CP Daily: Friday December 3, 2021

Published 03:17 on December 4, 2021  /  Last updated at 03:17 on December 4, 2021  /  Newsletter  /  No Comments

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

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TOP STORY

Q4 RGGI auction clears at record high, taps cost containment for 1st time in 6 years

The December RGGI auction settled at a new all-time high for the fourth straight sale, partially draining volume from the power sector cap-and-trade programme’s Cost Containment Reserve (CCR) for the first time in six years, according to results published Friday.

WEEKEND READS

FEATURE: Climate finance, not offsets, increasingly seen as a nature-based solution as critics persist

With nature-based credits valued at a growing price premium to other types of carbon offsets, scrutiny over the process is also on the rise, with even forest protection standards that are said to be raising the bar on quality finding criticism for lacking environmental integrity.

ANALYSIS: The carbon market’s uneasy relationship with crypto

The sudden emergence of Klima DAO and increasing interest in the carbon market from the crypto community has created some excitement over the opportunities for climate finance, but is also generating concern over legal and environmental integrity issues.

AMERICAS

California should raise 2030 LCFS target, add 2035 goal -researcher

California regulator ARB should increase the 2030 carbon intensity (CI) reduction target for the state’s Low Carbon Fuel Standard (LCFS) as well as add a 2035 target, an academic told a conference Friday.

RFS Market: RIN prices dive below $1.00 as lower RVO reports resurface

US biofuel credit (RIN) values tumbled to two-month lows on Friday after several news outlets reported the EPA is slated to soon release lower Renewable Fuel Standard (RFS) quotas in line with leaked volumes this fall.

California industrial allowance allocations decline in 2022 after COVID-affected year

California’s free carbon permit distributions to industrials dropped by roughly one third for 2022 after the coronavirus pandemic throttled production from some facilities, according to data from state regulator ARB published Friday.

Emitters offload allowances following WCI auction results, speculators build

Compliance entities massively reduced their California Carbon Allowance (CCA) holdings over the past week following the publication of Q4 WCI auction results, while financial players bolstered their net long position, according to US Commodity Futures Trading Commission (CFTC) data published Friday.

EMEA

Euro Markets: EU carbon posts 7.5% weekly gain after brief foray above €80

EUAs broke through the €80 barrier for the first time on Friday but failed to hold on to the new level as some profit taking emerged, while energy prices were mixed for a second day.

ASIA PACIFIC

CN Markets: CEAs stable as authorities encourage borrowing ahead of compliance deadline

Trading volume in China’s carbon market has doubled amid stable prices over the past week, as several provinces allowed borrowing of allowances between companies to help firms meet the impending compliance deadline.

Australia’s Labor party vows deeper emissions cuts if it wins election

If it wins next year’s election, Australia’s opposition party will increase the nation’s 2030 emissions target and achieve those cuts by investments in clean power and tightening the Safeguard Mechanism CO2 baselines for industrials, it announced Friday.

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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

Runaway or rundown – Miner Glencore’s new boss Gary Nagle has defended the company’s plan to run down its coal mines, but said he would be prepared to spin off the business if it became a problem for its biggest shareholders. Nagle said Glencore’s plan to close all of its coal mines within the next 30 years was the “responsible strategy for both our business and for the world”. Many big investors now think spinning off fossil fuel assets is the wrong thing to do because new owners might seek to increase production and therefore carbon emissions. (FT)

G7 infrastructure plans – Just as the UK G7 presidency is nearing its close, the world’s richest nations announced their intention to focus on “narrowing the infrastructure gap in emerging economies”, arguing that this should be carried out in a sustainable manner.  A statement published on Friday by the seven leaders argued that, in order to mobilise the “trillions” developing countries need, a stronger collaboration with multinational development banks will be required, including an implementation of the G20 Sustainable Finance Roadmap. The text came only a few days after the EU, a ‘non-enumerated’ G7 member, unveiled the details of an ambitious infrastructure programme aimed at helping the developing world modernise critical sectors as an alternative to China’s Belt and Road Initiative. Tackling climate change has been one of the UK’s policy priorities under its G7 presidency, with the country also host to the UN climate talks in November.

EMEA

Moskwa missive – Poland will raise the issue of EU ETS speculation at the next meeting of EU heads of government on Dec. 16 in Brussels, the country’s new climate minister Anna Moskwa told Bloomberg. Moskwa criticised a report on the issue last month by the ESMA financial watchdog, saying it amounted to a description of the situation without diagnosing its causes. She said the ETS had “reached such a level that it needs additional control mechanisms”. Read Carbon Pulse’s article on the previous EU leaders’ meeting in October, a summit that tasked the European Commission to assess whether regulatory action is required on ETS speculation based on a more detailed ESMA analysis due early next year.

Double down – Germany’s CO2 reduction by 2030 could more than double as a result of the prospective new government’s renewables expansion plans, according to the German Economic Institute (IW). If the new coalition  meets its targets, an additional 172 mln tonnes of CO2 could be saved in relation to 2020 emissions compared 106 mln from the plans of the current government. The institute stressed that rapid implementation of the wind and solar energy expansion plans is crucial. (Clean Energy Wire)

AMERICAS

Mixed messages – The Biden administration’s fossil fuel strategy is sending mixed signals to environmentalists and the oil and gas industry, making no one happy, Politico reports. Green groups had held onto President Biden’s campaign pledge to end federal oil and gas leasing as an indicator of an aggressive climate agenda but were disappointed that the Interior Department’s latest review on the leasing programme didn’t call for an end to new lease sales. They’ve also raised the alarm about new lease sales for exploration in the Gulf of Mexico after a federal court found the administration’s pause earlier this year was unlawful. Meanwhile, energy groups see hostility toward their industry from the administration, which revoked the permit for the Keystone XL pipeline and tabled new oil and gas leases for months while it conducted its review of the program. The administration is also appealing the court order pushing it to resume sales and moving to include environmental and health considerations when processing drilling permits. The administration was also compelled to respond to spiking fuel prices, calling on OPEC+ to increase its output to the frustration of domestic producers, while also making up to 50 mln barrels of oil available to refiners to help bring down gasoline prices, which irked environmental groups who said it sent the wrong signal as the White House sought to promote its climate change efforts. Prices have since started to cool amid concerns about the omicron Covid variant, and analysts said it makes sense to keep oil and natural gas flowing to address short term effects while moving toward a longer-term transition to renewable energy. But the messaging that strategy sends could fall flat, further threatening Democrats in next year’s midterm elections.

Ready or not? – Canadian environment minister Steven Guilbeault said the new federal climate plan won’t be ready until the end of March. The net zero accountability law passed in June requires the government to make public a GHG emissions reduction plan for 2030 within six months. But Guilbeault said the government is going to take advantage of a clause allowing it to delay that by another three months, meaning the plan will now be made public on or before Mar. 29. Guilbeault noted the delay is necessary to allow Indigenous Peoples, provinces, and other interested parties to weigh in on what the plan should contain. (Canadian Press)

Total hydrogen – Total Eren, the renewable developer part-owned by oil supermajor TotalEnergies, unveiled plans for a 10 GW wind project to power green hydrogen and ammonia production in Chile, Recharge reports. The developer has launched studies to scope out the massive development in the Magallanes region of southern Chile, an area where it has secured land and said boasts “the best onshore wind conditions” in the world and access to the sea for desalination, and ports to export green fuels produced by up to 8 GW of accompanying electrolyser capacity and an ammonia plant. The developer hopes after the studies to begin work on the H2 Magallanes project in 2025 with first production by 2027. It expects to produce 800,000 tonnes of green hydrogen and export 4.4 million tonnes of ammonia a year.

Good generations – California utility regulators took several steps to help keep the lights on during summer in 2022 and 2023 after extreme heatwaves this year baked the US West Coast and forced the state’s grid operator to impose rotating outages last year. The California Public Utilities Commission (CPUC) on Thursday approved steps to boost supplies of power generation and encourage consumers to reduce demand, especially when extreme weather stresses the grid. The actions were part of the CPUC’s ongoing efforts to respond to Governor Gavin Newsom’s July 2021 Emergency Proclamation urging all state energy agencies to ensure there is adequate electricity to meet demand. A CPUC analysis found that a range of 2,000-3,000 MW of new supply- and demand-side resources will help address grid reliability in the most extreme circumstances in 2022 and 2023. (Reuters)

ASIA PACIFIC

Hydrogen supply deal – Spanish renewable energy giant Acciona says it has signed a supply deal for a new 600 MW solar farm for a massive 3 GW green hydrogen facility proposed for the Gladstone region in Queensland, Australia, Renew Economy reports. Acciona says it has secured land from the state government for the 600 MW Aldoga solar farm, which will supply the Central Hydrogen Project, led by Queensland state government owned generation company Stanwell, that also includes four major Japanese industrial giants. The project includes Iwatani Corp, Kawasaki Heavy Industries, Kansai Electric Power and Marubeni Corporation, along with Australia’s APA, and aims to produce green hydrogen for use in local industrial facilities, with some also available for export. The plan is for an electrolysis complex that will grow in stages to 3,000 MW by 2031. It aims to produce about 100 tonnes per day of green hydrogen by 2026, scaling up to 900 tonnes per day of hydrogen by 2031.

AND FINALLY…

The grass isn’t always Greenidge – US Senator Elizabeth Warren sent a letter to the CEO of a Bitcoin mining company noting its significant environmental and climate impact and requesting information related to its “carbon-neutral” claims, including details on its carbon offset purchases. Warren’s letter also flags that the firm’s excessive energy use could impact the cost of electricity for retail consumers in New York. The Greenidge Generation power plant on the shores of Seneca Lake is one of the largest Bitcoin mining facilities in the US. In May 2021, Greenidge announced that it was purchasing voluntary carbon offsets from US projects to operate “an entirely carbon neutral bitcoin mining operation.” It has also said that it would help expediate the closure of an existing coal ash landfill in the state, and build a new solar farm on the site. However, the state’s government records show that the plant’s GHGs have increased nearly tenfold from 2019 to 2020, where they stood at 0.2 Mt, and are projected to continue to grow rapidly. The letter also notes that mining operations for Bitcoin are increasingly moving onshore, with the US share of global mining increasing from 4% in 2019 to 35% in July 2021. Around 500,000 formerly Chinese miner rigs are looking for new locations after China’s crackdown on cryptomining, according to the letter.

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