CP Daily: Friday April 30, 2021

Published 02:17 on May 1, 2021  /  Last updated at 02:22 on May 1, 2021  /  Newsletter  /  No Comments

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

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TOP STORIES

Brussels may delay 2030 climate package until July, says senior EU official

The European Commission could present its major EU climate package in July as it is still finalising work on a number of policy proposals, a senior EU official said Thursday, which may delay by several weeks proposals including the review of the bloc’s carbon market.

RGGI emissions accelerate in Q1 2021 on coal plant resumptions

CO2 output under the US Northeast and Mid-Atlantic RGGI cap-and-trade programme rose by 17% during the first quarter of 2021 even when excluding new member Virginia, as the return of several coal plants to the grid boosted emissions, according to data updated Friday.

EMEA

EU Market: EUAs hit new record above €49 on late short-squeeze, end April up 15%

EUAs surged to a new record above €49 on Friday afternoon, paring earlier losses in a move some said was a short squeeze aimed at catching out participants expecting prices to drop following the passing of the end-April ETS compliance deadline.

Germany, Russia sign MoU to ship hydrogen via controversial gas pipeline

Germany and Russia have signed a €2 billion memorandum of understanding (MoU) to leverage the controversial gas pipeline Nord Stream 2 for the eventual distribution of hydrogen, even as the European Parliament called for the project to be halted due to rising tensions with Moscow.

AMERICAS

ARB issues strong rebuke to study’s conclusions of rampant over-crediting in California’s forestry protocol

California regulator ARB repeatedly pushed back against researchers’ conclusions that the state’s forestry offset protocol allows for inaccurate baseline levels and for developers to utilise those loopholes to inflate credit issuances, according to responses published by the agency on Thursday.

California LCFS records largest credit surplus in four years during Q4 2020

Credit generation under the California Low Carbon Fuel Standard (LCFS) grew by nearly 5% during the fourth quarter of 2020, with record volumes from biofuels and electric vehicles propped up by a fall in deficit generation from petroleum-based options.

US Carbon Pricing and LCFS Roundup for week ending Apr. 30, 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 Illinois, Pennsylvania, and New Jersey.

WCI emitters nuke carbon holdings to pandemic-era low, as speculators push higher

Regulated entities came closer to holding a cumulative California Carbon Allowance (CCA) short position this week for the first time in over a year, while financial entities continued their months-long permit accumulation, according to US Commodity Futures Trading Commission (CFTC) data published Friday.

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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.

EMEA

EUA liberation – Czechia’s culture minister Lubomir Zaoralek has demanded an investigation into the sale of EUAs by Liberty Steel’s Ostrava facility on the night of Apr. 29, saying the company had broken a promise not to do so. Liberty’s stricken parent GFG – which faces collapse following the bankruptcy of its main financier Greensill Capital – confirmed the facility had sold 1 mln EUAs to its sister facility in Galati, Romania this week, at market price with the opportunity for it to buy back the units for cheaper in future, the FT reported. Earlier this month, Ostrava’s workers’ unions issued strike warnings due to increasing concerns that the firm would try to sell some of its spare EUAs to cover a €100 mln EUA shortfall at Galati ahead of the end-April compliance deadline to cover 2020 ETS emissions. The unions said Liberty had previously promised to use Ostrava’s ETS surplus to invest in two new furnaces by 2023. Argus earlier this month reported that Ostrava sold around 1 mln EUAs to Galati in Q1 of 2020, before Covid-19 took hold and as Liberty Steel Europe looked to generate cash to repay creditors, including Greensill. In that deal, Liberty reportedly unwound the buy leg to avoid paying margin as prices slipped, and did not have the cash or necessary credit lines to re-establish the purchase going forward. Employees involved in the sale repeatedly recommended buying back credits once the price approached a low of €15 in Mar. 2020, as they expected it to rebound. The Galati sales were originally completed at around €23, well below the current prompt price in the €40s, at which the company would need to buy back. Read Carbon Pulse’s report detailing ETS obligations and free allocations of both the Liberty facilities.

Troubling Turow – Poland’s climate ministry has extended a mining concession for the open-pit coal mine in Turow until 2044, outraging environmental campaigners, who said the move would worsen the climate crisis. The decision comes as the Court of Justice of the EU is poised to decide in early May whether the mine, located near the Czech and German borders, must close immediately, following a lawsuit filed by Czechia in February. The climate ministry said its decision was in the public interest as Turow supplies lignite to a nearby electricity plant, which provides around 5% of Poland’s power. (Reuters)

Seriously concerned – The EU has “serious concerns” over the Ukrainian government’s decision to dismiss the reform-minded head of state-owned O&G company Naftogaz, a spokesman said Friday. Ukraine’s cabinet on Wednesday sacked Naftogaz chief Andriy Kobolev, whose moves toward transparency won him support among Western investors, and suspended all members of the company’s supervisory board. Ukraine’s government said that Kobolev was dismissed after the company posted losses of $685 mln in 2020. Naftogaz denounced the decision, describing it as politically motivated and arguing that the company provided more than $5 bln to the state budget last year. Kobolev helped wean Ukraine off its dependence on Russian gas after Moscow in 2014 seized Crimea and war broke out in eastern Ukraine with Russian-backed separatists. (Euractiv)

Merco-unsure – The EU is seeking meaningful commitments on climate change and deforestation from Brazil and other Mercosur countries by the end of 2021 to push forward a trade agreement, European trade commissioner Valdis Dombrovskis said Friday. The trade pact struck in 2019 with Mercosur nations Argentina, Brazil, Paraguay, and Uruguay after two decades of talks promises to be the EU’s largest deal, removing €4 bln of import tariffs on its products. However, there are doubts it will ever enter force due to European concerns over Amazon deforestation and scepticism about Brazil’s commitment to the Paris climate change agreement. The Brazilian Amazon rainforest released more carbon than it stored over the last decade – with degradation a bigger cause than deforestation – according to new research. The study found that degradation accounted for three times more carbon loss than deforestation. More than 60% of the Amazon rainforest is in Brazil, and the new study used satellite monitoring to measure carbon storage from 2010-19. The findings, published in Nature Climate Change, also show a significant rise in deforestation in 2019 – 3.9 mln hectares compared to about 1 mln per year in 2017 and 2018 – possibly due to weakened environmental protection in Brazil. (Reuters)

AMERICAS

Scope for SCOTUS – West Virginia Attorney General Patrick Morrisey is leading 19 states seeking Supreme Court review of the scope of the US EPA’s authority over GHGs. The new petition from the conservative-leaning states asks the high court to review January’s appellate ruling that struck down the Trump-era Affordable Clean Energy Rule – the replacement to the Clean Power Plan – on power plant CO2 emissions. The Trump rule adopted a narrow view of EPA’s Clean Air Act authority that the US Court of Appeals for the DC Circuit rejected in January. If the high court accepts the case, it would set up an extremely high stakes legal battle before the court’s 6-3 conservative majority. (Axios)

What did Tennes see? – The federally-owned Tennessee Valley Authority (TVA) is planning to phase out its aging fleet of coal plants within the next 15 years because the plants are becoming uneconomical to operate. For TVA, all replacement options, including natural gas and nuclear, are on the table as it tries to meet President Biden administration’s power sector decarbonisation goals and its own mandate to deliver low cost and reliable power to its ratepayers, Jeffrey Lyash, TVA president and CEO, said on Wednesday during an Atlantic Council conference. Coal plant replacement options and the TVA’s carbon reduction goals will be discussed at next Thursday’s board of directors meeting, TVA spokesperson Jim Hopson said, and officials expect the federal utility to open up a new integrated resource plan process. (Utility Dive)

Weekend listening – The latest episode of Yale University’s Pricing Nature podcast asks if carbon pricing is a fundamentally conservative idea, and what is the future of climate action from the US Republican Party? The hosts speak with conservative climate activists including Congressman Bob Inglis (RepublicEN), Kiera O’Brien (Young Conservatives for Carbon Dividends), former Congressman Carlos Curbelo, and Jerry Taylor (Niskanen Center) about why they support carbon pricing policy. Listen/subscribe here

ASIA PACIFIC

Open for offsetting business – Competition for FDI is heating up in SE Asia, with Vietnam, Thailand and the Philippines boosting incentives or slashing corporate tax rates. Indonesia is considering introducing a carbon trading system that would allow investors to offset their emissions. The country’s Investment Coordinating Board is mapping out peatlands that can store vast amounts of carbon, and artificial lakes in former mining areas that could house floating solar panels. According to Bloomberg, the move is aimed at battery and EV companies that want to invest in Indonesia’s nickel supply chain but are balking at local processing plants’ reliance on coal for energy. The government has been trying to woo manufacturers from China, South Korea, and the US to set up shop in Indonesia.

Korean cargo – Australia LNG firm Santos has signed an MOU with SK E&E – a unit of Korean conglomerate SK Group – to investigate opportunities for carbon neutral LNG from its Barossa LNG-for-export project in Australia’s Northern Territory. The agreement also includes collaboration relating to Santos’ Moomba CCS project, bilateral arrangements for carbon credits and potential future development of zero-emissions hydrogen.

SHIPPING

A view to a ‘gill – US agribusiness giant Cargill, one of the world’s biggest charterers of ships, has cut nearly 1.5 Mt of gross CO2 emissions from its fleet since 2017, company executive Jan Dieleman said. Cargill’s gross CO2 emissions fell to 7.1 Mt in 2020 by investing in retrofitting energy saving and digital technology to improve vessel performance and reduce fuel consumption. (Reuters)

VOLUNTARY

Stanley stash – Investment bank Morgan Stanley on Friday pledged to mobilise $750 bln towards low-carbon solutions, tripling its original commitment set in 2018. In a press release, Morgan Stanley said it also joined the UN-convened Net-Zero Banking Alliance, which coordinates 43 of the world’s leading banks to accelerate the transition to net zero by 2050. Morgan Stanley’s other climate commitments include achieving carbon neutrality across global operations by 2022 – a goal that was set in 2017 – to power 100% of global operational electricity needs from renewable sources and offset any remaining emissions. To achieve this, the firm is exploring on-site power generation, securing power-purchase agreements, and purchasing renewable energy credits and carbon offsets.

X(ELS) marks the spot – Asia-based, blockchain-backed carbon offsetting platform XELS on Friday announced it has partnered with London-based brokerage and risk management firm Redshaw Advisors. Under the collaboration, Redshaw will provide strategic advisory, consulting, and procurement of carbon credits for XELS. Initially focused on the voluntary credit segment, XELS launched its blockchain platform and eponymous digital asset earlier this month, and the platform in the future aims to offer compliance credits in addition to voluntary units.

SCIENCE & TECH

CC-Exx – Exxon Mobil is advancing a carbon capture and storage project along the Gulf of Mexico through talks with rivals and government officials, Chief Executive Darren Woods said in an interview with Reuters on Friday. The largest US oil producer this month floated a public-private initiative that would collect and sequester planet-warming CO2 emissions from petrochemical plants along the Houston Ship Channel, a 50-mile long waterway that is part of the Port of Houston. Woods declined to identify by name the businesses Exxon hopes to attract to the project, saying he aims to lure the region’s top 50 CO2 emitters, and is lobbying federal, state and local officials for support. It would cost at least $100 bln from companies and government agencies to finance a project that could store 50 Mt of CO2 by 2030 and double that amount by 2040, Exxon has said.

Walkin’ on sunshine – Barcelona city council has installed Spain’s first photovoltaic pavement as part of the city’s drive to become carbon neutral by 2050. The 50 sq metres of non-slip solar panels, installed in a small park in the Glòries area of the city, will generate 7,560 kWh a year, enough to supply three households. The city has contributed €30,000 towards the cost, the remainder being met by the manufacturer. The viability of the scheme will be assessed after six months. (Guardian)

Fly-drogen – The hydrogen aircraft market is projected to reach $174 bln by 2040, according to Gediminas Ziemelis, chairman of the board at Avia Solutions. With the rate at which the hydrogen market and infrastructure are currently expanding, the costs to produce hydrogen is declining, making integration into aviation more economically viable. Because of this, it is expected to drive the growth of the global hydrogen aircraft market over the years to reach $27 bln in 2030. (H2 View)

Energy by any other name – BioSolar, Inc. (OTC:BSRC), a developer of clean energy technologies, has changed its corporate name to NewHydrogen, Inc., and it now has a new stock ticker symbol: NEWH. “With our increased focus on green hydrogen, we believe that NewHydrogen is a more appropriate name for our public company,” said CEO David Lee in a press release.

AND FINALLY…

Scourge of the woke, and the offset market – Reuters profiles controversial UK politician and Trump fanboy Nigel Farage, with the high-profile Brexiteer leaving politics to join Dutch carbon offset company Dutch Green Business (DGB) and touting the benefits of conservation and nature rather than just combating climate change – on which he says the science is still not completely settled. Some established figures in the carbon market expressed concern, with a spokesperson for offset certifier Gold Standard blasting the appointment of someone who has wilfully impeded progress on climate action, and developer South Pole pledging to no longer deal with the company after having previously sold the firm forest offsets from a project in Sierra Leone.

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