CP Daily: Wednesday March 23, 2022

Published 01:11 on March 24, 2022  /  Last updated at 01:11 on March 24, 2022  /  Newsletters  /  No Comments

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

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TOP STORY

Saudi Arabia announces string of MoUs for MENA voluntary carbon market

Saudi Arabia’s public investment fund (PIF) has signed five memorandums of understanding (MoU) with large businesses in the country as it seeks to establish a voluntary carbon market (VCM) in the Middle East and North Africa (MENA) region by 2023, it announced this week.

EMEA

EU debate on second ETS takes new turn as key MEP contemplates price corridor

Imposing a carbon price corridor for the EU’s proposed second ETS for transport and buildings is an idea gaining momentum among lawmakers, a move that could help defuse fears about the carbon market putting an excessive burden on poorer households.

UK budget update sends mixed signals on efforts to cut emissions

Headline budgetary measures published in the UK’s spring statement on Wednesday exert only light-touch pressures on greenhouse gas emissions, with a targeted VAT tax reduction pulling in the opposite direction as a 12-month fuel tax cut.

Euro Markets: EUAs drop sharply on sustained selling after March option contract expires

EUA prices dropped sharply on Wednesday after of the quarterly options contract expiry triggered a wave of selling, while energy prices were higher as traders weighed whether the EU needs additional gas supplies.

ASIA PACIFIC

Analysts see depressed ACCU prices, low project investments for several years after govt intervention

Australian offset prices are unlikely to rise much above the mid-A$30s in coming years, while plentiful supply from existing projects will torpedo new investments after the government’s recent market intervention, analysts said Thursday.

Australia Market Roundup: Double offset trouble for govt as ERF criticism mounts

The Australian government is facing increased criticism for its job operating the nation’s offset market, as a group of 15 market participants on Wednesday asked for the recently announced changes to the ERF to be delayed, while studies led by a prominent academic concluded the whole scheme is “largely a scam”.

China to ramp up “pivotal” green hydrogen production

China released Wednesday a 15-year roadmap for hydrogen production, setting production goals for green hydrogen for the first time.

Chinese investment bank launches ETF tracking EU carbon futures

The Hong Kong subsidiary of a major Chinese investment bank on Wednesday launched an exchange-traded fund (ETF) on the Hong Kong Stock Exchange that will track EU carbon futures.

INTERNATIONAL

Heavy industry needs clear CO2 pricing signal to decarbonise, avoid stranded assets

Heavy industries may need the timely introduction of a global CO2 price to ensure they decarbonise in line with international climate targets and avoid stranded assets, a virtual conference heard on Wednesday along with how EU carbon policies in development may serve as a good example.

VOLUNTARY

ICE plans May launch for its first foray into voluntary carbon market

The Intercontinental Exchange (ICE) is planning a May launch for its first nature-based carbon credit futures contract, giving buyers access to the fast-growing voluntary carbon market.

EEX parent company invests in AirCarbon Exchange

The parent company of Germany’s European Energy Exchange (EEX) has invested in and partnered with Singapore-based AirCarbon Exchange (ACX) to help develop and scale the voluntary carbon market (VCM), the companies announced Wednesday.

Occidental signs first “net zero oil” supply deal with Asian trading house

US oil and gas company Occidental has signed an agreement with a South Korean trading company for the supply of “net zero oil” in a five-year deal that involves the use of direct air capture (DAC) technology to remove CO2 from the atmosphere to abate the lifecycle emissions of the oil sold, the company announced.

Natural Capital Partners, ClimateCare announce rebranding, set 2030 goal

Voluntary carbon offset providers Natural Capital Partners and ClimateCare on Wednesday announced a rebranding as Climate Impact Partners, cementing their merger and setting a 2030 emissions goal.

AMERICAS

California mints largest compliance offset total in 15 months

California regulator ARB this week doled out the heaviest volume of offsets for the cap-and-trade programme since 2020, as two new forestry projects made a splash, according to state data published Wednesday.

California transportation fuel consumption jumps 10% in 2021

California transportation fuel sales ramped up considerably in 2021 as the state recovered from the onset of the COVID-19 pandemic, though the higher WCI-capped emissions that stemmed from this rebound were likely still below pre-coronavirus levels, according to state data released Tuesday.

March GWSA auction settlement crashes 95% versus previous sale

*Updates Tuesday’s story in CPD with details of the auction market monitor report published Wednesday*

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.

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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

Save for a rainy day – The European Commission has proposed obliging EU countries to fill up their gas stores at least 80% next winter and 90% in the following years, as well as introducing a new certification scheme to prevent manipulation of gas storage by foreign operators. The proposal comes before a two-day EU summit on Mar. 24-25 where leaders will debate energy security amid gas supply tensions caused by Russia’s war in Ukraine. Gas prices have increased sharply since the autumn, driven by a supply squeeze of pipeline gas coming from Russia, and insufficient storage levels, the Commission said. Storage sites supply 25-30% of gas consumed in winter and provide a buffer in case of supply disruptions. The revised regulation also seeks solutions for EU countries which don’t have gas storage available, requiring them to ensure domestic market participants have access to cross-border transmission capacity equivalent to 15% of the country’s annual gas consumption.

Save for a rainy day (part 2) – “Global and European energy markets are going through turbulent times, particularly since the Russian invasion of Ukraine. Europe needs to take swift action to ensure our energy supply for next winter, and to alleviate the pressure of high energy bills on our citizens and businesses. Today’s proposals are another step forward in our intensive work on this front,” said EU Energy Commissioner Kadri Simson in a statement. The Commission has also adopted a communication setting out the options for market intervention at European and national level, and assessing the pros and cons of each option, including creating a Task Force on common gas purchases at EU level. By pooling demand, the Task Force would facilitate and strengthen the EU’s international outreach to suppliers to help secure well-priced imports ahead of next winter.

British blue – The UK’s CCC advisory group on climate change to the government has published a briefing that outlines policy recommendations for blue carbon in the country. It said that the government should produce a roadmap to include saltmarshes and seagrass in the country’s GHG inventory. The body added that the interaction of marine and coastal ecosystems with wider catchments should be recognised in the design of initiatives to replace the EU’s Common Agricultural Policy, and opportunities for use of wider policy levers to deliver better management should also be pursued. Read Carbon Pulse’s previous coverage of blue carbon in the voluntary carbon market space.

Turkish delight – Campaign group Europe Beyond Coal has published a ‘Solar Potential of Coal Sites in Turkey’ report showing that approximately half of the country’s open-cast coal mines are suitable for conversion to solar farms. Taken together, they would boost the country’s solar capacity by 170% and produce enough electricity to power 6.9 mln homes, the non-profit said. The report found that the mines can play a vital role in decarbonising energy systems, and tackling the climate crisis. Separately, the Kahramanmaras Administrative Court has ruled in favour of residents and environmental groups and overturned the environmental impact assessment report on the proposed 1800MW Afsin C lignite-fired power plant in Kahramanmaras province. The court ruled the project should not proceed due to the impacts on agricultural production and air quality. The expansion of the existing Afsin plant was first proposed in 2008 but has encountered community opposition, legal challenges and waning interest from private investors. Most recently, the government-owned and managed Turkish Wealth Fund sought the involvement of seven Chinese companies to build and co-finance the plant. (CoalWire)

Germany’s Realpolitik – An immediate ban on Russian energy imports would trigger an economic recession in Germany and across Europe, German Chancellor Olaf Scholz warned Wednesday, POLITICO reports. Speaking to the Bundestag, Scholz said Germany would end its energy dependence on Russia in due course but cutting all ties now would leave the German economy unprepared. “We will end this dependence [on Russian oil, coal and gas] as quickly as we can, but to do that from one day to the next would mean plunging our country and all of Europe into a recession,” the Chancellor said, warning that “hundreds of thousands of jobs would be at risk, entire industries would be on the brink.”

Balkan plans – Bosnia and Herzegovina plans to put together a system for CO2 pricing and trading by Jan. 2026 to avoid paying the EU’s carbon border measure, said Branka Knezevic, head of the primary energy and policy department at the country’s foreign trade ministry, Balkan Green Energy News reported. According to Knezevic, the ministry has requested technical assistance from the Energy Community Secretariat and the World Bank is drafting a roadmap for introducing the CO2 taxing and trading system. The first activity of the ministry will be to prepare detailed information on the model for the country’s Council of Ministers by the end of the year. Read Carbon Pulse’s latest on Western Balkan nations committing to imposing carbon pricing by 2026, a timeframe matching the expected go-live of the EU’s border measure.

ASIA PACIFIC

Climate defenders – A roll call of senior ex-defence officers and security experts in Australia have put their names to an open letter naming climate change “the greatest threat to the future and security of Australians,” 9news reports. The letter, published on the Australian Security Leaders Climate Group website, called on political leaders to make climate change a primary focus ahead of the 2022 federal election. “The first duty of government is the safety and protection of the people, but Australia has failed when it comes to climate change threats,” the letter read. “Australia currently has no credible climate policy, leaving our nation unprepared for increasingly harsh impacts.” The signatories, including former ADF Chief Admiral Chris Barrie, said the current national objective of reaching net zero emissions by 2050 was “wholly inadequate.” “Decarbonisation must be reached as close to 2030 as possible,” he said.

Indigenous rights – Traditional owners in Australia’s Northern Territory say they have launched international legal action to try to block one of the biggest projects announced in the Australian oil and gas sector for almost a decade, ABC reports. Last year, Santos signed off on the A$4.7 bln Barossa offshore development, which includes a pipeline from a gas field in the Timor Sea to an existing LNG facility on Darwin Harbour. But some Tiwi Islander and Larrakia elders fear the project will have detrimental impacts on their sea country and marine life. They say they do not support the pipeline, which is proposed to run through a habitat protection zone near the Tiwi Islands, north of Darwin. Lawyers acting on their behalf have filed for an injunction in a Seoul court to try to prevent South Korean export agencies from providing almost A$1 bln in loans for the Barossa project.

Into the woods Bar a small number of government-led initiatives, Vietnam’s participation in the international carbon market has so far largely been focussed on the energy sector. That might be about to change as the south-central province of Quang Nam has asked for the national government’s permissions to develop and sell credits from forestry-based offset schemes, VNA reports. Quang Nam expects it will be able to generate around 1 mln forestry-based units annually.

Race to join Just over 50 more companies have over the past week agreed to sign up to the GX League, Japan’s incoming voluntary carbon market, the energy, trade, and industry ministry said in an update Wednesday. The total number now stands at 177 entities, with the deadline to register participation in the scheme’s first year falling on Mar. 31. Manufacturing industries continue to dominate participation with 57 entities involved, ahead of the information and communication industry (27), finance and insurance (17), and energy (16). Major utility Tokyo Electric Power Co. announced last Friday it would join the league.

AMERICAS

Tycoon lagoon – An energy company backed by Indonesian tycoon Sukanto Tanoto plans to spend $500 mln this year on a long-planned liquefied natural gas project in Canada, the clearest signal yet that it may move ahead with an LNG export facility on the country’s west coast.  Woodfibre LNG, backed by Tanoto’s Pacific Energy Corp., has yet to formally announce an investment decision. But Woodfibre President Christine Kennedy gave the spending details to local government officials in Squamish, British Columbia, on Tuesday, saying it wants to complete the 2.1 Mt/year project by 2027. (Bloomberg Quint)

AND FINALLY…

Sacre bleu! – Last year the French government, which was pumping billions of euros into keeping Air France afloat during the coronavirus pandemic, demanded a reduction in domestic flights where substitution by rail was feasible. As a result, domestic flights where the same journey could be completed by rail in under two-and-a-half hours would be banned. So on the link from Paris CDG to Lyon – served this Thursday, Mar. 24, by five domestic flights each way – you might expect the number to fall to zero. In fact, next week the frequency increases to six. Yes, not only are short domestic flights continuing within France – in some cases they are actually rising. (Independent)

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