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TOP STORY
PREVIEW: RGGI traders anticipate at or above market clear for Q3 auction
Traders are anticipating the upcoming Q3 RGGI auction to settle at or slightly above the secondary market, with compliance entities holding allowances close to current emissions through the first half of the year.
EMEA
EU financial watchdog “stands ready” to raise ETS market abuse concerns
The European Securities and Markets Authority “stands ready” to raise concerns voiced in a complaint about alleged market abuse in the EU ETS filed by a participant, according to email correspondence seen by Carbon Pulse, and with relevant committees and agencies the watchdog said they will consider action.
EU carbon and natural gas prices likely to de-link in coming months– analyst
European carbon and natural gas prices are likely to diverge in the coming months, as gas supply improves and the surplus of EU emissions allowances shrinks, according to an analyst.
Euro Markets: EUAs set a new record as gas supply worries grow
EU carbon prices erased Tuesday’s loss in early trading on Wednesday, climbing within a few cents of their record after TTF natural gas prices surged on the back of reduced production at a key North Sea platform.
COMMENT: What does the current price of EUAs actually represent?
Despite all the excitement around EUA prices topping €60 for the first time and moving on to a new record above €63.19 this week, let’s remember that coal-fired power generation is actually more profitable in the near term than natural gas. Wait, what? How did *that* happen?
World’s largest renewable-energy powered DAC project starts up in Iceland
Swiss firm Climeworks on Wednesday launched the world’s largest direct air capture (DAC) and storage plant powered by renewable energy, with the Iceland facility’s removal credits already in fiery demand.
AMERICAS
LCFS Market: California prices drop to a five-month low on bearish outlooks
California Low Carbon Fuel Standard (LCFS) credits sunk to a five-month low this week, as participants said bearish outlooks for the market are putting downward pressure on the physical and futures markets.
California offset issuances sink to lowest since June
California offset issuances slid to a more than two-month low this week, as regulator ARB doled out nearly 230,000 new credits mostly to ozone-depleting substance (ODS) projects, according to data published Wednesday.
Three California-registered projects apply for LCFS via book-and-claim pathway
Three Indiana-based offset projects are seeking to transition into the Low Carbon Fuel Standard (LCFS), with the new petition following similar efforts by dairy digesters over the past few years, according to documents published by state regulator ARB on Wednesday.
ASIA PACIFIC
NZ Market: NZUs gain another 5% as govt data shows big jump in speculator holdings
New Zealand carbon allowances raced to new highs in Wednesday trade, as the EPA posted data showing a 33% increase in speculator NZU holdings in the June quarter.
Australia’s new industrial credits could stall ACCU momentum, hurt investments, analysts say
Australia’s plans to introduce a new type of carbon credits for industrials could interrupt the demand side in the domestic voluntary carbon market and shave as much as A$2 billion ($1.48 bln) off ACCU investments over the next decade, analysts warned Wednesday.
SK Market: Lukewarm interest as South Korean CO2 auction fails to sell out again
South Korea’s monthly CO2 auctions continue to draw limited interest despite strong price growth, with buyers picking up fewer than half the available allowances at Wednesday’s September sale.
INTERNATIONAL
Argentina makes plea for debt-for-climate swaps ahead of COP26
Argentina wants to trade climate action for debt relief, President Alberto Fernandez told a virtual high-level dialogue on climate action on Wednesday.
Mitsubishi teams up with Shell for Canadian hydrogen for export project
Mitsubishi will partner with Shell on a project to produce hydrogen from Canada to Japan and other Asian markets from the latter half of this decade, the company announced on Wednesday.
VOLUNTARY
Conservation finance attracts huge investor interest despite challenges -study
There is overwhelming interest in conservation finance from global investors, but access to finance tools such as biodiversity offsets and investable large-scale deals remains a roadblock, according to research published on Wednesday.
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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
Net-more coal – Citi, Bank of America, and Commerzbank are lead arrangers for an inaugural USD offering by one of the world’s largest exporters of seaborne thermal coal, despite all three having made ‘Net Zero’ pledges. SUEK, Russia’s largest coal producer is looking to secure a 5-year dollar-backed bond but has yet to disclose how much it plans to raise through the issuance. Thermal coal remains a key global energy source, with a share of over 35% in global power generation. SUEK plans to expand shipment capacities to Asia to offset reduced EU demand driven by climate policies. Climate commitment by the financial institutions include goals to reach net-zero emissions in financing activities, operations and supply chains before 2050. (Responsible Investor)
Alok’s OK – Britain’s Alok Sharma, president of this November’s COP26 UN climate summit, said he had held constructive discussions with number one emitter China in recent days. The British summary of Sharma’s trip did not set out any new agreements reached, but said the parties discussed China’s commitment to achieve carbon neutrality by 2060, peak emissions before 2030, and reduce its use of coal. They also discussed opportunities for China to go further in areas like renewable energy and zero-emission vehicles. (Reuters)
Got a beef with beef – Global meat consumption is the biggest driver of agriculture’s climate impact and also comes with a wide range of other environmentally damaging effects that look set to intensify in the coming years, German NGO BUND and Green Party-affiliated Heinrich-Boll-Foundation have found in their Meat Atlas 2021 – a stocktake of global livestock and meat production activities. In 2018, the 20 leading livestock companies caused more GHGs than Germany, Britain, or France, with 90% coming from the animals themselves or from supply chain activities such as producing animal feed, the authors found. Yet governments currently make little requirements for meat producers to fully reveal their carbon footprint, the groups said. The growing market power of a few centralised meat producers allows them to enforce low meat prices, thereby putting pressure on individual livestock farmers to increase output and farm yet more animals – a practice often only sustained by government subsidies for farming, they argued. (Clean Energy Wire)
Investment conference – A timely forerunner to COP26, the Green Climate Fund’s Private Investment for Climate Conference (GPIC) will on Oct. 18-19 convene global leaders, executives, experts, and thought leaders from business, governments, financial institutions, and technology companies to accelerate private sector-driven climate action in developing countries. Following last year’s event, which attracted over 2,200 online participants, GPIC 2021 will help boost climate investments in key areas – including adaptation, ecosystem-based solutions and innovative technologies. Register for the event here.
EMEA
Be the change – A small activist investor wants RWE to accelerate a transition to clean power, and says the German utility giant could double in value by speeding up closing and separating its lignite operations. The shares could exceed €61 ($72) as part of a “credible plan” to divest assets run on lignite, the most polluting form of coal, Enkraft Capital GmbH said. These are no longer economically relevant, it wrote in a Sept. 6 letter to RWE’s chief executive officer and its chairman, a copy of which was seen by Bloomberg.
More Deutschmarks – Germany needs to triple its planned state climate protection investments in order to reach its 2030 target of reducing GHGs by 65% compared to 1990 levels, think-tank Agora Energiewende said. The federal government will have to invest about €30 bln annually over the coming years – about twice as much as current plans foresee. Coupled with further investments at local level, the figure will ultimately be three times higher than currently planned and reach €46 bln per year, the think-tank found in a study made in cooperation with the Forum New Economy. “No matter who forms the next government, they will have to initiate a wave of investments for necessary climate action measures – or risk failing the climate targets,” Agora Energiewende head Patrick Graichen said. Over the next five years Germany will have to invest €230 bln in railway expansion, digitalisation, support of building modernisation and other measures – €150 bln more than planned. (Clean Energy Wire)
ASIA PACIFIC
Amazon seeks the sun – Tech giant Amazon will partner with Mitsubishi to build solar power stations in Japan and procure renewable energy from them to supply electricity to its data centres for 10 years, reports Nikkei. Amazon will be able to procure stable electricity from exclusive renewable energy power stations for the long term without buying it from electric companies, enabling it to avoid power price fluctuations. A solar power company will build 450 stations with a total capacity of 22,000 kilowatts in the Tokyo metropolitan area and in the Tohuku region. Mitsubishi will then collect electricity generated from them and supply it to Amazon’s data centres, logistics centres, and offices. According to the Japan-based Renewable Energy Institute, there are only about 20 such power purchase agreements in Japan, and the Amazon project will be the largest of its kind in the country. The solar power stations will begin operation in 2023.
BP refines hydrogen option – BP and Macquarie Capital are assessing plans to transform the former site of Australia’s largest oil refinery into a clean-energy hub that could produce and distribute zero-emissions fuels including “green” hydrogen, according to the Sydney Morning Herald. Nearly 12 months after announcing the closure of the 65-year-old Kwinana oil refinery in Western Australia, saying it was no longer economically viable, BP has detailed plans to conduct a feasibility study to consider repurposing the site for producing hydrogen. John Pickhaver, co-head of Macquarie Capital Australia and New Zealand, said the company believed that the Kwinana precinct could support a “meaningful green hydrogen industry.” The Western Australian government has backed a viable hydrogen sector for the state, while the federal government has secured approval of state and federal ministers for a $370 mln Clean Energy Finance Corporation fund for new hydrogen projects.
Coal for hydrogen – India’s government has set up a task force and expert committee to examine the development of coal for hydrogen, the Ministry of Coal has said. The ministry has “constituted two committees today, one to oversee the programme and another of experts to give guidance to the Ministry.” While recognising that production of hydrogen from coal will have challenges in terms of high emissions, India’s coal resources could become a source of hydrogen when those emissions are trapped in an environmentally sustainable manner, such as through carbon capture and storage, the ministry said in its statement. India targets 450 GW of renewable energy capacity by 2030, but it is also a significant coal producer, with the fuel accounting for 70% of its power generation in 2020. With more focus being placed on major industrialising economies to develop strategies to reduce emissions, India appears to be exploring ways that will also minimise the impact on the viability of its coal sector. Meeting both objectives, however, will undoubtedly be a huge task.
AMERICAS
Big Green Apple – New York Governor Kathy Hochul signed legislation on Wednesday that would mandate that all new passenger cars and trucks sold in the state would be to be zero emissions by 2035. The goal would align with several US states, including California, that have sought to curtail GHG output from the transportation sector. New York is among the Northeast and Mid-Atlantic states that remain involved in the Transportation & Climate Initiative’s proposed fuel sector programme. However, the state has not signal that it would implement the programme.
Hey man, nice Earthshot – This morning brought the launch of a climate tech VC fund that’s notable for its prominent backers and connective tissue to communities on the front lines of global warming, Axios writes. Earthshot Ventures is a new early-stage investor in hardware and software companies that announced its presence today and the close of its first fund at $60 mln. Backers include Microsoft, billionaire climate activist Tom Steyer, the Emerson Collective, McKinley Alaska Private Investment, Kleiner Perkins chairman John Doerr, Hawaii’s state pension fund, and Facebook executive Chris Cox.
SCIENCE & TECH
All the help we can get – WWF-Canada is looking for help in developing technology that can monitor carbon benefits from nature-based solutions. The NGO launched a C$125,000/prize ($98,698) challenge that asks applicants to come up with a way to measures how much carbon is being stored in nature over time, and where. “A variety of approaches for carbon monitoring already exist, but they often deliver incomplete data and are costly and/or labour and time intensive,” the release notes. Proposals will be accepted between Sep. 7 and Nov. 8, 2021.
AND FINALLY…
Holy orders – For the first time, the leaders of the Roman Catholic Church, the Eastern Orthodox Church, and the Anglican Communion have jointly warned of a ‘critical moment’ regarding the urgency of environmental sustainability, its impact on poverty, and the importance of global cooperation. In a joint statement, they called on everyone to “choose life” by examining their behaviour and making meaningful sacrifices for the sake of the earth.
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