CP Daily: Monday March 21, 2022

Published 02:59 on March 22, 2022  /  Last updated at 02:59 on March 22, 2022  /  Newsletters  /  No Comments

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

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TOP STORY

US climate risk disclosure rule provides inclusion of Scope 3 emissions, offsets

The US Securities and Exchange Commission (SEC) released its highly-anticipated rule on climate-related financial disclosure on Monday, which includes a partial reporting requirement for companies’ indirect Scope 3 GHGs and mandate for firms to disclose offset usage.

VOLUNTARY

Gulf-based carbon standard eyes 2022 issuance of 25 mln credits as pipeline clears

The first carbon credit standard in the Middle East expects to issue some 25 million offsets this year, as hundreds of projects build in its pipeline.

VCM Report: Nature-based carbon credits consolidate losses amid uncertain market

Prices for exchange-traded, standardised voluntary emissions reduction (VER) contracts continued to trade with volatility over the last week as nature-based credits suffered marginal week-on-week (WoW) losses but generally moved sideways in a market that is searching for direction.

Indian developer woos EU partners for massive cookstove programme

A major Indian project developer is planning to roll out a large-scale cookstove programme that it says can generate tens of millions of carbon credits annually over the next five-six years, and is lining up European oil and gas companies as partners in the venture.

ASIA PACIFIC

Chinese province eyes international blue carbon market with new exchange

A Chinese province has decided to move forward with a carbon trading exchange that it hopes will capture the emerging market for so-called blue carbon credits amid heightened activity both domestically and abroad.

SK Market: KAUs drop to 8-mth low in major sell-off

South Korean carbon allowances on Monday recorded a 14th successive session of losses, with the spot KAU price falling to its lowest level since early July as holders rush to offload their permits.

Singapore, Indonesia ink MoU on climate change, sustainability cooperation

Singapore and Indonesia have signed a memorandum of understanding (MoU) for cooperation on carbon pricing, climate change, and sustainability, Singapore’s National Climate Change Secretariat (NCCS) announced on Monday.

Australia to offer tax concessions for carbon farmers

Australia on Monday said it would offer tax incentives for offset projects in the primary sector in a move designed to further drive supply of carbon credits.

EMEA

EU member states half done free carbon allowance allocations for 2022

EU member states have doled out just over half of this year’s free allocation of ETS carbon allowances and some 94.5% of the quota for 2021, data shows.

Euro Markets: Carbon broadly stable in thin trade as looming options expiry dominates

EUAs were little changed at the start of the week as the pull of the dominant call option strike price remained strong, while energy markets were mixed as traders weighted the likelihood of Europe extending sanctions against Russia to oil supplies.

Southern EU nations push for power price cap despite doubts over impact

Italy, Spain, Portugal, and Greece are pushing for bold power and gas market reforms at an EU leaders’ meeting this week, seeking to shield low- and middle-income households from sky-high energy prices despite uncertainty over how this would impact the EU ETS.

AMERICAS

NA Markets: RGGI prices drilled 8% on reported compliance selling

RGGI Allowance (RGA) prices lost over a dollar on Monday as traders said regulated entities may have been spooked by Virginia Governor Glenn Youngkin (R) divulging a blueprint for the state to exit the power sector carbon market.

US private equity firm puts up $200 mln for nature-based carbon offset platform

A New York-based alternative asset manager on Friday announced a new carbon credit platform for nature-based units, as it also acquired a US forestry offset project developer.

IN MEMORIAM 

Tributes after senior UN, voluntary carbon markets negotiator dies

Tributes are pouring in for one of the developing world’s foremost climate negotiators, who died this week just days after advancing efforts to improve the environmental integrity of the voluntary carbon markets.

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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

Dukes of nukes – UK Prime Minister Boris Johnson wants to make nuclear power 25% of the nation’s electricity mix by 2050, a strategy that would bolster the renewables industry and help wean the economy off a dependence on Russia’s fossil fuels. The goal would mark a significant expansion of nuclear power, which currently accounts for about 16% of the capacity, as the nation tries to satisfy soaring demand, including from electric vehicles and home heating pumps. A final decision hasn’t been made on any nuclear target to include in a plan ministers could unveil as soon as next week. The UK is drawing up an energy-security strategy in the aftermath of Russia’s invasion of Ukraine, with a focus on homegrown wind and solar power, and nuclear as a backup capacity. Separately, the Sunday Telegraph reports that Johnson is “privately frustrated” with Chancellor Rishi Sunak over his “apparent resistance” to the PM’s plans to boost new nuclear. Sunak is due to deliver his spring statement on Wednesday, where he is expected to announce new measures to ease the cost-of-living crisis, including potential cuts to fuel duty. (Bloomberg, Carbon Brief)

Down to Doha – Deutsche Welle reports that Germany has agreed a long-term energy partnership with Qatar to help cut its reliance on Russian gas, German economics minister Robert Habeck said on Sunday. Habeck is on a two-nation visit to the Arabian Gulf. Habeck said Qatar had pledged more support than Germany had expected, adding: “Although we might still need Russian gas this year, in the future it won’t be so anymore. And this is only the start.” Qatar is the world’s third largest exporter of LNG, though Germany currently lacks a terminal to receive shipments. Frankfurter Allgemeine Zeitung reports that, according to Habeck, Germany’s gas supply for the coming winter has not yet been fully secured. He says: “This means that if we don’t get more gas by next winter, and supplies from Russia are interrupted, we won’t have enough gas to heat all the houses and start the entire industry.” (Carbon Brief)

Floaters – Portugal plans to hold its first auction for floating offshore wind projects this summer, and the country hopes it will be able to produce between 3-4 GW of power by 2026, environment and energy minister Joao Matos Fernandes told Reuters. As part of a global shift away from carbon-emitting fossil fuels, countries are betting on new technologies to boost power generation from renewable energies such as wind and solar. Floating wind is a relatively nascent technology but due to the geography in Iberia and the surrounding water, the traditional fixed-bottom offshore turbines are less well-suited to Spain and Portugal than they are in Northern Europe.

ASIA PACIFIC

Unintended consequences – Australia’s largest energy producer, Woodside, continued to claim that gas produced from its biggest LNG project would reduce global emissions despite the claim being undermined in research, that the company itself commissioned, from Australia’s national science agency, CSIRO, The Age reports. The study found that increasing Australian gas supply could prolong coal, displace renewables, and increase emissions in Asia without a global carbon price. Woodside paid the CSIRO more than A$140,000 to verify its public claims in a report titled “Modelling the emission impact of additional LNG in Asia.” However, after four drafts were produced, the 73-page report was shelved. After a freedom of information application, Woodside released the final version. The CSIRO researchers modelled the impact of increasing gas supply to Asia across a range of scenarios. In most cases, they found more gas would have “no change” or “no net benefit” in reducing emissions. In some cases, they found more gas would have a “negative impact” by delaying renewable energy uptake, prolonging coal-fired power, or increasing emissions from gas.

All of the above – India and Japan have signed an agreement to form a “clean energy partnership” which embraces several technologies in the energy space, including renewables, hydrogen, batteries, energy efficiency, and biofuels, as well as CCS, LNG, and clean coal technology. “Cooperation under this partnership will build on the work already being covered out by the two sides under the foundation of the ‘India-Japan Energy Dialogue’ established in 2007 and will substantially expand the areas of collaboration for mutual benefit,” the joint statement said.

Hydrogen hopes – The win by the opposition Australian Labor Party in Saturday’s election in the state of South Australia puts in the spotlight the incoming government’s plan to spend nearly A$600 mln on a green hydrogen facility, which Labor had promised in its election campaign, Renew Economy reports. The project would involve the construction of a 250 MW electrolyser facility and a 200 MW hydrogen-fuelled power station. The outgoing Liberal government, however, had backed the creation of several hydrogen hubs, to be developed with private finance, which had attracted some interest from Australian and international investors.

Thai green power – The Federation of Thai Industries (FTI) has joined with the Provincial Electricity Authority (PEA) to sign an agreement on a pilot project to develop renewable energy and carbon credits, The Nation reports. A renewable energy trading platform will also run under the second phase of the Energy Regulatory Commission (ERC)’s sandbox programme, which it launched to test various energy-related innovations. The clean energy and carbon credit trading platform will be a key tool for making electricity trading contracts, to support the upcoming carbon credit market in the industrial sector. PEA will have a hand in delivering energy to purchasers, which will see more renewable energy sent to the manufacturing sector. The initiative is in line with Thailand’s new energy policy and goal to reach carbon neutrality by 2050 and net zero emissions by 2065.

Picture that Australian airline company Qantas is the latest to join the non-fungible token (NFT) craze, and will be selling pictures of historical Qantas planes on blockchain. The NFTs will be sold on low-carbon chains and be backed by carbon offsets, the company has promised. (Gizmodo)

AMERICAS

The (net) zero hour – The Net-Zero Advisory Body (NZAB), established under the Canadian Net Zero Emissions Accountability Act, on Monday released its submission to inform the country’s 2030 Emissions Reduction Plan (ERP). The NZAB 40 pieces of advice across four areas of inquiry – governance, buildings, transportation, and oil and gas – to inform federal decision-making to help reduce Canada’s GHG emissions by 40-45% below 2005 levels by 2030. The submission also provides advice on key guiding principles to help inform the development of quantitative five-year emission reduction targets for the oil and gas sector, as requested by the federal Ministers of Environment and Climate Change and Natural Resources. The Canadian government is slated to released the ERP next week.

BC credit consultations – The British Columbia Ministry of Environment and Climate Change Strategy on Monday published a consultation on the province’s draft offsets protocol policy. The proposed document outlines the government’s policy on how BC offset protocols will be identified and prioritised for development, developed, periodically reviewed, and amended or deactivated. The public consultation runs through Apr. 17. Additionally, the ministry published a What We Have Heard document that summarises comments received on the draft Forest Carbon Offset Protocol (FCOP), released for public consultation last year. The document references Carbon Pulse’s June 2021 article in which trade associations and project developers said the FCOP as currently designed would render projects economically unviable. A final FCOP is expected this year.

Re-lease me – President Joe Biden’s administration said on Friday it would resume oil and gas leasing on federal lands following a court ruling reinstating the social cost of GHG gas calculations issued by the White House last year. The administration reinstated values used by the Obama administration while it developed its own calculations. The announcement follows the DOE decision to allow two liquified methane gas export terminals previously barred from exporting to Europe to do so – further entrenching European dependence on methane gas despite the urgent need for methane pollution reduction. (Climate Nexus)

Is ESG SOL? – While ESG investing has been one of the the huge industry themes of the last decade, it seems very plausible that the next decade is going to be considerably more difficult, writes Bloomberg’s Joe Weisenthal.  He outlines two challenges, which are somewhat related. The first is that we’re seeing, immediately, that the world is nowhere close to transitioning off of fossil fuels. “There’s more to ESG than decarbonisation and renewables, but that’s a big part of it, moving away from energy sources like oil and coal. With gasoline costs surging in the US, that may provide some impetus to accelerate the adoption of electric vehicles. But that’s a slow process, and what’s more is that it too is constrained by resources (for example, various metals) which are expensive and scarce. And it’s going to be slow going to build out big new mines for them. The path of least resistance, for now, is more oil drilling.” According to Weisenthal, the other problem is that ESG funds are severely underperforming the broader market. The reason for this can be seen from their top holdings – they basically look like the Nasdaq 100. “Companies like Apple, Microsoft, Amazon, and Alphabet aren’t pulling dirty fuel out of the ground, so they rank well. And so, of course, an ESG fund is going to do well, because as a simple equity story, they’re in large part a tech story and tech had an incredible decade. But for the first time in awhile, we’re seeing a serious downturn in tech. It’s very possible, of course, that tech is just hitting a speed bump and will resume its outperformance. But at least for the moment, mining and other extractive industries are hot, and if you don’t have them in your portfolio, you’re missing out on real gains. For the moment, ESG investors are sacrificing returns. That, combined with the realities of our energy balances in the U.S. and Europe, may make this decade a tougher one when it comes to selling ESG.”

AND FINALLY…

No-brainer for beer – Each time you crack a beer, you probably aren’t thinking about climate change or saving the planet, but the Tree House Brewing Company is doing just that. Nate Lanier, co-founder and CEO of Massachusetts-based Tree House, told WBZ-TV the decision to install carbon capture technology at their Charlton facility was “literally a no-brainer”. Tree House has so far captured roughly 1,500 pounds (680 kg) of CO2 released through the fermentation process, and is sent over to small-scale CCS company Earthly Labs’ system to be cleaned and reused. Like many industries, breweries were affected by the recent supply chain crunch. Those using carbon capture technology were somewhat shielded from the rise in prices and lack of availability.

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