CP Daily: Wednesday March 30, 2022

Published 03:00 on March 31, 2022  /  Last updated at 03:04 on March 31, 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: EU carbon trading slows as exchange costs, volatility, and macro concerns discourage participants

Trading in EUAs has slackened markedly this month as participants have moved to the sidelines after prices dropped by more than a quarter in a week, and sources suggest the slowdown may last for some time.

EMEA

FEATURE: The Energy Charter Treaty and how it risks EU climate efforts

EU nations’ ability to stick to Paris-aligned emission targets is being put at risk by a 24-year-old global treaty that may force them to pay utilities billions in compensation for ditching big-emitting facilities.

Euro Markets: EUAs give up week’s gain as natural gas surges on growing concerns of supply cuts

EUAs gave up two days’ worth of gains on Wednesday as traders reacted to a sharp increase in natural gas prices when Germany triggered an emergency plan to conserve the fuel, after the EU refused to accede to Russian demands that gas imports should be paid for in rubles.

ASIA PACIFIC

Asia seen to hold great untapped potential for VCM growth as climate pledges lag

The widening gap over the next decade between growing GHG emissions from Asia’s biggest emitters and the trajectory they need to be on to align with a 1.5C scenario means that the region has significant potential to be a key source for rapid growth in demand for carbon offsets, a conference heard on Wednesday.

Australia, IUCN funding vehicle issues call for blue carbon project proposals

A funding vehicle backed by the Australian government and conservation group IUCN is calling for funding proposals for blue carbon offset projects in developing nations.

Australia’s Santos to invest heavily in CCS and offsets to meet boosted emissions target

Australian oil and gas major Santos on Wednesday said it could spend up to $5 billion this decade on CCS and clean fuel hubs, while also accumulating nature-based offsets to use towards its climate target and to enable “carbon neutral” energy product sales.

AMERICAS

Pennsylvania lawmakers mount latest multi-pronged attempt to block RGGI regulation

Pennsylvania Republicans and some Democratic lawmakers this week made a last-ditch attempt to prevent the publication of Governor Tom Wolf’s (D) RGGI-aligned cap-and-trade regulation through both legal and legislative means.

Trudeau govt seeking to “future-proof” Canada’s federal carbon pricing programme

The Trudeau administration is looking to “future-proof” Canada’s carbon pricing programme against future governments that may attempt to lower or cancel it.

Carbon-negative “technofixes” should only play limited role in Canadian climate plan -law firm

Carbon-negative “technofixes” that aim to suck CO2 out of the atmosphere should play only a limited role in Canada’s future climate plans, a law firm has warned.

Latam subsidy scramble puts low carbon transition at risk, warn ex-ministers

Latin American governments are artificially lowering fuel prices for consumers in response to the energy crisis linked to the Ukraine invasion, former finance ministers told a panel on Wednesday, noting that these subsidies are likely to harm the region’s progress towards climate goals.

Speculators continue flocking to California-registered WCI accounts during Q1

The number of California-registered California Instrument Tracking System Service (CITSS) accounts ticked up during the first quarter of 2022, as a steady influx of speculators counteracted a number of covered entities closing their accounts, according to data from state regulator ARB.

VOLUNTARY

Corporates more willing to set long-term climate targets but fall short on specifics to meet 1.5C

Corporate players have demonstrated progress in pledging more ambitious long-term, high-level climate goals, but still lag in the setting of more detailed commitments to align their strategies with a 1.5C scenario, results from a survey of 166 companies by a climate investor action group has found.

UPDATE – Brexit architect Farage launches campaign to ditch UK’s climate plans, with offsetter advisory role on hold

(Mar. 7 story updated on Mar. 30 to reflect new information regarding Farage’s relationship with offset firm DGB)

Nigel Farage, one of the architects of Brexit, is calling for another UK referendum, this time on the country’s climate change plans, as reports surface that his advisory relationship with a Dutch offsetting firm has been put on hold.

INTERNATIONAL

Global power sector emissions hit record level in 2021 in turn back to coal

Global emissions from the power sector rebounded to reach record levels in 2021 as the world returned to coal-fired generation amid soaring post-pandemic demand that outpaced wind and solarpower growth, according to a report from a climate think-tank on Wednesday.

COMMENT

Response to IETA Council Task Group on digital climate markets

As the largest player in this nascent space, we feel it is necessary to respond to some of the concerns communicated by the IETA task group on digital markets, as well as highlight important areas of collaboration and innovation moving forward, with the ultimate objective of scaling climate action, write two of the core members in crypto carbon outfit KlimaDAO.

CORRECTION

Offset ratings firm Sylvera expands carbon credit pricing offering

(Corrects Tuesday’s article, which had wrongly said Sylvera’s ratings had been included on CBL platforms since October)

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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

The dark side – Signs are emerging that the amount of financing going to coal-related projects is running at a rate that’s more than double last year’s pace, Bloomberg reports. With the first quarter coming to a close, banks, mostly based in China, have helped coal companies raise $9.9 bln via loans and bond sales. For comparison, the number was closer to $4.4 bln during the first three months of 2021. While the biggest chunk of the coal money is being accumulated for Chinese coal endeavors, the increase nevertheless runs counter to all the global banking sector chatter about its supposed commitment to helping the world cut dangerous emissions. And there’s no more dangerous fossil fuel than coal—the single largest source of global temperature rise.

EMEA

Alarm bells – Following Russia’s demand to be paid for energy and fuel in roubles, Germany has declared an early warning of a possible gas supply emergency. The early warning measure is designed to prepare for the risk of disruption, or even the stop of natural gas flows from Russia. After discussion in government, Berlin has informed the European Commission that it has declared the first stage of the gas emergency plan, the so-called early warning stage, said Robert Habeck, energy and climate minister, early on Wednesday. The news marks the clearest signal to date that the EU is preparing for supply disruption following the enforcement of sanctions against Moscow after Russia invaded Ukraine. (Euractiv)

Cep-saving – Spanish oil and gas group Cepsa will spend €7-8 bln on shifting its business to low-carbon energy sources by 2030 and net zero emissions by 2050. New CEO Maarten Wetselaar wants sustainable businesses including low-carbon jet fuel and 2 GW of renewably-produced hydrogen to generate more than half the group’s core earnings by 2030, from around 14% in 2022, while building out 7 GW of wind and solar power. (Reuters)

Shell pleading – Energy major Shell has filed its appeal against a Dutch court ruling that ordered it to cut its emissions faster and reduce its absolute emissions by 45% by 2030 rather than its mid-term intensity goal, Reuters reports. Shell said at the time of the ruling that it would appeal. In a post on LinkedIn, Marjan van Loon, Shell’s Netherlands President, said the appeal was filed Mar. 22. Read Carbon Pulse’s report on the May 2021 court ruling.

Fortescue to the rescue – Germany’s largest energy group E.ON on Tuesday signed a MoU with the green power arm of Australian miner Fortescue Metals to explore shipping green hydrogen to Europe and help wean itself off Russian gas. The agreement with Fortescue Future Industries (FFI) will look at ways to ship up to 5 mln tonnes of hydrogen generated from renewables to Europe per year by 2030, the two companies said in a statement. That roughly corresponds to one-third of the heating energy Germany imports from Russia each year, or 165 TWh, FFI Chairman Andrew Forrest said. Overall, Russian gas accounted for 55% of German imports of the fuel last year. (Reuters)

Circular economy on the way – The EU Commission is proposing to update the EU consumer rules to empower consumers for the green transition. The updated rules will ensure that consumers can take informed and environment-friendly choices when buying their products. Consumers will have a right to know how long a product is designed to last for and how, if at all, it can be repaired. In addition, the rules will strengthen consumer protection against untrustworthy or false environmental claims, banning ‘greenwashing’ and practices that mislead consumers about the durability of a product. (European Commission)

ASIA PACIFIC

Underbanked – The Indian banking sector may simply be unprepared with business strategies to help achieve its new and ambitious climate targets, Quartz India reports. Twenty-nine of India’s 34 biggest banks have scored less than 10 out of 20 points on this front, according to a report from Climate Risk Horizons. These 29 represent a market capitalisation of 11.85 lakh crore rupees ($155.3 bln) as of Mar. 31, 2021. The report views this as a red flag on India’s preparedness for a carbon-neutral economy. “The fact that even large, media-savvy, public and private sector institutions such as SBI (State Bank of India), Union Bank, ICICI Bank, and others are performing so badly should be extremely worrying for investors, and something that the regulators must address,” the report said. The report also highlights the scarcity of public information needed to gauge the sector’s preparations.

Freedom energy – Australia iron ore billionaire Andrew Forrest has struck a potential A$50 bln green hydrogen agreement with German energy giant E.ON to produce up to 5 Mt of green hydrogen by 2030, Renew Economy reports. The landmark agreement could deliver one third of Forrest’s hugely ambitious plans to produce 15 Mt of green hydrogen annually by 2030, a target the head of his own green energy company Fortescue Future Industries, Julie Shuttleworth, thought was “very, very stretched,” but now says is quite achievable. Forrest signed a MoU with E.ON and the German government, and indicated it would include exports of renewable hydrogen from Australia. The target would likely require in the order of 60-70 GW of wind and solar capacity. Fortescue is seizing on the opportunities presented by the decision by Germany and other European countries to stop their dependence on Russian gas as quickly as they can. This deal would account for one third of those targeted hydrogen imports. Forrest described it as “Freedom energy” at a press conference.

AMERICAS

Lucy, football, etc. US Senate Energy Chair Joe Manchin appears open to renegotiating a climate and energy package from the ashes of the Build Back Better bill, and the key players in his orbit could offer some hints into what it’ll look like, Politico reports. The final package could include a boost for domestic oil and gas production as well as the biggest clean energy investments in the country’s history. Some of that funding could come from rolling back Republicans’ 2017 tax cuts and reformed prescription drug pricing. A methane reduction package akin to the fee championed by Senate Environment and Public Works Committee Chair Tom Carper is also on the table, with Carper and Manchin discussing possible compromises. Manchin indicated he is hoping to hammer out a package during the April-May Senate work period. The White House also signalled its support for a package by leaving a deficit-neutral reserve fund in its budget request Monday.

AND FINALLY…

DGB drama – Former Brexit champion Nigel Farage is in line to gain up to €18.5 mln from share options in a carbon offsetting company despite launching a campaign opposing the UK government’s net zero 2050 target. Farage, former leader of the UK Independence Party, announced in Mar. 2021 that he had become chair of the advisory board to Dutch Green Business (DGB). He was reportedly introduced to the company by his friend John Mappin, a pro-Putin heir to a jewellery fortune, scientologist, and anti-vaxxer, who together with his wife has a 30% stake in DGB, according to Bloomberg data. Farage was granted 1 mln share options at the general meeting of the company’s shareholders in September 2021, with a strike price of €1.50. The options can be redeemed if DGB’s share price leaps from its current €1 to €20, netting him €18.5 mln, an investigation by Greenpeace has established. But DGB CEO Selwyn Duijvestijn said the relationship with Farage has been on hold and is under review since last September. “We share a mutual passion for planting trees, but DGB disagrees with his recent comments on net zero,” he said, adding: “DGB has no relationship whatsoever with the Mappin family and does not in any way agree with their political views. We are distancing ourselves from them entirely.”  (FT)

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