CP Daily: Friday March 11, 2022

Published 00:52 on March 12, 2022  /  Last updated at 18:55 on March 14, 2022  /  Newsletters  /  No Comments

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

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TOP STORY

ANALYSIS: Labour shortage expected to exacerbate VCM supply bottleneck through 2022

Staff shortages among verifiers and registry bodies are clogging up the voluntary carbon market (VCM) project pipeline, with any potential easing of the situation likely to take more than a year and issuances taking twice as long as in previous years, stakeholders have told Carbon Pulse.

AMERICAS

RGGI auction clears at new record in Q1, but fails to trigger reserve

The quarterly RGGI auction this week settled at a new all-time peak as compliance entities paid a premium to secure volume, though the sale fell short of triggering additional permits from the Cost Containment Reserve (CCR), according to results published Friday.

Manchin plays down US Build Back Better bill prospects, seeks hike in fossil fuels

West Virginia Senator Joe Manchin on Friday dismissed the chances of an attempt to revive the stalled $1.8 trillion Build Back Better Act that carried much of the Biden administration’s climate action plans, urging the US to drastically scale up fossil fuel production in response to Russia’s invasion of Ukraine.

Inauguration of “Chile’s first green government” promises climate action

Gabriel Boric was sworn in Friday as Chile’s youngest ever President, marking a fresh start to social and environmental policies in a country that is already scheduled for a revised constitution and new climate law this year.

California ARB Board members pushing for cap-and-trade reform in Scoping Plan

Board members of California regulator ARB on Thursday voiced support for environmental justice and market watchdog recommendations to reform the state’s WCI-linked carbon market as part of the state’s 2022 Scoping Plan update.

US Carbon Pricing and LCFS Roundup for week ending March 11, 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 passage of Washington state budget language to implement the state’s low-carbon fuel standard (LCFS) next year and the status of a Hawaii carbon tax bill.

Emitters boost, speculators keep flat CCA positions amid price plunge

WCI compliance entities trimmed their net short position this week as California Carbon Allowance (CCA) prices burrowed six-month lows, while speculators’ net long holdings only slightly inched up according to US Commodity Futures Trading Commission (CFTC) data published Friday.

EMEA

Russian-owned plants reportedly face suspension from EU ETS due to sanctions

At least one Russian-owned industrial plant has reportedly been suspended from the EU’s Emissions Trading System as part of sanctions levied on the country by the bloc over the war in Ukraine.

Brussels aims to end Russian fossil fuel imports by 2027, flags new sanctions

European Commission President Ursula von der Leyen confirmed on Friday that her executive is formulating plans for the EU to end fossil fuel imports from Russia by no later than 2027, while announcing that a new flurry of sanctions will target Russian energy and heavy industry.

Euro Markets: EUAs post 18% weekly gain amid sustained buying as energy prices back down

EUAs advanced on Friday morning after a strong auction outcome, reaching their highest level in more than a week as gas prices were flat amid optimistic reports from negotiations between Russia and Ukraine.

Romanian utility Oltenia to receive €848.6 mln for EUA purchases -media

Romanian utility Oltenia will receive state subsidies of €848.6 million for the purchase of EUAs, local media reported on Friday, adding that €535 mln of that will be available for compliance buying this year.

Strong economic incentive to switch now to clean electricity and green hydrogen -report

Analysis published on Friday by an environmental analytics group found that given the extreme high fossil fuel cost environment and current EU carbon price, the economic incentive is now overwhelmingly in place for the EU to directly switch from coal to clean energy and from grey to green hydrogen as soon as possible, to wean the bloc off Russian energy while keeping long-term climate goals in sight.

ASIA PACIFIC

CN Markets: Trading grinds to a halt in China ETS as policy signals weigh on sentiment

Traded volumes in China’s national emissions trading scheme fell to near zero this week as the government’s messaging on pro-growth policies eroded confidence that regulators will support a market already suffering from regulatory indigestion.

INTERNATIONAL

Expert group to develop methodology tools for Article 6

A group of international experts has launched an initiative to hammer out basic tools for developing methodologies for carbon projects under Article 6 of the Paris Agreement.

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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

Cash for war – EU nations continue to import an estimated €600 mln worth of coal, oil, and fossil gas from Russia per day, spending more than €9 bln on Russian fossil fuels since it invaded Ukraine, according to a new tracking tool launched by Europe Beyond Coal on Friday. Based on live data, the analysis underscores the duty for EU leaders to make every effort to urgently end Russian, and all fossil fuel dependence from society, the pressure group said. “With EU heads of state considering new measures to cut reliance on Russian fossil fuels, it’s critical to understand the scale of fossil fuel profits Russia continues to receive,” said Kathrin Gutmann, Europe’s Beyond Coal campaign director. “Coal, oil, and gas are fuelling this war on Ukraine and terrible loss of life. Europe’s energy transition is as much a necessity for peace as it is for a safe climate. Governments need to commit to immediate and heroic spending on energy savings, and transitioning energy systems to peace-promoting renewable energy sources. A safe and peaceful future for all must be the priority.”

Baltic pipe – Construction of the Danish part of the Baltic Pipe, which will connect Poland to Norwegian gas fields, is resuming following a nine-month hiatus, Danish grid operator Energinet said on Tuesday. The pipeline is designed to reduce Poland’s reliance on Russian gas but construction was halted in May 2021 due to environmental issues. Energinet said it had now received a new environmental permit and it still expects the pipeline to be partially operational from Oct 1 this year and running at full capacity of up to 10 bln cubic metres from Jan 1 2023. The suspension has already delayed the start date by three months. Russia’s invasion of Ukraine has triggered worries that Russian gas supplies to Europe could be cut, highlighting the need for diversification of supplies. Construction on two parts of the pipeline has been suspended since 2021 following the rescinding of an environmental permit by a Danish public appeals committee due to concerns over the pipeline’s impact on protected mice and bat species. Russia’s Gazprom supplies half of Poland’s 20 bln cubic metres of gas consumption, but the long-term contract expires at the end of this year and Warsaw doesn’t plan to renew it. Poland aims to replace these supplies with shipments via Baltic Pipe. A natural gas pipeline linking Poland to a LNG terminal in Lithuania, called GIPL, will open on May 1, Lithuania announced on March 7, earlier than the scheduled mid-2022 start. GIPL will allow Poland to boost LNG imports and to ship gas to the Baltic states to smooth out any interruptions. The pipeline, designed to have a capacity to ship about 2.4 bln cubic metres of gas per year in both directions, was financed by the EU to help Poland and the Baltic states boost supply security.

Flaring despair In the Niger Delta, natural gas flaring is killing crops, polluting water, and damaging human health, reports Climate Change News in Nigeria. The government promised to end flaring by 2030 under its national climate plan submitted to the UN last year, but communities remain sceptical, given previous failed attempts, as well as a lack of enforcement and necessary technology. Several studies have highlighted the devastating impacts of gas flaring on Niger Delta communities, including loss of biodiversity and shrinking water bodies that have seen communities endure squalid living conditions with rising poverty levels and loss of livelihood. Since 2012, Nigeria has been among the top seven countries flaring gas, where the practice emits both methane and CO2, emitting about 55 mln tonnes of CO2e per year according to Chukwumerije Okereke, a professor in environment and development at Reading University. Frontiers Oil and ExxonMobil started operating in the Niger Delta in 2003 and 1974 respectively.

ASIA PACIFIC

Not switching just yet China will make full use of coal as a vital part of its energy strategy, leaders and officials said during the nation’s annual gathering of parliament this week, as it bids to balance economic stability with its longer-term climate goals, Reuters reports. Following a speech by President Xi Jinping reiterating the importance of coal, delegates from across the country called for more investment in coal technology and new policies to shore up profits for coal enterprises.

Look, it’s a hydrogen partnership – Malaysia’s Petronas and Japan’s Eneos are the two latest Asian fossil fuel companies to partner up on hydrogen. On Friday they announced they will carry out feasibility studies on the possibilities of producing low-carbon hydrogen at Petronas’ existing facilities, green hydrogen from a planned hydro-powered electrolyser facility, and conversion of hydrogen into methylcyclohexane. The products would be shipped to Eneos’ refineries in Japan, if the projects are successful.

AMERICAS

Uncle Sam needs you – The Biden administration has been pushing the US oil and gas industry to drive up production in order to help offset the loss of Russian energy imports, with Energy Secretary Jennifer Granholm telling executives: “In this moment of crisis, we need more supply.” But industry executives aren’t letting their guard down, and are still wary of the administration’s long-term goals, Politico reports. The war in Ukraine has been putting energy prices through the mixer this week, with retail gasoline prices hitting new all-time records three days in a row. It’s prompted the administration to look for new energy sources and issue assurances that its policies aren’t targeting fossil fuels in a bid to calm the markets and consumers. President Joe Biden firmly said this week that it’s “simply not true that my administration or policies are holding back domestic energy production.” But that doesn’t mean the industry is buying it. Some executives and representatives argue the administration’s pause on new federal oil and gas leases caused them real harm, if not in direct opportunity losses, then in chilling investor confidence.

Windfall funds – US Sen. Sheldon Whitehouse (D) and Rep. Ro Khanna (D) released legislation Thursday to tax large oil companies for windfall profits made during the recent surge in crude prices from tight supplies and disruptions related to Russia’s invasion of Ukraine. The bill, backed by a handful of Democrats, would charge a 50% tax on profits oil companies earn above a $66 per barrel price – the average price from 2015 through 2019 – and send half of that revenue to taxpayers. Whitehouse estimates a single filer would get a $240 rebate, while joint filers would get $360 per year if crude remains at $120 per barrel. The tax would apply to companies that produced or imported at least 300,000 barrels of crude per day in 2019. Whitehouse said he hasn’t talked to his whole caucus about the legislation, and while passing it on its own wasn’t particularly realistic, he hoped it could hitch a ride on larger packages that aim to strengthen Europe’s energy security or as a consumer relief measure to counter rising commodity prices. (Politico)

Get in the (o)zone – The US EPA on Friday released new interstate ozone requirements to update the Cross-State Air Pollution Rule. The rule will require states to limit their NOx emissions – a precursor for ozone – depending on their contributions to downwind issues. The release comes one day after EPA Administrator Michael Regan pitched the agency’s suite of regulations on power plants’ air, waste water, and solid waste emissions. Other regulations coming down the pipeline include ones targeting natural gas turbine emissions and coal ash, Regan said Thursday. (Politico)

AND FINALLY…

Finance fractions – The US Congress approved $1 bln in international climate finance for 2022 on Friday – falling far short of President Joe Biden’s pledge to provide $11.4 bln a year by 2024. The budget is only $387 mln more than Trump-era spending, according to calculations by Joe Thwaites, researcher on global climate finance at the Washington-based think-tank WRI. If the US continued to scale up at that rate, it would take until 2050 to get to $11.4 bln, Thwaites estimates, describing the bill as “extremely disappointing for climate finance,” as reported by Climate Home. The bill allocates only $270 mln for bilateral adaptation finance, a figure far short of Biden’s commitment to provide $3 bln of adaptation finance by 2024, and notably excludes any funding for the UN’s flagship Green Climate Fund where the US still owed $2 bln from previous Obama-era commitments.

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