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TOP STORY
ANALYSIS: Room for removals? Integrating direct air capture into the EU ETS
EU lawmakers have proposed to incorporate direct air capture (DAC) and other carbon removal technologies into the bloc’s carbon market, but some industry experts say ETS integration would need to be coupled with other policies to see the technology scale up.
AMERICAS
NA Markets: CCAs plummet beneath November auction settlement, traders question new RGGI record
California Carbon Allowance (CCA) prices tumbled nearly 7% this week as persistent bearish macroeconomic conditions knocked prices below the most recent WCI auction settlement before stabilising, as RGGI Allowances (RGAs) stagnated before a late move up to a new all-time high had some traders raising red flags.
EMEA
EU approves restructuring of Romanian utility, may spur EUA buying
Romanian government plans to provide state-owned utility CE Oltenia with €2.66 billion for restructuring the company have been approved by the European Commission under its state aid laws.
Euro Markets: EUAs linger near €90 as gas prices slip back
EUAs climbed back towards the previous session’s 2022 high on Thursday while UK units rose to a new record, as prompt natural gas prices slipped back after Russia and Ukraine agreed to suspend hostilities.
Nord Stream 2 fate appears bleak as Germany, US vow retaliation over Russian invasion of Ukraine
The fate of the Nord Stream 2 looks bleak after Germany and the US appear to have reached an agreement to scrap the gas pipeline should Russia invade Ukraine – something that President Joe Biden reportedly said is “highly certain”.
ASIA PACIFIC
China set to accelerate energy transition despite near-term focus on coal -analysts
China’s energy transition is likely to speed up in 2022, even though near-term energy security concerns will mean continued focus on coal in the short term, according to a report released Thursday.
Singapore investment arm buys into green hydrogen outfit with Australian, Middle East projects
Singapore’s sovereign wealth fund, GIC, has made what it calls a “strategic equity investment” into Hong Kong-based Intercontinental Energy (ICE), a company with a portfolio of large-scale renewable hydrogen projects on its drawing board, the key investment arm of the Singaporean government announced.
INTERNATIONAL
Misplaced faith in long cycle bullishness for oil market risks stranded assets, value destruction, report warns
Oil and gas companies should resist the temptation to respond to rebounding oil demand and prices by sanctioning high-cost, long-cycle projects based on a bet that the current bullish investment environment will be prolonged, a report released on Thursday has argued.
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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
Transition takeup – The global low-carbon energy transition pulled in $755 billion of investment in 2021, a 25% increase over 2020, double what was invested in 2015, and a more than 20-fold increase since 2004, according to analysis from BloombergNEF. It also said climate innovation funding reached $165 bln in 2021.
EMEA
Coal cap bust – France is looking to temporarily raise the cap on allowed coal usage to ensure coal plants stay online this winter and limit a power price surge, Reuters reported, citing a government document. About 2.5 GW of coal-fired production capacity is available in France, which can reach peakload during times of low temperatures and low renewable availability. A public consultation on a decree to temporarily raise the cap ended on Jan. 20, but it has yet to be confirmed in the official journal. France’s emissions cap for power generators means coal plants under current law can operate for approximately 700 hours annually, but that could be lifted to 1,000 hours between Jan. 1 and Feb. 28 under the decree, with the emissions limit lowered for the rest of 2022 to compensate.
Hedged benefits – Polish oil refiner PKN Orlen has reported record quarterly EBITDA of PLN 2.1 bln (€460 mln) for Q4 2021, driven by a post-pandemic demand recovery that drove a 10% lift in sales, favourable current exchange and margins, and the hedging of its ETS exposure. During the press conference on the firms quarterly results, finance chief Jan Szewczak said that the company had spent PLN 1.8 bln on EUAs in 2021, but had saved itself PLN 3.5 bln by buying last year’s ETS requirement in 2019 when market prices were lower, Biznes Alert reported.
Sizewell swell – The UK government has given £100 mln in funding to the proposed Sizewell C new nuclear power project, moving closer to taking a stake in atomic generation for the first time in more than a decade. The money would convert to a government stake in the scheme or be repaid once a final investment decision – due in three years – is taken. (BBC)
Another lawsuit – Young Germans supported by an environmental NGO have filed a new lawsuit with the country’s highest court to force the government to further step up its climate ambitions. Nine children and young adults, along with Environmental Action Germany (DUH), launched a constitutional complaint claiming current policies are “insufficient” to combat global warming. DUH lawyer Remo Klinger said Germany must abide by its carbon budget to fulfil its obligations under the Paris Climate Agreement. “The targets remain too low to even begin to meet the Paris Agreement,” he said. The previous government already introduced more ambitious climate targets following a ruling by the constitutional court in favour of a similar lawsuit in May last year. But the complainants argue the new laws will still not sufficiently reduce emissions. In addition, the lawsuit claims that the situation has “decisively changed” since the last ruling as the latest IPCC report predicts climate change will take place faster and with greater consequences than previously assumed. (Clean Energy Wire)
AMERICAS
Biden backing – US President Joe Biden met with corporate executives from major companies about his Build Back Better (BBB) bill on Wednesday, arguing the positive economic aspects of its climate and child care provisions. Microsoft President Brad Smith said he would offer a “full throated endorsement of the climate provisions.” Biden congratulated General Motor’s CEO Mary Barra on the Tuesday announcement that the auto giant will invest nearly $7 bln in EV manufacturing sites in Michigan. Barra replied that she looks forward to working with Congress on the BBB provisions for EV tax credits. Biden conceded last week to potentially breaking up the stalled BBB package, acknowledging that some proposals won’t be able to find enough support in the Senate. (The Hill)
Breyer to retire – Justice Stephen Breyer is ending his nearly three decades on the US Supreme Court after expressing his intent to retire last week. Breyer, a member of the court’s minority liberal wing, had a track record of voting for environmental and public health protections, though he also didn’t shy away from making overtures and compromises with some of his more conservative peers. Breyer is expected to sit through the rest of this term, meaning he is still slated to rule on an upcoming case regarding EPA’s ability to regulate power plants’ GHG emissions. (Politico)
In tech we trust – Leading technology companies have filed an amicus brief urging the Supreme Court to uphold EPA’s authority to regulate climate pollution, calling it “vitally important” to fight climate change. Businesses including Apple, Amazon, Google, Meta, Microsoft, Netflix, Tesla, Paypal, and Salesforce filed a “Friends of the Court” brief in the West Virginia v. EPA. Briefs were also filed by local governments, 192 members of Congress, members of the Senate, the Edison Electric Institute and others, in support of the EPA. The oral arguments begin on Feb. 28th, and the outcome could have far-reaching consequences on the Biden administration’s authority to meet its climate commitments as well on the ability of future governments to do the same. (Climate Nexus)
C(EC) that you do – The Ontario government on Wednesday announced it is developing a voluntary clean energy credit (CEC) registry to boost the province’s competitiveness and attract jobs. The Ontario government said it has directed the Independent Electricity System Operator (IESO) to research and report back on the design of a provincial CEC registry, that would give businesses more choice in how they achieve their corporate sustainability goals. The IESO will deliver its report by July 4, and the government will then consider the report as well as stakeholder input, with the intention of having the registry available by Jan. 2023.
ASIA PACIFIC
Woodside exit – Australia’s Woodside Petroleum has announced it is following multinational energy groups Chevron and Total in exiting Myanmar, saying it is unable to work in the country following the military coup nearly one year ago and the regime’s continuing human rights abuses and violence against civilians, the Guardian reports. The move follows pressure from human rights groups, who have called on companies to stop doing business in Myanmar thereby cutting off the flow of money from projects to the junta.
AVIATION
Call for CORSIA – UN aviation body ICAO on Wednesday launched its fourth intake for emissions unit programmes to apply for eligibility under the CORSIA offsetting scheme. The call for applications is open through Feb. 26, and the ICAO Council will consider recommendations from CORSIA’s Technical Advisory Body (TAB) on the programmes at its 227th Session this fall.
SCIENCE & TECH
Stay out of the kitchen – A new study from Stanford University finds that gas-burning stoves in kitchens leak significant amounts of methane from pipes, hoses, and fittings, mostly before (and after) the gas is burned. Worryingly, these emissions have a heat-trapping climate impact equivalent to the CO2 emissions from about half a million gasoline-powered cars a year. In the study, scientists found the gas stoves leaked regardless of age, cost, or brand – even when the stove is off. And the stoves also release nitrogen dioxide, which can trigger asthma attacks, reduced lung function, and worsening coughs. “If you have the financial ability to swap out a gas stovetop for an electric induction cooktop, I do think it’s a good idea,” said Rob Jackson, the study’s co-author told the New York Times. “It’s a good idea for the planet and for air quality.” (Climate Nexus)
AND FINALLY…
Hot in the city – A surge in heat-related deaths amid record-breaking summer temperatures offers a “glimpse into the future” and a stark warning that Phoenix – one of America’s largest cities is already unlivable for some, according to its new heat tsar David Hondula. Almost 200 people died from extreme heat in Phoenix in 2020 – the hottest, driest and deadliest summer on record with 53 days topping 110F (43C) compared with a previous high of 33 days. Last year there were fewer scorching days, but the death toll remained staggeringly high, with people experiencing homelessness and addictions dying disproportionately. (The Guardian)
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