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TOP STORY
UN shipping body postpones decision over global carbon levy, R&D fund
The International Maritime Organisation’s (IMO) environment committee on Wednesday discussed the introduction of a global carbon levy for ships but decided to postpone this and other decisions to an upcoming meeting in November.
ASIA PACIFIC
South Korea’s ruling party leader pushes for stronger climate target
South Korea should set a 2030 emissions target of at least 40% below 2017 levels, the leader of the ruling Democratic Party said Wednesday, a move that would nearly double the country’s carbon-cutting efforts over the next decade.
NZ Market: NZUs soar to new record high on bullish sentiment
New Zealand carbon allowances sped past NZ$41 ($29.27) in Wednesday trade, hitting yet another all-time high as anticipated ETS changes, limited supply, and pre-auction speculation have all helped push the spot contract up more than 11% since the beginning of the month.
Australia Market Roundup: EDL nets 440,000 ACCUs as AGL expands carbon neutral offering
The Clean Energy Regulator has issued around 400,000 carbon credits to two landfill gas sites operated by EDL, while utility AGL on Wednesday announced it has expanded carbon neutral offerings to span its entire product line.
AMERICAS
Nova Scotia’s June carbon auction clears 75% above floor price
Nova Scotia’s June 9 cap-and-trade sale cleared nearly 75% above the 2021 auction reserve price, making the settlement the largest premium in the history of the programme, according to results published Wednesday.
California offset prices hit historic discounts as CCAs surge
California Carbon Offset (CCO) discounts are widening as California Carbon Allowance (CCA) prices spike amid a flurry of speculative interest, with some traders observing limited demand for credits.
RFS Market: RINs unravel further on report of flat biofuel quotas for 2021-22
Biofuel credit (RIN) values tanked for the fourth consecutive day on Wednesday after a news outlet reported the US EPA may opt to keep Renewable Fuel Standard (RFS) blending obligations flat or slightly below previous levels for the next two years in response to soaring costs under the programme.
EMEA
Euro Markets: EUAs buckle under UK auction pressure, reach parity with British units
EUAs gave back early gains on Wednesday as the fortnightly UK auction again weighed on Europe’s carbon markets, with UK Allowances hitting a new low to trade at parity with their EU counterparts for the first time.
New Israeli environment minister eyes carbon pricing, but prospects look dim
Israel’s new environment minister has pledged to try to advance legislation that would put a price on the country’s carbon emissions, but observers are not giving her efforts favourable odds of succeeding.
UK campaigner mulls appeal after losing court case to price incinerator GHGs
A British campaigner is considering an appeal after losing a High Court case against the UK government’s decision to exclude waste incinerators from its carbon market.
VOLUNTARY
S&P Global Platts adds carbon neutral LNG to voluntary offset assessment portfolio
S&P Global Platts on Wednesday began assessing prices for carbon neutral LNG to tend to the growing interest across global energy markets to bundle carbon credits with LNG shipments.
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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
CONFERENCE
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INTERNATIONAL
Bigger than Jesus – The world’s largest commodity traders are gearing up to profit from trading carbon, believing the global market could challenge crude oil in the coming years, they told the FT Commodities Global Summit. Trafigura’s Hannah Hauman believes carbon has the potential to be 10 times the size of crude trading. She noted about 11 bln tonnes of CO2 are currently covered by compliance markets, while total emissions were 50 bln tonnes a year. Mark Lewis, now of Andurand Capital, expects prices to double before some new emissions-cutting technologies kick in. Vitol’s Michael Curran said that he expects EUA prices to hit €75 in Q3, while hedge fund Northlander’s Ulf Ek said EU regulators were comfortable with EUA at today’s levels near €50 and he is not expecting them to intervene to bring prices down. The predictions harken back to 2007-8, when EUAs hit a then-record near €30 and traders said carbon was quickly becoming “one of the fastest-growing specialities in financial services” and that the global market could grow to be worth $1 trillion within a decade. (Bloomberg)
EMEA
Wood they? – The EU is considering tightening rules on whether wood-burning energy can be classed as renewable and count towards green goals, according to a draft document seen by Reuters. The aim is to protect delicate ecosystems like old growth forests and stop wood fit for other purposes, like making furniture, from ending up as pellets or chips burned to produce biomass energy. The draft European Commission proposal would require biomass-fuelled power and heat plants with a capacity of 5 MW or above to meet sustainability criteria, and provide substantial emissions cuts versus fossil fuels. Biomass plants with a capacity below 20 MW are currently exempt from those requirements. Renewable sources provided around 20% of EU energy in 2019. More than half of that was biomass, which the EU ranks as having a low carbon footprint since emissions produced from wood burning are partly balanced by CO2 absorbed by the trees as they grew. Environmental groups have criticised that accounting and some said the draft proposal would fail to protect forests.
Energy in early – Seven major EU energy companies – EDF, Enel, ESB, Fortum, Statkraft, Uniper, and Vattnefall – have put out a position paper for EU ETS reform, ahead of the European Commission’s ‘Fit for 55’ proposal due next month. The views were similar to that of wider electricity body Eurelectric’s earlier EU consultation response, urging steeper annual cap cuts from 2023 and a more evenly spread decarbonisation effort across all sector.
Be prepared – The UK is woefully unprepared to deal with changes occurring to the climate, according to the government’s Climate Change Committee advisory body in an adaptation report predicting warming will hit the country harder than first thought. It warns of more severe heatwaves, especially in big cities, and more intense rainfall, with an increased flood risk across most of the UK. It says homes, infrastructure and services must be made resilient to floods, heat and humid nights. (BBC)
Steel wheeling – Sweden’s Volvo plans to build cars using steel made without fossil fuels by 2026, as part of a deal that could significantly reduce the carbon emissions from manufacturing its vehicles. The carmaker and compatriot steelmaker SSAB signed a letter of intent to commercialise its HYBRIT technology that replaces coal with hydrogen in a crucial part of the process. Volvo estimates the steel in its petrol and diesel cars accounts for 35% of carbon emitted during production but just 20% for Volvo’s electric vehicles. (The Guardian)
Offset oil – Sweden’s Lundin Energy has sold an oil cargo certified as carbon neutral at the point of production to South Korean refiner GS Caltex in the first such sale of crude from Norway’s Johan Sverdrup field. The Sverdrup oil platforms are powered by hydroelectric electricity from land and thus only emit 0.45 kilograms of CO2 emissions per barrel of oil equivalent produced, or around 2.5% of the global average, Lundin said, adding that it would neutralise the residual emissions using “high quality, natural carbon capture projects” (Reuters)
Big stink – A cloud of methane was detected by satellite near coal mines in South Africa, drawing attention to a lesser-known environmental risk that comes from using the dirtiest fossil fuel. The potent GHG — methane traps roughly 84 times more heat than CO2 in its first two decades in the atmosphere — was emitted at an estimated rate of 65 metric tonnes an hour on May 10, according to Kayrros SAS. The Paris-based analytics company found the leak by parsing European Space Agency satellite observations. It was the worst plume of methane Kayrros detected in the data over Africa this year. (Bloomberg)
Citizens unite – The European Commission on Wednesday decided to register a European Citizens’ Initiative (ECI) called ‘Ban Fossil Fuel Advertising and Sponsorships’. The organisers of the initiative call on the Commission to propose legislation banning the advertising and sponsorship of fossil fuels, of all types of vehicles using these fuels, and all companies that extract, refine, produce, supply, distribute, or sell fossil fuels. The proposed ban should apply both online and offline, and cover advertising and sponsorship, especially in the context of sports, education, science, public events, and third-party media events. If the ECI receives 1 million support within one year from at least seven EU member states, the Commission will have to react. The Commission could decide either to follow the request or not, and in both instances would be required to explain its reasoning.
AMERICAS
Reconciling reductions – Majority Leader Chuck Schumer on Wednesday was slated to trigger the next “reconciliation” process – crafting spending and revenue measures immune from Senate’s 60-vote filibuster, and Schumer tweeted he wants “big bold measures to fight the climate crisis.” Schumer met today with Budget Committee members about a fiscal blueprint that would direct other committees to write policy measures consistent with its goals. and the aide said Schumer wants funding for clean energy incentives that would cut power sector CO2 emissions by 80% by 2030, as well as consumer rebates for buying electric cars. However, Schumer’s climate goals didn’t explicitly mention a clean energy standard proposed by President Joe Biden, a sign that its omission could signal the steep uphill climb toward gaining 51 votes for it. (Axios)
Tail(pipe) winds – US EPA air officials said Tuesday they’re in the early stages of additional regulations related to conventional and GHG emissions from tailpipes. The agency says it is on track to propose new federal light-duty standards sometime next month to replace the Trump rollback, but the Biden administration also is looking even further forward. Alejandra Nunez, the deputy assistant administrator for mobile sources in the air office, told a virtual gathering of transportation advisors on Tuesday that post-2026 standards are “a priority for us” and that a firmer timeline could come “in the next few months. (Politico)
Upward revision – Fed Chair Jerome Powell said Wednesday that the central bank was anticipating US inflation to rise 3.4% this year, an increase from the governments 2.4% expectations in March. The inflation has soared over the past several months as states ease COVID-19 restrictions, leading to higher expectations for the California cap-and-trade 2022 floor price. California’s floor price rises by 5% plus inflation annually, with the yearly uptick based on the October Consumer Price Index (CPI) inflation figure. Those higher 2022 expectations have spurred increased speculative interest in the WCI-linked market. (Washington Post)
AND FINALLY…
Own goal – Mats Hummels wasn’t the only one scoring an own goal during Germany’s Euro football championships defeat in Munich on Tuesday. Governing body Uefa confirmed several people were being treated in the hospital for injuries caused by a Greenpeace protester who parachuted into the stadium before the match. With “Kick out oil” written on his chute in a protest against tournament sponsor Volkswagen, he was demanding an end to the sale of petrol and diesel cars. But the man got tangled in overhead camera wires, bringing down debris and landing heavily. Uefa said law authorities would take “necessary action” and mentioned that it and its partners are “fully committed to a sustainable Euro 2020 tournament and many initiatives have been implemented to offset carbon emissions”. (The Independent)
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