CP Daily: Friday June 18, 2021

Published 00:30 on June 19, 2021  /  Last updated at 00:30 on June 19, 2021  /  Newsletter  /  No Comments

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

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TOP STORY

Analysts see initially modest China carbon price rapidly rising after 2025

China’s emissions trading market will likely see modest prices of around 40 yuan ($6.21) initially due to oversupply, quickly rising in the second half of the decade as the scheme is gradually tightened and more sectors brought in, analysts said Friday.

ASIA PACIFIC

SK Market: KAUs extend losses in rush to avoid cancellations

South Korean carbon permits fell another 8% on Friday to hit their lowest since Dec. 2015, as sellers remained desperate to offload KAUs to boost the number of allowances they can bank into next year.

Philippines ministry backs intensity-based carbon market

The Philippines Department of Finance is backing an intensity-based emissions trading scheme initially limited to the power industry, rather than a carbon tax, according to reports in local media.

AMERICAS

British Columbia forestry offset protocol would render projects unviable -stakeholders

A high maximum credit contribution to a contingency account is among the factors threatening the economic viability of British Columbia’s proposed forestry carbon offset protocol (FCOP), trade associations and project developers told Carbon Pulse.

WCI auction volume edges down slightly for August sale, with further reductions expected for Q4

The Q3 California-Quebec auction will include slightly fewer allowances than the May quarterly sale, while the final WCI auction of 2021 is slated to see a more significant reduction, according to an auction notice published Friday afternoon.

US Carbon Pricing and LCFS Roundup for week ending June 18, 2021

A summary of legislative and regulatory action on carbon pricing, clean fuel standards, and clean energy at the US subnational and federal level this week, including developments in Pennsylvania, North Carolina, Illinois, and California.

EMEA

Euro Markets: EUAs rebound on power gains to limit weekly loss to 1.5%, UKAs trade at discount

EUA prices climbed above €52 as power price gains dragged carbon higher, while UKAs traded at a discount for the first time as the prospect of additional supply loomed larger.

INTERNATIONAL

Strong carbon price “a core element” of building decarbonisation, says think-tank

Introducing a carbon price for buildings, paired with additional energy efficiency measures, will be needed for the sector to reduce its carbon footprint in a socially just manner, a Germany-based think-tank said Friday.

ICYM

COMMENT: Voluntary carbon market – broken more than breakthrough

The voluntary carbon market is supposed to be saving the world. Instead many carbon credit retailers are lining their pockets, warns market veteran and Redshaw Advisors founder Louis Redshaw.

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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

Biden backtrack President Joe Biden’s administration at the 11th hour refused to sign up to a G7 deal on ending domestic coal use, with the US team becoming nervous about the impact on domestic politics, Bloomberg reported, citing officials who asked not to be named discussing private talks. Negotiators had expected it would be particularly hard for Japan to commit, yet Prime Minister Yoshihide Suga’s team came around to the idea and backed it during talks. It was also the US that blocked a G7 initiative to make the majority of new passenger car sales zero-emission vehicles by 2030 – an aim British leader Boris Johnson and German Chancellor Angela Merkel were ready to back, officials said. Read Carbon Pulse’s report on last weekend’s G7 summit in Cornwall, which did manage to agree on cooperation on carbon pricing and carbon leakage, reaffirmed climate finance pledges for poorer nations, and vowed to end new government support for coal power by year-end. The seven leaders also committed to achieve domestically an “overwhelmingly decarbonised power system in the 2030s” and to actions to accelerate this.

Floor findings – An international carbon price floor (ICPF) among major emitting nations could help reinforce the goals of the Paris Agreement, according to a proposal by the IMF published Friday. The proposal, which builds off previous comments made by IMF officials, found that implementing an ICPF in China, the US, India, the EU, the UK, and Canada would reduce energy-related GHG emissions 23-24% below BAU by 2030. Extending the ICPF to other G20 countries would also cause a modest further increase in GHG reductions, the paper found.

EMEA

Car cuts – The European Commission is debating setting a zero-emissions target for vehicles sold beyond 2035 as part of its ‘Fit for 55’ proposal next month, Politico reported, citing three anonymous EU officials. Brussels is mulling upping the bloc’s 2030 target to mandate a 60% reduction in car emissions, compared to the current goal of a 37.5% cut, rising to 100% five years later.

Voluntary bond – The EU’s green bond standard will be voluntary rather than binding for issuers. The new bond rules, tied to the bloc’s green taxonomy blueprint for environmentally-friendly investments, will be ready for use in 2022 and aim to “set the global standard,” according to the document obtained by Bloomberg ahead of its planned publication next month. Green debt issuance has emerged as one of the fastest-growing corners of finance, with Europe taking a lead as nearly a quarter of its bond sales this year are related to ethical factors even amid over what counts as environmentally friendly.

It’s a syn – Rolls-Royce, which makes engines for aircraft and ships, has outlined plans to reach net zero emissions by 2050. The company has outlined plans for all its new products to be compatible with net zero targets by 2030 and lift its low carbon R&D spend to 75% by 2025 from the current 50%. Rolls-Royce is pinning its hopes on synthetic fuels, planning to gain regulatory approval by 2023 for their use in all current engine models, however, the company has so far been unable to commit to a science-based target because of uncertainty over how the supply of synthetic fuel will grow. (Guardian)

AMERICAS

Dakota scope – North Dakota is pushing the US Supreme Court to weigh in on federal climate regulation – the latest in a series of recent petitions on the issue. The state filed a petition Friday asking the justices to review a January appellate court ruling and clarify the scope of the EPA’s authority to regulate GHG emissions under a provision of the Clean Air Act. Similar petitions are pending from a coal company. Legal experts have cautioned that the rightward lurch of the nation’s highest court under President Donald Trump could eventually reverse or limit the EPA’s ability to regulate GHGs. (Bloomberg Law)

Golden State spar – Environmental groups sparred with the California Public Utilities Commission on Thursday over a 11.5 GW procurement proposal to support the Golden State’s grid over the 2023-26 period through natural gas-fired generation as the Diablo Canyon nuclear power plant goes offline. The Union of Concerned Scientists and Protect Our Communities Foundation agreed with the amount of procurement needed, but they did not believe additional carbon-emitting sources were necessary. The CPUC has proposed two procurement plans, with one seeking between 1 and 1.5 GW of natural gas generation by 2025 and the other adding 500 MW. The state has previously said some natural gas units remaining online could help reliability concerns as California works towards its carbon neutrality goal. (Utility Dive)

ASIA PACIFIC

Computer says no – Activist investors on Thursday pushed for Sumitomo Corp., one of Japan’s biggest trading houses, to take on stronger climate commitments, but the proposal was voted down at a shareholder meeting. Sumitomo has released some climate targets, but aims to remain involved with coal for another two decades. (Nikkei)

AND FINALLY…

An expansion of astronomical proportions – The Greens in the European Parliament have released a position paper on a ‘Green European Space Policy’ outlining different options to reduce emissions from spacecraft and curb space debris. Among other ideas, the Greens said the EU should “explore the option to create a similar system as the ETS, which would financially penalise debris generation”. Moreover, to reduce GHG output from space travel, the paper said that the existing EU ETS “should be expanded to the entire space sector, in particular to space transportation and tourism”, though such an option would encounter many difficulties due to the transnational nature of several space operations and the complexity of allocation of allowances.

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