CP Daily: Friday April 9, 2021

Published 22:51 on April 9, 2021  /  Last updated at 22:51 on April 9, 2021  /  Newsletter  /  No Comments

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

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TOP STORY

Challenges remain after Washington Senate passes LCFS, cap-and-trade bills

The Washington Senate approved a weaker version of a low-carbon fuel standard (LCFS) bill late Thursday that is tied to the implementation of a large transportation funding package, while the upper chamber also forwarded a WCI-modelled carbon market proposal to the House with a similar binding requirement.

AMERICAS

US Carbon Pricing and LCFS Roundup for week ending Apr. 9, 2021

A summary of legislative and regulatory action on carbon pricing, clean fuel standards, and clean energy at the US subnational and federal level this week, including a national CO2 fee and rebate bill and a Rhode Island net zero emissions act.

Federal forecast sees rising US fuel demand this summer, potentially padding California CO2 obligations

US gasoline and diesel consumption is expected to rise this summer over 2020 levels as the impacts of the COVID-19 pandemic ease, according to a federal forecast, likely increasing cap-and-trade obligations for US fuel suppliers in the WCI-linked programme.

Nova Scotia to offer largest number of carbon allowances yet at June 9 auction

The size of the Nova Scotia cap-and-trade auction on June 9 will increase over 40% from the most recent sale, according to a notice published by the province’s environment ministry on Friday.

Financial entities add to CCA holdings as emitters trim positions

Speculators increased their California Carbon Allowance (CCA) holdings over the past week, while WCI emitters shed their holdings slightly, according to US Commodity Futures Trading Commission (CFTC) data published Friday.

EMEA

EU carbon market surplus swells 14.2% following pandemic era cuts -analysts

The EU ETS’ allowance surplus increased 14.2% to 1.392 billion as emissions fell sharply last year, according to environmental campaigners at Sandbag, who are urging the bloc to tighten the market’s cap and MSR settings to counter the supply glut.

Costly CO2 cuts for EU transport, buildings point way to separate carbon market -report

The EU is unlikely to include road transport and buildings in its ETS anytime soon due to high abatement costs, according to analysts who believe that imposing carbon pricing on these sectors through a separate scheme initially could be a better option.

EU Market: EUAs inch higher to stay within reach of record

EUA prices eked out a small gain on Friday to limit the pullback from this week’s record high above €44, with bullish traders and observers expecting a fresh challenge to that level in the days ahead.

VOLUNTARY

REDD.plus executes first private-sector sale of national-level credits in test of UNFCCC as carbon standard

The REDD.plus trading platform has executed the first-ever purchase by a private sector buyer of jurisdictional-scale deforestation reduction credits, serving as a key test for national-level carbon offsets generated under the UN climate agency.

Commodities trader Trafigura opens carbon trading desk as it delves into global offset market

FREE READ – Commodities trader Trafigura has formally opened a carbon trading desk, the Singapore-headquartered firm announced Friday, as it ventures into the growing global offset market.

COMMENT

ECOSYSTEM MARKETPLACE – Shades of REDD+: The Risk of Diverting Carbon Finance from Nature to Technological Carbon Removals

Increasingly, engineered carbon removal technologies are pitched against nature-based solutions to tackle the climate crisis – particularly in the voluntary carbon markets. Will forests be passed over to benefit from carbon finance – again?

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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

CBAM slam – EU plans to impose a CBAM at its border are “discriminatory” and unfair to developing nations, ministers from Brazil, South Africa, India, and China have warned. In a joint statement, the four nations, known as the Basic countries, “expressed grave concern regarding the proposal for introducing trade barriers such as unilateral carbon border adjustment”. The EU has proposed to impose a levy on carbon-intensive products imported into the union from countries which do not have a price on carbon. Its supporters argue it is necessary to avoid carbon leakage, where producers of energy-intensive products like steel, cement, and aluminum move out of the EU to countries with weaker environmental regulations. But ministers from large emerging economies described the proposal as “discriminatory and against the principles of equity and [common but differentiated responsibilities and respective capabilities]” – a UN term meaning that developed countries, which are historically responsible for causing the climate crisis, should do more to address it than developing ones. (Climate Home)

AMERICAS

Budget billions – US President Joe Biden on Friday proposed $14 bln in spending on initiatives to fight climate change in the 2022 budget, including large cash injections for environmental regulation and science research. Biden’s so-called “skinny”, or preliminary, budget proposal includes $11.1 bln for the US EPA, a 21.3% boost over last year’s enacted level. It also includes $10.2 bln for the National Science Foundation, up 20% from the 2021 enacted level, with $500 mln of that going to climate and clean energy research. The request would also increase the Energy Department’s budget by 10.2% to $46 bln. Among new programmes it would fund, the DOE would invest $1.9 bln to launch a clean energy and workforce initiative that would help the Biden administration meet a goal of decarbonising the electricity sector by 2035 through a clean electricity and energy efficiency standard. On the international front, the budget request calls for a $1.2 bln contribution to the UN Green Climate Fund, a down payment of the remaining $2 bln it owes after former President Donald Trump cancelled the nation’s outstanding payments. (Reuters)

Acting on assets – Meanwhile, Biden is brewing up a plan to protect public and private financial assets from climate change, Bloomberg reports, and an executive order launching the strategy is close to completion. The strategy would be drafted by National Economic Council director Brian Deese and National Climate Advisor Gina McCarthy in coordination with Treasury Secretary Janet Yellen and the White House Office of Management and Budget. The Treasury would also work with members of the Financial Stability Oversight Council to share climate-related financial risk data and issue a report within six months on efforts to address such risks within the respective purviews of each independent regulatory agency. (Politico)

Hydrogen helpers – Canadian Minister of Natural Resources Seamus O’Regan on Friday announced the Hydrogen Strategy Implementation Strategic Steering Committee that will advance and measure the progress outlined in the country’s strategy for the fuel launched in December. The committee, co-chaired by Natural Resources Canada and the Canadian Hydrogen and Fuel Cell Association, is composed of senior leaders from across industry, provincial and territorial partners, non-government organisations, and Indigenous partners. It will establish priorities, guide actions, share knowledge, and track results to deliver on recommendations outlined in the country’s Hydrogen Strategy – laying the foundation for success in the short term and identifying activities in the medium and long term to unlock hydrogen’s full potential in 2050.

RNG team – Archaea Energy has agreed to join forces with Aria Energy, led by Rice Acquisition Corporation, to create the ‘leading’ US renewable natural gas (RNG) platform, the companies announced this week. The new combined company, to be called Archaea Energy, will be dedicated to reducing carbon emissions through landfill gas conversion, CO2 sequestration, and green hydrogen. Sixty to 70% of the new combined company’s RNG volumes will be contracted under fixed-price off-take agreements with investment-grade customers to limit earnings volatility. (Bioenergy Insight)

EMEA

Stranded! – Europe is already building or planning to build €87 bln worth of fossil gas infrastructure in a continued expansion of pipelines and LNG terminals, despite the need to halve emissions by 2030, according to a new report published on Thursday. Fossil gas consumption needs to decline 36% from 2020 to 2030, according to the European Commission, but the planned public and private investment would see an increase of 35% from the current import capacity. If the investment plans are implemented, the EU risks locking itself into a more polluting future or wasting billions on infrastructure, like pipelines, which have a lifespan of around 50 years, warns the report by the think-tank Global Energy Monitor.

ASIA PACIFIC

New bods – Australia’s Coalition government has mostly ignored advice from the independent Climate Change Authority since it took office, but on Friday, Energy and Emissions Reduction Minister Angus Taylor announced new appointments, putting former Origin Energy and Business Council boss Grant King in charge of the body. Susie Smith, an experienced climate policy expert with a background from oil and gas company Santos, was also among the new CCA members. Filling the agency meant to provide independent expert climate advice with former fossil fuel executives drew plenty of criticism, SBS reports.

SCIENCE & TECH

Pure hydrogen pureplay – A team of hydrogen and financial executives have launched a pureplay investment fund focusing on clean industrial-scale hydrogen projects, EnviroTech Magazine reports. The Euro-denominated fund, offered only to qualifying and verified investors, intends to raise €1 bln from a combination of financial and industrial investors. The fund will target upstream and downstream opportunities across the value chain, including green hydrogen production, use and downstream distribution assets to the transport segment, and associated fleet development schemes.

AND FINALLY…

Sucks at this – Bloomberg has published a scathing feature on Graciela Chichilnisky, the self-proclaimed inventor of carbon markets via her involvement in negotiating part of the 1997 UN Kyoto Protocol and now CEO of direct air capture firm Global Thermostat, which says it has raised $70 mln from backers including ExxonMobil, Coca-Cola, and Air Liquide. The article tracks a series of unmatched promises, project delays, and cost overruns. It interviews around a dozen mostly anonymous current and former Global Thermostat employees who suggest the company has been stymied by setbacks, mismanagement, and Chichilnisky’s ‘chaotic intermixing of company business with her personal life’.

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