CP Daily: Tuesday March 22, 2022

Published 02:32 on March 23, 2022  /  Last updated at 02:34 on March 23, 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 lawmakers grapple with ETS reforms in light of Ukraine crisis

EU lawmakers are struggling to home in on compromises on a pivotal reform of the bloc’s carbon market, with some wary of stirring public anger over heightened energy bills amid the unfolding crisis in Ukraine.

AVIATION/SHIPPING

FEATURE: Facing rising climate costs, ports are crucial for shipping decarbonisation

The global shipping and ports industries face long-term climate impact costs rising up to $25 billion annually in the absence of action to cut emissions, but ports are lagging on mitigation despite the key role they potentially play for the shipping sector to adopt a net zero goal.

Offsetting, sustainable aviation fuels to help Ryanair achieve net zero by 2050

Low-cost airline Ryanair has set itself a net zero target for 2050 – a goal that more than half of which it said will be met using a mix of carbon offsets and sustainable aviation fuels.

EMEA

Euro Markets: EUAs breach stubborn technical resistance ahead of options expiry

EUAs jumped to a six-day high above €81 on light trading Tuesday ahead of tomorrow’s quarterly options expiry, while energy prices were also generally higher as little progress appeared to be made towards reaching a ceasefire agreement in Ukraine.

UK industries urge government to shield them from Gazprom collapse

UK heavy industries are urging the British government to protect them from the potential collapse of an offshoot of Russian energy firm Gazprom, one of Britain’s biggest suppliers of gas and related carbon allowances.

Poland’s PGE reports 23% rise in coal power output for 2021

Polish utility PGE reported a 23% rise in its coal-fired power generation, it said in financial results on Tuesday, outpacing an 18% rise in its overall output amid a post-pandemic demand recovery.

AMERICAS

Canadian asset manager creates fund to purchase Alberta carbon credits

A Canadian asset manager has launched an investment vehicle that will buy performance credits and offsets under Alberta’s Technology Innovation and Emissions Reduction (TIER) regime and hold them as the carbon price jumps this decade.

March GWSA auction settlement crashes 95% versus previous sale

The March auction for the Massachusetts Global Warming Solutions Act (GWSA) settled well below $1.00, an enormous departure from all previous sales in the power sector cap-and-trade programme.

ASIA PACIFIC

China leaves headline climate targets untouched in energy plan

China on Tuesday released the five-year plan for its energy sector, but without announcing any new or improved climate change or carbon emissions targets for the industry.

INTERNATIONAL

With Article 6 rules agreed, experts stew over how emissions trade will work

Four months on from a UN emissions trade deal, governments remain puzzled over how host countries should authorise international transfers and many other practicalities, a virtual meeting heard this week.

US climate disclosure rules welcomed, as investors urge firms to look long-term

The US Securities and Exchange Commission (SEC) climate disclosure rules are a welcome step towards improved corporate climate action worldwide, a conference heard on Tuesday as investors urged firms to stay focused on long-term climate goals in the face of the current energy crisis.

VOLUNTARY

SparkChange signs strategic deal with Australian firm

Investment managers SparkChange have signed a strategic deal to manage the emissions inventory of an Australian company looking to expand into European and North American carbon markets.

London well-placed amid stiff competition to become green financial centre

London is in a strong position but faces significant competition from cities worldwide in its bid to become a global hub for climate finance and the voluntary carbon market, a conference in the UK capital heard on Tuesday.

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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

Gut feeling – UN chief Antonio Guterres has warned that the war in Ukraine risks pushing global climate targets out of reach. In a video address to an Economist conference, Guterres said: “The fallout from Russia’s war in Ukraine risks upending global food and energy markets, with major implications for the global climate agenda. As major economies pursue an ‘all-of-the-above’ strategy to replace Russian fossil fuels, short-term measures might create long-term fossil fuel dependence and close the window to 1.5C. Countries could become so consumed by the immediate fossil fuel supply gap that they neglect or knee-cap policies to cut fossil fuel use…This is madness. Addiction to fossil fuels is mutually assured destruction.” (The Guardian)

EMEA

Cambo comeback – Oil company Shell is reconsidering its recent decision to remove investment from the UK’s Cambo oil field, the BBC reported, citing anonymous sources. In December, Shell said the economic case – along with possible regulatory delays – meant it was withdrawing from the Cambo project. While oil was $70 per barrel at the time, it has since risen consistently over $100 per barrel. While the company’s official position had not changed, it did acknowledge that the economic, political, and regulatory environment had changed enormously since the decision was announced just three months ago.

Blue’s cruise – German Vice-Chancellor Robert Habeck has secured several hydrogen cooperation contracts with the UAE, with the first blue hydrogen expected to be shipped to Germany in 2022. The climate merits of blue hydrogen are often questioned though, because it relies on fossil gas as the primary feedstock whereas green hydrogen is made from water electrolysis. The vice-chancellor welcomed the planned cooperation between German and Emirati companies and the planned research cooperation involving German research institute Fraunhofer and the UAE’s energy ministry. Germany aims to import the lion’s share of the 3 million tonnes of “clean” hydrogen it aims to use by 2030. As a consequence, securing contracts with potential exporters like the UAE became a top priority, with the previous administration overseeing the launch of the Germany-UAE energy partnership in 2017. The announcement, made during Habeck’s trip to Abu Dhabi, comes a day after he announced a major LNG supply deal with Qatar, with both agreements aimed at helping Germany reduce its reliance on Russian gas. (Euractiv)

Vorsprung durch Tesla – Tesla has opened its first European e-car production hub with its gigafactory near Germany’s capital Berlin, shaking up the industry in the birthplace of the internal combustion engine, Clean Energy Wire reports. Tesla head Elon Musk handed over the first electric cars produced at the site to clients. Musk also invited top-level government representatives such as chancellor Olaf Scholz and economy minister Robert Habeck to the opening ceremony, who hailed the speed of the factory’s planning and construction. Start of production at the gigafactory is a crucial day for the mobility transition in Germany, Habeck said. “The path towards electromobility is another step away from oil imports,” he added, making a connection to the current energy supply debates following the invasion of Ukraine.

ASIA PACIFIC

Laying down the law South Korea’s state council on Tuesday approved the enforcement decree of the Framework Act on Carbon Neutrality, meaning the nation now has legislated its targets of cutting emissions 40% below 2018 levels by 2030 and reaching net zero emissions by mid-century. The legislation obligates all ministries to hammer out detailed plans on how they intend to meet those goals within their portfolios. The legislation also recognises the opportunity to purchase international carbon credits under Article 6 of the Paris Agreement. Korea currently plans to buy around 30-33 mln such units by the end of this decade.

Tackle demand, not supply (maybe) ExxonMobil is warning the Australian state of Victoria that those who rely on gas for heating, cooking, and hot water face the threat of price spikes and possible supply shortages if the Victorian government proceeds with a proposal to halve gas use, The Age reports. State government officials have indicated a 25% cut by mid-decade and a 50% cut by 2030, and are conducting public consultations for a roadmap that will outline plans to achieve emissions reduction targets, including using electrical appliances for heating rather than gas, improving energy efficiency, and focusing on alternative fuels such as hydrogen or biogas. However, ExxonMobil, which operates the Bass Strait oil and gas fields off Victoria’s coast, is growing increasingly concerned about the prospect of aggressive targets to slash gas consumption as the government builds a strategy to reduce the state’s high reliance on the fossil fuel. Interestingly, oil company executives have often called for climate and energy policymakers to address demand for fossil fuels, and not just supply, to avoid price shocks as the world transitions to a lower carbon future. At an energy conference last year, Reuters reported that Exxon Mobil Chief Executive Darren Woods said that “As policies around the world change and governments look to try to reduce their economies’ dependence on oil and gas … if we don’t balance the demand equation and only address the supply, it will lead to additional volatility.”

Road to net zero – It is “technically viable” for Singapore’s power sector to achieve net zero emissions and aspirations to do so by 2050 are “realistic,” an expert committee tasked to examine the future of the country’s energy system said, Channel News Asia reports. To achieve that, “transformational changes” will have to be made to the entire energy value chain – from supply and demand to the development of the country’s power grid. For example, Singapore must diversify its energy supply by having more electricity imports and using low-carbon hydrogen for power generation, as part of nine recommended strategies in the report. Other strategies include accessing carbon credits, maximising solar power, exploring other low carbon options such as CCS, geothermal, and nuclear, managing growth in demand, improving the grid, leveraging digital technologies, and shaping end user consumption patterns. However, the committee noted that the process of reaching net zero will be challenging given the uncertainty of technology and geo-economic trends, as well as Singapore’s limited renewable energy potential.

AMERICAS

Alive till ’25 – Canadian PM Justin Trudeau on Tuesday announced an agreement reached by his ruling centre-left Liberal Party and the left-wing NDP to keep the minority Liberal government in power until Parliament rises in June 2025. The parties agreed to prioritise seven actions under this agreement, including tackling the climate crisis through achieving net zero emissions no later than 2050 and developing a plan to phase out public financing of the fossil fuel sector. The agreement could help ensure support for the Liberals’ various climate policies, including the post-2022 carbon pricing benchmark that will see Canada’s ‘backstop’ CO2 price rise to C$170 in 2030 from C$65 in 2023.

Still standing – The coal-fired power plant in Bow, New Hampshire has won another year’s funding from a programme designed to guarantee future electricity supplies, although at about three-quarters of previous levels. The two units at Merrimack Station, the last coal-fired power plant in New England, will receive about $785,000 per month for being on call in the 2025-26 period under what is known as the forward capacity market. Merrimack Station is owned by Granite Shore Power, an investment group that bought it from Eversource in 2017. It operates as a “peaker plant,” providing power occasionally to meet peak demand or when other fuels are unavailable such as during winter when most natural gas is used for heating rather than power. (Concord Monitor)

VOLUNTARY

Setting up shop Oil major Shell and Indian project developer EnKing International have incorporated their joint venture agreed last year, which will seek to generate over 100 mln nature-based carbon credits over the next five years. The $1.6-bln JV, incorporated in India, has been given the name Amrut, which in Sanskrit means to obtain immortality, EnKing CEO Manish Dabkara said on LinkedIn.

Quality credit control – The Carbon Credit Quality Initiative (CCQI) on Tuesday published the second version of its methodology to provide a deep assessment of voluntary emission reductions (VERs). The environmental NGO-led initiative is trialling its approach on three project types and four offset standards, assessing VER quality against seven criteria and various sub criteria and formulating a ranking on a scale of 1-5. CCQI has not yet released its scores for these initial project types and standards.

AVIATION

SAFfy taffy – Delta has signed an agreement with sustainable aviation fuel (SAF) maker Gevo as part of its goal of fuelling 10% of its operation with SAF by the end of 2030, the company said in a press release. Through the agreement, Delta expects to receive roughly 283.9 mln L of SAF annually for seven years, anticipated to start in mid-2026. “SAF is existing technology that is crucial for the industry to achieve its net zero goals,” said Pam Fletcher, Delta’s chief sustainability officer. Delta will need to secure 1.5 bln L annually by the end of 2030 to meet its 10% SAF procurement commitment and approximately 15.1 bln gallons annually if it were to fly solely on SAF.

SCIENCE & TECH

Aerials and the Answer – Oil major BP’s venture capital arm, bp ventures, has made a £3 mln equity investment in a pioneering unmanned aerial vehicle (UAV) business that uses drones and AI to detection methane. The business, named Flylogix, combines its UAV with AI, satellite communications, and methane sensor technology, from partner SeekOps, to monitor and measure methane across the globe. Bp’s new investment supports the company’s ‘Aim 4’ of installing methane measurement on all existing major oil and gas processing sites by 2023 and delivering a 50% reduction in methane intensity across its operations. (Gasworld)

AND FINALLY…

New dimension – A new ‘3D’ pilot designed to capture CO2 from industrial activities at steelmaker ArcelorMittal’s Dunkirk site has begun operations. Funded by the EU’s Horizon R&D programme, it includes the verification of the DMX carbon capture process developed by IFPEN and designed to be replicable across heavy industry. During the demonstration stage, the pilot will capture 0.5 tonnes of CO2 an hour, equating to more than 4,000 tonnes per year. (Gasworld)

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