CP Daily: Monday April 26, 2021

Published 00:49 on April 27, 2021  /  Last updated at 00:54 on April 27, 2021  /  Newsletter  /  No Comments

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

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TOP STORY

Washington state passes cap-and-trade, LCFS bills with gas tax caveat

Washington state lawmakers this weekend approved a climate policy package that will see the state implement a WCI-modelled carbon market and low-carbon fuel standard (LCFS), but both programmes are still are contingent on the passage of a transportation funding package in the next year.

EMEA

EU leaders firm up date to debate climate policy, carbon market expansion

EU heads of state and government will on May 25 lay the groundwork on the bloc’s climate policy reform and debate key legislative proposals including the expansion of carbon trading to buildings and vehicles.

EU Market: EUAs resume record-breaking rally as compliance date looms

EUAs resumed their record-breaking rally on Monday, climbing towards €48 as some experts expected further gains this week before a correction upon the passing of the annual compliance deadline.

AMERICAS

Preliminary RGGI data shows significant YoY uptick in Q1 emissions

Four RGGI states have exceeded Q1 2020 carbon output levels for the first quarter of this year, while two large-emitting members are on pace to do the same, according to preliminary CO2 Allowance Tracking System (COATS) data.

NA Markets: CCAs jump on increased speculative demand, bullish outlook on 2022 floor price

California Carbon Allowances (CCA) surged on the secondary market Monday amid further rises in outright and spread demand ahead of the May auction, as some said the trend bore similarities to heightened speculative involvement over the 2018-19 period.

California fuel consumption slumps to usher in 2021, data shows

California fuel consumption dropped year-on-year in January as COVID-19 restrictions imposed by Governor Gavin Newsom (D) continued to cause demand destruction in the transportation sector, according to state data released Monday.

RFS Market: RIN prices lift back towards all-time high on eve of waiver appeal

US biofuel credit (RIN) credits surged back toward record prices on Monday on reported strong refiner demand, while stakeholders readied for Supreme Court oral arguments in a lawsuit regarding the EPA’s compliance waiver programme under the Renewable Fuel Standard (RFS).

New Brunswick granted retroactive start for provincial large emitter programme

The Canadian environment ministry on Friday announced that New Brunswick will be removed from coverage under the federal ‘backstop’ output-based pricing system (OBPS), instead allowing the province to apply retroactive compliance obligations to emitters under its alternative regime.

VOLUNTARY

VCM Report: VER prices hold steady on strong nature-based demand

Voluntary emissions reduction (VER) values were largely unchanged week-on-week even with significant activity in a new exchange-traded, nature-based offset, while several forestry project developers have reportedly entered into long-term forward agreements with above-market price floors.

ASIA PACIFIC

Australia Market Roundup: Veolia makes major ERF deliveries, as NSW committee backs out of imposing offset requirements

Veolia’s Australian subsidiary has delivered over 320,000 credits to the government’s Emissions Reduction Fund (ERF) in recent weeks, while NSW regulators declined to impose carbon offset requirements on a new coal mine despite the miner offering to accept such a measure.

COMMENT

ECOSYSTEM MARKETPLACE – Claims+Credibility: Embracing Diversification to Scale Carbon Markets

If total greenhouse gas emissions in new or updated country plans offer a mere 0.5% reduction, greater ambition is needed from governments to fill this gap. Can a robust voluntary carbon market play an important role in this context?

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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

State of the reinstatement – The US EPA announced Monday that is planning to reinstate California’s authority to regulate vehicle GHG emissions, a move that combined with actions taken last week by the Transportation Department will give the state back a powerful tool to fight climate pollution. Under President Trump, US regulators determined that California did not have the right to go beyond the federal government in independently establishing rules on GHGs produced by automobiles. In 2019, the EPA withdrew parts of the Clean Air Act waiver that gave the state the autonomy to curb tailpipe emissions and mandate the sale of zero-pollution vehicles. But now, EPA officials said they will proceed with the required public process needed to reinstate California’s Clean Air Act waiver under the Safer Affordable Fuel-Efficient (SAFE) Vehicles Rule, which includes changes needed to ensure other states can adopt California’s policies. The agency has scheduled a virtual hearing on the issue for June 2 and opened a comment period until July. (SF Chronicle)

80 or bust – The White House hopes to capitalise on growing support from utilities, unions, and green groups for a national clean energy mandate by pushing Congress to pass a law requiring the US grid to get 80% of its power from emissions-free sources by 2030, according to a senior administration official. The goal would fall short of President Biden’s stated ambition of net zero emissions in the grid by 2035, but is an interim milestone that could be passed without Republican support through budget reconciliation. “Our goal is to enact this into law,” deputy White House climate adviser Ali Zaidi told Reuters. “There are multiple pathways to get meaningful progress in the power sector. We think this is a really powerful one in terms of giving utilities a clear and clean planning horizon.” Zaidi’s statement comes as a coalition of environmental groups today urged Biden and Capitol Hill leaders to require major increases in zero-carbon power generation in the infrastructure package that lawmakers are crafting, including a 100% target by 2035.

Engine, Engine No 1 – ExxonMobil faces an “existential business risk” by pinning its future on fossil fuels as governments move to slash emissions, an activist hedge fund will tell investors in the final push to overhaul the oil major’s board. “ExxonMobil still has no credible plan to protect value in an energy transition,” said an 80-page investor presentation seen by the Financial Times, in which Engine No 1 excoriated the company’s “value destruction” and “refusal to accept that fossil fuel demand may decline”. The energy company “touts its efforts in areas like carbon capture and biofuels”, the document said, but those efforts have “delivered more advertising than results”. Exxon has captured less than 1% of its own emissions once the pollution from its sold products was included, said Engine No 1, which was started last year by hedge fund manager Chris James, best known as a tech investor, and Charlie Penner, who previously agitated against Apple while at Jana Partners.

EMEA

German jostling – The German Green Party, leading in a recent poll, wants to increase the CO2 price in the country’s emissions trading scheme (nEHS) for transport and heating fuels to €60 by 2023, above the trajectory due to be at €35 that year, Handelsblatt reports. The party also wants to restructure the electricity market to significantly boost renewables and double the country’s green hydrogen production target to at least 10 GW of electrolysers capacity by 2030. Meanwhile, the parliamentary group of the ruling centre-right CDU/CSU is launching a new climate programme, Der Spiegel reports. It also includes proposed increases to the nEHS price trajectory and wants the resulting revenue to be used to finance the surcharge on renewable electricity. (Clean Energy Wire)

Hamburg hub – Steelmaker ArcelorMittal has joined the renewable hydrogen consortium led by Swedish utility Vattenfall, aiming to produce carbon-neutral steel at Germany’s Hamburg port, Reuters reported, citing two executives speaking anonymously. Other partners include Shell, Airbus, Mitsubishi Heavy Industries, and municipal heat supplier Warme. The project involves converting Vattenfall’s Moorburg coal power plant, which is due to close by year-end under the German government’s compensation scheme.

German, Dutch connections – Shell, utility RWE, and the Dutch and German gas grid operators, Gasunie and Gascade, will step up their collaboration over a pipeline to transport hydrogen produced from North Sea offshore wind to Germany. The pipeline plan is a sub-project of the giant AquaVentus initiative called AquaDuctus, with a goal to pipe up to 1 Mt of green hydrogen annually from 2035 onwards. (ReCharge)

Antio anthraka – “We are saying goodbye to the coal age,” Greece’s energy state secretary told Euractiv following last week’s announcement that the country’s last lignite plant will be shut down in 2025, three years earlier than planned. PPC, Greece’s biggest energy company, said last week it was abandoning its plan to operate its Ptolemaida 5 lignite plant – still under construction – until 2028. Instead, the plant will switch from lignite to fossil gas in 2025. Previously, Greek PM Kyriakos Mitsotakis had made a pledge to end all dependence on lignite by 2028, saying all but one of the country’s coal-burning plants would close by 2023.

Good green taxes – Nearly 60% of the UK public says green taxes, whether carbon taxes on producers or consumers or green VAT taxes, are either a good idea or a very good idea, while more than 25% are neutral towards each, leaving between 5% and 12% opposed, according to a survey by the Green Alliance think-tank. The only green tax not found either good or very good by a majority of respondents was road pricing, which had overt support among 37% of respondents, while 28% were neutral and 24% opposed.

ASIA PACIFIC

New job description – The Australian Council of Superannuation Investors (Acsi), which represents investors that manage more than A$1 trillion in retirement savings and hold about 10% of the shares in the top 200 companies in the country, has threatened to vote against company directors who do not make sure their businesses are committed to action on global heating that includes hitting net zero by 2050. That’s even if the government fails to commit to a net zero target. (Guardian)

Add another zero – ANA, Japan’s biggest airline company, on Monday pledged to reach net zero emissions by 2050, in line with the government’s target. Increased use of sustainable aviation fuel will be at heart of ANA’s efforts to cut greenhouse gases, along with other technology improvements. However, the company also said that it would make use of carbon trading – primarily CORSIA-eligible offsets – to meet the goal, but did not specify a share of the reductions that would be met by the use of carbon credits.

INTERNATIONAL

Heard this before – BIMCO, the International Chamber of Shipping (ICS), and the World Shipping Council (WSC) prefer a UN-administered global carbon pricing scheme rather than the sector being covered under the EU ETS. WSC president John Butler said the EU’s proposal would create a fragmented regulatory regime for the maritime industry and wouldn’t help advance any low-carbon technology. The groups have asked the UN’s IMO to start talks for adopting industry-wide market-based measures to reduce CO2 emissions. ‘To expedite development, the (IMO) is requested to commence discussions on MBMs as soon as possible and before 2023, with a view to taking some decisions,’ they said in the proposal. The IMO has set a target to reduce global emissions from shipping by 50% from 2008 levels by 2050. It should be noted that the EU is advancing its plan of bringing shipping under its ETS after years of inaction by the IMO. (SeaNews)

What shall we talk about? – An analysis of transcripts from over 7,000 companies shows “climate change” has been discussed in 13.6% of calls in Q1 2021. That was the highest in at least 10 years and compares to a prior peak of 9.5% in Q1 2020. Firms are not yet discussing solutions, though, with “carbon taxes” and “carbon trading” being discussed by just 1.0% and 0.2% of firms, respectively. Chris Rogers, Senior Analyst at Panjiva, S&P Global Market Intelligence commented: “Unsurprisingly, the utility and extractive industries discussed the topic most frequently. The topic is also increasingly weighing on the minds of insurance and building materials executives, with 35.8% and 28.1% of sectors, respectively, discussing the topic. Meanwhile, 25.6% and 20.8% of electrical equipment and automakers’ calls, respectively, included climate change comments.”

AND FINALLY…

Green spying – The chief of Britain’s MI6 has said that the spy agency has started monitoring large industrial nations to make sure they stick to climate change commitments. In an interview with Times Radio, Richard Moore, also known as “C”, said that “green spying” needs to be part of their work to make sure countries are doing what they have signed up to do and support what he calls the “foremost international foreign policy agenda item for this country and for the planet”. “As somebody used to say – ‘trust, but verify’. On climate change, where you need everyone to come on board and to play fair, then occasionally just check to make sure they are,” he said. (Independent)

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