CP Daily: Tuesday June 22, 2021

Published 00:31 on June 23, 2021  /  Last updated at 00:36 on June 23, 2021  /  Newsletter  /  No Comments

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

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TOP STORY

Australia open to using carbon offsets in hydrogen GO scheme

Australia is considering allowing the use of offsets to carbon neutralise hydrogen made from fossil fuels, it said in a discussion paper on a domestic hydrogen Guarantee of Origin (GO) scheme.

EMEA

Leaked EU forest strategy’s “anti-science error” to put carbon sink at risk, say campaigners

A leaked version of the EU’s upcoming forest strategy risks failing to increase the bloc’s natural carbon sink amid a push to harvest wood products for construction and buildings, campaigners say.

Euro Markets: EUAs nudge higher above €53 amid supportive energy complex

EUAs climbed above €53 on Tuesday, gaining steadily for a third straight day as energy prices moved higher and buyers were not put off by a weaker auction result.

Finnish coal station to shut early due to rising EU carbon costs

A Finnish coal-fired power plant has been condemned to closure two years earlier than scheduled due to rising carbon prices.

AMERICAS

Pennsylvania Republican claims RGGI violates US Constitution, state lacks authority to join carbon scheme

A Pennsylvania Republican lawmaker questioned the legality of the existing RGGI cap-and-trade programme on Tuesday, while saying the power sector scheme faced “historic litigation” if it allows the Keystone State to join next year.

Pacific Northwest power imports rose in 2020, as California ramped up natural gas generation

California imported more electricity from the Pacific Northwest and less from the Southwest last year, while the state relied more heavily on carbon-emitting sources amid declining power demand during the COVID-19 crisis, according to new data.

RFS Market: RIN prices bounce back on opened gasoline arbitrage

US biofuel credit (RIN) prices pared back roughly half their losses sustained in recent days as market participants pointed to a higher soybean oil values and a reopened import window for gasoline.

ASIA PACIFIC

Australia Market Roundup: Regulator mints 665,000 offsets as Nationals drama casts fresh doubt on net zero target

Australia’s Clean Energy Regulator has issued almost 665,000 new carbon credits, while the optimism that Australia will set a 2050 net zero target this year – which some analysts say has been instrumental in pushing ACCU prices to record high levels – might be in question after the junior Coalition partner this week ditched its leader for being too pliant on climate.

Japex, J-Power take steps to generate JCM offsets from Indonesian CCS projects

Japan Petroleum Exploration Co. (Japex) and major power company J-Power have signed separate agreements with Indonesia’s state-owned Pertamina to earn carbon credits under the Joint Crediting Mechanism from CCS projects.

VOLUNTARY

New global soil carbon programme attracts $4 mln in pursuit of “lowest-cost” removal credit

California-headquartered Boomitra has raised $4 million from a variety of corporate backers and billionaires as it seeks to establish an international low-cost CO2 removal programme for both voluntary and compliance carbon markets.

INTERNATIONAL

Ex-Reddit boss’ $30 mln restoration deal may say more about investor appetite than new technology

Terraformation, the restoration company co-founded last year by former Reddit CEO Yishan Wong, made headlines this month for offering ‘reforestation in a box’, but the real news may be that more investors are willing to put money into sustainable land practices.

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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

The Argus Live: Carbon Markets and Regulation (15-16 July) conference is a 2-day virtual event that will provide participants with the latest pricing predictions, as well as updates on global policy and regulation within the carbon market. There will also be sessions focusing on the developments and opportunities in the voluntary carbon market. Hear from speakers such as DG CLIMA, EEX, ClearBlue Markets, CF Partners, BASF, Gold Standard, South Pole, Redshaw Advisors, and many more. Carbon Pulse readers can receive 15% off their registration fee using the code CARBONPULSE15 at checkout. Register here

INTERNATIONAL

Plan on it – The World Bank Group on Tuesday announced its new Climate Change Action Plan that aims to deliver record levels of climate finance to developing countries, reduce emissions, strengthen adaptation, and align financial flows with the goals of the Paris Agreement. The Action Plan for 2021-25 broadens World Bank Group efforts from investing in “green” projects to helping countries fully integrate their climate and development goals. The Plan also comes as countries seek sustainable pathways out of the disruption caused by the COVID-19 pandemic.

Is that all it will take? – Prime Minister Boris Johnson said meeting global targets for cutting climate emissions is simply a matter of “will” and the UK sees “no contradiction” between global economic growth and “protecting our planet.” “There is no reason why humanity should not prosper and safeguard our planet at the same time,” Johnson told the Qatari Economic Forum in Doha in a video address on Tuesday, according to Bloomberg. “We have the ingenuity, and the technology to achieve but all the remains to do is to summon the will.” Meanwhile, BP CEO Bernard Looney told Reuters that his firm will continue producing hydrocarbons for decades to come and will benefit from rising oil prices even as it reduces output as part of its shift to low-carbon energy.

Cut & run – The cost of renewable energy sources is undercutting that of new and some existing coal-fired power plants, a report by the International Renewable Energy Agency (IRENA) showed on Tuesday. Due to cheaper renewable energy, up to 800 GW of existing coal-fired capacity could be replaced by new renewables capacity, which would save up to $32 bln a year and reduce CO2 emissions by up to 3 bln tonnes. Last year the global weighted-average levelised cost of electricity (LCOE) from new capacity additions of onshore wind fell by 13% compared to 2019, while the LCOE of offshore wind dropped by 9% and utility-scale solar PV by 7%, the report showed. The LCOE comprises the cost of generating a megawatt hour of electricity, plus the upfront capital and development cost, financing costs, and operating and maintenance fees. Between 2010 and 2020, the LCOE of utility-scale solar PV for new projects fell by as much as 85%, while onshore wind was down 56% and offshore wind fell 48%. (Reuters)

Reef grief – An investigation by Unearthed and SourceMaterial finds that British oil major BP is planning to drill for gas on the edge of the world’s largest cold-water coral reef, The Independent reports. According to the newspaper, the planned “Greater Tortue Ahmeyim” project aims to develop a new gas field close to a 580 km coral ecosystem off the coast of Senegal and Mauritania. This area is “crucial for migrating waterbirds, as well as threatened sharks, turtles and whales”, the paper adds. Unearthed reports that the project is the first of three hubs that BP plans to operate for at least 30 years in the region, which could recover 40 trillion cubic feet of gas. When burned, this amount of gas would account for 0.3-1% of the remaining global carbon budget left to limit warming to 1.5C, it adds. BP has set a target to cut emissions to net-zero by mid century and “confirmed that emissions from the first phase of GTA and any further stages or approved projects will count against their emissions reductions targets”, the outlet notes. (Carbon Brief)

EMEA

German ambition – The German government aims to spend some €5.2 bln next year in climate protection investments as part of an emergency climate pact that is expected to be approved by chancellor Angela Merkel’s cabinet on June 23, reports newspaper Frankfurter Allgemeine Zeitung (FAZ), which obtained a copy of the document. The plan allocates an additional €8.1 bln to help achieve climate protection goals over the next five years. However, as the parliament is about to head into the summer break and Germany holds a national election in September, the proposals are more of a wish list for the next government. Legislative changes and the decision on funds from the budget would have to be made by the next parliament. Some €2.5 bln are earmarked for the funding of energy-efficient buildings in 2022, while more than €650 mln will go to the decarbonisation of industry as part of a plan that will also include Carbon Contracts for Difference (CCfD). In addition, the climate pact allocates €302 mln for the expansion of bicycle paths; €300 mln for waterways; and €200 mln for the railway. Support will also go to forest protection; climate-friendly social housing, ecological shipping and the steel industry, especially for hydrogen. Some €65 mln have been earmarked for offshore electrolysers and for the H2 Global initiative to support the energy industry and another €40 mln is backing hydrogen technology for hybrid-electric aircraft projects.

… and lack thereof – Speaking of the next government, the manifesto of Germany’s conservative CDU/CSU alliance for the upcoming national election remains vague on climate and energy, Clean Energy Wire reports, leaving plenty of leeway for possible government coalition negotiations with competitors like the Green Party. The bloc of chancellor candidate Armin Laschet presented an election programme that signals continuity with policies of outgoing leader Angela Merkel. The conservatives aim to make Germany a “climate neutral industrial nation” by 2045 – a target the government recently decided already – and to bet on European carbon pricing to bolster German climate action. Other parties, NGOs, and climate activists criticised the programme for its lack of ambition and detail on how to reach climate neutrality. Media commentators wrote that the lack of clarity, for example on CO2 pricing, is meant to avoid upsetting voters who still support climate action in general, but show reluctance towards changing their own behaviour or investing more of their income.

Silver lining – This year’s rally in EU carbon prices has already made it both cheaper and greener for Germany to bring forward its coal exit by eight years, Finnish technology group Wartsila said Tuesday. According to its modelling, carbon prices of around €50 made it 5-10% cheaper for Germany to retire all coal plants by 2030 and to replace them with a combination of much more renewable energy and some additional combined heat and power gas units. Wartsila estimated Germany would only need to raise its renewable energy expansion plans by roughly 50% to around 13 GW of new solar and wind per year out to 2045 to make up for a faster coal exit. It would also need another 12 GW of gas-fired combined heat and power plants. The earlier coal phaseout would save Germany roughly 600 Mt of emissions by its 2045 deadline to become carbon neutral. This would avoid at least €1.1 bln in carbon costs annually over the coming two decades, and more if EUAs near the triple-digit levels some have forecast. (Montel)

Toft tosh – EU plans to include shipping in the bloc’s ETS could drive up CO2 emissions as the industry – without a supply of green fuel – would be forced to deploy more vessels to cover the shortfall because ships will be forced to go slower to keep their GHG output down, according to Soren Toft, boss of shipowner MSC. This was dismissed as “not credible” by UCL Energy Institute expert Tristan Smith, who pointed out that operating ships caused more emissions than building them and that other factors such as fuel prices and freight rates also determined a ship’s speed. (FT)

Choice cuts – The Spanish government will suspend a 7% blanket tax on power generation for the third quarter as part of provisional measures to mitigate the impact of high wholesale electricity prices on consumers’ bills, environment and energy minister Teresa Ribera said. The three-month tax suspension — as well as a six-month reduction in VAT on power from 21% to 10% — will be approved on June 24, Ribera added. Consumers with less than 10kW of contracted supply will pay 10% VAT in July-December if monthly average wholesale prices exceed €45/MWh, Argus reported. The reduction will be applied to vulnerable consumers irrespective of wholesale prices, with the two measures combining to help reduce electricity bills by around 10%. Ribera has attributed the sharp rise in power prices to steep gains in EU carbon allowances.

Man of steel – European steel markets are developing customers interested in securing low-carbon steel products at higher prices, according to the MD of the Austrian Mining and Steel Association. New low-emissions steel plants and investments will require breakthrough technologies, finance and competitive energy prices, as well as supportive markets and legislation, Roman Stiftner said. “We need the customers, we need a green market,” Stiftner said in a presentation to the Sustainable Steel Strategies Summit, in association with Steel Times International. “We are seeing already that there are a lot of customers that are ready to pay a bit more for so-called green steel, and therefore maybe for a different price level.” (S&P Global Platts)

Flight of fancy – Britain’s aviation sector is setting itself interim emissions targets in a bid to reinforce its pledge to achieve its net zero CO2 target by 2050, the FT reported. UK airlines, airports, manufacturers, and air navigation service providers, under the aegis of the Sustainable Aviation Alliance, are promising to reduce or offset the sector’s net emissions by 15% in 2030 compared to 2019 levels, and by 40% in 2040. The plan involves 56% of the reduction for 2030 being met via CORSIA offsets or from buying allowances from other sectors in the UK ETS, cleaner aircraft will account for about 31%. The plan foresees a 70% growth in passengers by 2050 whilst reducing net carbon emissions levels from just over 30 MtCO2e.

New rules – In turn, Britain’s financial watchdog tabled new proposals on climate-related disclosures for listed companies and certain regulated firms in the UK on Wednesday. As climate-conscious commitments and environmental disclosure climb in importance for investors and consumers alike, the Financial Conduct Authority’s (FCA) new rules help ensure climate-related risks are known across the investment chain. The agency set out climate-related disclosure rules for large listed commercial companies in December, which are aligned with the Taskforce on Climate-related Financial Disclosures (TCFD) recommendations. The FCA proposed an extension to applications for its listing rule for premium-listed commercial companies to issuers of standard listed equity shares aligned with the TCFD. Another new rule will be mean asset managers, life insurers, and FCA-regulated pension providers will have to disclose their climate requirements. The FCA will confirm its final policy on climate-related disclosures before the end of this year. (City AM)

Paris declaration – France is striving to confirm its position as a global leader in corporate climate disclosures with an update of its 2015 rules taking effect from the 2021 reporting period, to make it mandatory for investors to set GHG goals every five years to 2050 and for quantified targets to protect biodiversity. The 230 portfolio management firms covered by the regulations will have to declare the percentage of their assets that is green and their exposure to fossil fuel companies. (Reuters)

Rabat calling – Morocco this week submitted an updated NDC under the Paris Agreement, pledging to unconditionally cut emissions by 18.3% below BAU levels by 2030, taking into account AFOLU reductions. That compares to the country’s previous unconditional goal of 17%, set out in the original plan published in 2016. With financial assistance, Morocco said it could achieve another 27.2% by 2030, bringing the total goal to 45.5% below BAU. Its previous conditional target was 42%. Morocco added that it would require $38.8 bln to reach its new target, including $21.5 bln for the conditional actions. In the updated NDC, the government lowered the country’s 2010 baseline to 72.8 mln tonnes of CO2e from the 93.9 Mt figure that appeared in the previous version. It now assumes BAU growth to 142.3 Mt by 2030, compared to 170.8 Mt in the previous document. As such, achieving the new conditional target using AFOLU would result in the country peaking its emissions around 2019 before cutting them back to 77.6 Mt by 2030, or nearly 5 Mt above the 2010 level. Morocco’s previous conditional target – with AFOLU and requiring a total $50 bln – would have seen the country cut to 98.9 Mt, which is also 5 Mt above 2010. As well, the government reiterated its intention to use international markets to reach its objectives. See all national contributions on Carbon Pulse’s NDC Tracker.

AMERICAS

Schoolyard Schlums – Schlumberger on Tuesday said it would reach net zero emissions by 2050, a move that sets it apart from rival oilfield services companies with less aggressive climate goals. By 2030 it plans to halve its Scopes 1 and 2 emissions and to cut by 30% its Scope 3 emissions. The initiative also involves minimal reliance on carbon offsets. (Bloomberg)

RFP – The Edwards Mother Earth Foundation has opened its next round of solicitations for grant funding. EMEF is conducting an open Request for Proposals, for projects designed to catalyse the adoption of agroforestry in the United States, as a means to help mitigate or reverse climate change. Proposals are due Aug. 27. Agroforestry offers significant potential to mitigate GHGs, enhance resilience, and deliver a host of other economic, social, and environmental benefits to landowners, producers, and communities, but it has been practiced less widely in the US than in other countries over the last century. This could now be changing, said Gordian Knot Strategies, which is coordinating the RFP. EMEF seeks to identify and support bold, multi-year, multi-partner strategies to catalyse greater adoption of agroforestry in the US. The RFP’s parameters have been designed to support a wide range of organisations, approaches, and strategies, and to encourage aspirational thinking and new forms of collaboration. For instructions on how to prepare and submit an application, see the full RFP here.

VOLUNTARY

Restory of the year – Food and drink processing company Nestle announced Tuesday that it will move beyond protecting forests to restoring them and helping them thrive, as part of its efforts to reach net zero emissions by 2050, the company said in a press release. While pursuing a forest positive approach, Nestle will also accelerate work to completely eliminate deforestation in its palm oil, sugar, soy, meat, as well as pulp and paper supply chains by 2022. By 2025, it plans to achieve the same for its coffee and cocoa supply chains.

Nordic limits – The government-funded Nordic Dialogue on Voluntary Compensation has opened a consultation through Aug. 30. It is seeking views as part of work to agree on recommendations and action points for a Nordic best practice approach to voluntary compensation that could also be applied internationally. Experts from consultancies Perspectives, Carbon Limits, IVL, and Tyrsky are steering the process.

AND FINALLY…

Devon can wait – Independent US oil producer Devon Energy on Monday pledged to reach net zero from its Scope 1-2 emissions by 2050. Devon also vowed to cut emissions intensity 50% by 2030 and intensity of methane emissions specifically by 65% by 2030, but its plans don’t cover Scope 3 emissions from the products it sells. (Axios)

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