CP Daily: Tuesday November 9, 2021

Published 01:06 on November 10, 2021  /  Last updated at 01:06 on November 10, 2021  /  Newsletter  /  No Comments

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

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COP26

Seeking Article 6 breakthrough, governments consider leaving emissions beyond pledges to the voluntary market

Negotiators working on rules to govern international emissions trade under Article 6 of the Paris Agreement are considering a fresh compromise to help break a deadlock over double counting safeguards that has lasted for nearly six years.

VCM market diverges on demand for ‘Paris-adjusted’ carbon credits

The voluntary carbon market has varied views over demand for correspondingly adjusted carbon credits, though many only expect limited take-up from a minority of corporate buyers seeking high quality units.

Glasgow faces credibility gap with climate efforts falling short, report warns

The Glasgow climate conference faces a credibility, action, and commitment gap with the world heading for end of century warming of over 2C, even when taking into account the recent spate of net zero pledges by key economies, a report released on Tuesday said.

WCI jurisdictions to explore possible carbon market alignment with New Zealand

California, Quebec, and New Zealand on Tuesday signed a declaration promising closer collaboration on climate policy, with the WCI jurisdictions looking into greater alignment with the Pacific Island nation on their respective cap-and-trade programmes.

Democratic Congressional delegates tout US climate leadership amid domestic headwinds

A collection of Democratic lawmakers, led by House Speaker Nancy Pelosi, arrived at the COP26 talks on Tuesday to rekindle trust in US climate leadership, but a bleak legislative and policy landscape at home and poor track record in global cooperation are raising doubts.

Germany puts up €10 mln to start buying credits under new Paris market mechanism

Germany said on Tuesday that it will spend €10 million to buy carbon credits under the new Paris Agreement carbon market mechanism once Article 6.4 rules are agreed.

COP26 Roundup: Day 8 – Nov. 9

It’s Science Day in Glasgow, while negotiations carry on under the guidance of ministers appointed by the UK COP26 Presidency.

SHIPPING

ANALYSIS: Shipping blueprint highlights need for R&D spend to kickstart industry decarbonisation

A recent warning from a shipping industry group that lack of investment in green technologies presents the biggest hurdle to the industry’s decarbonisation targets has sharpened focus on the technical and financial challenges facing the sector, whose emissions are seen as hard to abate, if it is to achieve net zero emissions by 2050.

ASIA PACIFIC

China’s central bank unveils new lending policy to fund decarbonisation

The People’s Bank of China (PBOC) has unveiled a new lending policy to provide cheaper funding to carbon reduction efforts, a move analysts say can inject at least a trillion yuan ($160 billion) into the market.

EMEA

Euro Markets: EUAs retreat from early gains amid Russian gas flows

EUAs gave back their intraday gains for a fourth straight day on Tuesday, as gas prices fell on news that Russia had kept its word and was increasing piped flows into Europe.

CEZ reports coal output cut as puts asset sale on hold

Czech utility CEZ saw its coal power output drop 18% over the first nine months of 2021 amid asset divestments, the company said on Tuesday, though it halted the sale of its Polish assets.

INTERNATIONAL

$100/tonne CO2 tax would have minor impacts in most OECD countries -study

A sudden global $100/tonne carbon tax would lower GDP by only 1-2% in most middle-to-high-income nations, but the effects would be more pronounced in carbon-intensive emerging economies such as Russia, South Africa, and India, according to new research.

VOLUNTARY

AirCarbon, Rio de Janeiro to establish Brazilian VER marketplace

AirCarbon Exchange (ACX) and the Rio de Janeiro government on Tuesday announced plans to launch a voluntary emissions reduction (VER) marketplace in Brazil next year as the country appears set to ramp up its carbon market activity.

Silicon Valley-backed corporate carbon offset ‘robo-advisor’ raises $3 mln in seed round

A Silicon Valley-backed ‘robo-advisor’ for high-quality offsets has raised $3 million in a fund raise to help scale its procurement platform for corporates seeking to neutralise their carbon footprint.

Evolution Environmental Asset Management welcomes green investment, offset experts into the fold

Evolution Environmental Asset Management (EEAM) on Tuesday announced the appointment of an advisory board made up of green investment experts, while also naming a carbon offset veteran to its team of founding partners.

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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

Shot across the bow – Further proof of the bitter fault lines emerging in the global green governance of shipping has emerged with an uncharacteristically strongly-worded missive from the Asian Shipowners’ Association (ASA), hitting out at the EU’s plan to include shipping in the bloc’s ETS. The group argued that as the industry’s global regulator, IMO is the only appropriate forum for the development of a market-based measure applicable to international shipping. The ASA said it is very concerned that the inclusion of shipping in the EU ETS is being taken forward with little apparent understanding of the implications for the ongoing negotiations at IMO to eliminate GHG emissions from the sector globally, or the wider ramifications for the EU’s relationships with its trading partners. ASA said it believes the application of the EU ETS to non-EU flagged ships is essentially an extraterritorial tax when the EU needs to encourage global trade, not create new barriers. Furthermore, ASA said that if the EU goes ahead with its ETS plans, other nations around the world might follow, applying their own carbon charges to international voyages that originate or terminate at ports outside their territory, “creating chaos and fragmentation of the global maritime regulatory framework”, the ASA stated. “Rather than incentivising the transition to zero-carbon technologies, the extension of the EU ETS to shipping will only serve to impede the process of decarbonisation of international shipping, putting the EU in conflict with the achievement of both IMO and UNFCCC climate change objectives, as the incorporation of shipping into the EU ETS will have profound implications for the future authority of IMO. This could potentially derail the concerted efforts by all IMO Member States, including European nations, to eliminate CO2 emissions from shipping completely.” The ASA has come out in favour of the International Chamber of Shipping’s plan for a research fund to drive innovation, paid for by a small mandatory $2/tonne contribution on marine fuels. (Splash)

Dodgy accounting – Across the world, many countries under-report their GHGs in their reports to the UN, a Washington Post investigation has found. An examination of 196 country reports reveals a giant gap between what nations declare their emissions to be vs. the GHGs they are sending into the atmosphere. The gap ranges from at least 8.5 bln to as high as 13.3 bln tonnes a year of under-reported emissions – big enough to move the needle on how much the Earth will warm. At the low end, the gap is larger than the yearly emissions of the US. At the high end, it approaches the emissions of China and comprises 23% of humanity’s total contribution to the planet’s warming, The Post found. That means the challenge is even larger than world leaders have acknowledged. The UNFCCC attributed the gap that The Post identified to “the application of different reporting formats and inconsistency in the scope and timeliness of reporting (such as between developed and developing countries, or across developing countries).” When asked if the UN plans on addressing the gap, spokesman Alexander Saier said in an email it is continuing its efforts to strengthen the reporting process: “However, we do acknowledge that more needs to be done, including finding ways to provide support to developing country Parties to improve their institutional and technical capacities.” The gap comprises vast amounts of missing CO2 and methane emissions, as well as smaller volumes of powerful synthetic gases. It is the result of questionably drawn rules, incomplete reporting in some countries, and apparently willful mistakes in others – and the fact that in some cases, humanity’s full impacts on the planet are not even required to be reported. The analysis found at least 59% of the gap stems from how countries account for LULUCF emissions. A key area of controversy is that many countries attempt to offset the emissions from burning fossil fuels by claiming that carbon is absorbed by land within their borders. The Post found that methane emissions comprise a second major portion of the missing GHGs, with independent scientific data sets showing between 57 Mt and 76 Mt more of human-caused methane hitting the atmosphere than UN country reports do. That converts to between 1.6-2.1 bln tonnes of CO2e.

AMERICAS

Mad about methane – The US EPA’s proposed methane rules could be the next target for legal opponents of President Joe Biden administration’s approach to estimating the value of curbing GHGs. Republican-led states have already attempted to challenge the Biden administration’s decision to ditch the Trump-era social cost of carbon, a closely related metric, but Judge Audrey Fleissig of the US District Court for the Eastern District of Missouri this summer rebuffed their lawsuit as premature. However, a new lawsuit opposing EPA’s methane rules is “certainly something that we will look into as we move forward with our appeal on the social cost of greenhouse gases case,” Chris Nuelle, a spokesperson for Missouri Attorney General Eric Schmitt (R), wrote in an email. Biden’s team is using interim values of about $51/tonne of carbon and $1,500/tonne of methane. Federal agencies under former President Trump had placed the cost of a tonne of CO2 at just $1 and considered only domestic, not global, economic impacts. (E&E News)

Pennsylvania RGGI update – The Pennsylvania House Environmental Resources and Energy Committee on Monday advanced a resolution to disapprove and reject Gov. Tom Wolf’s (D) efforts to join the RGGI power sector cap-and-trade programme. The GOP-controlled committee passed the Senate Concurrent Resolution No. 1 by a 16-9 margin, with one Democratic member backing the proposal. The Senate passed the resolution last week, and it now heads to the House for a floor vote.

Diablo double-take – California could reduce its power sector emissions by more than 10% from 2017 levels, save $2.6 bln in power system costs and improve system reliability by delaying the retirement of utility PG&E’s Diablo Canyon, its last nuclear plant, to 2035, according to a new report from experts at Stanford and MIT. Regulators in 2018 approved a settlement that would have the nuclear power plant shut down completely by 2025, when the federal license for its second unit expires. The Diablo Canyon facility provides 8% of in-state electricity and 15% of California’s carbon-free electricity, according to the report. (Utility Dive)

EMEA

Rolls with the (nuclear) punches – Britain has committed £210 mln to help Rolls-Royce build the country’s first small modular nuclear reactor, part of a drive to reach net zero carbon emissions. Hitting this goal by 2050 will require a huge increase in low-carbon power generation such as wind, solar and nuclear, but large-scale new nuclear projects have struggled for funding. “Small Modular Reactors (SMRs) offer exciting opportunities to cut costs and build more quickly, ensuring we can bring clean electricity to people’s homes and cut our already-dwindling use of volatile fossil fuels even further,” Business and Energy Secretary Kwasi Kwarteng said. Britain also aims to increase the number clean technology jobs as part of its so-called green industrial revolution and said it is seeking to reduce reliance on fossil fuel amid a global spike in gas prices. (Reuters)

ASIA PACIFIC

Hydrogen hub – A hydrogen economy and technology action plan is being formulated towards making Malaysia among the leading players in the hydrogen industry in Southeast Asia and the world, The Star reports. Science, Technology and Innovation Minister Datuk Seri Dr Adham Baba said the ministry through the National Nanotechnology Centre has appointed NanoMalaysia Berhad as a strategic partner to put up the plan. Adham said the hydrogen economy is the alternative energy sector that would be given focus in the government’s commitment to make Malaysia a carbon neutral nation by as early as 2050.

VOLUNTARY

Trade twosome – Blockchain-based credit trading platform ClimateTrade on Tuesday announced it has incorporated the digital carbon registries of Spain and Colombia onto its climate marketplace. ClimateTrade said this marks the first time that a carbon trading platform has connected directly with national registries, allowing real-time offset cancellations and transfers.

SCIENCE & TECH

Supply crunch – Equities analyst Jeffries has estimated that that electrolyser manufacturing capacity in 2030 will be unable to meet expected pledged demand, let alone aspirations towards net zero, Renew.biz reports. The company’s Plugging into the Hydrogen Ecosystem report highlighted that renewable projects and initiatives will top $120 bln per annum worldwide with specific carve-outs for green hydrogen at $20-30 bln. It noted that while the market for hydrogen is expected to grow eight-fold, with less than 1% of hydrogen production currently green today, electrolyser markets have the capacity to grow by 800 times by 2030. “Our analysis suggests current hydrogen demand in industrial applications equates to 550-1800 GW of green electrolysers vs current supply capabilities of perhaps 3 GW per year.”

In need of a change – Change Finance, a majority women-run asset management firm, said its US Large Cap Fossil Fuel Free ETF (CHGX) is the first fund to be certified carbon-neutral in the US In addition, Change Finance has also partnered with FinTech platform EthosESG to create a process that allows for carbon-neutral certification for asset managers. The process for the asset management industry utilises its own returns to pay for the carbon offsets in their entirety, allowing for the conversion of existing ETFs to carbon-neutral ones while creating an industry-wide certification process. In order to accurately calculate the carbon footprint of Change Finance’s ownership of the securities in CHGX, the firm worked with Verity Platforms, which pulls data from Carbon Disclosures Project, a non-profit organisation that discloses the environmental impacts of companies. Verity worked to pull the data for the individual securities and then calculate it across the fund to get an accurate carbon footprint of the entire portfolio. The ETF issuer searched for VCM projects with the most sequestration potential that also focused on improving biodiversity while supporting marginalised populations. They found their answer in Grassroots Carbon, a group that removes carbon from the atmosphere and stores it in the soil via regenerative grazing. For every $1 mln that is invested in CHGX, 7 tonnes of carbon are removed from the atmosphere. (ETF Trends)

AND FINALLY…

Tuvalu was here – Tuvalu is looking at legal ways to keep its ownership of its maritime zones and recognition as a state even if the Pacific island nation is completely submerged due to climate change, its foreign minister said on Tuesday. “We’re actually imagining a worst-case scenario where we are forced to relocate or our lands are submerged,” the minister, Simon Kofe, told Reuters in an interview. “We’re looking at legal avenues where we can retain our ownership of our maritime zones, retain our recognition as a state under international law. So those are steps that we are taking, looking into the future,” he said. Images of Kofe recording a speech to COP26 standing knee-deep in the sea have been widely shared on social media over recent days, pleasing the tiny island nation which is pushing for aggressive action to limit the impact of climate change.  Tuvalu is an island with a population of around 11,000 people and its highest point is just 4.5 metres (15 ft) above sea level. Since 1993, sea levels have risen about 0.5 cm (0.2 inches) per year, according to a 2011 Australian government report.

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