Newsletters > CP Daily: Tuesday June 1, 2021

CP Daily: Tuesday June 1, 2021

Published 01:59 on June 2, 2021  /  Last updated at 01:59 on June 2, 2021  / Carbon Pulse /  Newsletters

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

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TOP STORY

Spain seeks to curb windfall profits from nuclear and hydro amid soaring carbon price

Spain’s government has introduced plans to curb windfall profits that nuclear and hydropower plants earn from the wholesale power market as a result of higher carbon prices, a measure designed to shield household and industrial consumers from soaring EU carbon market costs.

EMEA

Brussels applies EU ETS free allocation factor for industries through 2025

The European Commission has applied a cross-sectoral correction factor (CSCF) for industry’s free carbon market allocations through 2025, a move that paves the way for 2021 EUA handouts later this summer.

Euro Markets: EUAs lift above €52 as energy prices rise, free allocations seen far off

EUA prices lifted above €52 in thin trade on Tuesday amid higher prices in energy and equity markets and as traders said Brussels appears to have made limited progress in handing out this year’s free allocations.

Contracts for difference could have “distortive effects” on EU ETS price, say exchanges

Carbon contracts for difference (CCfDs), an increasingly touted measure across the EU to decarbonise heavy industries, could have “potentially distortive effects” on the bloc’s carbon market, according to a network of European energy exchanges.

VOLUNTARY

Nasdaq buys carbon removals platform Puro.earth

US-headquartered exchange operator Nasdaq has taken a controlling stake in Finnish-based carbon removals platform Puro.earth, the latest deal reflecting soaring demand for high-end carbon credits based on eliminating rather than merely avoiding emissions.

VCM Report: VER values continue to rise on low-cost credit demand

Voluntary emissions reduction (VER) prices this week maintained their upward trajectory seen over late spring, with voluntary carbon market (VCM) participants continuing to attribute the uptick to large buyers scooping up low-cost renewables credits.

ASIA PACIFIC

CN Markets: CCER volumes fall in May as investors take break

Domestic offset prices in China’s carbon market remained firm throughout May, though volumes halved as investors took a step back after liquidity had spiked the previous month, while most of the action in the pilot schemes again took place in Guangdong.

Australia posts 5% drop in GHG emissions in 2020

Australia’s greenhouse gas emissions fell 5% year-on-year in 2020 to their lowest levels in three decades, as the pandemic muted transportation and the share of renewables in electricity production continued to rise.

Japanese company to sell carbon neutral gas to commercial, industrial customers

Japan’s Nihonkai Gas will start selling carbon neutral gas to its commercial and industrial customers this summer, it said Monday, after announcing its first carbon offset purchase.

AMERICAS

California initially foresaw substantially longer non-compliance period for partially invalidated Wisconsin offset project

California regulator ARB initially viewed a non-compliance issue at a Wisconsin dairy farm as a significantly longer period than it ultimately determined, with the offset project developer arguing the position would result in a financial loss of more than $600,000.

INTERNATIONAL

Switzerland, Thailand lay foundation for future Paris carbon credit deal

Switzerland intends to procure carbon offsets from Thailand under a joint statement signed by the two nations on Friday, marking the fourth arrangement for Paris-era international emissions trade orchestrated by Bern to date.

COMMENT

Growing Pains in the UK ETS

The UK ETS has been up and running for more than a week now, and while it might be stretching things to say that we can already see a few trends, there are nonetheless a few interesting developments worth noting.

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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

Finmins assemble – Finance ministers from the G7 will vow this week to support mandatory climate-related financial disclosures by companies that provide “consistent and decision-useful” information for markets. “We commit to properly embed climate change and biodiversity loss considerations into economic and financial policymaking, including addressing the macroeconomic impacts and the optimal use of policy levers such as carbon pricing,” said a draft communique seen by Reuters. G7 officials, set to meet in London on June 4-5, will also seek to coordinate globally on what constitutes sustainable, green investment to avoid confusion among investors. As well, the meeting is expected to pave the way an agreement on an “ambitious” deal on a minimum global corporate tax at the main G7 summit in July.

EMEA

Green olive branch – The European Commission has written to its environmental advisors greater scope to critique the bloc’s green taxonomy sustainable finance rules, according to a letter, dated May 26 and seen by Reuters. The five NGOs and consumer groups quit over the draft proposals in April, saying sections on forestry and bioenergy had been weakened at the request of some governments, and no longer reflected what the science said would support EU green goals. A decision on whether to label gas-fuelled power generation as green was delayed until later this year, with the rules due to take effect from 2022.

Green & disorderly – Bank of England Governor Andrew Bailey said the world’s effort to shift away from using fossil fuels could spark inflation if it’s done in a disorderly way, highlighting the risks involved with greening the economy. His remarks were aimed at spurring early action by investors and corporate executives to clean up the emissions blamed for causing global warming. “A disorderly transition, where more severe policies are introduced later in the horizon to compensate, could result in both lower growth and higher inflation from rising energy and materials costs in the economy,” Bailey said in a speech at an event hosted by Reuters on Tuesday. That shift, which he said climate science suggests is needed to protect the Earth’s atmosphere from bigger harms in the decades ahead, will be an opportunity for some industries and change the way goods like steel, cement and electricity are used. (Bloomberg)

Feel the burn – German coal and natural gas use increased in the first three months of 2021 compared to the same period last year, as the country’s wind turbines produced much less power, according data by energy market research group AG Energiebilanzen (AGEB). While oil use declined 19.4% due to the pandemic and higher prices for heating oil, Germany used 11% more natural gas, 9% more hard coal, and 26% more lignite than Q1 2020 – mostly to make up for the respective 35% and 17% decrease in onshore and offshore wind power. AGEB said these developments also led to increasing energy-related CO2 emissions, without providing details. Overall, the economic effects of the coronavirus pandemic, high energy and CO2 prices and the lack of a leap day caused German energy consumption to decline 0.8% YoY in Q1. Without the additional need for heating due to the colder weather, energy use would have declined by a larger 2.3%. Meanwhile, energy think-tank Agora Energiewende wrote in a blog piece that German power plants emitted about 10 Mt of CO2 more in Q1 than the same period last year, which could foreshadow a rise in emissions in calendar year 2021. (Clean Energy Wire)

Vroom vroom – Average CO2 from new cars and vans registered in the EU, Iceland, Norway, and the UK in 2019 stayed well below the applicable targets, according to final data published by the European Environment Agency. However, mean emissions from new passenger cars in 2019 increased for the third consecutive year, while CO2 from new vans remained stable. This left manufacturers with the significant challenge of reducing the average emissions of their fleet in 2020 when stricter targets were introduced. Four small-volume car manufacturers, each responsible for less than 10,000 new cars registered in 2019 and to whom a derogation had previously been granted, as well as one van manufacturer, were found to have exceeded their emissions target in 2019. As a result, they will be required to pay excess emission premiums totalling over €13.6 mln. New registrations of battery electric and plug-in hybrid electric cars continued to increase in 2019 but remained low at 3.5% of new registrations, compared to 2% in 2018. For vans, registrations of battery electric vehicles nearly doubled from 0.8% to 1.4% in 2019.

Unintended consequences – Detours taken by airlines to avoid entering Belarusian airspace following the forced landing of a Ryanair jet are responsible for around an extra 250,000 kg of CO2 emissions per day, EU air traffic management agency Eurocontrol’s estimates show. On average, EU and UK carriers must fly 40 nautical miles more to adhere to EU sanctions against Belarus, with most re-routing through the Baltic states. Prior to the ban, around 300 flights crossed Belarus daily, with roughly 100 of those operated by EU or British carriers. Eurocontrol estimates that around an additional 79,000 kg of fuel is burned each day due to the rerouting and that the release of NOx is boosted by around 1,200 kg daily.

Ambition Africa – Oil-rich Angola has submitted a revised NDC, committing to a unconditional 14% cut in emissions beneath BAU in 2025 using a 2015 baseline and an additional 10% contingent on international support “through the use of climate finance and international market mechanisms where appropriate”. That represents a change from its original NDC pledge to cut emissions 35% beneath BAU levels in 2030 using a 2005 baseline. The revised NDC aims to have emissions at 82.4 MtCO2e by 2025, whereas the original pledge projected emissions in that year at 113 Mt if the ultimate goal was to be fully achieved. Meanwhile, Sudan submitted its interim Paris update prior to the finalisation of its updated first NDC. The North African country aims to have 2.1 GW of utility-scale grid connected wind and solar power by 2030, as well as 800 MW of stand-alone and mini grid infrastructure. In addition, Sudan is seeking to implement its national REDD+ strategy, with afforestation, reforestation, and restoration on over 500,000 hectares slated to remove 12 MtCO2 in the 2031-30 timeframe. (Check Carbon Pulse’s NDC Tracker for an overview of the previously-submitted and updated Paris pledges.)

Moscow move – Russia’s lower house of parliament approved the nation’s first climate law on Tuesday, approving measures to curb GHG output in the world’s fourth biggest emitter, Reuters reported. The law still needs to be approved by the upper house of parliament and signed by President Vladimir Putin. Vladimir Burmatov, chairman of the parliamentary committee on ecology and environmental protection, said the bill was a first step towards carbon regulation in the country. Read Carbon Pulse’s take on the details in the bill, which requires large polluters to report their emissions from 2022.

Off to the big house – Two men have been sentenced by a UK court to a total of 19 years in jail for their roles in a £36 mln boiler room fraud, FT Advisor reports. Paul Seakens and Luke Ryan were sentenced to 13 years and six years imprisonment respectively at specialist court Prospero House Southwark after being convicted of fraud and money laundering. The pair were directors of Enviro Associates, which sold VERs to individuals but made false claims about returns. They targeted the elderly and inexperienced investors, according to the Crown Prosecution Service, which said the carbon credits, which were essentially worthless, were sold to individuals via call centres at “vastly inflated prices” of 200-1000% mark-ups. Read more about the case.

AMERICAS

Providing refuge – President Joe Biden’s administration is suspending all oil and gas leases in Alaska’s Arctic National Wildlife Refuge pending a deeper look at the environmental impacts of drilling in the sensitive region, the Interior Department said Tuesday. The suspension of the leases, follows Biden’s Jan. 20 20 executive order that identified “alleged legal deficiencies” in the original leasing programme and put in place a temporary moratorium on any oil- and gas-related activities in the refuge. The executive order also left open the possibility that the department would undertake a new environmental review to address potential legal flaws in the programme. A new environmental analysis could impose additional restrictions on development in the refuge or potentially nullify the leases altogether, undoing one of the signature policy achievements of the Trump administration. (Politico)

A POET and they didn’t even know it – POET, the largest biofuels producer in the US, has acquired Flint Hills Resources’ entire ethanol business, POET announced on Tuesday. The deal will boost POET’s ethanol production capacity by 40% to 3 bln gal (11.4 bln L) per year, the company said. It highlights POET’s bet that conventional biofuels like corn-based ethanol will play a role in reducing carbon emissions. The acquisition includes six bioprocessing facilities located in Iowa and Nebraska and two terminals in Texas and Georgia. POET, based at Sioux Falls, South Dakota, will now operate 33 bioprocessing facilities across eight states. (Reuters)

SCIENCE & TECH

Terrible temperatures – Climate change causes more than one-third of global heat-related deaths each year, new research published Monday in Nature Climate Change found. Seventy scientists assessed heat deaths in 732 cities from 1991-2018 and found 37% of deaths world-wide were directly attributable to climate change. In total they found an average of 9,700 deaths a year, just from the selected cities, could be blamed on human-caused heating. In the 200 US cities studied, the average was 1,100 deaths annually, about 35% due to climate change, while Hawaii had the highest proportion of climate-attributable deaths at 82%. (Climate Nexus)

AND FINALLY…

Humans aren’t the only ones masking up – Agriculture giant Cargill will start selling methane-absorbing wearable devices for cows, putting its support behind an experimental technology that could help the industry cut GHGs. The mask-like accessory was developed by UK startup Zelp, which claims it can reduce methane emissions by more than half. Cargill said it expects to start offering the devices to European dairy farmers in 2022. The companies haven’t set a price yet, but Zelp says an annual subscription fee may start at about $80 a cow. Some 95% of methane released by cows comes out as burps and through the nose. Zelp’s wearables, placed above cows’ mouths, act a bit like the catalytic converter on a car, with a set of fans powered by solar-charged batteries sucking up the burps and trapping them in a chamber with a methane-absorbing filter. Once the filter is saturated, a chemical reaction turns the methane into CO₂, which is then released. Cargill said the masks could be used in combination with other solutions. Several food suppliers are testing or have begun using feed additives which inhibit microbes in cows’ stomachs to help them produce less methane. Zelp is yet to prove to independent experts that the technology works, with peer-reviewed studies taking place in Q4 after the product has been fully optimised. Cargill believes more dairy processing companies will be willing to pay a premium for milk produced at farms that meet environmental and animal welfare standards, while farmers could also earn offsets for the practice. (Bloomberg)

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