CP Daily: Friday November 26, 2021

Published 01:33 on November 27, 2021  /  Last updated at 01:33 on November 27, 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: UK likely to boost auction ETS volumes in 2022 as prices trigger CCM, but timeline, supply source unclear

The UK ETS will face its first regulatory test at the start of December as the market’s Cost Containment Mechanism (CCM) will be triggered this month, though sources are fairly divided as to if and how the government will ultimately intervene.

EMEA

Euro Markets: EUAs claw back half their early losses to post 4.9% weekly gain amid macro gloom

EUAs plunged 5.5% in a hectic opening hour of trading on Friday as markets were shaken by reports of a new Covid-19 variant emerging in South Africa. Carbon eventually clawed back half of those losses.

EU lawmakers seek changes to CO2 border measures that could ease impact on US emitters

The European Parliament’s cross-party trade committee is seeking changes to the EU’s proposed Carbon Border Adjustment Mechanism (CBAM) that could substantially lower costs faced by US emitters, according to a draft report published this week.

Newly-formed German government firms up plans to shield citizens from energy transition costs

The incoming German cabinet is laying out plans to compensate its citizens for higher energy prices, in a move designed to enhance the acceptability of carbon pricing on consumer-facing sectors while safeguarding social justice.

ASIA PACIFIC

CN Markets: China carbon stable even as compliance deadline nears

Prices in China’s carbon market barely budged over the past week, as there is still a lot of uncertainty even with just three weeks left for 2019 and 2020 compliance.

INTERNATIONAL

Researchers pitch minilateral approach to ITMO trade to increase quality, ambition

Small groups of countries can band together in Climate Action Teams (CATs) under the Paris Agreement’s bilateral trading mechanism to drive high-quality economy-wide emissions reductions in seller countries to help all participants meet their climate targets at lower cost, researchers said Friday.

VOLUNTARY

Verra disassociates itself from crypto offset activities, says will seek solution

Offset standard manager Verra has disassociated itself from an offset-backed blockchain venture that has driven the retirement millions of its VCS units in recent weeks, but also said it would seek to work with market participants to find solutions.

AVIATION/SHIPPING

Campaigners cheer small victory for Arctic at UN’s shipping climate talks

A voluntary measure to reduce shipping’s black carbon emissions in the Arctic was adopted at the UN’s International Maritime Organisation (IMO) negotiations on Friday, a move welcomed by green groups as a modest step while other climate decisions for the sector were deferred.

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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

Saffa strings – South Africa will only accept $8.5 bln in initial funding pledged by rich nations to help it shift from coal to greener energy if the terms suit national goals like debt reduction and job creation, President Cyril Ramaphosa said Thursday. Earlier this month, the US joined Britain, France, Germany, and the EU to offer a multi-billion dollar package to help South Africa accelerate a transition from coal. South Africa, which is the world’s 12th biggest GHG emitter and heavily reliant on ageing coal-fired power stations for its electricity, said the money would help it deliver on a more ambitious pledge to reduce emissions by 2030. “This commitment from international partners does not mean we need to accept the offer, as such, or that we need to accept any unfavourable terms especially if the financing arrangements could impact negatively on the public fiscus of our country,” Ramaphosa told lawmakers when responding to questions. He added that most of it would need to be in the form of grants, and that any loans would need to have concessionary rates. Ramaphosa said most of the money was expected to help state-owned power utility Eskom, which is struggling under a mountain of debt and to keep the lights on in Africa’s most industrialised economy, reduce the nation’s over-reliance on coal-fired power plants supplying the bulk of domestic electricity. (Reuters)

EMEA

No fan of CCS – The CEO of multinational Italian energy firm Enel expressed doubt on the usefulness of CCS, suggesting the technology is not a climate solution, CNBC reports. “We have tried and tried — and when I say ‘we’, I mean the electricity industry,” Francesco Starace said. “The fact is, it [CCS] doesn’t work, it hasn’t worked for us so far,” he said. “And there is a rule of thumb here: If a technology doesn’t really pick up in five years — and here we’re talking about more than five, we’re talking about 15, at least — you better drop it.” The statement comes after the announcement earlier this week that Enel brought forward its net zero emissions pledge by 10 years to 2040.

Climate booster – Germany’s incoming government is working on a 2021 supplementary budget to pump more than €50 bln into its climate fund which could be spent over the coming years to speed up the transition towards a green economy, EURACTIV/Reuters reports. The funds will help the government to make almost full use of a higher-than-usual debt limit that was unlocked by the parliament amid the prolonged pandemic. Hence, the injection is expected to be primarily deployed to make critical public investments in climate protection measures, such as improving building insulation.

Welsh first – Wales is planning to adopt the world’s earliest net zero emissions target following a deal struck in its parliament, the Daily Mail reports. The paper explains: “The principality aims to cut greenhouse gas pollution to zero by 2035 – ten years earlier than Scotland’s goal and 15 years ahead of the UK-wide 2050 target. A deal cut between Labour and Plaid Cymru in the Senedd launched a paper which states the Welsh government will ‘commission independent advice to examine potential pathways to net-zero by 2035’.” The Welsh government will seek advice from the UK Climate Change Committee, the paper notes. (Carbon Brief)

ASIA PACIFIC

Green miles – Qantas frequent flyers will be awarded loyalty points and “green tier” status if they offset emissions from their flights, cars, and homes as part of the Australian airline’s efforts to improve its sustainability credentials, the Sydney Morning Herald reports. Amid growing scrutiny of the global aviation industry’s environmental impact, Qantas said it would be the world’s first airline to reward customers who minimise their carbon footprint in the air and on the ground. About 11% of Qantas customers currently pay a small amount (A$1/$0.71, on a Sydney-Melbourne flight) to offset the emissions from their travel, which goes towards revegetation projects, renewable energy projects, and other carbon abatement schemes.

Gas to net zero –  Australia’s Morrison government will back the development of more gas basins and the construction of new gas pipelines, as part of a new infrastructure plan that sees Australia double down on its status as a leading global producer and exporter of fossil fuels, Renew Economy reports. The 2021 gas infrastructure plan released on Friday outlined the Morrison government’s vision to expand the gas industry over the next two decades, including more production and spending on new gas infrastructure. It comes just weeks after the COP26 climate talks, where Australia signed the final communique that asked countries to improve their short term emissions targets in 2022, and to phase out inefficient fossil fuel subsidies. Earlier this week The Guardian reported that prime minister Scott Morrison told business leaders that he “did a bit of a jig” upon hearing that energy firm Woodside had made a final investment decision on the A$16 bln ($12 bln) Scarborough offshore gas and associated Pluto Train 2 LNG project.

Green hydrogen aim – Japanese material group Asahi Kasei aims to put one of the world’s largest production systems for hydrogen on the market in 2025, with a goal of lowering the price of the clean energy fuel to one-third of the current level, Nikkei reports. Potential buyers include European and Middle Eastern energy companies. The hydrogen generators, which use renewable energy to produce hydrogen, are in operation at a test facility in Japan’s Fukushima prefecture.

AMERICAS

Bad Spending – The office of the Auditor General of Canada tabled a report Thursday that shows the Government has spent “considerable money to reduce the country’s total emissions” but that mitigation programmes do not always deliver the intended emissions reductions. Specifically, the audit found that the $71.5 mln provided to the energy sector through the federal Onshore Program of Emissions Reduction Fund will not reduce the sector’s emissions as advertised.

AND FINALLY…

Kyrgyz splurge – Reuters reports from Bishkek, the capital of Central Asian nation Kyrgyzstan. Last winter it was the world’s most polluted city and it’s where the government is subsiding coal and urging citizens to burn more of it. But the former Soviet republic has little choice – almost half of its electric power is generated by hydroelectric plants, the biggest of which has suffered this year from low water levels due to drought. It is unable to import power from neighbours who face deficits themselves for various reasons including a cryptocurrency mining boom.

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