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TOP STORY

South Korea suspends 5.1 mln allowance auction as KAU price crashes

South Korea on Wednesday announced it has cancelled plans to auction off 5.1 million CO2 permits next week with no plans to make those available before the June 30 annual compliance deadline, after the spot price in the secondary market has collapsed by nearly 20% in the past two days.

AMERICAS

PREVIEW: June RGGI auction expected to clear near secondary market, with eyes on compliance buying

The Q2 RGGI auction is expected to settle closer to the secondary market after notching a wide discount in March, with some market participants foreseeing the quarterly sale settling at a premium due to deferred compliance demand.

Chicago-based financial firm opens second RGGI COATS account

A Land of Lincoln-headquartered financial firm opened a second RGGI account this week ahead of the Q2 auction, with the registration marking the first new speculative account in the power sector cap-and-trade programme in more than two months, CO2 Allowance Tracking System (COATS) data showed.

RFS Market: RIN prices tick up on strong commodity values, as traders question refiners’ strategies

US biofuel credit (RIN) values rose this week on the back of higher agricultural commodity prices, while market participants questioned whether other refiners besides a Delta Air Lines subsidiary were trimming back on Renewable Fuel Standard (RFS) purchases amid near-record high levels.

ASIA PACIFIC

China govt agencies back Beijing as carbon offset market hub

Eight major government agencies and institutions have encouraged Beijing to set up an offset trading platform in its pilot free trade zone to act as the centre for the Chinese carbon credit market.

EMEA

Brussels to keep low-carbon fuels out of updated renewables directive -EU official

The upcoming revision of the EU’s renewable energy directive will not include any measures to promote low-carbon fuels, a European Commission senior official said Wednesday, partly as a result of pressure from green groups and progressive EU lawmakers.

Euro Markets: EUAs, UKAs slip as British auction weighs

EUAs lost nearly 2% on Wednesday as the market again struggled to absorb the day’s two auctions, though they avoided the sharp sell-off triggered by the UK’s inaugural sale two weeks earlier, while trading data on UKA holdings was published for the first time ever.

EU joins forces with Bill Gates to mobilise $1 bln for clean energy tech

The European Commission and Bill Gates’ climate venture Breakthrough Energy Catalyst will mobilise $1 billion (€820 million) to scale up clean energy technology, the EU’s executive announced on Wednesday.

EU carbon rally loses momentum, but any near-term correction to be short-lived -analysts

The “perfect storm” of bullish factors that drove EU carbon prices to a record high last month has lost momentum, analysts said Wednesday, but warned that any correction would likely be temporary.

Morgan Stanley lifts long-term EU carbon price forecasts but warns of H2-21 pullback

Analysts at Morgan Stanley have nudged up their long-term EU carbon price forecasts, but they are expecting allowances to pull back during the second half of this year.

ICIS head of European power and carbon analytics leaving to join boutique consultancy

The head of European power and carbon analytics at ICIS is leaving for a boutique consultancy, Carbon Pulse has learned.

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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

Good news and bad – Global energy investment is likely to rebound to pre-pandemic levels this year, with most finance going towards renewables – but, ultimately, the new generation capacity financed will not be compatible with long-term climate goals. That is according to the 2021 edition of the International Energy Agency’s (IEA) World Energy Investment report. Published Wednesday, the report forecasts a 10% year-on-year increase in global energy investments, bringing levels to almost pre-pandemic proportions. Of the energy-related sectors, power generation will attract the largest sum, accounting for half of investment growth, after investment levels plateaued between 2019 and 2020. Promisingly, the IEA believes that 70% of the total amount that will go towards generation this year will go towards renewables. Solar and onshore wind are likely to be the most attractive options in most geographies, with average installation costs down by 10% and 5% respectively. Nonetheless, the IEA is urging readers to be aware that the global energy sector is still off-track to deliver net-zero by 2050, and that if the investment patterns seen between 2017 and 2021 continue, the goal will not be met. (edie)

Hello sailor – CO2 emissions from seaborne coal exports stayed steady last year despite the impact of the coronavirus on consumption, according to a study by environmental think-tank Ember. They were estimated to account for 3.1 bln tonnes of CO2 produced in 2020, or some 10% of total energy-related CO2 emissions last year, down from 3.4 bln in 2019. Ember said the G7’s deal last month to stop international financing of coal projects by the end of this year was likely to put significant pressure on coal exporters such as Indonesia and Australia, which together accounted for 59% of last year’s total, on the resulting declining demand. (Reuters)

EMEA

CBAM time – The EU’s planned carbon border adjustment mechanism (CBAM) will force importers to have to buy special certificates at a price linked to the EU ETS, a person familiar with European Commission proposals due to be unveiled next month told Bloomberg. The 27-nation bloc wants to make importers of steel, cement, and aluminum pay for their emissions in a mechanism that will link new levies to the costs that domestic producers already face. The EU’s executive is considering a transitional period of up to three years before a full entry into force of the mechanism in Jan. 2026, according to a draft proposal. In 2023-26, it could use a simplified system “with the objective of reducing the risk of disruptive impacts on trade flows and alleviating the initial administrative burden for declarants,” the proposal said. The price of CBAM certificates will be calculated as the average of government EUA auction prices each week, with importers needing to submit a declaration stating the emissions embedded in goods they brought in during the previous calendar year. “In case the actual emissions cannot be adequately verified, including cases where the authorised declarant has failed to submit the necessary information, the number of CBAM certificates to be surrendered shall be determined in accordance with default values.”  If the embedded emissions originate in a country that has carbon pricing, the importer would be entitled to claim a reduction in the number of CBAM certificates to be surrendered. Importers will face a non-compliance penalty of three times the average price of CBAM certificates in the previous year for each certificate that wasn’t surrendered.

Cementing net zero – Germany-headquartered HeidelbergCement intends to upgrade its facility in Slite, on the Swedish island of Gotland, to become the world’s first carbon-neutral cement plant, the company announced on Wednesday. The plant will be scaled to capture up to 1.8 MtCO2 annually, which corresponds to the plant’s total emissions. Additionally, the use of bio-based fuels in the cement production at Slite will be increased in line with the company’s commitment to significantly raise the share of biomass in its fuel mix. The full-scale capturing of the plant’s CO2 emissions is targeted by 2030.

Multibillion plan – Danish utility Orsted plans to spend $57 bln by 2027 to be the world’s leading green energy provider, eyeing 50 GW of renewable capacity by 2030. As the firm faces competition from other utilities as well as oil majors, Orsted’s new target is an average annual increase of about 50% from the company’s last strategy update in 2018, it said Wednesday, though the spending plan is still below what some of its closest competitors are targeting. Spain’s Iberdrola has earmarked €150 bln through 2030 to become the biggest renewable power company, and Italy’s Enel unveiled plans last year to roughly triple its renewable capacity to 120 GW by 2030, part of a €160 bln investment plan. (Bloomberg)

A while longer – Uniper’s coal power unit Heyden 4, which was slated for decommissioning as a result of the first round of German hard coal exit tenders, has to remain online in reserve to help secure supply because it cannot be converted to a non-coal burning power flow management in time for the year-end shutdown of the Grohnde nuclear plant, according to the Federal Network Agency (BNetzA). Uniper anticipates Heyden 4 to remain in operation as a reserve power plant from July 8, 2021 to September 30, 2022, it has been turned on only seven times so far this year to balance the grid. (Clean Energy Wire)

Money grows on trees – German agriculture minister Julia Kloeckner has presented a model for financially rewarding forest owners for their part in protecting the climate. Part of this model would be a payment for forests with sustainability certification. Those who increase the CO2 storage capacity of the forest through further measures or ensure that their harvested wood is used in durable wood products are to receive a bonus. “If we put a price on CO2 emissions, then we must also support those who preserve, care for and manage our forests as key climate actors,” said Kloeckner. The ministry said it is in talks with the European Commission to deal with state aid related questions of the proposed model. (Clean Energy Wire)

AMERICAS

On the border – A border carbon adjustment is being discussed among moderate GOP lawmakers as a policy that might soften the Republican Party’s perceived antagonism toward climate action without mandating new costs or regulations on American industry, two people close to the discussions told E&E News. The idea is being explored by at least four Republican senators who view carbon border adjustments as potentially viable because they would challenge China economically, the sources said. The group includes Sens. Lisa Murkowski of Alaska, Mike Braun of Indiana, Mitt Romney of Utah and Susan Collins of Maine, one of the sources said. The group is in discussions about the idea but has not put together a proposal. President Joe Biden has also signalled interest in border adjustments, and climate envoy John Kerry has hinted that the administration will seriously consider one in the lead-up to UN climate talks in Scotland later this year.

Sun run – BP is investing $220 mln in US solar projects across 12 states “as it seeks to expand its renewables portfolio”, the Hill reports. The projects will amount to 9 GW worth of energy, which the oil company said will be enough to power about 1.7 mln homes. BP, which is one of the largest oil and gas producers operating in the US, previously announced it intends to increase its renewables capacity to 20 GW by 2025 and 50 GW by 2030. (Carbon Brief)

SCIENCE & TECH

If you Bill it, they will come – Bill Gates’s TerraPower will build an advanced nuclear reactor demonstration project at a retiring coal plant in Wyoming, the state’s Republican Governor Mark Gordon announced Wednesday. The TerraPower demonstration project will be located at the site of one of PacifiCorp’s retiring coal-fired power plants. The project will be a 345MW fully functioning power plant demonstrating its Natrium technology, which would store excess energy in tanks of molten salt to help supplement variable wind and solar energy in periods of high demand. The Natrium plants will be cooled by liquid sodium. (Washington Examiner)

AND FINALLY…

G, thanks – As the UK prepares to host the G7 summit, new analysis reveals that the countries attending committed $189 bln to support oil, coal, and gas between Jan. 2020 and Mar. 2021, while only spending $147 bln on clean forms of energy. The analysis from the development charity Tearfund, the International Institute for Sustainable Development, and the Overseas Development Institute showed that the nations missed opportunities to make their response to the pandemic greener. In most cases, money provided for fossil fuel industries was given with no strings attached, rather than with conditions requiring a reduction in emissions or pollution. The analysis found that eight in every 10 dollars spent on non-renewable energy came without conditions. (Guardian)

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