CP Daily: Tuesday December 7, 2021

Published 01:42 on December 8, 2021  /  Last updated at 01:52 on December 8, 2021  /  Newsletter  /  No Comments

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

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TOP STORY

US EPA proposes long-awaited RFS volumes, denial of all compliance waivers

The US EPA on Tuesday proposed multi-year blending quotas under the Renewable Fuel Standard (RFS) that were in line with previously leaked volumes, though the agency also stated its intention to reject the dozens of remaining small refinery exemptions (SREs) under the federal biofuels programme.

EMEA

Euro Markets: Another record for EUAs as options traders start to eye €100

EUAs continued their unprecedented trajectory on Tuesday, adding as much as €4.25 at one point as options hedging and speculative buying continued, while energy markets rose strongly amid colder temperatures across the EU.

EU lawmakers at odds over short-term ETS intervention amid record-breaking rally

Two key EU parliamentarians were split over the likelihood of an intervention to try to curb prices in the EU ETS, a conference heard on Tuesday as prices hit new heights.

EU industrials should extend buy-and-hold strategies as ETS price soars -analyst

Companies should consider buying more carbon allowances both as a hedge against future ETS price rises and also to use towards voluntary climate pledges, a conference heard on Tuesday.

Industry, experts call for major changes to EU’s CBAM border proposal

The EU’s proposed carbon border adjustment mechanism (CBAM) needs fundamental design changes, including adding export rebates, a testing period, and extended coverage to scope 2 emissions, a conference heard Tuesday.

AMERICAS

California requests input on stronger LCFS targets, programmatic changes

California regulator ARB on Tuesday called for public feedback on strengthening the ambition of pre- and post-2030 GHG targets under the Low Carbon Fuel Standard (LCFS), while also floating a number of other changes to the transportation sector programme once the forthcoming Scoping Plan update is complete.

California power sector CO2 output falls to six-year low in October

October electricity sector CO2 emissions under the California Independent System Operator (CAISO) dropped to their lowest level in six years despite gas generation rising month-on-month, according to data published Monday.

ASIA PACIFIC

Australian steelmaker to collaborate with energy major Shell on renewable hydrogen

Australia’s Bluescope has signed a Memorandum of Understanding (MoU) with oil major Shell to explore renewable hydrogen projects in the state of New South Wales, the company announced on Tuesday.

VOLUNTARY

ExxonMobil pledges net zero emissions by 2030 from Permian basin assets

US oil and gas major ExxonMobil will target net zero GHG operational emissions by 2030 from its operated assets in the US Permian basin, a prolific oil and gas-producing region in Texas and New Mexico, the company has announced.

COMMENT

Trigger-happy on European carbon market intervention

A few people have been talking about whether EUA prices are coming close to triggering an intervention to calm prices, so I though I’d quickly go through what I understand to be the rule and the different possible interpretations.

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CONFERENCE

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.

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

Fire fear – Wildfires, supercharged by climate change, produced a record amount of planet-warming CO2 in 2021, European scientists reported Monday. Fires in the US, Siberia, and Turkey together emitted 1.76 bln tonnes of CO2, the EU’s Copernicus Atmosphere Monitoring Service said. In California, 2021 saw the second-most acres burned on record (2020 was the only worse year) as infernos, including the largest single fire in recorded history, burned an area larger than the entire state of Connecticut. (Climate Nexus)

AMERICAS

“It’s anti fossil-fuel discrimination” – The American Legislative Exchange Council, or ALEC, held its States and Nation Policy Summit in San Diego last week, where the right-wing group’s Energy, Environment and Agriculture Task Force, which met on Friday, voted to back two pieces of model legislation that portray climate policy – even climate policy that doesn’t exist yet – as unfairly discriminating against fossil fuel companies. The ​“Resolution Opposing Securities and Exchange Commission and White House Mandates on Climate-Related Financial Matters” encourages states to take up legal challenges against forthcoming rules from federal financial regulators around climate risk and disclosures, potentially aiming to trigger a similar wave of lawsuits from states that followed the Clean Power Plan during the Obama administration. This follows a letter sent to the “US Banking Industry” by state treasurers, plus a comptroller and auditor, from 16 extraction-heavy, Republican-controlled states just before Thanksgiving, pledging “collective action” against “reckless attacks on law-abiding energy companies.” The “Energy Discrimination Elimination Act,” voted through unanimously on Friday, directs states to compile a list of entities that are supposedly boycotting fossil fuel companies, explicitly citing banks that are “increasingly denying financing to creditworthy fossil energy companies solely for the purpose of decarbonising their lending portfolios and marketing their environmental credentials”; institutional investors that are “divesting from fossil energy companies and pressuring corporations to commit to the goal of the Paris Agreement to reduce greenhouse gas emissions to zero by 2050”; and large investments that are “colluding to force energy companies to cannibalise their existing businesses.” Both draft laws exhibit the emerging right-wing argument that policy that reduces emissions is in fact discriminatory. (New Republic)

Area of concern – A transition aide to incoming Virginia Governor Glenn Youngkin says that the governor-elect and members of his transition team are concerned with the latest Regional Greenhouse Gas Initiative (RGGI) auction data that was recently reported. After joining the initiative in 2020 with 10 other states, Virginia made more than $227 mln during its first year. Last week, the latest quarterly numbers were released showing Virginia brought in a further $85.6 mln in the latest auction, which cleared at a record high $13/short ton. According to the unidentified transition aide, Youngkin’s team is looking at what options the future governor would have to address what they consider to be the scheme’s contributions to the higher cost of living in Virginia. (Virginia Scope)

Woodside goes stateside – Australian independent Woodside Petroleum has formed a joint venture with US-based hydrogen fuel cell heavy vehicle producer Hyzon Motors to build an initial 290MW facility in Oklahoma to fuel electrolysis to produce up to 90 tonnes per day of liquid hydrogen for the heavy transport sector, Argus reports. A final investment decision on the project is planned for next year’s second half. First production from the project, known as H2OK, is planned for 2025, Woodside said.

Carbon neutral sludge – Colombia, a producer of sludgy, dirty oil, is seeking to sell crude that’s carbon neutral as it tests the market’s appetite for ESG oil. State-controlled oil driller Ecopetrol SA is offering as much as 1 mln barrels of oil, according to an internal document seen by Bloomberg. Future emissions from that crude will be offset with carbon credits from renewable-energy projects in Colombia. Ecopetrol is following in the footsteps of Occidental Petroleum, which sold a cargo of so-called carbon-neutral US oil to Indian refiner Reliance Industries in February. In a similar move in September, Japan’s Inpex sold LNG offset by credits from projects such as forest conservation in Indonesia. The Colombian oil producer is testing the waters for carbon-neutral oil and, depending on buyer interest, plans to offer such cargoes on a regular basis, according to a person with knowledge of the situation. The company didn’t immediately return a call and email seeking comment. Bids are due Thursday and the cargoes will load in February.

EMEA

Steelers suffer – Higher power prices in Britain than in other European countries will weigh on efforts by the UK steel sector to reduce its emissions, trade association UK Steel said in a report calling for network cost cuts. It said British steel producers pay 61% more for electricity than rivals in Germany and 51% more than in France. Among other recommendations, the UK steel report said the British government should implement power network cost reductions similar to those in Germany and France in order to help the industry reduce its CO2 impact.

Grid grappling – The new German coalition government’s goal of a 2030 coal exit, eight years earlier than initially planned, will require a massive transformation of the grid if it is to be successful, an analysis by transmission system operator Amprion has found. The company advised that the exit date is technically possible, but will require more updates to the current grid infrastructure than what is currently planned as well as reforms of the market and regulatory design. The analysis also showed that part of the to-be-shut-down coal-fired power plant capacities will have to be temporarily transferred to the grid reserve to ensure a stable power supply. (Clean Energy Wire)

VAT scat – EU finance ministers agreed on Tuesday to change EU rules so that they can cut the Value Added Tax (VAT) on goods and services linked to fighting climate change, health protection, and making the EU more ready for the digital age. At the same time they agreed to phase out by 2030 some of the existing lower VAT rates on fossil fuels or other goods that add to GHG emissions, to help the 27-nation bloc reach its net zero 2050 target. (Reuters)

Taxonomy watch – The EU is set to decide under its sustainable finance taxonomy this month whether investments in gas and nuclear energy should be labelled climate friendly but will defer a decision on farming, two anonymous officials told Reuters.  Bloomberg reported that the rules are set to be released on Dec. 22.

Removals relief – The UK has set out £116 mln in government innovation funding divided among CCS, energy efficiency, and clean tech. Some £64 mln has been funnelled into the Direct Air Capture and Greenhouse Gas Removal programme with a view to enabling commercial scale deployments in negative emissions technologies from 2025.

Efficiency deals – The UK’s Climate Change Agreements scheme has delivered 6.6 MtCO2e of emissions cuts during 2019 and 2020, some 13.3% of emissions across 8,705 participating firms, according to a government report on the country’s energy efficiency reward scheme that aims to shows how businesses across multiple industrial sectors are cutting energy usage. The scheme offers tax benefits to firms which agree to energy efficiency targets and has seen total emissions savings of 23.8 MtCO2e.

ASIA PACIFIC

Coal exit – Insurance and finance firm AIA Group has sold almost $10 bln of investments in coal mining and coal-fired power businesses as pressure grows on financial firms to cut ties with the sector, the South China Morning Post reports. The insurer completed the entire sale of directly-managed equity and fixed income portfolios in October, seven years ahead of its original target, according to a statement. It said it won’t make new investments in businesses directly involved in coal mining or generating electricity from coal.

Green power for smelter – Australian utility Alinta Energy is proposing a A$4 bln ($2.8 bln) 1,000 MW wind farm off the coast of Victoria that could help power the Portland aluminium smelter with up to 100% renewables, and inject green energy into the country’s main grid, Renew Economy reports. The Spinifex project would connect to the grid via the smelter’s switchyard – which accounts for more than 10% of the state of Victoria’s electricity demand – and make the site among Australia’s first smelters to be powered by up to 100% renewables.

VOLUNTARY

Tru to form – Truterra, the sustainability business of US farmer-owned cooperative Land O’Lakes, announced its 2022 carbon programme on Monday, following the launch of the $20/tonne initiative in February. New in 2022, Truterra is also launching a forward-looking approach for farmers implementing climate-smart practices for the first time and interested in potentially participating in carbon markets in the future. Truterra’s carbon market access programme will engage and support farmers through the process of implementing new practices, and they may be eligible to receive one-time payments of up to $2 per acre for enrolling in the new offering. Under this approach, farmers will maintain ownership and options with their carbon rights in current and future years and are not required to make a long-term commitment to maintain the practice changes if they are not the right fit for their operations.

AND FINALLY…

Black box – Inspired by an aircraft’s flight recorder, the “Earth’s Black Box” will be built in 2022 on the remote west coast of Australia’s Tasmania, an area deemed geographically and politically stable, its creators, scientists and artists ranging from marketing communications company Clemenger BBDO to the University of Tasmania are looking to hold the world accountable for the Earth’s future by creating an “indestructible” storage device to record humanity’s handling of the climate change crisis. The 10-metre-long steel monolith was designed to withstand natural disasters and will be powered by solar and thermal energy. (Reuters)

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