CP Daily: Monday April 11, 2022

Published 03:14 on April 12, 2022  /  Last updated at 03:14 on April 12, 2022  /  Newsletters  /  No Comments

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

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TOP STORY

POLL: Analysts nudge up 2022 EUA forecasts despite uncertainty, see bigger gains from 2023

Analysts have nudged up their short- and medium-term EU carbon price forecasts despite the recent crash and ongoing geopolitical risk, while giving a bigger boost to their long-term outlook for EUAs due to more coal burn in Europe and increased policy certainty.

EMEA

French climate policy hangs in the balance following first presidential vote

French energy and climate policy faces an uncertain future as the country opted to elect either Emmanuel Macron or Marine Le Pen as its next president in a first vote on Sunday, with neither candidate seen as having put forward manifestos that align with international climate targets.

Euro Markets: EUAs slide in thin Easter trading as energy markets continue to seek direction

EUAs drifted lower in thin trade despite a strong auction as the Easter holiday period drained the market of liquidity, while energy markets were mostly weaker even as Japan sought to boost natural gas stocks and the risks of interruptions to Russian gas supplies remained elevated.

Switzerland misses 2020 GHG target despite pandemic, relies on offsets for UN goal

A coronavirus-induced drop in output wasn’t enough to ensure Switzerland met its 2020 emission reduction target, according to the Federal Office for Environment, adding that the country will meet its international climate obligations once its offset purchases are taken into account.

ASIA PACIFIC

Japan business group calls for mandatory carbon pricing

A group of over 200 Japanese businesses has called on the government to implement mandatory carbon pricing and large investments in renewables, arguing that the country’s planned voluntary emissions market will be insufficient to meet climate targets.

China includes carbon in broad announcement on unified markets, leaves market guessing

China’s central government has released guidelines on accelerating the construction of a number of unified markets, including energy and carbon, but a lack of detail left carbon traders unsure what to make of it.

Australia’s ERF contracts 7.6 mln ACCUs at latest auction as prices rise

Australia contracted to buy some 7.6 million offsets at last week’s Emissions Reductions Fund (ERF) auction, the Clean Energy Regulator announced Monday, but the regulator expects the bulk of the credits to feed into the voluntary spot market as all the contracts were optional.

VOLUNTARY

VCM Report: Nature-based VERs continue rebound after bearish ‘blip’ in March

Prices for nature-based exchange-traded, standardised voluntary emissions reduction (VER) contracts continued to rebound over the last week as buying interest remained strong for a second consecutive week in April after a bearish March.

C-Quest Capital secures Dutch funding to ramp up African cookstove offset portfolio

Offset developer C-Quest Capital (CQC) has secured further investment to help scale its rollout of clean cookstoves across Sub-Saharan Africa, the company said on Monday.

UAE firm launches collaboration to set up online carbon exchange in Africa using blockchain

A Dubai-based firm has launched an initiative to establish a blockchain-based online carbon credit exchange in Africa, in partnership with a Singapore technology group and a non-profit organisation focused on African climate projects, it announced on Monday.

Bluesource, Star Royalties announce scale-up in funding for ag sector VER programme

North American carbon credit developer Bluesource and precious metals and green royalty and streaming investment company Star Royalties have announced a fourfold expansion of their plans to generate millions of voluntary emissions reductions (VERs) from a regenerative agriculture programme.

AMERICAS

Canada’s provinces face pressure to increase carbon cost for industrials

Canada’s industrial carbon pricing regulation is increasingly coming under the public spotlight for its low carbon costs, putting additional pressure on the federal government to increase ambition as provinces push for equivalency status ahead of key elections.

Nova Scotia carbon allowance supply reduces 10% for June auction

The permit volume on offer for the Nova Scotia cap-and-trade auction in June marks a step down from the previous sale, according to a notice published Friday, in what could be the penultimate auction before the Canadian province switches CO2 pricing approaches.

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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

Learning lessons – Consultancy Perspectives has published a discussion paper on capacity building for Article 6 cooperation for the Carbon Market Mechanisms Working Group, a Germany-funded initiative. The paper aims to outline lessons learned from capacity building efforts in the context of the Kyoto Protocol’s market mechanisms, especially the CDM, to conceptualise capacity building and to discuss the challenges and success factors of capacity building, in particular of capacity building support provided to developing countries, through North-South, South-South, and peer-to-peer approaches.

EMEA

Time for a rethink – EU ETS reforms under the bloc’s Fit for 55 package should be adapted to the drastically changed energy landscape caused by Russia’s invasion of Ukraine, according to Jos Delbeke, the European Commission’s former top climate official and a key architect of the bloc’s cap-and-trade system, Bloomberg reports.  Delbeke said overall ambition should be maintained but the effort should be spread equally over the decade not frontloaded. He said the extension of the current higher MSR withdrawal rate, cancellation of MSR-held units, and one-off unit cancellation were all elements that could create or exacerbate price spikes. Delbeke called the current price near €79 “useful” and advocated efforts to broadly achieve a €60-90 range.

Wood-to-coal – Danish energy company Orsted is building its coal stockpile in anticipation of burning more of the fuel next winter, just as the EU approved a ban on Russian coal imports as part of a fifth round of sanctions, the FT reports. Boss Mads Nipper told the newspaper that a global shortage of wood pellets meant the company was likely to temporarily increase its use of coal later in the year but added that the firm’s plans to close its remaining coal-burning facility next year remained unchanged. Six of Orsted’s nine Danish plants run primarily on wood pellets; two run on gas; and one runs on coal.

Benz the curve – German carmaker Mercedes-Benz aims to halve its CO2 emissions by 2030, the carmaker said on Monday, providing a half-way goal to its existing target of becoming CO2 neutral by 2039. The company will also work towards covering 70% of the energy it needs for production with renewable energy by 2030, up from 45-50% at present, it said. Around 15% of this energy should come from solar and wind plants on or linked to Mercedes-Benz’ own sites, with the rest sourced through PPAs. (Reuters)

Drilling on – Norwegian oil producer Equinor has discovered oil and gas close to its existing North Sea operations. Based on preliminary estimates, the discovery is the size of 25-50 mln barrels of recoverable oil equivalent. Temporarily called Kveikje, this is the sixth discovery in this area since the autumn of 2019. Up to more than 300 mln barrels of oil equivalent were proven in the five former discoveries. (Norway Today)

Permission not granted – The number of construction permits issued for new German onshore wind turbines in the first three months of 2022 fell 14% compared to the same period last year, wind energy industry association BWE said. The upward trend we have seen since last year is clearly losing momentum in the first quarter of 2022, the association said. Between Jan-Mar. 2022, 204 turbines with a joint capacity of 1.04 GW received their permit while few were given out to projects in Germany’s southern states that are in most need of increasing capacity.

Trialwinds – Up to three quarters of the electricity flowing onto the Irish grid at any point in time can now come from variable renewable sources, according to a study by national grid operator EirGrid. The Ireland and Northern Ireland power system is the first in the world to reach this level, overcoming the major technical challenges associated with integrating electricity from wind farms, solar farms, and interconnectors that link it with other countries. EirGrid had previously imposed a cap of 70% on the amount of variable renewable generation on the grid at a given time. This has now been raised to 75% following a successful 11-month trial. The grid successfully ran at between 70-75% variable renewable energy for a total of 232 hours during the trial period. (ReNews)

Free gas – Portugal’s government announced a non-refundable subsidy to gas-hungry companies, such as those in the cement, steel, and glass industry, to cover 30% of the increase in their bills spurred by Russia’s invasion of Ukraine. Economy minister Antonio Costa Silva said all companies whose gas costs are equal to at least 2% of their turnover and which saw, since February, their bills double compared to a year ago, were eligible to ask for the subsidy. The government will initially allocate €160 mln to this first package to preserve their productive capacity, as much as possible, he said. Each company will be able to receive a maximum subsidy of €400,000. Gas is trading at around five times higher YoY.

ASIA PACIFIC

Projects vanish – Funding for major energy projects in Australia, which were dependent on passing legislation, have evaporated as the Morrison government goes into caretaker mode ahead of the national election on May 21. RenewEconomy reports that the 46th parliament has been dissolved without passing several of its promised reforms or governance regimes, and failing to pass legislation establishing long-promised funding initiatives to new energy infrastructure. The government’s A$1 billion ($742 mln) Grid Reliability Fund, for example, lapsed on Monday without it ever being put to a vote in parliament. The government intended to use the fund to support new energy projects, with 12 shortlisted, in partnership with state governments. Another example is the A$500 mln Low Emissions Technology Commercialisation Fund, which the government announced during the COP26 climate talks in Glasgow, which was designed to attract $500 mln in in-kind private support in emissions reduction projects.

CCUS partnership – Japanese trading house Mitsui and Indonesia’s state-owned refiner Pertamina have started a joint feasibility study on CCUS, with a target of commercial operations during 2025-29, Argus reports. The companies are considering examining Pertamina’s depleted oil and gas fields in Indonesia’s Rokan oil block in central Sumatra, including the Duri and Minas oil fields. The integrated project aims to build CCUS value chains in Asia-Pacific, including CO2 capture and its transportation. The CO2 will come from industry and power sectors in Indonesia, as well as being shipped from outside Indonesia including Japan.

ICAP heads east – Intergovernmental carbon markets association ICAP has launched a call for applications for the upcoming ICAP “Regional Training Course: Emissions Trading in Asian Countries.” The 2-week long course will take place online from May 16-26 and is hosted by Ecologic Institute and Get2C. For more information, please find the call for applications attached. To apply, fill out this form by May 2.

AMERICAS

Thirty cents – The Irving Oil refinery and a group of other large facilities in New Brunswick that released up to 3.84 mln tonnes of CO2 in 2019 are facing federal carbon charges on less than 2% of that amount, according to recent figures released by Environment and Climate Change Canada. National carbon pricing in Canada began in 2019 at a price of C$20 per tonne, but emission levels and charges to large industrial and other operations for that year have only recently been finalised and publicly released. Revenue from large New Brunswick facilities for that year, not including power generating stations, is listed at $900,000 which is equivalent to levying the carbon charge on just 45,000 tonnes of emissions, or 1.2% of the province’s large industrial emissions. It is also equivalent to charging less than 30 cents per tonne on the group’s total emissions. Large industrial emitters fall under Canada’s Output-Based Pricing regulation which applies the carbon price to the portion of emissions exceeding a sector specific benchmark. “There’s a lot of emissions coming out of there and we’re not pricing them,” Dave Sawyer, an economist with the consultancy EnviroEconomics said. “On an average cost basis, we’re not pricing them … There’s an open question about whether or not, you know, is that the right benchmark?” (CBC)

Enough time? – Canada has less than nine years to design and implement most of the policies contained in its recently tabled Emissions Reduction Plan, according to an article penned for Corporate Knights magazine by senior analysts at the Canadian Climate Institute. The authors noted that 43% of the needed reductions in CO2 are outlined to come from policies that have been announced in principle but have not yet been developed, gone through public consultation, or made their way through the lengthy regulatory process. The authors note that key policies such as the oil and gas sector emissions cap, clean electricity standard, and clean fuel standard will need to be designed and implemented at speed in order for the nation to hit its international target of a 40-45% in GHGs by 2030 compared to 2005 levels. “As Canadian climate policy wonks know all too well, the process of regulatory consultation and design takes time,” the authors note.

Blame game – A significant majority of Americans blame Russian President Vladimir Putin for the recent spike in prices at the pump, but almost as many blame oil companies, according a new ABC News/Ipsos poll released Sunday and reported by Politico. When asked about the sizeable increase in fuel prices in 2022, more than two-thirds of those polled blamed Putin — 71% — and oil companies — 68% — either a “great deal” or a “good amount.” Only 8% found Putin to be blameless in this matter; the same was true of oil companies. Finger pointing with regard to the cause of high gas prices as well as overall inflation is likely to dominate the midterm elections this fall, with 51% of those polled also placing blame on President Joe Biden and the policies of the Democratic Party for the higher fuel prices. In contrast, a third of those polled blamed the policies of the Republican Party and a quarter put some blame on former President Donald Trump.

VOLUNTARY

Coining it in – ClimateCoin, the creator of the world’s first regulated digital carbon asset, has announced Javier Manzanares as co-CEO of the crypto company. He will share the title and responsibilities with Pedro Ramon Lopez Garcia, co-founder of ClimateCoin and blockchain carbon marketplace ClimateTrade. The firm said the addition of Manzanares will enable ClimateCoin to further expand into the US market and deliver the multiple  benefits of ClimateCoin to a global base of companies, organisations, and individual investors. Manzanares joins from the Green Climate Fund, where he served as deputy executive director for eight years and has an investment banking background. ClimateCoin is planning to soft launch its Clima(T) governance token at an event in Miami on April 23.

SCIENCE & TECH

Hydrogen warning – A study released on Friday by the UK government’s business ministry BEIS has found that hydrogen is twice as powerful a greenhouse gas as previously thought, Recharge reports. The report explains that H2 is an indirect greenhouse gas, which reacts with other GHGs in the atmosphere to increase their global warming potential (GWP). “While hydrogen-induced changes in methane and ozone in the troposphere [the lowest layer of the atmosphere] have been considered previously, we have also considered, for the first time, previously ignored changes in stratospheric [that is, in the second-lowest layer of the atmosphere] water vapour and stratospheric ozone in our calculations of hydrogen’s GWP,” explain the authors. The report, which was commissioned by BEIS, continues: “The majority of uncertainty in the GWP arises from uncertainty with regard to the natural budget of atmospheric hydrogen, where the magnitude of the soil sink for hydrogen is the most uncertain factor. Future work is required to resolve these atmospheric uncertainties.” This all means that leaks from hydrogen pipes and equipment must kept to a minimum. “Any leakage of H2 will result in an indirect global warming, offsetting greenhouse gas emission reductions made as a result of a switch from fossil fuel to H2,” the study points out.

AND FINALLY…

Choo-choo blues – Britain’s 150+ tourism-based heritage railways are running out of steam. Or, to be more precise, coal. Vintage rail operators across the country – which witnessed the birth of the steam train age in the early nineteenth century – have warned that their stocks are now dangerously low and the prospects of replacing them in the near future look bleak given that their next planned supply source was heavily sanctioned Russia. Welsh mine Ffos-y-fran was the last to supply heritage rail lines with lumped coal but has now halted its supply before its total closure later this year as part of UK net zero targets. Alternative smokeless fuels are still in the testing phase. (The Guardian)

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