CP Daily: Monday October 18, 2021

Published 00:20 on October 19, 2021  /  Last updated at 00:44 on October 19, 2021  /  Newsletter  /  No Comments

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

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TOP STORY

Shell predicts threefold growth in voluntary carbon market

Oil major Shell expects trading in the voluntary carbon market to increase by around threefold to 1.1 billion tonnes of CO2e a year by 2030, though rising corporate demand could exceed supply within a few years due to a lack of high-quality projects.

EMEA

Euro Markets: EUAs drop to seven-week low as gas weakens after Ukraine auction

EUAs fell steeply to a seven-week low at the end of Monday’s session, after having held at around Friday’s close for much of the afternoon. Gas prices retreated steadily even after Russia’s Gazprom declined to book additional transshipment capacity through Ukraine.

Russia sets MRV rules, eyes verifier network for domestic carbon market

The Russian government has taken more steps towards the development of a domestic carbon market, including setting MRV rules for companies and establishing a network of internationally-recognised emissions auditors.

INEOS plans €2 bln green hydrogen investment in Europe

Industrial conglomerate INEOS plans to make a big investment in developing Europe’s green hydrogen capacity, with an announcement on Monday to commit €2 billion in what will be the region’s largest investment to date in electrolysis projects.

AMERICAS

Earlier California CO2 neutrality goal could necessitate cap-and-trade budget revisions -official

A decision to bring forward California’s carbon neutrality goal by a decade could lead the state to alter its yearly allowance budgets under the cap-and-trade programme to meet this greater ambition, an official from state regulator ARB said Monday.

Canadian ‘backstop’ OBPS obligations to wither in 2022 as provinces exit -analyst

Compliance obligations under the Canadian ‘backstop’ output-based pricing system (OBPS) will plummet next year as provinces depart the federally imposed large emitter programmes and implement their own alternatives, an analyst said Monday.

ASIA PACIFIC

ETS sectors face tough task as South Korea adopts stronger 2030 target

South Korea on Monday as expected approved its upgraded 40% emissions reduction target by 2030, which contains steep cuts for sectors in the emissions trading scheme and a shared role for government and the private sector in buying carbon credits from abroad.

Chinese thermal power growth rebounds, but still haunted by coal shortages

China’s thermal power growth picked up in September from the 10-month low recorded the previous month, official data showed Monday, but the numbers were still moderate as coal shortages and curbs on energy-intensive industries continued to weigh on the market.

VOLUNTARY

VCM Report: VCM Report: VER price slump deepens as issuance pressure builds

Standardised, CORSIA-grade voluntary emissions reduction (VER) prices came under further pressure this week, consolidating the downturn of a week earlier amid signs of a ramp-up in issuances.

Mitsubishi commits to halving emissions by 2030, reaching net zero by 2050

Mitsubishi Corporation, Japan’s largest trading company with ten business units, will target a halving of its Scope 1 and 2 emissions by 2030 and aim for net zero operational emissions by 2050, the company announced on Monday.

INTERNATIONAL

Western Europe leads world in clean energy innovation -report

Western Europe is being credited as the highest contributor to global clean energy innovation, while the US and China lag behind, and the UK sets its sights on nuclear innovation.

COMMENT

High anxiety in the EU ETS

Summer seems a long time ago now. Back in August and September, EU carbon was setting almost weekly records, European gas was nicely positioned at the top of the merit order, the European Commission was talking about climate ambition, and all was right with the world. And just three weeks later, the EU ETS finds itself in a time of high volatility and of high anxiety.

ICYM

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.

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CONFERENCE

Prospero Events’ Carbon Trading and Markets 2021 virtual conference now takes place on Dec. 6-7. 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

G20 fails on climate – An assessment released by three major global investor groups shows that G20 countries have significant policy barriers deterring investment in the opportunities to tackle the growing climate crisis, says the AIGCC. The G20 Countries’ Climate Policy Report Card finds that most G20 countries do not have the policy settings in place to attract the urgent investment needed in the zero emissions, climate resilient transition. This is a significant finding, the AIGCC states, with G20 countries accounting for 80% of global GHG emissions. The report card finds Argentina, Australia, China, India, Indonesia, Mexico, Russia, and Saudi Arabia are among the least attractive countries for green investment in the G20.

COP complaint – Companies that stumped up millions of pounds to sponsor the COP26 climate summit have condemned it as ‘mismanaged’ and ‘very last minute’ in a volley of complaints. The sponsors, which include some of Britain’s biggest companies, have raised formal complaints blaming very inexperienced civil servants for delayed decisions, poor communication, and a breakdown in relations between the organisers and firms in the run-up to the landmark talks. (Guardian)

Manama bla bla – Gas-rich Bahrain has unveiled its updated NDC, pledging mitigation co-benefits resulting from adaptation actions and economic diversification plans but still no outright emissions target. The country did add a goal of a 6% energy efficiency improvement over 2017 levels by 2025 and to reach renewable power penetration of 5% of peak capacity by 2025, 10% by 2035. It also said it would consider Article 6 mechanisms. Explore Carbon Pulse’s NDC Tracker.

EMEA

Warsaw’s burden – Poland on Monday called for the EU to cancel or delay parts of its Fit for 55 climate package, warning that if an “excessive burden” is put on consumers, they may reject the EU’s climate aims. It singled out the proposal to launch a carbon market for transport and buildings, and said the EU should maintain its current minimum energy tax rates rather than the proposed end to end tax exemptions for aviation fuel, according to a paper seen by Reuters and circulated to EU leaders ahead of quarterly European Council summit. The Council will discuss the energy price hikes, with the European Commission and all but a handful of eastern states so far sticking to the line that the price spike should encourage Europe to accelerate its green shift away from volatile fossil fuel prices. Threatening to overshadow the summit is a row about Poland’s recent court ruling against the supremacy of EU law, with the Netherlands’ Mark Rutte promising to call on the EU to withhold Warsaw’s €36 bln share of post-COVID recovery money and a committee of the European Parliament pushing to sue Brussels for its inaction over the dismantlement of the rule of law in Poland and Hungary.

Domestic front – The UK government’s is due to publish its long-delayed 150+ page net zero 2050 strategy this week. Sector-specific emission reduction targets for the year 2035 reported by PoliticsHome – citing anonymous energy sector sources – as are follows: power: 80-85% reduction; natural resources, waste, and F gases: 39-51% reduction; fuel supply and hydrogen: 53-60% reduction; transport: 47-59% reduction; industry: 63-76% reduction; heat and buildings: 47-62% reduction. Funding for a new nuclear power plant will also be announced before the 2024 election, The Telegraph reported, with The Guardian adding that lawmakers are poised to approve funding for a fleet of Rolls-Royce mini nuclear reactors. Separately, the UK Treasury late Monday announced that some large British businesses will have to start disclosing their environmental impact under new rules set to be brought in. The requirements will also apply to investment products and pension schemes, BBC reported. The Treasury said the new sustainability disclosure requirements mean an investment product will now have to set out the environmental impact of the activities it finances. In addition, a company’s sustainability claims will have to be justified “clearly”, and their net zero transition plans properly set out. The aim is to combat “greenwashing”, where firms make misleading claims about their environmental commitments.

Wheelin’ & post-Brexit dealin’ – Britain said it had attracted nearly £10 bln from global investors to fund its green regeneration agenda, as it hosted an investment summit involving 200 of the world’s top financiers and executives. The summit marks post-Brexit Britain’s biggest push to woo investors, even leveraging the soft power of drinks with Queen at her castle, as it seeks cash and partners to get ahead in the international race for a competitive edge in green technology. The British government announced private investment deals worth £9.7 bln, including £6 bln in offshore wind from Iberdrola, as well as in net zero carbon warehouses and decarbonisation technology for the waste industry. (Reuters)

What it boils down to – Britain will increase grants to homeowners to remove their gas boilers and replace them with greener technology such as heat pumps as the government tries to tackle one of the biggest challenges to achieving a net zero emissions target by 2050. The government will provide grants of £5,000 for homeowners to install more environmentally friendly heating systems as part of a £450 mln boiler scrappage programme. (Reuters)

Don’t count – The main political parties in the Netherlands are discussing a new approach to climate-related investments that would mean they don’t count toward the country’s headline budget deficit. PM Mark Rutte and his potential allies are in negotiations to form a new coalition government and the official steering those talks, Johan Remkes, included the proposal in a programme submitted to parliament earlier this month. The idea was put forward by Rutte’s People’s Party for consideration by the other groups involved in the process, according to a spokesperson for Remkes. The proposal would place climate-related investments “outside of the regular budget so that the Economic and Monetary Union deficit isn’t directly affected,” according to the programme. The document goes on to say that debt levels should return to the prescribed levels in the “medium term.” (Bloomberg)

ASIA PACIFIC

Maybe – After months of pushing back, India is set to update its 2030 climate targets under the Paris Agreement. India is considering cutting down almost by half the amount of GHGs produced for every dollar of economic activity by the end of the decade, according to the Economic Times. India’s NDC could include a commitment to cut carbon intensity 46-48% below 2005 levels by 2030, compared to 33-35% currently.

Maybe not – In Australia, the Morrison government has all but ruled out increasing Australia’s 2030 emissions reduction target despite sustained diplomatic pressure from key allies, including the US and UK, the Guardian reports. While stepping back from a significant attempt to increase the Abbott-era 2030 target after an effective Nationals veto on Sunday, Scott Morrison was more pointed on Monday about landing a net zero target ahead of the looming COP26 in Glasgow. The prime minister told Liberal party MPs net zero would be a cabinet decision, and it would be expressed as an NDC under the Paris agreement.

Climate cash – New Zealand will quadruple its climate aid contribution to NZ$1.4 bln ($1 bln) over the next four years, it announced Monday, with at least half of that going to Pacific nations. Prime Minister Jacinda Ardern said in a comment that the increase will mean NZ is doing its fair share on global funding.

Targeting Australia – Oil and gas giant Shell is mapping out its next moves to expand its Australian power business and aims to develop more renewables and zero-emissions hydrogen projects locally to capitalise on the accelerating clean energy revolution, according to the Sydney Morning Herald. Shell, already one of Australia’s biggest producers of LNG, is seeking to use its global scale in oil and gas to build up its power businesses in America, Europe, and Australia, and has committed up to $3 bln in the coming years to pursue the strategy. Shell bought into the Australian power market in 2019 by acquiring ERM, a top retailer to commercial and industrial customers.

Zero carbon terminal – A smart container terminal with zero carbon emissions started operations Sunday in north China’s Tianjin Port, according to news.com. The terminal, built in 21 months, is the world’s first “smart” and “zero-carbon” terminal. Doing away with fossil energy, the terminal only relies on wind power and photo-electricity. Its energy consumption can be reduced by over 17% compared with traditional automated terminals, the report said. The smart zero-carbon terminal has a designed annual throughput of 2.5 mln twenty-foot equivalent unit containers.

Join the net zero club – Three Japanese insurance companies joined the UN-convened Net-Zero Asset Owner Alliance, adding a combined $1.4 trillion to total assets under management (AUM) and total membership of the alliance to 53, according to the UNEP finance initiative. Japan’s Nippon Life, Sumitomo Life, and Meiji Yasuda Life Insurance announced their membership, committing to net-zero portfolios by 2050 and establishing interim targets every five years in line with the Paris Agreement’s goal of limiting warming to 1.5C.

AMERICAS

Don’t call it a comeback – Some House and Senate Democrats, smarting from a move by conservative West Virginia Sen. Joe Manchin to kill a major element of US President Joe Biden’s climate plan, are switching to Plan B: a carbon tax, the New York Times reports. The White House is scrambling to come up with alternatives to replace the $150 bln clean electricity programme that had been the centrepiece of Biden’s climate agenda until just days ago, when Manchin indicated he strongly opposed it. That programme would have rewarded utilities that stopped burning fossil fuels in favour of wind, solar and nuclear energy, and penalised those that did not. As they seek alternatives, White House officials are also weighing a voluntary version of a cap-and-trade programme. Additionally, National Climate Advisor Gina McCarthy told a meeting of Biden’s council of advisors on science and technology on Monday that lawmakers are also considering a CO2 price. However, McCarthy did not say whether the White House is pushing legislators to do so, according to Reuters.

Brazil hydrogen – ENGIE and the Ceara state government in Brazil have signed a memorandum of understanding on a large-scale green hydrogen project to be located at the port of Pecem, reports Marketscreener. The project’s main focus will be green hydrogen exports, but applications also undergoing analysis include heavy mobility, steel, chemicals production, and mixed-gas transportation networks. These applications would enable the project site to be a green hydrogen hub in the region.

RGGI review session – Market administrator RGGI, Inc. on Monday announced it will facilitate a virtual listening session to solicit public input on the objectives, topics, and analyses for its 2021-22 Program Review on Nov. 8 at 1800-2000 Eastern time (0000-0200 GMT). As with the first listening session earlier this month, RGGI will ask for feedback on the power sector carbon market’s allowance surplus, annual CO2 cap linear reduction factor, Cost Containment Reserve (CCR), and Emissions Containment Reserve (ECR).

AND FINALLY…

Scuttle the huddle? – “Huddles”, where negotiators gather in close proximity to thrash out their disagreements, have become a key feature at UN climate talks. But at this year’s COP26 summit in Glasgow, things will be different. It is the first COP since the COVID-19 pandemic took hold. With an estimated 25,000 people expected to attend from around the world and high levels of COVID transmission globally, organisers are trying to avoid creating the conditions for the airborne coronavirus to spread. The code of conduct states that attendees should be masked unless eating, drinking, “sitting to perform negotiations” or in “office spaces/meetings”, and should keep one metre apart from each other. Negotiators Climate Home spoke to broadly agreed that huddles have been effective in reaching agreements but are not a fair way of conducting diplomacy. And with allegations of sexual harassment, a lack of equity for some participants, and no translation services for others who don’t speak English, plus the difficulty of holding huddles online in what is to be a hybrid COP this year, is it time to scuttle the huddle?

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