CP Daily: Friday July 9, 2021

Published 02:11 on July 10, 2021  /  Last updated at 02:11 on July 10, 2021  /  Newsletter  /  No Comments

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

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TOP STORY

POLL: With EU ETS reforms afoot, analysts point to petering out price rally

EU carbon prices have likely seen the bulk of the appreciation expected from upcoming supply-slashing market reforms, analysts forecast, with most predicting that EUAs would now sit tight and trade within sight of existing levels through 2023.

ASIA PACIFIC

New Zealand weighs position limits, exchange-based trading in ETS

Limiting NZU positions or purchase volumes and requiring all transactions to go through an exchange are among the options considered by the New Zealand government as it plans to strengthen the governing regulations of its emissions trading scheme.

China to push blue carbon, make case for bivalve offsets

Developing offsets from so-called blue carbon projects will play an important role in China’s efforts to meet its climate targets, and the country is also pushing for crediting sinks created by the farming of bivalves and other ocean life forms.

AMERICAS

Speculators’ California carbon position inches up as allowance prices notch new all-time high

Speculative firms added to their California Carbon Allowance (CCA) positions over the week as prices hit a fresh record high, but the week-on-week changes revealed more modest growth compared to last month, according to US Commodity Futures Trading Commission (CFTC) data published Friday.

US Carbon Pricing and LCFS Roundup for week ending July 9, 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 Oregon and the PJM wholesale grid.

EMEA

Euro Markets: EUAs continue rebound from rout, still post 5.4% weekly loss

EUAs rose back above €54 on Friday, clawing back some of the week’s heavy losses after a strong auction and as energy and wider markets also rebounded following a shaky week.

Austria to introduce carbon price from 2022 -finance minister

Austria will introduce a carbon price for sectors not covered by the EU carbon market from 2022, the country’s finance minister said on Thursday, with a proposal expected to be released this autumn.

Germany launches tender to buy 175k CERs to offset 2020 government travel

Germany has launched a tender to procure around 175,000 Kyoto Protocol offsets to neutralise the carbon emissions generated from the business trips of federal government officials in 2020.

COMMENT

COMMENT: Playing with fire – the EU carbon market for buildings

EU plans for an upstream cap on emissions from buildings and transport are both welcome and worrying, says Sanjeev Kumar of the European Geothermal Energy Council.

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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

Finmin feels – G20 finance ministers will for the first time recognise the role of carbon pricing as part of efforts to tackle climate change, people familiar with the matter told Bloomberg, citing a draft document.  But the communique of their meeting in Venice due Saturday will stop short of calling for net zero emissions by 2050. French Finance Minister Bruno Le Maire urged his G20 counterparts to back a global minimum price for carbon emissions in the absence of a single global price. “I think that a global floor could be a very good starting point to have all the G20 member countries committing on carbon pricing,” he said during a session on environmental taxation, Reuters reported.

EMEA

A pricing pickle – Plans to introduce a carbon price in the UK that would raise domestic gas bills, though softened by a rebate scheme for poorer households, are being discussed at the highest level of government, ENDS reports, citing other media. A Whitehall source told The Times that the rebate is “being actively discussed in Downing Street. It is still at a relatively early stage and the Treasury is likely to be resistant but it is a clear way of showing people that they are not bearing the brunt of net zero.” Average bills would rise by £80-170 a year, depending on how high the cost of carbon is set. But PM Boris Johnson has been resistant to the prospect of forging the path to net zero on the back of more expensive energy, fearing the electoral consequences. He told the Commons’ Liaison Committee on Wednesday that the government is “determined to keep bills low”. Domestic heating is largely dependent on gas boilers, which must be eliminated long before the 2050 net zero deadline. But there is currently little incentive to switch to less carbon-intensive heat pumps as the electricity that powers them is relatively costly, partly due to the extra charges put on it to pay for decarbonisation policies. The imbalance with natural gas is due to be corrected in the forthcoming Heat and Buildings Strategy.

What a luxury – Carbon contracts for difference (CCFDs) weakening EU carbon prices would be “a luxury problem,” said a senior member of the European Parliament’s biggest political group on Friday, according to Montel. “I’m happy that the carbon price will one day go down because we decarbonised the steel industry,” said German MEP Peter Liese, the centre-right EPP’s lead member in the environment committee. But that would be a long way off, with many challenges before then, he added. Power, gas, and energy storage trade associations have argued that using CCFDs in selected sectors could reduce demand for EUAs, depressing prices and so weakening the decarbonisation signal for non-supported sectors. The EPP, however, supports CCFDs as a way to help EU industry decarbonise and avoid carbon leakage. Standard CFDs work by governments paying a beneficiary the difference between an agreed fixed ‘strike’ price and a reference price such as a market price, where the latter is lower. If the reference price is higher the beneficiary must pay the difference to the government.

Italian approval – The European Commission on Friday approved, under EU State aid rules, Italian plans to partially compensate energy-intensive companies for higher electricity prices resulting from indirect emission costs under the EU ETS. The scheme will cover indirect emission costs incurred in the period 2020-30, with a provisional budget of approximately €1.49 bln. The compensation will be granted through a partial refund of indirect ETS costs to eligible companies.

French disapproval – The project to convert the 1.2GW Cordemais coal-fired power plant to burn biomass has been halted in part due to cost, EDF announced on Thursday. “Two main reasons led to this decision: the cost of the project, which would not make it possible to guarantee an attractive price for the final product, and the recent withdrawal of the industrial partner who was at our side,” EDF explained in a press release. The plant will continue to run on coal past 2022, with France targeting a complete phaseout of the fuel from the generation mix by 2025.

Balkan bonus – Producers of electricity from coal and traders in the Energy Community of the EU’s eastern neighbours enjoy record profits – unlike their EU counterparts – they don’t have to pay for CO2 emissions, Energy Community Secretariat Director Janez Kopac said at the presentation of a study on climate change impact. While the EU is working on a Carbon Border Adjustment Mechanism (CBAM), coal power plants in the Energy Community are increasing output. (Balkan Energy News)

ASIA PACIFIC

Bloody kids – Australia’s environment minister Sussan Ley on Friday said she will appeal a Thursday federal court declaration that she has a duty of care to protect Australian children from climate harm that would be caused by the expansion of a coal mining project, and that experts say is likely to be applicable to many other natural resources projects. (Guardian)

Carbon trading shippers? – China is in the early stages of discussing whether to bring shipping into its nationwide emissions trading scheme, according to Lloyd’s List ($). The sector is not on the list of eight initial sectors scheduled to be brought into the ETS by 2025, and China has expressed some dissatisfaction with EU plans to bring shipping into its carbon market.

AMERICAS

Standard procedure – US Energy Secretary Jennifer Granholm aggressively pushed a clean energy standard on CNN Thursday, tying the need to legislate a reduction in emissions to the record-setting heat waves, droughts, and hurricanes impacting the country. Though a clean energy standard wasn’t included in the bipartisan infrastructure framework, Granholm pushed for it to be included in a budget bill that’s expected to be passed via reconciliation. And while she said the administration prefers a bipartisan legislative solution, she didn’t rule out executive action to get climate priorities through. Granholm said there’s been outreach to bring on board moderate Democrats like Sens. Kyrsten Sinema and Joe Manchin to a clean energy standard via reconciliation, adding that “those senators understand the importance of investing in clean energy.” But it’s not yet clear the administration has the moderates’ votes. (Politico)

VOLUNTARY

Carrying the torch – The Tokyo Organising Committee of the Olympic and Paralympic Games on Friday provided an update on its Sustainability Pre-Games Report, pledging to go beyond CO2 neutrality. With the participation of more than 200 local businesses, carbon credits equivalent to 4.38 MtCO2e have been collected by Tokyo Metropolitan Government and Saitama Prefecture, far exceeding the originally estimated Games carbon footprint of 2.73 Mt. Additionally, it is expected that 100% of the electricity used during the Games will come from renewable sources, with a direct supply of energy being provided by Olympic and Paralympic Partner ENEOS, and through the use of tradable green power certificates.

Freight forward – US tanker operator Penfield Marine, with help from Macquarie bank, claims to have completed its first carbon neutral voyage via offsets to cover the carbon footprint of an entire voyage. Penfield believes that this is the first carbon neutral freight offering from a freight pool operator globally. The International Seaways vessel loaded 1 mln barrels of crude oil in Brazil for delivery to multiple ports in Southeast Asia, while the ballast leg from Singapore to Brazil was also offset. The offsets, identified, sourced, and retired by Macquarie, were from multiple Verra-registered projects. (Splash)

AND FINALLY…

Status quo for the climate – Despite all the changes that are necessary to protect the climate, “there won’t have to be any major sacrifices”, Olaf Scholz, the German Social Democrats’ (SPD) chancellor candidate, told weekly newspaper Die Zeit in an interview. “It is an elitist attitude when those who are financially secure and can afford a new car and expensive flights preach sacrifices to those who cannot do so easily,” said Scholz, who is currently finance minister in the Merkel coalition government. It is for Germany to show how prosperity and climate protection can go hand in hand, he explained. “Hundreds of new coal-fired power plants are planned worldwide. They will only not be put into operation if there is a better alternative.” Speaking about his party’s plans for a climate-neutral Germany, Scholz argued that a ban on combustion engines won’t be necessary because the automobile industry will get rid of fossil fuelled cars all by itself in the foreseeable future. “The car companies can invest tens of billions [of euros] on their own – and they are doing so. We will also invest billions, for example, to accompany the transition in supplier companies,” he said. (Clean Energy Wire)

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