CP Daily: Thursday March 17, 2022

Published 01:50 on March 18, 2022  /  Last updated at 01:54 on March 18, 2022  /  Newsletters  /  No Comments

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

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TOP STORY

EU nations stumble over plans for second carbon market

A growing number of EU member states are prepared to support a second ETS for buildings and transport, a meeting of the bloc’s environment ministers showed on Thursday, though wrangling over a related fund risks sowing division.

AMERICAS

Appeals court allows US govt to resume use of social cost of carbon metric

A US federal appeals court reinstated the use of interim ‘social cost of carbon’ (SCC) estimates on Wednesday, after a lower court had blocked the key climate metric from being used by President Joe Biden’s government agencies to measure the benefits of reducing GHG emissions.

NA Markets: CCA prices trend higher as activity slows, RGGI drops after auction and Virginia report

California Carbon Allowance (CCA) prices continued to bounce back from multi-month lows this week even as trading activity cooled down, while RGGI Allowances (RGAs) dropped after the publication of Q1 auction results and a Virginia report detailing its plan to exit the cap-and-trade programme.

ASIA PACIFIC

Regulator predicts steady growth in Australia’s offset market, as intermediaries claim bigger slice of the pie

Australia’s Clean Energy Regulator expects both supply and demand in the nation’s offset market to rise to record highs this year, with data showing brokers, traders, and financial institutions becoming far more involved.

Developer urges delay, rethink of Australia’s ERF exit rule

An Australian offset project developer has urged the government to delay the implementation of a new rule that allows sellers to exit their contracts with the Emissions Reductions Fund, and cap the volume of carbon credits that can be sold on the voluntary market instead.

Cheating Chinese verifier pulls out of carbon market

A Chinese verifier caught falsifying data for participants in the national emissions trading scheme will no longer provide services related to the carbon market.

Asian corporates more willing to disclose climate data, but gaps and lack of ambition remain a challenge, survey finds

Asia-Pacific companies need to adapt more far-reaching climate targets and provide better data, a survey has found.

EMEA

Not just gas: EU could endure life without all Russian fossil fuels

An EU stop to Russian oil and coal imports would be relatively less painful than the planned gas phaseout and the bloc could endure a short adjustment period in order to cut all energy ties with Moscow, analysts suggest.

Euro Markets: EUAs test technical level as buying resumes amid growing options activity

EUAs erased early losses on Thursday as buyers emerged to test a major technical level as the expiry of the March options contract approached, while energy markets were firmer amid a lack of progress in Russia-Ukraine peace talks and signs pointing toward continued conflict.

VOLUNTARY

Airbus, Occidental subsidiary ink 400k DAC carbon credit deal

A subsidiary of Occidental Petroleum has agreed to sell 400,000 direct air capture (DAC) credits to plane-maker Airbus, the companies announced late Thursday.

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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

Menacing methane – The world’s coal mines emit 52.3 Mt of methane per year, according to a new report by Global Energy Monitor (GEM), greater than annual emissions from oil (39 Mt) or gas (45 Mt). A slate of new coal mine projects currently under development would further emit 11.3 Mt of methane per year if the projects proceed as planned, and would effectively lock in new emissions equivalent to the coal-based CO2 emissions of the US. Mining emissions translate to CO2e of 1,560 – 4,320 Mt per year when averaged over a 100-year and 20-year timeframe, respectively, according to GEM. This 4,320 MtCO2e is comparable to the climate impact of the CO2 emissions of all coal plants in China. GEM’s methane estimates by source differ somewhat from a report released last month by the IEA, although the agency also found that coal was the biggest contributor, accounting for 42 Mt, followed by oil (41 Mt), extracting, processing, and transport of gas (39 Mt), bioenergy (9 Mt), and leaks from end-use equipment (4 Mt).

Hydrogen pilot – Delta and Airbus will collaborate on industry-leading research to accelerate the development of a hydrogen-powered aircraft, the companies said in a press release. As part of its net zero plans that include the scaling scaling of sustainable technologies, Delta has signed an MoU to become the first US-based airline to collaborate with Airbus on the research and development of hydrogen-powered aircraft. “To pull the future of sustainable aviation forward, we need to accelerate the development and commercialisation of potentially disruptive technologies,” said Pam Fletcher, Delta’s chief sustainability officer. “Hydrogen fuel is an exciting concept that has the potential to redefine the status quo. These tangible steps lay the groundwork for the next generation of aviation.” Under the agreement, Delta will identify the fleet and network expectations, and the operational and infrastructure requirements required to develop commercial aircrafts powered by hydrogen fuel.

Reinsure ramping – The world’s second biggest reinsurer Swiss Re said it would no longer insure most new oil and gas projects, seeking to align with the IEA’s 1.5C trajectory report. In its annual sustainability report it said that by 2025, it wanted half of its overall oil and gas premiums to come from companies aligned with a net-zero by 2050 plan, and by 2030 all its clients in the sector should have done so. Also, from 2022, the company said it will no longer insure companies or projects with more than 10% of their production in the Arctic, apart from Norwegian producers. (Reuters)

EMEA

German cars – Germany backs the EU proposal to phase out the sale of combustion engine cars from 2035, dropping its earlier insistence on an exception for cars using synthetic e-fuels made with renewable energies, CLEW and POLITICO reported. Germany has until now resisted a hard phase-out date for conventional cars, hoping the use of e-fuels could throw a lifeline to many companies in its large supplier industry that are focused on combustion engines. In its coalition agreement, the government had stated that “outside of the existing system of fleet limits, we advocate that only vehicles that can demonstrably only be fuelled with e-fuels can be newly registered” from 2035. But environment minister Steffi Lemke now said the government will no longer insist on this broad exception.

Nuclear extensions – Belgium may extend the life of its nuclear power plants, delaying an exit planned for 2025 after the Russian invasion of Ukraine has forced a rethink by the governing coalition, Reuters reports.  The country’s energy minister Tinne Van der Straeten presented a note to cabinet members to extend the lives of the two newest reactors by up to 10 years. An energy ministry spokesperson said on Thursday that Van der Straeten had spelt out options in her note and that no decision was imminent. The minister is expected to set out on Friday a plan to reduce Belgium’s reliance on fossil fuels with an increase of offshore wind parks, more solar panels and a reduction of gas and oil heating by 2026. Belgium’s nuclear switch-off had initially relied on a shift to natural gas, including a gas-fired plant to be built just north of Brussels.

Gas infrastructure on the rise – Italy’s Snam is working on a series of infrastructure projects to help boost gas supplies as Europe scrambles to find alternative sources to cut its reliance on Russia, Reuters reports. Snam, which manages some 33,000 km of pipeline in Italy, has stakes in key pipelines bringing Algerian and Azeri gas to Italy as well as the TAG pipeline that transports Russian gas. “There’s a renewed focus on supply diversification maximising pipe imports from the south and particularly additional LNG,” Chief Executive Marco Alvera said in a conference call on Thursday.

Gettin’ hy with a little help from my friends – With Europe planning to end its reliance on Russian gas as quickly as possible, Norway, the second-largest gas exporter to the EU, “wants to actively contribute to the rapid development of the hydrogen market in Germany” and on the continent, Euractiv reports. Hydrogen does not release CO2 emissions when burned and is expected to play a key role in decarbonising process industries like steel and chemicals, which cannot fully electrify. But ramping up “green” hydrogen production from renewables requires huge quantities of wind and solar electricity, which are currently missing. So in the transition phase, gas companies are pushing for low-carbon “blue” hydrogen produced from natural gas with carbon capture and storage (CCS) to bury the emissions underground. Once reluctant to “blue” hydrogen, the newish German government is now having a change of heart in light of Russia’s war in Ukraine. Norway and Germany are in the process of examining “whether we need a pipeline,” German Vice-Chancellor Robert Habeck explained during a visit to Oslo on Mar. 16 alongside the Norwegian PM Jonas Store. “Norway wants to actively contribute to the rapid development of the hydrogen market in Germany and the EU,” says a joint declaration adopted after Habeck’s visit. “To this end, it has been agreed that a joint review will be conducted with a view to making large-scale transport, including via pipeline, of hydrogen from Norway to Germany possible,” the statement says.

ASIA PACIFIC

Low-carbon cement – Holcim New Zealand will construct and operate a new facility in Auckland, the company stated in a press release. Holcim will import and distribute lower carbon cement replacement products, which will enable a reduction of construction-related embodied carbon. The facility will be adjacent to the company’s existing cement import terminal at Ports of Auckland. At peak operation the site is expected to enable replacement of just under 100,000 tonnes of Ordinary Portland Cement, which will substantially reduce GHG emissions. Annually, this is the equivalent of removing approximately 78,000 tonnes of CO2, the company said.

Gippsland gas – Exxon Mobil and BHP Group will go ahead with a project to boost gas output from their Gippsland Basin Kipper field off southeast Australia, which would help fill a looming gas shortage in the local market, Reuters reports. Exxon’s Esso Australia said the project would cost about A$400 mln to extract an additional 200 petajoules (PJ) of gas over the coming five years, adding that about 30 PJ will be produced next year. The country’s regulators have warned that eastern Australia faces a gas shortfall from 2026, largely because the ageing gas fields in the Gippsland Basin Joint Venture, which has been the biggest supplier into the market for decades, are drying up. Esso operates the joint venture in a 50-50 partnership with global miner BHP. The extra production from the Gippsland Basin will come online ahead of five proposed LNG import terminals, looking to serve the same market. Only one of those has begun preliminary construction work.

It’s got potential – Australia has the potential to drive significant emissions reductions across the Asia Pacific region – by as much as four times its own emissions – by decarbonising Australia’s major export industries, new research by the Australian National University has found. The study found that an Australian supply of zero emissions products could cut the Asia-Pacific region’s emissions by around 8.6%, while only requiring around 2% of Australia’s landmass for wind and solar energy production. The researchers say that this could be achieved by replacing coal and gas with renewable electricity and hydrogen, and cutting emissions in the production of steel and aluminium production. (RenewEconomy)

AMERICAS

LNG lob – President Joe Biden’s administration said on Wednesday it had authorised additional exports of liquefied natural gas from two major facilities on the US Gulf Coast, in a move that could help Europe deal with an energy crunch worsened by Russia’s invasion of Ukraine. The US Department of Energy (DOE) issued approvals allowing major LNG supplier Cheniere Energy to export the equivalent of 203.9 mln cubic metres per day of the supercooled fuel from its Sabine Pass, Louisiana and Corpus Christi, Texas, terminals to countries that do not have free trade agreements with the US including all of Europe. The authorisations mean every operating US LNG export project now has approval to export its full capacity to any country where not prohibited by US law or policy, the DOE said in a press release. (Reuters)

Dominion details – The Virginia State Corporation Commission has given Dominion Energy the green light on a planned 1 GW renewable energy expansion, including what will become Dominion Energy Virginia’s largest solar-plus-storage project to date. The approval represents the second expansion requested by Dominion since the 2020 Virginia Clean Economy Act mandated full decarbonisation of the utility’s generation fleet by 2045. Dominion is nearly halfway to targets established by the 2020 law, but must still build out nearly 10 GW of new wind and solar capacity to comply. (Utility Dive)

VOLUNTARY

You would never break the chain (never break the chain) – Carbon offset standard manager and developer Verra this week opened a public consultation on a “Methodology for Avoiding Greenhouse Gas Emissions by Keeping Food in the Human Supply Chain”. Verra said the methodology would enable the quantification of emissions reductions from activities that avoid food loss and waste, and the baseline scenario assumes the continuation of pre-project food waste diversion to landfills or other waste destinations. Project activities may prevent loss or waste of food products at different stages of the food supply chain – for instance, during the production, processing, distribution, retail, and/or consumption of food products – and include enhanced demand planning, the use of apps to facilitate food sharing, and food bank donations. The consultation runs through Apr. 24, and Verra is also inviting proposals from validation/verification bodies for a technical assessment of this methodology.

Friends with benefits – Nature-based mitigants to climate change will offer attractive risk-adjusted returns to investors, according to a new report from the Canada Pension Plan Investment Board. Currently, the cost of offsetting a single tonne of CO2 costs carbon credit purchasers less than $10, but by some estimates it could cost $120 by 2050. The report highlighted a carbon credit scheme backed by the CPPIB. Launched in 2021, Accelerate Nature is a partnership between the institutional investor and Conservation International. It’s working with Indigenous Peruvian communities to co-manage 500,000 hectares of forests. In a press release, Deborah Orida, global head of real assets and chief sustainability officer of the CPPIB, said the project serves as a prototype for future partnerships between institutional investors and conservation organizations. “Through initiatives pioneered by Accelerate Nature, we will help protect ecosystems and their communities while we earn attractive risk-adjusted returns in the best interests of our contributors and beneficiaries.” (Benefits Canada)

AND FINALLY…

Helicopter money – An investment company that operates California Carbon Offset (CCO) projects says that some of its projects don’t actually change the way forests are managed, and therefore do little to help the climate, Bloomberg Quint reports. New Hampshire-based Lyme Timber Co. sells carbon credits on about 89,000 ha, or 15% of its land, and its projects have generated over 5 mln CCOs under the California’s WCI-linked cap-and-trade programme, according to data from state regulator ARB. However, CEO Jim Hourdequin said that when his company began developing a string of offset projects, he was struck by how often they received large volumes of lucrative credits for creating few additional climate benefits. One deal netted Lyme about $20 mln for minor changes to a forest in West Virginia. After purchasing a huge hardwood forest there in 2017, it put together a carbon project on 19,000 ha of forbidding terrain. Some of the land is so rugged and steep, Hourdequin says, the trees can be extracted only by helicopter, which is prohibitively expensive. Additionally, Lyme’s first carbon project in Tennessee was acquired by selling a restrictive easement to the state of Tennessee on roughly 2,000 ha, preventing the company from harvesting on it. Yet the company still met the criteria under the California forestry offset protocol to generate credits in the programme. Researchers last year found that the California programme could have erroneously issued up to nearly 40 mln CCOs to forestry projects, and said developers utilised gaps in the state’s protocol to inflate emissions reductions attributed to those initiatives.

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