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TOP STORY
Lead EU lawmaker proposes changes to ETS reforms -leaked draft
Shipping, buildings, and road transport should be included in ETS programmes a year earlier than originally planned, according to a leaked EU Parliament draft on carbon market reform seen by Carbon Pulse on Wednesday that also seeks sweeping changes to free allocation and the addition of a whole new sector.
ASIA PACIFIC
Korean auction undersubscribed again, even as price rises
South Korea sold only 40% of the allowances available at its first carbon auction of the year, even as the KAU price continues to rise.
Australia Market Roundup: ACCUs fly even higher as Safeguard deadline approaches
Australian carbon credit prices are continuing to rise quickly on very low volumes, as all available supply is quickly picked up by voluntary buyers and emitters preparing for next month’s Safeguard Mechanism compliance deadline.
China plans regional carbon sink trading schemes in the northeast
China’s central government said Tuesday to establish carbon sink trading pilots in Inner Mongolia and Heilongjiang province in northeast China, two of China’s most forestry abundant regions.
EMEA
Euro Markets: EUAs test below €80 amid retreating energy markets
EUAs slipped briefly below €80 in another volatile session on Wednesday as both gas and power prices weakened for a fourth day, while trade in UK Allowances picked up ahead of the British market’s first sale of the year.
Campaigners to sue UK government over lack of detail in net zero strategy
Two climate campaign groups will take the UK government to court over its net zero strategy and its lack of concrete policies required to meet the country’s legally binding carbon budgets.
AMERICAS
Large Alaska-based CCO project loses invalidation risk, as voluntary retirements rise 15%
An Alaska forestry project saw millions of its California Carbon Offsets (CCOs) shed their invalidation risk this week, while entities voluntarily retired a large chunk of the compliance credits over the past two months, according to data from state regulator ARB published Wednesday.
RFS Market: RINs fall on reports US EPA may cut 2022 biofuel quota
US biofuel credit (RIN) prices fell from 2.5-month highs on Wednesday on a report that President Joe Biden’s administration may trim recently proposed Renewable Fuel Standard (RFS) volumes for this year.
VOLUNTARY
UN teams up with second exchange to promote CDM credit sales to voluntary market
The UN’s climate change agency has partnered with a second carbon exchange to drive sales of carbon credits issued under its Kyoto-era Clean Development Mechanism (CDM) to the voluntary carbon market, as the international offsetting scheme readies its transition under the Paris Agreement.
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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
Cold war rhetoric – The head of the IEA has accused Russia of throttling gas supplies to Europe at a time “of heightened geopolitical tensions”, implying Moscow has manufactured an energy crisis for political ends, the FT reports. Fatih Birol said on Wednesday that the IEA, which represents many big fossil fuel consuming countries, believed Russia was holding back at least a third of the gas it could feasibly send to Europe, while draining Russian-controlled storage facilities on the continent to bolster the impression of tight supplies.
Club class – The G7 has the opportunity to strike a “grand bargain” with developing nations on combating climate change at the same time as health crises like the COVID-19 pandemic, says economist Dennis Snower. G7 members could help set up production capacities for vaccines or protective equipment in poorer countries in exchange for their cooperation on climate action, according to the founder and president of the Global Solutions Initiative think-tank alliance. Snower said the G7 could thus be the birthplace of a climate club with effects that go far beyond the group itself. While it is important richer nations reduce their own carbon footprint, they also play a crucial role in coordinating their actions in ways that can draw the developing world in for ambitious climate action, said the government advisor. (Clean Energy Wire)
EMEA
Lost at sea – European Commission proposals to bring shipping into the bloc’s carbon market contain exclusions for small commercial and military vessels that would leave millions of tonnes of CO2 emissions unregulated, an NGO study showed. A study by environmental group Transport & Environment (T&E) said that the proposals, which will be negotiated in Brussels this year, exclude ships below 5,000 GT (gross tonnage), which include small offshore supply ships that service the oil and gas industries. Fishing and military vessels would also be exempt. T&E said the loopholes would mean that some 25.8 Mt of CO2 would not fall under the ETS, meaning that roughly 20% of the 130 Mt emitted annually by shipping in the bloc would be excluded. Jacob Armstrong, sustainable shipping officer at T&E, said the proposals were “based on arbitrary loopholes” and would let “too many heavily polluting vessels off the hook”. “The EU must rethink its shipping laws,” he added. A European Commission official said the 5,000 GT threshold aimed “to minimise administrative burden for companies”, especially for small and medium-sized enterprises, “without jeopardising the objective to cover the vast majority of greenhouse gas emissions from the sector”. With about 90% of world trade transported by sea, global shipping accounts for nearly 3% of the world’s CO2 emissions. (Reuters)
Pass on gas – The Institutional Investors Group on Climate Change (IIGCC) coalition wants the EU not to label natural gas investments as sustainable, saying Brussels’ draft sustainable finance taxonomy plan to do so would weaken its global leadership on green finance. The latest draft proposal would set conditions including a 270g CO2e/kwh limit for gas plants until 2030, with government given until later this month to make comments. (Reuters)
Biofuel buy – ExxonMobil is expanding its interests in biofuels that can help reduce GHG emissions in the transportation sector, acquiring a 49.9% stake in Biojet, a Norwegian biofuels company that plans to convert forestry and wood-based construction waste into lower-emissions biofuels and biofuel components, Renewable Energy Magazine reports. Biojet plans to develop up to five facilities to produce the biofuels and biofuel components. The company anticipates commercial production to begin in 2025. The agreement enables ExxonMobil to purchase as much as 3 mln barrels of the products per year, based on the potential capacity of five facilities.
All Thyssen and more – Shell has signed a contract with the German company Thyssenkrupp for a 200MW electrolysis plant, called Hydrogen Holland I, in the port of Rotterdam, the Netherlands, Power Technology reports. As agreed, Thyssenkrupp will engineer, procure, and fabricate the electrolysis plant. According to a Thyssenkrupp statement, the company will deliver the green hydrogen plant using its large-scale 20 MW alkaline water electrolysis module.
Out with the old, INEOS with the new – INEOS has agreed a long-term power purchase agreement (PPA) for offshore wind power in Belgium from producer Eneco. Under a ten-year deal that begins in 2022, INEOS will purchase 250 GWh per year of offshore wind power produced in the North Sea. The power generation is estimated to reduce carbon emissions by almost 1 mln over the length of the contract, allowing parts of the INEOS business to switch to green power from January 2022 onwards.
AMERICAS
Big breezes – President Joe Biden’s administration on Wednesday said it would hold the US government’s biggest ever offshore wind auction next month for areas in waters off the coast of New York and New Jersey, part of a range of measures it unveiled to speed clean energy growth. The Feb. 23 sale of six commercial leases in the New York Bight is projected to one day host projects able to generate up to 7 GW. The Bureau of Ocean Energy Management said 25 companies are eligible to bid on the leases, including entities controlled by Equinor, Avangrid, BP, and EDF, and each bidder may only win one lease. (Reuters)
Enhanced enhancements – The Alberta environment ministry on Wednesday approved the Quantification Protocol for Enhanced Oil Recovery Version 2.0 under the Canadian province’s offset programme. Version 2.0 replaces the flagged Quantification Protocol for EOR, and the flagged version is now withdrawn as of Jan. 11, which means that no new emissions offset projects can be initiated using Version 1.0. Existing projects on the Alberta Emission Offset Registry that are using Version 1.0 of the protocol must update their project plan to use Version 2.0 of the protocol effective Jan. 11.
ASIA PACIFIC
Costly renewables – Asia-Pacific’s levelised cost of electricity (LCOE) for renewable electricity broke historical trends and rose in 2021, but still gained ground against fossil fuel power, according to analysis by Wood Mackenzie, ReNews reports. The research said that last year Asia’s power crisis sent fossil fuels and renewable sources into a frenzy as prices spiked amidst strong demand and supply chain tightness. Spot market fuel prices averaged over the year pushed up costs of coal and gas power by 19% and 46% respectively, making renewables – utility PV and onshore wind – appear more competitive. However, increased equipment and logistics costs meant that solar and wind power were also hit by cost inflation.
VOLUNTARY
Futurefunds – German carbon removal marketplace Carbonfuture has raised $2.8 mln in seed funding, with the investment round led by Ubermorgen Ventures and joined by early-stage investor seed + speed Ventures, impact investor Wi Venture, plus existing investors and additional business angels. The company, which only trades credits from carbon sinks, also said that it has recently opened an office in California. (CleanTechnica)
SCIENCE & TECH
Gloomy forecast – Economic growth goes down when the number of wet days and days with extreme rainfall go up, a team of scientists from the Potsdam Institute for Climate Impact Research (PIK) finds. Rich countries are most severely affected and herein the manufacturing and service sectors, according to their study now published as cover story in the science journal Nature. The data analysis of more than 1,500 regions over the past 40 years shows a clear connection and suggests that intensified daily rainfall driven by climate-change from burning oil and coal will harm the global economy. “Macro-economic assessments of climate impacts have so far focused mostly on temperature and considered – if at all – changes in rainfall only across longer time scales such as years or months, thus missing the complete picture,” says Leonie Wenz, who led the study. “While more annual rainfall is generally good for economies, especially agriculturally dependent ones, the question is also how the rain is distributed across the days of the year. Intensified daily rainfall turns out to be bad, especially for wealthy, industrialized countries like the US, Japan, or Germany.”
AND FINALLY…
Snip at a clip – With the climate crisis becoming ever more urgent, The Guardian profiles the growing number of young, childless men that are taking the drastic decision of being sterilised for environmental reasons. World Vasectomy Day is now an annual event and year-round programme that has worked with family-planning groups and public health bodies around the world. Clinicians, who are offered training in the latest no-scalpel technique, have performed almost 100,000 vasectomies as part of the campaign.
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