CP Daily: Thursday October 21, 2021

Published 23:56 on October 21, 2021  /  Last updated at 23:56 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

NA Markets: California carbon heads toward $30, RGGI tops $12

California Carbon Allowance (CCA) prices leapt to a new all-time high this week as speculators kept up purchases and entities continued to roll positions en masse, while RGGI Allowance (RGA) values also notched new records as more financial players opened accounts.

EMEA

EU leaders postpone decision on energy crisis, ETS intervention

EU leaders postponed a decision on bloc-wide measures to tackle surging energy prices and ETS speculation late on Thursday, tasking their energy ministers to reach agreement as soon as next week.

Euro Markets: Carbon shakes off energy weakness to consolidate below key resistance

EUAs shrugged off weakness in energy markets on Thursday to consolidate below key resistance in their narrowest trading range in a week, after prices had fluctuated by an average €3.43 over the previous three days.

Pilot Russian carbon trades to start next year, with at least three regional schemes eyed

Pilot trading in Russia’s domestic carbon market is expected to start before the end of next year, according to a senior bank official, with at least three regions looking to launch pricing schemes.

AMERICAS

US Democrats scramble towards ‘Plan B’ for climate provisions in troubled legislative package

As US President Joe Biden’s flagship emissions reduction proposal falters due to the intransigence of a coal-state senator, other Democratic legislators have set their sights on a state-led subsidy package and other alternatives to move the nation’s climate policy forward and build credibility ahead of the COP26 UN summit.

ASIA PACIFIC

Chinese provinces embrace reforms to give more leeway in power pricing

Several Chinese provinces on Thursday moved to cancel fixed power prices for business and industrial customers in response to last week’s power market reforms aimed at easing ongoing electricity shortages, a move experts say is crucial for the market’s ability to accommodate a carbon price.

Australia Market Roundup: Spot ACCU price extends record high, as business leaders want 100 mln offsets per year by 2030

Spot credits in Australia’s offset market traded up another 3% on Thursday, while a coalition of big-emitting companies said more than 100 million ACCUs would be required annually by 2030 to meet demand.

INTERNATIONAL

Document leak shows fossil fuel exporting nations’ IPCC push on CCS, carbon trading

A leak of government inputs into part III of the UN-backed IPCC scientific panel’s upcoming landmark climate report shows how several nations are pushing for a prominent role for CCS and carbon trading in global mitigation efforts.

Oil and gas firms not aligning emissions cuts with Paris goals -report

Most public oil and gas companies have not set emissions reduction targets that align with the Paris Agreement’s objective to limit the rise in the global temperature to below 1.5C, new research has found.

VOLUNTARY

Additional US government oversight, regulation necessary to grow VER market -report

Greater oversight by the federal government is necessary to ensure voluntary emissions reductions (VERs) provide significant environmental and economic benefits, with proposed Congressional legislation on a carbon offset certification system serving as a model, according to a right-wing think-tank study published 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

Make way for Modi – Indian PM Narendra Modi will attend COP26 in Glasgow, the country’s environment minister said on Thursday. India is the world’s third-biggest emitter after China, and Modi’s participation was seen as critical amid uncertainty whether Chinese President Xi Jinping would attend. Both nations face pressure to present pledges to raise their climate ambition at the conference. “India’s NDCs are quite ambitious,” Indian Environment Minister Bhupender Yadav told Reuters. “We are doing more than our fair share. Our NDCs are more progressive than major polluters.” The country is on track to increase green energy capacity to 450 GW by 2030, he said. It has installed more than 100 GW of renewable energy, which accounts for more than 25% of overall capacity. India has not yet committed to a net zero target. Its cabinet, chaired by Modi, will decide the position to be taken at COP26, most probably within a week, a environment ministry spokesperson said. Government sources have told Reuters that India is unlikely to bind itself to a net zero target of 2050, as tougher deadlines would hit demand growth projected to outstrip that of any other nation over the next two decades. India’s per capita GHG emissions are a third of the world average, Yadav added.

For some banks, it’s business as usual – JPMorgan plans to keep lending to the fossil fuel industry to help it transition to a low-carbon economy, despite campaigner calls for banks to phase out financing to the sector, an executive said on Thursday. Chuka Umunna, who heads the bank’s environmental, social, and governance-related activities in Europe, the Middle East, and Africa, said oil and gas companies were “part of the solution” to climate change and would need support to develop renewable energy technologies. His comments follow similar remarks made by Goldman Sachs CEO David Solomon earlier this week. (Reuters)

Pakis-plan – Pakistan released its updated NDC on Thursday, pledging an unconditional 15% cut below BAU by 2030, plus a further 35% conditioned on receiving financial aid.  The country’s previous target was a conditional goal of 20% below BAU by 2030 based on international aid needs of $40 bln. Pakistan now says it requires $101 bln just to complete its proposed energy transition. To reach the target, Pakistan aims to shift to 60% renewable energy, and 30% electric vehicles by 2030 and completely ban imported coal. Moreover, Pakistan seeks to expand nature-based solutions by implementation of a Ten Billion Tree Tsunami Programme (TBTTP). Pakistan estimated its 2018 emissions at 490 MtCO2e, compared to around 405 Mt in 2015. In terms of carbon pricing, Pakistan said a range of activities have commenced including capacity building, a national consultation, and scoping of pricing instruments. “The aim is to explore options for the introduction of domestic carbon pricing instruments to manage the cohort of large-scale emitting installations, representing around 27% of domestic emissions, as well as an opportunity for similar or related economic instruments for the transport sector,” the NDC said. A National Committee on the Establishment of Carbon Markets (NCEC) will oversee the development of potential architecture of a market landscape. Follow Carbon Pulse’s NDC Tracker.

EMEA

Methane fix – The European Parliament voted on a non-binding resolution asking the EU to legally require companies to fix methane leaks and impose binding targets on countries to cut emissions of the potent GHG, setting the scene for legislation the European Commission is due to propose in December. The Parliament adopted by 563 votes to 122 the motion, which said the rules should apply to the entire oil and gas supply chain as soon as possible and the EU should make fossil fuel imports conditional on complying with the rules. (Reuters)

Pro-nuclear front grows stronger – While the EU sustainable taxonomy was not supposed to be at the top of the agenda, a pro-nuclear front helmed by French President Emmanuel Macron relied on the summit to promote nuclear power as a sustainable investment. Along with France, the alliance comprised Bulgaria, Croatia, Czech Republic, Finland, Hungary, Poland, Slovakia, Slovenia, and Romania. “The summit is being leveraged to get this message out”, Esther Bollendorff, EU gas policy coordinator at Can Europe told Carbon Pulse. Whether nuclear power and low-carbon gas will be included in the green finance rulebook will affect the degree to which such projects will be able to attract private capital in the near future. With the decision expected no earlier than in 2022, political debate is likely to intensify.

Green dreams – Green hydrogen produced from renewables will account for 20% of Europe’s power consumption in 2050, and for 10% globally, a report published by Norwegian power company Statkraft on Thursday showed. European power demand will rise to just over 5,000 TWh in 2050, with green hydrogen production accounting for around 1,000 TWh, up from current demand of around 30 TWh, Statkraft’s sixth annual Low Emissions Scenario report showed. Global power demand will likely more than double by 2050 to just over 60,000 TWh as electrification is seen as the main tool to reduce CO2 emissions with renewable energy meeting about 80% of that demand, it found. At present, green hydrogen production is more expensive than traditional production from fossil fuel sources, but Statkraft said that would change. The company expected investment costs for electrolysers to fall by 60% by 2050, which coupled with storage could ensure a steady supply for industry. (Reuters)

Grounded – Several environmental organisations are calling for an immediate end to short-haul flights within Germany. Such a ban would save more than 1 MtCO2 annually, the 14 NGOs wrote in a paper addressed to the three parties currently in negotiations to form a ‘traffic light’ coalition government. Under the title “Trains instead of flights”, the campaign calls for an end to flights to all destinations that can be reached within four hours by the country’s high-speed train service ICE instead, and to make flights up to a distance of 1,500 km redundant by strengthening rail transport. “Half of all domestic German flights can already be replaced by a rail journey of less than four hours, saving 1.6 Mt annually,” Werner Reh from Friends of the Earth Germany said. German airlines obviously opposed the idea, saying domestic air travel is an “important pillar” and could not be completely replaced by rail. Unilateral restrictions would weaken Germany’s position as an aviation location in international competition, which would do nothing for the climate, one airline association added. According to a YouGov survey conducted earlier this year, 70% of Germans are in favour of banning short-haul flights in order to protect the climate, as long as the distances can be covered in three hours or less by train. Neighbouring France announced earlier this year it would ban short-haul flights where a train journey under 2.5 hours could be provided as an alternative. (Clean Energy Wire)

ASIA PACIFIC

Chinese efficiency – China’s government said on Thursday energy-intensive industries like steel, aluminium, cement, and oil refining should ensure that more than 30% of their production capacity meets tighter energy efficiency standards by 2025. The goals, published on the website of the National Development and Reform Commission (NDRC), have been set to put China, the world’s biggest emitter of GHGs, on track to meet its pledge to peak carbon emissions by 2030 and become carbon neutral by 2060. By 2030, the government will further lift energy efficiency standards and expects a greater percentage of companies to conform to these, said the statement, which was jointly issued by the NDRC, the industry and environment ministries, the market regulator, and energy administration. An annex to the document outlined how much industries must cut their energy consumption by for a single unit of production by 2025. Blast furnaces, for example, must cut by 17%. Oil refiners must permanently shutter plants with processing capacity below 2 Mt a year, or 40,000 barrels a day, while there is a strict ban on building new crude distillation units with annual capacity of less than 10 Mt and catalytic cracking units with capacity below 1.5 Mt. (Reuters)

Climate cost – Australia’s failure to commit to net zero targets or any credible climate policy is a growing economic threat to New South Wales and other Australian states, argues a report by pro-renewables think-tank IEEFA. It found that Australia’s climate policies will have an extremely detrimental impact on the NSW economy as increased spending resulting from climate mitigation and damage from extreme weather events will push out debt levels. Couple that with declining coal royalties and continued reliance on high emitting fuels, the state’s net debt is estimated to reach 100% by 2060.

Kiwis first – New Zealand has become the first country to pass laws requiring banks, insurers, and investment managers to report the impacts of climate change on their business, officials said on Thursday. About 200 of the largest financial firms in New Zealand, including banks with total assets of more than NZ$1 bln, large insurers, and equity and debt issuers listed on the country’s stock exchange will have to make disclosures. Several foreign firms that meet the NZ$1 bln threshold – including Australia’s four largest banks: Commonwealth Bank of Australia, Australia and New Zealand Banking Group, Westpac, and National Australia Bank – will also come under the legislation. The new laws will require financial firms to explain how they would manage climate-related risks and opportunities, and the disclosure requirements will be based on standards from New Zealand’s independent accounting body the External Reporting Board (XRB). Those standards will be based on the Task Force on Climate-related Financial Disclosures (TCFD), and the disclosures will become mandatory for financial years beginning in 2023. The New Zealand government has introduced several policies to lower emissions during its second term including promising to make its public sector carbon neutral by 2025 and buy only zero-emissions public transport buses from the middle of this decade. (Reuters)

Climate spend – Indonesia will need $200 bln a year in the next decade and over $1 trillion annually in the next four decades to achieve its target of net zero carbon emissions by 2060, a recent government study showed, highlighting the need for massive financing in a country heavily reliant on coal, reports Nikkei Asia. The study, issued by planning ministry Bappenas, found that from 2021 to 2030, overall investment needs will amount to an average of $150-bln to $200 bln per year, $700 bln to $1 trillion per year in the next decade, $1.3 trillion to $1.6 trillion per year in 2041 to 2050, and $2.1 trillion to $2.2 trillion per year in the two decades after.

AMERICAS

Sink on it – Canada’s economy faces a “sink-or-swim” decade, according to the first study to assess the country’s economic prospects in the face of accelerating global market shifts responding to climate change. The study, published by the independent, government-funded Canadian Institute for Climate Choices think-tank, tested publicly traded companies under different scenarios. Without major investment, the report founded, many exporters and multinationals will see significant profit loss in the coming decades. The stakes are high for Canada, with almost 70% of goods exports and over 800,000 jobs in transition-vulnerable sectors, including oil and gas, mining, heavy industry, and auto manufacturing.

Stay out of school – California’s oil and gas regulator on Thursday proposed that the state ban new oil drilling within 3,200 feet of schools, homes, and hospitals to protect public health in what would be the nation’s largest buffer zone between oil wells and communities. This would be the first time California has set statewide rules on how close drilling can be to these locations, as other oil and gas producing states such as Colorado, Pennsylvania, and even Texas have rules about how close oil wells can be to certain properties. California’s plan, if adopted, would also go further than the 2,500 foot (762 m) buffer environmental groups sought. (AP)

VOLUNTARY

You love to E(Y) it – London-based global professional service organisation EY announced it has attained carbon negativity and intends to go further. EY will now focus on a target to reduce its GHG output by 40% by 2025 through seven key actions as it seeks net zero emissions by that year. EY noted it has invested in a carbon offset portfolio with South Pole, which includes multiple projects that offset or remove carbon through reforestation, regenerative agriculture, biochar, and forest conservation. Six recent projects, including the QianBei Afforestation Project in China, contributed to removing or offsetting a total of 528,000 tCO2e, meaning EY removed an additional 34% of its FY21 carbon footprint, making it carbon negative.

SCIENCE & TECH

Plastic future – The carbon-intensive production of plastics is on pace to emit more GHGs than coal-fired power plants within this decade, undercutting global efforts to tackle climate change, a report released on Thursday said. The report by Bennington College and Beyond Plastics projected that the plastic industry releases at least 232 Mt of GHGs each year throughout its lifecycle from the drilling for oil and gas to fuel its facilities to incineration of plastic waste. That is the equivalent of 116 coal-fired power plants. “The scale of the plastics industry’s greenhouse gas emissions is staggering, but it’s equally concerning that few people in government or in the business community are even talking about it,” said Judith Enck, a former US EPA regional administrator and president of Beyond Plastics. Also, the report found that petrochemical facilities tend to be clustered in just 18 largely low-income and minority communities, where 90% of the pollution occurs. With at least a dozen more plastic production plants under construction and 15 more planned, resulting emissions would undercut any gains made by phasing out coal power and shifting toward more renewable energy, Enck said. (Reuters)

AND FINALLY…

What’s worse than COVID, you ask? – Climate change will trigger food scarcity, extreme weather disasters, and disease outbreaks far worse than the current pandemic, UK medical journal The Lancet warned Wednesday. Since the last annual volume of its Countdown on health and climate change, threats to human health have grown worse on more than 12 metrics, and without aggressive action to slash GHGs the climate crisis will become the “defining narrative of human health,” the journal said. Extreme heat is the most deadly impact of climate change, followed by the spread of insect-carried diseases, risks of cholera and waterborne diseases following floods and storms, and respiratory dangers from everything from wildfire smoke to increased pollen in the air, which can exacerbate asthma and other conditions. Coming just weeks before COP26, the Countdown is far from the first warning by health professionals about the dangers posed by climate change and the need to rapidly cut methane and CO2 pollution. (Climate Nexus)

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