CP Daily: Wednesday September 1, 2021

Published 00:26 on September 2, 2021  /  Last updated at 00:26 on September 2, 2021  /  Newsletter  /  No Comments

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

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TOP STORY

Pennsylvania’s IRRC approves RGGI final regulation in narrow vote

The Pennsylvania Independent Regulatory Review Commission (IRRC) approved the finalised RGGI regulation on Wednesday by a thin majority, moving the Keystone State one step closer to joining the carbon scheme next year.

ASIA PACIFIC

South Korea takes on tougher emissions target

South Korea’s National Assembly has adopted legislation that significantly firms up its 2030 emissions target as the nation steps up efforts to get on track to meeting its mid-century net zero ambition.

Chinese exchange eyes blue carbon market

An exchange in China’s Fujian province has set up the nation’s first trading platform for blue carbon credits, in expectation of a government-backed push for offset projects that store carbon in the ocean.

EMEA

Euro Markets: EUAs, natural gas turn lower amid crude sell-off

Both EUAs and front-month TTF natural gas fell back amid robust selling after posting a new all-time high on Wednesday, after crude oil prices dived on reports that Russia could increase output, while UKAs also climbed to a fresh record.

Fund manager WisdomTree relaunches exchange-traded product for EU carbon

Fund manager WisdomTree has relaunched its exchange-traded product (ETP) for EU carbon allowances a little over a year after it delisted the investment vehicle.

Trade group, law firm team up to create UKA single trade contract

The Climate Markets and Investors Association (CMIA) and law firm DLA Piper have jointly developed a single trade agreement for UK emissions allowance transactions for counterparties that do not have a master trading agreement in place.

Switzerland schedules second aviation carbon permit auction

Switzerland has scheduled its second aviation carbon allowance auction, and the first for the current trading phase.

AMERICAS

NA Markets: California allowances decline as speculative buying diverges from recent trends

California Carbon Allowance (CCA) prices saw steep declines on Wednesday following steady selling over the first half of this week, bucking the trend of significant daily increases to start the past few months.

ICYM

UPDATE – New Zealand sells entire 2021 cost containment reserve as carbon permit auction clears at record

New Zealand carbon permit auction cleared at a record high of NZ$53.85 ($37.97) on Wednesday, with ravenous buyers snapping up all 7 million units for 2021 under the market’s new cost containment reserve, along with the 4.75 mln on offer in the sale, before continuing with a spectacular secondary market bull run.

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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

The gift of the jab – Delegates to COP26 from developing nations are increasingly frustrated by a lack of information about how they can access Covid-19 vaccines ahead of the Glasgow summit. The UK host announced in June that it would provide jabs to delegates from developing countries, who wouldn’t otherwise be able to get them before the UN climate talks taking place Oct. 31-Nov. 12. Negotiators and civil society representatives due to the attend the conference were asked to apply for the vaccines by Jul. 23. As of Sep. 1, no vaccines had been delivered by the UK government and most of those who applied had heard nothing about if, when and how they would receive the jabs. (Climate Home)

Green dream – A new forecast of the energy transition from DNV has warned that even if all electricity was ‘green’ from this day forward, the world will still fall a long way short of achieving net zero emissions by 2050. DNV’s Energy Transition Outlook, now in its fifth year and launched two months before COP26 takes place in Glasgow, provides an independent forecast of developments in the global energy system to 2050. The 2021 report highlights the global pandemic as a “lost opportunity” for speeding up the energy transition, as Covid-19 recovery packages have largely focused on protecting rather than transforming existing industries. Electrification is on course to double in size within a generation and renewables are already the most competitive source of new power however, DNV’s forecast shows global emissions will reduce only 9% by 2030, with the 1.5C carbon budget agreed by global economies emptied by then.

EMEA

Making a splash – Shipping’s carbon footprint is very much in the crosshairs of European regulators this year, an uncomfortable position that is likely to become more urgent following the release of a new report by the European Environment Agency and the European Maritime Safety Agency this week, which shows the industry’s emissions are far greater than previously estimated. Shipping makes up almost 14% of GHG from transport within the EU, making it the third-biggest emitter after road vehicles, which account for 71%, and just behind aviation, according to data in the new report. Maritime transport emissions must be drastically cut further if the EU hopes to become carbon neutral by 2050, the report adds. Nearly 77% of European external trade and 35% of all trade among EU member states occurs on maritime routes, it said. Though EU CO2 emissions stemming from navigation have dropped by around 26% from 1990, they still account for around 16 Mt, or 18% of global maritime emissions, the report said, attributing the decrease to fleet renewals and greater energy efficiency. Shipping is set to be included in the EU ETS shortly with other green measures under discussion in what is widely seen as a splintering of shipping’s green governance away from the UN’s International Maritime Organization (IMO). (Splash, Euractiv)

Climate stress tests – The European Central Bank is stepping up pressure on lenders to prepare for stress tests next year that will show just how vulnerable the industry is to climate change, according to people familiar with the process.  Bloomberg reports that the ECB, which earlier this year voiced displeasure over finance industry efforts to respond to climate risks, has sent out confidential documents to banks stating they’ll need to provide data on how their balance sheets might fare through 2050, the people said. The regulator also plans to study the link between profits and carbon risk in banks’ portfolios, they added.

Christine & the Council – The EU’s lending arm has created a Climate and Environment Advisory Council to advise on how its green projects are run and has enlisted European Central Bank President Christine Lagarde among other high-profile members, Reuters reports. The European Investment Bank recently adopted its Climate Bank Roadmap to deliver a planned €1 trillion sustainable investment programme set to run until the end of the decade. EIB President Werner Hoyer said climate change required “a rapid global response” and thanked Lagarde for joining the group, which also held its first meeting on Wednesday. (Reuters)

CBAM survey says – European think-tank ERCST has launched a survey that aims to collect stakeholder reactions to the proposed provisions of the July 2021 European Commission proposal for a regulation establishing a Carbon Border Adjustment Mechanism (CBAM), and border carbon adjustments (BCAs) more widely. Please take 10 minutes to complete it here. ERCST will share a summary of the survey results once compiled.

ASIA PACIFIC

Deadline – Participants in the Shanghai ETS have until the end of September to hand over allowances to the government covering their 2020 emissions, the municipal Bureau of Ecology and Environment said Wednesday. Annual compliance deadlines in most of China’s pilot carbon markets have been delayed as a result of knock-on effects from the COVID-19 pandemic.

Green hydrogen – A local environment bureau in China’s Qinghai province on Wednesday announced it is backing a 3MW solar-powered hydrogen project. Total project investment will run to 5.9 mln yuan ($912,000), and the facility will be constructed by China Huadian, of the country’s five big state-owned power companies. The majority of China’s hydrogen capacity is fossil-fuel based, though analysts expect that to slowly change. A public comment period will be held over the next week.

CBAM ahoy! – Kazakhstan is working on the introduction of a domestic carbon price on energy consumption to avoid full payment of the proposed carbon border adjustment in the EU, Minister of Energy Nurlan Nagaev said on Tuesday at an international practical conference in Kazan, according to TASS. The country is proactively working on development of a 2050 low-carbon development concept to be approved shortly, Nagaev said.

Offsets off the charts – One hedge fund in Asia is betting big on the growing interest in carbon offsets to protect forests, as industries and policy makers start to make efforts to cut emissions. Tribeca Investment Partners, which manages $3.2 bln of assets, has bought around $100 mln worth of carbon credits, portfolio manager and partner Ben Cleary told Bloomberg. “We are seeing major demand from Asian corporates for offsets, above and beyond their organic carbon reduction programs,” said the Singapore-based Cleary. The price of carbon credits in the Asia-Pacific region is likely to rise substantially, he added. Tribeca is eyeing carbon credits that can qualify for programs such as Australian Carbon Credit Units or the UN’s REDD+ framework. REDD+ carbon prices could top $100/tonne in the next couple of years, from an average about $8 to $10 now for high-quality projects, Cleary predicts. Tribeca currently has credits covering about 10 Mt, he added. Tribeca is aiming to raise $500 mln, including the sum already deployed on carbon credits, for a new decarbonisation-focused fund. The balance will be invested in climate-friendly plastics, chemicals and food, according to Cleary.

AMERICAS

Duke it out – Duke Energy is eyeing an early retirement of its coal-fired plants by the end of the decade, according to the revised integrated resource plans (IRP) filed with South Carolina regulators Friday for its subsidiaries, Duke Energy Progress and Duke Energy Carolinas. According to Utility Dive, Duke’s revised IRPs also call for adding 3,000 MW of solar energy and 600 MW of wind power over the next 15 years, compared to earlier proposals South Carolina’s Public Service Commission (PSC) rejected in June. Duke’s preferred alternative would add 15,500 MW in solar power by 2035, compared to 12,300 MW under a scenario in the earlier proposal. However, environmental groups are criticising Duke’s revised IRPs – essentially blueprints for future power plant development – faulting the reliance of the utility subsidiaries on new natural gas-fired plants to pick up the slack as coal-fired plants are shuttered.

Going nuclear – The Illinois Senate passed a wide-ranging energy bill on Wednesday by a 39-16 vote that would support two nuclear power plants from shuttering this year through carbon mitigation credits. The legislation would include $600 mln to support Exelon’s Byron and Dresden power plants, with the utility previously saying both facilities would shut this year without state or federal assistance. The bill moves to the House where it faces an uncertain future. Governor JB Pritzker said a statement that he looks forward to finalising a bill that puts consumers and the climate first. (Reuters)

No harm, no foul – A US federal judge on Tuesday rejected a legal challenge to President Biden’s executive order effectively increasing the social cost of climate pollutants in federal agency decision making. The judge ruled the states could not bring the “inherently speculative” case because they had not suffered any actual harm, but said they could refile the lawsuit if they experienced actual harm in the future. The “social cost” of a pollutant is a calculation of the harms to society incurred by the emission of that pollutant. Government agencies use the figure when calculating the benefits and potential costs of a proposed rule or regulation. Biden ordered an interim increase in the social costs of carbon, methane, and nitrous oxide early in his presidency and directed a task force to calculate and establish a more permanent estimate of those costs within a year. (Climate Nexus)

Insuring against climate change – The US Treasury Department is soliciting information on ways to measure and assess the climate-related risks for the insurance sectors and financial markets more broadly. In its solicitation released on Tuesday, the federal agency said climate-related disasters are increasing in frequency and severity, and those impacts are leading to financial losses for insurers. The move aligns with broader actions by the Biden administration to account for climate-related impacts in various markets.

New deal or no deal – The Canadian province of Prince Edward Island failed to update its carbon pricing agreement with the federal government ahead of the Sep. 20 Canadian election. The tiny province had originally negotiated an exemption from the federal carbon charge applied to fuels in exchange for its own provincially-mandated carbon price, but this deal expired in March with a further extension ending today. According to CBC, the provincial pricing system had been criticised by experts for omitting key sectors such as home heating oil and propane, while also offsetting rising gasoline and diesel prices with corresponding cuts to provincial excise taxes on fuel.

More but also less  – The UNFCCC posted Belize’s updated NDC on Wednesday offering improved data and coverage, including expansion to N2O and Methane in the land sector. Targets are now estimated to avoid 5.6 MtCO2e of cumulative emissions between 2021 and 2030. This includes a targeted 63% increase in GHG removals from the land sector financed through results-based payments under the UN REDD+ platform. However, two other key targets were weakened under the submission including moving to a commitment to achieve 75% of electricity generation from renewables by 2030, a reduction from the previous goal of 85%.  Belize would also reduce the transport target to a 15% reduction in fuel use from the prior goal of 20%. According to its most recent data, Belize’s emissions increased by 44% between 2012 and 2017.

VOLUNTARY

Watch the wash – The Netherlands’ advertising watchdog has urged Shell to stop running a campaign promoting fuel purchases as “carbon neutral”. The campaign in question promotes a Shell offer whereby those buying petrol and diesel can choose to pay an extra fee that will fund carbon offsetting. Shell uses carbon credits that support nature-based projects including tree planting. A group of nine law students from the Free University in Amsterdam made a complaint to the Netherlands’ Advertising Code Committee over the ‘Drive CO2 Neutral’ campaign. Their argument was that the advertisements imply that the offsetting will be equivalent to the emissions which will be generated by burning the fuel in their vehicles, but that this is unlikely given the cost of the service, which stands at €0.01/litre of fuel. The Committee upheld the complaint and gave Shell two weeks to formally appeal the decision. A Shell spokesperson told edie.net that the company “takes its responsibilities as an advertiser extremely seriously” and called the campaign a “genuine and important initiative to give consumers the option to offset CO2 emissions associated with the fuel they purchase”. Shell has not yet issued a formal response but has stated that it will “consider any necessary changes to communications. The Advertising Code Committee’s ruling is not legally binding.

AND FINALLY…

A Jerome for all seasons – In recent weeks, the climate movement has become caught in the middle of a fight that seemingly has nothing to do with the environment: Should US President Joe Biden renominate Jerome Powell to lead the Federal Reserve? The choice of who should run the country’s central bank has historically not captivated climate advocates – or many Americans, for that matter – yet it has carved the left into two opposing camps, each claiming to fight for a greener economy. On one side, a group of pro-Powell employment hawks argue that Powell has overturned right-wing orthodoxy that has needlessly cramped economic growth and impoverished American workers for decades. Their opponents say that Powell and other Republican Fed governors have gone too easy on big banks and are now risking a climate-induced financial crisis. According to the Atlantic, it is a strange fight, but an important one. Although Powell’s term does not expire until February, Biden will reportedly decide whether to renominate him in the next few days – and whom Biden picks could shape the rest of his presidency, determine the success of his economic agenda, and even influence his long-term legacy. But the fight isn’t really just about who will chair the Fed a few months from now. It has as much to do with the climate movement’s ultimate goals, and what kind of economy activists hope to bring about.

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