CP Daily: Thursday September 30, 2021

Published 02:43 on October 1, 2021  /  Last updated at 02:46 on October 1, 2021  /  Newsletters  /  No Comments

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

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TOP STORY

ANALYSIS: Surge in “carbon neutral” LNG prompts moves for clearer emissions counting

The acceleration in “carbon neutral” LNG cargoes is leading to louder calls for clear reporting on emissions and offset quality, as some companies use methods that cover barely a fifth of the fuel’s climate impact while avoiding hundreds of thousands of dollars in offsetting costs.

EMEA

EU lawmakers reject calls for motion on ETS speculation as member states plot further action on energy prices

The European Parliament’s political leaders on Thursday rejected calls for a resolution to seek restrictions on speculation in the bloc’s carbon market and other measures to calm the bloc’s soaring energy prices, instead opting to hold a debate with the other EU institutions.

Euro Markets: Carbon eases back amid energy volatility as quarter ends

EUA prices declined on Thursday as sentiment turned bearish, while German power and TTF gas surged to new records as the month and quarter came to an end.

Battle brewing on carbon ownership rights within Irish farmlands after minister’s remarks

The Irish agriculture minister has said that CO2 stored in forests planted on farmland belongs to the government, but agriculture groups maintain they have the right to sell the sequestered carbon on the voluntary emissions reduction (VER) market.

Romania to front-load most of its pre-2032 coal plant closures under EU investment plan

Romania will phase out coal-fired power by end of 2032, with a majority of its 4.59 GW fleet being shuttered before 2026, according to a deal clinched with the European Commission.

Former Gazprom emissions trading head lands at BP

The former head of environmental products at Gazprom’s trading arm has landed at UK oil major BP, Carbon Pulse has learned.

AMERICAS

NA Markets: RGGI allowance prices crack $11, California carbon notches fresh high

RGGI Allowance (RGA) prices headed north of the $11 mark this week on a wave of compliance buying and speculative interest, while California Carbon Allowance (CCA) values topped out a new all-time record as traders pointed a possible correlation with EU carbon.

California-registered CITSS accounts hit record high during Q3

The number of California-registered Compliance Instrument Tracking System Service (CITSS) accounts under the linked WCI cap-and-trade programme grew to a record during the third quarter, with new entrants split evenly between general market accounts and covered entities, according to data published by state regulator ARB on Thursday.

Jamaican expert panel calls for Caribbean carbon price

There is merit in a Caribbean carbon pricing regime, the Jamaican Economy Panel (JEP) of economic and public sector experts from the region said this week, providing guidance on how the policy should be designed to safeguard vulnerable households.

US oil and gas company Phillips 66 announces 2030 carbon intensity goals

American energy company Phillips 66 on Thursday announced it intends to reduce the carbon intensity of its oil and gas operations and energy products by 2030.

ASIA PACIFIC

Indonesia to introduce carbon tax from 2022

Indonesia will introduce a carbon tax that will apply from Apr. 2022 as a result of an agreement between parliament’s finance commission and the government, according to news reports on Thursday.

CN Markets: Large OTC deals lift China ETS, most eyes on offsets

Nearly 9 million allowances traded OTC in China’s carbon market over the past couple of days, adding some much-needed liquidity to the market, though most traders are focused on offsets with speculators placing bets on which CCERs might be deemed eligible for the first compliance cycle.

China’s small-scale offset market boom comes to Shenzhen

Shenzhen has become the latest Chinese jurisdiction to announce plans for a so-called “inclusive” small-scale offset scheme, aiming to drive production and lifestyle changes that can cut carbon emissions from small businesses, organisations, and individuals.

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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

Negotiator fear – US and European officials pushing for tougher climate action are worried the energy crunch that’s snarling the global economy could also undermine the COP26 UN climate talks in Glasgow in November, Bloomberg reported, citing anonymous government officials. They said the risk is that the price spike makes emerging economies like India more reluctant to ditch coal because that would threaten energy security. Whereas countries like the UK have tried to use gas as a so-called “bridging fuel” to lower-carbon options, the surge in prices makes that option less palatable, at least for now. The crisis has also thrown into sharp relief the volatility that can accompany renewable energies.

Finding funding – Rich nation envoys have met South African cabinet ministers to discuss a climate deal that could channel nearly $5 bln towards ending the country’s reliance on coal. The funding would comprise mainly of loans, Bloomberg reports, citing an anonymous source, adding that the delegation is trying to hammer out an agreement that can be announced at COP26. Read Carbon Pulse’s article about how South Africa scaled up its near-term climate ambition ahead of Glasgow.

1.5 alive – The Energy Transitions Commission (ETC) global coalition of 40 energy producers, industrial companies, and financial institutions put out a report on Thursday outlining six actions which need to be agreed at COP26 and implemented this decade to give the world a chance of limiting global warming to 1.5C. The actions are: significant and rapid reductions in methane emissions, halting deforestation and beginning reforestation, decarbonising the power sector and accelerating the phaseout of coal, accelerating the electrification of road transport, accelerating supply decarbonisation in buildings, heavy industry, and heavy transport, reinvigorating energy, and resource efficiency.

Logging leery – Several dozen environmental groups have penned a letter to the European Commission and other developed country governments expressing their alarm at the imminent lifting of the moratorium on the allocation of new logging concessions in the Democratic Republic of Congo (DRC). Calling on the DRC’s international partners through the Central Africa Forest Initiative and other aid programmes, the groups pressed these governments to act immediately and stop the moratorium. They added the impending move would risk Paris climate goals and negatively impact progress on a post-2020 biodiversity framework.

Nature calls – The cross-stakeholder Taskforce on Nature-related Financial Disclosures (TNFD) has unveiled a 30-strong set of financial and corporate experts. The body aims to hammer out a framework so investors can see companies’ vulnerabilities on hard-to-measure biodiversity risks.

EMEA

Steel cash – The steel industry needs financial support of €13-35 bln to make the shift to climate-friendly steel production, according to an analysis conducted by think-tank Agora Energiewende and made available to Handelsblatt. Carbon contracts for difference (CCfD), which compensate companies for the additional investment needs for climate-friendly production, are an efficient instrument to reduce emissions, the think-tank writes. The report states that a permanent refinancing mechanism is needed “so that the industry receives investment security.” In addition, green lead markets must be established parallel to the climate protection contracts, “which reward the added value of climate-neutral steel and establish it as a standard on the market.” (Clean Energy Wire)

Gas tax switch – The UK government is to outline plans next month to move environmental and social levies from household electricity bills onto gas bills. The move, subject to consultation and potentially to be phased in over 10 years, aims to encourage people to take up technologies such as heat pumps and electric vehicles. The plan will explore how to allocate energy costs to incentivise cost-effective decarbonisation and would involve the introduction of new levies on gas bills designed to support net zero, such as a charge on gas bills to help fund the fledgling hydrogen industry. (FT)

Here comes fusion – Staying with the UK, the government on Friday announced it will become the first country in the world to detail how it would legislate to ensure the safe and effective rollout of fusion energy. Fusion energy research aims to capture the same energy process that powers the sun, and it forms part of the government’s long-term plans to harness new technologies to build a strong, home-grown energy sector that reduces reliance on fossil fuels and exposure to volatile global gas prices. A fusion power plant would combine hydrogen atoms to generate energy without producing the carbon emissions that contribute to climate change. Due to the expected low hazard of fusion power, the government is proposing the continuation of a proportionate ‘non-nuclear’ regulatory approach as laid out in regulatory consultation proposals published today. This will allow for the safe and efficient rollout of the technology through innovation-friendly regulation. In addition, the Fusion Strategy published alongside the green paper sets out how the UK will leverage its leadership in fusion to deliver commercialisation of this potentially revolutionary technology.

ASIA PACIFIC

Kasikorn on the cob – Nearly a dozen companies in Thailand are setting up a voluntary carbon trading platform to handle offset deals, Bloomberg reports. Kasikornbank billionaire Dhanin Chearavanont’s Charoen Pokphand Group and Bangkok transit operator BTS Group Holdings are among the founders of the Carbon Markets Club, whose members are trading credit over-the-counter in an effort to expedite an energy transition, said Chaiwat Kovavisarach, CEO of energy company Bangchak Corp., one of the founding members.

AMERICAS

Relax, already – Wholesale grid operator PJM’s proposal to relax its minimum offer price rule (MOPR) took effect Wednesday after the US Federal Energy Regulatory Commission’s four members deadlocked on the plan. The “focused” MOPR will allow resources like wind farms and nuclear power plants with state subsidies to take part in PJM’s next capacity auctions without the threat their bids will be increased by the grid operator’s current market rules. The grid operator has asked FERC for permission to delay its upcoming auction from Dec. 1, 2021, to Jan. 25, 2022. Additionally, the Electric Power Supply Association, a trade group for competitive power suppliers that opposes the focused MOPR, is considering asking FERC for a rehearing, a required step before petitioning the DC Circuit Court of Appeals to review the focused MOPR. (Utility Dive)

Get ‘yer Phil – US oil company Phillips 66 on Thursday said it plans to reduce Scope 1-2 emissions intensity from operations by 30% and Scope 3 emissions intensity of its energy products by 15% below 2019 levels by 2030. The company plans to increase the production of renewable fuels, advance the electric vehicle battery supply chain, implement carbon capture technologies at select facilities, and participate in commercial-scale lower-carbon hydrogen production.

VOLUNTARY

Reforestation rub – Landowners stand to create a $1 trillion investment opportunity by the end of this century through action to restore degraded forest ecosystems, according to a new report from forest-tech startup Terraformation and consultancy Frontier Economics. It states that several factors have led to a growing restoration economy, including the growth of corporate interest in carbon offsetting and subsequent launch of bodies designed to ensure robust carbon markets for nature-based projects. Other factors which have made reforestation more popular and easier to invest in include increased research into biodiversity loss and restoration and falling costs of forest restoration technologies. (edie)

Cram ’em in – Sustainable aviation fuels and carbon offsetting are little more than “greenwashing” that do little to reduce the airline industry’s contribution to climate change, according to Jozsef Varadi, CEO of Budapest-based Wizz Air – one of Europe’s largest carriers. Operational changes such as improving route efficiency and using advanced aircraft packed with passengers would be more effective, he said Thursday at an aviation industry Wings Club event in New York. Airlines in the EU, for example, could reduce industry emissions in the region by roughly a third by adopting Wizz’s high passenger density on Airbus SE A321neo narrow-body aircraft, he said. (Bloomberg)

Jet-(off)setter – The Climate Jet Club (CJC) – a company that calls itself an “aviation brokerage project” and offers users a programme to offset carbon emissions – has introduced what it says is the private aviation industry’s first permanent carbon removal option. Switzerland-based CJC has partnered with US-based carbon sequestering technology developer Charm Industrial, which has created a method of capturing carbon and injecting it in a stable form deep into porous and sedimentary rock layers, effectively removing it from the environment. CJC offers three tiers of sustainability jet cards in its program, which are sold based on the amount of emissions generated. The Blue Card will offset 100% of a user’s travel emissions, while the Gold Card will offset 80% and remove 20% and the Platinum Card will offset 20% and remoe 80%. According to CJC, the removal process is far more costly – $600/tonne compared with offsetting, which begins at $2/t – but the company claims that until now, private aviation passengers did not even have the removal option. (AIN Online)

AND FINALLY…

More like Exxon No-bil, month two US oil major Exxon Mobil rejected a pitch from a Citigroup senior investment banker to commit to a target for net zero emissions even after shareholders staged a revolt over the company’s climate policy. Stephen Trauber, co-head of the bank’s newly created natural resources and clean-energy transition group, said he met with the oil giant’s executive committee right after it lost three board seats in June, when activist investor Engine No. 1 ran a successful proxy campaign as it pushed for a net zero target. Trauber said he urged the oil giant to reconsider its position. “They looked at me and said, ‘That’s great, but we don’t know how we would get there. We can’t commit to that if we don’t have a plan to get there,’” he said Thursday during the webcast of an event hosted by Rice University’s Baker Institute for Energy Studies and law firm Baker Botts LLP. “I assured them most companies today who have committed to net zero don’t have a plan on how to get there, but they’re working to get there.” Trauber’s comments offer a rare glimpse inside Exxon’s inner sanctum as it grapples with intense external pressure to follow the example of European rivals Shell and BP, which have pledged to eliminate on a net basis not only their own emissions but those of their suppliers and customers as well (Bloomberg)

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