CP Daily: Friday July 16, 2021

Published 02:37 on July 17, 2021  /  Last updated at 02:37 on July 17, 2021  /  Newsletter  /  No Comments

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

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TOP STORY

China carbon price beats expectations on opening day

Trading in China’s national emissions trading scheme launched on Friday at prices well above expected levels, though market participants cautioned against reading too much into the initial transactions.

EMEA

Investor influence on EU carbon market seen outweighing that of industrials

Investors are seen as bigger buyers of EU carbon allowances than Europe’s heavy industries over the coming months and years because utilities are rapidly decarbonising and industrials lack financial clout or are cushioned by ongoing free allocation, a conference heard on Friday.

MSR reform plans separate from rest of EU’s ‘Fit for 55’ legislative process -official

Modifying the supply-managing Market Stability Reserve (MSR) of the EU ETS to maintain its current ambition level will be a separate, “quicker” process to the legislation of the European Commission’s larger ‘Fit for 55’ climate package, a senior EU official said Friday.

UKA prices slump to surprise discount to EUAs amid “no hurry” to clear demand backlog -experts

UK carbon prices have fallen to an “unexpected” discount to EU Allowances as utilities have held back from swapping EUAs for UKAs and investors have mostly stayed on the sidelines, according to a panel of experts.

Euro Markets: EUAs slip further below €53 for 2.7% weekly loss

EUAs remained firmly entrenched near €53.00 on Friday despite a stronger energy complex, while UKAs continued to recover from their record low.

AMERICAS

Virginia judge rejects industry group lawsuit of RGGI regulation

The Virginia Department of Environmental Quality (DEQ) did not violate state law when it amended its RGGI-aligned cap-and-trade regulation to include full auctions, and the programme does not constitute an illegal tax in violation of Old Dominion’s Constitution, a judge ruled Wednesday, refuting a manufacturer-led challenge.

WCI emitters’ allowance length grows by largest amount in two months

Regulated entities boosted their California Carbon Allowance (CCA) length for the first time in 10 weeks over the most recent five-day stretch, while speculators kept their positions nearly unchanged, according to US Commodity Futures Trading Commission (CFTC) data published Friday.

US Carbon Pricing and LCFS Roundup for week ending July 16, 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 North Carolina.

ASIA PACIFIC

Hong Kong to explore carbon market opportunities

Hong Kong will explore opportunities in establishing itself as a carbon trading centre for mandatory and voluntary carbon markets both in mainland China and internationally, with an initial focus on the Guangdong-HK-Macao greater Bay region.

Australia to hold next ERF auction in October

The 13th Emissions Reduction Fund (ERF) auction will be held on Oct. 13-14, the Clean Energy Regulator announced Friday, as the offset price in the secondary market hit yet another record high.

INTERNATIONAL

Sweden seeks out Article 6 projects in the Dominican Republic

Sweden is inviting carbon-cutting cutting projects in the Dominican Republic to bid to be the first initiatives that could ultimately deliver Paris Agreement-era carbon credits to the Nordic country.

CLARIFICATION

Brussels plans earlier start to EU ETS reforms, other sectors don’t escape

(Clarifies Wednesday’s article to say the proposed 61% ETS emissions reduction target for 2030 includes the maritime sector, after Commission officials confirmed a mistaken conflict among the proposal documents) 

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.

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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

INTERNATIONAL

Berlin bind – Germany and the US have entered a climate and energy partnership following a Washington meeting between US President Joe Biden and outgoing Chancellor Angela Merkel. Among other things, the two agreed to coordinate on climate and trade agendas and prevent the use of energy as a coercive tool. They also vowed to mobilise investment in Central and Eastern Europe, including by supporting Ukraine’s energy transformation, energy efficiency, and energy security.

EMEA

Les reservations – France has expressed “reservations” about the social consequences of extending EU carbon trading to the building and transport sectors – a proposal put forward by the European Commission on Wednesday. Although France shares the Commission’s ambition “to put Europe at the forefront of the climate fight”, it still has worries. “France has reservations about the relevance of this measure and its consequences on households and small businesses. It will continue discussions to ensure that social justice and solidarity remain at the heart of climate action,” the ecological transition ministry has warned, according to Euractiv. The same is true of the conservative EPP group in the European Parliament: “While the proposal to create a Climate Action Social Fund is commendable so that the most vulnerable do not bear the brunt of the ecological transition, the European Commission seems to forget that it is the middle classes who, in France as in Europe, will bear the brunt of an increase in fuel prices,” MEP Agnes Evren commented, evoking memories of protests in part over France’s carbon tax several years ago.

Balkan business –  A Chinese-backed $1.1 bln deal to help Bosnian utility EPBiH expand its 715MW Tuzla coal-fired power plant has run into problems following General Electric’s withdrawal from the project, according to Nermin Dzindic, industry and energy minister in the government of Bosnia’s autonomous Bosniak-Croat Federation. EPBiH picked China Gezhouba Group and Guandong Electric Power Design in 2014 to build a 450 MW to replace three ageing units. Documents released by Serbian news outlet Klix said the Chinese partners had informed EPBiH in January that GE was dropping out and offered alternative subcontractors, but EPBiH rejected the proposed replacement companies. (Reuters)

AMERICAS

Hot seat – US congressional investigators are planning to question an Exxon Mobil lobbyist who inadvertently confirmed a decades-long effort by the company to derail federal action on climate change in a secretly recorded video, according to officials involved in the effort. The interview by the House Oversight and Reform Committee will likely precede what stands to be a blockbuster hearing with Exxon CEO Darren Woods and other executives of major oil and gas producers. A televised spectacle with oil industry officials gained importance following the release last month of a surreptitiously recorded video in which Keith McCoy, the Exxon lobbyist, acknowledged that the company had funded “shadow groups” to sow doubt about climate science. He also undermined Exxon’s public expressions of support for a carbon tax by saying it’s a “talking point.” McCoy was secretly recorded by activists from Greenpeace UK, who claimed to be headhunters for a deep-pocketed public relations firm with Middle Eastern oil clients. Exxon officials have sought to distance themselves from McCoy, who has lobbied for the company since 2014. Woods described McCoy’s remarks as “deeply disappointing” and reiterated the company’s commitment to carbon pricing and GHG reductions. McCoy has also disavowed what he told the activists on video, saying that “my statements clearly do not represent Exxon Mobil’s positions on important public policy issues” (E&E News)

Something fishy – The US Court of Appeals for the District of Columbia Circuit ruled on Friday in favour of environmental groups who argued against the federal government’s conclusion that biofuel blending obligations posed no danger to species’ habitats. The court found that the EPA violated the Endangered Species Act by failing to consult with the US Fish and Wildlife Service and the National Marine Fisheries Service before ruling on biofuel blending obligations under the Renewable Fuel Standard (RFS) for 2019. The court also found that the EPA’s approach to determine the effect of the obligations on the environment was contrary to record evidence and thus arbitrary and capricious. Based on the findings, the court ordered the EPA to reassess the 2019 renewable volume obligation decision. (Reuters)

If you build it, they will clean – British Columbia is building a new clean energy centre that will bring together industry, governments, and academics and help incubate new tech companies, Premier John Horgan announced Friday. Horgan said the province is partnering with the federal government and Shell Canada to help invest a total of C$105 mln dollars for a new BC Centre for Innovation and Clean Energy, with each entity contributing C$35 mln. The premier said the centre will also help to initiate new technology and developments to accelerate the province’s goal of reaching net zero emissions by 2050. The centre’s first projects are expected to begin in fall 2021 and will focus on carbon capture, biofuels, and battery technology. (CBC)

Pneuma pneuma – Alberta Environment and Parks (AEP) on Friday published a memorandum related to changes in eligibility for future and existing offset projects that use the province’s Quantification Protocol for Greenhouse Gas Emissions from Pneumatic Devices. A high-level summary of the AER’s analysis concluded that offset projects and subprojects initiated before Jan. 1, 2022 are eligible to generate credits until Dec. 31, 2022. However, pneumatic instruments and pumps installed on or after Jan. 1, 2022 are not eligible to generate offsets from the protocol.

ASIA PACIFIC

Think of the children, and also of coal – Australian energy and emissions reduction minister Angus Taylor has dismissed a Federal Court ruling that found the Australian government owes a duty of care to young people to protect them from the impacts of GHG emissions, according to RenewEconomy. Taylor said in a radio interview that he did not think it was appropriate for courts “to take over the role of government,” and that it was not the role of the courts to dictate how decisions were to be made, and said coal would remain a feature of Australia’s energy system “for many years” to come. It was about balancing the needs of different groups, Taylor said.

Another one of those – Australia’s Carbon Market Institute has again been forced to delay its annual Australasian carbon market conference. It was originally meant to be held for a hybrid virtual/in-person audience in June, but was postponed to August due to a fresh COVID-19 outbreak in Sydney. On Friday, CMI said it had to push the event even further back, and it is now planned for Dec. 9-10.

AND FINALLY…

Living up to its name – The left-leaning government of Greenland has decided to suspend all oil exploration off the world’s largest island, calling it “a natural step” because the Arctic government “takes the climate crisis seriously.” No oil has been found yet around Greenland, but officials there had seen potentially vast reserves as a way to help Greenlanders realise their long-held dream of independence from Denmark by cutting the annual subsidy of 3.4 bln kroner ($540 mln) the Danish territory receives. The decision was made June 24 but made public Thursday. The US Geological Survey estimates there could be 17.5 bln undiscovered barrels of oil and 148 trillion cubic feet of natural gas off Greenland, although the island’s remote location and harsh weather have limited exploration. (AP)

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