CP Daily: Wednesday November 17, 2021

Published 00:47 on November 18, 2021  /  Last updated at 00:47 on November 18, 2021  /  Newsletter  /  No Comments

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

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TOP STORY

ANALYSIS: Glasgow could be a ‘game-changer’ for fossil fuel subsidies

Language on fossil fuel subsidy reform in the decision of the COP26 UN climate conference was dismissed by some as another empty promise, but others believe it could pave the way for drastic cuts in government support for oil, gas, and coal.

VOLUNTARY

Offset-cancelling crypto initiative eyes Paris carbon units

A carbon-backed crypto currency initiative that has driven the retirement of more than 10 million voluntary offset credits over the past month is considering expanding its scope to also include units under the Paris Agreement’s Article 6 once that market becomes operational, it said Wednesday.

LNG group, industry players release frameworks for GHG counting in transparency push for “carbon neutral” claims

An LNG industry group and a separate collaborative corporate effort both released on Wednesday key methodologies for calculating and reporting GHG emissions from LNG cargoes to provide industry-wide frameworks to ensure greater transparency to LNG “carbon neutral” claims that are increasingly being made.

ASIA PACIFIC

Intermediaries in China carbon market see windfall gains from rapidly rising voluntary offset prices

Intermediaries in the Chinese carbon market are reaping benefits from fast-rising offset prices as the gap widens between what domestic developers ask and the international market is paying.

AMERICAS

WCI allowance surplus to persist through 2030 on greater ZEV adoption -analysts

Higher-than-expected zero-emissions vehicle (EV) uptake will reduce California GHG emissions and likely prevent an allowance shortage from arising this decade under the WCI-linked cap-and-trade programme, analysts said.

Virginia re-approves Dominion’s RGGI rate request, denying green group petition

The Virginia State Corporation Commission (SCC) on Wednesday lifted its suspension of utility Dominion Energy’s rate case request for recovering RGGI-related costs, and in the process rejected an environmental group’s petition against the power generator.

RGGI compliance holdings lagging emissions through Q3 -report

Year-to-date CO2 output under the RGGI cap-and-trade system exceeded allowance holdings by compliance entities during the third quarter, while higher trade volumes and open interest were associated with more speculators in the market, according to a report published Wednesday.

EMEA

Euro Markets: EUAs slump after setting third record in a row as gas wipes out early gains

EUAs fell away late on Wednesday after setting a record high for the third consecutive day, as energy prices first extended gains amid continuing uncertainty over gas flows, and then slumped after Germany’s grid operator said winter supplies would be sufficient.

Swiss-EU ETS allowance transfer calendar for 2022 published

The EU and Switzerland have published the ETS allowance transfer window schedule for 2022, providing 28 one-day opportunities for units to flow between the linked carbon markets.

COMMENT

A Brave New (Article 6) World

Last week’s UN agreement on Article 6 is bullish for the role of market-based mechanisms in supporting global climate action. But the new dawn comes with added complexities, write Sebastien Cross and Tommy Ricketts of BeZero Carbon.

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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

AMERICAS

Kloser to Kigali – The White House on Tuesday sent the Kigali amendment to the Montreal Protocol to the Senate for ratification, completing one of President Joe Biden’s campaign pledges. Biden, in a message to the Senate, urged ratification “at the earliest date” and said it would help the US remain a leader in developing alternatives to highly-potent global warming gases HFCs and give American businesses access to growing refrigeration and cooling markets abroad. Kigali was adopted in 2016, but former President Donald Trump refused to send the treaty to the Senate for the necessary two-thirds ratification. In September, the US EPA finalised a rule that would slash the use of HFCs by 85% over the next 15 years, carrying out legislation that was passed with bipartisan support by Congress last year and would make the US compliant with the treaty. (Reuters)

Further from Kigali – Meanwhile, the US government on Wednesday opened more than 80 mln acres (32.4 mln ha) in the Gulf of Mexico to auction for oil and gas drilling, a record offshore lease sale that will lock in years of GHG emissions. The lease sale is a major reversal of Biden’s commitment to shut down new oil and natural gas leases on public lands and waters and comes just days after the president’s pledge to slash emissions during COP26. The lease sale has the potential to emit more than 516 MtCO2e into the atmosphere, according to the Center of Biological Diversity. The president signed an executive order in January directing the Secretary of the Interior to halt new oil and natural gas leases on public lands and waters and to begin a thorough review of existing permits for fossil fuel development. But in June, a federal judge in Louisiana issued a preliminary injunction to block the administration’s suspension and ordered that plans continue for lease sales that were delayed for the Gulf and Alaska waters. The US Department of Justice is asking an appeals court to overturn the judge’s order. The auction on Wednesday sold 308 leases and brought in $191.7 mln, larger than most Gulf sales conducted under Trump since 2017. (CNBC, Bloomberg)

Willie or won’t he? – The US Senate unanimously confirmed Willie Phillips on Tuesday to fill a vacant seat at the Federal Energy Regulatory Commission (FERC), giving Democrats a 3-2 majority at the agency. Adding Phillips to the agency could break potential logjams over key policy decisions, with FERC considering changing its rules around transmission planning, how it reviews natural gas infrastructure, and how to give the public a bigger role in its decision-making processes. On climate change, the agency is also considering whether to allow carbon pricing in wholesale electricity markets. Read Carbon Pulse’s article on Phillips’ September nomination to FERC here. (Utility Dive)

Not very appealing – The Manitoba government says it will not appeal a court ruling that said the Canadian federal government has a right to impose its ‘backstop’ CO2 pricing system on provinces. Last month, a federal court judge rejected Manitoba’s argument that Ottawa should not have imposed an escalating minimum price on carbon, because the province was planning its own emissions plan that could have been just as effective. New Manitoba Progressive Conservative Premier Heather Stefanson on Wednesday she recently spoke with Canadian PM Justin Trudeau and wants a more collaborative approach. Stefanson says Manitoba is developing a new policy and will negotiate with Ottawa in the months ahead. (Canadian Press)

Sark attack – Alternative investment fund manager Sarkis is planning to launch a new physically-focused environmental fund after receiving approval from California regulator ARB to participate in WCI auctions and hold carbon units, Bloomberg reports. The London-based energy fund manager has about $500 mln under management and until now has focused largely on fossil fuels.

Viaje Verde? – Since February, the ride hailing company Uber has offered customers in Mexico an “Uber Planet” option that allows them to offset the emissions associated with their trip. Although the company’s emissions strategy aims to transition drivers to EVs, executives told Reuters that this transition is “impractical” in the near term in parts of Latin America, given the region’s nascent EV markets. However, offset credits used by the scheme are facing criticism, with campaigners Carbon Market Watch questioning the additionality of the Oaxaca IV wind farm CDM project that accounts for 16% of purchases in Mexico.

EMEA

COP26 spill-overs – The European Commission has unveiled a long-awaited draft law to tackle consumption-driven deforestation. Arguing that the vast majority of global deforestation is triggered by agricultural expansion, the draft provides a framework to ensure that “the products that EU citizens buy, use and consume on the EU market do not contribute to global deforestation and forest degradation.” It sets out a benchmarking system to classify countries according to their level of deforestation risk that will be used to determine the obligations on companies and member states, Bloomberg reported. The announcement came days after the COP26 UN climate conference in Glasgow, which saw the signing of a pledge on battling deforestation by over 100 nations.

Pretty in pink – French President Emmanuel Macron announced Tuesday that France will provide an additional €1.9 bln in to support the development of zero-carbon and green hydrogen production. The new spending announcement brings total national support to around €9 bln when combined with funds announced in France’s 2030 hydrogen strategy. When the package was first announced on Oct. 12, Macron also stated that France would build “at least” two GW-scale electrolyser production factories, as well as a small modular reactor for nuclear power generation. According to the government, the funds will be used for the production of green hydrogen, as well as pink hydrogen derived from nuclear power. (ICIS)

Nearly there – The parties negotiating Germany’s next government coalition plan to table a coalition treaty and propose new government ministers next week and to have a new government in place by the end of the month, Clean Energy Wire reported. In a joint statement, party representatives did not share information on the remaining disputes, but the Green party had previously warned that disputes particularly in climate policy continued to be significant and could potentially derail the agreed schedule. Read Carbon Pulse’s article on the key climate policy battlegrounds for parties jostling to govern Europe’s biggest economy.

Green hydrogen – Namibia has issued a notice of award stating its intention to appoint HYPHEN Hydrogen Energy as preferred bidder to develop the country’s first large-scale vertically integrated green hydrogen project in the Tsau/Khaeb national park, Off Grid reports. The project, worth an estimated $9.4 bln, will ultimately produce 300,000 tonnes of green hydrogen a year for regional and global markets, either as pure green hydrogen or in derivative form (green ammonia).

ASIA PACIFIC

Not the point – Australia’s federal energy minister Angus Taylor has labelled potential reforms to his own government’s Safeguard Mechanism as a ‘tax by stealth’ while admitting the mechanism was never designed to compel companies to reduce emissions, RenewEconomy reports. Taylor made the comments in a pre-recorded address to the Energy Users Association of Australia on Wednesday, where he rejected a proposal put forward by the Business Council of Australia to strengthen and expand the Safeguard Mechanism, which is seen by many as an effective way to implement a much-wanted form of carbon pricing for Australia’s largest emitters. The federal Coalition has railed against any form of carbon pricing, but Australian business, investors, and many energy market participants have consistently called for some form of market mechanism, as it would allow businesses to appropriately account for the cost of CO2 output.

Can’t breathe – India has directed six coal-fired power plants located around Delhi to shut down until the end of this month as part of measures to clean some of the world’s dirtiest air, as a cloud of smog has enveloped the city and its suburbs for nearly two weeks. The federal environment ministry late Tuesday also barred the entry of all trucks except those carrying essential items into the National Capital Region of Delhi and encouraged citizens to work from home to curb pollution. The decision came after officials from the Delhi government and the neighbouring states of Uttar Pradesh, Punjab, Rajasthan, and Haryana met to discuss ways to check the soaring pollution. India’s Supreme Court on Monday called for urgent restrictions on vehicular movement and industrial activities in and around the capital. The city has ordered schools to only teach online until Nov. 20, halted construction activities and asked some government employees to work from home after the top court called the situation an “emergency” on Saturday. About half the 13,210 MW thermal power capacities in the capital region have been ordered shut to improve air quality. Thermal capacity of 6,300 MW capacity within a 300-km radius of Delhi that has been closed down includes two units of 2,400 MW in Haryana, two units of 2,180 MW in Punjab, and two of 2,320 MW in Uttar Pradesh. (Bloomberg)

VOLUNTARY

Methodology updates – Offset standard American Carbon Registry (ACR) on Wednesday announced a public comment period to updates on two methodologies, the Use of Certified Reclaimed HFC Refrigerants and the Transition to Advanced Formulation Blowing Agents in Foam Manufacturing and Use. ACR said the changes to both methodologies include quantification for emissions at end of life of the equipment containing the HFCs, and also updates the end use-specific HFC emissions rates consistent with the US EPA GHG Inventory 1990-2019.

Cheat fleet – Carbon offsets amount to cheating and avoid the real challenge of cutting back on CO2, according to Gulf carrier Etihad Airways’ boss Tony Douglas. The state-owned company offset 70,000 tons of CO2 flight by buying into a forestry program in Tanzania and still intends to plant mangroves in Abu Dhabi, he added. (Bloomberg)

SCIENCE & TECH

New-look nuclear – Backed by the US federal government, as well as billionaires Bill Gates and Warren Buffett, upstart TerraPower is planning to build a roughly $4 bln next-generation nuclear power plant in Wyoming. Selection of the site near utility PacifiCorp’s retiring Naughton Power Plant was announced Tuesday, marking the latest milestone in a high-profile effort to launch a flexible new asset to unlock a deeper decarbonisation of the US power mix. Founded by Gates and other investors in 2006, TerraPower is partnering with GE Hitachi Nuclear Energy to begin building the plant by 2024, pending regulatory approvals. The 345MW sodium-cooled fast reactor is paired with a molten-salt energy storage system designed to boost the facility’s output to 500 MW for more than 5 hours, equal to the energy needed to power around 400,000 homes, according to TerraPower. PacifiCorp, a subsidiary of Buffett’s Berkshire Hathaway Energy, intends to purchase the facility upon its planned completion in 2028 as part of a sweeping transition toward renewable energy and other emission-free sources of power. (S&P Global Platts)

Foiled by soil – Global warming will cause the world’s soil to release carbon, new research shows. Scientists used data on more than 9,000 soil samples from around the world, and found that carbon storage “declines strongly” as average temperatures increase. This is an example of a “positive feedback”, where global warming causes more carbon to be released into the atmosphere, further accelerating climate change. Importantly, the amount of carbon that could be released depends on the soil type, with coarse-textured (low-clay) soils losing three times as much carbon as fine-textured (clay-rich) soils. The researchers, from the University of Exeter and Stockholm University, say their findings help to identify vulnerable carbon stocks and provide an opportunity to improve Earth System Models (ESMs) that simulate future climate change. “Because there is more carbon stored in soils than there is in the atmosphere and all the trees on the planet combined, releasing even a small percentage could have a significant impact on our climate,” said Professor Iain Hartley of Exeter’s College of Life and Environmental Sciences.

AND FINALLY…

Aspirational target – You can save the planet with a swipe of your bank card. That’s the enticing proposition made by a company called Aspiration, which promises to take the leftover change from customers’ purchases and use it to plant trees around the world. Aspiration is on track to spend $149 mln this year marketing that message, according to its financial documents, considerably more than the revenues the company expects to take in. But Aspiration’s signature marketing claim – about its tree-planting programme – turns out to be overblown upon closer examination. “In the past year, the Aspiration community has planted over 35 mln trees,” CEO and co-founder Andrei Cherny said on an Aug. 18 webcast announcing that his company would go public by merging with a special purpose acquisition company in what was billed as a $2.3 bln deal. However, the footnote for one of Aspiration’s two main tree programmes presents a different picture than Cherny did: “The advertised number of trees planted is the cumulative total of to-be planted trees…” In other words, that 35 mln figure included millions of trees that had not actually yet been planted. After weeks of questions from ProPublica, during which the company declined to say how many seeds or saplings have actually been planted, Aspiration said the actual number is 12 mln. ProPublica attempted to confirm these figures with the three organisations Aspiration uses to plant trees. A spokesperson for Eden Reforestation Projects offered a higher figure than Aspiration provided: “The current total of trees planted for all project sites that Aspiration sponsors is 16 mln trees.” A second Aspiration partner, Arbor Day Foundation, told ProPublica it planted 6,000 trees for Aspiration between early 2019 and Aug. 1 of this year. “There are currently no agreements in place with them at this time,” a spokesperson wrote in an email. A spokesperson for the third partner, One Tree Planted, confirmed that Aspiration “supported one reforestation project with us so far,” but declined to comment further, citing “confidentiality/non-disclosure commitments.”

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