Newsletters > CP Daily: Wednesday December 8, 2021

CP Daily: Wednesday December 8, 2021

Published 01:17 on December 9, 2021  /  Last updated at 01:20 on December 9, 2021  / /  Newsletters

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

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TOP STORY

Virginia GOP governor-elect says to withdraw state from RGGI

Virginia Governor-Elect Glenn Youngkin (R) on Wednesday announced he will use executive authority to exit RGGI, sending allowance prices in the power sector cap-and-trade scheme tumbling.

EMEA

Euro Markets: EUAs have biggest-ever absolute daily gain as options hedging intensifies

EUAs rose by their biggest ever daily amount in absolute terms on Wednesday as financial and speculative traders continued to push the market higher, while energy markets posted robust gains as gas storage withdrawals continued at a faster pace.

Key takeaways from analysts as EU ETS prices spike to new highs above €90

EUA prices at record levels above €90 are unlikely to face a political backlash, trigger market intervention, or even cause most big-emitting industries much hardship, a conference heard on Wednesday from three analysts, who nonetheless expected ongoing carbon market volatility.

EU lawmakers eye quicker entry of shipping into ETS as clean-up costs mount

Senior EU Parliamentarians want shipping to be phased in to the bloc’s ETS more quickly than proposed, the MEPs said this week as a study outlined the stiff challenge to decarbonise the sector.

ASIA PACIFIC

SK Market: Korean auction fails to sell out, settles well below secondary market

South Korea on Wednesday sold around 80% of the carbon allowances on offer at its monthly auction, with government officials setting the clearing price below the lowest bid at a 6% discount to the secondary market.

Japan flags tiered use for offsets as committee begins work

Allowing only correspondingly adjusted carbon credits to offset direct emissions was one of the ideas put forward by the Japanese government as a committee heavy in participants from the fossil fuels and finance sectors on Wednesday began work on designing “appropriate” use of offsets.

Australia Market Roundup: ACCUs extend record price levels as superannuation fund claims first credits

The spot price for Australian carbon credits rose to yet another record high on Wednesday, while the Clean Energy Regulator’s latest issuance rounds included a batch of more than 50,000 units to one of the country’s superannuation funds.

Woodside announces $5 bln outlay by 2030 in bid to build low carbon portfolio

Australian LNG player Woodside will spend $5 billion in “emerging new energy markets” by 2030 as it seeks to position the oil and gas company to support the decarbonisation goals of its customers, CEO Meg O’Neill announced in an investor update on Wednesday.

China pitches regional bamboo carbon trading schemes

China’s central government on Wednesday released guidelines urging local authorities to establish pilot trading markets for bamboo-backed carbon offsets.

Trading house hires former Shell originator in carbon role

A major international trading house has added a former Shell employee to strengthen its carbon trading and originator desk in Singapore.

AMERICAS

US Build Back Better bill: What’s at stake for green hydrogen?

Green hydrogen is likely to get a major boost in the US if the Build Back Better (BBB) bill clears Congress, with new benefits for both climate and labour, though experts say demand-side policy is still lacking.

California offset issuances plumb 6.5-mth low as credits in circulation drop

California regulator ARB this week distributed the fewest number of new compliance offsets since April, as the number of credits in circulation plummeted as the agency accounted for cap-and-trade retirements from 2018-20.

INTERNATIONAL

WTO boss touts global carbon price cooperation with other international agencies

The director general of the World Trade Organization (WTO) on Wednesday reiterated her assertion for developing a global price on carbon, noting burgeoning collaboration on the issue with other international bodies as a way to curb policy fragmentation and trade frictions.

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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

EMEA

Tit-for-tat – The European Commission has proposed a new trade defence measure meant to prevent third countries from retaliating against any of the EU-27, Reuters reports, while adding that the plan is already facing scepticism. The measure could be handy if in force today, the newswire noted, as it could be used by Lithuania, currently under mounting Chinese pressure after it allowed Taiwan to open a de facto embassy within its territory. Officials say the measure would particularly target areas such as climate change, taxation, or food safety. The proposal is yet to be approved by the EU co-legislators, with a split likely to emerge between proponents France and states like Sweden and Czechia said to view the drive as a largely protectionist initiative.

Nord Stream saga – Germany’s new government – installed today – admitted that an escalation of the Ukraine crisis may lead Berlin to reconsider the launch of the Nord Stream 2 gas pipeline, Bloomberg reports. However, new chancellor Olaf Scholz said he felt bound by his predecessor Angela Merkel’s commitments on the near-ready pipeline. Vice Chancellor Robert Habeck promised that the authorities will take into account the political situation in Ukraine and what the EU can do to de-escalate the crisis. This comes as the US and Russia failed to find an middle ground during a video call on Tuesday, after US intelligence revealed a Russian troop build-up near Ukraine.

Baer-boss – Separately, Germany’s new foreign minister, Green Party co-leader Annalena Baerbock, will head up international climate policy for the first time in the ministry’s history, Sueddeutsche Zeitung reports. This has traditionally been the responsibility of the Federal Environment Ministry (BMU), and the restructuring means it now has higher priority within the new coalition government. Baerbock from now on will also be the country’s chief negotiator at the UN climate conferences, the next of which will be held in Egypt in November 2022. The Federal Foreign Office (AA) will work on establishing international climate partnerships, and German embassies abroad will receive additional tools to help strengthen cooperation with partner countries on this issue. Foreign climate policy will also be more closely entwined with other diplomatic activities in order to make better use of opportunities to exert influence on climate-related issues. (Clean Energy Wire)

Flexible friend – A more flexible German CO2 price would be beneficial for consumers and also make it harder for oil-exporting countries to undermine it, former German government advisor Peter Bofinger suggested in a comment piece for Handelsblatt. Bofinger said CO2 pricing is necessary in the climate fight but that rigid prices do not “take into account that the world market prices for oil and gas do not represent competitive prices.” He suggested a flexible pricing system could help lessen inflation when the cost of crude oil rises dramatically, and also prevent oil-exporting countries such as Russia from undermining the CO2 price through lowering their own prices. The new system “could be introduced as early as the beginning of next year by suspending the planned increase of the CO2 price on buildings and transport from €25-30.” (Clean Energy Wire)

AMERICAS

Cain of infinity – A Trump-appointed US federal judge on Tuesday appeared ready to block President Joe Biden administration’s interim social cost of carbon (SCC). During a hearing, Judge James Cain Jr of the US District Court for the Western District of Louisiana questioned whether Biden had overstepped legislative and constitutional authority in instructing federal agencies to apply an interim value for the SCC. The White House in February set out a $52/tonne interim SCC – using the default 3% average discount rate – as the agency prepares to issue a final rate by January through an interagency working group process. Yesterday’s hearing stemmed from a challenge by 10 Republican state attorneys general, led by Jeff Landry of Louisiana, urging the court to block the interim SCC, arguing the Biden administration had improperly mandated the use of the interim metric within federal agencies through an executive order without first undergoing a legally required notice and comment period. (E&E News)

Federal focus – Meanwhile, the White House on Wednesday announced Biden signed an executive order so that federal operations will run entirely on carbon-free electricity by 2030. The federal government would also acquire 100% zero-emissions vehicles (ZEVs) for light duty vehicles by 2027 and all vehicles by 2035, and reach net zero emissions from federal procurements by 2050. In addition, the executive order directs the government to reduce emissions from federal buildings 50% by 2032 and reach net zero by 2045, and cut GHGs from all federal operations 65% by 2030 and reach net zero by 2050.

Give Peace River a chance – From 2018-20, the Alberta government lowered Canadian Natural Resources Ltd.’s costs for its oil-producing Peace River site to comply with the Technology Innovation and Emissions Reduction (TIER) regime, with Peace River’s per-barrel emissions triple that of the already-high oil sands average, Reuters reports. Alberta requires high-emitting facilities under TIER that pollute more than the industry benchmark to comply, either by buying emissions credits or offsets from better-performing facilities for up to 60% of their obligation, or by paying into a government fund at the going rate for carbon emissions, currently C$40 per tonne. The province’s cost containment programme, however, eases the financial pain for facilities whose compliance costs are greater than 3% of their sales or more than 10% of their profits, to prevent “economic hardship”. Greenfire Oil and Gas Limited and Athabasca Oil Corp, which run the second- and eighth-most emissions-intense Alberta oil sands sites, according to government records, also received cost reductions.

ASIA PACIFIC

Coal country to hydrogen hub – Australian utility AGL Energy has struck a deal with iron ore billionaire and green hydrogen evangelist Andrew Forrest to turn its Hunter Valley coal fired power stations, in the Australian state of New South Wales, into a major renewable hydrogen and industrial hub, Renew Economy reports. The vision shared by AGL and Forrest’s Fortescue Future Industries is to power the “Hunter Energy Hub” with wind, pumped hydro, solar thermal storage, and grid scale batteries, and to attract industry to the facility. The ageing Liddell coal generator is due to close in early 2023, and Bayswater is expected to run for another decade or so, although many analysts anticipate an earlier closure.

Upstream gas stake – Japan’s largest power generation company JERA has acquired a 12.5% stake in the Barossa/Caldita gas field in Australia through an equity purchase agreement with a subsidiary of Santos, the Japanese company said in a statement, S&P Global Platts reports. JERA said the transaction, done through its subsidiary JERA Australia, is expected to be finalised after the necessary approvals, and will allow it to participate in the project that is developing backfill gas supply for Darwin LNG in Australia, as existing feedgas is set to expire in coming years.

Cleaner shipping fuel – Japanese shipping company NYK has announced the order of its first two liquefied petroleum gas (LPG) dual-fuel very large LPG/ammonia gas carriers from Kawasaki Heavy Industries, according to Marketscreener. Both ships will be built at the KHI Sakaide Works shipyard and are set for delivery in 2024.

AND FINALLY…

Well drilled – The Biden administration is approving drilling permits at a faster clip than the Trump administration, according to data first analysed by the advocacy group Public Citizen. Bureau of Land Management data indicate that in 2021, the agency has approved drilling permits at an average of 336 per month, an increase from the monthly average of 245 at this point during the Trump administration. Public Citizen’s analysis omitted January, as then-President Trump was in office for most of that month, but even without January data the monthly average stood at 333. The rate of approvals remains below the 2020 high-water mark of 452 per month. Much of that is due to a period between the end of the 2020 election season and Biden’s inauguration season when oil and gas companies, anticipating increased regulation under Biden, stockpiled leases, according to an AP analysis. By other measures, however, the Biden administration continues to trail the Trump administration on leasing. (The Hill)

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