CP Daily: Tuesday January 4, 2022

Published 02:10 on January 5, 2022  /  Last updated at 02:10 on January 5, 2022  /  Newsletters  /  No Comments

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

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TOP STORY

VCM Report: VER issuances, retirements end year 65-70% higher over 2020 levels

Issuances and retirements of voluntary emissions reductions (VERs) skyrocketed over the course of 2021 from the four main carbon credit registries, as escalating demand in the voluntary carbon market (VCM) drove offset prices to continuous new records that held mostly steady over the holiday break.

EMEA

EU prepares for some gas and nuclear investments to be labelled as green

The European Commission is sticking to its long-touted plan to enable some gas and nuclear power investments to be classified as sustainable, according to proposals it circulated among member states over the last week that have prompted anger from environmentalists.

UK’s Cost Containment Mechanism triggered for second month after December no-show

The UK ETS Authority will meet again this month to consider whether to add more UK Allowances to the market after prices exceeded the threshold for intervention for a second month in December, though the scheme’s Cost Containment Mechanism (CCM) will not be triggered in either February or March after last month’s average price fell below required levels.

Euro Markets: EUAs kick off 2022 strongly as traders, utilities build length amid firm energy

EUAs kicked off the new year on a strong note, with the benchmark contract adding as much as 7.6% from the closing price in 2021 as traders built positions and sellers were scarce, while energy prices were sharply higher.

ASIA PACIFIC

CN Markets: Most Chinese companies meet ETS deadline amid late price spike

Allowance prices in China’s national carbon market rose to nearly $10 amid a flurry of trading activity in the last week of the year, which eventually saw 99.5% of market participants meet their compliance deadline for 2019 and 2020.

Papua New Guinea approved by ART for national REDD concept

The Architecture for REDD+ Transactions (ART) programme has approved a listing from Papua New Guinea to generate carbon credits, with the South Pacific nation proposing to deduct emissions reductions from individual deforestation reduction projects as part of the initiative.

AMERICAS

Speculators dominate new California-registered WCI accounts in Q4

The number of California-registered Compliance Instrument Tracking System Service (CITSS) accounts hit another all-time high during Q4 2021, with investment management firms and other speculators continuing to pour into the linked WCI carbon market, according data from state regulator ARB.

Producers slash CCA short position, speculators cut net long after Dec-21 expiry

Regulated entities in the WCI cap-and-trade programme saw their net California Carbon Allowance (CCA) short position more than halve last week as the Dec-21 expiry occurred, while financial players saw their net length crater to a 6.5-month low, according to US Commodity Futures Trading Commission (CFTC) data published Monday.

VOLUNTARY

Carbon offset project development ripe for market consolidation -report

Deals struck in 2021 between carbon offset project developers and large financiers highlight the potential for voluntary carbon market supply consolidation, a trend that also risks leaving hundreds of smaller project developers on the sidelines as the industry rushes to fill a projected surge in demand.

INTERNATIONAL

Carbon border schemes face multiple real-world hurdles -researchers

Border carbon adjustments risk being imperilled amid a raft of legal and implementation constraints that could undermine any climate benefits, researchers warned in a paper published this week.

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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

Poland’s campaign – Poland’s Prime Minister Mateusz Morawiecki has continued rallying against rising EU carbon prices, which he sees as contradictory towards the “assumptions of a fair energy transition”, he wrote in an op-ed published on Euractiv. “The thesis that an increase in emission prices, and thus a drastic increase in energy bills, is the right direction that does not require adjustments, in fact, means a green light to further speculative functioning of the EU system,” he wrote. Morawiecki also contested the logic according to which the rising cost of allowances could act as an economic incentive for energy-hungry firms to make the necessary investments towards lower-carbon fuels.“ A rapid rise in prices will not be a positive incentive, but a barrier that will prevent thousands of companies from operating,” he said. A solution to this can be found in a “profound reform of the ETS system,” he argued, that would consist in enhanced supervision of the market, complemented by a withdrawal from the MSR whenever prices were too elevated.

Norway hearing – The European Court of Human Rights is asking Norway to respond to charges by Greenpeace-backed activists that allowing new oil and gas drilling in the Arctic during an environmental crisis may breach fundamental freedoms. In a document seen by Bloomberg, the court will give the Norwegian government an Apr. 13 deadline to comment, in writing, on the merits of the case which it said may potentially be designated an “impact” case, meaning it could have broad ramifications beyond Norway. Such a designation would substantially shorten the length of time to a ruling, which now can take as long as six years, and could provide climate activists with a new route for holding governments accountable.

Tory tangle – Twenty lawmakers from the UK’s ruling Conservative party and have called on the government to tackle the spiralling cost of living. In a joint letter, they argue for a cut in environmental levies and the removal of energy taxes following big increases in wholesale gas prices. The letter has been organised by the Net Zero Scrutiny Group of Conservatives, which keeps an eye on the potential consequences of the government’s environmental commitments. (BBC)

Bill fix – In response to the high energy bills, UK energy companies have pitched a mechanism based on the government’s existing ‘contracts for difference’ subsidy as one option for protecting British households and suppliers against high wholesale electricity and gas prices, the FT reports, citing anonymous sources. Among other options suggested is a £20 bln fund, with both methods allowing suppliers to spread out the costs of recent surges in wholesale energy prices for consumers over a number of years, but without imperilling their own balance sheets.

AMERICAS

Take two in ’22 – The US Senate returned Tuesday, and despite the December blow up of the Build Back Better Act, Democrats are still optimistic that significant climate change provisions will make it into a salvaged version of the bill that coal state Sen. Joe Manchin can support. That assessment comes even though there is little indication that any real progress was made on reaching a deal over the holidays. Democrats and environmental activists following negotiations say their differences with the West Virginia conservative on climate provisions are narrower than other policy areas of President Joe Biden’s Build Back Better (BBB) agenda, especially as it relates to the giant package of tax credits aimed at speeding the transition to clean energy. There haven’t been substantive breakthroughs, though, over outstanding energy policy areas such as the methane fee, pro-union EV tax credits, and 45Q carbon capture subsidies. But Senate Majority Whip Dick Durbin on Tuesday said work on BBB is stalled until after the upper chamber deals with voting rights legislation, pushing work on the budget reconciliation package until later this month, Punchbowl News reported. (Politico)

Pennsylvania posturing – Pennsylvania Gov. Tom Wolf has often said he’s “not a politician.” But before a vote on a key climate policy last month, his administration reached for a classic piece of Harrisburg leverage – state funding for local projects – to get Democratic lawmakers in line. On the record, no Democratic lawmakers would acknowledge the tactic to the Pennsylvania Capital-Star. But privately, lawmakers and lobbyists noted that the Democratic Wolf administration implied that gubernatorial sign-off for millions in state aid to lawmakers’ districts was contingent on backing the power sector RGGI cap-and-trade programme. While the Republican-controlled General Assembly did pass a resolution to block the initiative last month, the vote totals were shy of the two-thirds majority needed to override Wolf’s veto. Meanwhile, Pennsylvania Rep. Daryl Metcalfe, chair of the state House environmental committee (ERE), a strong supporter of the natural gas industry, and a climate change denier, announced Tuesday he plans to retire after this year. As ERE committee chair, Metcalfe is a key opponent of Wolf’s plan to join RGGI. Metcalfe’s platform allowed him to organise several hearings on RGGI, which were stacked with like-minded opponents. He advanced legislation and resolutions that would let the legislature block entrance to RGGI, and he wrote letters to offices he believed could keep the state out of the effort, such as RGGI, Inc., the non-profit that administers the programme. (StateImpact Pennsylvania).

ASIA PACIFIC

Green gas? – South Korea’s government is being criticised for including natural gas in a category of activities that it deems will help cut emissions. LNG was included in a taxonomy to accelerate green goals released by the environment ministry on Dec. 30, while nuclear energy was left out. LNG is in the transition section, so shouldn’t be seen as an outright green activity, but is essential in the move away from dirtier fuel, the ministry said. (Bloomberg)

Coming down – South Korea’s GHG emissions in 2019 fell 3.5% YoY to 713 MtCO2e, the environment ministry has announced. The biggest drop came in the power and heat sector, which saw a nearly 19.6 Mt drop, while GHGs from road transport rose by 2.75 Mt. The energy sector remained the nation’s main source of emissions, at 87.2% of its total output.

AND FINALLY…

Savannah slam – Deforestation last year rose to the highest level since 2015 in Brazil’s Cerrado, prompting scientists to raise alarm over the state of the world’s most species-rich savannah and a major carbon sink. Deforestation and other clearances of native vegetation in the Cerrado rose 8% to 8,531 sq km in the 12 months through July, Brazil’s official period for measuring deforestation, according to national space research agency Inpe. (Reuters, Guardian)

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