CP Daily: Thursday March 3, 2022

Published 04:34 on March 4, 2022  /  Last updated at 04:34 on March 4, 2022  /  Newsletters  /  No Comments

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

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TOP STORIES

Australia to allow offset projects under govt contract to sell to voluntary buyers

Offset projects under contract to deliver carbon credits to the Australian government will be allowed to exit those obligations and sell their units on the voluntary market at three times the price.

ACCUs fall off cliff as ERF exit option seen hurting market confidence

Australia’s decision to allow project developers to exit offset contracts with the government in order to increase secondary market supply had caused a 24% drop in ACCU prices by early Friday afternoon and will likely damage overall confidence in the nation’s carbon market, according to experts.

ASIA PACIFIC

New Zealand proposes to rule out key source of forest NZUs from ETS

New Zealand on Thursday proposed to exclude exotic forests such as radiata pine from generating credits in its emissions trading scheme, a move that would close the door on the vast majority of new plantings driven by the nation’s high carbon price.

Beijing eyes start of national offset market by year-end

The Beijing municipal government aims to kick off China’s national carbon offset trading platform before the end of the year, but doubts linger as to whether federal regulators will be able to finalise the market framework by then.

New Forests closes $120 mln fund for Southeast Asian sustainable forestry investment

Global forestry investment manager New Forests has announced the first close of a new $120 million fund, the Tropical Asia Forest Fund 2 (TAFF2), with a host of sovereign, development finance, private, and philanthropic investors with the aim to capitalise on long-term investments in sustainable plantation forestry in Southeast Asia, the company announced on Thursday.

EMEA

“Not all doom and gloom”: Bloomberg analysts see EU carbon price rebound

EU carbon prices will recover from their recent speculator-led crash as the focus shifts back to fundamentals, analysts at BloombergNEF said, arguing that the market would benefit from the stability delivered by more participants.

Opposition to second EU ETS deepens, as divisions emerge among largest political group

Opposition against a proposed second EU carbon market for buildings and transport has spread to the biggest political group in the bloc’s parliament, with centre-right members rebelling against their senior spokesperson and joining progressive MEPs in seeking to limit the measure or kill if off entirely.

IEA urges EU to consider nuclear extensions to help wean itself off Russian gas

The EU should delay planned closures of nuclear power plants, incentivise greater use of wood-burning generators, and encourage citizens to turn down their heating, the IEA said on Thursday in a 10-point proposal to cut the bloc’s dependence on Russian gas.

Lawmakers, NGOs urge EU to put embargo on Russian energy imports

Calls to put a full embargo on Russian oil and gas exports are growing louder in the EU as Moscow’s brutality against Ukraine intensifies, pushing what is still a minority of stakeholders to ask for a halt to what they see as unacceptable funding of war via the bloc’s energy purchases.

Euro Markets: Carbon recovers to end 1.7% lower after early plunge amid extreme energy volatility

EUAs endured another volatile trading session on Thursday, with prices moving sharply amid bursts of activity as energy markets whipsawed on reports that Russia was open to renewed ceasefire talks with Ukraine.

UK lawmakers warn of critical gaps in government’s net zero strategy

The UK is likely to miss its 2050 net zero emissions target because of a failure to put in place credible plans to encourage essential investment by consumers and businesses, a cross-party group of UK lawmakers said in a report on Friday.

Fortum to halt investments in Russia and reduce thermal exposure

Finnish energy firm Fortum will halt all new investments in Russia and cut its ownership of thermal assets there, it said in results Thursday, vowing to maintain operations in Russia for the time being.

Poland’s free EUA allocation for 2022 unlikely before April

Poland may not hand out free EU carbon permits for 2022 to heavy industry before April – a month later than expected, the government announced Thursday.

AMERICAS

NA Markets: CCAs set multi-month lows after post-auction jump, RGGI sinks ahead of Q1 sale

Both California Carbon Allowance (CCA) and RGGI Allowance (RGA) values fell this week in tandem with the geopolitical-fuelled plunge in EU carbon and global equity values, with the losses negating early week gains in the WCI programme and coming just ahead of RGGI’s quarterly auction next week.

Two Canadian-based offset investor firms make personnel, share-listing moves

The director of business development at ClimateCare/Natural Capital Partners has left to join a Toronto-headquartered carbon credit investment vehicle, while another Canadian-based offset investor will see its shares start to trade publicly on Thursday.

VOLUNTARY

Blockchain door closing for older carbon credits

The Swiss-based group that has bridged the vast majority of carbon credits onto blockchain so far is planning to shut the door on older vintage offsets in a bid to increase the quality of the units available on-chain.

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CONFERENCES

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

City Week 2022: Resetting Priorities for a Better Future – Apr. 25-27 at London Guildhall: Now in its 12th year, City Week is the premier gathering of the international financial services community. Organised in partnership with the UK Government and leading City institutions, City Week brings together industry leaders and policy makers from around the globe to consider the future of global financial markets. Each day will address a specific theme, with Day 1 focussing on “Meeting the climate change challenge – the role of financial services in achieving net zero”. www.cityweekuk.com

Reuters Events: Global Energy Transition 2022 – June 14-15 in New York City: The conference unites CEOs and changemakers from the energy, industrial, and government ecosystems to shed light on the defining issue of our time, and help companies meet a uniquely difficult challenge. Over two days and five critical themes, we will define the future of energy, inspire a decade of action, and prepare the sector for challenges still to come, with diverse voices from around the world bringing passion and expertise to deliver a new path forward. Find out more by visiting the website today: https://bit.ly/35H7cgb

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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

Barely any – Just 1% of companies who submit climate change-related data to nonprofit environmental disclosure platform CDP provide investors with the information they need to assess whether they have a credible plan for the transition to a low-carbon economy. CDP analysed submissions from 13,120 companies, representing 64% of the world’s market capitalisation, and found that just 135 companies met the grade of disclosing information for all 24 key indicators CDP has judged as vital for a credible plan. Only 30% claimed to have a low-carbon transition plan. (Reuters)

Detour – The Russian invasion of Ukraine is rippling throughout the aviation industry just as it emerges from the COVID-19 downturn, Axios reports. The closure of vast stretches of airspace from North America to Russia has airlines scrambling to reroute flights, with flight times increasing along with their carbon footprints. In many cases, new routings to avoid both Ukrainian and Russian airspace have been adding hours to long-distance flights, resulting in greater emissions and higher costs for airlines amid increasing fuel prices. According to Umang Gupta, managing director at Alton Aviation Consultancy, the typical flight time between Europe and Asia is about 11.8 hours, and 13.5 hours flying the reverse leg, but that was when Russian airspace was open. Now, “in a best-case scenario, more than two hours of flight time will be added in each direction,” Gupta told Axios. The round trip fuel burn would increase by more than 20%, he added, and that’s for the most fuel-efficient wide-body aircraft flying today. At today’s oil prices of around $100 per barrel, “this will translate into nearly $25,000 of additional expenditure for the airline round trip,” Gupta said. This development could mean more demand for carbon units under the UN’s CORSIA scheme or the EU ETS.

EMEA

Greenwash trial – A group of environmental organisations including lawyers ClientEarth has filed a lawsuit in the Paris Judicial Court against French oil major TotalEnergies, accusing it of misleading consumers about its efforts to fight climate change. The claimants allege TotalEnergies was in breach of the European Unfair Consumer Practices Directive (UCPD). The claim concerns the company’s “reinvention” marketing campaign, which claimants say broke European consumer law by suggesting TotalEnergies can reach net-zero carbon emissions by 2050 whilst still producing more fossil fuels. (Reuters)

ASIA PACIFIC

Big deal – Australian infrastructure assets owned by IFM Investors and the Queensland Investment Corporation, including Melbourne Airport and Ausgrid, will hit carbon emissions targets faster than expected following a A$500 mln deal with Origin Energy to buy renewable power, Australian Financial Review reports. IFM, which own stakes in Australia’s biggest airports, ports and electricity networks – and will be one of Sydney Airport’s biggest owners when the airport’s A$23.6 bln takeover is finalised– hired consultants Renewable Energy Hub to search for renewable power suppliers and brought in QIC as well as Transurban as partners. In a press release, Renewable Energy Hub announced that it had successfully structured and implemented a first of its kind multi-asset, multi-state PPA agreement which will help decarbonise critical infrastructure.

No more coal – The Sumitomo Corporation, one of the three EPC contractors implementing the first phase of the Matarbari coal-fired power plant project in Bangladesh, has dismissed any possibility of it taking part in the second phase of the project in a latest update of its policies on climate change issues, New Age Bangladesh reports. In the policy updated on Feb. 28, the Sumitomo Corporation said that it will not invest in any new coal-fired power generation business in order to turn the company carbon neutral by 2050.

Hydrogen supply – South Korea’s Kogas stated that it eventually seeks to secure 1 Mt of hydrogen from Australia and the Middle East annually, accounting for about half of South Korea’s target to secure around 2 Mt annually by 2030. (Kogas)

AMERICAS

Can’t stop, won’t stop – Canada’s BC government is vowing to take action against record-breaking gas prices, but says freezing carbon tax increases or capping gas prices aren’t on the table. Provincial Energy Minister Bruce Ralston said the province is not considering stopping the imminent raise to C$50/tonne from C$45 on Apr. 1 because he doesn’t think it would lead to any savings at the pumps. Costs have spiked since Russia’s invasion of Ukraine, with the cost increases prompting some municipal and provincial politicians to urge the federal government to pause scheduled increases to its own carbon tax to C$50/tonne. (Global News)

Benchmark business – The Alberta Environment and Parks ministry on Thursday announced the signing and publication of a new ministerial order establishing updated high-performance benchmarks under the Technology Innovation and Emissions Reduction (TIER) Regulation for oil sands mining and upgrading. The updated benchmarks will be applied and may be used by regulated facilities in these sectors starting in the 2021 compliance year for the output-based pricing scheme. Additionally, the Alberta government on Thursday said it using more than C$2 mln in TIER Fund revenues through Emissions Reduction Alberta for four CCUS projects in the Canadian province.

Barging in – The company that abandoned plans for a land-based LNG facility in Nova Scotia’s Guysborough County last summer is looking at an alternative option amid demands in Europe for gas from sources other than Russia. Last summer, the CEO of Calgary-based Pieridae Energy announced a proposed C$13-bln liquefied natural gas project in Goldboro would not proceed due to cost pressures and problems getting financing. Instead of a land-based facility, Pieridae is now looking into the project using a floating barge. A company spokesperson said the floating LNG project would result in emissions of 400,000 tCO2e, far less than the 3 Mt estimated from the land-based site. The spokesperson added the company would need to understand how it can work with Nova Scotia’s cap-and-trade system, although Pieridae will advance the view that the project would be considered net zero when factoring in a CCS facility it’s planning in Alberta. (CBC)

VOLUNTARY

Something wrongo in the Congo – A major European logging firm may have illegally converted more than a dozen of its timber concessions in the Democratic Republic of the Congo into so-called conservation concessions, a new investigation can reveal. After harvesting the most valuable timber from the 15 concessions — covering an area the size of Belgium — Portuguese-owned Norsudtimber is now eyeing European investment in carbon credit schemes it will operate from the former logging sites. Since late 2020, the DRC has assigned 24 new conservation concessions, as investors seek to benefit from rising interest in carbon-trading initiatives in the world’s second-largest rainforest. A seven-month investigation by El Pais/Planeta Futuro has obtained unpublished documents showing that, in Dec. 2020, the outgoing environment minister Claude Nyamugabo signed contracts transferring millions of hectares of Norsudtimber concessions from its logging subsidiaries, Sodefor and Forabola, to Kongo Forest Based Solutions (KFBS) – another Norsudtimber subsidiary set up to manage its carbon-trading operations. The concessions were reassigned without public oversight or consultation with people who will be affected. Several of the concessions overlap with a protected area and the ancestral lands of the Bambuti, Bacwa and Batwa peoples, and nearly a third of the area covers climate-critical peatlands. (Mongabay)

Blue away – Canadian alternative ESG investor Carbon Neutral Royalty (CNR) on Thursday announced it has entered into an investment agreement partnership with diversified investment holding company Maris to originate and co-develop blue carbon projects. In a press release, CNR said the partnership will operate within the Maris group of companies’ operational zones including Kenya, Tanzania, Angola, and the DRC, and will exclude project locations where CNR has other international partners. The partnership provides CNR exposure to future blue carbon project co-development concessions through government MOUs, and will lock in planting costs for CNR on future projects at cost plus 10%. The announcement comes two days after CNR signed a deal with another blue carbon project developer targeting 70 mln offsets.

AND FINALLY…

It’s a gas – Pro-fossil fuel US senators from both parties on Thursday grilled Democratic energy regulators who recently approved guidelines for approving new natural gas projects that allow consideration of environmental justice, landowner, and climate issues. The three Democrats on the five-member Federal Energy Regulatory Commission (FERC) voted in February to update the guidelines for the first time since 1999, a move that analysts say could present hurdles for new gas projects. The two Republicans on the panel opposed the guidelines. “In my view, there is an effort underway by some to inflict death by a thousand cuts on the fossil fuels that have made our energy reliable and affordable,” said West Virginia Senator Joe Manchin (D), who made nearly $500,000 last year on a coal brokerage he founded, on Thursday during a hearing of the Senate Energy and Natural Resources Committee he chairs. Wyoming Senator John Barrasso (R), the committee’s top Republican who has taken over $1 mln in oil and gas company donations while in Congress, has said FERC’s ruling was “just the latest attack in (President Joe) Biden’s war on American energy.” An interim guideline FERC approved on Feb. 17 requires environmental impact statements on natural gas projects that emit above 100,000 MtCO2 per year, a process that opponents say can be lengthy and unwieldy. (Reuters, CNN, Accountable.us)

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