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TOP STORY

Euro Markets: EUAs drop 10% on gas price plunge, other bearish factors

EUAs plummeted along with gas prices on Tuesday, falling below technical supports to suffer the second largest absolute drop ever as oil slid and an improved French nuclear outlook and dire German economic data also weighed on carbon.

EMEA

Brussels draft seeks 2035 phaseout of EU ETS free allocation, FAZ reports

The European Commission may propose phasing out carbon allowance free allocation from 2025 through 2035, German newspaper Frankfurter Allgemeine Zeitung (FAZ) reported on Tuesday, citing a leaked draft document.

European Commission adopts green investment roadmap, voluntary bond standard

Brussels on Tuesday presented a new strategy to help finance the EU’s energy and climate transition, expanding its definitions of ‘green’ activities and setting out a voluntary green bond standard.

AVIATION

ICAO moves forward CORSIA emissions recovery forecast, drops offset cost estimates

Emissions under the global aviation offset programme CORSIA are expected to bounce back more quickly in the coming years, while carbon credit costs will still remain far below previously forecast levels, according to a committee of UN body ICAO’s Council.

AMERICAS

WCI emitters push more allowances into compliance accounts ahead of Q4 deadline

WCI regulated entities increased the number of allowance transfers into their compliance accounts over the second quarter, with nearly half these permits coming from the most recent May current vintage auction, data released Tuesday showed.

Pennsylvania won’t delay RGGI finalisation timeline as GOP lawmaker asks for postponement

The Pennsylvania Department of Environmental Protection (DEP) will not delay consideration of finalising its RGGI-aligned carbon market rulemaking at a committee hearing next week, as a Republican legislator said the item should be postponed until the fall.

LCFS Market: California prices recede to two-month low

California Low Carbon Fuel Standard (LCFS) credit values last week stepped down to lows not seen since the spring, as multiple traders questioned the reason for the price movement.

ASIA PACIFIC

Western Australia state govt launches funding scheme for carbon farming projects

Western Australia has launched a programme offering upfront funding assistance to develop revegetation and soil carbon projects.

INTERNATIONAL

Investor group worth $6 trillion backs global carbon price corridor

Governments should agree a coordinated global carbon price corridor rising to around $147/tonne by 2030 to meet a 1.5C global warming limit, investors managing more than $6 trillion in assets said Tuesday.

VOLUNTARY

DAC technology developer, offset ratings provider team up to market CO2 removal credits

A high-profile direct air capture (DAC) technology developer and a carbon offsets ratings and solutions provider have teamed up to offer removal credits to retail voluntary buyers.

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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

Excess gas – Global natural gas consumption growth will slow again next year after 2021’s post-pandemic surge, but even that modest trajectory is out of step with emissions-cutting goals as required by the Paris Agreement, the International Energy Agency said in a new report. The IEA sees natural gas demand growing by 3.6% this year after falling sharply in 2020, and then growing at a slower pace, averaging 1.7% in 2022-24. The increase stems not only from the pandemic recovery, but also the continuing replacement of more emissions-intensive coal and oil with gas in some applications. (Axios)

Conditional chums – South Korean industry minister Moon Sung-wook on Tuesday met with the EU’s climate chief Frans Timmermans, and the two agreed to work together on battling climate change. But the unity lasted only until the EU’s Carbon Border Adjustment Mechanism came up, which Moon said must not provide a barrier in global trade and should be designed in line with WTO rules. (Yonhap News Agency)

EMEA

Think about sinks – The EU has drafted plans to build up forests, grasslands, and other natural carbon sinks, according to a draft document seen by Reuters on Tuesday. The European Commission will next week propose a target to expand the EU’s sink to absorb 310 Mt of CO2e per year by 2030 by giving each member state a legally binding goal, according to the draft.  The proposal would require better protections for forests and wildlands, which have shrunk due to logging, demand for biomass energy and threats worsened by climate change such as wildfires and pests. The draft did not define the national targets, which would replace a current requirement to ensure that CO2 sinks do not shrink this decade. From 2031, the EU would also begin accounting for agricultural emissions of gases including methane in its net carbon sink tally. The proposal is due to be published on July 14 as part of a broader package of ‘Fit for 55’ climate policies. EU forests, grasslands, croplands and wetlands altogether removed a net 263 million tonnes of CO2e from the atmosphere in 2018, according to the Commission. That tally also accounts for the amount of CO2 released when trees were cut down or wildlands burned.

‘Polluter doesn’t always pay’ principle – Taxpayers are too often being forced to pay to clean up environmental damage while the companies responsible dodge the costs, the European Court of Auditors (ECA) said on Monday. The auditors looked at a sample of 42 environmental clean-up projects, backed by €180 mln of EU funds, to fix issues like industrial pollution and contaminated landfill sites in Italy, Poland, and Portugal. Roughly a third of the money was spent on “orphan pollution”, where contaminated sites were damaged so long ago that polluters cannot be identified or made liable. In other cases, EU taxpayers paid for the clean-up since the company responsible was insolvent. The auditors said the EU should close gaps in legislation that let companies off the hook. (Reuters)

Limited progress – The fifth round of negotiations on reforming the Energy Charter Treaty (ECT) – an international agreement that allows energy companies to sue governments for decisions impacting their investments – took place in early June, but attempts by the EU to bring the treaty in line with international climate goals have so far fallen flat, according to two leaked diplomatic cables. Unanimity is required to modify the treaty, whose 54 members include countries like Azerbaijan and Kazakhstan that are heavily reliant on fossil fuel exports and have little incentive to reform. The cables show that, despite pressure from countries like France and Spain for the EU to withdraw the treaty, “withdrawal was not option A” for the European Commission, which continues to negotiate in good faith, hoping to find an agreement. (Euractiv)

Charting waters – Europe’s biggest shipping emitter MSC would be in sixth place of the biggest emitters in the EU ETS if shipping was part of the market in 2020, according to green group T&E, which analysed EU data. It found MSC’s emissions to be 10.9 MtCO2e from all voyages involving European ports, down 3% year-on-year. T&E added that between 65-79% of the top five shipping companies’ CO2 output was from journeys going beyond EU waters, therefore urging the EU to agree on a similarly wide scope when putting the sector into the EU ETS. Read Carbon Pulse’s latest on how the European Commission could be planning to include the sector from 2023.

Tax avoidance – The British government is introducing legislation to allow a VAT zero rate to apply to trades in the UK ETS, said Jesse Norman, financial secretary to the UK Treasury. The scheme replaced the country’s participation in the EU ETS post-Brexit. Market participants can bid for UK ETS allowances on the UK auction platform or can acquire futures contracts in UK ETS allowances on the secondary market. “The zero-rating relief provided by the TMO avoids the administrative and cash flow burdens of accounting for VAT and should have no effect on the VAT amount collected at the final stage of consumption,” Norman said. He added that the tax treatment will be provided from the time UKA trading began in mid-May.

AMERICAS

Do the wave – The US Department of Energy (DOE) on Tuesday announced up to $27 mln in federal funding for research and development projects to convert energy more efficiently from ocean waves into carbon-free electricity. The R&D and testing performed under the “Advancing Wave Energy Technologies through Open Water Testing at PacWave” funding opportunity announcement (FOA) will be the first round of activities supported at the PacWave South test site in Newport, Oregon.

SCIENCE & TECH

Urban influence – Urbanisation has influenced anthropogenic CO2 and air pollutant emissions across all world regions, according to a study making use of the latest developments in the EU’s EDGAR emissions database. The results show that by 2015 urban centres were the source of a third of global anthropogenic greenhouse gases, and the majority of air pollutant emissions. The authors provide a country-to-global view of the evolution of sector-specific air pollutant and GHGs from urban centres and other geographical entities for different types of human settlement over the past five decades. Their results were published in the journal Environmental Research Letters.

AND FINALLY…

Your answers were always lying on the ocean bed – All the battery metals necessary to power one bln electric vehicles could be lying on the floor of the Pacific Ocean – but collecting them and turning them into EV batteries is a major challenge. The Metals Company of Vancouver claims it has identified a less damaging way to mine battery metals from ancient seafloor rocks. A robotic collector skims areas of seabed, sucking up polymetallic nodules lying amid a thin layer of sediment, before pumping them up to a production support vessel on the surface. But this approach has its opponents, as a Greenpeace post says “sending gigantic mining machines designed to bulldoze and churn up the seabed is clearly a very bad idea”. Through sponsorship deals with three tiny Pacific island nations – Nauru, Tonga, and Kiribati – The Metals Company secured exploration rights to approximately 150,000 sq. km. (Axios)

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