CP Daily: Thursday July 22, 2021

Published 03:01 on July 23, 2021  /  Last updated at 03:21 on July 23, 2021  /  Newsletter  /  No Comments

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

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TOP STORY

EU’s carbon border levy to affect closest neighbours more than global players, experts say

The EU’s proposed carbon border adjustment mechanism will likely affect its closest neighbours much more than global trade partners, experts believe, despite an increasing number of countries across the globe expressing concerns over the 27-nation bloc’s plans.

EMEA

Euro Markets: EUAs slide to 7-week low amid pre-holiday “de-risking”

EUAs fell to their lowest in nearly seven weeks as traders cut long positions ahead of the holidays season, outpacing declines in energy markets as de-risking took centre stage.

UK utility SSE sees power output fall 10% in Q2

UK utility SSE saw its power output drop 10.4% year-on-year in Q2 as calmer, drier conditions curbed renewables while gas generation fell mainly on lower plant availability, the company said on Thursday.

EEX publishes EU carbon permit auction calendar for 2022, updates 2021 schedule

Energy exchange EEX on Thursday published the EUA and EUAA auction calendar for 2022, while updating the 2021 schedule to account for supply withdrawals by the MSR from September to December.

AMERICAS

NA Markets: CCA prices retrace further despite influx of V20 buying, RGGI stagnates on low demand

California Carbon Allowance (CCA) prices this week declined despite a surge in transacted volume, while RGGI Allowance (RGA) values edged down slightly across the week with limited buying interest.

California natural gas generation rises in 2020 as power demand slumps

California electricity consumption declined to a near-term low in 2020 as a result of the COVID-19 pandemic, but natural gas-fired generation still increased over the past year due to a drop in hydroelectric capacity, according to state figures.

Quebec rejects LNG project over potential GHG impacts

The Quebec government declined to authorise a proposed natural gas liquefaction facility on Wednesday due to concerns that the project would not lead to a net reduction in global emissions.

ASIA PACIFIC

Guangdong ETS reports 100% compliance for 2020 as power plants exit scheme

All 245 companies covered by China’s biggest pilot emissions trading scheme surrendered permits in time this week to meet their 2020 obligations, marking the end of the last compliance cycle before coal-fired power plants accounting for around 40% of the scheme’s emissions transition to the national market.

Trading house opens Singapore carbon desk, former Shell traders join

A major Dutch-headquartered firm has become the latest trading house to expand its emissions business to the Asia-Pacific region, with at least two carbon traders joining from Shell.

INTERNATIONAL

Oil industry falls short of 1.5C goals, finds study that takes a hard line on offsets

The world’s oil and gas industry is set to vastly exceed emissions levels compatible with limiting global warming to the Paris Agreement’s 1.5C goal, according to a study that gave no weight to the sector’s massive offset buying spree.

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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

All’s well that ends well – Germany and the US have reached an agreement resolving their long-standing conflict over the Nord Stream 2 pipeline. The deal allows for the completion of the pipeline, now 98% finished, which will allow Russian natural gas to flow directly into Germany. In a joint statement, the US and Germany committed to working together to mitigate Russia’s energy dominance in Europe and preventing Moscow from using “energy as a weapon” in Ukraine and other countries in the region. Berlin and Washington expressed determination to “hold Russia to account for its aggression and malign activities by imposing costs via sanctions and other tools.” The countries have also pledged to invest in Ukraine’s green energy infrastructure with a fund of at least $1 billion, including funds from private third parties. Germany will initially contribute $175 mln to the “Green Fund for Ukraine.” Berlin also wants to support bilateral energy projects in the country with around €70 mln, especially in the field of renewable energies and energy efficiency. In addition, the US and Germany are aiming to ensure Russian gas flow through Ukraine continues beyond 2024, when the Russia-Ukraine gas transit agreement is set to end. (Clean Energy Wire)

Gee up – G20 energy and environment ministers are likely to end talks in Naples this week without an ambitious climate deal, another setback in the fight against rising temperatures ahead of COP26 UN climate talks in November, Bloomberg reported. According to several officials and diplomats familiar with the discussions, the ministers are stuck on a number of issues and will kick a final decision to a meeting of their leaders in October. The parties haven’t been able to agree on specific actions and firm timetables needed to reach net zero global emissions by 2050 and keep global warming at 1.5C, according to a draft communique and the officials.

Mobilise! – US Treasury Secretary Janet Yellen told the heads of the World Bank and other multilateral development banks on Thursday to come up with concrete plans to mobilise significantly more capital to fight climate change and support emission reductions goals. The Treasury said in a statement that Yellen, White House climate envoy John Kerry, and the heads of the major development banks discussed ways to “maximise” private capital for climate change finance and re-evaluate the banks’ internal incentives and practices toward that end. “Secretary Yellen encouraged the MDBs to increase their focus on climate adaptation, particularly through private-sector operations, and to support developing countries in implementing ambitious emissions reduction measures and protecting critical ecosystems,” the Treasury said. Yellen will reconvene the group “to discuss their concrete plans in October” on the sidelines of the World Bank and IMF annual meetings.

NDC watch – Big-emitting Indonesia submitted a revised NDC to the UN on Thursday along with comparative minor Paraguay. Neither nation made increases to their mitigation ambition, with Indonesia’s revised pledge containing a minor update in BAU methodology that changes 2030 emissions numbers by 0.4%, more details on policies adopted in recent years, and an improved adaptation target. Observers had been expecting Jakarta to submit a revised NDC much closer to November’s COP26 UN climate talks, which is aiming to collate more ambitious NDCs from all nations.

EMEA

Sakhalin storage – The Russian Pacific island of Sakhalin is close to a CCS cooperation agreement with a Japanese company as it moves to carbon neutrality by 2025, regional governor Valery Limarenko told Reuters, without giving further details. Sakhalin’s LNG plant operated by Sakhalin Energy has worked out an “ecological LNG” strategy, Limarenko said, to cut its carbon footprint and supply carbon neutral fuel. Read Carbon Pulse’s reporting on carbon trading developments in Sakhalin.

AMERICAS

Sophomore cycle – Climate tech company NCX announced a five-fold increase in the participation in its second Natural Capital Exchange cycle, as 577 American landowners opted into the voluntary carbon market that matches buyers with forest landowners. The company, which was formerly SilviaTerra, said the landowners were spread across 16 US states, with 61% of the properties beneath 750 acres. NCX claimed the new enrollment would offset roughly 500,000 tonnes over the one-year period. Microsoft, Rubicon, Patch, Lune, and Cargill are among the buyers in the programme. The company announced the largest US-based forest carbon project by acre earlier this year, with Microsoft, Shell, and South Pole among the buyers.

Nothing good to see here – CarbonPlan Policy Director and California Independent Emissions Market Advisory Committee member Danny Cullenward told CNBC on Thursday that voluntary carbon offset purchases by corporations were not helping to reduce fossil fuel emissions. Cullenward said the offset market does not have stringent standards, while the voluntary market is completely unregulated. However, he said offset purchases could account for 5-10% of the climate solution, but companies need to focus on more direct CO2 cuts. (CNBC)

Pre-emptive move – The California Bay Area Air Quality Management District voted 19-3 on Wednesday to require two of the state’s largest oil refineries to cut particulate air pollution. The vote would force Chevron’s Richmond plant and PBF Energy’s Martinez refinery to install wet gas scrubbers to reduce pollution from catalytic cracking units within five years. Valero’s Benicia refinery would also be covered by the decision, but the Bay Area refinery already has the wet scrubbers installed. The move is expected to spark a legal challenge. (Reuters)

VOLUNTARY

Protection over planting – Companies looking to offset their climate-warming emissions can have a bigger impact backing governments’ initiatives to halt forest destruction rather than planting new trees, Reuters reported, citing a white paper published by non-profit group and carbon offset intermediary Emergent. Demand is growing for carbon credits, prompting some of the world’s biggest corporations to announce tree-planting initiatives. But with an area of tropical forest the size of New York’s Central Park cleared every 15 minutes, there is much greater value in helping under-resourced governments preserve existing forest, Emergent said. Read Carbon Pulse’s latest on Emergent’s role as an intermediary for a coalition launched by the US, UK, and Norway to raise $1 bln in private capital for jurisdictions that reduce deforestation emissions under the Architecture for REDD+ Transactions (ART) programme.

AND FINALLY…

First is the worst – US utility FirstEnergy agreed to a $230 mln penalty for bribing former Ohio Republican House Speaker Larry Householder and former Public Utilities Commission of Ohio (PUCO) chairman Sam Randazzo, according to charges released Thursday. According to federal investigators, FirstEnergy and its affiliated companies had several goals: pass a $1 bln bailout for two FirstEnergy Solutions-owned nuclear plants, secure money for FirstEnergy Corp. through a decoupling provision, and ward off a rate distribution case scheduled for 2024. Legislation pushed by Householder, HB- 6, solved the first two problems, and in Nov. 2019, the PUCO under Randazzo’s leadership terminated the requirement that FirstEnergy’s subsidiaries file a new rate case in 2024. FirstEnergy, its subsidiaries, and its executives are accused of obscuring millions to reach these ends, and acting US Attorney Vipal Patel called the $230 mln settlement “the largest criminal penalty ever collected as anyone can recall in the history of this office.” FBI agents charged Householder and four other associates last year for racketeering in helping to pass HB-6 in 2019, which gutted the state’s Renewable Portfolio Standard (RPS). (Cincinnati Enquirer)

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