CP Daily: Monday March 7, 2022

Published 02:02 on March 8, 2022  /  Last updated at 02:08 on March 8, 2022  /  Newsletters  /  No Comments

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

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TOP STORIES

EU climate chief rules out Russian energy ban, but seeks major cut

The EU is in no position to embargo Russian oil and gas imports in response to the war waged by Moscow on Ukraine, the European Commission’s climate chief Frans Timmermans said late on Monday, adding that such a scenario would leave some member states in real trouble if gas was halted overnight.

EMEA

France’s attempted deal on CBAM narrows as ‘hot potato’ issues sidelined

Two of the most contentious issues of the EU’s proposed carbon border adjustment mechanism (CBAM) will be dealt with separately by member states, a leaked draft showed on Monday, a move that could allow France to broker an “early deal” on the flagship file without getting stuck on controversies.

Euro Markets: EUAs shed 10% amid cash call as energy markets surge on Russian ban concerns

EUAs plunged more than 10% on Monday as traders sold to generate cash to maintain margins in other markets amid a spike in energy prices after reports emerged that the US and EU are considering a ban on energy products from Russia.

Functioning of price control mechanism must be clarified to give EU carbon market credibility, think-tank argues

The mechanism tasked with responding to price spikes in the EU ETS contains too many ambiguities and is in dire need of certainty and transparency in order to give the market more credibility and investors more confidence.

Brexit architect launches campaign to ditch UK’s climate plans

One of the architects of Brexit is calling for another UK referendum, this time on the country’s climate change plans.

Switzerland delays carbon market compliance deadline for 2021

Switzerland has delayed the deadline for emitters surrendering ETS permits against last year’s emissions, the government announced Monday.

VOLUNTARY

SBTi halts oil and gas firm involvement while it revamps its template

The Science Based Targets initiative (SBTi) will no longer accept commitments or validate targets from fossil fuel companies, the partnership said on Monday, adding that it aims to complete its much-delayed methodology for the sector later in the year.

VCM Report: Exchange-traded VER prices extend downfall, while OTC market holds firm

Standardised, exchange-traded voluntary emissions reduction (VER) prices continued to plough multi-month lows this week amid a bearish trend in global carbon and equities markets, while voluntary carbon market (VCM) participants said values on the over-the-counter (OTC), project-specific market were holding up far better.

Modest token sale seen as highlighting challenging times for blockchain carbon

A new blockchain venture sold only a modest number of carbon tokens over its three-day fundraising event that closed Saturday, an outcome participants said was a result of difficult overall market conditions rather than a signal that crypto’s inroads into carbon are coming to an end.

INTERNATIONAL

US envoy Kerry urges major emitters to scale up shorter-term climate effort

Major emitters such as China, India, and Mexico need to sharpen their 2030 climate pledges ahead of longer-term efforts, US climate envoy told a conference on Monday, flagging prospects for a further roll-out of public-private funding.

Switzerland, Chile to explore Article 6 cooperation under new arrangement

Switzerland and Chile last week signed a Memorandum of Understanding (MoU) on Article 6 of the Paris Agreement, reinitiating discussions on carbon credit transfers between the two nations.

Colombian leader flags nation’s potential to be major player on offsets

Colombia has the potential to be a major global player in the international carbon market, President Ivan Duque told a conference on Monday, citing plans to develop nature-based credits for use at home and abroad.

ASIA PACIFIC

Australia Market Roundup: Offset review begins as market still reels after contract ruling

Australia’s independent Climate Change Authority (CCA) on Monday launched its review of the use of international carbon credits, while the market remained quiet as traders continued to ponder the implications of last week’s Emissions Reduction Fund (ERF) exit option announcement.

China softens energy control measures in pursuit of economic growth

China has eased its tone on energy control efforts in this weekend’s annual government work report, focusing instead on achieving its GDP growth targets.

AMERICAS

NA Markets: California carbon dives to 6-mth low as EUAs, equities continue to weigh

California Carbon Allowance (CCA) values plummeted by nearly 9% on Monday morning as WCI permits remained tethered to pervasive bearish pressure in global equity markets and EU Allowances (EUAs).

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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

EMEA

German transformation – Germany has earmarked €200 bln to fund industrial transformation out to 2026, including climate protection, hydrogen technology, and expansion of the electric vehicle charging network, its finance minister Christian Lindner said. He added that this also included the removal of renewable energy levies. Lindner’s comments come as Germany increases efforts to cut reliance on Russian gas by boosting infrastructure to import LNG and possibly relying more on coal-fired power plants. Separately, German state bank KfW and the Dutch utility Gasunie signed an MoU on the construction of the first LNG terminal in Brunsbuttel due to be operational in 2024 with an annual regasification capacity of 8 bcm. Germany also plans to boost investment in renewables for energy production with several pieces of legislation expected over the coming months. (Reuters)

Reprieve? – German coal power plant operators are making provisions for a runtime extension of decommissioned stations in preparation for possible energy supply disruptions as a result of the war in Ukraine, business daily Handelsblatt reports. “We’re inspecting our facilities to remain ready if the government deems such measures necessary,” a spokesperson for energy provider RWE told the newspaper. Besides RWE, operators Vattenfall, EnBW, and Steag also confirmed they are reviewing their decommissioning plans. About 26 GW of coal power capacity are currently operational in Germany and this could increase to 34 GW next winter by re-starting plants that have already been taken offline or are being held in reserve, in order to partly replace Russian gas imports. In light of the attack on Ukraine, calls are growing to revisit the country’s coal phaseout schedule – plans by the new government to bring the exit forward from 2038 to 2030 in line with the Paris Agreement. Plans currently include the decommissioning of about 5 GW capacity by 2024. The director of the Potsdam Institute for Climate Impact Research (PIK), Ottmar Edenhofer, told the newspaper that “we will need to use coal plants, also in the power sector, especially if we are to reduce hard coal imports from Russia.” He argued that the country faces “an emergency situation that requires well-coordinated action.” Germany currently sources almost half its hard coal imports from Russia, but import companies say these supplies could be substituted in the short-term. Plants in the country’s capacity reserve mainly run on domestically-sourced lignite. The government is also reportedly looking into extending the life of the final batch of German nuclear plants that are due to close this year, though these facilities would be unlikely to be able to supply power until after next winter. (Clean Energy Wire)

Greens for nukes – Belgium should keep an open mind about extending the lifespan of its remaining nuclear power plants, the country’s Green energy minister said on Monday, in a shift of position prompted by the conflict in Ukraine. After months of debate, Belgium’s seven-party coalition government agreed a compromise in December that the country’s last nuclear power plant would close in 2025 provided it did not lead to energy supply shortages. The Greens had said a 2003 law setting out a nuclear exit by 2025 must be respected, while the French-speaking liberals want to extend the life of the two newest reactors. (Reuters)

Dutch flyer – A study commissioned by the Netherlands to investigate the feasibility of electric aircraft has concluded commercial services by small, short-range e-planes could begin as early as 2026, reports GreenAir Online. The investigation focused on operations within the Netherlands, and between the Caribbean islands of Aruba, Bonaire and Curaçao, the so-called ‘ABC Islands’ region. It concluded nine-seat electric aircraft, for example the Eviation Alice, could be operated by 2026, while 19-seat electric aircraft, such as Sweden’s Heart Aerospace ES-19, could be in service by 2030. But the report also makes clear that for electric aircraft to enter commercial service, airport and energy infrastructure would require significant upgrading. The Netherlands has committed to stepped decarbonisation of its air transport sector, through 2030 initiatives including a 15% cut in domestic flight emissions compared to 1990, electric taxiing of aircraft and the introduction of hybrid-electric planes up to 50 seats, transitioning by 2050 to zero emission flights on all domestic routes and fully-electric aircraft on flights of up to 500 kilometres.

ASIA PACIFIC

Ahead of the curve Participants in the Tokyo ETS continue to stay far ahead of the emissions reductions forced on them by the programme, municipal government data shows. In FY2020 compliance firms had reduced their emissions an average 33% below their mid-2000s baseline, while their 2024 target is just a 25-27% cut on that number. Most of the entities achieved large emissions cuts amid an energy efficiency campaign driven by the government in the aftermath of the 2011 Fukushima nuclear disaster, and as a result have never been in any danger of missing their ETS targets.

Next peak? Japan will hold its next J-credit auction from Apr. 11, the government said Monday. The sale, organised by the Mizuho Research Institute, will offer 200,000 renewable-energy-based offsets as well as 100,000 offsets from energy savings projects. All the credits are currently held by the government. Last week Japan announced the results of the January auction, showing prices rose to new records as the nation’s domestic voluntary carbon market nears launch.

AMERICAS

SECond-hand info – The US Securities and Exchange Commission (SEC) plans to propose its landmark climate risk rule by as early as next Wednesday, sources tell Reuters. One of the anonymous sources said that the financial regulator is “committed” to issuing the proposal by month end, which would then be subject to public consultation. The SEC rules were initially planned for October, but Chair Gary Gensler subsequently pushed that deadline to January before further delays. SEC’s Democrats — Gensler and his fellow commissioners Allison Herren Lee and Caroline Crenshaw — are reportedly deadlocked over whether the rules should require companies to disclose Scope 3 emissions from their supply chains along with their more direct Scope 1-2 GHGs. **Read the related Carbon Pulse stories here and here**

Heavy duty – The US EPA on Monday said it was proposing new rules to cut GHGs and other pollutants from heavy duty vehicles. The proposed rules would cut nitrogen oxide emissions from new trucks by up to 90% by 2031 compared to today’s standards, while the agency is also proposing stricter GHG emissions standards for some types of heavy vehicles. The White House said that the EPA and Department of Transportation are also preparing to redouble President Joe Biden’s administration’s commitment to zero-emissions trucks by using the upcoming Heavy-Duty GHG Phase 3 Programme to set more ambitious GHG and efficiency standards that would begin in 2030. The administration is also rolling out the significant investments funded in part under the bipartisan infrastructure bill for more clean and climate-friendly fleets of public and school buses. It is also doubling the amount of zero-emission heavy-duty vehicle models available to federal agencies, aiming for 100% zero emission vehicle acquisitions by 2035. Heavy-duty vehicles currently make up nearly one-quarter of all US transportation-related GHG emissions.

SCIENCE & TECH

EV variation – More Americans are opting to purchase an electric vehicle, but some EV owners are surprised to find out how much their car’s driving range is compromised by winter weather, Axios reports. In Norway, where half of all new cars are plug-ins, tests show that EVs lose about 20%, according to the Norwegian Automobile Federation. Motor club group AAA found the loss in driving range could be as high as 41% with the heater on full blast, though some EVs do better than others in the cold.

AND FINALLY…

Well that’s a bit unexpected – Russian President Vladimir Putin has signed into law a bill to establish measures to help the country’s gas-rich Sakhalin region achieve carbon neutrality, Russian news outlet TASS reports.  In what the agency called an “experiment”, the programme will run until at least the end of 2028, with a coal to achieve net zero emissions by the end of 2025. “The experiment can also be held in Russian regions that will be included into it by amendments into the law,” TASS added, quoting an explanatory note accompanying the legislation.  No further details were available.  Sakhalin is understood to be one of the future training grounds for pilot trading in Russia’s domestic carbon market, with transactions expected to start later this year. But Russian entities may need to go it alone at Sakhalin after oil major Shell last week said would quit all its operations in the country after Putin ordered the invasion of Ukraine, including its 27.5% stake in the flagship Sakhalin-2 oil and LNG development that its 50% owned by Russia’s Gazprom.

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