CP Daily: Monday January 10, 2022

Published 01:35 on January 11, 2022  /  Last updated at 01:35 on January 11, 2022  /  Newsletters  /  No Comments

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

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TOP STORY

Carbon offset prices could surge fifty-fold by 2050, report says

The price of carbon offsets will surge over the next few decades to $47-120 per tonne by 2050, up from around $2.50 in 2020, according to report from an energy research firm released on Monday.

ASIA PACIFIC

Analysts see room for rising prices in China ETS

China’s carbon market has considerable room for rising prices in this decade, though there is also a risk the value of CO2 allowances might stagnate depending on the market’s regulatory settings, according to analysts.

China’s CNOOC reaps windfall profits from ETS natural gas arrangements

A natural gas subsidiary of state-owned China National Offshore Oil Corp. (CNOOC) has used the nation’s emerging green finance market to turn a handsome profit from carbon allowances freely awarded under gas companies’ no-lose inclusion in the world’s biggest emissions trading scheme.

AMERICAS

Pennsylvania governor vetoes anti-RGGI resolution, says carbon market regulation should take effect

Pennsylvania Governor Tom Wolf (D) on Monday disapproved and returned a resolution to block the state’s RGGI-aligned cap-and-trade regulation, arguing the General Assembly failed to act on the document in time and that the rulemaking should go into effect.

US emissions climb over 6% in 2021 on transportation, coal power rebound -report

US GHG output bounced back last year amid the economic recovery from the earlier waves of the COVID-19 pandemic, taking emissions further away from the country’s enhanced Paris Agreement target, according to a report published Monday.

EMEA

Euro Markets: EUAs plunge most in three weeks amid short-selling as equities and energy slide

EU Allowance prices slumped as much as 6.6% on Monday as short-sellers entered the market after a weak first daily auction of the year and as equities and energy prices retreated.

Despite COP26 boasts, UK lawmakers question government’s delivery on domestic climate plans

COP26 President-Designate Alok Sharma touted the UK’s strong delivery of the UN Glasgow climate talks on Monday, but was forced to defend his government’s credibility on domestic climate action amid lawmaker doubts about how well measures are coordinated across departments.

ECB member seeks efforts to curb inflationary impact while keeping green deal on track

Persistently high energy prices risk leading to unsustainable inflation that may push the European Central Bank (ECB) to raise its initial forecasts, ECB board member Isabel Schnabel said on Saturday, stressing that the bloc’s climate policies likely mean high energy values will linger or even increase further.

VOLUNTARY

VCM Report: VER prices vacillate as C-GEO contracts kick off trading

Voluntary emissions reduction (VER) prices trended in opposite directions this week for different exchange-traded product categories, while Xpansiv market CBL’s Core-GEO (C-GEO) contract saw its first activity after its mid-week launch.

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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

Copernicus record – GHGs in the atmosphere hit record highs in 2021, which was one of the world’s hottest years ever and underlined the need for change, the EU’s Copernicus Climate Change Service (C3S) has said. Globally, 2021 was the fifth hottest year on record, with an average temperature 1.1-1.2C above 1850-1900 levels. The last seven years were the world’s warmest on record “by a clear margin”, C3S said in a report. (Reuters)

Fair share – BlackRock’s absolute carbon emissions for assets under management linked to corporate securities and real estate accounted for 1% of global emissions in 2020, the firm’s latest climate disclosures show. BlackRock’s absolute emissions stood at 330.7 Mt of CO2e. Published as part of the group’s Task Force on Climate-Related Financial Disclosures (TCFD), the analysis provides a glimpse into the asset manager’s contribution to climate change. (Risk.net)

EMEA

Climate club – yes or no? – A climate club should live up to the principle of common but differentiated responsibilities for fighting the climate emergency, argued researchers from EU universities in an op-ed published on Euractiv. Seen as a key policy tool to step up climate action, setting up a coalition of highly-ambitious climate actors has gained momentum over the past months backed up by the support of a German G7 presidency. But there are conditions for it to work. “For a climate club to respect this principle and to live up to the imperative of climate justice, it is key to support to emerging economies and developing countries in their transition to a low carbon future,” the piece said. Additionally, the policy could risks being regressive for poorer states that won’t be able to join the “club”, an outcome that could be avoided by using revenues as international carbon dividends. This would see prospective club members committing to climate action, in return for which they would benefit from international carbon dividends, the text argued.

Taxonomy teaser – The European Commission said it has delayed to later this month the deadline for experts to give feedback on its sustainable finance taxonomy plans unveiled just before year-end. Expert advisers will have until Jan. 21 to provide feedback on the draft proposal, rather than until Jan. 12 as initially planned. (Reuters)

Debt zero – German government plans to supercharge the country’s climate fund by €60 bln via unused credit lines from the pandemic have been called into question by national auditors. Germany does not spend more than it receives from taxes in a year, a concept enshrined in its constitution via the so-called “debt brake”. This convention now threatens to hinder the country’s decarbonisation efforts. The FDP party, part of the new German coalition government, has promised to keep to the rule but in a bid to also channel new funding into the climate budget, the party wants to repurpose unused credit lines granted under the extraordinary circumstances of the pandemic. Germany’s court of auditors have deemed the plans to be “constitutionally questionable”. (EurActiv)

Greenflation concern – Quickly rising prices for raw materials needed to build a fossil-free energy infrastructure could become a severe problem for Germany’s energy transition, consultants of the German Economic Institute (IW) found in an analysis for the Bavarian industry association vbw. Resources needed for car batteries, wind turbines, solar panels, and other energy transition products are becoming increasingly costly on international markets and a dominant position by just a handful of suppliers leaves customers vulnerable to trade barriers, the consultants found. Companies could therefore struggle to guarantee a steady supply of critical materials like copper, cobalt, lithium, or platinum, which means that the German government as well as the EU need to stand in for their businesses and help secure access to raw materials, the industry association concluded. (Clean Energy Wire)

Habeck hurries – With a set of immediate measures, Germany’s new economy and climate minister Robert Habeck wants to kickstart the government’s ambitious plans for fast emissions reduction and energy transition progress in the next years, news agency dpa reports. Green Party minister Habeck, who is also the new vice chancellor, intends to present a first set of legislation and measures, which the cabinet could approve in April, the article states, citing ministry sources. (Clean Energy Wire)

Greek grief – The US is no longer supporting the construction of EastMed gas pipeline project as Washington’s interest is now switching to renewable energy sources, according to a State Department statement. According to Greek media, the move benefits Turkey. “We remain committed to physically interconnecting East Med energy to Europe. We are shifting our focus to electricity interconnectors that can support both gas and renewable energy sources,” the US State Department said. The statement added that at a time when Europe’s energy security is more than ever a question of national security, “we are committed to deepen our regional relationships and promote clean energy technologies”. The US is now backing projects such as the planned EuroAfrica subsea electricity interconnector from Egypt to Crete and the Greek mainland, and the proposed EuroAsia interconnector to link the Israeli, Cypriot and European electricity grids. “Such projects would not only connect vital energy markets but would also help prepare the region for the clean energy transition,” the statement added. (Euractiv)

AMERICAS

Fordist mode of production – Ontario is on track for a 375% increase in power sector emissions between 2017 and 2030 if it carries through with a plan to increase its reliance on natural gas power plants, concludes an analysis of the Annual Planning Outlook published last month by the province’s Independent Electricity System Operator (IESO). That assessment adds up to some “very bad news” on GHG emissions, air quality, and the future cost of electricity, wrote Mark Winfield co-chair of York University’s Sustainable Energy Initiative, and Colleen Kaiser, a post-doctoral fellow at the University of Ottawa, in a post for the Hamilton Spectator. The trajectory in outlook makes Ontario the only Canadian province “that seems to be planning on major increases in its electricity-related emissions,” they added. “The reasons why Ontario has found itself in this situation lie, not surprisingly, at the feet of the Ford government, although its Liberal predecessors are due some of the blame as well.” The two authors said the province “has no planning or regulatory framework” to shape the future of the electricity system or address the climate emergency, yet “largely abandoned” a comprehensive energy efficiency strategy in 2019 after shutting down 758 smaller renewable energy contracts and a completed wind farm. (The Energy Mix)

43% burnt – The world’s sole CCS project on a large power plant caught 43% fewer tonnes of CO2 in 2021 compared with the year before, according to new data from the Canadian utility company operating the project. SaskPower said the drop in captured emissions at the Boundary Dam Power Station stemmed from challenges with the main CO2 compressor motor – forcing its CCS facility to go offline for multiple months last year. A SaskPower spokesperson said the issues the utility encountered with the compressor were “exceptional events” and that the company expects a higher capture rate for this year. Still, the company’s data showing the CCS facility captured roughly 44% of its 90% maximum capacity is triggering criticism that Boundary Dam’s Unit 3 is trapping a small fraction of its emissions. The coal plant’s original yearly CO2 capture target was 1 Mt, according to SaskPower. Boundary Dam started operations in fall 2014 and became the world’s only power plant with carbon capture after NRG Energy’s Petra Nova facility in Texas went offline in mid-2020. (E&E News)

Motorready – General Motors on Sunday said it had agreed to recognise California’s authority to set vehicle emission standards under the US Clean Air Act, a move that will make the Detroit automaker eligible for government fleet purchases by the state government. Shortly after Joe Biden was elected president, GM in Nov. 2020 reversed itself and no longer backed an effort by the then-Trump administration to bar California from setting its own emissions rules for vehicles. In Nov. 2019, California said it planned to halt all purchases of new vehicles for state government fleets from GM, Toyota, and other automakers backing former President Donald Trump in the tailpipe emissions battle. However, strengthened federal vehicle GHG standards finalised by the Biden administration last month appear to be stronger than the California standards brokered by the state and several other automakers during Trump’s tenure. (Reuters)

California cash – California Gov. Gavin Newsom (D) on Monday revealed his 2022-23 state budget proposal, including an additional $22.5 bln one-time amount from various fund sources over five years that build on the $15 mln for climate resilience in last year’s budget. The proposal invests an additional $6.1 bln towards zero-emissions vehicles, $9.1 bln for transportation projects that align with climate goals, $2 bln towards a variety of clean energy projects like green hydrogen, industrial decarbonisation, offshore wind, and equitable building decarbonisation.

New Mexico money – New Mexico Gov. Michelle Lujan Grisham will renew her push to create a new government office to spearhead a green energy transition as part of her budget proposal. The plan, announced last week includes $2.5 mln to create a first-of-its-kind Climate Change Bureau within the Environment Department. The bureau would be responsible for implementing clean car rules and future legislation to implement a clean fuel standard and hydrogen hub, as well as more policies to get the state to net zero emissions by 2050. New Mexico lawmakers return Jan. 18 for a one-month session. (The Center Square)

ASIA PACIFIC

More CN LNG – In Japan, city gas company Hiroshima Gas has received its first shipment of ‘carbon neutral’ LNG, provided by Petronas subsidiary Malaysia LNG, the latter announced Monday. The carbon credits involved in the transaction covered all emissions from extraction to combustion, though the parties did not disclose how many offsets were involved or which standard they were issued under. Hiroshima Gas in November set out a plan to become carbon neutral by 2050, with a partial goal to reduce its annual emissions by 300,000 tCO2 by 2030. It expects to start selling the CN LNG to its customers in April.

Falling behind – South Korea’s National Pension Service and other state-run financial institutions have been passive on setting climate targets over the past year compared to private-sector financial firms, according to the Korea Herald, referring to a Solutions for Our Climate’s (SFOC) analysis of the 100 largest financial institutions in Korea showing that none of the nation’s 14 public financial firms promised to achieve net-= zero emissions in their asset portfolios by 2050, nor devised any specific plans for reducing carbon emissions.

Solar boost – The Australian government has unveiled fresh funding to drive down the cost of solar technology as part of a wider goal of getting the cost of production of green hydrogen below A$2 ($1.44) per kilogram, Upstream reports. The government’s independently run Australian Renewable Energy Agency (Arena) announced up to A$40 mln in funding to support research and development into lowering the cost of solar photovoltaics. Arena said the funding would be directed towards projects that are aligned with the agency’s Solar 30 30 30 goal — targeting 30% module efficiency and reducing the total cost of construction of utility scale solar farms to 30 cents per installed watt by 2030. The Australian government recently made “ultra low cost solar” a priority technology under its latest Low Emissions Technology Statement, which set a stretch goal of A$15 per megawatt hour, which Arena states is roughly a third of today’s cost.

VOLUNTARY

Let’s stay together – After reviewing its client roster to align with a new climate strategy, the world’s largest PR firm made no commitment to end its work for fossil fuel clients. Instead, the company’s CEO Richard Edelman told Adweek that it will work alongside clients to improve their climate plans and reduce emissions and impact. “We’re going to have engagement about a path forward based on our principles,” he said. “We clearly want to be with companies that are accelerating action. But if we can’t, then we will part company.” Edelman launched this 60-day review of its operations and client roster in November. The announcement followed a campaign by climate activists that demanded Edelman cut ties with ExxonMobil due to the oil company impact on climate. Now, just 53 days later, the company said it’s finished the review – but won’t leave fossil fuel brands behind. That’s not enough, according to Christine Arena, former executive vice president at Edelman. “The only way for PR and ad agencies to lead on climate is by eliminating the misleading messages that directly contribute to predatory delay, confuse the public and hold our country back from needed climate policy that could save millions of lives,” Arena said.

AND FINALLY…

Good advice? – As politicians and energy companies struggle to figure out how to shield British households from surging prices, one supplier has a few low-cost suggestions: eat some ginger or try a hula hoop contest. SSE Energy, a unit of Ovo Group, posted an online guide to keeping warm without cranking the heat this winter. Yet all the techniques combined likely won’t be enough to overcome the 200% increase in natural gas prices in the last year that’s underlying a potential $24 bln spike to energy bills in April. “Trying to use your heating less in the winter, while staying warm, isn’t easy, especially if you’re working from home,” SSE Energy said in its 10-step guide. “But there are still some simple steps you can take to keep costs down.” The suggestions fall in two broad categories, with plenty of pictures of smiling children and senior citizens for emphasis. The first includes techniques that will make you feel warmer, even while the air in your home stays cold. Those include putting on sweaters and soft Merino wool socks, cleaning the house, having a hula hoop contest, or eating foods like potatoes, lentils, or ginger that stimulate digestion to warm up the body. An accompanying photo shows an elderly couple dancing in the kitchen. The second category features suggestions to actually use heat more efficiently. They include better insulating your home, closing doors to rooms that aren’t used very often, or using a smart thermostat to better regulate energy usage. Ovo Energy later said it was “embarrassed” about the blog, which also suggested customers cuddle pets or eat porridge to stay warm. The company said it had removed the post so it could update it with “more meaningful information for customers”. In a statement to the BBC, Ovo said it recognised the content of the blog was “poorly judged and unhelpful”.

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