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TOP STORY

ANALYSIS: A good vintage? The voluntary carbon market’s longevity problem

The voluntary carbon market’s (VCM) effectiveness as a force in climate action is being called into question, with more than half of credits retired in 2021 representing emissions cuts made more than five years earlier.

ASIA PACIFIC

Singapore announces large hikes in carbon tax rate, adds partial offset option

Singapore will raise its carbon tax to reach as high S$80 ($60) per tonne of CO2 by the end of the decade and will commit to net zero emissions by “around mid-century”, the island state’s finance minister announced Friday while delivering the government’s 2022 budget, adding that emitters will be allowed to use international offsets towards a share of their obligations.

Cambodia emerges as SE Asian frontrunner on Paris-adjusted carbon credits

Cambodia is emerging as the Southeast Asian nation most likely to make the first corresponding adjustments for carbon credits sold to corporate buyers, with the nation conducting extensive market outreach and one regional expert regarding it as a frontrunner in promoting carbon finance.

CN Markets: Activity wanes in China’s carbon market, as observers expect delays to CCER restart

Chinese carbon allowances fell by almost 6% over the week, though trading volumes were so low that not much can be derived from the price direction, sparking renewed calls for allowing financials to participate in the market.

SK Market: Falling KAU price triggers market volatility measures

South Korean carbon allowances have suffered losses throughout the week, triggering price volatility measures that market participants expect to be put in place next week.

India launches green hydrogen policy to boost decarbonisation, energy security

India’s power ministry released a green hydrogen policy this week, outlining a raft of incentives in the first detailed plan to kickstart hydrogen production from renewables since the announcement of a “national hydrogen mission” by India’s Prime Minister Narendra Modi  in August last year.

EMEA

Brussels plans event to gather views on EU carbon market oversight

The European Commission is planning to host a high-level expert event on carbon oversight towards the end of next month, seeking diverse views on how to respond to a long-awaited financial watchdog report, according to leaked plan seen by Carbon Pulse on Friday.

Euro Markets: EUAs shrug off weaker prompt energy markets as traders spy oversold market

EUAs shrugged off weakness across prompt energy markets on Friday, erasing the previous day’s losses as traders judged the market oversold, while prompt energy markets weakened on milder temperature forecasts and strong renewable generation as Storm Eunice battered the west of the continent.

More European utilities announce ETS-covered fossil generation drop

Portugal’s EDP and Norway’s Statkraft both announced a year-on-year fall in ETS-covered thermal generation for 2021 in their financial results published late this week, the latest in a string of European utilities that have noted a drop in mainly gas-fired output.

AMERICAS

Pennsylvania legislative office counters DEP legal petition to publish RGGI regulation

The Pennsylvania Legislative Reference Bureau (LRB) this week asked a state court to deny the Department of Environmental Protection’s (DEP) petition to compel it to publish the state’s RGGI-modelled cap-and-trade regulation, claiming the request is unconstitutional and untimely.

US Carbon Pricing and LCFS Roundup for week ending February 18, 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 the second consecutive failure of a New Mexico LCFS bill, and efforts in Washington’s transportation budget proposal to overcome a lawsuit against the state’s LCFS implementation.

WCI compliance entities add allowances before WCI auction, speculators hold firm

Emitters in the WCI cap-and-trade programme decreased their net short California Carbon Allowance (CCA) position prior to the Q1 auction this week, while financial players kept their holdings largely the same, according to US Commodity Futures Trading Commission (CFTC) data published Friday.

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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

Plane standards – Experts from the US and some European countries backed tougher plane emissions standards during a virtual gathering of UN aviation body ICAO’s CAEP environmental panel this week, Reuters reported, citing working papers and anonymous sources. CAEP agreed on Thursday to draft new standards as part of broader efforts through 2025 to update rules, but it remains unclear when the proposed standards would be drafted and take effect, and how stringent they would be. ICAO has already backed the phase-in of a standard for existing aircraft built from 2023, with a cut-off date of 2028 for non-exempted planes that do not comply.

EMEA

LNG limits – Europe’s LNG terminals have limited available capacity to absorb extra supply from the US or other major producers in the event of Russian gas disruption if it invades Ukraine, Euractiv reports. Concerns are mounting that Russia, which provides around a third of Europe’s gas, is preparing to invade Ukraine which could disrupt gas flows to Europe. Russia has repeatedly denied it is preparing to invade Ukraine. The US administration has recently approached major energy producers such as Qatar and Japan to see if they can send extra LNG to Europe and at least half of US LNG shipped this month has gone to Europe, Refinitiv data shows, with Europe poised to remain the top destination for US shipments for the third month in a row. After hitting a record high in January at more than 16 bcm, US shipments have totalled 6.9 bcm so far in February. This means most of Europe’s LNG terminals are operating at full capacity, especially in north-west Europe, which feed large economies like Germany, France, and Britain, raising the question of how much more LNG can be processed.

Overpowerful – German energy company RWE has a dominant position among the country’s power suppliers, the country’s competition authority said in its report. An increase in electricity demand, low renewables feed-in, and coal plant closures “made the power plant fleets of the electricity supplier RWE, which remains the largest supplier, indispensable for meeting the electricity demand in a significantly higher number of hours” last year, according to the president of the German competition regulatory agency. RWE is currently the only power company which clearly exceeds the threshold for the presumption of market dominance applied by the competition authority. The importance for meeting demand of the remaining power plant capacities across all major German electricity producers is likely to increase in the future due to nuclear and coal closures. RWE is one of Germany’s former so-called “big four” power suppliers along with EnBW, E.ON and Vattenfall. (Clean Energy Wire)

Ace in the MOL – Hungarian multinational oil and gas company, MOL Group, reported record high earnings of $3.5 bln before taxes in its 2021 financial report released Friday. Cash flow also tripled compared to the previous year driven mainly be favourable oil and gas prices, the company said. Members of MOL Group include among others the Croatian and Slovak formerly state-owned oil and gas companies. In 2020, MOL Group announced a net zero GHG emissions target for 2050, and also aims to reduce GHG emission intensity by 45% by 2035 compared to 2019 levels.

Swiss reserves – Switzerland plans new hydropower reserves and two or three back-up power plants by winter 2022/23 after officials warned the country would be without power for nearly two days in a worst-case scenario if it does not strike an electricity deal with the EU. The choice of technology and location of the back-up plants was still open, but the government’s concept includes the staggered construction of two to three gas-fired power plants with a total capacity of up to 1,000 MW. (Reuters)

AMERICAS

Border efficiency – US Senator Kevin Cramer (R) made the case this week for a climate-focused trade policy centred on carbon border fees. With President Joe Biden’s climate and social spending bill currently dormant, Cramer said it’s time to build an “America First energy policy.” His remarks were part of a discussion at the Bipartisan Policy Center think tank, where he noted that he’s trying to soften up his conservative base to the idea of taxing carbon-heavy products from China and Russia. The discussion expanded on an opinion piece Cramer co-wrote in December with former President Trump’s national security adviser HR McMaster that argued that a joint carbon-border adjustment mechanism (CBAM) between the US and the EU could benefit their geopolitical interests. However, while the op-ed cites a study showing US manufacturers emit less carbon than those in several other countries, the US does not have a price on carbon emissions at the federal level. Cramer said he believes that a CBAM can exist without a price on carbon. “I think the simpler you make it the better,” he said. “If there is a standard, then if you meet it there’s nothing, and if you don’t then there’s a tariff.” (E&E News)

Power up – US power plant emissions increased 7% to 1.7 bln tons in 2021, according to EPA data published Friday. While electricity demand increased 3% over 2020 levels last year, based on the first 11 months of 2021 data, coal-fired generation skyrocketed 16% year-on-year. On the other hand, natural-gas fired generation fell 3% YoY, while power from renewables climbed 4%.

Hitting the Link – Southern California Gas is proposing what it says will be the biggest green hydrogen pipeline in the country as part of an effort reduce GHG emissions in the Los Angeles area. The Angeles Link would provide enough renewable-sourced hydrogen to replace up to 11.4 mln L of diesel per day used in the region’s trucking and transition up to four natural gas power plants to hydrogen, according to the company. SoCalGas submitted an application Thursday with the California Public Utilities Commission to track costs associated with the project, and the company said it would offer opportunities for public input. (Politico)

ASIA PACIFIC

Ammonia power – Power generator JERA has sent a request for proposals describing bidding conditions to more than 30 companies for the supply of 500,000 tonnes of ammonia annually for a thermal coal power plant. Under its “JERA Zero CO2 Emissions 2050” objective, JERA has been working to reduce CO2 emissions from its domestic and overseas businesses to zero by 2050, to promote the adoption of greener fuels, and to pursue thermal power that does not emit CO2 during power generation. As part of this effort, JERA is working on a project to demonstrate the use of fuel ammonia at the Hekinan Thermal Power Station, aiming to switch 20% of the fuel at Unit 4 to ammonia by the late 2020s. Given the steady progress of this demonstration project, JERA has decided to consider fuel ammonia suppliers in parallel, and to conduct an international competitive bid.

Funds for net zero – Japan’s biggest steelmaker is calling on Tokyo to provide at least ¥2 trillion ($17 bln) in subsidies over almost three decades to meet net zero carbon targets, as it seeks to stay competitive against China and other global rivals, Business Live reports. Nippon Steel needs the money to vie on an “equal footing,” according to Hideo Suzuki, the managing executive officer overseeing its net zero initiative. The company expects it will cost as much as ¥5-trillion to build facilities enabling decarbonisation by 2050.

AND FINALLY…

Gas clash – Germany and the US have clashed over whether nuclear power should be part of the energy mix as rich countries race to cut emissions to limit the impact of global warming. Speaking at the Munich Security Conference, US Special Climate Envoy John Kerry said that cutting emissions fast required some reliance on nuclear energy, adding that – without CCS – relying on gas as a stop-gap fuel amounted to ignoring the root cause of the climate crisis. Franziska Brantner, parliamentary state secretary in the Economic Ministry and a member of the Greens, defended Germany’s plan to rely on gas a bridge fuel as it phases out nuclear and coal and expands renewables. (Reuters)

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