CP Daily: Friday November 5, 2021

Published 01:12 on November 6, 2021  /  Last updated at 01:14 on November 6, 2021  /  Newsletter  /  No Comments

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

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COP26

US envoy Kerry praises breakthrough deals as “genuine progress”, not distraction

US climate envoy and COP veteran John Kerry gave assurances on Friday that the wave of climate commitments announced during the first week at the Glasgow UN conference will result in “real money being put on the table” and allow for concrete action to avoid catastrophic climate change.

US eyes less than $100/tonne DAC technology to hit net zero

The US Department of Energy (DOE) on Friday announced a goal to slash the cost of direct air capture (DAC) to under $100/tonne by 2030, saying otherwise nations will not stay within the bounds of Paris Agreement temperature limits.

COP26 Roundup: Day 5 – Nov. 5

Delegates at COP26 in Glasgow are nearing the end of the first week, but with everything still in play on issues such as the future of carbon markets.

EMEA

German domestic CO2 price should double because transport emissions going in “wrong direction” -env. agency boss

Germany’s domestic carbon price should be at least doubled from 2022 as the country’s transport emissions are “heading in the wrong direction”, the German environment agency’s boss has said.

Uniper’s capped European emissions rise 38% amid energy price surge, while Enel also ups fossil generation

Germany-based utility Uniper saw its ETS-covered emissions surge during Q3 as some of its coal facilities powered up, while Italy’s Enel reported less of a rise in its fossil-fuel fired-generation.

Euro Markets: EUAs unable to stick above €61 for second day, notching 1.2% weekly rise

EUAs posted another long-wicked daily candle after failing to hold above €60, with the benchmark contract notching a modest 1.2% rise for the week.

AMERICAS

Financials cut, emitters add to California carbon position

Speculators reduced their net length in California Carbon Allowances (CCAs) during the past week, while compliance entities boosted their position and whittled down their overall net short amid the October contract expiry, according to US Commodity Futures Trading Commission (CFTC) data published Friday.

LCFS Market: California credits fall back to 3.5-year low as Q2 surplus weighs

California Low Carbon Fuel Standard (LCFS) values slid further into the $150 range this week as market participants continued to process a bearish data release for the transportation sector programme in Q2.

ASIA PACIFIC

Australia Market Roundup: ACCU bull run won’t let up, as ERAC defends major offset method

Australian carbon credits rose to a fresh high again on Friday, while a study commissioned by the committee safeguarding the integrity of domestic offset units concluded that one of the nation’s biggest-generating methods stands up to scrutiny.

CN Markets: Trading volumes rise in China’s carbon market as compliance deadline nears, but prices stable

There was a significant uptick in allowance and offset trading volumes in China’s market over the past week with the 2019 and 2020 compliance deadline now just six weeks away, but price movement was limited.

VOLUNTARY

Major London-based exchanges make first foray into voluntary carbon market

Two major London-based exchanges have announced plans to launch products that will give buyers access to the fast-growing voluntary carbon market.

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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

Shell transition – Anglo-Dutch oil major Shell has set up a dedicated $1.4 bln fund to invest in “innovative companies” that are working towards accelerating the energy transition, Upstream reports. Shell Ventures managing director Geert van de Wouw confirmed that the company had set up the fund, which will be invested over the next six years to support “start-ups and scale-ups”. “In line with Shell’s efforts to accelerate progress against our net-zero target, our investments will be laser-focused on renewable energy, storage and utilisation, mobility, transportation and logistics, circular economy, and nature-based solutions,” van de Wouw said.

1 for 1 – New research published this week in the journal Nature Energy warns that half of the world’s fossil fuel assets could become worthless by 2036 if governments fail to work in concert to phase out global investment in oil, gas, and coal, and this could trigger a global financial crisis akin to the 2008 crash. European NGO Finance Watch said the results show the urgent need for tougher capital requirements for fossil fuel financing. The organisation has recently called for a one-for-one rule for fossil fuel financing whereby for every dollar banks and insurers use to finance the exploration or the production of new fossil fuels reserves, they would need to hold one dollar to guard against future risks. “In a context where we already have six times as many proven reserves of fossil fuel assets as we can afford to extract and burn given the carbon budget of the planet, all the money invested into the exploration or the exploitation of new reserves will vanish, potentially triggering a financial crisis, unless banks and insurers have adequate capital buffers in place to absorb the losses,” the organisation said.

Survey says – As consumers across the world have adapted behaviours during the COVID-19 pandemic, they have become less concerned by the environmental impact of their choices regarding the products and services they buy or use. This is one of the key findings of a survey launched Friday by the World Economic Forum and Ipsos, which was carried out across 29 countries between Sep. and Oct. 2021. On average, over half (56%) of the 23,055 adults interviewed said they have modified their consumer behaviour out of concern about climate change over the past few years. This is down from an average of 69% in Jan. 2020, when an identical question was asked in all but two of the same 29 countries. Even in countries where consumers are still relatively likely to report having adapted their behaviour to counteract climate change, the proportion of environmentally conscious consumers seems to have fallen significantly since the last survey. They include India (76%, down 12 percentage points), Mexico (74%, -12pts), Chile (73%, -13pts), and China (72%, -13pts). Countries experiencing the biggest decline since 2020 in their share of environmentally conscientious consumers include Malaysia (62%, -23pts), Spain (53%, -23pts), Poland (49%, -23pts), and France (52%, -21pts). The countries where consumers are least likely to say they have modified their behaviour due to climate concerns include Japan (22%, -9pts), Russia (40%, -12pts), the US (41%, -15pts), and the Netherlands (41%, -16pts). Globally, the individual actions most commonly taken to counteract climate change are recycling or composting (cited by an average of 46% of respondents), generally saving energy at home (43%), avoiding throwing away food (41%), and saving water at home (41%). Women are generally more likely than men to report changing their behaviour because of climate concerns, especially in terms of avoiding throwing away food (46% vs 36%, respectively on average across all countries), saving water at home (46% vs 36%), buying fewer new things (36% vs 26%) and avoiding products that have a lot of packaging (33% vs 25%).

EMEA

Germanwatch – The German coalition government talks could go longer than the planned deadline at the end of November, Green Party co-leader Annalena Baerbock has said, arguing that “key levers” in climate policy still had to be pulled before her party could sign a coalition contract with the Social Democrats (SPD) and the Free Democrats (FDP), Der Spiegel reports. “We’re not at a point where we could seal the deal,” Baerbock said after about four weeks of talks between the three parties. Climate policy and finance are key stumbling blocks in the negotiations, reports Sueddeutsche Zeitung. The three “traffic light coalition” parties want to clinch a deal soon, hoping to put new SPD Chancellor Olaf Scholz in office the week of Dec. 6. “We see too little progress at the moment in terms of substance,” said Michael Kellner, Green Party secretary general. However, Green Party sources said the disagreements were not insurmountable, and any delays will be based on what the SPD and FDP can offer. German business daily Handelsblatt also reports that the Green Party leadership has replied to a letter from environmental NGOs criticising vague wording in a preliminary coalition agreement. Party officials called on the NGOs to “work towards the SPD and FDP bringing in ambitious proposals here.” (Clean Energy Wire)

With a briefcase full of euros – Polish Environment Minister Anna Moskwa was in Prague on Friday for negotiations with her Czech counterparts over the controversial Turow lignite mine. According to a Polish draft agreement seen by Politico, Warsaw is offering to pay Prague a €50 mln “financial contribution” if Czechia withdraws its lawsuit and promises to never again bring action based on EU law against Poland in relation to the mine. Local communities are urging the Czech government to reject the offer, arguing that the proposal does not sufficiently address the mine’s impact on the environment. Poland has vowed to continue extracting coal at its Turow mine after being ordered by Europe’s top court in September to pay daily fines of €500,000 to the European Commission over the government’s refusal to adhere to an earlier ruling. The ECJ levied the penalty, saying “such a measure appears necessary” to coerce Poland and state-controlled utility PGE to halt operations at the open-pit lignite mine on the Czech border, which Prague claims is damaging its citizens’ houses and water supplies. Czechia took its case to the ECJ, with the court delivering an interim verdict in May in its favour. Since then, the two governments have attempted to forge a compromise to limit the impact on local water, noise, and pollution levels, but with little success.

Greece is the word – Greece has introduced its first climate law, with a focus on low-carbon energy, as PM Kyriakos Mitsotakis steps up efforts to tackle the effects of the global environmental crisis. The premier outlined his “ambitious” goals at a cabinet meeting on Thursday, including a ban on sales of new combustion-engine cars from 2030. While the law has been long-planned, extreme weather events this year have brought Greece’s vulnerability into sharp focus. Mitsotakis flagged on Monday that the country was ready to approve the legislation, amid EU efforts to achieve climate neutrality by mid-century. Greece’s law also states that all new taxis and a third of new rental cars in the country’s two biggest cities – Athens and Thessaloniki – should be hybrids or electric vehicles from 2025. In the housing sector, the legislation introduces a ban on oil burners in all new-build properties as of 2023 in areas where the “natural gas network is sufficient”. Record-high temperatures in Greece this summer, combined with strong winds, caused a series of wildfires that burnt for more than two weeks, razing a large part of northern Evia, an island close to Athens. Evia was also severely affected by flash floods that struck the country in October. (Bloomberg)

Bad bonds – The Bank of England said on Friday it would no longer buy bonds from companies that generate money from the mining of thermal coal, and would only purchase from carbon-intensive organisations that had a target for cutting GHGs, the FT reports. Outlining how it planned to make good on its commitment to green its corporate bond portfolio, the BoE said companies would need to meet new climate-related eligibility criteria, with purchases to be “tilted” towards the “stronger climate performers” within each sector. Companies would be assessed on the “emission intensity” of their activities, how much they had decarbonised so far, their climate-related disclosures and whether they had published an emissions reduction target. Companies in “high emitting sectors”, such as energy, electricity, gas, and water, would have to publish decarbonisation targets for their bonds to be eligible for purchase by the BoE, while those generating any revenue from mining thermal coal would be ineligible. The bonds of companies that generate any revenue from the use of thermal coal would also be ineligible for purchase unless they met certain criteria, the bank said. The change would reduce the weighted average carbon intensity of the BoE portfolio by 25% by 2025, and would align it with net zero by 2050, it said.

Let’s get digital – The French Senate has passed a law that aims to reduce the environmental footprint of digital technology, which includes an obligation for French telecoms operators to disclose to the public what they are doing to this end. According to Euractiv, the Senators approved the bill on Tuesday after it had already been amended by the National Assembly, without modifying it further, so that it can be implemented quickly. The proposal’s author, Les Republicains Senator Patrick Chaize, criticised the deputies for having lowered some of their ambitions. “The text from the National Assembly is incomplete and this second reading has a taste of unfinished business,” he said. According to Chaize, there is an urgent need to act. In France, the digital sector accounted for 2% of GHGs in 2019 and this figure could rise to 6.7% by 2040, a Senate report published last summer found. The new law focuses on several key areas, including raising awareness of the environmental impact of digital technology and encouraging digital sobriety. It also seeks to limit the renewal of terminals by introducing the notion of software obsolescence in particular, and by encouraging virtuous digital practices by promoting data centres and less energy-intensive networks. French telecoms operators like Orange, SFR, Bouygues Telecom, and Free will thus have to publish “key indicators on their policies for reducing their environmental footprint”. These include the reduction of GHGs and the carbon footprint of mobile terminals or equipment – like connection boxes and TV receivers for example – as well as the solutions provided for their recycling and reuse. According to Senate figures, the manufacturing of terminals is responsible for 70% of the total impact.

UAE maps hydrogen – The UAE has announced a hydrogen leadership roadmap, a national blueprint to support domestic, low-carbon industries, contribute to the country’s net zero ambition and establish the country as a competitive exporter of hydrogen, the Emirates News Agency reports. The roadmap comprises three core objectives: unlocking new sources of value creation through exports of low-carbon hydrogen, derivatives and products to key importing regions, fostering new hydrogen derivative opportunities through low-carbon steel, sustainable kerosene, and other priority  industries, and contributing to the UAE’s 2050 net zero commitments.

AMERICAS

Carbon market calling – Brazil’s lower House on Thursday fast tracked a vote on a compliance carbon market bill, with lawmakers set to vote on the proposal next week, Congressman Marcelo Ramos tweeted. Ramos also said legislators should approve the bill next week, which aims to operationalise a cap-and-trade programme based on the country’s 2009 climate law. Additionally, the House on Friday approved a petition to combine the carbon market bill (PL 528/21) with other legislation (PL 290/20) that would allow thermoelectric power generators to earn CERs.

Third time’s the charm – Regulated entities under the California-Quebec cap-and-trade programme achieved 100% compliance with their third trading period (2018-20) deadlines on Nov. 1, regulators for both jurisdictions announced Friday afternoon. California emitters were responsible for surrendering compliance instruments for the remaining 70% of their 2018-19 GHG obligations and 100% of 2020 obligations on Monday, while Quebec entities had to turn in allowances or offsets for 100% of their 2018-20 emissions. The fourth trading period of the WCI carbon market started this year and runs through 2023.

How’d you get that number? – Several US Senate Republicans are pushing for more transparency on how President Joe Biden’s administration is calculating the federal social cost of carbon (SCC). On Thursday, the lawmakers wrote to the White House working group on the issue requesting information on areas of decision-making, budgeting, and where the SCC may be used across governments. Biden had called for recommendations on the SCC under a Jan. 20 executive order, and the White House working group was supposed to deliver this back in September. GOP legislators say that deadline has lapsed with no word to Congress about the status of the recommendations. The Biden administration restored an Obama-era central value for the SCC at $51/tonne in Feb. 2021 and is expected to publish updated figures at the start of 2022. (Politico)

One is the loneliest number – The US EPA has denied one 2019 compliance waiver for the Renewable Fuel Standard (RFS), according to agency data updated Friday. The denial of the small refinery exemption (SRE) means there are 29 outstanding compliance relief petitions for 2019, and 65 for the entire 2016-21 period.

ASIA PACIFIC

Santos came early this year – Australian oil and gas producer Santos has struck a deal with the Australian government’s science research agency, CSIRO, to trial technology aiming to suck CO2 from the atmosphere and pump it underground, the Sydney Morning Herald reports, as governments and industry explore new ways to neutralise emissions and stop the planet from overheating. The collaboration will seek to develop a so-called “direct air capture” project – the first of its kind in Australia – and connect it to Santos’ A$220 mln ($162 mln) Moomba carbon CCS project, which the Santos board agreed to finance earlier this week.

Right on Fortes-cue– Australian mining magnate Andrew “Twiggy” Forrest’s Fortescue Future Industries (FFI) plans to develop more than a dozen hydropower and geothermal energy projects in Papua New Guinea, the West Australian reports. The wholly-owned subsidiary of Fortescue Metals Group has signed an agreement with the PNG government to look at the feasibility of up to seven hydropower and 11 geothermal energy projects. They would be used to generate renewable electricity for the development of green hydrogen and ammonia. Fortescue Metals Group expects this to create a significant domestic and export industry for a country that relies heavily on imported oil. The company anticipates the projects, once completed, could produce up to 2.3 mln tonnes of green hydrogen a year. Andrew Forrest’s FFI had also made hydrogen deals with Argentina and Jordan during the week.

SCIENCE & TECH

Standards please – A bid to develop a global green hydrogen standard was launched at COP26 by the Green Hydrogen Organisation (GH2), and the UN High-Level Climate Action Champions, Recharge reports. The new standard would address: the total GHG emissions of each batch of green hydrogen, to guarantee that it was produced using renewable energy with close to zero emissions; the overall ESG performance of GH2-certified hydrogen; and the impact of green H2 development in developing countries.

Ammonia time – Announcing its membership of the new First Movers Coalition this week at COP26, commodity trader Trafigura has outlined its commitment to own and operate six ammonia carriers which – if technically feasible – will operate on ammonia as their primary fuel source by the end of the decade and would account for around 18% of the company’s owned fleet. Trafigura noted that its planned ammonia carriers will be able to make the switch from conventional fuel oil to low-carbon (blue or green) ammonia when the MAN Energy Solutions two-stroke ammonia engine that Trafigura is co-sponsoring becomes commercially available. It is also involved in a number of initiatives focused on researching into and realising the potential of ammonia as a marine fuel. In July, Trafigura and German hydrogen specialist Hy2Gen signed an MoU for a study that will quantify the infrastructure and production demands for green ammonia as marine fuel. Trafigura became a shareholder and a board member of Hy2Gen back in Dec. 2019. In June this year, the group also signed an MoU with ammonia specialist Yara to work on the development of ammonia as a bunker fuel as well as the creation of a green and blue ammonia fuel infrastructure. In the same month, Trafigura entered into a MoU with 22 companies across a range of industries to initiate a joint study on ammonia as an alternative marine fuel. (Bunkerspot)

AND FINALLY…

The white stuff – Colombia’s president has hit out at Western cocaine users who preach environmentalism while consuming a recreational drug whose production is one of the biggest causes of Amazon deforestation. “In order to produce one hectare of coca, almost two hectares of tropical jungle are destroyed in Colombia,” President Ivan Duque told the Financial Times in an interview at COP26. “You meet cocaine users in other countries who are very avid and very talkative when speaking in favour of the environment. But they don’t realise that when they consume [cocaine] they’re doing great damage to the environment.” About 143,000 ha of Colombia are dedicated to growing coca leaves, the key ingredient in cocaine production, according to UN figures. Coca cultivation has increased in national parks and indigenous reserves, despite government efforts to eradicate the illicit crop. Large quantities of petrol are used in cocaine production, along with cement, hydrochloric acid, and toxic solvents such as ether and acetone. Duque said that only when visiting illegal cocaine labs in the jungle raided by the authorities did “you realise the terrible environmental damage because all the chemicals from the processing end up being dumped into the soil of the tropical forest”.

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