CP Daily: Tuesday April 19, 2022

Published 03:29 on April 20, 2022  /  Last updated at 03:30 on April 20, 2022  /  Newsletters  /  No Comments

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

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TOP STORY

Pennsylvania to publish RGGI regulation this week, setting up Q3 entrance

Pennsylvania will publish its final power sector cap-and-trade rulemaking at the end of the week, which would allow the state to link with the RGGI market in July barring any setbacks from current or future legal challenges and legislative efforts to stop this process.

ASIA PACIFIC

China likely to introduce key ETS reforms in 2023 -govt advisor

China is set to introduce major changes to its national emissions trading scheme such as bringing in more sectors and begin auctioning of some CO2 permits from the 2023 compliance year, according to a leading academic who is advising the government on ETS design.

CN Markets: CEAs rise marginally, but outlook clouded by lack of supply, regulatory news

The spot price in China’s national carbon market remained firm over the past week, but traders lack enthusiasm about the near future as the market is seeing little action and no regulatory progress.

China thermal power generation decline in March amid increase in renewables, COVID outbreak

China’s thermal power generation declined last month for the first time since last December, while total generation growth dropped to near zero, official data showed Monday.

EMEA

Industry committee MEPs set to endorse EU ETS review, compromises suggest

The European Parliament’s cross-party industry committee (ITRE) is set to largely back a Brussels plan for reforming the EU ETS on Wednesday, according to compromise amendments crafted by senior lawmakers that leave some key sticking points to other MEPs.

European oil and gas majors outperform peers in gearing up for energy transition, assesment finds

European majors Shell, TotalEnergies, and Repsol lead their peers in managing climate risk and re-shaping their business models for a low carbon world, while some Asian players have boosted their rankings due to greater energy transition investment, an assessment that ranked the climate strategy performance of oil and gas corporates has found.

Euro Markets: EUAs edge higher in year’s narrowest daily range as compliance buying fades

EUAs resumed trading after the Easter break on a quiet note with prices gaining marginally on Tuesday, while energy prices sagged even as the latest monthly pipeline capacity auction showed no natural gas will come to Europe through the northern Yamal pipeline in May.

EU member states more than three-quarters of the way through 2022 EUA allocations -data

EU member states are now more than three-quarters of the way through the 2022 free carbon allowance allocation cycle, according to official data.

Nine more UK ETS trading accounts opened since mid-February

At least nine more non-compliance trading accounts have been opened in the UK Emissions Trading Scheme in the past two months, government data shows.

VOLUNTARY

VCM Report: Buyers continue shift towards nature-based units amid quality focus, crypto slowdown

Voluntary emissions reduction (VER) prices largely stagnated this week with the exception of nature-based units, as voluntary carbon market participants reported a continued shift away from lower-cost offsets from China and India.

ACR to distinguish improved forest management projects that generate “removal” credits

Carbon offset standard American Carbon Registry (ACR) on Monday announced it will begin labelling credits as CO2 “removals” through a new registry functionality, as well as allowing improved forest management (IFM) projects to generate units clearly tagged as removals or emissions reductions.

DIY crypto venture plans to issue 1 billion carbon credits

A US-registered crypto company plans to issue 46 million carbon tokens this year, rising to 1 billion over the next decade, without involving any third-party verifiers to assess projects.

VCM Integrity Council appoints Indigenous and Local Community leadership

The Integrity Council for the Voluntary Carbon Market (IC-VCM) announced on Tuesday the appointment of Indigenous people and Local Community (IPLC) representatives to its governing board and advisory board.

AMERICAS

Pennsylvania moves closer to publishing RGGI regulation after court dissolves stay

A Pennsylvania court on Monday rescinded its order that held up the publication of the state’s RGGI-modelled cap-and-trade regulation, though Republican legislators next month will still receive a hearing to consider their request to block the programme from taking effect.

US Biden administration presses on through criticism over climate action

The US President Joe Biden administration is hitting back this week on criticism over its failure to pass key climate provisions and accusations that it is not living up to its campaign promises or international commitments to tackle climate change.

WCI emitters reach net long CCA position for first time in 11 months

Regulated entities in the WCI cap-and-trade programme held a net long California Carbon Allowance (CCA) position for the first time since May, while speculators whittled down their holdings, according to US Commodity Futures Trading Commission (CFTC) data published Friday.

RFS Market: RINs reach 1.5-mth high on refiner buying, bean oil price surge

US biofuel credit (RIN) prices continued to rise on Tuesday as traders cited strong refining margins and an elevated bean oil-heating oil (BOHO) spread as reasons for the increase in the Renewable Fuel Standard (RFS) market.

INTERNATIONAL

ART approves Gabon application to TREES programme

The Architecture for REDD+ Transactions (ART) programme has approved a listing from Gabon to generate carbon credits which will be used to meet the terms of a forest management agreement with Norway.

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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

Pacific partners – California Governor Gavin Newsom (D) and China’s Minister of Ecology and Environment Huang Runqui on Monday renewed a Memorandum of Understanding (MOU) to advance ongoing cooperation on initiatives to protect the environment, reduce CO2 emissions, and promote clean energy development. The MOU, which renews a prior version signed by Governor Jerry Brown (D) in 2018, outlines continued exchanges between the two jurisdictions on emissions trading systems, expanding markets for clean transportation, and reducing short-lived climate pollutants. It also includes a new focus on strategies to achieve CO2 neutrality, nature-based solutions to mitigate climate change and protect biodiversity, and climate-resilient infrastructure investment and green finance.

ASIA PACIFIC

Emissions fall – Japan’s GHG emissions fell to a record low in the financial year that ended in Mar. 2021, government figures showed, a result of slower industry activities amid the pandemic and wider use of renewable energy, Asia Financial reports. The 5.1% decline marks seven consecutive years of declines. Emissions for 2020-21 fell to the equivalent of 1.15 bln tonnes of CO2e from 1.21 bln tonnes the previous year. The 2020-21 level was the lowest since 1990-91. In April 2021, Japan, the world’s fifth-biggest carbon emitter, raised its climate goal pledging to trim emissions by 46% from 2013 levels by 2030, up from its previous target of 26%. The 2020-21 figure represents a reduction of 18.4% from 2013 levels.

Coal buddies – Australian Labor leader Anthony Albanese has committed his government to supporting new coal mines, matching the pro-mining stance of the coalition government, as the opposition targets crucial regional seats for the upcoming federal election on May 21, The Age reports. Albanese’s move is a nod to Labor’s traditional blue-collar base as well as a bid to avoid a repeat of the 2019 election, according to The Age, when controversy over the Adani coal mine dogged former leader Bill Shorten. “If coal mines stack up environmentally, and then commercially, which is the decision for the companies, then they get approved,” he said in Queensland, a resource-rich state where Labor performed badly during the last federal election. “Labor would welcome any jobs that would be created from that.” According to the latest data from the Australian Bureau of Statistics, however, coal mining in Australia employed 34,600 people in the first quarter of 2022, a small fraction of Australia’s total labour force of around 13.4 mln.

SmartAg Fellowship – Western Australia is set to hold its first Climate Smart Agriculture Fellowship, designed to improve farmers, pastoralists, and landholders climate and carbon literacy. Farmers for Climate Action and AgZero2030 released a statement saying the six-week fellowship will allow up to 30 farmers to learn about challenges and opportunities in the carbon, energy, and climate space through locally specific adaptation and mitigation opportunities. Farmers for Climate Action has previously run the fellowship across Victoria, Queensland and South Australia, however it is the first time the programme is being run in WA. AgZero 2030 chair Simon Wallwork said the fellowship pulls together expertise in climate change, carbon farming, adaptation, insurance, and supply chains, to ensure participants have the information needed to make “proactive, climate smart decisions for our farms and in our communities.”

Exxon CCS – ExxonMobil has announced it has begun early front-end engineering and design studies for a potential CCS project in Gippsland, Victoria. Exxon said late last week that its South-East Australia CCS hub would initially use existing infrastructure to store CO2 in the depleted Bream field off the coast of Victoria. The company said it is in active discussions with local industries which may be interested in accessing the hub to reduce emissions from their operations. The project would capture up to 2 mln tonnes of CO2 per year and be operational by 2025, if all things went according to plan. A similar project jointly funded by the Victorian and federal government, dubbed CarbonNet, designed to inject CO2 in depleted oil and gas reservoirs in the Bass Strait, has been in development for some time. One exploration well for the project was drilled in 2019, however regulatory and environmental assessments by the state government will not occur until later this year and it is not expected to be operational until 2030.

Low carbon deal – Japan’s Inpex announced that it has signed a joint study agreement with Kansai Electric Power on zero carbon fuels and CCS, the energy company stated in a press release. Based on this agreement, Inpex and Kansai Electric Power will evaluate opportunities to collaborate on the realisation of businesses related to both zero carbon fuels and CCS. In February, Inpex set the goal of expanding its five net zero businesses and making its oil and gas business more resilient. Meanwhile Malaysian NOC Petronas has awarded a FEED contract to a consortium of companies for the Kasawari offshore gas CCS project, which aims to process 3.7 mln tonnes of CO2 annually from 2025, according to meconstructionnews.

Doing it later Chinese state-owned conglomerate CITIC Group has pledged to peak its CO2 emissions at around 50 Mt in 2030, but only after adding some 14% to the 43.8 Mt it emitted in 2020. In a climate action plan the company said it will pivot investments into low-carbon areas and deploy emissions reduction technologies at its industrial sites. CITIC owns two coal-fired power plants regulated in the national ETS with a combined CO2 output of 16.3 Mt, and also operates a steel producer with an annual CO2 footprint of 6 Mt that is covered by the regional ETS in Hubei province.

A first time for everything Oil company CPC Corp. on Monday held a ceremony for what it claims is Taiwan’s first carbon neutral petrol station, located in the city of Tainan. The station is mostly running on solar panels and LNG-based fuel cell batteries, with the rest drawn from the local grid. The station bought offsets from a Gold Standard-verified wind farm for the emissions it was unable to mitigate, but did not say how many. The announcement made no mention of whether Scope 3 emissions were included in the carbon neutral claim.

Tree tribulations – Pakistan’s ambitious tree-planting programme faces a major setback after prime minister Imran Khan was ousted by a no-confidence vote in parliament last week. The former cricketing star launched the first phase of the “Ten Billion Tree Tsunami” in 2019 to increase forest cover and mitigate the impact of climate change on the South Asian nation of 220 mln. The programme was progressing fast, with 1.5 bln trees planted by March this year against a target of 3.2 bln by 2023, but this could hit a snag. Climate action has not historically been a priority for incoming prime minister Shehbaz Sharif or the parties he will rely on to govern. (Climate Home)

AMERICAS

Quiet riot – Ontario’s government quietly revised and published its plan last week to meet the province’s 2030 climate target to cut emissions by 30% from 2005 levels. The new plan does not include any reductions from greater uptake of electric vehicles, which accounted for nearly 15% of mitigation in the previous 2018 plan. There was also no mention of the Ontario Carbon Trust initiative, a C$400-mln fund announced in 2018 that never materialised but could have helped the private sector develop clean technologies. Although Premiere Doug Ford’s government unveiled its 2018 environment plan with a splash, it did not issue a news release about its new emissions forecast. The new plan relies heavily on three actions to meet the target: greater renewable content in gasoline and other fuels, stricter emissions standards for heavy industry, and a shift away from coal-fired furnaces for steel production. These measures are already being regulated or spearheaded by the federal government, experts told CBC, with Ontario’s new climate strategy merely demonstrating a planned compliance to these initiatives. (CBC)

Climate considered – US President Joe Biden’s administration announced Tuesday that it is restoring parts of a bedrock environmental law, once again requiring that climate impacts be considered and local communities have input before federal agencies approve highways, pipelines, and other major projects. The administration has resurrected requirements of the 50-year-old National Environmental Policy Act that had been removed by President Donald Trump, who complained that they slowed down the development of mines, road expansions, and similar projects. The final rule announced Tuesday would require federal agencies to conduct an analysis of the GHGs that could be emitted over the lifetime of a proposed project, as well as how climate change might affect new highways, bridges, and other infrastructure, according to the White House Council on Environmental Quality. (NYT)

Will she stay or will she go? – White House climate adviser Gina McCarthy is planning to step down, two sources familiar with the deliberations told Reuters, which would end a tenure marked by ambitious emissions targets but failure in securing major US carbon-cutting legislation. McCarthy, 67, had initially planned to remain in the White House for about a year, hoping to help federal agencies implement President Joe Biden’s ambitious climate legislation, but those efforts stalled amid intraparty opposition from key Democratic senators. McCarthy has already delayed her departure, and told one Reuters source that she plans to leave as soon as next month.  McCarthy denied that she is stepping down. White House spokesman Vedant Patel said on Thursday: “This is not true and there are no such plans underway and no personnel announcements to make.” He added, “Gina and her entire team continue to be laser focused on delivering on President Biden’s clean energy agenda,” he said in an email. McCarthy, a former EPA administrator during the Obama administration, was selected by Biden to a new role leading domestic climate policy coordination at the White House. McCarthy leads inter-agency efforts to coordinate domestic climate change policy and serves as a domestic counterpart to John Kerry, who Biden appointed as his special international envoy on climate change.

Another lawsuit – A federal appeals court on Tuesday sent lawsuits by six California cities and counties accusing ExxonMobil, Chevron, and other energy giants of fuelling climate change back to state court after the US Supreme Court required it to take another look. The ruling by the San Francisco-based 9th US Circuit Court of Appeals made it the third federal appeals court to remand a climate change lawsuit after the Supreme Court last year gave the companies an opening to try to fight them in federal court. Circuit Judge Sandra Ikuta rejected the companies’ arguments that the cases raised substantial federal issues that belonged in federal court, adding that the statute that governs removing cases from state to federal courts must be interpreted narrowly. “Our adherence to this doctrine does not change merely because plaintiffs raise novel and sweeping causes of action,” she wrote for the three-judge panel. Chevron in a statement said it “looks forward to additional challenges that should put an early end to this meritless lawsuit.” The counties of San Mateo and Marin and the city of Imperial Beach in a joint statement said they were “eager to return to the state courts where we filed our cases more than four years ago.” California local governments including San Mateo, Marin, and Santa Cruz counties sued more than 30 energy companies beginning in 2017, alleging their production and marketing of fossil fuels contributed to global warming. The lawsuits claimed the companies, which also include BP and Shell, created a public nuisance, failed to warn about the risks of climate change and should be forced to cover the climate change costs the local governments face, such as infrastructure repair due to rising sea levels. The cases were filed in state courts, which are typically perceived as advantageous for plaintiffs. (Reuters)

Forever and Evers – Governor Tony Evers (D) and Wisconsin’s Office of Sustainability and Clean Energy on Tuesday released the state’s Clean Energy Plan. Among the immediate action strategies called for by the plan is exploring a market-based programme to reduce power sector emissions in America’s Dairyland, either through a carbon price or Clean Energy Standard, and explore efforts to enact a low-carbon fuel standard (LCFS) for the transportation sector. The plans stand little chance of coming into law through legislative means in Wisconsin’s’ General Assembly, which is heavily gerrymandered to favour Republicans, and Evers is up for re-election in November.

Grid goals – Utility giant National Grid is planning to eliminate fossil fuels from its heating systems in New York state and Massachusetts by 2050, primarily by expanding the use of electric heat pumps and sourcing more renewable natural gas (RNG), the company said Monday. National Grid plans to have New York and Massachusetts using 100% fossil-free gas by 2050, relying on a significant increase in use of RNG produced from farms, landfills, wastewater facilities, and imports instead of conventional natural gas. The utility is targeting 50% of buildings’ heating to come from electric heat pumps with energy sourced from sources like wind and solar. The other 50% would come from “fossil-free gas” and a hybrid of electric fossil-free gas systems, the company said. (Reuters)

EMEA

Fracking blowback – Fracking is still not an option for Germany, even in the light of an ensuing energy shortage if Russian gas supplies stopped flowing, economy and climate minister Robert Habeck told Funke Mediengruppe newspapers, Clean Energy Wire reports. Groundwater protection legislation would make fracking difficult to use and it would take years to establish production, he added, shrugging off some politicians’ calls for a review of the government’s policy of not exploiting new oil and gas reserves. Separately, Germany has released nearly €3 bln to acquire floating liquefied natural gas import terminals, the finance ministry said Friday, as it seeks to move away from dependence on Russian gas. Europe, and Germany in particular, is counting on LNG to reduce its dependence on Russian imports after Moscow’s invasion of Ukraine. Some 20 countries export this liquefied gas which is transported by ship, and whose three largest suppliers are Australia, Qatar and the US.

VOLUNTARY

Black Rock target – At least three quarters of BlackRock’s managed assets invested in corporate and sovereign issuers are expected to be invested in issuers with science-based net zero-aligned climate targets by 2030, ESG Today reports. CEO Larry Fink recently warned that the Russian invasion of Ukraine has caused an adjustment in global energy considerations, with energy security joining the list of priorities alongside the climate-driven energy transition, likely resulting in a near-term slowdown in progress towards net zero goals, but likely accelerating the long-term shift to cleaner energy sources, with several countries already indicating plans to turn to renewable energy sources to establish energy independence. In its 2021 TCFD report, published last Thursday, BlackRock reiterated these positions, including the statement from Fink’s 2020 letter that “climate risk is investment risk,” and that better long-term outcomes will be generated by investors that position themselves well with respect to climate risk and the energy transition.

EOR sore – Daimler trucks, eBay, and US energy company Merit Energy were among the recent buyers of nearly 3 mln carbon offsets created by three US projects involving enhanced oil recovery that ignored the emissions associated with the extracted oil from an ExxonMobil facility, the FT reports. Between 2000-08, under now-defunct offsetting rules, the three projects generated a combined 12.4 mln offsets. Although the schemes – developed by Merit and Bluesource – can no longer generate credits, companies can still buy those created before the change. Read Carbon Pulse’s analysis on the voluntary carbon market’s longevity problem.

Milkin’ it – Dairy giant Arla Foods is willing to pay European farmers extra for milk based on how many carbon-reducing activities they can tick off a company list. The reward program would cover about 20 variables, such as using natural additives in feed to cut methane emissions by cows or following precision farming techniques, Chief Executive Officer Peder Tuborgh told Bloomberg in an interview. The bonus amounts still need to be determined, and the plan could be implemented as soon as next year. The incentives, which are still being hashed out, are meant to help the Denmark-based co-operative achieve its target of reducing farm-level emissions by 30% this decade. The agriculture industry is being pushed to become greener, and Arla has committed to using fossil-free trucks, renewable sources of electricity and low-energy operations at its sites. “The more activities you do that reduce the climate impact, the better the milk price you get from us,” Tuborgh said. “We know it will make a huge difference to the farmers if they are financially motivated to do the right thing.” The Nordic region’s biggest dairy company also is researching how to remove carbon from the atmosphere using plantings and how to make energy production greener by converting manure into biogas or installing solar panels. Those actions could be included in the upcoming milk-price model.

SHIPPING

Mechanism moves – China and a powerful group of developing nations have proposed a new ‘International Maritime Sustainability Funding and Reward’ mechanism that promises to spur uptake of zero-carbon fuels, while fixing problems of cost and fairness. The market-based proposal, while less ambitious than some rival plans, marks a notable step towards decarbonisation by countries not known for their climate activism at the International Maritime Organization, the UN shipping agency. (Lloyd’s List)

PODCAST

Yale University is out with a special bonus episode of its Pricing Nature podcast, featuring an interview with science communicator Hank Green on how to talk about climate change.  It’s about climate communication in general, not carbon pricing specifically. Link: https://pricingnature.substack.com/p/bonus-episode-hank-green-on-how-to?s=w

AND FINALLY…

Walking down Scott Street, not feeling like a stranger – Republican Scott Pruitt, the scandal-ridden former head of the EPA, filed Friday to run for Oklahoma’s open US Senate seat, making a return to politics in a state with deep ties to the oil and gas industry. While Pruitt was Oklahoma’s attorney general, he filed more than a dozen lawsuits against the agency he was later picked to lead by former President Donald Trump. After arriving in Washington, he worked to dismantle Obama-era environmental regulations that aimed to reduce pollution and CO2 emissions. Pruitt stepped down as EPA administrator in 2018 amid a wave of ethics scandals, including living in a bargain-priced Capitol Hill condo tied to an energy lobbyist. He also faced ethics investigations into pricey trips with first-class airline seats and unusual security spending, including a $43,000 soundproof booth for making private phone calls. He also demanded 24-hour-a-day protection from armed officers, resulting in a swollen 20-member security detail that blew through overtime budgets and racked up expenses of more than $3 mln. (AP)

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