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FIT FOR 55
The European Commission on Wednesday kicked off the reform of the EU’s carbon market by proposing an increase of the EU ETS’ linear reduction factor (LRF) and a one-off cut of the emissions cap that could tighten supply from 2023.
The EU will force importers of electricity and a number of foreign industrial sectors to pay for emissions covered under a carbon border adjustment mechanism (CBAM) from 2026, according to a proposal released by the European Commission on Wednesday, which came as a UN agency urged caution over the divisive policy.
The European Commission is today publishing its long-awaited ‘Fit for 55’ climate legislative package, seeking to recalibrate the bloc’s climate policies towards a tougher 2030 emissions target. Here’s a rolling timeline of today’s major developments and expert and stakeholder insight to complement Carbon Pulse’s other coverage.
US Senate Democrats on Wednesday announced they will include a clean electricity standard in an upcoming budget resolution, though it is uncertain if the proposal can pass muster in the reconciliation process or gain the support of conservative members of the caucus.
The largest US wildfire so far in 2021 is in the proximity of a California Carbon Offset (CCO) forestry project, with tech giant Microsoft having procured credits from the Oregon undertaking.
California regulator ARB distributed the largest volume of compliance offsets since December this week as a new forestry initiative took home the vast majority of the new credits, according to agency data published Wednesday.
The former director of emissions and clean energy analytics at S&P Global Platts has taken a director position at Washington DC-headquartered Rapidan Energy Group.
The Shanghai and Shenzhen stock exchanges have released guidelines for so-called carbon neutral corporate bonds in an attempt to root out abuse by companies seeking to profit from the new and trendy product.
More than 80% of companies in New Zealand’s emissions trading scheme paid the NZ$35 fixed price option (FPO) instead of surrendering allowances for 2020 compliance, according to EPA data, saddling the government with another 30 million surplus NZUs to digest.
South Korea’s first monthly auction for the 2021 compliance cycle failed to sell out Wednesday, as a handful of successful bidders only picked up around 70% of the 2.15 million units on offer.
Euro Markets: EUAs briefly surge above €55 on Brussels plans, as UKAs lose ground despite stronger auction
EUAs jumped nearly 5% to a one-week high above €55 as the European Commission published its long-awaited ETS reform proposals, but prices quickly retreated as traders digested the heavily-trailed plans.
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BITE-SIZED UPDATES FROM AROUND THE WORLD
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Oil test – Rising oil prices could help speed climate action by accelerating the shift to electric vehicles, but could come at the expense of the economic recovery from the COVID-19 pandemic, according to the IEA in its monthly oil market report. It said global demand for crude surged by an average of 3.2 mln barrels a day in June compared with the previous month, but the return of oil production has failed to keep pace, triggering a steady rise in market prices towards $80/barrel. (Guardian)
Brussels concerns – Almost a third of the 27 EU Commissioners expressed concerns on Wednesday about the EU executive’s ‘Fit for 55’ climate package and criticised the way the initiative was handled by the Commission President Ursula von der Leyen, while Budget Commissioner Johannes Hahn voted against it because it had no reference to the EU’s new own resources needed to help finance it. That’s according to EurActiv, citing seven anonymous Commission insiders. Three sources said that ‘red flags’ raised by some cabinet officials during the consultation phase were ignored, with one official noting documents arrived “quite late”, some as late as last week. A broadly shared concern was the social impact of the package on vulnerable groups, particularly those in fossil fuel reliant nations.
Aarhus achieved – The scope of legislation that can be challenged in court at EU level for breaching environmental rights has been widened following a deal struck by MEPs and representatives from EU member states. Negotiators on Monday reached an agreement on bringing the EU in line with the Aarhus Convention – an international agreement that allows citizens to challenge legislation that breaches environmental laws. EU countries and European Parliament negotiators agreed to broaden the list of those who can contest legal acts, beyond just NGOs, to include members of the public. They also agreed to widen the scope of the regulation to include administrative acts requiring implementing measures at the national and EU level. This is seen as a big win for the European Parliament which considered it a red line and a hurdle for the EU to be fully compliant with the Aarhus Convention. (Euractiv)
Moving target – The UK government has released long-awaited transport decarbonisation strategy, saying new technology will allow domestic flights to be emissions-free by 2040, and international aviation to be zero carbon by mid-century. The strategy includes plans for vehicle efficiency regulations, EV smart charging, a goal for the government’s vehicle fleet to be fully electric by 2027, an increase in support for active travel (walking and cycling) and a net zero emissions rail network by 2050. The policy has been ridiculed by environmentalists who say the government is putting far too much faith in innovation as Britain bans the sale of new petrol and diesel trucks from 2030. (BBC)
Public purse – A 70,000-word manifesto by the UK cross-party Environmental Justice Commission argues for a “people’s dividend” worth billions of pounds as part of the national drive to hit the nation’s net zero 2050 target and the restoration of nature. Among the measures put forward are free public transport, more green spaces, and money for improving homes. (Guardian)
Coal to the highest bidders – Germany has agreed terms with utilities to close down more than 2,100 MW of coal-fired power generation, its energy regulator said on Wednesday. The latest auction, which earmarks supply to go offline from Oct. 31 2022, includes Steag’s 717MW Bergkamen A plant, the 350MW Farge plant operated by Onyx Kraftwerk Farge, and Uniper’s 345 MW Scholven C plant. The auction had been for 2,481 MW, meaning it was undersubscribed, though all 11 bidders received permits. Bids had ranged between zero and €155,000 per MW, which was the maximum the regulator had allowed. The average award was €102,799/MW. Wednesday’s was the third such auction held. The first held last December agreed terms for the closure of 4,788 MW of capacity and a second auction more than 1,514 MW. Germany has pledged to abandon coal by 2038 and achieve a mostly carbon-free energy system by 2050, while trying to lessen the impact on utilities, regions, employment, and the budget. After 2027, compensation will no longer be available, so operators were ready to bid as low as possible to avoid losing out to competitors. (Reuters)
Reaching both ways – Two MPs representing Australia’s right-wing ruling Coalition on Wednesday called on the government to cut emissions to net zero by 2050, even though the government itself has been reluctant to commit to that. At the same time, a parliamentary committee rejected a bill proposed by independent MP Zali Steggall last year, that would have committed Australia to a firm net zero target and obligated future governments to periodically demonstrate they were on the way to meeting that goal. (Sydney Morning Herald)
Bank wants more – Singapore’s low carbon tax makes it an “outsider” and the city-state needs to boost the levy at a faster rate to meet its climate change commitments, the central bank chief said on Wednesday, Businesshala reports. Ravi Menon said in a speech to the Institute of Policy Studies that the original plan to gradually increase the tax to S$10-$15 per tonne by 2030 is no longer enough stimulus for a successful restructuring for emissions reductions and a green economy.
Splashing the cash – The Australian Renewable Energy Agency is to commit up to A$2 mln to local non-profit ClimateWorks Australia to assist in the next phase of an initiative targeting the reduction of emissions in hard-to-abate sectors, including iron and steel, aluminium, and chemical supply chains, according to RenewEconomy.
Assessment Allison – President Joe Biden’s administration has appointed a new head of the National Climate Assessment (NCA), a pivotal, congressionally-mandated report on how climate change is affecting the US. The next NCA will be overseen by Allison Crimmins, an environmental scientist who has spent a decade at the EPA and has expertise in scientific communication. Her appointment Tuesday comes after the administration reassigned the previous head of the NCA, Betsy Weatherhead, to the US Geological Survey. Weatherhead, who has extensive research experience in mainstream climate science, had been appointed by the Trump administration. (Axios)
Absolutely indisputable proof that everything is fine – After a decade of alarming bleaching events driven by warming waters and climate change, UNESCO last month said it will put Australia’s Great Barrier Reef on its list of endangered sites. The move angered the Australian government, which immediately sent a letter of protest, co-signed with a number of allies, amid some accusations China was behind UNESCO’s move. On Wednesday, AFP reported Australia is making one last-ditch attempt to stop the reef – a hugely important tourism destination – from being listed as threatened. Ambassadors from EU countries and a dozen other nations have been invited to go scuba-diving on Thursday this week to see with their own eyes that the reef is fine. There was no information on exactly where the sightseeing trip would take place, though the reef is 2,300 km/1,429 miles long.
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