CP Daily: Tuesday October 5, 2021

Published 00:48 on October 6, 2021  /  Last updated at 00:50 on October 6, 2021  /  Newsletters  /  No Comments

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

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TOP STORY

Air transport industry pledges net zero CO2 emissions by 2050

The International Air Travel Association (IATA) has committed the global air transport industry to achieve net zero CO2 emissions by 2050, the group announced on Monday.

EMEA

Sell MSR carbon allowances to deal with EU energy crisis, Greece urges

Greece has proposed auctioning carbon allowances from the EU ETS’ Market Stability Reserve as a short-term measure to help raise cash to urgently deal with Europe’s energy crisis.

Euro Markets: Carbon pulled higher as record energy prices spark talk of new EUA sales

EUAs extended its gains for a third day, climbing to within less than 40 cents of its recent record high amid gains of more than 20% for some European energy contracts as the region faces up to continued fuel supply tightness and regulatory uncertainty over the Nord Stream 2 pipeline.

INTERNATIONAL

New index aims to show cost of carbon allowances in global context

A coalition of business and academics has launched a new global carbon pricing index that shows how the existing pricing mechanisms represent a small share of the worldwide total, in an effort to ramp up emissions-cutting ambition in line with the goals of the Paris Agreement.

New US-listed ETFs launched to track EU, California carbon allowances

Two new US-listed exchange-traded funds tracking European and California carbon allowances started trading on Tuesday, adding to the expanding field of options available for investors seeking exposure to compliance-based emissions trading schemes.

Miner Fortescue outpaces peers with 2040 net zero goal for Scope 3 emissions

Australia’s Fortescue Metals Group (FMG), one of the world’s largest iron ore producers, will target net zero Scope 3 GHG emissions by 2040, a tougher goal than that pledged by many of its rivals on Tuesday.

ASIA PACIFIC

Japan links with industry to develop CO2 capture offset crediting standards

Japan’s Ministry of Energy, Trade, and Industry (METI) will cooperate with domestic and international industry to develop a common understanding and standards for a mechanism to allow CCS and CCUS projects earn carbon credits.

Trafigura hires former Shell trader to lead Asia carbon trading operations

Commodities trader Trafigura has hired a former Shell trader to lead its carbon trading operations in Asia, Carbon Pulse has learned.

Vitol hires head of China carbon trading operations

Dutch-headquartered trading firm Vitol has hired an experienced trader to head up its China carbon trading team.

AMERICAS

WCI emitters deposit more allowances in compliance accounts during Q3 as true-up deadline nears

California and Quebec regulated entities continued to move permits into their compliance accounts ahead of the Nov. 1 full surrender deadline for the third trading period of the WCI cap-and-trade programme, data published Tuesday showed.

RGGI Q4 auction volume creeps higher to round off 2021

The Northeast US RGGI cap-and-trade programme will offer 23.1 million allowances for its Dec. 1 sale, a volume slightly higher than the September auction, the power sector scheme announced Tuesday.

VOLUNTARY

Voluntary Carbon Market Roundup for Oct. 5, 2021

A one-off summary of voluntary carbon market (VCM) news and developments on Tuesday, including the launch of stock exchange-listed carbon credits, a multi-million investment in South American REDD+ projects, and a long-term forestry credit offtake from a US company catering to small landowners.

ICYM

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.

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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

First isn’t the worst – Some of the world’s biggest companies are signing up for a coalition created by US Special Presidential Envoy for Climate John Kerry to scrub notoriously dirty industries, according to a list seen by Bloomberg Green. Shipping behemoth AP Moller – Maersk A/S, commodity giant Trafigura, and global cement maker Holcim are among those in the First Movers Coalition set to launch in the coming weeks at the COP26 climate summit in Glasgow. The US State Department and the World Economic Forum are teaming up to persuade global titans to commit to buying low-carbon products by 2030 or sooner in a bid to accelerate the push to meet climate goals and help develop greener supply chains, initially targeting aviation, shipping, steel, and trucking.

How do we look? – Brazil, under fire for failing to stop destruction of the Amazon rainforest, plans to show the world at next month’s COP26 that it can fight climate change while remaining a top agricultural powerhouse, Environment Minister Joaquim Leite said on Tuesday. Leite, who will head the Brazilian delegation to Glasgow, said the Paris Agreement on limiting global warming is an opportunity for Brazil to show it can reduce emissions even while serving as a major food producer for the world. “We want to clearly position Brazil as a country that is part of the climate agreement and has an ambitious target of a 43% reduction in emissions by 2030 and carbon neutrality by 2050. We are part of the solution,” he told reporters. With an energy matrix based on 83% renewable sources, mainly hydroelectric, Brazil can meet that target, he said. To deliver on promises, Brazil needs to cut way back on deforestation, the country’s main source of emissions. Under Bolsonaro, destruction of the Amazon rainforest has surged to levels last seen over a decade ago. Leite said challenges in Glasgow include an agreement for more funding for greener economies and forest conservation, and to get carbon markets working more effectively.

NDC Updates – Burundi and Mauritius updated their first nationally determined contributions (NDCs) under the Paris Agreement on Tuesday, ahead of the quickly approaching COP26 in November. Burundi reiterated its commitment to reduce emissions by 3% unconditionally compared to BAU levels, or 23% with financial assistance by 2030. Although the target figures remain unchanged, Burundi has now included additional sectors beyond energy, including transport and waste. Meanwhile, Mauritius strengthened its 2030 ambition, increasing its target to a 40% reduction in GHGs compared to BAU levels, up from the previous goal to reduce emissions by 30%. Mauritius aims to produce 60% of its energy from “green” sources by 2030, phase out the use of coal before 2030, improve energy efficiency, and promote sequestration in the land sector. Both countries say that internationally-funded climate finance will be required to reach these goals, with Mauritius estimating total needs at $4.2 bln for mitigation and adaptation combined.

Shipping conditions – The International Chamber of Shipping (ICS) global industry association has pledged to reduce its GHGs 25% by 2030 and to zero by mid-century – but only if governments impose a mandatory $2/tonne levy on shipping fuel to fund the development of new low-carbon technology. UN shipping body IMO’s current target is to halve CO2 emissions from international shipping by 2050 and only foresees revising its emissions strategy in 2023. (Guardian)

EMEA

He’s Putin you on – Vladimir Putin has blamed the shift to renewable energy for causing “hysteria and confusion” in European markets, as gas prices surged to new record highs. The Russian president claimed that the power crisis gripping the West is being driven by an “unbalanced” and “drastic” move away from fossil fuels, amid efforts by the Kremlin to downplay suggestions that it has sent prices surging by restricting the supply of gas. “Some people are speculating on climate change issues, some people are underestimating some things, some are starting to cut back on investments in the extractive industries. There needs to be a smooth transition,” Putin added. The Russian leader’s comments follow widespread speculation that Moscow is withholding supplies to put pressure on Germany to approve the new Nord Stream 2 pipeline connecting the two countries. Experts do not believe the gas supply crunch is caused by the shift to green energy, although demand has been boosted by efforts to switch away coal and from carbon pricing. (Telegraph)

Red alert – The UK government must roll out emergency measures quickly to help industrial energy users cope with the gas crisis, or face business shutting down this winter, a lobby group warned. Europe’s gas crunch has hit sectors from fertilisers to metals, and there’ll likely be production halts and disruption to supply chains without government action, the Energy Intensive Users Group (EIUG) said Tuesday. Amongst the measures it is calling for are to end policies such as the Carbon Price Support scheme, replicate network tariff discounts given to industries in the EU, and take steps to ensure sufficient gas is available. Gas markets have tightened just as cold weather starts in the Northern Hemisphere. Britain in particular is feeling the blow because it lacks large storage facilities and relies heavily on imports of the fuel, causing power costs in the country to surge. (Bloomberg)

Farmer’s delight – Lawmakers in Denmark set binding carbon emission targets for the Nordic country’s agricultural industry. The deal ensures that farmers will reduce their emissions by 55-65% by 2030 compared with 1990 levels, with $600 mln set aside to compensate them. The agreement is expected to reduce emissions by 7.4 MtCO2 by 2030, and includes converting some farmland to wildlife areas. (Bloomberg)

Timber talk – Europe’s biggest timber nations lined up at an Austrian conference on Tuesday to reject Brussels’ draft forest strategy. Forestry ministers from Germany, France, Finland, Slovakia, and Sweden, as well as industry representatives declared that the European Commission should steer clear of any rules that restrict national control over the continent’s €640 bln timber business. The EU’s executive arm wants to expand woodlands by planting an additional 3 bln trees, even as it encourages more timber use to replace carbon-intensive concrete in construction but ministers said the that risks undercutting employment and depriving its economy of resources. (Bloomberg)

Bumpy borders – An EU carbon border adjustment mechanism (CBAM) can be a first step towards a fairer competition environment regarding emission costs but not accounting for indirect emissions means that a level playing field is not created yet, according to researchers from the Institute of Energy Economics at Germany’s University of Cologne in a policy briefing. (Clean Energy Wire)

Putting the ‘fun’ in Innovation Fund – On Oct. 12 at 1500 CEST (1300 GMT), the EU’s Directorate General for Climate Action and the European Climate, Infrastructure and Environment Executive Agency (CINEA) are organising an event to present useful takeaways from the Innovation Fund call for small-scale proposals, the revised state aid rules applying to clean tech projects, as well as relevant national aid schemes. The first call for small-scale proposals, which closed on Mar. 10, resulted in 32 projects being invited to prepare individual grant agreements. With the next small-scale call coming up in Mar. 2022, the Commission said this is a good moment to take stock of lessons learned from this call and what applicants could improve for the next one. It will present an aggregated analysis of the applications and the results of the first call, highlighting key best practices for a successful application. In addition, revised aid guidelines will be presented that are applicable to schemes that can finance projects similar to those supported by the Innovation Fund. The webinar will be open to the public and web-streamed. The recording and presentations will be published after the session.

Repsol represent – Spanish oil and gas firm Repsol has set its first-ever reduction target for what it defines as absolute emissions, aiming for a cut of 55% from its own facilities by 2030 and to shrink by 30% net emissions from all products it brings out of the ground, including those used by customers. It also hiked its renewables capacity target and plans to have installed wind, solar, and hydro plants with a combined capacity of 20 GW by 2030, up from its previous target of 12.7 GW. (Reuters)

Not willing to pay – Customers and investors want supermarkets to improve their environmental credentials but are not prepared to accept higher prices or lower returns as a trade-off, the head of Britain’s biggest retailer Tesco told the Reuters Impact conference. “I think there is always a small proportion of very committed customers who are willing to pay a premium, but actually the vast majority are not is the honest truth. So I think what our customers expect us to do is find ways to innovate, to make sustainable products affordable for them,” said Ken Murphy. Investors, he said, also insist that supermarkets increasingly focus on environmental goals, but did not want to see a lower return on their investment as a consequence. 102-year-old Tesco has set out plans to hit a net zero carbon target by 2035 by using renewable energy. As well as cutting plastic and encouraging more sustainable diets.

Doesn’t make sense anymore – Uniper no longer believes in the construction of an LNG terminal in northern German Wilhelmshaven, reports energate messenger. It is not apparent “that investors have much interest in building such an LNG terminal in Germany”, CEO Klaus-Dieter Maubach said in an interview. Uniper had abandoned its plans for what could have been Germany’s first domestic LNG import terminal due to the absence of binding consumer bookings last year. “It is becoming difficult for LNG to be competitive in the German market due to the good supply situation through pipelines – and with Nord Stream 2 another one is coming,” the CEO said. Meanwhile, newspaper tageszeitung reports that plans for another LNG terminal in the city of Rostock on the Baltic Sea have also been abandoned. Russian investor Novatek had stopped the project to build a terminal, which would have directly supplied ships and trucks with LNG instead of feeding it into the country’s gas grid. Germany has a well-developed natural gas pipeline grid, but so far it does not have its own import terminal for LNG. The development of two LNG terminal projects continues in Stade and Brunsbuttel. (Clean Energy Wire)

Beyond borders – Germany will support green hydrogen projects in other countries with up to €350 mln by 2024, with the economy ministry publishing a directive with the relevant guidelines. The funding directive specifically supports projects for the production and further processing of green hydrogen as well as for the storage, transport, and use of hydrogen in countries outside the EU through an investment grant for the facilities worth up to €15 mln each. (Clean Energy Wire)

German CO2 sales – Exchange EEX today sold the first certificates in the nEHS, Germany’s domestic emissions trading system for transport and buildings. Some 500,012 nEHS certificates were sold to a total of four participants at the fixed price of €25 each, EEX said. EEX is due to sell an unlimited number of nEHS units every Tuesday and Thursday until Dec. 7. Prices rise each year until reaching €55 in 2025 before transitioning to a price-collared trading system.

ASIA PACIFIC

Never too late to carry on as before – The Australian government has been accused of demonstrating it is not taking the climate crisis seriously after approving a third new coal mine development in a month shortly before a major international conference on the issue, the Guardian reports. With global climate talks in Glasgow less than four weeks away, the environment minister, Sussan Ley, has given a subsidiary of the mining giant Glencore the green light to expand the Mangoola mine near Muswellbrook. It means the company can create a new coal pit north of an existing mine to extract of an additional 52 mln tonnes of the fossil fuel over eight years.

Green rebuff – The Australian government will provide a A$30 mln grant to a proposed gas power station backed by resources billionaire Andrew Forrest, but it turns out that the project will aim to rapidly avoid the use of fossil gas, according to RenewEconomy. Federal energy minister Angus Taylor announced on Tuesday that the federal government will be providing A$30 mln to Australian Industrial Power, a subsidiary of the Forrest backed Squadron Energy, to progress the development of a 660MW gas-fired power station at Port Kembla. But Squadron Energy pointed out that the new generator will limit the amount of fossil gas ever used at the plant, and it will run entirely on green hydrogen by the end of the decade.

Staying the course – Japan aims to expand renewable energy as much as possible and restart nuclear power plants whose safety has been confirmed, its new industry minister said on Tuesday, to meet a 2030 target of a 46% cut in GHG emissions from 2013 levels, Reuters reports, citing new energy, trade, and industry minister Koichi Hagiuda’s first press conference since he took over the post on Oct. 4.

Bring on the coal – China has ordered its banks to ramp up funding to coal and energy companies, another step in its efforts to ease a power crunch and ensure supplies this winter, according to Bloomberg. Banks and other financial institutions should prioritise lending to qualified mines and power plants so they can increase thermal coal and electricity output, China Banking and Insurance Regulatory Commission said in a statement Tuesday.

What a dump – The operator of a giant landfill in Lahore, Pakistan, said higher-than-average waste dumping contributed to releases of super-potent GHGs from the site earlier this year. There were multiple reasons for abnormally high leaks in July and August, according to the senior manager of the Lahore Waste Management Co., which operates the Lakhodair landfill in the northeast part of the city. Among them were offal being dumped after the Eid al-Adha holiday at the end of July. As well, the Monsoon season increases methane emissions from the site. There were also nearby industrial units that operated during that time that may have also contributed. Last month, Bloomberg Green reported that satellites had spotted a large methane plume above Lahore. While the precise source of the gas was difficult to pinpoint based on the images, decomposing trash is a common source of urban methane leaks.

Hydrogen for Singapore – A subsidiary of Sembcorp Industries, Sembcorp Utilities, has signed a memorandum of understanding with Chiyoda Corporation and Mitsubishi Corporation to explore the feasibility and implementation of a commercial-scale supply chain to deliver decarbonised hydrogen into Singapore, according to the Business Times. In a joint statement on Monday, the companies said that the MOU represents a “strategically important step in the potential creation of a commercial-scale global supply chain for decarbonised hydrogen into Singapore.”

AMERICAS

1977 – The Canada-Michigan spat over Enbridge’s Line 5 pipeline turned more serious on Monday when Canada invoked a 1977 treaty with the US to defend the pipeline’s continued operation. Michigan ordered the pipeline that runs under the Straits of Mackinac shut down over environmental concerns, but Canada insists it’s a necessary conduit for its energy needs. Enbridge has kept the pipeline open, which ships 540,000 barrels of oil across the border each day, ready to duke it out in court. (Politico)

VOLUNTARY

I’m lovin’ it – McDonald’s says it aims to cut its GHGs to net zero by 2050, with the target covering everything from the beef in its burgers to the lights in its restaurants. On Monday, the burger chain also said it was working with the non-profit Science Based Targets initiative (SBTi) to revamp its existing climate goals, and by 2030, it aims to cut a third off emissions from suppliers and its nearly 40,000 restaurants. About 80% of its emissions come from the supply chain, in particular its use of beef, chicken, dairy, and other proteins. The US chain is one of the world’s biggest buyers of beef. McDonald’s says it will use new guidelines from SBTi to cut emissions from agriculture, land use, and forestry. (Reuters)

Live MaaS – Canada-based technology company Greenlines on Tuesday announced a partnership with Mazmobi, a Mexico-based corporate MaaS (Mobility-as-a-Service) provider, to launch the first carbon offset programme for corporate fleets in the Latin American country. In a press release, Greenlines said its patent-pending Mobility Carbon Engine, operational since 2019, generates emissions reductions produced when switching from single-occupancy vehicles to transit, shared-mobility, micromobility and more.

SCIENCE & TECH

Let’s get physical – Three scientists have won the 2021 Nobel prize in physics for their groundbreaking contributions to our understanding of complex physical systems – including how humanity influences the Earth’s climate. The winners, Syukuro Manabe, Klaus Hasselmann, and Giorgio Parisi, will share the award, announced on Tuesday, presented by the Royal Swedish Academy of Sciences and worth 10 mln Swedish kronor. One half of the prize was jointly awarded to Manabe and Hasselmann for their physical modelling of Earth’s climate, quantifying variability and reliably predicting global heating. The other half went to Parisi for his discovery of the interplay of disorder and fluctuations in physical systems from atomic to planetary scales.

AND FINALLY…

History lesson – Carbon Brief has, for the first time, calculated national responsibility for historical emissions based on all CO2 sources from 1850-2021, including land-use emissions. In first place on the rankings, the US has released more than 509 bln tonnes of CO2 since 1850 and is responsible for the largest share of historical emissions, with some 20% of the global total. China is a relatively distant second, with 11%, followed by Russia (7%), Brazil (5%), and Indonesia (4%). The latter pair are among the top 10 largest historical emitters due to CO2 from their land. Historical emissions underpin claims for climate justice made by developing nations, along with disparities in wealth.

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