CP Daily: Thursday December 2, 2021

Published 09:10 on December 3, 2021  /  Last updated at 09:10 on December 3, 2021  /  Newsletter  /  No Comments

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

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TOP STORY

EU nations remain split over need to meddle in energy, CO2 markets

EU energy ministers remain at odds over whether to intervene in the EU ETS amid a long-lasting energy price spike, with a few member states still pushing for temporary relief at Thursday’s Council meeting.

AMERICAS

NA Markets: CCAs routed after post-auction rebound, RGAs drift before sale results

California Carbon Allowances (CCAs) were taken to the woodshed this week as ICE’s margin hike and coronavirus worries weighed on a market still recovering from a surprisingly low auction settlement, while RGGI Allowance (RGA) prices trended down as traders awaited the result of the power sector scheme’s own Q4 sale.

British Columbia not considering LCFS price cap even as credit values soar

British Columbia Low Carbon Fuel Standard (LCFS) credits reached new highs last month, but the province isn’t likely to move forward with a price cap, a government official told a conference Thursday.

ExxonMobil sets Scope 1 and 2 GHG emissions intensity targets for 2030

US oil and gas major ExxonMobil has for the first time set emissions targets for 2030, extending a commitment that it made last year to cut the emissions intensity of its operations by 2025.

EMEA

Euro Markets: EUA rally stops short of €80 as options hedging picks up pace

EU allowances set their 12th record in the last 15 days on Thursday as buyers dominated the market, while a major fund manager predicted prices would reach €100 before the end of the year.

ASIA PACIFIC

Chinese province reports 5.5-mln allowance surplus ahead of ETS compliance deadline

A Chinese province has announced its local coal-fired power plants have a surplus of millions of CO2 allowances ahead of this month’s ETS compliance, despite some being punished for failing to report emissions.

Australian investor signs deal with developer for African carbon offsets

An Australian investor has signed a €10 million offtake deal that will secure it several hundred thousand voluntary carbon credits created from cookstove projects in East Africa over the next five years.

Australian Big Four bank hires ex-broker for carbon job

One of Australia’s four big banks has appointed a former emissions broker as its new associate director for carbon trading.

VOLUNTARY

Uncertain legal nature of voluntary carbon credits holding back market -financial trade body

The fast-growing market for voluntary carbon credits would be bolstered by the further development of derivatives trading, but several key legal issues including the uncertain legal nature of offsets need to first be addressed, a major financial industry trade association has said.

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CONFERENCES

IETA is delighted to announce the 2021 Virtual Edition of its European Climate Summit takes place Dec. 7-8. Experience with carbon markets in Europe runs deep. It is a world leader in climate action, designing policies and programs to adapt to changing market dynamics. 2021 and beyond heralds new territory for the market with new regulations and uncertainties, links to new markets and sectors, and funds to drive green recovery, innovation and technology. This edition will look at the future of emissions trading in europe, and aligning the EU ETS with net zero. IETA will bring together leading climate and energy practitioners, industrials, carbon traders, analysts, regulators, to discuss and analyse key developments in carbon markets and emissions trading, green recovery and finance, industry decarbonisation and energy transition. Attendance is free of charge – Register via link above.

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

Tariff tussle – US President Joe Biden could be keeping steel and aluminium tariffs in place on the UK to pressure Boris Johnson into playing nice on Northern Ireland as part of its post-Brexit arrangements, Politico reports. The tariffs remain nearly a month after the US and the EU agreed to end Trump-era tariffs on the products and vowed to work towards a broader global arrangement that would penalise countries that don’t meet low-carbon targets.

EMEA

Big hydrogen – Plans for a gigawatt-scale electrolyser to fuel green steel processing using renewable hydrogen have been unveiled by global giant Iberdrola and a Swedish start-up, Recharge reports. Iberdrola and H2 Green Steel want to build the plant to start production in 2025 or 2026 at an as-yet undisclosed site on the Iberian Peninsula. Iberdrola will deliver renewable power to a 1 GW electrolyser to produce H2 that will in turn fuel reduction of iron ore using a process called DRI (direct reduced iron) that usually relies on gas, producing about two million tonnes of ‘green iron’ annually.

Mind the gap – The UK is “nowhere near” meeting its climate targets, according to the a post-COP26 update from the government’s official advisers the Climate Change Committee (CCC). The body calls for tougher policies to help close the gap to what is one of the most ambitious 2030 emissions targets in the world, especially on farming, food, and flying. (BBC)

Cambo collapse – Oil major Shell said it had scrapped controversial plans to develop the Cambo oilfield in the British North Sea. It concluded the economic case for investment was not strong enough, as well as having the potential for delays. The project has been at the centre of a political debate on whether Britain should develop new fossil fuel resources as it seeks to become a net zero carbon economy by 2050. Majority shareholder Siccar Point insisted the field remained critical to the UK’s energy security and economy. (Reuters)

Green progress – A provisional agreement reached between the European Parliament and Council on the 8th Environment Action Programme (EAP) has been welcomed by the Commission. The joint programme for implementing the European Green Deal until 2030 enshrined into law both environment and climate objectives, alongside a mechanism to monitor progress “beyond GDP”. The deal features six priority objectives: climate neutrality, climate adaptation, circular economy, zero pollution, protecting and restoring biodiversity, and reducing environmental and climate pressures related to production and consumption, the EU Commission said.

ASIA PACIFIC

Phasing out for real – China has promised not to sponsor any new coal power projects in Africa in a joint climate announcement issued by China and 53 African nations, the state-run Xinhua news agency reported. Instead China said it will expand investments in solar and wind power generation in Africa, as well as in other low-emission industries. The statement comes after President Xi Jinping pledged earlier this year his government would halt coal financing abroad. China has been the world’s biggest financier of coal.

Emissions target – The West Australian government will set a 2030 emissions target for its power generator Synergy in early 2022 with plans for all sectors of the economy to follow in 2023, the Sydney Morning Herald reports. The state’s climate action minister, Amber-Jade Sanderson, launched a two-year effort to develop “sectoral emissions reduction strategies” for all areas of the WA economy, where emissions have increased 21% since 2005 while all other states achieved cuts. The new approach could be a significant turnaround for a government often accused by environmentalists of being too close to the gas industry that is the principal cause of the state’s rising emissions. The government will lead “in coming months” with 2030 targets for its own activities, including power generator and retailer Synergy that is responsible for 98% of its emissions. The initiative pulls WA in line with other states that have a range of interim emissions targets leading to zero by 2050 and minimum levels of renewable energy in their power grids.

Hard habit to break – It’s been less than a month since world leaders pledged to combat climate change at the COP26 summit in Glasgow, yet Japan is already showing signs of putting the brakes on divestment from fossil fuels, according to a report in the Japan Times. Government officials have been quietly urging trading houses, refiners and utilities to slow down their move away from fossil fuels, and even encouraging new investments in oil and gas projects, according to people within the government and industry, who requested anonymity as the talks are private. The officials are concerned about the long-term supply of traditional fuels as the world doubles down on renewable energy, the people said. The import-dependent nation wants to avoid a potential shortage of fuel this winter, as well as during future cold spells, after a deficit last year sparked fears of nationwide blackouts.

AMERICAS

Shipping carbon fee ­ – The Panama Canal launched an initiative this week that will encourage shipping companies to reduce the carbon footprint of their passage through the waterway. The canal authority will implement a GHG tariff based on factors such as the vessel’s energy efficiency index and its use of zero-carbon biofuels or carbon-neutral fuels. The canal transits 3.5% of the world’s seaborne trade.

Pellet pilot – Brazilian miner Vale is considering replacing coal used in the production of iron ore pellets with biochar, in what it sees as a major step towards reducing emissions. Vale officials said one of the company’s pelletizing units did a test run in which biochar accounted for 25% of the total coal used, which allowed it to cut emissions by 10% while producing the key steelmaking ingredient. (Reuters)

RVOs ‘round the corner? – The US administration plans to propose in days the amount of biofuels oil refiners must blend into their fuel mix this year and next year under the Renewable Fuel Standard (RFS), as it reaches out to lawmakers to discuss the move, three sources familiar with the matter told Reuters. The administrations of President Donald Trump and Joe Biden have delayed decisions on 2021 RFS renewable volume obligations (RVOs) by more than a year, and it missed a deadline to finalise 2022 obligations this week. The oil and biofuel industries have called for the EPA to announce the proposals, saying delays have created uncertainty for the market. Current-year D6 (ethanol) RIN prices fell roughly 10% to 100 cents on Thursday after media outlets reported the imminent RVO announcement, traders told Carbon Pulse.

RNG agreement – Renewable natural gas (RNG) producer OPAL Fuels and special purpose acquisition company ArcLight Clean Transition Corp. II on Thursday announced an agreement for a business combination that will result in OPAL Fuels becoming a publicly listed company on the Nasdaq Stock Exchange. Additionally, affiliates of power generator NextEra Energy have made a commitment for up to a $100 mln preferred equity investment in OPAL Fuels and have entered into a purchase and sale agreement for the majority of OPAL Fuels environmental attributes. Today, OPAL Fuels operates 21 biomethane projects, of which three are in RNG service and the balance are in renewable power service, with 23 other projects in the pipeline.

VOLUNTARY

More, please – On Wednesday, Carbon Pulse wrote a story about a single carbon credit that had been sold for $70,000 as a “carbon credit non-fungible token”. Whoever bought that credit, which was generated by a large REDD+ project in Indonesia, has put it out for sale on blockchain trading platform Ghostmarket, asking $310,000 for it. The auction will run until Dec. 23.

Pure water – Offset developer South Pole has teamed up with Australian non-profit Abundant Water, the two announced Wednesday. The plan is to work together on Abundant’s clean water projects in Laos and Timor-Leste, which reduce the need for firewood to boil water, which in turn eases deforestation rates. The parties estimate the projects avoid some 18,500 tCO2e worth of emissions annually, which South Pole will help turn into carbon credit assets.

Crop shop – German chemicals giant BASF has announced its Global Carbon Farming Program to support the commitment of its Agricultural Solutions venture to reduce the carbon footprint per tonne of crop produced by 30% by 2030 in wheat, soy, rice, canola, and corn. BASF will launch its programme in phases starting in 2022, and the company will build the global framework to allow farmers to generate carbon credits from recognised certifiers that will lead to second revenue streams from their CO2 reduction efforts, according to officials. (Successful Farming)

AVIATION

CORSIA data – Non-profit organisation Ecosystem Marketplace on Thursday announced it is officially supplying data to UN aviation body ICAO’s global offset programme CORSIA, following an agreement earlier this year. This month’s EM Data CORSIA update covers aggregated and anonymised carbon market transactions of CORSIA-eligible credits transacted in 2021 (Jan. 1–Nov. 5) and 2020, from nearly 70 projects located in 17 countries in the geographic regions of Africa, Asia, Europe, Latin America and the Caribbean, and North America that are registered with American Carbon Registry (ACR), Clean Development Mechanism (CDM), Climate Action Reserve (CAR), Gold Standard (GS), and Verra.

AND FINALLY…

Treason trip – Australia’s assistant minister for energy and emissions reduction, Tim Wilson, has labelled a proposed independent expert body on climate “subversion and treason” – in an extraordinary attack, Climate Home reports. Wilson’s remarks were in reference to a proposed Climate Change Bill being pursued by independent MP Zali Steggall to enshrine Australia’s commitment to reaching zero net emissions by 2050 into law. It would also establish an independent climate change commission to provide advice to the government on the appropriate policy mechanisms and interim targets needed to achieve this target.

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