CP Daily: Wednesday October 20, 2021

Published 01:13 on October 21, 2021  /  Last updated at 01:15 on October 21, 2021  /  Newsletter  /  No Comments

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

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TOP STORY

China releases carbon neutrality framework, eyes 80% non-fossil in energy mix by 2060

China has released a policy framework document laying out an overall pathway to becoming carbon neutral by 2060, including a target to get 80% of its energy from non-fossil sources by that year, with a set of more detailed action plans expected to be released in coming weeks.

EMEA

Heavy industries urge EU leaders to step in to ease energy crisis

The EU’s energy intensive industries on Wednesday urged EU leaders to lean on gas suppliers to help ease the current price surge, and to act to avoid sudden increases in carbon prices in future.

Euro Markets: EUAs, UKAs rally sharply after Tuesday’s “overdone” sell-off

EUAs recovered early on Wednesday after the previous session’s 8% plunge, as many traders saw the drop overdone and some industrial buyers looked to take advantage of the lower prices.

EU’s east-west wealth divide may widen if climate overhaul falters – think-tank

The EU’s central and eastern (CEE) nations must deeply commit to the bloc’s wide-ranging European Green Deal (EGD) or risk falling further behind wealthier western member states, a think-tank said in a report published on Wednesday.

Earlier German coal phaseout to shave 120 Mt from EU ETS emissions -analysts

Bringing Germany’s coal phaseout deadline forward by eight years would slash European emissions by around 120 million tonnes this decade, with the bulk of the reductions seen during the final four years.

ASIA PACIFIC

Western Australia govt clears way to earn carbon offsets from forestry

The Western Australia state government on Wednesday proposed to amend its Forest Products Act so that it can earn millions of carbon credits by implementing its pine tree planting programme.

AMERICAS

RFS Market: RIN prices spike to 2-mth high on bean oil strength

US biofuel credit (RIN) values jumped to a nearly two-month high on Wednesday as traders pointed to strong soybean oil prices and a lack of news on preliminary Renewable Fuel Standard (RFS) volumes.

INTERNATIONAL

Sluggish global progress in decarbonisation sees 1.5C goal further out of reach, report warns

Global decarbonisation is happening too slowly andthe world is getting further behind in efforts to get on a 1.5C pathway, according to a report from PwC released on Wednesday.

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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

Vladimir Put-off – Russia’s President Vladimir Putin will not attend COP26 in Glasgow but will take part remotely, the Kremlin said on Wednesday. No reason was given for the decision not to attend, but a Kremlin spokesperson said climate change was an “important” priority for Russia. There is also doubt over whether Chinese President Xi Jinping or Indian Prime Minister Narendra Modi will make the trip. The UK government on Wednesday published its COP26 programme, with almost 50 events organised by the presidency to showcase action and drive momentum from all of society during the two-week summit. A programme for the UK Pavilion, which will highlight the country’s climate leadership, was also released. (Sky News)

Fossil overspill – Major economies will produce more than double the amount of fossil fuels in 2030 than is consistent with meeting Paris Agreement goals, according to the UN Environment Programme’s (UNEP) annual production gap report, which assesses the difference between governments’ planned fossil fuel production and Paris-aligned levels. It concludes that of the 15 major fossil fuel producers assessed, they plan to produce around 110% more fossil fuels in 2030 than would be consistent with limiting the degree of warming to 1.5C, and 45% more than is consistent with 2C. (Reuters)

Importer/exporters – The total carbon emissions of the US economy should be viewed as more than 6% higher than widely believed while China’s carbon emissions could be around 10% lower, according to new proprietary analysis by Bloomberg Intelligence. China is the world’s largest emitter in absolute terms, seen as accounting for over 30% of global carbon emissions. Yet, when carbon transfers linked to imports and exports are taken into consideration, the reduction in its carbon emissions amounts to around 3% of global emissions. Accounting for 13% of global carbon emissions and ranking second after China, the US could be more than 6% higher when accounting for emissions from its trade balance. This would increase the country’s share of global emissions by one percentage point.

They knew – French oil and gas major TotalEnergies deliberately downplayed the threat of global warming from the 1970s onwards, according to research based on interviews with former company executives and internal company documents, AFP reports. The findings, published by a trio of historians on Wednesday in the peer-reviewed journal Global Environment Change, follow similar revelations about ExxonMobil and Shell. The pattern that emerges is one of oil and gas giants well aware — often informed by their own scientists — of the dire risks posed by rising temperatures, on the one hand, while undermining confidence in climate science in their public pronouncements, on the other.

Well-situated seven – G7 members are well placed to fully decarbonise their electricity supply by 2035, which would accelerate the technological advances and infrastructure rollouts needed to lead global energy markets towards net zero emissions by 2050, according to a new report from the International Energy Agency. Reaching net zero emissions from electricity among G7 economies would require completing the phase-out of unabated coal while simultaneously expanding low emissions sources of electricity, including renewables, nuclear, hydrogen, and ammonia. According to the IEA’s pathway to net zero by 2050, renewables need to provide 60% of the G7’s electricity supply by 2030, whereas under current policies they are on track to reach 48%.

Can we recover, recover, recover?Gas-fired power plants are increasingly making a loss in both Europe and the US, a situation not helped by soaring fuel prices, a report from Carbon Tracker revealed. The financial think-tank estimated that developers of most gas plants planned or under construction will never recover their initial investment and more than $24 bln (£17.5 bln) is at risk in the US and nearly £2.6 bln in the UK, even if plants run for their full planned lifetime. The report calculated that if gas plants are phased out in line with a target of net zero by 2050, nearly $16 bln of investment in units that are currently profitable could be stranded. (IEEFA)

EMEA

Debt debate – The European Commission has launched a public consultation on the EU’s Stability and Growth Pact, the fiscal framework that dictates member states’ debt and deficit levels. The SGP was suspended in Mar. 2020 to give member states the flexibility to react to the COVID-induced downturn, but Brussels is now considering new exceptions to allow for climate-linked investments. (Bloomberg)

Decision delay – Brussels will delay once again much-awaited proposals that will define whether low-carbon nuclear power and natural gas will be deemed sustainable investments in the bloc’s green taxonomy finance rulebook, EU financial services commissioner Mairead McGuinness told the FT. However, EU leaders are still due to debate the taxonomy at this week’s Council summit along with the response to surging energy prices. McGuinness said there are chances for the proposal to be pushed into 2022, a situation that would see France’s bargaining position over nuclear grow even stronger as Paris will be at the helm of the rotating Council Presidency from January.

‘Prom probe – Intensifying its diplomatic efforts, Poland sent a letter to EU antitrust commissioner Margrethe Vestager, accusing Russian major Gazprom to have deliberately worsened the European gas crunch to cement its position on the market and accelerate German as well as EU regulatory approval of its Nord Stream 2 gas pipeline, Euractiv reports.

Hold them to it – Eurozone banks should be legally bound to adopt plans that spell out how they will mitigate their exposure to climate-related risks over the next 30 years, European Central Bank board member Frank Elderson said on Wednesday. The ECB is putting pressures on the 114 banks on its watch to address risks stemming from climate change – such as weather hazards and new rules aimed at limiting emissions – via stress tests and requests for disclosure. Elderson, a Dutch lawyer who represents the ECB’s supervisory arm on the Executive Board, said banks should be mandated to tackle climate-related risks or may never make good on their “lofty intentions”. (Reuters)

Paper cuts – EU ETS-covered paper and pulp producer Stora Enso has joined Nordic rivals UPM and Metso in setting a 1.5C-aligned climate goal endorsed by the Science-Based Targets Initiative. The firm committed to reducing absolute Scope 1 and 2 GHG emissions by 50% by 2030 from the 2019 base year and set the same goal for its Scope 3 emissions, aiming to achieve net positivity by 2050 by boosting recycling and enhancing biodiversity in its plantations.

Athens asks –  Greek Prime Minister Kyriakos Mitsotakis has written to European Commission head Ursula von der Leyen urging that plans to include shipping in the EU ETS should entitle owner countries to get back auction revenue raised and that the money should be spent on decarbonising maritime transport, Reuters reported. Brussels has proposed phasing in shipping over 2023-26 to eventually cover intra-EU voyages and half of international ones, with auction revenue returned to member states – the industry wants some of the money to go towards an R&D fund.

Without a plan – Nearly half of the 100 biggest companies listed on Britain’s FTSE Index have no net zero target at all and just 23 have a scientifically approved plan, according to ESG investment research and asset manager Arabesque. It found that 45 companies on the FTSE-100 index had no net zero target, while just 23 had goals meeting the standards of the Science Based Targets Initiative (SBTi), which defines best practice in such targets. The research found that 28 FTSE companies are on course to contribute to a global temperature rise of 2.7 C or above by 2050. Scientists believe such a rise would lead to a worst-case climate scenario.

ASIA PACIFIC

Rio renewables – Mining giant Rio Tinto has unveiled plans for massive investments in wind and solar projects, including up to 5 GW for its Australian Boyne Island and Tomago smelters and another 1 GW for its huge iron ore mines in the Pilbara region in Western Australia, RenewEconomy reports. The projects were unveiled as part of Rio Tinto’s newly announced plans to spend $7.5 bln slashing its Scope 1-2 emissions in half by 2030. The plan also includes investments in green steel and green aluminium, replacing gas power plants, and the full electrification of its Pilbara grid, including all trucks, mobile equipment, and rail operations, which will require another gigawatt-scale renewable deployment and advances in fleet technologies. Rio Tinto said the 50% cut in Scope 1 and 2 carbon emissions by 2030 more than triples its previous target of a 15% cut by that year. The company will now aim for a 15% cut in Scope 1-2 emissions by 2025.

ASEAN renewables – The cost of building new solar and wind energy in the ASEAN region is now cheaper than coal and gas, allowing the region to accelerate its net zero transition with the right policy reforms, according to analysis from the Asia Investor Group on Climate Change. However, the analysis also shows that, unless alternative action is taken, nearly half of incremental energy demand between 2020 and 2030 is expected to be met by coal, despite ASEAN governments’ commitments to shift their energy mix towards renewable sources. The energy system analysis provides a deep dive into the power markets in Indonesia and Vietnam, as together they will account for more than 70% of the incremental CO2 emissions in ASEAN within this decade. A more aggressive approach to deploying renewables, backed by market reform and energy efficiency efforts, can see CO2 emissions from the power sector peak earlier in 2025 in Indonesia and 2027 in Vietnam.

Adani renewables – Indian conglomerate Adani will invest over $50-70 bln in renewable energy value chain over the next decade and the group firms have committed 70% of planned capex until 2030 to the energy transition, its billionaire chairman Gautam Adani said on Tuesday, reports The Economic Times. Speaking to business leaders on the sidelines of the UK’s Global Investment Summit at the London Science Museum, he made a plea for equitable and pragmatic policies in the battle against climate change and recommended setting practical goals and agendas. Hydrogen, he said, is a game-changer and the group’s green energy portfolio will expand to become one of the world’s largest green hydrogen producers.

Fujian fun – The annual compliance deadline for 2020 in Fujian’s ETS will fall on Nov. 22, the provincial government announced this week, leaving emitters with a month to secure all the allowances they may need. However, allocation has not yet been finalised, as regulators only hand out the final 30% of permits once production and emissions data for the previous year have been verified, similar to how China’s national ETS works.

AMERICAS

Glasgow Old Party – US House Republicans are planning their own trip without Democrats to COP26, the Washington Examiner reports. While Republicans from both chambers have attended previous UN climate conferences, this is the first time GOP lawmakers are organising a delegation among themselves in order to have flexibility in promoting their own agenda. The Republican agenda does not include a specific target to cut emissions, as they argue the US should extract a stronger commitment from China before making its own pledge. Members attending the trip and the groups supporting them claim their intent is to be constructive and not to derail the US and other countries’ efforts to strengthen Paris Agreement emissions targets at the conference.

Not Joshing – Pennsylvania Republican leaders in both the state House and Senate sent a letter to Attorney General Josh Shapiro Tuesday calling on him to review the statutory authority and constitutionality of the final RGGI regulation. The letter argued that RGGI violates the Air Pollution Control Act (APCA) and “imposes an unconstitutional tax on two-thirds of Pennsylvania’s electricity generation capacity.” Democratic Governor Tom Wolf’s administration has countered that the regulation is needed in order to address climate change and reduce the state’s carbon footprint, and officials said the executive action he took to enter the initiative is permitted under the APCA. A spokesperson from Shapiro’s office said the attorney general is only permitted to review the form and legality of regulations, similar to reviews of state contracts. (City & State Pennsylvania)

Underpriced – A decades-long drop in global real interest rates means that the US government and other entities may be vastly underestimating the true future economic cost of climate change, according to research published on Wednesday by the San Francisco Federal Reserve. The Biden administration employs a $50/tonne estimate for the “social cost of greenhouse gases” in rule-making processes and permitting decisions. The price is meant to account for economic damages associated with a rise in carbon dioxide and other planet-warming emissions, in effect penalizing polluters and incentivising investments in non-polluting alternatives. But that estimate does not take into account a long-running trend toward lower borrowing costs as aging populations, slower productivity growth and rising income inequality constrain global demand, the authors of the study said. Using an estimate more in line with actual trends in real interest rates yields a per-ton cost of $100, they found. (Reuters)

VOLUNTARY

CoGo-a-go-go – New Zealand-based carbon footprint tracking fintech CoGo will launch a $20 mln capital raising to fund growth in the US, Europe, and Asia, Chief Executive Ben Gleisner said on Wednesday. The firm, whose algorithms help consumers align their purchasing habits with targets such as reducing emissions, is opening the fundraising to venture funds, companies, and its retail customers, Gleisner said. “If you look at what’s going on around the world you’ll see why we think we’ll be the world’s first climate impact unicorn within three years,” Gleisner said, referencing the tag given to startups worth at least $1 billion. Gleisner said that, pre-funding, revenue is expected to grow to between NZ$2.5 mln and NZ$5 mln in fiscal 2022, and to more than N$7.5 mln in fiscal 2023, from about NZ$500,000 in the fiscal year ending Mar. 2021. (Reuters)

SCIENCE & TECH

CCUS please – A first of its kind benchmarking report on the industry attitudes towards carbon capture, utilisation, and storage (CCUS) has revealed that 65% of executives working in hard-to-abate sectors see CCUS as ‘critical’ or ‘important’ reaching their 2030/2050 goals. The report is broken down into three key areas: the economics of carbon capture, the operational challenges around CCUS, and the pace of roll out. It found that 34% of respondents plan to roll out a CCUS solution in the next six years, increasing to 60% with CCUS adoption plans into the next decade. Among the operational challenges, space is a key barrier to widespread CCUS adoption, with most executives working in hard-to-abate sectors noting it as an issue. The most frequently mentioned concern was around the onward transportation and disposal of captured carbon – from the distance to markets, to the development of transportation and storage infrastructure – as well as markets for carbon use. The survey also provided valuable insights on the optimal purchasing model for industries with 41% of respondents most interested in a fully funded CCUS model and 59% preferring a mix of funded/operated and owned equipment. No respondents selected outright equipment purchase.  The Scaling up CCUS – market insights report is based on an anonymised survey of senior executives and input from an expert panel. It is published today by Decarb Connect and Carbon Clean.

AND FINALLY…

COP copses – Eight new ‘Wee Forests’ each the size of tennis courts are to be planted across Glasgow to help city celebrate the COP26 climate summit. Earthwatch Europe and NatureScot are planting the compact forests of 600 trees with a view to creating a cluster of nature-rich green spaces. (BusinessGreen)

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