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TOP STORY
NA Markets: Investor inflows fuel additional CCA gains, RGGI prices increase on compliance demand
Speculators continued to fuel bullish pressure for California Carbon Allowances (CCAs) on the secondary market this week, as RGGI allowance (RGA) prices hit a two-month high with an uptick in compliance demand.
EMEA
EU Market: EUAs climb back above €50 as rally resumes
EUAs resumed their record-breaking run on Thursday, climbing back above €50 to extend the week’s all-time high as bullish sentiment continued to hold sway.
ArcelorMittal output recovers in “strongest quarter in a decade”, announces low-carbon steel projects
Steelmaker ArcelorMittal saw a substantial demand recovery in Q1, achieving the “strongest” quarterly results in a decade following the COVID-19 crisis, it said in financial results on Thursday that also unveiled new deals to reduce emissions at its European facilities.
Utilities Enel, Uniper report a rebound in power output for Q1
European utilities Enel and Uniper both reported a year-on-year rebound in power output for Q1 on Thursday, with last year’s generation levels disrupted by the start of the coronavirus crisis and dampened by warmer weather.
European renewables expert joins IncubEx from South Pole
Environmental markets platform IncubEx has hired a new director to further develop its European carbon and renewables certificates offerings.
ASIA PACIFIC
SK Market: KAUs rebound, but remain frail as traders await news on market balance
South Korean carbon allowances have rebounded 28% since hitting a 5-year low last month, though uncertainty is high in the market as the government has yet to announce the exact ETS emissions balance for 2020.
AMERICAS
LCFS Market: California prices roar back despite quarterly credit build
California Low Carbon Fuel Standard (LCFS) credits rebounded towards a one-month high this week even after the programme posted its highest quarterly credit surplus in four years.
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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
Enveloping emissions – The distribution of global GHG emissions has reached an inflection point, as China’s emissions exceeded developed nations combined in 2019, a new Rhodium Group analysis concludes. In its findings, Rhodium compared China’s emissions to nations in the multilateral OECD as of 2019 and all 27 EU members. Additionally, the analysis also showed that on a per-capita basis, China’s 2019 emissions were close to the OECD average. The firm expects that the final 2020 data will show China’s per-capita emissions exceeded the OECD average. (Axios)
Methane mission – The world could cut rising methane emissions driven by human activity by up to 45% by 2030 using currently available technologies, according to the Global Methane Assessment report published by the UN Environment Programme and the Climate & Clean Air Coalition. It found the world could avoid nearly 0.3C of global warming by the 2040s, but failing to tackle the potent gas would push global climate goals out of reach. (Reuters)
EMEA
Pricing pinch – In 2021, EU chemicals producers under the EU ETS could face a carbon bill of €1.5 bln, analysts at ICIS said – more than double the €600 mln charged last year – due to a fall in the amount of free handouts and a rise in the price of EUAs. Europe’s chemicals industry accounted for 8% of emissions covered under the ETS in 2020, and it received most of its allowances for free to protect it from high costs and competition from non-EU producers. With a significant downward revision of the chemicals industry benchmarks of up to -24% for the 2021-25 period, ICIS expects the number of free allowances to significantly decline from 2020 to 2021, resulting in the short position of the sector to further increase to, on average, 35 mln in the next few years.
Pricing pinch 2 – German industry associations are complaining that the country’s nEHS carbon price – initially fixed at €25/tonne – for the buildings and transport sectors is already causing problems and want the government to improve protection against double burdens and carbon leakage. Germany’s metal industry association WVM said some energy-intensive sectors largely made up of mid-sized companies and facing international competition would not receive any protection. The Association of German Chambers of Commerce and Industry has also called for a rapid expansion of the carbon leakage list and a reduction of bureaucratic hurdles. Separately, German media including Der Spiegel reported that the country’s energy industry will have to shoulder the bulk of the additional emissions reductions by 2030, according to a draft amendment to the climate law. The draft is to implement the government’s agreement to raise Germany’s climate target for 2030 to 65%. Instead of 175 Mt – the current target – the sector will only be allowed to emit 108 Mt. Heavy industry is supposed to reduce emissions to 119 Mt from its current target of 140 Mt. All targets would be preliminary and depend on how the EU intends to implement its more ambitious 2030 climate target. (Handelsblatt, Clean Energy Wire)
F off – Germany is putting a stop to illegal imports of partially fluorinated hydrocarbons (F-gases), banning the purchase or resell if they do not meet the requirements of the European F-Gas Regulation. In order to facilitate controls, information about manufacturers and importers of F-gases, as well as information about the legality of the imported goods in the supply chain, must be passed on. This is what is provided by the current amendment to the Chemicals Act, which was passed by the German Bundestag today. By 2030, the EU member states want to reduce the consumption of climate-damaging partially fluorinated hydrocarbons by around 80%. The EU F-gas regulation has been in place since 2015, but for now its prescribed quota only applies to the first time F-gases are placed on the EU market, with no restrictions for downstream traders and consumers. Germany’s new regulations now also transfer the requirements from the EU F-Gas Regulation to subsequent actors in the supply chain. Separately, the European Commission on Thursday announced that it is in the process of reviewing the F-gas Regulation as part of its Fit for 55 package, due to be adopted this summer. “In addition to raising the level of ambition and ensuring long-term EU compliance with international rules, the review will also help ensure the rules are easier to enforce and coherent with other legislation,” it added. Stakeholders will be informed about the preliminary findings of a study and the Commission will seek additional technical input to enhance the basis for the F-gas review, which is set to be completed by the end of this year.
TEN plus one – Some 11 EU countries have signed a declaration calling on the 27-nation bloc to stop funding fossil fuels under its trans-European energy infrastructure regulation (TEN-E), which is currently under revision. The signatories – Austria, Belgium, Germany, Denmark, Estonia, Ireland, Luxembourg, Latvia, the Netherlands, Spain, and Sweden – emphasise the role that decarbonising the energy system will have in reaching Europe’s 2030 and 2050 climate goals. The joint paper added that the regulation must contribute to developing the framework for “a viable pathway away from the reliance on fossil fuels,” particularly as investments made over the next few years will have an impact for decades to come. (Euractiv)
ASIA PACIFIC
Coal stop – Malaysia’s Maybank has said it will no longer finance new coal activities as part of a five-year strategy that will also see the bank committing $12 bln in sustainable financing. The bank, Malaysia’s largest lender by assets, will work with existing borrowers to diversify and achieve a sustainable renewable energy mix over the medium- to long-term. (Reuters)
AMERICAS
Coming undone – Promised health gains from the decline of coal-fired electricity are being undone by pollution caused by burning other combustion fuels like gas and wood pellets, new research from Harvard scientists found. The study, published Wednesday in Environmental Research Letters, found stationary sources, like power plants, buildings, and industrial boilers, killed at least 47,000 people in the US in 2017, and gas-fired pollution killed more people than coal in at least 19 states plus Washington DC. The research, which was supported by RMI, found particulate pollution from biomass burning “essentially replaced” averted sulfur dioxide emissions from coal and oil combustion. (Climate Nexus)
VOLUNTARY
Go with the ‘grove – US-based NGO Conservation International on Thursday announced that a mangrove along the coast in Cispata, Colombia, is the first to have its carbon stores fully accounted for with a new credit developed specifically to address the unique CO2 sequestration potential of mangroves. The two-year project was funded in collaboration with Apple to push forward innovative blue carbon solutions, and while a small portion of the carbon credits produced by this project will be retired in Apple’s name, most of the tech giant’s funding was part of a philanthropic donation. Conservation International plans to sell its mangrove carbon credits anywhere from $12-20/tonne, skewing towards the higher end of voluntary emissions reduction (VER) values. (GreenBiz)
SCIENCE & TECH
A must halve – Holding global temperature rise to no more than 1.5C – rather than following current emissions pledges – could halve the sea level rise from melting land ice by the year 2100, according to new research. The Nature study, which brings together 84 authors from 62 institutions, projects future sea level rise using the latest models and future pathways. It estimates that if current pledges to reduce emissions are met, land-ice loss will drive around 25 cm of sea level rise by 2100. However, this falls to 13 cm if warming is limited to 1.5C above pre-industrial levels. (Carbon Brief)
AND FINALLY…
Castle high, sequoia bright – A giant sequoia is still smoldering after last year’s Castle Fire, an illustration of the severity of last year’s fire season and an indication of California’s drought, the AP reports. Though giant sequoias have historically been resilient to wildfire, the Castle Fire was so severe it likely killed more than 1,000 trees, including many that had stood for more than 1,000 years. Climate change is making droughts more likely to occur, and more severe when they do, and thus makes wildfires more extreme as forests and other fuels sources are turned into proverbial tinder boxes. (Climate Nexus)
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