CP Daily: Friday April 23, 2021

Published 03:14 on April 24, 2021  /  Last updated at 03:24 on April 24, 2021  /  Newsletter  /  No Comments

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

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TOP STORY

Verra will not require corresponding adjustments for voluntary offset transactions

Offset standard manager and developer Verra on Thursday said it will not require corresponding adjustments for Paris Agreement-era voluntary carbon market (VCM) transactions, arguing such a move could hinder climate finance to developing countries and create needlessly complex accounting systems.

INTERNATIONAL

Leaders Summit on Climate: Officials highlight need for public, private action ahead of COP26

Government officials on Friday pushed for the public and private sectors to increase climate ambition ahead of the UN COP26 summit this fall, as the US and other countries announced a pair of initiatives to drive future reductions.

LEAF to impose high-ambition climate, deforestation commitments on both buyers and sellers -panel

The Lowering Emissions by Accelerating Forest (LEAF) finance coalition will impose high ambition requirements on public and private sector buyers and sellers of offsets, its founding nations the US, the UK, and Norway said on a webinar on Friday.

ASIA PACIFIC

Xi’s coal control pledge could help tighten China ETS

Chinese President Xi Jinping’s pledge at the Leaders’ Climate Summit to strictly control coal projects in the current five-year period and phase them down from 2026 will likely benefit the national emissions trading scheme, prompting a cut in excess allowances earlier than presumed, according to experts.

Australia to roll out Indo-Pacific offset scheme

Australia will develop a carbon offset programme across parts of the Indo-Pacific region that can generate “high-integrity” units eligible under the Paris Agreement, Energy and Emissions Reduction Minister Angus Taylor announced Friday.

NZ Market: NZUs rise to 5-wk high on small clips

New Zealand carbon allowances have ticked up to their highest level since last month’s inaugural NZU auction, though the market remains thin ahead of next month’s 2020 compliance deadline which still has the NZ$35 fixed price option.

AMERICAS

US likely needs new legislation to hit its revised Paris climate goal -panel

The US will need to leverage existing programmes and regulatory authority to drive near-term emissions reductions, but federal legislation is likely required to hit its enhanced Nationally Determined Contribution (NDC) to the Paris Agreement, panelists told a conference on Friday.

US Carbon Pricing and LCFS Roundup for week ending Apr. 23, 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 developments in Washington, Pennsylvania, and New York.

Financials’ California carbon length approaches 60 Mt, as regulated entities whittle down holdings

Speculators brought their California Carbon Allowance (CCA) holdings closer to pre-pandemic levels this week, as WCI emitters once again reduced their net length, according to US Commodity Futures Trading Commission (CFTC) data published Friday.

EMEA

EU Market: EUAs halt record-breaking rally but still notch 5.7% weekly gain

EUAs ended their run of five consecutive record-breaking sessions on Friday, but the futures only slipped slightly as traders expected a few more days of tightness up to the annual compliance deadline.

EU carbon bull run could run out of steam in €45-50 range, analysts warn

The bull run in EU carbon could stabilise in the €45-50 range as compliance buying runs out of steam and other bearish factors emerge, analysts said.

UK fines seven firms £600k for EU ETS breaches

The UK has fined seven companies a total of more than £600,000 for not complying with their obligations under the EU carbon market.

VOLUNTARY

VCM participants split on shorter offset permanency requirements for struggling small forest owners

US owners of lands smaller than 2,000 hectares are struggling both to maintain forests and generate credits under existing voluntary carbon offset (VCM) standards, but experts are divided on whether lower monitoring obligations can help alleviate the situation, panelists at the North American Carbon World (NACW) conference said Thursday.

ICYM

UPDATE – Australia purchases 6.8 mln ACCUs in latest ERF auction

(Adds details throughout from Thursday’s article) – Australia bought 6.8 million carbon credits at last week’s Emissions Reduction Fund (ERF) auction at marginally higher prices than in the previous round, the Clean Energy Regulator announced Friday, though almost all the contracts were for optional delivery.

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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

Global hit – If no mitigating actions are taken to prevent or build resilience to climate change, a study by global reinsurer Swiss Re shows that there could be as much as an 18% hit to global GDP by 2050. That’s aligned with a 3.2C increase in global temperatures. If some mitigating actions are taken then a 2.6C increase would only mean a 14% hit to GDP, a 2C increase an 11% hit to GDP, and even if the world can keep global warming to under 2C, hitting Paris Agreement targets, the firm estimates that global GDP will still take a negative hit of 4%. (Artemis)

Shopping spree – Some investors spent Earth Day investing like never before in the world’s largest publicly-traded carbon market fund. The KraneShares Global Carbon ETF (ticker: KRBN) posted inflows of more than $15 mln on Thursday, bringing its total assets to more than $160 mln, according to Bloomberg – some 10 times where it was at the start of the year. It is the largest public fund that invests cap-and-trade allowances, covering the EU ETS, California market, and RGGI.

AMERICAS

CBAM Biden? – US President Joe Biden is exploring the idea of a carbon border adjustment mechanism, White House climate envoy John Kerry said Friday. “President Biden, I know, is particularly interested in evaluating the border adjustment mechanism,” Kerry said in an interview on Bloomberg Television. Biden supported a CBAM during the presidential campaign last year, coming as UK PM Boris Johnson has urged G7 countries to enact carbon border taxes and Canadian PM Justin Trudeau explores a similar concept. The Office of the US Trade Representative said in March it would consider a CBAM to encourage climate action globally while protecting domestic manufacturing. (Bloomberg)

Much to be R&Desired – The White House Council of Economic Advisers has prepared a detailed analysis arguing that big new investments in climate-friendly energy and infrastructure are crucial to US competitiveness and to avoid increasing damage to the economy. The analysis, obtained by Axios, is part of a wider effort to marshal support for President Biden’s $2 trillion-plus infrastructure plan, which is heavy on climate-related spending. The report warns that unlike major trading partners, the US lacks an effective strategy around R&D, deployment and supporting workers through the transition to lower-carbon energy.

Not pure idiocy – The Senate will vote next week on a Congressional Review Act resolution to nullify a Trump-era rule that weakened protections on methane emissions. Sen. Susan Collins (R-ME) announced Wednesday that she’d support the measure, and the CRA rollback requires only a simple majority to pass. The oil and gas industry also has its backers for the repeal. Senate Majority Leader Chuck Schumer called the Trump administration’s rule an “act of pure idiocy.” (Politico)

Getting cracking on fracking –  California Gov. Gavin Newsom on Friday directed the state’s top oil regulator, the Geologic Energy Management Division, to immediately begin crafting a regulation to halt new hydraulic fracturing permits by 2024. Newsom also asked regulator ARB to study ways to phase out all oil extraction across the state by no later than 2045. Newsom acted after ambitious legislation – which would have gone much further – died in the state Senate last week. Hydraulic fracturing, or fracking, while a hot button issue nationally, accounts for between 2% and 20% of California’s oil extraction. (Palm Springs Desert Sun)

The Big Apple bites – New York City is suing three major oil companies and fossil fuel lobby API for misleading consumers in violation of state consumer protection law. The lawsuit, filed Thursday in state court, is the latest in a drumbeat of litigation brought by states and municipalities across the country seeking to hold fossil fuel companies accountable for their contribution to climate change. New York City’s lawsuit says Exxon Mobil, Shell, and BP “falsely present themselves as corporate leaders in the fight against climate change” and falsely advertised their gas sold at New York City gas stations as “cleaner” and “emissions-reducing.” The suit also argues API “misleads NYC consumers by promoting fossil fuels as integral to ‘climate solutions’ without disclosing that fossil fuels are the primary cause of climate change.” (Climate Nexus)

ASIA PACIFIC

Largely consistentChina’s pledge to achieve carbon neutrality before 2060 is largely consistent with the 1.5C warming limit, according to researchers from Chinese, EU, and Japanese universities published in the journal Science. To stay below this level of warming, the country will need to aim higher than its current net zero goal and accomplish deep emission reductions in the near term, the authors said. It found that that the 1.5C mark would require China’s demand for coal to drop to nearly zero by 2050. (Carbon Brief)

EMEA

BEX & DAX – The EU ETS should integrate bioenergy carbon capture and storage (BECCS) and direct air carbon capture and storage (DACCS), starting with a pilot phase in 2025 and moving to full coverage in 2030-35, researchers suggest. In a paper expected to be published at the end of May, researchers including Wilfried Rickels of the Kiel Institute for the World Economy suggest a path starting with the revision of the EU ETS in 2021, and leading up to 2040, when the EU could start designing a net-negative cap. The researchers say that proposals to reform the EU ETS – due in June – should include replacing free allowance allocations with a carbon border adjustment mechanism (CBAM). This would further boost incentives for fossil CCS, which in turn could lead to declining costs for BECCS and DACCS thanks to scale effects and increased competition and learning, and because transport and storage infrastructure can be shared with fossil CCS. The paper suggests that in 2023, the EU continues to lower existing regulatory barriers for BECCS and DACCS before launching a pilot phase in 2025, which would be evaluated between 2030-35, gradually moving towards full EU ETS coverage. (Argus)

Fuel first – IAG has become the first European airline group to commit to powering 10% of its flights with sustainable jet fuel by 2030. The group said it will buy 1 Mt of sustainable aviation fuel every year, enabling it to cut its annual emissions by 2 Mt by the end of the decade. IAG boss Luis Gallego said that government support would be “critical” to helping attract investment to get sustainable aviation fuel plants up and running and producing sufficient volumes for the future. (Press Association)

Bauhaus is back – The European Commission on Friday presented its New European Bauhaus prizes, to award artists, cultural performers, designers and more for projects that showcase values of values of sustainability, aesthetics, and inclusion. The prize includes categories for sustainable buildings and products, as well as education modules integrating sustainability.

AND FINALLY…

Belgians Frite out – Residents of a small town in Belgium are trying to block the construction of €300 mln mega-frites factory, which would make owner Clarebout the world’s biggest potato processor, Politico reports. It has triggered a broader debate about whether Belgium’s gastronomic heritage including double-fried artisanal frites and moules-frites is being forgotten in the increasing industrialisation of modern food production that sends Belgian oven fries around the globe. The plant would be covered by the EU ETS, and become the area’s top polluter.

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