Newsletters > CP Daily: Monday July 5, 2021

CP Daily: Monday July 5, 2021

Published 21:02 on July 5, 2021  /  Last updated at 21:06 on July 5, 2021  / Carbon Pulse /  Newsletters

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

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TOP STORY

EU to align aviation and maritime fuel taxation rules with carbon market reform -draft

The European Commission intends to introduce minimum taxes for aviation and maritime fuels to align its energy taxation rules with its carbon market expansion, according to a draft seen by Carbon Pulse.

EMEA

Euro Markets: Carbon firms as gas extends rally

EU carbon prices climbed back towards €58 on Monday, as more gas gains lifted EUAs while traded volumes appeared subdued amid a US holiday.

Morocco includes carbon levy in tax reform bill

Morocco wants to introduce a national levy on carbon emissions as part of a wider overhaul of the country’s tax system.

ASIA PACIFIC

Chinese banks explore ways to back forest carbon schemes

Agricultural Bank of China has approved a loan to an olive oil company taking future expected income from carbon credit sales as security, as lenders keep exploring ways for forest owners to secure hard-to-get loans after the government identified carbon sinks as a key means to meet China’s long-term climate goals.

VOLUNTARY

VCM report: VERs inch up to new records, CBL sees fourfold annual growth

Prices for voluntary emissions reductions (VERs) edged up to new heights this week with both lower-end CORSIA-eligible credits and mid-range nature-based units making gains, while Xpansiv market CBL reported a fourfold year-on-year rise in its carbon trade for Q2.

ICYM

ANALYSIS: UK carbon prices about to trigger intervention mechanism, but will lawmakers act?

UK carbon allowances just ended their second straight month above the trigger for possible market intervention, but views are mixed as to whether the British government will decide to unleash more supply into the market in an attempt to dampen rising prices if the Cost Containment Mechanism (CCM) is activated at the end of July.

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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 today

INTERNATIONAL

What a gas – A rebound in global gas demand to 2024 following the record fall last year is poised to knock the world off track from reaching its goal of net zero emissions by 2050, the International Energy Agency (IEA) warned Monday. “Natural gas demand is set to rebound strongly in 2021 and will keep rising further if governments do not implement strong policies to move the world onto a path towards net zero emissions by mid-century,” the IEA said in its latest gas outlook. Gas demand in 2021 is expected to rise by 3.6% as global economies recover following a record fall in 2020 when restrictions to limit the spread of COVID-19 caused a drop in demand. From 2022-24, demand growth is expected to average 1.7% per year, meaning gas demand would be too high to keep to the IEA’s roadmap towards hitting global net zero by 2050. (Euractiv/Reuters)

EMEA

Survey says – European citizens believe climate change is the single most serious problem facing the world, according to a Eurobarometer survey published Monday. More than nine out of 10 people surveyed consider climate change to be a serious problem (93%), with almost eight out of 10 (78%) considering it to be very serious. When asked to pick out the single most serious problem facing the world, over a quarter (29%) chose either climate change (18%), deterioration of nature (7%), or health problems due to pollution (4%). The survey’s other results:

  • 90% agree that GHGs should be reduced to a minimum while offsetting remaining emissions to make the EU climate-neutral by 2050
  • 87% think it is important that the EU sets ambitious targets to increase renewable energy use, and the same percentage believe that it is important that the EU provides support for improving energy efficiency
  • 64% are already taking individual climate action and consciously making sustainable choices in their daily lives
  • When asked who is responsible for tackling climate change, citizens underlined the need for structural reform to accompany individual action, pointing to national governments (63%), business and industry (58%), and the EU (57%)
  • 81% agree that clean energies should receive more public financial support, even if this leads to a reduction in subsidies for fossil fuels
  • 75% believe that investment in the economic recovery should mainly target the new green economy
  • 78% agree that taking action on climate will lead to innovation that will make European companies more competitive
  • 78% agree that promoting EU expertise in clean technologies to countries outside the EU can help create new jobs in the EU
  • 70% believe that reducing fossil fuel imports can benefit the EU economically
  • 74% agree that the cost of damages due to climate change are much higher than the investments needed for a green transition

Uranium glows green? – Germany has gathered support from four EU countries around its opposition to classifying nuclear energy as “green” and sustainable for investment purposes, a letter to the Commission seen by Reuters on Friday showed. By making green investments more visible to investors in its new ‘taxonomy’ rule book, Brussels hopes to help steer huge sums of private capital from next year into activities that support EU climate goals. Spain, Austria, Denmark and Luxembourg joined Germany in saying investors concerned about nuclear waste storage could lose confidence in financial products labelled green if they included nuclear energy without their knowledge. Countries like nuclear-reliant France and some eastern European states favour nuclear because it emits no CO2. The Commission has published climate-related criteria for green investments ranging from building renovations to the manufacture of cement, steel and batteries. The nuclear issue, which is being dealt with separately, finds mixed responses even inside the Commission. The letter cited the fact that the question of final nuclear waste storage is not yet clarified.

More lawsuits – Environmental NGO Deutsche Umwelthilfe (DUH) has issued five new legal cases on behalf of children and young adults who claim that the climate legislation of German states is insufficient to achieve the targets of the Paris Agreement and is in collision with the German constitution. In the wake of the landmark climate decision of the Federal Constitutional Court, the stakeholders are now also demanding the adoption of adequate climate protection laws at the state level. DUH and the complainants are taking legal action against Bavaria and North Rhine-Westphalia for not having sufficient intermediate targets for GHG cuts and for not specifying the instruments and measures to reach them, and against Brandenburg for not having a climate action law at all. In April, Germany’s highest court ruled the federal Climate Action Law insufficient and partially unconstitutional because it lacked emission reduction targets beyond 2030. This triggered reforms by the German government, which passed an amended climate bill within weeks of the court’s decision. Both Brandenburg and North Rhine-Westphalia are home to lignite mines and have been pivotal players in negotiating Germany’s coal phaseout by 2038 – a date that climate activists and many analysts think is too late for the country to meet its own tougher climate targets. The suits come as the campaigns for the federal elections are slowly gathering pace. The state premier of North Rhine-Westphalia, Armin Laschet, is also the conservative CDU/CSU alliance’s candidate to succeed chancellor Angela Merkel, making him the top contender to head the next German government. (Clean Energy Wire)

And more complaints – A lobby group for leading oil retailers and distributors in Ireland has lodged a complaint with the European Commission, alleging that Irish government policy on funding the country’s Climate Action Fund breaches EU state aid rules. According to the Irish Times, Fuels for Ireland (formerly the Irish Petroleum Industry Association) has lodged the complaint on behalf of 10 oil distributors. It claims the state has put in place a “discriminatory fiscal measure” that gives competitive advantages to rivals involved in gas, solid fuels, and electricity from non-renewable sources. At present, a €0.02/litre levy, dating back to 2007, is applied to home heating oil and petrol and diesel products used for motor vehicles. This money has been used to pay the operating costs of the National Oil Reserves Agency, which is mandated to meet the state’s international obligation to maintain 90 days of oil reserves. According to Fuels for Ireland, this levy has generated a surplus of about €300 mln in the agency’s funding. The group claims that an amendment to legislation last year provides for the diversion of this levy, at the discretion of the government, to the Climate Action Fund that was established to provide support to projects that will help Ireland achieve its climate and energy targets. The fund will provide at least €500 mln in government funding for climate projects up to 2027. To date, none of the agency funding has been diverted. Fuels for Ireland claims the levy paid by its members will be used to finance the Climate Action Fund, putting them at a disadvantage to their non-oil rivals who are not required to pay the levy. It said this difference in treatment is “unjustified, arbitrary and discriminatory, which leads to an advantageous benefit accruing to our members’ competitors”. Fuels for Ireland said its members accept that oil companies should be asked to contribute to a Climate Action Fund but that should be via a carbon tax, which would also capture contributions from its non-oil energy competitors.

Mandate missive – Norway’s $1.4 trillion sovereign wealth fund has cautioned against changing its investment mandate, arguing that the inclusion of climate targets could put returns at risk. Norges Bank Investment Management said including specific climate goals in the fund’s investment mandate would assume that climate risk is mispriced in the market and that the fund either has an advantage or better information than other investors. (Bloomberg)

Bad biodiesel – Europe’s thirst for biodiesel to fuel its cars and trucks has likely wiped out forests the size of the Netherlands since the introduction of the EU’s green fuels law a decade ago, a new study shows. T&E, which carried out the study, called on the EU to end support for palm and soy biodiesel immediately to avoid further deforestation, habitat loss, and greater CO2 emissions than the fossil diesel it replaces. The Renewable Energy Directive (RED) was introduced in 2010, setting a 10% renewable energy target for transport by 2020 for each member state. This has driven up demand for cheap crop-based biodiesel, such as palm and soy oil, which is mainly sourced from Asia and South America. It is likely that roughly 4 mln hectares of forests have subsequently been razed, destroying an estimated 10% of the world’s remaining orangutan habitats.

H2 multiplied – Shell is looking to increase the capacity of Europe’s largest electrolyser tenfold by 2024, with the aim of supplying German industry with green hydrogen, Euractiv reports. The project Refhyne, based in Germany’s North Rhine-Westphalia region, will produce approximately 1,300 tonnes of green hydrogen per year with its 10MW capacity, but Shell intends to ramp up the electrolyser capacity to 100 MW and make it the world’s largest green hydrogen plant. However, whether the oil major fulfills its ambitions will depend on the carbon price and the amount of additional funding available, which could come from either the EU or Germany. “We will need more support in North Rhine-Westphalia via targeted support and subsidies,” said Fabian Ziegler, managing director of Shell Germany.

ASIA PACIFIC

Sump & pump – China Petrochemical Corp (Sinopec) on Monday announced that it started building a CCUS project in east China, the largest of its kind in the country, as part of the refiner’s goal to be carbon neutral by 2050. The Asian company has been planning to cap its CO2 emissions at peak levels prior to a national timeline set by the government for 2030, both through its work to increase hydrogen output and the treatment and capture of the gas. The CCUS project involves capturing CO2 produced from a Sinopec’s Qilu refinery in eastern Shandong province during a hydrogen-making process, and then injecting it into 73 oil wells in nearby Shengli oilfield, Sinopec said in a statement. At a purified rate of more than 99%, CO2 can be mixed with crude oil and help generate higher oil production. Sinopec estimated that 10.68 Mt would be injected into the oilfield over the next 15 years and boost crude oil production by nearly 3 Mt. The project is scheduled to start operations at the end of this year, Sinopec said, adding that it plans to build similar projects in neighbouring Jiangsu province by capturing and utilising CO2 from refinery and petrochemical plants there and using it to boost oil output at its Huadong and Jiangsu oilfields. (Reuters)

AMERICAS

Eye of fire – Multiple outlets report on the dramatic fire in the Gulf of Mexico, which was caused by a gas leak from an underwater pipeline next to an offshore oil platform, according to the owner. The fire was extinguished after five hours with no injuries, said Mexico’s state-owned Pemex. Bright orange flames jumping out of water resembling molten lava was dubbed an ‘eye of fire’ on social media due to the blaze’s circular shape, as it raged a short distance from the platform. Some environmental groups pointed to the fire as a stark example of the risks of relying on fossil fuels as climate change contributes to fatal heat waves across Canada and the Pacific northwest. (Carbon Brief)

Not fine – Brazil under President Jair Bolsonaro has obstructed the system for environmental fines, one of the main instruments for punishing those who illegally cut down the Amazon rainforest, according to government documents and insiders. Under a presidential decree issued by Bolsonaro shortly after assuming office, those individuals and companies accused of environmental crimes after October 2019 are entitled to “reconciliation hearings” that can reduce or cancel penalties. Yet a backlog of more than 17,000 fines has piled up, going uncollected as they await hearings, according to internal documents seen by Reuters and confirmed by two sources at the main federal environmental agencies Ibama and ICMBio, both of whom requested anonymity as the information is not publicly available. So far about 500 reconciliation hearings have been held, according to a statement from environmental agency Ibama and data obtained by Reuters under Brazil’s public information laws in mid-June – less than 3% of the backlog.

SCIENCE & TECH

Cold runnings – A team of scientists at Jeddah-based King Abdullah University of Science and Technology is testing a technique for freezing GHGs from power plants that is about half the cost of existing carbon capture techniques, Bloomberg reported. The cryogenic technology was developed by Sustainable Energy Solutions, a private company based in Salt Lake City, and may cost between $35-40/tonne on a large scale. Within two years, the team hope to capture up to 25 t/day from a power plant near the new city of Neom that is currently being built in northwestern Saudi Arabia. The project will cost around $25 million. Saudi Arabia is exploring a number of carbon capture, storage, and reuse technologies. Aramco is capturing 40 mln standard cubic feet of CO2 a day at its Hawiyah gas plant, which it then pipes 85 km to the Uthmaniyah oil field to be injected into the reservoir for storage and enhanced oil recovery. Aramco is also working on technology that captures carbon emissions from car exhausts and stores it until it can be offloaded at fuel stations. (Arab News)

AND FINALLY…

Sounds a bit-crap – Summer on Seneca Lake, the largest of the Finger Lakes in upstate New York, is usually a time of boating, fishing, swimming, and wine tasting. But for many residents of this bucolic region there’s a new activity this season – protesting a gas-fired power plant they say is polluting the air and heating the lake, NBC reports. The RGGI-covered facility is owned by private-equity firm Atlas Holdings and operated by Greenidge Generation LLC. They have increased the electrical power output at the gas-fired plant in the past 18 months and use much of that fossil-fuel energy not to keep the lights on in surrounding towns, but for the energy-intensive mining of Bitcoin. The plant’s more than 8,000 computers operate 24/7, burning through an astounding amount of real energy and producing real pollution, all in an effort to collect a virtual currency that rallied to a record high of over $63,000 this past April. Atlas bought the 150-acre, coal-fired Greenidge plant in 2014, three years after it had closed. Converted to natural gas, the almost 80-year-old plant began operations in 2017, generating energy to the grid only at times of high demand. RGGI data shows it emitted 228,303 short tons in 2020. Separately, according to publicly available data from the University of Cambridge Centre for Alternative Finance and the IEA, Bitcoin’s carbon intensity may have already peaked, Coin Telegraph reports.

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