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TOP STORY
ANALYSIS: US oil companies lag in climate targets, avoid lifecycle commitments
The climate goals of US oil and gas companies are less ambitious compared with their European counterparts as they avoid firm commitments to address full lifecycle emissions and set targets that enable their absolute greenhouse gas output to rise.
EMEA
UK government declines to add more UKAs to market after January intervention trigger
The UK ETS Authority will not add any additional UK Allowances to the British market after the market’s cost containment mechanism (CCM) was triggered for a second successive month at the end of December, it said on Tuesday.
Curbs and challenges: Member state moves could further complicate EU ETS reform process
Two EU member states are making moves to further complicate efforts to reform the bloc’s carbon market.
Euro Markets: EUAs stage strong afternoon rally amid aggressive buying
EUAs reversed early losses on Tuesday as trading volumes picked up amid aggressive buying, while energy markets were firmer even as gas supplies from Norway recovered after brief interruptions.
MEPs propose setting a floor level for new ETS-linked social fund -media
The EU’s new Climate Action Social Facility should pay out a minimum of €72.2 billion to support poorer households rather than be fully linked to prices in the bloc’s second carbon market, media reported on Tuesday, citing a draft report set to be tabled by senior lawmakers.
Rosneft, Russian commodity exchange agree carbon market collaboration
Russian oil giant Rosneft has inked a deal with one of the country’s commodity exchanges to cooperate on carbon trading, and in particular to explore holding emissions unit auctions.
ASIA PACIFIC
Australian emitters double voluntary carbon offset cancellations in 2021
Australian companies doubled the number of carbon credits they retired voluntarily from the national registry last year, though the growth was far higher for cheap, plentiful UN-issued credits than the expensive, less-available domestic units.
China’s auto industry on track to miss carbon neutral target, analysts find
Emissions from China’s car making industry are set to plateau after peaking in 2027, putting the sector off track for a 2060 net zero pathway, according to an analysis by a green group released on Tuesday.
AMERICAS
Canada publishes first two draft protocols for federal offset system
The Canadian environment ministry this week released the first two draft protocols under the national carbon offset system, as it revealed further details on the delayed timelines for developing and finalising additional methodologies under the nascent programme.
Exxon snubs vast majority of emissions in aspirational 2050 net zero target
ExxonMobil on Tuesday announced it will hope to reach net zero GHG output from its operations by mid-century, though it continued the trend of American oil majors declining to cover emissions from their products within their climate strategies.
INTERNATIONAL
Offset policy can provide easier path to carbon market linking, report finds
Prospects for linking carbon markets could hinge on how closely jurisdictions make provisions for offset use, according to a report prepared for the regulatory authorities of the EU, California, Quebec, China, New Zealand and Switzerland carbon compliance markets.
SHIPPING
Carbon price of $360/t required to decarbonise shipping by 2050 -report
An average carbon price of almost $200 per tonne would be required to decarbonise the global shipping sector by 2050, with the price ultimately hitting heights of $360 in the target year, according to a report by an industry coalition published on Tuesday.
VOLUNTARY
South Pole increases VCM presence in Africa with Carbonsink acquisition
Integrated carbon services firm South Pole has expanded its business in Africa through its acquisition of Carbonsink, an Italian-based consultancy with more than 30 carbon-cutting projects on the continent.
OPIS extends carbon credit assessments to single VER price, co-benefits
Commodity price reporting agency OPIS on Tuesday announced it has deployed a series of new voluntary emissions reduction (VER) assessments, including a single combination of CORSIA-eligible and nature-based credits as well as the price premium associated with offset project co-benefits.
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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
Nuke sticks around – Belgium’s nuclear regulator gave a provisional green light on Monday to extend the life of two of the country’s reactors and urged the government to make a final decision on the issue in Q1, Reuters reports. Belgium’s seven-party coalition has been wrestling for months over the topic. The Greens are adamant a 2003 law setting out a nuclear exit by 2025 be respected, but the French-speaking liberals favour extending the life of the two newest reactors. The regulator said updates to the installations would be required to extend the life of the Tihange 3 and Doel 4 reactors and that the government should order the start of planning for this by the end of January. An extension should be for at least 10 years, the watchdog said. PM Alexander De Croo has said it is possible that certain nuclear reactors could be left to operate longer, but added this was “very unlikely”.
Unlimited funds – The German government will use whatever state funds necessary to support the transition of the country’s heavy industry to climate neutrality through carbon contracts for difference (CCfDs), economy and climate minister Robert Habeck said at the Handelsblatt Energy Summit 2022. Asked about the total volume of state funds available for these CCfDs, Habeck said: “The volume shall not be the limit”. (Clean Energy Wire)
Dirt buddies – Historically at odds, the German ministries of environment and agriculture are planning to jointly reform the country’s farming policies to ensure the inclusion of both nature conservation and climate protection. To that end, environment minister Steffi Lemke announced a 10-year €48 mln funding programme for four pilot projects for peat soil protection in moorland regions, which will be rewetted and alternative cultivation. (Clean Energy Wire)
How to not spend it – More than €2 bln of EU funding to help businesses save energy contributed little to climate change targets and in some cases funded investments that would have happened anyway, auditors said Monday. The EU regards curbing energy use as essential to meeting goals to cut GHGs, and record high gas and power prices in recent months have increased the focus on measures to save energy. But so far, EU funding to support energy savings for businesses has not been effective, the European Court of Auditors said in a report. The EU spent €2.4 bln from its budget over 2014-2020 to support energy efficiency in enterprises, including energy audits and measures to cut energy consumption or energy intensity in industry, services or the public sector. The auditors estimated that projects backed by that funding achieved 0.3% of the annual savings needed to reach the EU’s target to cut final energy consumption by 32.5% by 2030, compared to projected levels. (Euractiv)
Market support – The UK government is exploring a radical intervention in the power market, whereby energy suppliers would receive payments from government when wholesale gas prices exceeded a certain threshold so they would not then have to pass the increase on to consumers, the FT reports, reflecting on the looming removal of Britain’s energy price cap from April.
Climate costs – The UK has released its third five-yearly climate change risk assessment, part of the government’s legal requirements on tackling climate change. It looks at 61 potential risks and opportunities across business, infrastructure, health, nature, and international issues at 2C and 4C of warming this century. It said that new and stronger government action is needed in the next five years to deal with risks in more than half the areas assessed, such as climate threats to water, energy and transport networks and impacts on crops. (The Independent/PA)
Sticky decision – Campaigners’ attempts to use the courts to curb UK oil production have been defeated but they are considering an appeal, Climate Home reports. The Oil and Gas Authority (OGA) has a legal duty to “maximise economic recovery” of petroleum in the UK. The country produced over 1 mln barrels of oil a day in 2020, about 1% of the world’s total. Last month, campaigners’ 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”. High court justice Sara Cockerill disagreed. In her ruling, she said it was not the court’s job to interpret what parliament meant by “maximise economic recovery”. Campaigners had argued that oil and gas production costs UK taxpayers money.
Financing the green transition – Economy and finance ministers gathered on Tuesday to discuss the state of play regarding the implementation of the Recovery and Resilience Facility (RRF). The RRF is a temporary recovery instrument that allows the Commission to issue debt on behalf of the Union to help Member States implement reforms and investments. It makes €723.8 bln (in current prices) available in loans (€385.8 bln) and grants (€338 bln). A few days ago, Politico reported that the EU’s long-term budget had emerged as a possible way to finance the fight against climate change despite carrying heavy debt from the pandemic. However, no conclusions emerged at the end of Tuesday’s behind-closed-doors discussion, with EU ministers likely to advance discussions during the informal Council set to take place in Paris on Feb. 25-26.
ASIA PACIFIC
Get the soap – “Clean” coal is going to continue being a feature in China’s energy mix, and the country will seek to make good use of it, state planner NDRC said at a press conference Tuesday. The agency said it will set benchmarks for clean and efficient use of coal, and encourage coal-fired generators to upgrade their facilities.
Better spending – China’s environment and commerce ministries have released a joint statement encouraging companies to actively invest in low-carbon and renewable energy projects as well as carbon sinks when investing overseas. Chinese investors should consider the environmental impacts their projects will have on ecosystems, the ministries said, partly as a follow-up to President Xi Jinping’s announcement last year that China will no longer fund coal projects abroad.
Aussie offsets – Private vehicles users and heavy industries, as well as farmers, will need to contribute to Australia’s 2030 and 2050 emissions ambitions, according to the government’s independent climate change advisory body, which warns renewable energy cannot do all the work, the Australian Financial Review reports. In a rare interview as prices for carbon credits hit records, Climate Change Authority chairman Grant King and chief executive Brad Archer also predicted there would not be enough offsets to allow heavy emitters to continue business-as-usual in coming years. The remarks came as the authority awaits terms of reference from the Morrison government for an inquiry announced by Energy Minister Angus Taylor in December into the credibility of Commonwealth-certified carbon credits or offsets. Part of the review will include looking at claims made through certification programs including Climate Active – a joint venture between the government and business – and particularly of international credits. The authority is expected to report its findings by mid-year.
Biomass for hydrogen – Australian biomass-to-hydrogen venture Verdant Earth has progressed plans to undertake a public listing in the US, kickstarting a process to raise almost A$100 mln to fund the recommissioning of a New South Wales power station using biomass, Renew Economy reports. Verdant Earth has been developing plans to use the now decommissioned Redbank power station with the ultimate goal of producing hydrogen, which it says could be certified as renewable through the use of biomass. In seeking a public listing, Verdant is looking to secure investor support to reactivate the 150MW Redbank power station, located in the Hunter Region, and which has previously been fuelled with coal.
Bilateral ties – The president of South Korea on Monday vowed that his fossil fuel-dependent country and the oil-rich UAE would jointly expand their investments in renewable energy to tackle climate change, AP reports. During a visit to the UAE, President Moon Jae-in reiterated Seoul’s commitment to reach carbon neutrality by 2050, slash methane emissions and boost renewables as the nation — known as one of Asia’s biggest GHG emitters — comes under growing pressure to combat climate change.
AMERICAS
RD or not ? – US refiners and biofuel companies are likely to reach less than half the renewable diesel (RD) production projected by the government for 2025 due to policy and feedstock constraints, according to a study released Tuesday from consultancy Cerulogy. The Energy Information Administration estimates RD production capacity in the US could increase fivefold by 2024 to more than 5 bln gal (18.9 bln L) per year from 1 bln gal currently. But Cerulogy estimated the projects are more likely to yield approximately 2 bln gal of total RD production capacity in 2025, meaning at least 2 bln gal of already announced capacity additions are likely be delayed, cancelled, or downsized. (Reuters)
The low road has no exits – Fossil fuel-related government revenues are slated to plummet if the US deeply lowers GHGs, and policy tools to make up the shortfall face hurdles, according to new analysis from Washington DC-based think-tank Resources for the Future (RFF). Oil, gas, and coal provided an average of $138 bln annually in 2015-20, with fuel excise taxes making up the biggest source at $48 bln for states and $40 bln for the federal government annually. Should the US cut emissions in line with limiting global temperature rise to 1.5C above pre-industrial levels, RFF projected revenues would decline 18% by 2030 and 80% by 2050. The drop is also significant under 2C scenario, at 6% and 56%, respectively. (Axios)
Call it in the Aer – Macquarie Capital, the corporate advisory, capital markets, and principal investing arm of Australian-headquartered bank Macquarie Group, on Tuesday announced the launch of Aerogy, a platform that develops, operates, and invests in renewable natural gas (RNG) infrastructure projects that convert waste into low-carbon energy. The company will initially focus on funding and accelerating projects in the broader RNG and renewable fuels landscape and plans to expand into renewable diesel, sustainable aviation fuel, and hydrogen, Macquarie said in a press release.
VOLUNTARY
Seven and 7 million – Toronto-based investment vehicle Carbon Streaming Corporation on Tuesday said it anticipates the delivery of approximately 7 mln voluntary emissions reductions (VERs) this year from its existing stream investments in the Rimba Raya and Cerrado Biome forestry projects. The company noted it has a pipeline of potential VER opportunities of $200 mln near term out of a total pipeline of $700 mln, with plans to invest in new carbon projects. The fund added it may list the company on a major US stock exchange in the first half of 2022.
Credit where it’s due – Deveron, an agriculture digital services and insights provider in North America, announced Tuesday it has signed a $750,000 enterprise contract with a carbon credit-focused investment company, Generic. The contract provides Generic with access to Deveron’s platform for collecting, analysing, and sharing in-field soil carbon data. Additionally, Deveron said it will work with Generic to create, certify and invest in Canadian carbon credits. The platform developed by Deveron aims to eliminate obstacles to the accurate measurement of carbon sequestration in agricultural land in order to generate reliable carbon credits for the sector.
Science seeks – Corporate climate goal standard SBTi on Tuesday opened a month-long consultation for its target setting guidance for companies in land-intensive sectors, such as food, agriculture and forestry, to align their science-based targets to include land-related emissions and removals. Read Carbon Pulse’s report detailing SBTi’s aim to incorporating new guidance on land use accounting from September even as the initiative sticks to a hard line on the use of offsets overall.
AND FINALLY…
Stop playing games – Climate change will limit where the Winter Olympics can be held as winter changes across the Northern Hemisphere, according to a study by an international team of researchers led by the University of Waterloo. The study, involving researchers from Canada, Austria, and the US, found that if global GHGs are not dramatically reduced, only one of the 21 cities that have previously hosted the Winter Olympics would be able to reliably provide fair and safe conditions for the snow sports program of the Games by the end of this century. However, if the Paris Climate Agreement emission targets can be achieved, the number of climate-reliable host cities jumps to eight, with only six considered unreliable. In conducting the study, the researchers reviewed historical climate data from the 1920s to the present day, and future climate change scenarios for the 2050s and 2080s. They also surveyed international athletes and coaches and found that 89% felt changing weather patterns are affecting competition conditions, and 94% fear climate change will impact the future development of their sport.
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