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TOP STORY
Voluntary carbon market profiteering to be called out, says integrity council
Members of the governance body tasked with taking forward the work of the private sector Taskforce on Scaling Voluntary Carbon Markets said they will call out project developers, intermediaries, and other market actors that put profits before the climate.
EMEA
EU Market: EUAs drop over 10% as traders take profit ahead of options, futures expiries
EUAs plunged by their largest-ever one-day margin on Thursday as traders took profit after prices had added €10 in three days, while energy markets also slid on increased North Sea gas supplies after a brief reduction on Wednesday.
ANALYSIS: EU ETS allocation adjustment rules put “borrow” trade at risk -analysts
New procedures to calculate the allocation of free EUAs to industry may lead to delays in handing out allowances each year, putting at risk a trading strategy that has allowed industrial companies to raise cash during economic downturns, analysts say.
France vows to fast-track deal on CO2 border measure under EU presidency
French President Emmanuel Macron said on Thursday he will seek adoption of the EU’s proposed carbon border adjustment mechanism (CBAM) by the middle of next year, a clear signal that the proposal will be a priority for Paris within the wider climate agenda.
Polish parliament passes resolution calling for suspension of EU ETS
The Polish parliament passed on Thursday a resolution calling on EU member states to suspend the EU ETS and to reform the bloc’s carbon market, according to media reports.
AMERICAS
NA Markets: CCAs recover from sell-off, RGGI plunges from records on possible Virginia exit
California Carbon Allowance (CCA) prices this week made up all of their losses after a massive sell-off as traders pointed to speculative interest and options positions as drivers, while RGGI Allowance (RGA) values soared to a new all-time high before plunging after Virginia’s governor-elect announced he intends to pull the state out of the market next year.
Green groups seeking tighter CO2 caps, allowance adjustments in RGGI programme review
Environmental organisations are calling for RGGI member states to significantly increase the ambition of the scheme’s allowance budget, along with other mechanisms to improve the CO2 mitigation performance of the Northeast and Mid-Atlantic US carbon market, according to public comments.
RFS Market: RIN prices increase as traders take bullish view of 2022 quotas
US biofuel credit (RIN) values jumped over the past two days as Renewable Fuel Standard (RFS) market participants thought 2022 biofuel blending requirements announced by the EPA this week could cause an issue for obligated shorts in the future.
ASIA PACIFIC
Trafigura joins Australian hydrogen rush with A$750 mln project
Global commodity trader Trafigura has added to the growing hydrogen project pipeline in Australia with plans to develop a A$750 million ($540 mln) facility that will be integrated with a large smelter, the South Australian (SA) state government announced on Thursday.
VOLUNTARY
Blockchain start-up aims to provide transparency around ‘carbon neutral’ LNG
An Estonia-based blockchain company has developed a platform to track offsetting of emissions from LNG shipments and allow several parties to contribute carbon credits to the same cargo, in a bid to boost transparency around controversial ‘carbon neutral’ fossil fuel announcements.
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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
INTERNATIONAL
Cratering costs – A dramatic fall in electrolyser prices will help some nations produce green hydrogen from renewable energy for $1 per kg by 2030, with sub-$2 per kg achievable in many countries, according to a new report from analyst Wood Mackenzie, Recharge reports. The study finds that the cost of alkaline and PEM electrolysers are set to fall by 35% and 50% respectively by 2025, with solid oxide electrolysers seeing the “most dramatic [price reductions] in the next six to eight years”.
EMEA
Super savings – Reuters profiles Italy’s “superbonus” scheme to subsidise home energy saving measures, which has seen massive take up since its introduction last year and seen as a litmus test for the sort of policies all EU member states may need. Italy’s council of engineers estimates it has boosted GDP by 0.7% this year and created 153,000 jobs. On the down side, a surge in demand has inflated the cost of building services and Italy’s tax collection agency said last month it had uncovered fraud worth more than $1 bln related to the scheme and other home improvement incentives.
Sustainable investments – EU states adopted the first delegated act of a long-awaited sustainable financial rulebook on Thursday, Reuters reports. The EU taxonomy, which is meant to help investors define whether an economic activity can be viewed as sustainable or not, seeks to achieve six objectives: climate change mitigation, climate change adaptation, sustainable use and protection of water and marine resources, transition to a circular economy, pollution prevention and control, and protection and restoration of biodiversity and ecosystems. With the first delegated act in place, the first section of the taxonomy will apply from Jan. 1, which means that companies will have to start reporting against the classification, while investors should better prepare for the upcoming SFDR disclosure requirements, according to ESG Today. Yet the rulebook’s most contentious components are yet to be hammered out amid a lingering split among major EU member states over the introduction of nuclear power and natural gas in the list of green investments. When asked to give his view at a Politico event on Wednesday, the bloc’s energy chief Frans Timmermans replied that finding a solution would imply striking a difficult balancing act between what is “green” and what is “necessary”, making it abundantly clear that both energy sources will have a role to play in the transition.
Copenhagen capture – Denmark has awarded a $30 mln grant to the INEOS-led consortium backing the Greensand CCS project in the North Sea. The project would support Denmark’s ambitions to cut emissions by 70% by 2030. Greensand has a storage potential of up to 1.5 MtCO2 a year from 2025 in depleted oil and gas fields, rising to up to 8 Mt by 2030. Denmark also awarded another $11 mln to Project Bifrost, led by TotalEnergie, which is projected to have capacity to store about 3 MtCO2 a year from 2027, potentially rising to 16 Mt in later years.
Another lawsuit – Three climate campaigners took the UK oil regulator to court on Wednesday in a bid to prevent them handing out more drilling licences. Kairin van Sweeden, Jeremy Cox, and Mikaela Loach challenged the Oil and Gas Authority (OGA) in the high court over its interpretation of a legal duty to “maximise economic recovery” of petroleum. Their lawyers argued that the regulator failed to consider government tax breaks to the oil and gas sector and the broader climate change context when deciding what was “economic”. Outside the Royal Courts of Justice in London, Cox told Climate Home: “All of the decisions [the Oil and Gas Authority regulator] makes are [based on] whether it is profitable for the oil and gas companies, never mind whether it’s good for the country as a whole.” If they successfully argue the OGA’s decisions are unlawful then it will have to change how it assesses applications for oil drilling permits. Cox, who used to work at an oil refinery, said he hoped this would end or at least limit new oil and gas extraction in the UK.
Launch date – ICE Futures has set a Jan. 31, 2022 start date for trading in its Global Carbon Index Futures contract. Read Carbon Pulse’s latest on how the bourse has revamped the index to include the four largest emissions markets: the EU ETS, California’s cap-and-trade system, RGGI, and the UK ETS. ICE will offer 12 delivery months for trading, with a contract size of $50 per index point.
AMERICAS
Seventy-five alive? – Carbon capture advocates are pushing to change House language around the tax incentive in US Democrats’ reconciliation bill for deploying CCS technology. The bill sent to the Senate last month raises the tax credit to $85 per tCO2 from $50, but it requires 75% of a facilities’ total emissions to be captured in order to qualify. That would shut out power stations that deploy carbon capture technology in a more piecemeal fashion, advocates say, and could make the tax credit functionally inaccessible. Several key lawmakers, including Senators Joe Manchin, Tina Smith, and Ben Ray Lujan are part of a group of lawmakers discussing scrapping or at least lowering the 75% threshold, Politico reports. But the 75% threshold still has its defenders, particularly House Democrats who fear removing it could open the door for power plants to claim millions in credits by applying carbon capture to uneconomic coal plants that would otherwise retire, a move that would undercut the climate benefits.
Pass on gas – New York City is set to phase out gas in new construction with the city council reportedly planning to vote next week on the measure. The legislation, which is expected to pass, would require electricity-powered heat and hot water in new buildings under seven stories by 2024 and all other buildings in 2027. Burning fossil fuels for space and water heating accounts for nearly 40% of New York City’s climate pollution. (Climate Nexus)
ASIA PACIFIC
Somewhere over the horizon – A new Australian company called Nexsphere has unveiled plans to build an “over-the-horizon” wind farm of up to 1 GW off the coast of north-east Tasmania, the latest in a string of offshore wind proposals emerging after the passage of legislation in federal parliament, Renew Economy reports. The Bass Offshore Wind Energy project will be sized between 500MW and 1,000MW, at least in its first stage, and could be expanded to 2 GW or more in later stages. Earlier this week plans were also released, by utility Alinta Energy, for 1 GW offshore wind farm, in the state of Victoria.
Domestic LNG deal – Australian LNG exporter Woodside, which this week announced a $5 bln spend by 2030 on low carbon projects, is in discussions to supply LNG to an import terminal that Viva Energy, a refiner, plans to build in the state of Victoria, Nasdaq reports.
VOLUNTARY
Rebuffed hot air – The largest carbon standard Verra posted its response Wednesday to a report by NGO Foodwatch, and related REDD Monitor article, that claimed that an offset project in Peru was “verified hot air.” The report claimed that the Verra VCS-certified nut concessions project in Madre de Dios, Peru (#868), which has sold 10 mln carbon credits, has had very little climate benefit, and it accused the project of using inflated baselines while also providing very little financing – and therefore incentive to protect the forests – to the local Brazil nut harvesters. Verra says that it rejects the analysis and said “the deforestation rate in the project area was lower than in the ‘business-as-usual’ scenario (baseline). This indicates that the project was successful.” It also said the article wrongly accused it of potential conflict of interests in the area by misrepresenting its role in the certification process, pointing out that third-party verifiers, not Verra, are responsible for validating projects and verifying emission reductions. Read Carbon Pulse’s report on how criticism of such projects is spurring a move away from offsetting and towards climate finance.
SCIENCE & TECH
Plants to the rescue – The extent to which plants have responded to rising levels of CO2 in the atmosphere by sucking up more of the GHG in recent decades has helped slow – but by no means halt – global warming, a new study suggests. Despite the “very large” increase in photosynthesis reported by scientists this week – an estimated rise of 12% between 1982 and 2020 – they stressed that this is “nowhere close to removing” the amount of CO2 humans are putting into the atmosphere. “It’s not stopping climate change by any means, but it is helping us slow it down,” said Trevor Keenan of the Lawrence Berkeley National Laboratory, who is the lead author of the study published in the journal Nature on Thursday. Furthermore, the scientists warn it is unclear for how long forests will continue to perform this service. But they do expect it to “saturate” in the future, at which point land sinks – currently “the only nature-based solution that we have in our toolkit to combat climate change” – will have “a much lower capacity to offset our emissions”, Keenan said. (Independent)
AND FINALLY…
Ocean commotion – The ocean provides a major opportunity for pulling carbon out of the atmosphere, but more research is needed on the science and governance of those efforts, two new reports say. The current state of knowledge on Ocean CDR approaches (including artificial upwelling, seaweed cultivation, and actions to make the ocean less acidic) is inadequate, according to a report from the National Academies of Sciences, Engineering, and Medicine. That report calls for a $125 mln research programme to better understand overarching challenges for ocean-based CO2 removal approaches, including the potential economic and social impacts. A complimentary Aspen Institute report charts out the first steps to develop a code of conduct for ocean-based carbon removal efforts, especially important because of the complicated nature of maritime sovereignty. (Climate Nexus)
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