.

EMEA

By the numbers: Utilities, airlines lead record drop in EU ETS emissions in 2020

Utilities and airlines accounted for more than 80% of the record drop in verified EU ETS emissions in 2020, according to near complete data published by the European Commission on Tuesday.

Stricken steelmaker Liberty faces €100 mln EU carbon bill -FT

Beleaguered UK-based Liberty Steel faces paying more than €100 million to buy enough EU carbon allowances to cover its 2020 compliance, the FT reported on Tuesday, citing anonymous sources.

VOLUNTARY

The Nature Conservancy discloses portfolio review of forestry offsets, while developer defends practice

Green group The Nature Conservancy (TNC) is undertaking an internal review of its improved forest management (IFM) carbon offset protocols in response to questions of environmental integrity, but a project developer is defending the stringency of the underlying methodologies.

VCM Report: VER issuances and retirements grow in first quarter of 2021

Voluntary emission reduction (VER) prices largely continued their downward or stagnant trend this week on lower activity, even as data showed voluntary carbon market (VCM) issuances and retirements surged in the first quarter of the year compared to 2020.

AMERICAS

Court extends timeline for US DOJ challenge to California-Quebec cap-and-trade linkage

A federal court extended the timeline for the pending US Department of Justice (DOJ) appeal that challenges the constitutionality of the WCI carbon market linkage, likely giving the government additional time to get political appointees confirmed.

Manure spill prompted California investigation at Wisconsin-based offset project, documents show

A manure spill at a Wisconsin offset project caused the dairy farm to violate its permit, leading California regulator ARB last week to launch an investigation into more than 30,000 carbon credits issued to the digester, according to records obtained by Carbon Pulse.

WCI regulated parties beginning to prepare for upcoming full compliance deadline, data shows

WCI emitters shifted nearly 50 million allowances into compliance accounts over the first quarter of the year as they prepare for the linked cap-and-trade programme’s full true-up deadline this fall, according to programme data published Tuesday.

WCI compliance entities add length to CCA holdings as March futures contract expires

WCI emitters increased their net California Carbon Allowance (CCA) length last week as the March futures contract expired, boosting compliance entities’ current holdings to a 14-week high, according to US Commodity Futures Trading Commission (CFTC) data published Friday.

RGGI Q2 auction volume drops after finalisation of five-year bank adjustment

The Northeast US RGGI cap-and-trade programme will offer nearly 23 million allowances at its June auction, with the quarterly volume declining slightly after the recent finalisation of the 2021-25 surplus bank adjustment, according to an auction notice posted Tuesday.

Canadian bank opens account in RGGI cap-and-trade scheme

A Canada-based bank opened a RGGI CO2 Allowance Tracking System (COATS) account over the past week, breaking a recent trend of only compliance entities opening general market accounts in the Northeast US power sector carbon market.

LCFS Market: California prices fall towards pandemic-era lows on heavy sell-side pressure

California Low Carbon Fuel Standard (LCFS) credit values sank on Tuesday as bearish pressure manifested across the curve, pushing prices closer to levels not seen since the early days of the COVID-19 outbreak.

ASIA PACIFIC

SK Market: KAU prices nose dive even as analysts revise down oversupply estimates

South Korean allowance prices have plummeted almost 15% so far this month amid a large oversupply for 2020, even though analysts now say the permit surplus won’t be as large as previously expected.

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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

Knee high (in regulations) by the end of July – President Joe Biden’s administration is on track to propose by the end of July new limits on GHG emissions from automobiles that are strong enough to meet “the urgency of the climate crisis,” US EPA Administrator Michael Regan told Bloomberg. The agency is now rewriting a Trump-era regulation that relaxed limits on emissions from vehicles through the 2026 model year, though Regan signalled the EPA would not yield to pressure from automakers to water down these tailpipe emissions requirements. The EPA also is set within weeks to formally issue its plans for a Trump-era rule that blocked California from using its Clean Air Act waiver to set its own vehicle emissions standards. Regan did not rule out future emissions requirements that create a de facto ban on new conventional, gasoline-powered automobiles, like an explicit phase out ordered by California Governor Gavin Newsom.

Get in line – US Treasury Secretary Janet Yellen said the Biden administration would “encourage financial institutions to credibly align their portfolios and strategies with the objectives of the Paris Agreement,” likely sparking dispute with Republican Congressional members, Bloomberg reports. Yellen added in her virtual meeting remarks to global finance ministers that the Treasury would also seek to align tax policy with the administration’s climate goals, including transitioning to a decarbonised economy.

Infra-stuck-ture – US President Joe Biden would be willing to push through his $2 trillion infrastructure plan without the support of Republican lawmakers if he cannot reach a bipartisan deal, Energy Secretary Jennifer Granholm said on Sunday. Granholm’s comments come just days after White House National Climate Advisor Gina McCarthy said Biden would seek to pass a national clean energy standard (CES) – contained in the infrastructure plan – through Congress. However, West Virginia Senator Joe Manchin, a critical swing vote for Democrats, on Monday said he is not yet supportive of Biden’s proposal, saying the corporate tax rate hike in the bill to 28% from 21% presently needs to be lowered. Democrats will need Manchin’s vote to pass the bill in the Senate even if they use budget reconciliation, which would allow them to bypass the 10 Republicans needed to break a filibuster but still require all 50 Democrats in the chamber. (Reuters, Forbes)

Programme pondering – Ontario Liberal leader Steven Del Duca is backing away from reintroducing his party’s former WCI-linked cap-and-trade programme, which was scrapped by Progressive Conservative Premier Doug Ford. Del Duca said since Ontario was required to impose the federal government’s carbon pricing programme after the elimination of the cap-and-trade plan, he will “wait to see what Doug Ford comes up with before we get a sense of whether we need anything else.” Del Duca, a former transportation minister in Premier Kathleen Wynne’s Liberal cabinet, said the Liberals are “still working” on their climate change plan that will be presented soon as the party readies to face Ford in the June 2022 provincial election. (Stoney Creek News)

Mind your Ps and (45)Qs – Enbridge’s push into new frontiers of the energy transition such as CCS and clean hydrogen production could use Canadian tax credits similar to those in the US, the company’s CEO said. North America’s biggest oil pipeline company, which for years has invested in wind and solar power projects, is also looking at gaining scale and becoming competitive in technologies such as hydrogen production using renewable electricity. To get there, it’s seeking incentives in Canada like the $35 to $50/tonne CO2 sequestration and storage credits that exist in the US under Section 45Q of the Internal Revenue Code, Chief Executive Officer Al Monaco said in an interview with World Oil.

First quarter blitz – Virginia-based Nodal Exchange reported a Q1 record in traded and open interest for environmental contracts, according to a press release. The bourse, which works with Chicago-headquartered environmental product development firm IncubEx, said 58,065 contracts transacted over the quarter, a 54% rise from the previous year. Open interest also rose to 123,200 contracts, an 89% rise from Q1 2020. Most of the increase came as a result of renewable energy certificates (RECs), which surged 111% to 54,421 contracts. Nodal currently has 82 futures and options contracts in the environmental space, including RGGI and California Carbon Allowance futures contracts.

Started from the bottom – Rajinder Sahota was promoted as California regulator ARB’s deputy executive officer of climate change and research last week, the agency announced in a press release. Sahota previously served as the regulator’s industrial strategies division chair, where she oversaw the state’s WCI-linked, economy-wide cap-and-trade scheme. In her new role, Sahota will continue to lead the state’s climate change programmes, while also being responsible for the ARB’s research division. Regulatory experts told Carbon Pulse Sahota’s previous role would likely be filled from within the agency.

EMEA

Athens orders – Greece has confirmed the shutdown of four lignite power plants operated by state-owned PPC – nearly a third of the country’s capacity at 1.2 GW – with two not operating since mid-2019 after using up their allotted hours for plants not equipped with anti-pollution upgrades. The other two were operating until May last year. Greece’s coal phaseout has been pledged for 2028. (Ekathimerini)

Balkan first – North Macedonian state-owned power utility ESM is to implement internal carbon pricing by year-end to guide its investment decisions. The utility becomes the first to do so among the nine Energy Community partner nations bordering the EU despite a call by the Community’s secretariat for all utilities to do so as part of a roadmap to an eventual EU ETS link.

Underestimated – Carbon emissions from England’s planned £27 bln roadbuilding programme will be about 100 times greater than the government has stated, according to expert witnesses in a court challenge. Environmental campaigners are seeking a judicial review of the second roads investment strategy (RIS2), which was described by ministers when launched as “the largest ever investment in English strategic roads”, paying for 4,000 miles of road and including such schemes as the Lower Thames Crossing and the Stonehenge tunnel. Lawyers for Transport Action Network (TAN) claim that the strategy is incompatible with climate crisis commitments. Government lawyers have argued that the additional net greenhouse gases from the roadbuilding are de minimis, or too small to be material. However, testimony from two UK transport and environment professors – both of whom have previously acted as advisers to the government – said the true impact of the roadbuilding would be many times greater than the Department for Transport’s calculations suggest. (Guardian)

Blue moolah – Sticking with the UK, the country’s seabed is more valuable as a carbon sink absorbing pollution from industry than as a source of oil and natural gas, official estimates from the government’s Office for Nationals Statistics show. The findings put the value of Britain’s marine “natural capital assets” at £211 bln ($300 bln) and represent an emerging area of research where nations attempt to put a value on the environment. The estimates also probe the benefit the UK gets from “blue carbon,” or the amount of GHGs captured by the ocean and coastal ecosystems. It’s part of a global effort to use financial tools to understand the costs of using fossil fuels, which advocates of the methods say will help focus policy makers on reducing harmful emissions. Using conservative estimates, the ONS said sea-grasses, muds, sands and saltmarshes already capture at least 10.5 MtCO2e/year, with a value of £57.5 bln. By comparison, woodlands in the UK captured carbon worth about £55 bln. (Bloomberg)

INTERNATIONAL

Middle Eastern promise – The US and the UAE have vowed to work together on coordinating finance to decarbonise the economy, focusing on renewable energy, hydrogen, industrial decarbonisation, CCS, nature-based solutions, and low-carbon urban design, the two said in a joint statement following a visit from US climate envoy John Kerry. Kerry also took part in a MENA climate dialogue, which concluded with another statement signed by Bahrain, Egypt, Iraq, Kuwait, Qatar, Sudan, the UAE, and the US pledging to accelerate climate action, mobilise investment in a new energy economy and help the world’s most vulnerable cope with climate change. (Reuters)

ASIA PACIFIC

No, not like that – The New South Wales state government in Australia is putting together an advisory board on how to reach net zero emissions by 2050, and was in the process of appointing former PM Malcolm Turnbull as the board’s head. But after Turnbull recently suggested the state should stop developing new coal mines, the government changed its mind and decided not to go with the ex-PM after all, reports RenewEconomy.

SCIENCE & TECH

Man-made feedstock – Oxy Low Carbon Ventures, a subsidiary of US-based Occidental Petroleum, and bio-engineering startup Cemvita Factory on Tuesday announced plans to construct a 1 tonne/month bio-ethylene pilot plant that would use human-made CO2 as a feedstock. The pilot project would utilise scaled up processes from laboratory tests to produce ethylene from non-hydrocarbon-sourced feedstocks. The companies said the project could help reduce carbon emissions, while still producing ethylene for the chemical industry.

AND FINALLY…

Not the good 420 – The concentration of CO2 in Earth’s atmosphere hit more than 420 parts per mln for the first time in human history on Saturday. The daily average of 421.21 ppm at Hawaii’s benchmark Mauna Loa Observatory means human activities like burning fossil fuels have produced so much pollution that the atmospheric concentration of CO2 is more than halfway to double pre-industrial levels. (Climate Nexus)

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