Newsletters > CP Daily: Thursday February 17, 2022

CP Daily: Thursday February 17, 2022

Published 00:41 on February 18, 2022  /  Last updated at 00:41 on February 18, 2022  / /  Newsletters

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

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TOP STORY

EU lawmaker’s ETS price control plan unlikely to trigger fresh supply -analysts

EU lawmaker proposals to strengthen ETS price controls are still unlikely to trigger an injection of additional EUAs into the market, while adjoining ideas will likely mean supply tightens in later years, analysts said on Thursday.

EMEA

Brussels plans to increase EU carbon market oversight -media

The European Commission is considering imposing more reporting requirements for EU ETS emissions derivatives as soon as next month, media reported late Thursday, citing a draft document.

Euro Markets: EUAs shed nearly 4% as issuance of 2022 allowances triggers selling

EUAs slumped on Thursday amid reports that member states have begun issuing free allowances to industrial installations for 2022, while participants also continued to digest proposals to relax the parameters to trigger additional supply if prices rise too sharply.

German researchers, NGOs urge changes to domestic ETS to help it gain social acceptance, prep it for EU transition

German citizens should already get rebate payments from the country’s carbon pricing on buildings and road transport rather than the government’s pledged 2026 start to its ‘Klimageld’ social compensation mechanism, according to an NGO-commissioned report published on Thursday.

Air France-KLM expects demand recovery to continue slowly in Q1

Franco-Dutch airline group Air France-KLM expects passenger demand recovery to continue at a similar rate in Q1 2022 to that seen in Q4 2021, it said in financial results published on Thursday, that still projected figures well below pre-pandemic levels.

Brussels-based emissions trading group policy director joining UK energy trade association

The Brussels-based European policy director of a major emissions trading lobby is leaving to take up a senior role at a UK energy trade association.

VOLUNTARY

Puro.earth launches engineered carbon removals registry

Nasdaq’s carbon removals platform Puro.earth has launched a registry for units issued under its standard, seeking to scale up voluntary activity and transparency.

Klima DAO launches carbon neutral service to boost on-chain offset market

Crypto outfit Klima DAO on Thursday launched a carbon neutral and climate positive service for emitters that it hopes will boost liquidity in blockchain-based carbon markets as well as help its struggling KLIMA token rebound from recent lows.

New nature-based offset developer aims for 40 Mt of mitigation over next two decades

A Parisian carbon offset developer and agroforestry company is aiming to invest $500 million over the next six years in nature-based operations, with financial backing from two French multinationals helping get the new endeavour off the ground.

ASIA PACIFIC

Power player accelerates Australia’s coal exit momentum with early closure of 2.9GW plant

Australian power and gas company Origin Energy on Thursday announced the early closure of the 2.9 GW Eraring black coal plant, which emits around 13 million tonnes of CO2 annually.

Australia Market Roundup: ACCU price softens further as more projects complete ERF contracts

The spot price for Australian carbon credits has come down a little further over the past week with available supply on the upswing, while two more projects have completed contracts with the government to supply a combined 1.1 million offsets.

China gets ready to shame emitters that failed ETS compliance

China’s environment ministry has ordered provincial regulators to collect and publish a list of companies that failed to surrender permits in time under the 2019 and 2020 compliance cycle of the national emissions trading scheme.

AMERICAS

NA Markets: CCA prices sink into Q1 auction before post-sale jump, RGGI ambles

California Carbon Allowance (CCA) values plumbed to a 4.5-month low heading into the February WCI auction before prices rose sharply after the Wednesday sale concluded, while RGGI Allowance (RGA) prices remained glued to the 2022 Cost Containment Reserve trigger price.

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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

INTERNATIONAL

Walk the talk – Four of the world’s largest oil and gas companies – Shell, BP, Chevron, and ExxonMobil – are failing to back their words and pledges on climate change with genuine action and investment, according to a study published in PLOS ONE and reported by Carbon Brief. It found that despite making more climate pledges, their oil and gas production has remained consistently high, whereas less than 1% of their capital investment went into low-carbon technologies between 2010-2018. Read Carbon Pulse’s analysis on how big oil is seeking shortcuts in a climate target ‘arms race’.

Fossils and farming – Government subsidies for heavily polluting industries led by coal, oil, gas and agriculture have reached at least $1.8 trillion a year, or around 2% of global GDP, according to a study backed by The B Team and Business for Nature, a global coalition of companies seeking to stop biodiversity loss and promote sustainability. The study is the first in over a decade to estimate the total value of environmentally harmful subsidies. It found the biggest beneficiary was the fossil fuel industry at $640 bln a year, while the agriculture and forestry sectors received $520 bln and $155 bln respectively. (Reuters)

ASIA PACIFIC

Up, up, and away – Neste and Itochu have expanded their partnership to grow the availability of sustainable aviation fuel (SAF) in Japan, Biofuels International reports. Itochu will act as the branded distributor of the fuel, making it available first at Tokyo Haneda and Narita airports. Neste, Itochu, and All Nippon Airways started cooperating in 2020, establishing a SAF supply chain in Japan and enabling Neste’s first SAF delivery into Asia to take place. Neste plans to have a global SAF production capacity of 1.5 mln tonnes per annum by the end of 2023, including up to 1 Mt of SAF production capacity in its Singapore refinery, with the capacity expansion project scheduled for start-up by the end of the first quarter of 2023.

Green incentives – India will allow companies that manufacture green hydrogen to install renewable energy generating plants without transmission costs, the country’s power minister said, Channel News Asia reports. “Green hydrogen manufacturers can set up renewable energy capacity by themselves. We will give them free transmission until 2025 and banking for 30 days,” Power Minister RK Singh said. More details on incentives for green hydrogen manufacturing will be made public when India releases the first part of its national hydrogen policy.

Emission very possible – The emissions profile of Australian oil and gas company Santos’ preliminary plans for a CCS project for its emissions-intensive offshore Barossa gas field demonstrates the project will still release the same amount of CO2 emissions, with or without CCS, finds a new report from the Institute for Energy Economics and Financial Analysis (IEEFA). Santos’ current plans, as IEEFA understands them, involves piping captured CO2 approximately 300 km from the Barossa gas field to Santos’ Darwin LNG plant and then 500 km further again to its near-depleted Bayu-Undan field in the Timor Sea. “Transporting CO2 over such a large distance creates high emissions from the needed compression and processing,” says John Robert, the report’s author. “The emissions are so high, any effort for CO2 storage is negated, even before assuming CO2 storage actually works. Adding CCS to the Barossa development, in the way Santos apparently favours, would bring little or no reduction in emissions while adding substantial cost, delays and risk.”

Green hydrogen bid –British financial services company Octopus Group will partner with Aboriginal communities in northern Australia on plans for renewable energy projects it says could attract investments of as much as A$50 ($36 bln) bln over the next decade, the Sydney Morning Herald reports, on the day that the closure date for Australia’s largest coal plant was brought forward by seven years to 2025 due to the accelerating transition to cleaner sources of energy. Octopus Group, which operates out of Melbourne as Octopus Australia, has announced a plan to invest A$49.2 bln over the next 10 years in Desert Springs Octopus, a company which it says will be majority Indigenous-owned and led. It plans to become a green hydrogen generator, exporting to markets in Asia.

EMEA

Petit COP – France plans to host the Climate Chance Europe summit in Nantes on Mar. 7-8. The event will be dedicated to Europe, specifically to “the implementation of the Green Deal” and “the challenges of mitigating and adapting to climate change at the European level”, EurActiv reports. Bringing together representatives of civil society – including associations, companies and local authorities – the summit plans to host nearly 300 high-level speakers.

Hy North – Energy companies Neptune Energy and RWE have signed a Joint Development Agreement to develop the H2opZee offshore green hydrogen project ahead of 2030, Rigzone reports. H2opZee is a demonstration project which aims to build 300-500 MW of electrolyser capacity in the North Sea to produce green hydrogen using offshore wind. The hydrogen will then be transported to land through an existing pipeline. The pipeline has a capacity of 10-12 GW, so is already suitable for the further roll-out of green hydrogen production to the gigawatt-scale in the North Sea. The intention is to begin the feasibility study in the second quarter of 2022.

Cash for life – The European Commission has announced an investment of over €110 mln for environmental and climate protection as part of its LIFE programme. The projects were selected after a call for proposals covering the year 2020. The funding will support new environmental and climate projects in 11 EU countries – Cyprus, Czechia, Denmark, Estonia, Finland, France, Latvia, Lithuania, the Netherlands, Poland, and Slovenia – and support the European Green Deal’s objectives of making the EU climate neutral by 2050. The successful projects will receive funding in line with the EU Biodiversity Strategy for 2030 and the EU Circular Economy Action Plan. “The LIFE programme provides direct support to projects across the EU and enables entire countries and regions to protect and restore nature,” Frans Timmermans, the executive vice-president responsible for the European Green Deal said. Integrated projects allow Member States to pool additional EU funding sources, including agricultural, structural, regional and research funds, as well as national funding and private sector investment. Altogether, the 11 projects are expected to attract more than €10 bln of complementary funds.

AMERICAS

Guyanas and Dolls – Guyana is actively pitching selling carbon credits to states and multinational petroleum operators, Minister of Natural Resources Vickram Bharrat told Stabroek News. Bharrat said the South American nation just had a meeting with the energy minister of Saudi Arabia regarding carbon credit purchases, and that the government will also discuss this with US oil giant ExxonMobil. The Architecture for REDD+ Transactions (ART) programme in October announced it had approved three The REDD+ Environmental Excellency Standard (TREES) documents for Guyana, allowing the country to move forward with independent validation and verification by an accredited verification body for its reductions.

Pipeline pressure – US energy regulators plan to look more closely at the economic need and environmental impacts of new interstate natural gas pipelines – a consequential update of a 23-year-old policy that underpins federal pipeline reviews. Gas pipeline reviews will take into account a proposed project’s effect on climate change, look at a wider set of impacts on landowners and environmental justice communities, and scrutinise the economic need for a project beyond its contracts with shippers, the Federal Energy Regulatory Commission (FERC) announced Thursday. The commission will automatically prepare an environmental impact statement for proposed pipelines and liquefied natural gas terminals with estimated GHG emissions of at least 100,000 Mt per year. Proposed projects falling under that threshold will be subject to a less stringent environmental assessment. All three of FERC’s Democratic commissioners supported the proposal, while both Republicans opposed it. (Bloomberg Law)

Good Apollo, I’m Burning RD –  Vertex Energy said in a Thursday statement it has contracted 100% of the renewable diesel to be produced at its Mobile, Alabama, refinery to Idemitsu Apollo Renewable Corporation under an offtake agreement which will increase volumes of the low-carbon fuel heading to the lucrative California market. Under the five-year product supply agreement with the California-based wholesale supplier of gasoline and diesel transportation fuel, Vertex will supply Idemitsu Apollo all the renewable diesel (RD) output from the 90,000 Mobile refinery. The Idemitsu deal is predicated on the closure of the sale of the refinery from Shell Oil to Vertex, which has been delayed from originally scheduled Q4 2021 timeframe. (S&P Global Platts)

College complaints – Students in multiple legacy US universities filed complaints Wednesday to their respective attorney’s general seeking to force their schools to divest from the fossil fuel industry. The novel legal strategy, developed with the Climate Defense Project, escalates long-running efforts across the country to persuade and pressure school officials that, with some notable exceptions, have been largely unsuccessful so far. The complaints, filed by students at Princeton, MIT, Stanford, Vanderbilt, and Yale (which hold $150 bln in their combined endowments), seek state investigations into whether the schools’ investments violate state laws governing investments by non-profit institutions, and a federal law requiring universities to invest their resources consistent with socially beneficial ends. They also argue the investments in fossil fuels are poor financial investments. (Climate Nexus)

VOLUNTARY

Disqualified – The Beijing Winter Olympics’ claim to “carbon neutrality” is based on junk offsets that do little or nothing to counteract the emissions of the games, making the assertion little more than marketing, Bloomberg reported. To back its carbon-neutral claim, the Beijing Organizing Committee (BOCOG) secured 1.7 mln offsets compared to an estimate of the games’ total carbon footprint of 1.3 Mt CO2e. But the climate math doesn’t add up, Bloomberg said. Some 1.1 mln credits are linked to tree-planting projects across China, according to the committee’s marketing materials. “Tree-planting projects are limited in their ability to be carbon sinks. At best, they store carbon temporarily, which doesn’t compensate for the burning of permanent stores of carbon, aka fossil fuels.” BOCOG sourced the remaining 600,000 offset credits from the CDM, which multiple studies have found to be fundamentally flawed in terms of its environmental integrity. The Beijing Olympic committee didn’t disclose the details of its 600,000 CERs, but according to public data reviewed by Bloomberg, at least 200,000 are linked to a mammoth wind farm in northeast China, close to the North Korea border. With 33 giant turbines, the Guoshuitou Diaobingshan Quanyangou Wind Power Project issues offsets under the theory that its renewable electricity replaces that from dirty coal-fired power plants. But of all CDM projects, large-scale old wind farms “are likely among the worst” as they lack additionality. BOCOG has taken many other steps that reduced the games’ carbon impact, including securing renewable power, reusing old venues, and using electric vehicles. In response to questions about the carbon-neutral claim, the committee directed Bloomberg to its green marketing materials.

Back to their roots – Grassroots Carbon, a Texas-based soil carbon credit company that connects American ranchers with companies looking to reduce their carbon footprint, has released over $200,000 in payments to Texas ranchers for soil carbon credits. Grassroots said these payments represent the first of many, with several additional soil sampling campaigns being scheduled and the company planning to certify and deliver another 200,000 credits this year. The company added the ranchers will receive a much higher payment by the end of this year, due to the high cost of rigorous soil sampling.

AND FINALLY…

Exchange-traded failure – A UN-backed green investment fund is on the brink of failure three months after its launch during the Glasgow COP26 climate summit because institutions including big banks never delivered expected seed funding, the FT reports. The MSCI Global Climate Select exchange traded fund was unveiled in early November. Trading under the ticker NTZO, it excludes fossil fuel companies and boosts holdings of companies with lower carbon emissions. The fund has amassed less than $2 mln and is likely to be wound down as soon as the end of March without further investment, said fund manager Dallas-based Impact Shares. Impact Shares has been spending about $25,000 a month to manage the ETF, which was created by along with Global Investors for Sustainable Development (GISD) – a group of 30 global companies that launched in Oct. 2019 to help fund the UN’s sustainable development goals. Bank of America, Citigroup, and Santander – all GISD members – pledged to provide seed money to NTZO but have refused until other investors step up, said former Credit Suisse bankers who are involved with the fund. Bank of America and Citigroup pledged up to $50 mln and $12.5 mln for the ETF, respectively, but with the proviso that their investments could not account for more than 25% of the fund. Santander, the Spanish bank, pledged $50 mln but would not have more than 5%. Because of the ETF’s small size, the banks could not provide their maximum dollar commitments without exceeding the pledged percentages. The UN said it “continues to support innovative finance solutions” and will “support those efforts when called upon”.

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