CP Daily: Friday January 14, 2022

Published 01:46 on January 15, 2022  /  Last updated at 01:53 on January 15, 2022  /  Newsletter  /  No Comments

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

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TOP STORY

Key EU lawmaker plans to propose steps to curb carbon market “manipulation”

The EU lawmaker steering ETS reform is working on measures to prevent carbon market “manipulation”, he said on Friday, vowing to ensure such steps don’t punish companies with emissions obligations.

EMEA

French nuclear downgrade could lead to 20 Mt more CO2 output in 2022

Analysts predict that a reduction in French nuclear output flagged by utility EDF for 2022 will lead to a net rise of around 20 million tonnes of EU CO2 emissions, spurring additional demand for EUAs from the additional gas and coal burn and putting the carbon market on notice for future announcements.

Euro Markets: EUAs trim weekly loss after news of curbs to French nuclear output

EUAs ended the week on a positive note, trimming their weekly loss to 3.9%, as energy markets lifted on news that utility EDF expects to generate up to 60 TWh less power at its French nuclear units in 2022 after faults were discovered in several of its plants.

Lead MEP launches push to force ETS-linked penalties on EU nations -media

EU nations should face penalties for every tonne of emissions exceeded in non-ETS sectors based on prices in the bloc’s carbon market, Bloomberg reported on Friday, citing draft plans set out by the lawmaker steering scrutiny of the revised Effort-Sharing Regulation (ESR).

AMERICAS

US Federal Reserve nominee likely to advance climate lens in financial regulation, oversight

President Joe Biden announced his nominations for three top Federal Reserve officials on Friday, advancing climate change considerations into the central bank’s influence over the financial sector.

Biofuel, EV groups seek stronger California LCFS targets, as refiners more measured

Credit generators under the California Low Carbon Fuel Standard (LCFS) called on regulator ARB to strengthen carbon intensity (CI) reduction targets for the programme, while refiners said a long-term market signal was important but declined to provide specific goals, according to public comments.

Quebec free carbon allowance allocation inches down in 2022

Quebec’s initial free allowance distribution for 2022 slightly regressed from the previous year, even as the number of industrial cap-and-trade emitters receiving allocation increased, according to data published by the province’s environmental ministry.

Financial players’ CCA length rises back towards 100 mln, emitters add to holdings\

Speculators significantly increased their California Carbon Allowance (CCA) holding this week as prices dove, while compliance entities modestly decreased their net short position, according to US Commodity Futures Trading Commission (CFTC) data published Friday.

US Carbon Pricing and LCFS Roundup for week ending Jan. 14, 2022

A summary of legislative and regulatory action on carbon pricing, clean fuel standards, and clean energy at the US subnational and federal level this week, including a market-based climate policy in New Mexico.

ASIA PACIFIC

CN Markets: CEAs stable as traders await allocation plan

Chinese carbon allowance prices remained largely stable over the past week as market participants await the official allocation plan for 2021, while offsets are being offered at far above market prices amid severely limited supply.

INTERNATIONAL

Rebound in demand saw global electricity emissions spike by 7% in 2021, IEA says

Strong growth in global electricity demand of 6% in 2021, brought about by the recovery of global GDP from the Covid-19 induced slump from the year before and extreme weather conditions, saw electricity CO2 emissions spike by nearly 7% to reach a record level in the year of COP26, the International Energy Agency (IEA) stated on Friday.

AVIATION

Low-cost UK airline Jet2 launches “one of world’s largest” offset programmes

UK-headquartered low-cost leisure airline Jet2 has launched what it calls “one of the world’s largest” aviation offset programmes, neutralising all emissions not already covered by compliance schemes.

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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

The happiest number? – Cargo ships schlep thousands of millions of tons of cargo around the world every year, belching out 3% of the world’s GHG emissions as they traverse the seas. But the real damage is done by the contents of their holds, Quartz reports. By weight, 40% of maritime trade consists either of fossil fuels on their way to be burned or of chemicals derived directly from fossil fuels. Data maintained by the United Nations Conference on Trade and Development (UNCTAD) shows how, while the tonnage of crude oil shipped around the world has remained relatively stable over the last 20 years, the weight of natural gas and petrochemicals has boomed. And on a 40-year time scale, the spread of robust supply chains for consumer goods has enabled an explosion in the tonnage of dry goods cargo. In 2018, the dry goods cargo included 1,263 Mt of coal, according to UNCTAD. When the tonnages for coal, oil, gas and petrochemicals are summed up, they constitute nearly 4.5 billion tonnes out of the 11 bln tonnes of total maritime shipping. But this isn’t necessarily bad news, as the climate activist Bill McKibben pointed out in his newsletter. “Because it means that if and when we make the transition to solar power and windpower, we will not just stop pouring carbon into the atmosphere, and not just save money—we will also reduce the number of ships sailing back and forth by almost half,” McKibben wrote.

AMERICAS

Don’t delay – Canada’s low-carbon transition poses important risks for some sectors, and delaying actions to prepare could expose financial institutions and investors to “sudden and large losses,” the country’s central bank and financial regulator said in a report on Friday. The transition, to be spread over 30 years, will hit Canada’s economic growth as demand and prices for commodities fall, leading to less inflationary pressure and a need for more stimulative monetary policy, the Bank of Canada and the Office of the Superintendent of Financial Institutions said. The pilot study, which looked at various climate risk scenarios, found Canada’s economy will undergo “significant structural changes” to meet climate targets, made more difficult by its large carbon-intensive sectors. (Reuters)

Budget build-up – Meanwhile, the Canadian government will probably include a CCS tax credit in the next budget and detail its goal to cut emissions 40% to 45% below 2005 levels by March, natural resources minister Jonathan Wilkinson told Bloomberg. The government also expects to announce a cap on emissions from oil and gas facilities as early as this year, in line with a campaign pledge by PM Justin Trudeau. The oil sands industry has already adopted a 100Mt cap on emissions that’s well above current levels, but the federal government’s cap would be lower, closer to current emissions, and reduced over time, Wilkinson added.

Beacon and the blade – New York Gov. Kathy Hochul’s office said Friday that contracts have been finalised between a state agency and Empire Wind Offshore and Beacon Wind for offshore wind power projects totalling nearly 2.5 GW of capacity for a total cost of $80.40/MWh. The 1,260MW Empire Wind 2 and 1,230MW Beacon Wind projects were provisionally awarded in Jan. 2021 resulting from the New York State Energy Research and Development Authority ‘s second offshore wind competitive solicitation. Each project is a 50-50 partnership between Norway’s Equinor and London-based BP. Empire Wind 2 is expected to commence commercial operations in 2027, followed by Beacon Wind in 2028. (S&P Global Platts)

EMEA

Is it a bird…? – The German government’s ambitious new renewable plans may face a challenge from from nature conservation groups. The ministry of economy and climate protection headed by vice-chancellor Robert Habeck wants to cover 2% of German land with onshore wind turbines to meet much stricter 2030 emissions targets. Berlin’s new wind goals may clash however with nature conservationists who cite EU law to back their case. In what is often referred to as the “ban on killing,” enshrined in the EU’s Birds and Habitats directive, EU states must prohibit deliberate capture or killing and disturbance of birds, as well as several other activities. It is thought that these laws have already hampered German onshore wind expansion in recent years, and it is possible that the legislation may continue to do so (Euractiv).

Ghost defender – The EU has defended its airport slots rule following complaints by some airlines including Lufthansa that the requirement forces it to fly empty planes, Bloomberg reports. Lufthansa last week launched an onslaught against the EU’s use-it-or-lose-it rules that stipulate flights must take place or takeoff and landing slots will be forfeited. The carrier, whose units include Swiss, Brussels Airlines, and Austrian Airlines, has claimed the regulations will force it to operate 18,000 flights without passengers over the winter season, causing unnecessary CO2 emissions. Competitors like Ryanair have accused Lufthansa of distorting the environmental issue, saying the airline should sell cheaper tickets to make sure the planes aren’t empty. The EU last year waived the normal requirement to use 80% of assigned slots due to the worldwide slump in global travel amid the pandemic. The minimum was raised to 50% for this winter and will be hiked again to 64% for summer. The requirements are based on Eurocontrol bookings and cancellation numbers and are “very reasonable,” European Commission spokesman Stefan De Keersmaecker said Thursday. It “cannot be argued that the EU rules oblige the airline to fly,” he said, adding that airlines can apply for an exception if they cannot operate the route. According to Eurocontrol, air traffic so far this winter has been in the range of 73% to 78% of 2019 levels and is forecast to be at 88% for 2022.

Blast it – German steelmaker Salzgitter wants to shift its entire steel production from blast furnaces to low-emission technologies by the middle of the next decade, newswire Reuters reports in an article carried by Handelsblatt. “Then we will have reduced our CO2 emissions in steel production by 95%, almost 8 million tonnes every year,” CEO Gunnar Groebler told Frankfurter Allgemeine Zeitung. The company estimates it will need to invest between €3-4 bln to finance the transition, and Groebler said he expects policy support. Salzgitter is responsible for around 1% of Germany’s total CO2 emissions. The steel industry is one of the world’s largest emitters because it uses coking coal to smelt iron ore. In this conventional production method, CO2 emissions are unavoidable. But the decarbonisation of the sector by replacing coking coal with fossil-free electricity and hydrogen is rapidly gathering speed around the world. The new German government has made industry decarbonisation a priority in its drive towards achieving the target of climate neutrality by 2045. It plans to help industry by using carbon contracts for difference (CCfDs), among other measures. (Clean Energy Wire)

Dirty burn – A Swedish power plant that’s vital to keeping the country’s lights on used almost eight times more oil last year as the energy crunch boosted demand for the dirtiest fuels. The Karlshamn plant in southeast Sweden used 27,984 tonnes of heavy fuel oil last year, up from 3,636 tonnes in 2020, data from operator Uniper show. Electricity output from Karlshamn jumped to 110 GWh last year, the most since 2010, resulting in CO2 emissions of 89,532 tonnes. Uniper has an agreement with Sweden’s grid operator that the plant can be called upon when reserve power is needed between mid-November and mid-March, and there’s also some capacity left to run when prices are high enough to make a profit.  The plant “has been called upon more frequently over the past few months, which is related to the shortage situation we’re now seeing in large parts of Europe,” Uniper spokesman Torbjorn Larsson said.  According to Bloomberg, it’s the latest evidence of how combating global warming has taken a backseat as Europe faces a historic energy crisis. Burning oil is a reliable source of generating power – but among the most polluting methods – and adds to the rising use of coal and natural gas needed to meet demand in the region.

Support snub – British industry has reacted with dismay after the government signalled it had little appetite to provide immediate financial support to energy intensive users struggling with soaring gas and electricity prices, the FT reports, citing a letter sent from junior business minister Lee Rowley to the Energy Intensive Users Group last week. The note played down expectations of any intervention, pointing out that the most exposed sectors had received extensive support” for a number of years, including more than £2 bln to help with the high electricity prices.

ASIA PACIFIC

Shipping hydrogen – Korea Shipbuilding & Offshore Engineering (KSOE) expects to have the technology to transport hydrogen by ship by 2025, an executive said, Channel News Asia reports, targeting a breakthrough in supplying a fuel touted by supporters as offering a major source of clean energy. The development by KSOE, the shipbuilding arm of Hyundai Heavy Industries Group, one of the world’s biggest shipbuilders, comes amid growing global interest in rolling out hydrogen as a cleaner fuel alternative. Vessel makers worldwide are looking at ways to transport the gas, currently supplied via pipelines and trucks.

What in blazes – Australia matched the country’s highest temperature on record, triggering a bushfire warning and temporarily shutting a natural gas export plant, Bloomberg reported. A production train at Woodside Petroleum’s North West Shelf liquefied natural gas export plant in Western Australia suffered a brief outage this week due to the spike in temperatures. Several bushfire alerts are in effect in Western Australia, including one at the Wheatstone LNG export plant, according to the state government’s website. The temperature hit 50.7 degrees Celsius (123 degrees Fahrenheit) in a part of Western Australia on Thursday, matching a national record set in 1960, according to the Bureau of Meteorology. A severe heatwave is forecast through Saturday in some parts of the Pilbara region, the country’s iron ore production hub that hosts mines operated by companies including BHP and Rio Tinto.

Solar milestone – Australian homes and businesses installed a record amount of rooftop solar in 2021, Renew Economy reports, just edging past the expected milestone of 3 GW of new capacity added in one year, despite a second round of COVID-19 chaos and increasingly strong global solar market headwinds. For Australia’s rooftop solar industry, the notorious solar coaster has been in full effect this year, with the ups and downs of pandemic-affected trading conditions and the twists and turns of multiple major supply-chain constraints.

Furious anger – The arrival of a new offshore drilling rig in New Zealand, a year after the country declared a climate emergency, has prompted a fresh wave of anger at the government’s alleged “hypocrisy” and “cynical politics” on climate change, the Guardian reported. The new offshore drilling rig, run by oil and gas company OMV, will operate under a permit predating the ban. It will be transported to the mature Maui B gas field off the coast of Taranaki in the coming days, where it will complete “development drilling”.

Sharing the spoils – Chinese car-sharing service Dida Chuxing is aiming to make car-sharing eligible to earn CCERs – the central government’s carbon credits that are eligible for compliance use in the national ETS – the company vice president told the 21st Century Business Herald. The move comes after Dida helped finalise an initial car-sharing offset methodology last month.

VOLUNTARY

TREES in Tshuapa – The Architecture for REDD+ Transactions (ART) programme on Friday announced it has approved a TREES concept from the Tshuapa province in the Democratic Republic of the Congo, which accounts for 9.3% of the African country’s’ national forest cover. The jurisdictional REDD concept would utilise a 2012-16 reference period and 2017-21 crediting period, while also being able to negotiate emissions reduction purchase agreements with the LEAF coalition for mitigation in the 2022-26 timeframe. This brings the total number of jurisdictions listed with ART to 12.

Spending in ‘Straya – Canadian carbon specialist company Radicle has acquired advisory firm Carbon Farmers of Australia (CFA), it announced this week. CFA is specialising in land-based offset projects, in particular soil carbon, and Radicle hopes the acquisition will give it a foothold in the fast-growing Australasian carbon market, the company said in an announcement. The Canadian outfit aims to use technology under development to launch projects in Australia’s agriculture sector, but also expand its activities to other sectors of the economy.

AND FINALLY…

Put a sock in it – UK energy supplier E.ON said it is sorry for sending socks to customers with advice to keep warm in the middle of a Europe-wide energy crisis. The energy supplier sent pairs to 30,000 households with advice on turning down the heating to cut carbon footprints, the Guardian reports. The company said it was “incredibly sorry” after sending pairs of polyester socks branded with advice to turn heating down to help reduce carbon emissions to about 30,000 households which had taken part in an energy saving campaign last year. Many of the new sock-owners took to social media to criticise the “pitiful package” which was delivered to homes in the same week that Ovo Energy was forced to apologise for a customer letter urging households to cuddle a pet, eat ginger, or perform star jumps to keep warm. British households face some of the highest energy bills on record this winter, due to soaring market prices fuelled by record gas costs.

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