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TOP STORY

ANALYSIS: As higher VER prices become the new reality, voluntary players change tact

The surge in pricing for voluntary emissions reductions (VERs) over the past year has caused voluntary carbon market (VCM) participants to reassess their trading strategies, as buyers alter procurement methods and preferences while developers and intermediaries adjust to dwindling credit supply.

EMEA

EU lawmaker mulls proposing tougher EU ETS price control measures -Bloomberg

MEP Peter Liese is considering a proposal to release allowances held in the MSR and to lower the threshold at which the Article 29a mechanism is triggered as part of a plan to control sudden EU ETS price spikes, he told Bloomberg in an interview published on Friday.

Euro Markets: EUAs stage steady rally as compliance buying adds support in “unconvincing” market

EUAs recouped nearly half of the week’s losses on Friday as compliance entities were reported as re-entering the market after prices briefly touched an eight-day low, while energy prices rose after French utility EDF downgraded its generation forecast for next year and tensions remained high over Ukraine.

Lawmakers tussle over how new EU climate fund can best help the poorest

European lawmakers are getting to grips with the design of a proposed new social fund meant to help the poorest households counter the potentially regressive elements of EU climate policy, seeking to ensure the money ‘lands with the right people’.

EDF downgrades 2023 French nuclear output outlook

EDF has downgraded its estimate for 2023 nuclear output, days after it further slashed its generation expectations for this year due to defects found at selected generation units.

VOLUNTARY

VCM initiative prepares to set out its definition of Core Carbon Principles

The Integrity Council for Voluntary Carbon Markets (ICVCM) aims to set out a framework by the end of March to determine its Core Carbon Principles, a quality threshold for projects generating credits on the voluntary carbon market (VCM), a senior member of the group has told Carbon Pulse.

Gold Standard accelerates digital drive to scale up climate project action

Certifier Gold Standard aims to launch an initiative this year to deploy more digitisation towards the auditing of carbon projects, the latest in a growing number of initiatives tapping big tech to help scale the role of carbon finance in tackling climate change.

ASIA PACIFIC

CN Markets: China’s carbon price holds firm in thin market awaiting regulatory clarity

China’s national emissions trading scheme is seeing near-record high price levels, but on very thin volumes as traders await clarity from the government on what happens next.

Analysts adjust down Korea ETS oversupply estimate, but price upside limited

Oversupply in South Korea’s emissions market for 2021 is likely 5-10% lower than previously estimated as CO2 output rise, but there is still limited upside potential in price movement, analysts said Friday.

NZ Market: Relentless bull run creates CCR challenge

New Zealand carbon permits extended their all-time high for a fourth consecutive session in Friday trade, with the relentless run raising some concerns over regulatory consequences.

Australia’s climate authority to review use of international offsets

Australia’s minister for energy and emissions reduction, Angus Taylor, has asked the independent Climate Change Authority (CCA) to review the use of international carbon offsets by Australian companies, ahead of the launch of the regional Indo-Pacific Carbon Offset Scheme (IPCOS).

Shanghai announces carbon allocation for 2021, possible introduction of new offset programme

The Shanghai municipal government will hand out almost 4% more carbon permits under its emissions trading scheme this year as some facilities have been added to the market, and said Friday it could add new types of offsets to increase supply if necessary.

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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

CONFERENCE

North American Carbon World (NACW) 2022 – Apr. 6-8 in Anaheim, California – presented by the Climate Action Reserve: Learn, collaborate, and network on carbon markets and climate policy at NACW, North America’s largest carbon event. NACW features comprehensive and up-to-date information, key thought leaders advancing innovative climate solutions, and the best networking opportunities with colleagues in the business, government, nonprofit, and academic sectors. NACW will dive into the status and future of North American carbon markets, climate policies, innovative solutions, natural climate solutions, net zero pledges and beyond, transportation and LCFS markets. www.nacwconference.com

AMERICAS

You down with SCC? Apparently not – A federal judge in Louisiana on Friday shot down President Joe Biden’s interim estimates on the social costs of carbon (SCC), dealing another judicial blow to the administration’s climate agenda. A 2021 executive order directed agencies to use an interim metric that estimated costs to society that would come from burning carbon in environmental permitting and regulatory decisions. But Louisiana, Alabama, and eight other states “sufficiently identified the kinds of harms” needed to block the metric’s use, the US District Court for the Western District of Louisiana ruled. “The Court agrees that the public interest and balance of equities weigh heavily in favor” of ordering the administration to disregard the calculations Judge James D. Cain Jr. wrote in the opinion. States challenged the temporary cost, claiming Biden didn’t have the authority to issue such a significant decision without notice-and-comment rulemaking. They also claimed that its use in decisions would hamper their economies through higher costs and more stringent standards. The Justice Department unsuccessfully tried to argue that the states’ claims were premature until the metric was actually used in a decision. The DOJ said it’s “reviewing the decision” and declined to comment further. The court did make it clear that it was ruling on whether Biden had flown against administrative procedures with his interim metric and not on “the scientific issues regarding greenhouse gas emissions, their effects on the environment, or whether they contribute to global warming.” (Bloomberg)

We’re still in – Last week’s ousting of Canada’s Conservative Party leader Erin O’Toole – a move linked to his more progressive views in support of issues such as firearm licensing and a variation of carbon pricing ­– marked a likely fatal blow to the support for carbon pricing that had previously been enjoyed across Canada’s core political spectrum. However, a group of high-profile Conservatives, Thursday, launched the ‘Conservatives for Clean Growth’ initiative, stating that “it’s critical for the Conservative Party of Canada to have a credible plan on the environment.” Co-chaired by a former federal minister and former Alberta provincial minister, the new organisation is pledging to work with any candidate running to replace O’Toole as leader, if they are interested in developing “a credible climate, energy and economic plan.” While the group explicitly highlights carbon pricing for industrial emissions, there is no mention of a consumer-facing carbon price, of the sort O’Toole had endorsed, or is currently implemented at C$40/tonne under the ruling Liberal government’s climate policy. (The Globe and Mail)

Going underground – PG&E wants to bury about 3,600 miles of power lines over the next five years in areas at high risk of wildfires, part of an ambitious plan to reduce the threat of its equipment starting catastrophic blazes in drought-parched California. The utility giant aims to reduce the cost per mile from $3.75 mln today to about $2.5 mln in 2026, CEO Patricia Poppe said Thursday, offering new details on a plan to bury 10,000 miles of power lines. This year, PG&E aims to put 175 miles of lines underground, according to a slide presentation posted Thursday. The utility expects to ramp up its annual pace of burying electrical conductors to 1,200 miles in 2026. In total, PG&E has 25,000 miles of overhead lines in high-threat fire areas. Last summer, Poppe first unveiled the company’s ambitious undergrounding goal shortly after the start of the Dixie Fire, which was found to have been caused by the utility’s equipment and exploded to become the second-largest in state history. (Bloomberg)

Not good – Deforestation in the Brazilian Amazon last month was the highest of any January dating back to 2008, reports Brazil’s national space research agency INPE. According to data released today, 430 square km of rainforest was chopped down in January, a 400% rise over Jan. 2021 when 86 square km was lost. The average extent of deforestation in January for the past 15 years has been 171 square km. However, month-to-month deforestation recorded by INPE’s alert system — called DETER — can be highly variable, especially during the rainy season when cloud cover obscures vast areas of the Amazon. Indeed, deforestation in Dec. 2021 was 60% below the level registered in Dec. 2020. (Mongabay)

EMEA

Brexit brigade – The British public “was sold a lie” on leaving the EU and “it is about to be sold another by the same troupe that brought us Brexit”, reports the New Statesman. Climate action “appears to have become his new whipping boy” for Nigel Farage, founder of the UK independence Party, writes Philippa Nuttall: “Rumours abound that Farage plans to launch a national campaign for a referendum on pursuing net zero. ‘Just like the European question, just like the open-door immigration question, just like so many things, these [net zero actions] are imposed upon British people,’ he said this week.” A supporting cast could include Tory MPs Steve Baker and Craig Mackinlay (once the deputy leader of UKIP). “They, too, have adopted opposition to net zero as their new standard, launching the net zero scrutiny group in 2021. Climate scientists have accused the group of opposing climate action, but supporters insist they are only opposed to the cost of reducing dependence on fossil fuels.” The right-wing media is also “leading the charge against climate action … printing misinformation or playing with the truth to suggest that the green agenda, rather than gas, is responsible for the energy crisis, and casting doubt over everything from wind power to electric vehicles and heat pumps”. While the prospect of a net zero referendum might now seem remote, the same could have been said of a Brexit referendum, which in 2011 was rejected by parliament. “History could repeat itself; instead of focusing on how renewable energy offers a way out of the cost-of-living crisis, politicians and climate campaigners might frame their defence of net zero around emissions targets and potential temperature rises, concepts that set nobody’s heart racing.” (Carbon Brief)

Bunker blunder – The European Commission’s proposals to put shipping in the EU ETS and FuelEU Maritime imposition of vessel emissions intensity goals could interact poorly with each other, according to trade association Danish Shipping. It noted that the EU ETS covers tank-to-wake CO2 emissions while FuelEU Maritime covers wider well-to-wake emissions also featuring methane and N2O. The lobby also said that both policies incentivised LNG and may do too little to encourage more expensive renewable fuels. (Argus)

Holes in Blackburn, Lancashire – The owner of the shale fracking company Cuadrilla will permanently plug and abandon its two shale wells in Lancashire, reports the Guardian, “drawing a line on Britain’s failed fracking industry.” Francis Egan, the chief executive of Cuadrilla, said the industry regulator – the Oil and Gas Authority (OGA) – had ordered the “ridiculous” shutdown of the wells in the northern Bowland Shale gas formation despite Europe’s gas supply crisis. The paper says that the OGA originally called for the wells to be shut down last summer and gave Cuadrilla until June this year to complete the work. Egan’s stance has “won support from two members of the Conservative net zero scrutiny group,” the paper said: “Tory MP Craig Mackinlay, the [climate-sceptic group], described the shutdown of the redundant wells as ‘madness’ and Steve Baker, the group’s deputy chair, said the decision would ‘make the situation even worse’ for households struggling with energy bills.” A Whitehall source tells the Times: “Fracking led to unpredictable and unmanageable seismic events in local communities. Even if new scientific evidence emerged and we lifted the moratorium tomorrow it would take approximately 10 years before sufficient quantities of gas could be produced for the market. Given [that] gas is a globally traded commodity with prices set by international markets, there’s no way domestic production would have a material effect on wholesale prices.” (Carbon Brief)

ASIA PACIFIC

Market forces (the issue) – Australian shareholder advocacy group Market Forces has worked with Woodside and Santos shareholders to formally call on Australia’s two largest, and rapidly growing, oil and gas producers to manage winding down production in line with a net zero emissions by 2050 pathway, the group announced. The resolutions, which will be voted on at the companies’ annual general meetings in April, follow significant investor support for similar calls at last year’s AGMs, which saw 19% of Woodside and 13% of Santos shareholders take the extraordinary step of voting for the companies to wind down production and return capital to shareholders. (Market Forces)

SAF for Sings – Singapore’s civil aviation authority and state-investor Temasek will support the city-state’s flagship carrier Singapore Airlines in buying sustainable aviation fuel from US oil producer ExxonMobil and Finnish SAF producer Neste. Its use is expected to reduce about 2,500 tonnes of CO2 emissions during the one-year pilot programme starting from Q3 this year. (Reuters)

INTERNATIONAL

Indo-needs-ya, Germany – The German government plans to support climate and environmental protection projects in Indonesia with credits worth 2.5 bln euros by 2025, the German development cooperation ministry said. Funds will be provided for infrastructure such as clean mobility projects in urban areas; waste and water management, and other projects that reduce emissions and ocean pollution in the country, which ranks within the top ten GHG emitters in the world. “Considerable investments are needed to make progress on climate action and improve the living conditions of the population,” German minister Svenja Schulze said after meeting with Indonesian counterparts. She explained the project has “a high priority” for Germany’s development cooperation efforts, which the government is aiming to intertwine more closely with general climate action efforts. (Clean Energy Wire)

SCIENCE & TECH

It’s electrolysing! – DNV is launching a joint industry project (JIP), with 18 partners, to enhance the standardisation for electrolysers connected to renewable electricity sources to produce green hydrogen, Renews.biz reports. Electrolysers are hydrogen producing devices, splitting water into hydrogen and oxygen using electricity in a chemical process known as electrolysis. Kim Sandgaard-Mork, executive vice president for renewables certification at DNV, said: “DNV predicts that hydrogen will move from approximately 1.9% of the mix of energy carriers in 2040 to 5% in 2050, a trend that DNV anticipates will continue into the second half of the century.

AND FINALLY…

Out with the old – Nearly 40% of voluntary carbon credits purchased by companies are more than five years old, new Nikkei analysis of global data shows, a trend that experts say threatens progress on cutting GHG emissions. Nikkei analysed data going back to 2009 published by Verra, looking at some 99,000 credits types or vintages used to offset a total 192 Mt of CO2e. The data included the names of the companies that bought the credits. Nikkei’s analysis found that 38% of the validated credits purchased by companies – equivalent to 73 Mt – were over five years old, while more than 4% were at least 10 years old. Only 37% were three years old or less. While older credits are not necessarily less effective than newer ones at reducing carbon emissions, their additionality can be questioned and they can hamper efforts to cut GHGs because once the credits are issued it is rare for a third-party organisation to monitor whether the projects upon which the credits were based, such as afforestation projects, were properly maintained.  But as carbon prices usually fall by roughly half after five years, some companies tout their own emissions-cutting efforts by buying older, cheaper credits. The use of older carbon credits differs by industry, Nikkei found. As of Sep. 2021, Delta Air Lines was the largest buyer of credits older than five years, buying the equivalent of 7.28 Mt of CO2, representing 45% of the US airline’s offset purchases. “Verified carbon credits for projects that are active and closely monitored are still viable, even if they are of an older vintage,” a public relations official at Delta told Nikkei. Energy giant Shell offset 79% of its emissions with credits older than five years, while Disney, Chanel, and Goldman Sachs were amongst those also buying credits no more than five years old.

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