CP Daily: Monday October 25, 2021

Published 00:42 on October 26, 2021  /  Last updated at 00:42 on October 26, 2021  /  Newsletter  /  No Comments

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

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TOP STORY

British Columbia proposes higher CO2 price, tighter LCFS in new climate plan

British Columbia (BC) released a new climate plan Monday that will meet or exceed federal carbon pricing requirements and implement the most stringent Low Carbon Fuel Standard (LCFS) in North America alongside a swath of other strategies to meet its emissions reduction targets.

INTERNATIONAL

Nations could deliver $100 bln climate finance promise three years late

Climate finance flows in 2020 fell short of the $100 billion per year promised to developing countries and central to achieving the Paris Agreement, but a new delivery plan released Monday shows this could happen by 2023.

Saudi Arabia targets net zero emissions by 2060, joins global methane pledge

Opec powerhouse Saudi Arabia will target net zero emissions by 2060, the kingdom’s crown prince, Mohammed bin Salman, announced at a conference in Riyadh over the weekend.

UPDATE – Researchers find CDM transition unlikely to raise ambition, as Brazil shifts stance

(Updates Friday’s article with Brazil stance, Perspectives CER transition findings)

Few CDM projects could deliver genuine abatement if allowed to transition into the Paris Agreement regime though scant pre-2020 credits may be available anyway, researchers found, as pro-transition Brazil has reportedly softened on insisting on a carryover.

VOLUNTARY

VCM Report: Exchange-traded VER prices notch new highs as traders absorb bumper supply

Standardised voluntary emissions reduction (VER) prices for CORSIA- and nature-based units trended up towards fresh record highs on exchanges this week, with voluntary carbon market (VCM) participants citing involvement by speculative firms and crypto traders for the increase.

Lack of transparency casts doubt on “carbon neutral” fuel deals –report

Fossil fuel companies are brazenly greenwashing by marketing shipments bundled with offsets as “carbon neutral”, environmental campaigners concluded on Monday in a report scrutinising the burgeoning trade.

Offset expert joins ClearBlue as NBS director after brief stint with Natural Capital Partners

Carbon trading and advisory firm ClearBlue Markets has hired a new director of nature-based solutions (NBS), with the offset expert joining after spending just eight months at Natural Capital Partners (NCP).

ASIA PACIFIC

No changes as China releases climate plan, but details to be hammered out

China on Sunday published its long-awaited “1+N” climate policy blueprint without offering any changes from previous documents, though analysts expect more detailed action plans to emerge ahead of COP26.

EMEA

Euro Markets: EUAs edge higher in illiquid market as energy firms

EUA prices post a modest increase on Monday in relatively thin trading, as natural gas prices rose on reduced pipeline flows despite predictions of milder weather.

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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

Higher, faster – The WMO reported Monday that GHG concentrations hit a new record high last year and increased at a faster rate than the annual average for the last decade despite a temporary reduction during pandemic-related lockdowns. In its annual report on heat-trapping gases in the atmosphere, the UN weather agency said concentrations of CO2, methane, and nitrous oxide were all above levels in the pre-industrial era before 1750, when human activities “started disrupting Earth’s natural equilibrium.” The global average of CO2 concentrations in the atmosphere hit a new high of 413.2 parts per million last year, according to the report. The 2020 increase was higher than the annual average over the last decade despite a 5.6% drop in CO2 emissions from fossil fuels due to COVID-19 restrictions, it said. WMO Secretary-General Petteri Taalas added: “At the current rate of increase in greenhouse gas concentrations, we will see a temperature increase by the end of this century far in excess of the Paris agreement targets of 1.5 to 2 degrees Celsius above pre-industrial levels.” The report’s release came days before the start of the UN COP26 climate talks in Glasgow, Scotland. (AP)

Carbon taxes 101 – The UN Handbook on Carbon Taxation for Developing Countries is a new publication developed through the work of the UN Committee of Experts on International Cooperation in Tax Matters and its Subcommittee on Environmental Taxation Issues. The Handbook is a living document meant as a practical guide containing many real-world examples and useful tools, including checklists to assist policymakers and government officials. It seeks to address carbon taxation issues in a clear form, to raise awareness of potential challenges and opportunities as well as the pros and cons of possible options for countries and agencies, and ultimately to assist in making decisions on policy and administration that are informed and reflect country priorities as well as local and global realities. Download the report

EMEA

It ain’t broke – A group of nine EU countries including Germany and the Netherlands said Monday they would not support a reform of the EU electricity market, ahead of Tuesday’s emergency meeting of energy ministers to discuss the recent price spike. Soaring market price have prompted a number of governments to urge Brussels to redesign its electricity market rules.  But these nine nations poured cold water on the proposals, saying they cannot support any measure that conflicts with the internal gas and electricity market, including a full overhaul of the wholesale power market. “As the price spikes have global drivers, we should be very careful before interfering in the design of internal energy markets … This will not be a remedy to mitigate the current rising energy prices linked to fossil fuels markets,” the statement said. The signatories called instead for more measures to save energy and for a target for a 15% interconnection of the EU electricity market by 2030. European energy ministers meet tomorrow to discuss their response to the price spike, with most countries opting to use tax cuts, subsidies, and other national measures to shield consumers. The European Commission has said it will investigate whether the EU power market is functioning well, but that there is no evidence to suggest a different system would have better protected countries against the surge in energy costs. (Reuters)

Nuclear, again – Nuclear power is set to play a dominant role in the upcoming French presidential election, Les Echos argues. The financial outlet observed nuclear could offer candidates along the political spectrum a way to stand out compared with firmly pro-nuclear president Emmanuel Macron, who has recently pledged investments in small reactors and could even be considering building six new EPRs (European Pressurised Reactors). The centre-right candidate Xavier Bertrand, who will head Les Republicains party, said that he won’t lower nuclear to below 50% of the national mix, hence keeping dependence from foreign – and particularly Russian – gas limited. On the left, instead, the picture appears more mixed, although socialist Jean-Luc Melenchon has been vocally advocating for a prompt nuclear phase-out.

No funds, no climate plan – An historic low in Brussels-Warsaw relationship may pose a serious threat to the adoption of an ambitious version of the EU’s Fit for 55 legislative climate package, the FT reported. Poland’s Prime Minister Mateusz Morawiecki made clear that any attempt to withhold the €36 bln Covid-19 coronavirus relief package “would be met with strong retaliation”. “If they start the third world war, we are going to defend our rights with any weapons which are at our disposal,” Morawiecki said.

Awkward – COP26 host Britain is the source of some of Europe’s worst methane emissions, according to the nonprofit Clean Air Task Force. The group used a special infrared camera to detect supersized leaks at two sites operated by National Grid outside London. They were the largest releases found among 200 sites in 12 nations. CATF also discovered plumes from 13 British oil wells, and regular discharges at the Bacton gas plant operated by Royal Dutch Shell. Tackling methane emissions is one of the rare climate solutions that doesn’t require advances in technology. Oil and gas companies have the tools they need right now to stem leaks, which can be done within days of being detected. National Grid said that the leaks detected by CATF were caused primarily by maintenance activities and that the company is working to cut methane emissions as a part of its plan to reach net zero by 2050. Shell declined to comment. The company has said previously the emissions are the result of a process called venting and are reported in line with regulatory requirements. It’s also carrying out modifications to reduce emissions. (Bloomberg)

ASIA PACIFIC

Getting there – In Australia, the National party – the junior ruling coalition partner – on Sunday agreed to sign up to a net zero target by 2050, the Guardian reports. That came after week-long negotiations where the rural National party has been seeking protection and support for agriculture and the natural resources sector. The Cabinet has yet to announce the net zero goal, and it appears doubtful whether Australia will increase its emissions target for 2030, which it set six years ago.

Joining the methane gang – South Korea is planning to join the EU-US led Global Methane Pledge, the environment ministry announced Monday. The initiative calls on participants to reduce their methane emissions 30% from 2020 levels by 2030, though Korea intends to use 2018 as its base year. Twenty-four nations signed up to the initiative at its launch earlier this month.

Singapore wants green power – Singapore plans to further reduce the carbon footprint of its power sector by importing around 30% of its electricity from low-carbon sources, such as renewable energy plants, by 2035, according to the Straits Times. This move will allow Singapore, which lacks access to most renewable energy options other than solar, to tap sources such as wind energy and hydropower in other countries. The minister for trade and industry Gan Kim Yong said on Monday: “Importing low-carbon energy will be a key needle mover in Singapore’s energy transition in the near to medium term.” Singapore’s Energy Market Authority (EMA) said it plans to issue two requests for proposal for up to a total of 4GW of low-carbon electricity imports into Singapore by 2035. This is expected to make up around 30% of Singapore’s electricity demand then. The first request for proposal to import up to 1.2GW of electricity will be launched next month and is expected to begin by 2027. The second one for the remaining 2.8GW is expected to be issued in the second quarter of next year and to start by 2035. Proposals for electricity from coal-fired generation sources will not be accepted, said EMA.

CCS bid for Asia – ExxonMobil is pursuing CCS hubs across Asia and has started talks with some countries with potential storage options for CO2, the company’s head of low carbon solutions said on Monday, reports Marketscreener. One of Exxon’s key projects is to build CCS hubs in Southeast Asia, similar to one being built in Houston, Texas, ExxonMobil Low Carbon Solutions President Joe Blommaert told Reuters. CCS advocates, including oil majors and the IEA, see the technology as being essential to help meet net zero emissions and key to unlocking large-scale economic hydrogen production, although critics say CCS will extend the life of dirty fossil fuels. Melbourne-based Global CCS Institute said in October that global plans to build CCS projects surged 50% over the last nine months. For CCS to take off, a transparent carbon price and cross-border pricing adjustment systems will be necessary to enable CO2 to be captured in one country and stored elsewhere, Blommaert said.

SK Group cuts the carbon – South Korean conglomerate SK Group is looking at cutting 200 MtCO2 in 2030, as it increases investments in green technologies, Bloomberg reports. About 50 Mt of the cuts in 2030 will come through enhancing efficiencies in its processes and purchasing renewable energy, Chairman Chey Tae-won was quoted as saying in a statement on Sunday. SK will also invest more than 100 trillion won ($85 billion) in environment-friendly businesses, such as electric cars and hydrogen energy, while managing the value chain to reduce the remaining 150 Mt of CO2, according to the statement. The company aims to achieve a zero carbon footprint by around 2035, it said. SK’s petrochemical business has been responsible for total emissions of 450 MtCO2, Chey said.

Another Australian hydrogen project – Oil and gas company Woodside has announced plans to build a hydrogen and ammonia production hub on government land south of Perth, sparking debate over the project’s green credentials, reports the ABC. While the company and Western Australian Premier Mark McGowan said the A$1 billion ($750 mln) project, dubbed H2Perth, would position the state as a global clean energy powerhouse, the facility was not going to be entirely ‘green’. Woodside CEO Meg O’Neill said the phased development would, at full potential, produce up to 1500 tonnes of hydrogen per day for export in the form of ammonia and liquid hydrogen. The first phase of the project would produce mostly “blue” hydrogen and around a third “green”. In this case the hydrogen will be produced from natural gas and Woodside says 100% of the project’s emissions would be abated or offset.

AMERICAS

Methane Death – A Democratic proposal to impose a methane fee on US oil and gas producers is not likely to be included in the reconciliation bill currently stuck in the legislative process on the Hill, two sources familiar with the negotiations told Reuters on Monday. The methane fee is opposed by US Senator Joe Manchin (D), who is also responsible for the likely demise of the Biden Administration’s flagship climate policy the Clean Electricity Payment Program (CEPP), as well as Democrats from oil-producer Texas, the sources said. The methane fee cleared the House Energy and Commerce Committee in September, and would charge petroleum companies $1,500/tonne (~$60/tCO2e) on emissions from natural gas wellheads and storage facilities that exceed a pre-defined threshold. The fee, coupled with methane rules currently under development in the EPA, would support US efforts under its Global Methane Pledge, an initiative it championed earlier this month with the EU bringing commitments from 24 countries on the potent GHG. The American Petroleum Institute industry was one of several groups that lobbied to kill the methane fee calling it duplicative of existing EPA efforts and unnecessarily punitive. The fee, if passed, would have been the first type of GHG pricing imposed at the federal level, and its demise marks another loss to the Administration’s climate agenda.

Teen years – RGGI Allowance (RGA) prices once again set a new record on Monday, with the Dec-21 V21 contract transacting at $13.00 on light volume on ICE before retracing, market participants reported. As in previous days, trader said speculators were likely behind the movement, with numerous financial players having recently entered the Northeast US cap-and-trade market. In hitting the $13 mark, RGA values are now even with the 2021 Cost Containment Reserve (CCR) trigger, which if hit at the December auction will release up to 12 mln more allowances for purchase.

Allocation situation – The Mexican environment ministry (SEMARNAT) on Monday completed free allowance allocations for 2021 under the province’s pilot emissions trading scheme, according to a notice. The country’s ETS is in the second year of its pilot phase, with a transition phase scheduled in 2022 before full compliance obligations begin in 2023.

All my friends are living Saints – St. Kitts and Nevis submitted its updated Paris Agreement NDC on Monday, pledging a 61% reduction in economy-wide CO2 emissions below 2010 levels by 2030 levels. The tiny Caribbean Island nation noted this was an upgrade from its original NDC goal of a 35% reduction below business-as-usual levels by 2030, as the country overestimated its GDP growth and would have actually led to an increase in emissions. St. Kitts and Nevis added that while it currently does not use any market mechanisms, it may consider doing so under Paris’ yet-to-be finalised Article 6. Follow Carbon Pulse’s NDC Tracker.

SCIENCE & TECH

Ta ta, emissions – Tata Steel said it has installed a 30 MW generator at a British plant that will cut costs and its carbon footprint. The generator will convert gases generated at Tata’s plant in Port Talbot, Wales, into useful energy, cutting its energy bill by millions of pounds each year and slashing CO2 emissions, the company said in a statement on Monday. (Reuters)

AND FINALLY…

Think of the children – Speaking to a group of children on Monday, British PM Boris Johnson said it is “touch and go” whether COP26 will be a success. “It’s going to be very, very tough, this summit,” he said while taking questions in London. “I’m very worried, because it might go wrong and we might not get the agreements that we need.” Johnson has staked considerable political capital on using the summit in Glasgow to put the UK at the forefront of global efforts to tackle climate change. But it’s not clear if he can persuade richer countries to raise their emissions reduction ambitions or fulfil their promises to ramp up climate finance to $100 bln a year to help poorer nations. Hopes of a major breakthrough deal were dealt a blow last week when the Kremlin said Russian President Vladimir Putin would not attend, while there remains uncertainty over whether China’s Xi Jinping will make the trip. Johnson urged Putin to bring forward to 2050 Russia’s 2060 target for achieving net zero, the PM’s s office said after the two leaders spoke by phone. (Reuters)

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