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TOP STORY
Annual voluntary carbon market value to hit $1 bln in 2021 -report
The annual value of voluntary carbon market (VCM) transactions is on track to exceed $1 bln this year for the first time ever, building off previous record volumes in 2020 as more entities become involved in the space, according to a report published Wednesday.
AMERICAS
NA Markets: California allowances surge to new all-time high above $26 after recall election
California Carbon Allowances (CCAs) soared to a new record high on Wednesday morning after Governor Gavin Newsom (D) survived a recall election, with traders adding that aggressive buying had caused prices to pop more than $1 on the day.
Newsom wins gubernatorial recall election to preserve California climate policies
California Governor Gavin Newsom (D) survived a recall election on Tuesday, keeping California’s suite of carbon reduction policies in tact as the state’s Democratic-leaning voting bloc rejected a GOP-backed effort to oust the first-term governor.
Legislative timelines may push back Pennsylvania’s RGGI entrance in 2022
Legislative timelines may delay the Pennsylvania Department of Environmental Protection’s (DEP) implementation of its RGGI-modelled cap-and-trade rule next year, with the outcome potentially causing the Keystone State to join later in 2022.
US gov’t agency approves subcommittee to examine carbon market design, regulation
The US Commodity Futures Trading Commission (CFTC) voted Wednesday to create a subcommittee group to explore carbon market design, with the scope to provide input on frameworks for compliance and voluntary programmes.
Another California-registered offset project applies for LCFS pathway
An Idaho-based livestock project certified under California’s compliance offset market is the latest dairy digester to seek a transition to the Low Carbon Fuel Standard (LCFS) and supply renewable natural gas (RNG), according to documents posted by state regulator ARB on Tuesday.
INTERNATIONAL
EU chief urges China to raise 2030 emissions pledge, proposes climate aid increase
China should raise its near-term emissions pledge while others need to flesh out how their goals will be met, said European Commission President Ursula von der Leyen on Wednesday, proposing an increase in the EU’s climate finance to poorer nations.
ASIA PACIFIC
China thermal power growth slows down in August on slowing economy, tight coal supply
China’s thermal power generation growth dropped to the lowest since last October, according to official data, echoing with earlier expectations that energy consumption growth for the second half of 2021 will slow as the economic output cools down.
EnergyAustralia’s carbon offset scheme grows by over a third
Gentailer EnergyAustralia retired 36% more offsets under its carbon neutral product after expanding its scope, but documents released this week showed only 2% of the credits used were domestic ACCUs.
EMEA
CORRELATIONS: EU carbon link to gas breaks down as winter coal burn locked in
European carbon’s correlation to gas prices is dissipating as EUAs have retreated in recent days despite the fuel continuing to rally to new-all-time highs, analysis by Carbon Pulse shows.
Euro Markets: Carbon ends flat as October gas trades in huge €14/MWh range
EUA prices ended the session unchanged on Wednesday, as front-month gas prices whipsawed in a €14.10/MWh range and traders speculated whether TTF prices are poised for a reversal.
VOLUNTARY
Investor group wants oil firms to avoid ‘overreliance’ on offsets
Oil and gas companies should minimise the use of offsets in their strategies to align with a net zero emissions pathway, a report from leading global investors stated 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
All hail Gambia – Gambia is the only country in the world deemed to currently be on course to deliver climate action that is in alignment with the 1.5C pathway of the Paris Agreement, according to new research from Climate Action Tracker (CAT). The organisation on Wednesday launched a new methodology to rate national approaches to climate action. Observing trends such as the domestic target, policies and action, fair share, climate mitigation finance, and land use and forestry, it found that just Gambia is on track. Another seven nations are classed as “nearly sufficient” – Costa Rica, Ethiopia, Kenya, Morocco, Nepal, Nigeria, and the UK – with CAT stating that these nations could reach the 1.5C threshold with “moderate improvements”. The research also found that momentum on updating targets to 2030 on climate action has stalled since May this year, with no major emitter or economy putting forward new targets. CAT estimates that current efforts will see emissions today be roughly the same as in 2030 – the year where it is recommended that emissions are halved. As such, the world is on track to be emitting twice as much as required by the 1.5C limit. Gambia earlier this week submitted its updated NDC to the UN, setting a target to cut emissions 47.2% under BAU levels by 2030, up slightly from its original pledge of 45.4%. (edie)
MEF assemble! – US President Joe Biden will hold a virtual meeting of the Major Economies Forum on Friday to discuss plans to combat climate change with other world leaders before COP26 in Glasgow later this year. “At the MEF meeting, the president will emphasise both the urgency and the economic benefits of stronger climate action. He will call on leaders to strengthen their climate ambition heading into COP26 and in the years beyond,” the White House said in a statement on Wednesday. “The president also will outline plans to leverage the MEF post-Glasgow as a launchpad for collective, concrete efforts scaling up climate action through this decisive decade,” it added.
Tell us everything – Top emitters of carbon are not disclosing the full risks associated with climate change, reducing the chances of meeting global emissions targets, a study by Carbon Tracker and the Climate Accounting Project (CAP) said on Thursday. The CAP is an informal team of accounting and finance experts drawn from the investor community and commissioned by the Principles for Responsible Investment (PRI), while Carbon Tracker is funded by around 30 charitable foundations. Of 107 listed companies assessed in the study, across sectors including oil and gas, automobiles and aviation, more than 70% did not reflect the full risks resulting from climate change in their 2020 accounts, the report released on Thursday by Carbon Tracker said. (Reuters)
AMERICAS
Reconciliation rate – The US Senate Finance Committee is considering including carbon pricing in its portion of the budget reconciliation climate package, the Washington Examiner reports. The primary evidence for this is a leaked Finance Committee document listing many different revenue raising provisions under consideration, including a CO2 tax at the point of extraction starting at $15/tonne and escalating over time. According to the document, any price on carbon would also be paired with rebates or some other form of relief for low-income taxpayers, as well as a border adjustment. The Finance Committee is expected to release its reconciliation bill soon, and its chairman Sen. Ron Wyden (D) made his rounds Wednesday in webinar events previewing his forthcoming plan.
Apt alternative – Canadian Conservative Leader Erin O’Toole says his party’s version of the national carbon price on fuel would not automatically replace the existing levy that sparked resistance from Ontario Premier Doug Ford and other Tory lawmakers across the country. O’Toole told the Toronto Star the Conservative carbon price is meant as an “alternative” to the existing federal system and that provinces where the current ‘backstop’ scheme applies would decide whether to adopt the new one. He did not say when the Conservative system would be ready, only that an O’Toole government would seek to engage provinces on the subject “very quickly.” The Conservative platform says the party would “scrap” the existing consumer carbon price, which the Liberals implemented in 2018 and which currently stands at C$40/tonne. Ontario, Alberta, and Saskatchewan joined forces to challenge the policy all the way to the Supreme Court, which ruled in March that the federal carbon price was constitutional. At the time, O’Toole also vowed to scrap “Justin Trudeau’s Carbon Tax” if his party won the next election. Now, the policy his party is proposing is a different version of the existing system, where the taxpayer rebates — which are sent as flat payments to households — are replaced with a rewards-style ‘carbon savings account’ that allows people to spend the money they pay through the levy on “green” purchases like bicycles or energy-efficient furnaces. The Tories and Liberals are roughly tied in the polls, ahead of the Sep. 20 election.
Adding in the cost – Activist hedge fund manager Jeff Ubben called on the US Securities and Exchange Commission (SEC) to make companies include a carbon price as part of the climate-related ESG disclosures. Ubben, who founded Inclusive Capital Partners, urged the SEC to adopt those policies in a 14-page letter sent to the federal agency on Sep. 8. “The most impactful role for the SEC would be to require all US-listed companies to report the price of carbon they assume in their strategic planning, from decision-making to risk assessment and capital allocation,” he wrote. Ubben told the Institutional Investor that he believed the disclosure could spur the federal government to implement a carbon tax or cap-and-trade plan.
Their first Rodeo? – California Bay Area regulators are investigating whether Phillips 66 failed to obtain necessary permits to produce renewable fuels at its oil refinery in Rodeo, according to an email reviewed by Reuters. The refiner is undergoing a multi-step conversion of the plant to turn it into the world’s largest producer of renewable fuels using feedstocks such as soybean oil and animal fats, and it started to process small volumes of soybean oil at the Rodeo refinery in Q1 2021. However, the Bay Area Air Quality Management District, which regulates stationary sources of air pollution in the region, is investigating whether the company modified its refinery without getting required additional permits. At least 10 groups, including the National Resources Defense Council, have complained to regulators about the additional emissions produced by using more hydrogen to treat feedstocks like soybean oil and animal tallow.
A POET’s work – POET, the largest biofuels producer in the US, committed Wednesday in its first sustainability report that its bioprocessing facilities would be net zero in carbon emissions by 2050. Additionally, the company plans to reduce its GHG emissions by 70% compared to gasoline by 2030. Currently bioethanol reduces carbon emissions by 46% compared to gasoline. (Argus Leader)
Sequestration request – The Alberta government is requesting expressions of interest (REOI) from companies interested in building, owning, and operating a carbon sequestration hub in Alberta. Expressions of Interest (EOI) submissions will be voluntary, and information submitted through the REOI process will be used to inform the subsequent request for Full Project Proposals (RFPP), anticipated for late 2021. Participation in the REOI stage is not required to be eligible to participate in the RFPP stage.
EMEA
Almaty upheaval – Kazakhstan is considering introducing a domestic carbon tax so that the goods it exports can dodge the EU’s proposed carbon border adjustment mechanism proposed by the EU from 2026, deputy energy minister Murat Zhurebekov told Reuters. Kazakhstan’s main exports are oil and metals and the EU is one of its biggest trading partners, accounting for about 40% of all exports. Kazakhstan aims to increase the share of renewables in its energy mix and uses a scheme where the state guarantees that it will buy all energy from renewable producers at a certain price. Read Carbon Pulse’s reporting on Kazakhstan’s ETS – a scheme that has been in place since 2013 but has been beset with low prices and thin trade.
Do more – UK lawmakers on Thursday called on the Bank of England to help tackle climate change by boosting investment in green finance and penalising banks that finance the fossil fuel industry. The intervention by a cross-party group of 51 lawmakers comes ahead of the COP26 global climate talks to be held in Glasgow in November and follows a recent expansion of the BoE’s remit to ensure it helps meet the government’s own climate goals. In a letter to BoE Governor Andrew Bailey seen by Reuters, the group said he needed to do more, as the financial sector it regulates is underpricing climate-related risk, and not enough money was being spent on green finance.
Hydrogen union – Four Italian companies, Edison, Snam, Saipam, and Alboran Hydrogen have signed a Memorandum of Understanding to develop a green hydrogen project in southern Italy, Upstream reports. The scheme envisages the building of three green hydrogen production plants at Brindisi, Taranto, and Cerignola, that will have a combined capacity of 220 MW. It will be powered by a total photovoltaic (PV) production of 380 MW. Once the three plants are operational, it is forecast they will be able to produce about 300 mln cubic metres of renewable hydrogen every year. The green hydrogen will be used primarily for local industries with some of the gas to be injected or blended into Snam’s local gas network and may also be used for sustainable mobility. In order to execute the project, the partners anticipate creating a special purpose company in which Edison, Snam, and Alboran will each hold 30% stakes, while Saipem will be a 10% stakeholder. Italy plans to develop 5 GW of green hydrogen capacity by 2030.
ASIA PACIFIC
Have some of that – Australia needs to do more to cut emissions and should reform its Safeguard Mechanism to drive deeper carbon cuts in the economy, according to a new OECD report, writes the Australian Financial Review. Prepared by OECD staff overseen by Secretary-General Mathias Cormann, the report repeatedly laments the lack of a nationwide carbon price and raises questions about whether the government’s current technology-based approach will be sufficient to put the economy on a net zero by 2050 trajectory. Cormann is the former Australian finance minister, and spent a decade fighting against a carbon price before landing the OECD job.
VOLUNTARY
Buying into the future – US-based investors Carbon Direct have paid €15 mln for a 6.98% stake in Australian company LEILAC Group, a subsidiary of Calix, which produces low-carbon cement and lime. LEILAC is scaling up its production capacity to 100,000 tonnes/year, from 25,000 currently, and is also planning several commercial scale projects in Europe and Australia, it announced Wednesday.
SCIENCE & TECH
More crap – A new “Issue With Tissue” scorecard released Wednesday reveals that some of the largest tissue makers are still relying on non-sustainable practices, with many products coming from clear-cut forests. Research from US green group NRDC shows that large firms such as Procter & Gamble rely on “climate-critical forests” like the Canadian Boreal. Solutions do exist, including products made from sustainable bamboo, and are being offered by smaller companies along with other alternatives, the organisation said. A total of 11 toilet papers made with recycled materials rolled in with an “A” or “A+” in the new 2021 scorecard, with Who Gives a Crap, 100% Recycled, and Green Forest placing the highest in sustainability. Major brands Charmin and Angel Soft scored “F” respectively. Kimberly-Clark, the first major company to be offered an “A” score for any product, is now offering its Scott Essential Standard Roll online, made from 100% recycled content. However, the research says that the company still makes Cottonelle and Kleenex from 100% forest fibre, where fibre purchase volumes increased by 17% last year.
AND FINALLY…
Carbon ott-sets – Sea otters were once widespread across coastal waters in the Northern Pacific Ocean. However, in the 1700s and 1800s, fur traders hunted their population down to about 2,000. Since then, conservation efforts have allowed the otters to rebound somewhat, but some 4,000 km of coastline in their historic range is still devoid of the furry mammals. Scientists say the return of these creatures doesn’t just transform their ecosystems, but it can also turn them into a powerful carbon sink. Sea otters help ecosystems capture carbon from the atmosphere and store it as biomass and deep-sea detritus, preventing it from being converted back to CO2. In order to maintain their high metabolic rates, the mammals must eat constantly. Among their favourite foods are sea urchins, which are easy to catch and dense in calories. But when sea otters are lost from an ecosystem, sea urchin numbers spike, with the herbivores clear cutting kelp – a powerful, fast-growing absorber of CO2. Using data on the rate of kelp growth and its density at sites with and without otters, researchers found that their presence in the study area, covering an area about the size of Costa Rica, is capable of storing 4.4 to 8.7 Mt of CO2 compared to an otter-free zone. Researchers estimate the value of those reductions in the hundreds of millions of dollars, based on current carbon prices. And these perpetually hungry mammals don’t only protect kelp ecosystems. Otters can also benefit seagrass as they mostly feed on crabs, bringing down those numbers too. That causes the grazing organisms eaten by crabs to rebound, and these slugs and snails scrape away the algae that grows on the seagrass, which allows it to absorb more sunlight and grow more efficiently. However, reintroducing otters is not a win for everyone. Their massive appetites can diminish fishing opportunities for commercial operations and subsistence-based Indigenous communities. But a 2020 study found that the monetary benefit of sea otters – due their restoration of kelp habitat and associated increase in fish stocks, carbon sequestration, and ecotourism value – outweighs the losses to shellfish fisheries. One idea floated is to use money from otter-generated carbon offsets to compensate fishers. (BBC)
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