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TOP STORY

EU carbon border levy proposed as ‘notional’ ETS with transition phase -draft

The EU’s proposed carbon border adjustment mechanism (CBAM) will look like a ‘notional’ ETS and will give importers a transition phase to alleviate their burden, according to draft documents that give little indication over how the measure will interact with free allocation of carbon allowances to industry.

AMERICAS

WCI link “absolutely imperative” for Washington carbon market -senator

A linkage with the California-Quebec cap-and-trade system is essential for Washington state’s newly approved carbon programme, the leading legislator behind the policy said Wednesday, as he also minimised the impact of Governor Jay Inslee’s (D) partial vetoes of the underlying climate bill.

NA Markets: CCA prices rocket toward 2021 highs following Q2 auction, RGGI allowances stagnate before June sale

California Carbon Allowance (CCA) prices surged on the secondary market this week after speculators acquired an all-time high at the Q2 WCI auction, while RGGI allowances (RGAs) dithered ahead of their own quarterly sale.

Virginia utility commission should approve Dominion’s RGGI rate request, hearing examiner says

The Virginia State Corporation Commission (SCC) should accept Dominion Energy’s nearly $168 million rate request to cover RGGI compliance costs, but the state agency may want to consider requiring further analysis on the utility’s long-term CO2 trends, according to a document filed this week.

ASIA PACIFIC

SK Market: Auction cancellation fails to halt KAU slide

Korean carbon allowances continued to fall in Thursday trade, hitting their lowest since Feb. 2016 despite the government abandoning plans to auction millions of permits next week.

Australia Market Roundup: Waste firm collects 120,000 ACCUs as reports sounds alarm over Woodside, BHP plans

Australia’s Clean Energy Regulator handed out 120,000 carbon credits to waste tech firm Global Renewables in its latest issuance round, while a report warned Woodside and BHP’s Scarborough to Pluto LNG project could create almost 1.7 billion tonnes of CO2e emissions over its lifetime.

EMEA

Euro Markets: EUAs slip towards €50 after technical breakout

EUAs fell towards €50 on Thursday, with prices breaking out of a technical range and continuing their retreat from last month’s record levels.

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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

Aid angst – The UK and the US are the only two G7 countries to have set out proposals to increase climate finance to developing nations in recent months, according to a report by NGO Care Denmark, a member of the international NGO network. Care found that most G7 countries have still made no new commitments on climate finance, despite a pledge by the developed world made in 2009 to provide $100 bln a year to developing countries by 2020, which has not been met. The issue threatens to hold up the UN climate negotiations, which are in the first of a three-week virtual meeting ahead of November’s COP26 Glasgow summit. G7 finance ministers are also due to discuss climate change at a meeting Friday, ahead of the main leaders’ summit on June 11-13. (Guardian)

Mines a double – The world’s coal producers are currently planning as many as 432 new mine projects with 2.28 bln tonnes of annual output capacity, research published on Thursday showed, putting targets for slowing global climate change at risk. China, Australia, India, and Russia account for more than three quarters of the new projects, according to a study by US think-tank Global Energy Monitor. China alone is now building another 452 Mt of annual production capacity, it said. (Reuters)

Forest friends – The UK and US this week joined Germany and Norway as part of an international alliance to stop deforestation in Peru. Originally struck in 2014, the four countries agreed to extend the agreement until 2025, with Norway upping its financial contribution to NOK 1.8 bln (over $200 mln). Of this, up to NOK 1.5 bln are payments for reduced deforestation through the Architecture for REDD+ Transactions (ART) programme, with Norway guaranteeing a $10/tonne floor price.

EMEA

Greener leaning – Germany’s government coalition of Chancellor Angela Merkel’s conservative CDU/CSU and the Social Democratic Party (SPD) is aiming for higher renewables expansion targets for 2030 as part of its upcoming “Climate Emergency Programme 2022”. A draft of the programme seen by Clean Energy Wire states that the government assumes a need of 95 GW of onshore wind capacity – up from the current 71 GW target – and 150 GW of solar PV capacity (current target: 100 GW) by 2030. The programme also includes additional funding of €8 bln for issues such as the energy-efficient modernisation of buildings, e-car buyer’s premium, and the climate-friendly transformation of industry. With the emergency programme, the government says it wants to “significantly increase the dynamic” of the transformation needed to reach its more ambitious climate targets in the early 2020s. The programme is currently only a policy proposal and it is unclear whether much of it can be put into action or legislation before September’s national election.

A bit of both – The European Commission is planning to adopt a combination of mandatory and voluntary due diligence rules later this year to prevent global deforestation in its supply chains, marking a sharp turn away from its reliance on voluntary schemes. Speaking at a EURACTIV debate, Carla Montesi, director of the Green Deal and Digital Agenda at the Commission, said Europe needs to tackle its responsibility for global deforestation with an integrated and holistic approach that promotes dialogue and takes into account its impact on producing countries. The European executive is preparing to table due diligence legislation later this year. At the moment, the Commission is currently finalising the impact assessment and ensuring it complies with WTO rules. But any proposal will need to tackle a wide array of topics across global supply chains, from European businesses to smallholdings in developing countries. It will need to address human rights violations, trade and security issues, and combat the root causes of poverty which often drive deforestation.

Friendly skies – EU nations have agreed a reform of the bloc’s air traffic management aimed at cutting emissions, reducing costs for hard-hit airlines, and improving safety. The reform, known as Single European Sky, includes a variety of initiatives, such as beefing up the role of regulator Eurocontrol in coordinating and optimising air traffic flows. The European Commission had suggested such a move in September, saying CO2 from aviation could be cut by up to 10% by making flight paths more direct and reducing delays due to congested airspace. A more efficient system could also increase flight capacity and help an aviation industry that has been hammered by the plunge in travel due to COVID-19. Meeting in Luxembourg for the first time since Dec. 2019 due to the pandemic, EU transport ministers said countries could vary air navigation charges for destinations within their borders to help improve the environmental efficiency of flights. Negotiations on a final text will now start between the European Parliament and the EU’s 27 countries before it can enter into force. (Reuters)

Fuelling concerns – A new study commissioned by the International Chamber of Shipping (ICS) and the European Community Shipowners Association (ECSA) raises concerns over the EU’s FuelEU Maritime proposal due on July 14 to increase the uptake of alternative fuels for the maritime sector. The study finds that the proposal has the potential to mandate the use of biofuels if other viable alternative fuels are not available and would also make shipowners accountable for the quality of fuels, when this should be the responsibility of fuel suppliers. The study also finds that there are significant challenges in enforcing EU fuel standards outside the bloc’s jurisdiction, and that the proposal sets an “extremely complex” compliance system that “would effectively establish a carbon trading scheme in addition to and clearly overlapping with the proposal to extend the EU ETS to shipping”.

Greenprints – Bank of England Governor Andrew Bailey said on Thursday that the central bank would cut the emissions from printing banknotes and running its buildings to net zero by 2050. British finance minister Rishi Sunak changed the BoE’s mandate in March to require it to support the government’s goal of reducing GHGs. Bailey said in a speech hosted by the Bank for International Settlements that he will be “disappointed” if it takes until 2050. The BoE this month will for the first time require British banks and insurers to undertake a ‘stress test’ of their exposure to financial risks linked to climate change. However, Bailey told a Reuters conference on Tuesday that it was too soon to link capital requirements directly to climate change goals, and that a better approach was to require businesses to disclose their climate impact clearly to investors. (Reuters)

AMERICAS

Power plunge – Total costs dropped $4.4 bln and prices dropped to $50/MW-day compared to the previous auction, during PJM’s years-delayed capacity auction concluded on Wednesday, due largely to lower load forecasts, which translated to lower reliability requirements, according to the wholesale eastern US grid operator. Nuclear generation cleared the most additional capacity compared to the previous capacity auction, at an additional 4.5 GW. Gas plants followed with a 3.4 GW increase over the previous auction, and solar and wind saw 942 MW and 312 MW increases, respectively. Meanwhile, coal-fired power cleared nearly 8.2 fewer GW than the last auction. PJM’s auction was delayed following a multi-year debate over a controversial Federal Energy Regulatory Commission rule that ultimately raised the minimum offer price (MOPR) for state-subsidised resources bidding into capacity auctions. Some resources subject to the MOPR did not clear the auction, according to PJM, though it’s unclear if they would have cleared without the MOPR either. (Utility Dive)

Topaygo to pollute – Trinidad and Tobago Planning and Development Minister Camille Robinson-Regis this week said the Caribbean Island nation would explore opportunities related to carbon pricing. Robinson-Regis said the country is developing a “Just Transition of the Workforce” policy to guide potential challenges in TT’s path to net zero emissions, and said the government hopes this “will create the policy framework to truly maximise the potential benefits of carbon pricing”. (Trinidad and Tobago Newsday)

ASIA PACIFIC

Red light districts – Two-thirds of China’s provinces and regions failed to meet energy efficiency and consumption targets in Q1, according to the National Development and Reform Commission. The planning agency released a traffic light-coloured evaluation system on each province’s performance, with only 10 out of 30 regions getting a green light, with the rest getting yellow or red. Zhejiang on the east coast along with Guangdong, Guangxi, and Yunnan in the south were the worst offenders, reports Reuters.

VOLUNTARY

Get yer ‘fill – The American Carbon Registry (ACR) on Thursday announced it has approved a new methodology for monitoring, reporting, and verifying GHGs collected using new technology at large landfills in the US. The methodology seeks to incentivise the deployment of Automated Landfill Gas Control Technology, which would allow landfills to go above and beyond existing regulations to prevent the release of methane and other gases into the atmosphere, offering the potential for hundreds of millions of tonnes of additional emissions reductions over the next decade.

AND FINALLY…

Puny polluters – Many of the oil and gas industry’s top emitters of methane are small, little-known companies, a new analysis of US EPA emissions data found. The analysis, commissioned by Clean Air Task Force and Ceres, found that five of the 10 biggest methane emitters were small producers, and overall the 195 smallest producers were responsible for 22% of total emissions, despite only accounting for 9% of production. These small producers have largely escaped the climate scrutiny placed on major oil and gas companies. The largest emitter, Hilcorp Energy, reported almost 50% more methane emissions than Exxon Mobil despite pumping far less oil and gas, and had a leak rate nearly six times higher than the average of the top 30 producers. One reason small producers emit so much is because they have purchased old, highly-polluting oil and gas assets from larger companies like BP and ConocoPhillips. The practice allows major fossil fuel companies to garner positive press by selling assets and cutting their personal carbon footprint, when in actuality those assets continue to pollute. (Climate Nexus)

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