Newsletters > CP Daily: Monday October 4, 2021

CP Daily: Monday October 4, 2021

Published 02:44 on October 5, 2021  /  Last updated at 16:40 on October 8, 2021  / /  Newsletters

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

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TOP STORY

FEATURE: Carbon traders, analysts face recruitment frenzy amid global market boom

Record carbon permit prices and the emergence of new emissions trading markets around the world are leading to a surge in demand for emissions traders and analysts, with multinational banks, oil majors, and commodity merchants stopping at nothing to poach top staff and aggressively build out their desks.

AMERICAS

Quebec carbon market emissions still exceed cap during pandemic-affected 2020

Quebec’s WCI-covered GHG emissions declined nearly 10% in 2020 amid coronavirus travel and economic restrictions, but still overshot the allowance budget for the year under the cap-and-trade programme, according to provincial data published Friday.

NA Markets: California, RGGI allowance prices soar again to fresh records

Allowance prices under the WCI and RGGI cap-and-trade programmes lifted to new all-time highs on Monday as traders reported steady financial interest and some compliance buying was pushing values higher.

RFS Market: RINs reverse course to post 3.5-week high

US biofuel credit (RIN) prices surged to a fresh 3.5-week high on Monday, counteracting significant losses over the month of September as market participants searched for a reason for the upswing.

EMEA

Austria unveils German-inspired carbon levy in tax overhaul

Austria will introduce a German-inspired carbon tax on domestic transport and building emissions from 2022, the conservative-greens coalition government announced Sunday as it unveiled larger tax reforms.

Euro Markets: EUAs surge on firm energy, while UK carbon slides ahead of auction

EUAs on Monday rose to their highest since the market set a new record last week, as the new quarter encouraged traders to put on new positions while wider energy markets surged. Meanwhile, UKA slumped nearly 7% as traders looked ahead to Wednesday’s fortnightly auction.

PM Johnson aims for fully clean UK power mix by 2035

UK Prime Minister Boris Johnson wants Britain to have a fully “clean” power grid by 2035, he said on Monday, aligning with expert views on how to meet the country’s climate goals.

Seeking EU membership, Western Balkan countries should plan coal exit -report

EU leaders meet with their Western Balkans counterparts on Wednesday to discuss the bloc’s criteria for EU accession – including climate and energy policy – while a report shows that a coal exit in the region by 2040 is feasible and cost effective, given the bloc’s looming border carbon levy on imports and other risks.

ASIA PACIFIC

Kishida takes reins at crucial time for Japan climate policy

Japan’s parliament on Monday elected Fumio Kishida as the nation’s new prime minister, with observers unsure what to expect from the leadership change in a crucial period for the roll-out of new climate and energy policies.

New Zealand releases 2022 ETS auction calendar

The New Zealand environment ministry has released its NZU auctioning calendar for next year, with the first sale due in mid-March.

VOLUNTARY

VCM Report: VER issuances, retirements double in third quarter over 2020 levels

Voluntary carbon market (VCM) prices largely held steady or ticked up over the past week, while registry data showed voluntary emissions reduction (VER) issuances and retirements more than doubled in Q3 when compared to last year.

INTERNATIONAL

Governments need to boost backing for low-carbon hydrogen, IEA says

Governments should move faster and more decisively in their support for low-carbon hydrogen if the sector is to fulfill its potential in contributing to a global net zero emissions energy system, the International Energy Agency (IEA) said in a report released on Monday.

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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

COP out caps – The current hike in energy prices is threatening to overshadow the COP26 UN climate summit this November as countries scramble to tackle the rising costs of electricity, oil, and gas, warned Gonzalo Saenz of Spanish power firm Iberdrola. Policies brought in by European governments to try and tackle the soaring prices risk looking hypocritical in light of the climate ambition they are demanding from the rest of the world at the COP26 summit. Spain, for instance, has capped gas prices and cut taxes in order to help alleviate some of the strain. (EurActiv)

Market matters – A research project on a China-California carbon market – which involves multiple institutes – officially kicked off through a virtual launch ceremony last Wednesday, China’s Economic Daily reports. The endeavour, called the China-California carbon market joint research project, aims at improving the operating efficiency and effect of the carbon markets in in both jurisdictions. It also intends to promote the development of the global carbon market and propel the communication and cooperation between China and the US on climate change, the state-run outlet said. Four establishments – Institute of Climate Change and Sustainable Development of Tsinghua University, Institute of Energy, Environment, and Economy of Tsinghua University, California-China Climate Institute, and Emmett Institute on Climate Change and the Environment of the University of California in Los Angeles – will conduct the research together, the publication added. (Carbon Brief)

EMEA

Team picks –  German parties have kicked-off exploratory talks for what is likely to be a three-way coalition government after the September election failed to deliver a clear winner. The SPD, with 26% of September’s vote, said Sunday that it is looking to collaborate with the Green Party (15% of vote) and FDP (12% of vote). The smaller parties are also keeping the door open to an alliance with Merkel’s CDU/CSU (24% of vote) now headed by Armin Laschet. “We have had a constructive discussion and have few hurdles in terms of content,” FDP General Secretary Volker Wissing said after his party met a team from the CDU/CSU. The conservative union may be a more natural fit for the centre-right FDP compared to attempting to find compromise with the centre-left SPD, though the opposite may be true for the Greens. The coalition negotiations are expected to take months, with climate policy and the country’s pathway to carbon neutrality likely to be key sticking points. (Reuters)

Finnish funding – The European Commission has approved Finland’s €2.1 bln post-pandemic 2021-26 recovery plan, nothing that half The NextGenerationEU money would be spent on measures to cut GHG emissions across energy, housing, industry, and transport. It includes reforms to phase out the use of coal power, changes to taxation to favour cleaner technologies, and a reform of the Waste Act with increased targets for recycling and reuse. On the investment side, the plan will finance clean energy technologies and related infrastructure, industry decarbonisation, the replacement of oil boilers with low- or zero-carbon heating systems, and private and public charging points for electric cars.

The (other) smartest guys in the room – Like German utility RWE, steelmaker Salzgitter has managed to keep its CO2 risk under control through 2030 by pre-emptively buying its required carbon units, Handelsblatt reports. Salzgitter confirmed to the paper that it had stocked up on EU Allowances years ago when the price was still just a few euros a tonne, versus the current €65. In preparation for the loss of free allocations during Phase 4, the firm is reported to have accumulated €1 bln worth of EUAs as of the end of 2020, which at then prices of around €33 amounts to approximately 30 Mt. And should it not end up needing all the permits, the firm will enjoy a sizeable windfall profit, with EUA prices forecast to approach or even top €100 by 2030.  Meanwhile, rival German steelmaker Thyssen-Krupp has not stocked up on EUAs to the same extent, Handelsblatt reports. A spokesman said the firm has built up an inventory as part of its procurement goals, but he would not disclose its size beyond saying that “trade and speculative elements are not part of the strategy.” This, according to Handelsblatt, suggested T-K shied away from long-term hedging similar to competitor Salzgitter.  The paper added that T-K staff had pushed management to adopt such a strategy, but headquarters deemed it “too speculative”.  As a result, T-K faces a significantly larger carbon bill, possibly putting it at a disadvantage to Salzgitter. “That could exacerbate the already critical situation for the group, which is currently facing a Herculean task: With tense finances, it has to make production more climate-friendly. The investment requirement is enormous.”

Stronger, faster – The German Environment Agency (UBA) has called to raise the country’s GHG emissions reduction target for 2030 to 70% percent below 1990 levels, up from the current 65%, Spiegel reports. UBA also aims for the coal power phaseout to be brought forward from 2038 to 2030. In an unpublished report seen by Der Spiegel, the UBA says a faster transition to a climate-neutral economy is necessary for Germany to comply with the climate target set out in the Paris Agreement. Other recommendations include an annual increase in onshore wind power capacity of 7 GW and in photovoltaic capacity of 10 GW, in industry a complete halt to coal use by 2040, an increase in the use of green hydrogen, and improved energy efficiency. In the building sector, it calls for an immediate ban on new oil heating systems and restrictions on new gas heating systems from 2026. Combustion engines should be banned for new cars by 2035. The CO2 price for petrol and diesel should also be higher than previously planned. The UBA also calls for annual meat consumption to be reduced from around 60 kg per capita at present to just under 16 kg. (Clean Energy Wire)

Coal closure – German utility EnBW will register its 517MW RDK 7 hard coal-fired power station at Karlsruhe for closure by mid-2022, it said on Friday, which means it could cease operations 12 months later unless grid operators and authorities object to plans to align with Germany’s 2038 coal phaseout. Karlsruhe’s block 8, an 874MW unit, is not affected by the move, EnBW said. (Reuters)

AMERICAS

Just a little more time – US House speaker Nancy Pelosi (D) shifted the infrastructure bill deadline to Oct 31 on Saturday, after the critical House vote was delayed last week. The $1.2 trillion bipartisan bill includes spending on electricity and EV infrastructure amongst its other priorities, but is being held up by progressive Democrats that want to see progress on the separate $3.5 trillion social- and climate-focused reconciliation package. “Again, we will and must pass both bills soon. We have the responsibility and the opportunity to do so.  People are waiting and want results,” the Speaker wrote in a letter Saturday on her newsroom page.

Cherry (Point) on top – BP will spend $269 mln at the Cherry Point refinery in Washington state to produce more renewable diesel and make other improvements that will reduce GHG emissions by about 7%, according to a corporate statement on Monday. Some $169 mln will go towards improving the efficiency of the refinery’s hydrocracker, where heavy oils are processed into gasoline, diesel, and jet fuel, $55 mln will help improve a cooling water system, and $45 mln will be used to double the processing capacity of Cherry Point’s renewable diesel operations. A BP official said that the investments at Cherry Point could help the company get ahead of its carbon reduction and enable the oil major to bank, trade, or sell allowances under Washington’s WCI-modelled cap-and-trade regulation that is scheduled to take effect in 2023. Additionally, BP stands to benefit from complementary low-carbon fuel standard (LCFS) legislation passed in Washington this year and also slated to commence in 2023. (Seattle Times)

ASIA PACIFIC

Cop-out – Australian mining billionaire Andrew Forrest has slammed long-term net zero emissions targets as a “cop-out” for corporate chief executives and voiced scepticism about the “failed” technology of carbon capture and storage, in comments that look set to reignite tensions with Australian oil and gas producers, according to the Australian Financial Review. Forrest also criticised carbon offsets, saying they can be “unreliable” and involve “scams”, while acknowledging Fortescue Metals Group, which he chairs, would need to initially use offsets to help meet its own emissions goals.

CCS and ammonia deals – Mitsui and JOGMEC have agreed to conduct a joint feasibility study on CCS in Western Australia that is associated with Mitsui’s Perth Basin investments, Mitsui stated on Monday. Mitsui has also agreed with Wesfarmers Chemicals, Energy & Fertilisers to jointly study the commercial and technical viability of building a low carbon ammonia production plant, which will include CCS solutions to be provided by Mitsui in Western Australia, the company also stated.

AND FINALLY…

Oil & water – Greenpeace activists on Monday sought to block shipping traffic at Shell’s refinery in Rotterdam port as part of a campaign against what they call “greenwashing” – misleading advertising by oil industry companies seeking to profile themselves as pro-environment. The action comes as Greenpeace and more than 20 other environmental groups kicked off a campaign for a Europe-wide ban on adverts and sponsorships by oil and gas companies, comparing them to harmful tobacco promotions. It also coincided with a large oil spill off the cost of Huntington Beach, California, where at least 477,000 L of crude gushed from a pipeline, contaminating beaches and killing wildlife. (Reuters)

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