CP Daily: Friday April 8, 2022

Published 05:37 on April 9, 2022  /  Last updated at 05:37 on April 9, 2022  /  Newsletters  /  No Comments

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

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TOP STORY

Indonesia withholds 2021 voluntary credits amid regulatory changes

The Indonesian government is temporarily holding off on issuing 2021 vintage credits to carbon credit developers, cutting off supply from one of the voluntary carbon market’s biggest host nations as uncertainty swirls around how the country will regulate projects in the country.

EMEA

PREVIEW: French presidential candidates sideline climate ahead of vote

Almost all of the 12 candidates to become the president of France on Sunday fail to prominently address climate in their election manifestos, with just one contender considered to have a programme aligned with international and European climate targets in their effort to lead the EU’s second biggest economy.

EU fossil generation rises 10% YoY in Q1 as coal surges to replace hydro, nuclear

Fossil fuel-based power production across EU nations increased by an estimated 10% in Q1 2022 compared to a year earlier as coal-fired generation stepped into replace weak nuclear and hydro output, putting the European power sector on a strong emissions trajectory in 2022 that would boost EUA demand.

Euro Markets: EUAs post 2% weekly gain amid thin volume as energy drifts on ample supply

EUAs gave up early gains amid light trading as participants pointed to the beginning of the Easter break, while gas markets weakened amid healthy supplies as Europe and Japan both agreed to ban imports of Russian coal.

Another carbon ETF adds UK Allowances to holdings

Another exchange-traded fund tracking global carbon markets has added UK Allowances (UKAs) to its holdings.

Senior EU carbon analyst rejoins ICIS as head of energy analytics

A senior European carbon and power analyst has rejoined ICIS to head up its energy analytics, Carbon Pulse has learned.

ASIA PACIFIC

CN Markets: CEAs lift moderately on bullish draft plan, but traders await confirmation

Allowance prices in China’s national emissions trading scheme edged up slightly this week on signals the government might make significant cuts to allocation, but a lack of confirmation and the long lead-time to the next compliance deadline tempered the market response.

Australian offset regulator announces fit and proper person guidance

The Australian Clean Energy Regulator has published new guidance outlining what it considers a fit and proper person (FPP) to be a carbon market project proponent in the Emissions Reduction Fund, in a bid to help restore confidence in the market.

Woodside merger with BHP oil unit will help “navigate” energy transition but risks come with offset reliance, shareholders told

Australian oil and gas producer Woodside’s merger with BHP’s petroleum unit will enhance its ability to navigate the energy transition though it will rely heavily on offsets to meet climate targets, the company said on Friday, as it released a slew of documents recommending that shareholders approve the deal in a vote on May 19.

Asia should pivot from LNG to renewables to realise energy security, climate goals, report says

Key Asian economies should pivot from their reliance on LNG towards renewables to protect themselves from energy price volatility and geopolitical supply shocks as they seek to deliver on their net zero goals, a report released on Friday said.

VOLUNTARY

UK govt to fund new regional Mexican voluntary carbon market

The British government will fund a voluntary carbon offset market across four Mexican states with the aim of potentially scaling up into a compliance-based mechanism, a conference heard Friday.

Better voluntary carbon market oversight on its way, say experts

There is limited authoritative oversight of the voluntary carbon market, but both private-led initiatives and governments are beginning to show interest, according to participants at the North American Carbon World (NACW) conference in Anaheim, California.

AMERICAS

Regulated parties, financials add to California carbon holdings

Compliance entities came closer to holding a flat California Carbon Allowance (CCA) position this week, while speculators slightly boosted their net long, according to US Commodity Futures Trading Commission (CFTC) data.

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CONFERENCES

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

Desertec reloaded – The Desertec project, which garnered major hype in the German solar power industry around 2010 but was later largely abandoned, is being resurrected in a slightly altered form as a result of Europe’s push for greater energy independence from Russia, Focus Online reports. This time, the idea pushed by the EU would not be to transmit electricity generated with large solar plants in the Sahara desert to Europe, but to produce green hydrogen in northern Africa and Spain. The EU would have to invest about €80 bln in infrastructure to replace half of its Russian gas imports with roughly 20 Mt of hydrogen, which could be financed through rising prices on carbon emissions, according to Focus Online. The solar-power-from-the-desert project by Siemens, RWE, and Deutsche Bank was abandoned in 2015 due to political risk in North Africa and the fact that solar power production in Europe had expanded rapidly in recent years. Africa has been a focus region for Germany’s efforts to install a global network for supplying green hydrogen that can replace fossil fuels in sectors that are otherwise difficult to decarbonise. (Clean Energy Wire)

EMEA

Coal ban – The EU on Friday formally adopted its fifth package of sanctions against Russia since the country’s Feb. 24 invasion of Ukraine, including a bans on the import of coal, cement, cement, and fertilisers, Reuters reports. No new coal contracts can be signed from today while existing contracts will have to be terminated by the second week of August – talks on the ban dragged on this week after Germany reportedly sought a longer lead-in time for the coal ban.

Helping hand – Berlin has agreed on a support package for German businesses affected by the war in Ukraine and sanctions against Russia – such as rising energy prices, Clean Energy Wire reports. However, the government could not suspend market forces forever or set wrong incentives with respect to the use of fossil energies, it said. Economy and climate minister Robert Habeck said the energy price rises would have dramatic consequences for some businesses. However, it would not be possible to shield companies from all damaging effects resulting from the war and sanctions imposed on Russia would always mean simultaneous negative effects at home. Habeck said the support package would include credits worth €7 bln disbursed by state-owned development bank KfW to secure the liquidity of the companies in the short term. Should things get worse, the government is also preparing a programme to temporarily cushion the gas and electricity price increase for particularly affected companies in the form of a temporary and narrowly defined cost subsidy. Energy cost support would be made available to businesses whose energy bill had inflated by more than 100% compared to 2021.

Compo creep – Following the UK government’s extension of compensation for ETS indirect costs to heavy industries in its energy security strategy this week (read Carbon Pulse’s report), the UK’s business ministry outlined further details in a statement. It noted that the available budget would more than doubling to support energy intensive industries, with payments to be made at the end of each quarter and full details of eligibility to be “published in due course”. In the wake of the energy security strategy, the UK government today also underscored its £375 mln support package to help meet its aims – with £240 mln going to clean hydrogen, £2.5 mln for next-generation nuclear, and £5 mln for CCS research.

ASIA PACIFIC

West invests – Western Australia’s state government has committed A$11 mln ($8.2 mln) to seven regional projects as part of the second round of its Clean Energy Future Fund. The fund is designed to support innovative clean energy projects and technologies that support greenhouse gas emission reduction, the government said today. The seven projects includes a big battery in Port Headland, a geothermal drilling campaign in the Mid West, a renewable diesel project in Narrogin and a microgrid project in the town of Moora. The state government expects the project developers to invest a total of around A$197 million in Western Australia and avoid around 132,000 tonnes of carbon emissions each year.

CSIRO cash splash – Australia’s peak scientific body, CSIRO, will commit A$50 mln over the next five years to tackle energy storage, carbon locking and the bioeconomy. The funding will come from the body’s A$200 mln Future Science Platforms. The CSIRO describes carbon locking as using biology, chemistry and engineering to drive innovation in carbon capture and carbon storage science. Permanent Carbon Locking director Dr Andrew Lenton said the research would focus on accelerated atmospheric carbon removal and permanent carbon storage, and integrating these in novel ways.

AMERICAS

Electric emphasis – Massachusetts state senators unveiled a suite of concrete climate change regulations tallying more than $250 mln Thursday that they consider vital for ensuring the state achieves net zero carbon emissions by 2050, including incentives to bolster the transition to electric vehicles and all-electric building construction. The bill calls for the creation of a $100 mln Clean Energy Investment Fund to spur infrastructure developments, with separate proposals making it easier to seek financial assistance for “cutting-edge technologies,” including nuclear fusion, networked geothermal, and deep geothermal energy. There’s also a proposed $100 mln Electric Vehicle Adoption Incentive Trust Fund in the bill, plus $3,500 rebates – an increase of $1,000 from the current provision – for zero-emission cars and light-duty trucks. Rideshare companies like Uber and Lyft would need to comply with stricter emission-reductions rules, and the bill also requires the MBTA fleet to be fully electrified by 2040. (MassLive)

La belle provider – Quebec energy company Utica Resources is asking the province to halt the adoption of a bill that would stop all oil and gas exploration in Quebec. The company has written to elected members of the National Assembly asking them to vote against the bill, which has reached the final stages of the legislative process. The company holds hydrocarbon permits issued by the government. If the bill becomes law, the company could be compensated to give them up. Utica President Mario Levesque says Quebec, with its untapped gas reserves, should instead send its supply to Europe as an alternative to Russian oil. According to him, Quebec could meet up to 20% of Europe’s natural gas needs currently supplied by Russia. He says the province could begin exports within 18-24 months. (Canadian Press)

VOLUNTARY

Zombie resurrection – Some 28% of the voluntary carbon credits bridged onto the blockchain by tech firm Toucan Protocol – some 6 mln units – come from so-called ‘zombie’ projects that were formerly defunct and only came back to life due to the new demand from cryptocurrency activity, according to a report by non-profit research organisation CarbonPlan. The group argued that this undermines Toucan’s mission to ‘sweep the floor’ of the market for the cheapest credits, thereby raising prices to stimulate new project activity. Read Carbon Pulse’s extensive reporting on crypto activity in the voluntary carbon market over the past six months.

AND FINALLY…

Hero to zero – The Dutch advertising watchdog has ruled that a KLM promotion telling the airline’s customers they could fly carbon-emissions free is misleading. The ad’s tag line, “Be a hero, fly CO2 zero,” is an absolute claim, the Dutch Advertising Code Committee said in a verdict seen Friday by Bloomberg. As such, the company has the burden of proving the statement and didn’t meet that test, the committee said. While the ruling is limited to only one carrier, it touches on broader pressure on airlines to lower their carbon footprint and ‘flight-shaming’ campaigns to get people to stopping flying. Commercially viable alternatives like electric and hydrogen powered jetliners are at least a decade away so carriers are relying on measures like carbon offsetting to reduce impact.

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