CP Daily: Friday October 15, 2021

Published 03:02 on October 16, 2021  /  Last updated at 03:02 on October 16, 2021  /  Newsletter  /  No Comments

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

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TOP STORY

POLL: Analysts raise EU carbon price forecasts following gas spike, though some see downside risk

Analysts have raised their EU carbon price forecasts across the board to reflect the surge in gas prices and the ongoing influx of new speculative capital into the ETS, though some warned of possible downside risk ahead.

EMEA

Prospective German coalition agreed on 2030 coal exit

Germany’s potential ‘traffic-light’ coalition has agreed on key policy issues as part of their efforts to form a government, including a coal exit by 2030, according to a document that will form the basis of further talks.

Concerns mount for EU’s downstream industries left out of CO2 border measure

EU downstream manufacturers fear their exclusion from the EU’s carbon border adjustment mechanism (CBAM) will lead to their customers switching to foreign-made products, as officials deem them not currently worth the effort.

Euro Markets: Carbon prices post 1.9% weekly gain despite late sell-off

EUAs posted a weekly advance of 1.9% despite a late sell-off on Friday as energy markets fell ahead of Ukraine’s next gas pipeline capacity auction, and carbon traders reacted to reports that Poland was proposing new measures to curb speculative trading.

AMERICAS

US moves to enable mandatory climate transparency for corporates and large emitters

The White House outlined plans Friday for how it will make US companies legally required to publicise their climate change plans, making the information auditable by financial regulators and potentially helping to increase ambition at the COP26 UN summit next month.

Compliance entities chop CCA holdings, speculators see mixed results

Emitters in the WCI-linked cap-and-trade programme increased their California Carbon Allowance (CCA) short position as prices retraced this week, while financial entities saw varied results between the futures-only and futures and options markets, according to US Commodity Futures Trading Commission (CFTC) data published Friday.

ASIA PACIFIC

CN Markets: Liquidity improves as compliance nears, CCERs at standstill

The Chinese Carbon Emissions Allowance (CEA) price rebounded this week and trading volumes again beat the lows from mid-September, while domestic offset prices remain rangebound.

Australia’s new carbon crediting mechanism could fail unless govt sorts out demand, groups say

Australia’s plans to launch a new industrial carbon crediting scheme next year will likely fail to drive significant emissions cuts unless the government introduces regulations that will make someone want to buy the units, several groups have pointed out.

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CONFERENCE

Prospero Events’ Carbon Trading and Markets 2021 virtual conference takes place Nov. 8-9. This virtual conference will gather C-level experts responsible for carbon & power trading, carbon markets & pricing, climate policy, ETS and market analysis from leading European energy companies as well as banks and other financial institutions. The conference will focus on discussing the ongoing challenges and trends in carbon markets and carbon trading insights. You can expect presentations and case studies from MOL Group, Enel, HeidelbergCement AG, Fortum, Berenberg, and more. Up to 90 minutes of Q&A and networking time.

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

Xi’ll not meet again – British Prime Minister Boris Johnson has been told that President Xi Jinping of China will not attend next month’s critical climate change conference in Glasgow amid international pessimism that the event will be successful, the Times reported Friday. While the news was reported in UK media as a setback, Xi had not been expected by China watchers to attend COP26 as he has not left China since the outbreak of the COVID-19 pandemic and even declined to attend the COP15 biodiversity summit currently taking place in Kunming.  His absence and news that Russia’s Vladimir Putin may not show due to the pandemic could mean just one or two of the leaders of the formidable BRIC nations make the trip.

Preview or Epilogue? – The Pre-COP26 Chair’s Summary was published Thursday outlining the key takeaways from the meeting in Milan at the end of Sep. where more than 50 Ministers and high-level officials discussed their expectations for the COP26 outcome. Many ministers reiterated the importance of all remaining countries to come forward with ambitious NDCs and long-term strategies to net-zero ahead of COP26 to “keep 1.5C alive.” Ministers noted the importance of meeting the $100 bln per year climate finance goal, a promise made over ten years ago but yet to be fully delivered. Meanwhile countries clashed on the three remaining issues needed to close the Paris Rulebook: Article 6, common timeframes for NDC targets, and enhanced transparency reporting. The COP President Designate urged Ministers to encourage their technical negotiators to ‘get the required work done.’ On Article 6 specifically, Minister’s asked the SBSTA chair to provide a simple document ahead of COP26 outlining options on a way forward to prep Ministers for ‘constructive discussions.’

Mind the wage gap – Scottish railway workers and refuse collectors have voted to back potentially highly disruptive strike action during COP26, in a major escalation of long-festering pay disputes. The threat by the RMT transport workers union to halt all train services within Scotland from Nov. 1-12 could throw into chaos the already challenging logistics surrounding an international meeting aimed at accelerating efforts to combat global warming. Separate planned action by refuse collectors raises the spectre of piles of rubbish in the streets of Glasgow just as the eyes of the world turn to Scotland’s largest city. The RMT rail union said on Thursday that a ballot of more than 2,000 members had backed plans to strike, with 84% in favour of the action over what it says is a refusal by Scottish railway operator ScotRail and government agency Transport Scotland to negotiate an acceptable pay increase. (FT)

ASIA PACIFIC

Higher carbon tax – Singapore’s revised carbon tax rate for 2024 will be announced in next year’s budget, which will also indicate what to expect up to 2030 for the city-state, the Straits Times reports. Finance minister Lawrence Wong said the republic’s carbon price today is too low. This is why the government is reviewing the level and trajectory of the tax, so that it reflects the cost of carbon and influences investment decisions effectively, he said. Singapore was the first South East Asian nation to introduce a carbon tax in 2019, but its rate of $5 per tonne is considered to be on the low end of the spectrum.

Methanation deal – Inpex and Osaka Gas have announced the two companies will jointly launch a technical development business targeting the practical application of a CO2-methanation system toward the carbon neutralisation of gas, according to an Inpex press release. Methanation is a method to produce synthetic methane, which is main component of city gas, by reacting CO2 with hydrogen through a catalyst. By manufacturing synthetic methane from green hydrogen produced with renewable energy and CO2, it is possible to realise the carbon neutralisation of city gas.

The Coal-o-phile Hunter – The Australian government’s lacklustre climate policies have been advertised to the world, in perhaps the most prominent location in the world, with billboards labelling PM Scott Morrison “Coal-o-phile Dundee” playing in New York City’s Times Square, reports RenewEconomy. The billboard, which drew attention to Australia’s weak climate policies and poor responses to last year’s climate-fuelled bushfires, had been arranged by Australian comedian Dan Ilic, and funded by a crowdfunding campaign. Ilic was able to secure a 10-minute slot on one of the most prominent billboards in New York’s Times Square, a 23-metre billboard dubbed the ‘Godzilla’ billboard, which included parody tourism messaging, including “Visit Australia, we’re rich in wind, sunshine and climate denial”, as well as imagery of a kangaroo on fire and koalas in a tree that was in the process of being cut down.

AMERICAS

The Gang Goes to Glasgow – US President Joe Biden’s administration is going all out in its delegation to COP26 next month, which Biden himself plans to pop into for the first two days. The US delegation will also include climate envoy John Kerry, national climate advisor Gina McCarthy, Secretary of State Tony Blinken, EPA Administrator Michael Regan, Interior Secretary Deb Haaland, Energy Secretary Jennifer Granholm, Transportation Secretary Pete Buttigieg, Treasury Secretary Janet Yellen, and Agriculture Secretary Tom Vilsack, among others. Just before showing up in Scotland, Biden plans to attend the G20 summit from Oct. 30-31 in Rome, with a quick stopover at the Vatican to meet Pope Francis. It’ll be the first time America’s second Catholic president meets the Pope as president, and they plan to touch on tackling climate change along with a host of other issues. (Politico)

Empire wait – New York will have to wait a bit longer before its first offshore wind farm starts generating power, as Empire Wind said it is pushing back its completion date for the 816MW project by roughly 18 months to the end of 2026. In its filing with the Federal Energy Regulatory Commission on Wednesday, Empire Wind, a joint venture between a subsidiary of Norwegian energy company Equinor and BP Energy, cited the ongoing regulatory permitting process and the complexity of offshore construction for the delay. The joint venture’s request is triggered by the looming ratification of a grid interconnection agreement with the New York Independent System Operator, which requires the offshore wind project to start producing electricity for the New York market by June 14, 2025. (Utility Dive)

RD reduction – California’s Contra Costa County said on Friday that oil refiners Marathon and Phillips 66 may need to reduce capacity of proposed renewable diesel plants by about 50% and 20% respectively to mitigate environmental impact. Contra Costa is required to identify an environmentally superior option to the projects under the California Environmental Quality Act, and the county said it would be an “environmentally superior option” for Marathon to process 23,000 bpd of fuel instead of the planned 48,000 bpd in a draft environmental impact report released Friday. To reduce environmental impacts of a similar project at Phillips 66’s Rodeo, California site, the county identified the refiner could supply 102,000 bpd of renewable fuels to the regional market instead of 120,0000 bpd using only two pre-treatment trains, which would cut down the number of marine vessels needed. (Reuters)

EMEA

Octopus stretches its tentacles – UK renewable energy companies Octopus Energy and RES today announced plans to invest $4.1 bln by 2030 to construct green hydrogen plants across the UK, RenewablesNow reports. Octopus Renewables, part of the generation arm of the renewable energy retailer, and renewables developer RES will combine their expertise and capital to develop, own, and operate the facilities. The partners want to make the most of surplus solar and wind energy by storing it as green hydrogen, supporting the UK’s energy independence and the decarbonisation of industrial businesses. They pointed out that green hydrogen offers protection from present and future gas price volatility.

AND FINALLY…

Her Majesty the Green – Britain’s Queen Elizabeth waded into the climate debate yesterday, suggesting world leaders are “irritating when they talk but don’t do” in unscripted remarks filmed on a phone after she opened a session of the Welsh parliament. Discussing the upcoming COP26 UN climate conference being held in Glasgow, the Queen was heard saying they “still don’t know” which of 120 world leaders will attend the summit, adding she has “no idea”. (The Sun)

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