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The Shanghai Environment and Energy Exchange confirmed Thursday afternoon that China’s much-anticipated national emissions trading scheme, set to become the world’s biggest carbon market, will launch Friday after a three-week delay.
Proposals to tighten the EU ETS and rebase its cap within a rapid timeframe are an initial cause for concern among market experts still digesting the full impact of Brussels’ wide-ranging climate measures, a conference heard on Thursday.
Spain calls for price intervention on EU carbon market, questions new system for transport and buildings
The EU should introduce price controls for its carbon market amid recent spikes, Spain’s deputy PM and environment minister said on Wednesday as the 27-nation bloc presented its ‘Fit for 55’ legislative package to further tighten its ETS and other climate policies.
Issuance of free EUAs for 2021 to Polish installations will likely take place in Q4 of this year, after the European Commission has approved the country’s proposed allocation plan, while Germany’s permit distribution also probably won’t completed until the autumn at the earliest.
EUAs were steady Thursday, trading in their narrowest range for seven sessions as the market continued to digest the European Commission’s ‘Fit for 55’ package announced yesterday, while exchange data showed investment funds have cut their net length to the lowest in eight months.
China’s thermal power generation in June was up by 10.1% from a year ago, outpacing a 7.4% gain in overall power output, official data showed Thursday, as the nation’s carbon-intensive COVID-19 recovery continued.
Australia Market Roundup: Govt protests EU CBAM move, while offset issuances fall back to average levels
Australian Trade Minister Dan Tehan on Thursday accused the EU of “imposing its views and its ways” on other nations through its carbon border adjustment mechanism (CBAM) proposal, while new offset issuance levels this week declined to long-term average levels after last week’s bump.
California Carbon Allowance (CCA) prices retraced over the week as demand declined from financial firms, but RGGI allowances (RGAs) inched closer to the $9 level due to an influx in buying from compliance entities.
A New York-based hedge fund opened a RGGI CO2 Allowance Tracking System (COATS) account on Thursday, marking the second new financial firm to register in the Northeast US cap-and-trade scheme since June.
Delta Air Lines is wary of purchasing biofuel credits (RINs) under the US Renewable Fuel Standard (RFS) due to transparency concerns, CEO Ed Bastian said Wednesday, giving credence to recent reports that the company’s refinery subsidiary has halted purchases amid soaring price levels.
None of the soil organic carbon protocols developed by third-party standards, start-ups, or governmental and academic organisations is doing enough to ensure high-quality outcomes, with the existing methodologies severely lacking in areas such as additionality and durability, according to a report published Thursday.
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BITE-SIZED UPDATES FROM AROUND THE WORLD
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
Fossil rebound – Global CO2 emissions from burning coal and gas are likely to increase by 3.5% in 2021 and by 2.5% in 2022, the IEA said in the mid-2021 edition of its Electricity Market Report, predicting that global electricity demand is growing faster than renewable energy capacity can be rolled out and will require more power to be generated from the burning of fossil fuels. After falling by about 1% in 2020 when the COVID-19 pandemic curbed industrial activity across the world, power consumption is set to grow by close to 5% in 2021 and by 4% in 2022 as economies recover. (Reuters)
Earlier exit – Coal would be phased out of Europe by 2030 due to rising carbon prices spurred by the European Commission’s reformed climate targets, analysts told Montel. The ‘Fit for 55’ proposals published Wednesday would see strong carbon prices that would make coal-fired power plants economically unviable by the end of this decade, sources said. Rising CO2 costs could see “an EU-wide market-driven coal phase-out by 2030”, according to Matthias Buck, director European energy policy at Agora Energiewende. Carbon prices in the €40-60/t range “pushes coal off the system”, said Richard Howard, director of research at analysis firm Aurora. “Pure economics” would suggest a rapid phaseout of coal in Germany in particular, faster than the 2038 deadline the government had anticipated, he added. Other EU members like Denmark, France, Greece, Hungary, Italy, Netherlands and Spain will exit coal this decade. There would also be a faster build-out of renewables, possibly above the new 40% target for 2030 floated by the Commission, said ICIS.
Ruble trouble – Russia’s economy ministry estimates that Russian goods worth $7.6 billion, including iron ore, steel, aluminium, pipes, electricity and cement, could be subject to a EU CBAM if it is adopted. The 27-nation bloc unveiled the divisive proposal on Wednesday to charge importers from 2026 for bringing in carbon-intensive goods from countries with lax environmental regulations. Economists predict that Russia and Turkey, and to a lesser extend Asian economies, will be the hardest hit by the move.
Kyiv call – Ukraine should consider adopting a roadmap that will guide its efforts to create an efficient ETS with the right carbon price, Vice-President of the European Commission for Interinstitutional Relations and Foresight Maros Sefcovic has said. “Nobody expects Ukraine to reach [the EU ETS] price level now. Ukraine, should however consider adopting a roadmap that would guide its efforts to establish its effective ETS system with the right carbon price,” he told Interfax-Ukraine.
Batman & Robbin’ – A British property investor and Tory party donor would not get a fair trial if extradited to Germany to face charges of running a criminal gang that allegedly stole €125 mln through VAT fraud using the EU ETS, his lawyers told a court on Thursday, as reported by Law360. Counsel for Peter Singh Virdee argued that his client is facing charges in Germany based on “untested” hearsay evidence that is “offensive to the notion of a fair trial”. They also claim Virdee, who denies being a ringleader nicknamed Batman, is the victim of a plot involving a ‘kingpin’ in Dubai, Metro reports. German prosecutors last year reissued an arrest warrant for Virdee after he was apprehended in 2017 at Heathrow Airport and later released. They want him to face charges in Germany, where they said several of the suspect’s associates have already been sentenced to jail terms ranging from 27 months to eight years.
TBD tests – The US Federal Reserve will probably end up requiring banks to conduct tests to judge their vulnerability to the effects of climate change, Chairman Jerome Powell suggested on Thursday. “My guess is that’s a direction we’ll go in but we’re not ready to do yet,” he told the Senate Banking Committee. Some European central banks are already running climate stress scenario exercises for their banks to undergo. They are designed to ascertain the banks’ readiness and resiliency to extreme weather events and other long-term effects of a warming climate. (Bloomberg)
Chasing cars – Environmentalists are increasingly worried President Joe Biden’s administration will yield in coming days to automaker pressure and adopt modest limits on GHG emissions from cars, instead of the strict standards they say are necessary to combat climate change. In letter from more than two dozen green groups on Thursday, activists are asking Biden to mandate emissions curbs that are at least as strong as those he helped broker as vice president in 2012, when the Obama administration set a 5% reduction annually. However, the industry’s preferred model is a compromise California regulators negotiated with five auto companies last year that, on paper, requires them to reduce GHGs from their fleets by just 3.7% annually. Actual real-world emissions reductions under the California compromise are even lower – closer to 2.7% – because the deal adopted more flexibilities sought by automakers, including double counting of electric vehicle sales and extra credit for technologies that make cars more fuel efficient but don’t necessarily show up in tailpipe readings. (Bloomberg)
Getting the wallet out – China Baowu, the world’s biggest steel producer, along with partners including China Pacific insurance and the National Green Development Fund have launched a 50-bln yuan ($7.74 bln) carbon neutral fund, Reuters reports. The equity fund will focus on clean energy, green technology, environmental protection, and pollution control, the founders said, though there were little detail beyond that. The fund will be the largest in China so far focusing on carbon neutral development.
NCS notes – The Natural Climate Solutions Alliance (NCS Alliance) on Thursday published high-level guidance for the credible use of nature-based voluntary emissions reductions (VERs) by corporates. The Alliance, convened by the World Economic Forum and World Business Council for Sustainable Development, provides guidance on demand-side VER eligibility, NCS supply, markets and policy, and communicating climate strategies that include nature-based solutions.
The three amigos – Oil major BP, infrastructure company Sempra LNG, and Mexican natural gas distribution company IEnova announced Thursday they have entered into an agreement into a contract for the delivery and receipt of the companies’ first carbon offset liquefied natural gas (LNG) cargo. The cargo is expected to be delivered to the Energia terminal in Mexico on Friday, and it will be sourced from bp’s global LNG portfolio. These estimated emissions will be offset by retiring a corresponding amount of carbon credits, sourced from a Mexican afforestation project from BP’s portfolio of offsets on behalf of Sempra LNG.
Abaxx abucks – Canadian financial software company Abaxx Technologies on Thursday announced it has completed a second follow-on investment into Singapore-based exchange AirCarbon, as laid out in February. The approximately $1.1 mln investment will increase Abaxx’s ownership in AirCarbon to 7.5% on a fully diluted basis, though the the Board of Directors of Abaxx have made the strategic decision to sell two-thirds of the company’s pro forma ownership interest in AirCarbon to new venture Base Carbon. Abaxx said Base Carbon intends to raise and deploy capital across the carbon credit market ecosystem in a risk-adjusted manner as carbon markets evolve.
SCIENCE & TECH
Bit of a wobble – A moon “wobble” will contribute to an increase in severe flooding in the mid-2030s, NASA has warned. The moon’s orbit, which affects the Earth’s tides, has a natural “wobble” every 18.6 years that causes extremely high and low tides. In a new study, published by Nature Climate Change, NASA’s Sea Level Change Science Team calculated that the next wobble in the mid-2030s will amplify rising sea levels caused by climate change. (Sky)
Amazon-sized problem – The Amazon rainforest is now emitting more CO2 than it is able to absorb, totalling 1 bln tonnes a year, scientists have confirmed for the first time. The research used small planes to measure CO2 levels up to 4,500 metres above the forest over the last decade, showing how the whole Amazon is changing. Previous studies indicating the Amazon was becoming a source of CO2 were based on satellite data, which can be hampered by cloud cover, or ground measurements of trees, which can cover only a tiny part of the vast region. Most of the emissions are caused by fires, many deliberately set to clear land for beef and soy production. But even without fires, hotter temperatures and droughts mean the south-eastern Amazon has become a source of CO2, rather than a sink. (Guardian)
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