CP Daily: Monday July 12, 2021

Published 00:33 on July 13, 2021  /  Last updated at 00:33 on July 13, 2021  /  Newsletter  /  No Comments

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

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TOP STORY

Canada proposes more rigorous carbon pricing benchmark as government rejects Saskatchewan CO2 tax proposal

The Canadian government opposed Saskatchewan’s carbon tax proposal as it outlined more stringent benchmark criteria for provinces under the federal ‘backstop’ CO2 pricing regime, while the country’s updated Paris Agreement NDC confirmed Prime Minister Justin Trudeau’s administration will hike the national price by C$15/tonne annually over 2023-30.

EMEA

Euro Market: EUAs, UKAs tumble as gas falls and traders brace for Brussels news

EUAs and UKAs gave up all of Friday’s gains on Monday as gas and power markets turned lower and traders looked ahead to Wednesday’s unveiling of EU ETS reform proposals.

Doubled EU carbon price, CBAM to have negligible impact on industry, households -economists

Neither an EU carbon border adjustment mechanism (CBAM) nor a steep rise in carbon allowances prices – two long-term expected outcomes from the bloc’s major climate and energy package to be released this week – will have a significant impact on EU industry or consumers, economists said Monday.

UK ETS cost containment trigger rises 5.4% for October

The October trigger price for the Cost Containment Mechanism (CCM) in the UK ETS has been raised by 5.4% month-on-month, the British government announced Monday, reflecting climbing allowance prices.

German energy exchange launches zero-carbon shipping index

German energy bourse EEX on Monday launched a Zero Carbon Freight Index that it said will allow players in the dry freight market to measure how carbon costs will affect them.

VOLUNTARY

VCM Report: VER issuances, retirements blossom in Q2 as prices increase further

Voluntary emissions reduction (VER) prices for CORSIA-eligible credits topped out above $3.00 last week to cap off a months-long voluntary carbon market (VCM) bull run, as registry data showed offset issuances and retirements rose significantly year-on-year in the second quarter of 2021.

Shell, PetroChina sign 5-year deal on carbon neutral LNG

Oil and gas majors Shell and PetroChina on Monday announced a 5-year supply contract for LNG backed by carbon credits in what they said was the world’s first term deal for carbon neutral LNG.

US pipeline company to spend $150 mln on carbon offsets for proposed interstate project

A Pennsylvania-based pipeline company announced plans on Monday to acquire carbon offsets over a 10-year period for an interstate pipeline, with the credits to make the project carbon neutral over its first decade of operation.

AMERICAS

California needs deeper evaluation of cap-and-trade scheme, stronger sectorial reductions -comments

California should further evaluate the contribution of its WCI-linked cap-and-trade programme to reach the state’s long-term GHG reduction goals, while state regulator ARB should also implement further climate policies to decarbonise the building and transportation sectors, stakeholders wrote in public comments.

ASIA PACIFIC

Major Chinese steel hub commits to peaking carbon emissions by 2025

One of China’s biggest steel-producing hubs has said it will make sure carbon emissions from the industry will peak by 2025 or sooner, adding to the national government’s challenge of setting a suitable CO2 allocation level in the national emissions trading scheme.

ICYM

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.

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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

Floor floored – G20 finance ministers have collectively endorsed carbon pricing for the first time as one of a “a wide set of tools” to tackle climate change after their meeting in Venice on Saturday, Reuters reported. French finance minister Bruno Le Maire noted that his nation had “been pushing very hard to have these two words…introduced into a G20 communique” but the document made no mention of the global minimum carbon price Le Maire had also been pressing for.

EMEA

They would say that – European aluminium producers are calling for exclusion from the first phase of the EU’s carbon border adjustment mechanism, claiming the plan will put the industry at a competitive disadvantage to foreign rivals and do little to tackle climate change. According to the FT, European Aluminium, which represents smelters and manufacturers, said the tax proposal would harm its members and their customers while accelerating carbon leakage. “In view of the many open questions and the significant negative impact of the current CBAM approach … aluminium should not be included in the pilot phase,” said Gerd Goetz, director-general of European Aluminium. Greek company Mytilineos said the CBAM would encourage Chinese and Russian “resource shuffling” — where producers redirect their low-carbon production to Europe while selling their less environmentally friendly output in the rest of the world. This would do nothing address the dominance of coal-powered production globally, it said. Separately, Eurofer has raised its own concerns over the CBAM proposal. According to Kallanish, the group expects a steep reduction in free EUAs, which would “increase the steel industry exposure to EU ETS costs” and “artificially drive up the carbon price.” Nevertheless, Eurofer noted that “at this stage, it is unlikely that the proposal will include any solution for EU export competitiveness or provide any effective measures against circumvention practices by importers, such resource shuffling or cost absorption.” Brussels is due on Wednesday to announce a series of carbon market reform proposals aimed at reducing net GHGs by 55% below 1990 levels by 2030.

Border bust-up – Some industry groups have called to maintain free CO2 allowances in addition to the upcoming carbon border levy. Their addiction to subsidies must be brought to an end, otherwise Europe risks triggering a trade war that would also undermine the EU’s climate leadership, writes former EU climate commissioner Connie Hedegaard and former EU trade and WTO boss Pascal Lamy. They said it is already clear that many of the EU’s trading partners regard both measures together as a “double protection” providing them with a rationale for retaliation. (EurActiv)

No guarantee – Carbon emissions in Europe could rise in 2021 compared with 2020 and 2019 despite higher carbon prices, the European Commission said in its latest quarterly power market report. This would happen if the post-pandemic recovery continued to boost power demand, and there were more incidents of lower-than-average wind speeds and extreme winter and summer temperatures, the Commission said. These factors could offset the impact of higher carbon prices, which have risen by as much as 80% this year to a record near €59 earlier this month. “High carbon prices alone are not a guarantee of falling CO2 emissions,” the EC said. Low renewable generation, high gas prices, and/or high demand can overcome their effect. (Montel)

Bin it here – Norwegian company Aker Carbon Capture (ACC) said it would launch a service offering the removal of CO2 from industrial processes and its subsequent storage, with increased interest from potential EU ETS-covered customers. The company didn’t say how much such a service could cost. By 2025, ACC aims to sign firm contracts for capturing 10 MtCO2 per year. (Reuters)

AMERICAS

Power perks – Establishing a standard to reach 80% carbon-free power by 2030 in the US would improve air quality enough to avert an estimated 317,500 premature deaths and generate health benefits totalling $1.13 trillion between now and 2050, said analysis released Monday through Syracuse University’s Clean Energy Futures project. Power sector GHG emissions would also fall by 98% from 2005 levels over the same period, the study projected, offering an additional $637 bln climate boost. The report is the first to quantify the health effects of a clean electricity standard, or CES, a policy embraced by President Joe Biden’s administration, researchers said. (E&E News)

Upping the pace – California Governor Gavin Newsom directed regulator ARB and the California Public Utilities Commission on Friday to examine pathways to reach the state’s 2045 climate neutrality goal by as early as 2035. Newsom, who is facing a recall election this September, directed the ARB to include strategies to reduce fossil fuel demand and supply, while asking the CPUC to set a more ambitious GHG reduction goal by 2030. California’s ARB is currently drafting its 2022 Scoping Plan that will chart a path to the state’s carbon neutrality goal. California has already hit its 2020 goal of limiting emissions to 1990 levels, but ARB officials have noted the 2030 goal would require more significant GHG reductions.

ASIA PACIFIC

Unattractive – India received no bids for 48 of the 67 mines up for sale as part of its plan to open up coal mining to private companies, reflecting little investor appetite for a sector clouded by environmental concerns and low margins, Reuters reports. Prime Minister Narendra Modi last year offered financial incentives to the private sector and removed restrictions on the end-use of the fuel in a bid to reduce imports and make India a net coal exporter.

Time to perform – New Zealand’s Contact Energy has converted its NZ$305 mln worth of loans to Sustainability Linked Loans (SLLs), it announced Monday. The company has agreed with the five banks involved – ANZ, BNZ, CBA, CCB, and Mizuho – a set of environmental, sustainability, and climate change goals, and should Contact fail to meet those it will be charged at higher interest rates. Among its goals is to generate 95% of its electricity from renewable sources by 2025.

VOLUNTARY

Index outing – GHG emissions from global listed companies will blow past Paris Agreement targets in just six years, despite the plethora of net-zero corporate pledges, according to a tracker by index provider MSCI covering more than 9,000 companies. The MSCI analysis identifies some of the worst-performers, in terms of the biggest emitters that have failed to make any disclosures at all, at a time when investors are seeking to assess the progress of listed companies in curbing climate risk. The list of climate laggards is led mainly by state-backed publicly listed companies based in India and China as well as the US-based oil refiner PBF Energy. (FT)

AND FINALLY…

Papal push – Climate Home chronicles how the Vatican is an unlikely broker for green debt swaps, motivated by Pope Francis’ first-hand experience of how default tore his home country of Argentina apart in the 2000s. But the green debt swap concept brings its own controversies: many observers are wary of commodifying nature and sceptical of how rigorously the environmental benefits will be counted.

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