CP Daily: Tuesday April 26, 2022

Published 00:43 on April 27, 2022  /  Last updated at 00:43 on April 27, 2022  /  Newsletters  /  No Comments

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

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TOP STORY

EU lawmakers may seek to toughen ETS reforms as a way to kill ETS2

Plans to launch a new EU carbon market covering buildings and transport are likely to be rebuffed by European Parliamentarians in favour of even sharper reforms of the current ETS, a senior lawmaker said on Tuesday just three weeks before a key parliamentary committee is due to forge its position.

EMEA

Momentum builds among MEPs for curbs on speculative trading in ETS

EU lawmakers are weighing up the possibility of introducing limits on speculative trading in the EU ETS, though they acknowledge that there is a role for intermediaries to service compliance participants in the carbon market, a leading MEP said on Tuesday.

Euro Markets: EUAs give up early gains on suspension of gas flows to Poland

EUA prices gave up early gains on Tuesday when gas prices leaped on reports that Russia has suspended gas flows to Poland, and a leading MEP raised the possibility that speculative trading in the EU ETS may be limited under reforms being worked out by the European Parliament’s environment committee.

EU carbon market volume surges to fresh record as volatility further increases -report

EU ETS trading volume rose year-on-year by 13% in 2021 to an all-time record as auction participation remained stable and volatility further increased from 2020, according to a report published on Tuesday.

VOLUNTARY

FEATURE: Bahamas and others step in from the sidelines of voluntary carbon market

The Bahamas has proposed legislation that will chart a course for the Caribbean nation’s participation in the voluntary carbon market, a move that follows other legal frameworks emerging from host countries and raises questions on how these play into the unregulated market’s norms.

Nature-based offset prices seen climbing through inflationary headwinds, say experts

Voluntary carbon market prices could diverge further this year as demand for nature-based carbon credits is seen riding out the inflation-hit global economy while some technology-based units are weighed down by a supply glut, analysts and bullish investors told panels on Tuesday.

Emsurge originates first carbon trade, concluded on CBL exchange

Over-the-counter online trading platform Emsurge Carbon Marketplace has originated its first deal, it announced Tuesday, the latest provider seeking to facilitate trade in the fast-growing voluntary carbon market.

Singapore bank partners with digital exchange to set up tokenised carbon credit offering

A Singapore-headquartered bank has teamed up with a regulated digital exchange to offer tokenised carbon credits that the bank’s customers can use to offset their greenhouse gas emissions.

Non-profit body under pressure to drop green label for cement-making fuel

Pressure is mounting on an influential non-profit group to drop its classification of burning waste as an “alternative fuel” in cement kilns, with environmental campaigners claiming that millions of dollars meant for climate mitigation will instead prop up one of the world’s most climate-polluting industries.

AMERICAS

Coal industry sues to prevent enforcement of Pennsylvania RGGI regulation

A collection of Pennsylvania coal-fired power plant owners and labour organisations on Monday filed a court challenge to prevent the state’s newly published RGGI-modelled cap-and-trade regulation from taking effect, arguing the programme is an unconstitutional tax and falls outside existing authority.

Federal watchdog says Canada’s carbon pricing policy needs further improvements

Canada needs to increase its stringency requirements for subnational CO2 pricing systems for industry and foster better public reporting practices to help the country hit its 2030 emissions target, according to a report released Tuesday by the Commissioner of the Environment and Sustainable Development.

ASIA PACIFIC

India edges closer towards setting up national carbon trading market

India plans to set up a uniform carbon market framework within a year to help finance its energy transition and emissions reduction goals, local media reported on Tuesday.

Australian Nationals Party says net zero is dead, as Labor clarifies Safeguard Mech

MPs with Australian Coalition government partner the Nationals Party are undercutting the country’s net-zero emissions by 2050 commitment made last year, while confusion remains about how Labor’s expanded Safeguard Mechanism would work.

South Korea ramps up support for ETS companies

South Korea on Tuesday announced a $8-billion plan to cut carbon at one of the facilities in its emissions trading scheme, as it is quadrupling its annual spending in support of ETS entities.

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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

IETA European Climate Summit 2022 – May 24-25 in Barcelona: Join us for the 4th edition of this IETA-led European summit, bringing together leading private sector experts and policymakers from both the carbon and energy world, to analyse and discuss the current state of play, and what’s next for compliance and voluntary markets.  Why attend?  1. gain a comprehensive understanding of current and forecast carbon market drivers and developments; 2. how are we implementing our transition to a net zero economy, both on the ground and through policy; 3. understand the pricing evolution, risk profile, and investment opportunities across the compliance and voluntary carbon markets; 4. what/how/why of digital climate assets. www.europeanclimatesummit.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

Shrinking pipeline – Global coal plant capacity in the development pipeline shrank 13% in 2021, according to Global Energy Monitor’s (GEM) eighth annual survey, although the non-profit research outfit also warned that steeper cuts are needed to achieve climate goals. GEM said total coal power capacity in the development pipeline declined last year from 525 GW to 457 GW, a record low – where this pipeline includes capacity in the announced, pre-permit, permitted, and construction stages, and includes capacity that may not actually be built. There was, however, an increase in net additional coal capacity that began operating in 2021, which is the sum of new capacity commissioned minus capacity retired. It increased by 18.2 GW, up from an increase of 11.5 GW in 2020. But when China is excluded, GEM data showed that there was actually a net reduction in operating coal capacity in 2021, of 5.9 GW, reflecting the impact of retirements of coal plants in the US and Europe. However, this decrease was not as acute as in 2020, when net coal capacity (ex-China) fell by 10.7 GW (Global Energy Monitor).

GEF heft – The Global Environment Facility (GEF) has announced a record replenishment of $5.25 bln to support conservation and environmental protection programmes covering the next four years, a 30% rise. Now the GEF’s CEO Carlos Manuel Rodriguez is pushing for more flexibility in the fund’s grant-making, including more opportunities for non-state actors to receive money without government approval. Such a shift could result in more Indigenous peoples and local communities receiving funds. (Mongabay)

EMEA

Help’s on the way – UK ministers are poised to double the government assistance provided to energy-intensive industries whose bills are soaring with an estimated £800 mln three-year package to be announced this week, the FT reports. Kwasi Kwarteng, business secretary, has been under pressure from big business to provide relief for the spiralling cost of gas that is driving up global energy prices. Kwarteng first indicated in October that he was pushing the Treasury for a solution. Under the agreement expected on Friday, the government will extend an existing programme called the “energy intensive industries compensation scheme” which expired at the end of March for a further three years. The scheme provides relief to strategic industries for the costs of being in the UK ETS and Carbon Price Support mechanism in their electricity bills. Kwarteng will make clear that the compensation scheme support package will more than double its previous level of about £130 mln a year up to £280 mln. That estimate reflects that the UK ETS system has become more expensive because of the rising price of gas. Through the support package, companies receive compensation for 75% of their costs under the ETS scheme. The minister is also expected to clarify which industries will be eligible for the support, including chemicals, ceramics, steel, cement and paper.

Local matters – UK regulator Ofgem has launched a review into how the UK energy system is planned and operated locally to ensure the country is ready for a huge increase in green, more affordable homegrown power, it said in a release. This could result in the creation of new independent bodies separate from network companies to oversee local energy systems across the country. The body said that local power grids will play a critical role to help reduce reliance on expensive imports of gas, bring down energy bills, and meet the country’s climate goals. They will deliver electricity to charge millions of electric cars and power clean alternatives to gas boilers to heat homes and businesses. To do this most quickly and at the lowest cost to customers requires a strategic, co-ordinated approach at a local level, the regulator said.

Earnings of steel – Swedish steelmaker SSAB reported on Tuesday a bigger-than-expected jump in first-quarter earnings on the back of strong steel prices, but said the outlook for demand and shipments was beset by some uncertainty. The specialised high-strength steels producer rode to a record profit last year on the back of soaring steel prices and strong output at its production plants in Sweden, Finland and the US, a development that carried into 2022. The niche steelmaker said operating profit, excluding extraordinary items, rose to 8.38 bln Swedish crowns ($864 mln) from a year ago to surpass analysts’ estimate of SEK 6.66 bln. (Reuters)

ASIA PACIFIC

Labor Pacific funding – The Australian Labor Party has announced it will establish a Pacific Climate Infrastructure Financing Partnership to support clean energy infrastructure projects in Pacific countries if it wins the upcoming federal election. The commitment is part of a broader A$525 mln ($378 mln) policy announcement to restore Australia as the partner of choice for the countries in the Pacific, after Solomon Islands signed a security pact with China last week, causing a ripple of tension and uncertainty throughout the region, with Labor placing the blame squarely on the Morrison government. The joint statement by several Labor MPs said “by combining effective climate leadership, vital development assistance and improvements to Pacific worker programs – along with defence and security cooperation and enhanced diplomatic capability, we will leverage Australia’s strengths to secure our region”. Labor also intends to apply to host a future UN COP talk in partnership with Pacific nations, if it wins government.

CCS funding – Mining company Glencore has received A$35 mln from the Australian government for its CTSCo CCUS project, the company announced on Tuesday in a press release. The A$210-mln test injection project will capture CO2 from the Millmerran coal power station and store it underground in the Surat Basin in Queensland, the release stated. In addition to funding from Glencore, the project will also receive industry funding support from Low Emissions Technology Australia (LETA), a scheme which is funded by a voluntary levy on coal production and includes 26 investors from among Australia’s black coal producers. Glencore has set a short term emissions reduction target of 15% by 2026 and a medium-term 50% reduction of its total (Scope 1, 2 and 3) emissions by 2035 on 2019 levels. Post-2035, it has set an ambition is to achieve, with a supportive policy environment, net zero total emissions by 2050.

Thai, Bangladeshi transitions – JERA, the Japanese power firm, has concluded a memorandum of understanding (MOU) with the Electricity Generating Public Company (EGCO), a major power generation company in Thailand, to cooperate in the energy transition field, the company announced on Tuesday. The MOU stipulates that JERA and EGCO will discuss the possibility of collaboration in order to develop LNG value-chain projects and establish a large scale supply chain for hydrogen and ammonia, according to a JERA press release. JERA also announced that it had signed an MOU with Summit Power, Bangladesh’s largest independent power producer, to collaborate on the development of a decarbonisation roadmap for the Bangladeshi power firm. The two companies will explore projects that create opportunities for hydrogen and ammonia, as well as renewables and energy storage.

AMERICAS

Change of heart – Canadian Conservative leadership candidate Jean Charest is promising to repeal the Liberal government’s consumer carbon price and eliminate the federal portion of the Harmonised Sales Tax on low-carbon purchases as part of a plan released Tuesday. Charest would also backtrack on PM Justin Trudeau’s enhanced Paris Agreement GHG reduction goal of 40-45% below 2005 levels by 2030, and instead go back to former Conservative PM Stephen Harper’s target of a 30% cut. Charest had introduced Quebec’s WCI-linked cap-and-trade programme when he was premier of the province, but his plan did propose to make industrials pay a CO2 price as part of an overall “heavier focus on industrial emissions.” (Canadian Press)

And another – The Biden administration has announced that it is shrinking the amount of land eligible for drilling at an oil reserve in the Arctic, reports the Hill. The move reverses a Trump-era plan that would have opened up 82% of the reserve. Instead, there would now be a return to an Obama administration plan that would enable the government to lease up to 52% of the National Petroleum Reserve in Alaska for oil and gas exploration. The move comes as the Biden administration is grappling with high gasoline prices and Republican criticism over its energy policies, but Monday’s move is not expected to have any immediate impacts on gasoline prices at the pump. In explaining its rationale, the administration said that it would better protect the environment while still allowing energy development. (Carbon Brief)

TC to RNG – Canadian fossil fuel pipeline company TC Energy says it will partner with GreenGasUSA to explore development of a network of renewable natural gas (RNG) transportation hubs. TC Energy says it will build, own, and operate the RNG transportation hubs in several US states along its natural gas pipeline system within the next four years. The first hub could be in service by the second quarter of 2023. (Canadian Press)

JetGreen – Renewable fuel company Aemetis on Tuesday announced it has signed a $530-mln offtake agreement with US airline JetBlue for 473 mln L of blended sustainable aviation fuel (SAF) to be delivered over 10 years. The SAF is expected to be produced by the Aemetis renewable jet/diesel plant under development on a 51-ha former US Army Ammunition production plant site in Riverbank, California. The blended sustainable aviation fuel is scheduled to begin deliveries to JetBlue in 2025.

Sixty-two in the 312 – Chicago has announced its 2022 climate action plan (2022 Cap) that sets the goal of directly reducing emissions in the city by 62% by 2040. The 2022 Cap builds on Mayor Lori Lightfoot’s 2022 budget, including the Chicago Recovery Plan’s $188 mln in climate mitigation investments. The City That Works is seeking to uphold commitments to 100% renewable energy for municipal operations by 2025 and citywide by 2035, investing in 30 MW of renewable energy on City property by 2030, and encouraging a transition from fossil fuel-based ‘peaker’ plants during peak energy demand to clean battery storage technologies. (SmartCitiesWorld)

VOLUNTARY

Nature’s needs – The philanthropy-backed Finance for Biodiversity (F4B)’s has published a new governance model for carbon offset markets. The body says the plan goes beyond the aims of the IC-VCM and VCMI voluntary carbon market governance bodies by arguing that nature markets – a category that includes nature-based carbon offset markets but is rapidly growing to include other ecosystem services – require stronger and more innovative governance than typical financial markets. It also explores how new technologies such as satellite-based geospatial imaging, blockchain and distributed ledger technology have reduced the costs of large-scale information collection and stakeholder participation, thereby increasing the technical and financial feasibility of such a model.

SCIENCE & TECH

Impending disasters – Human activity is driving an increase in medium- to large-scale disasters, many of which are fuelled by climate change, the UN Office for Disaster Risk Reduction warned in its global assessment report this morning. Between 1970 and 2000, there were about 90 to 100 disasters per year, a number that rose to 400 by 2015 and could reach 560 (or 1.5 per day) by 2030. Extreme heatwaves will be three times more frequent in 2030 than in 2001 with 30% more droughts. (Climate Nexus)

Dust of ages – Spreading rock dust across the UK’s farmland could provide almost half of the amount of CO2 removal the country needs to meet its binding net zero target for 2050, according to a new analysis. Enhanced rock weathering, a process in which rocks such as basalt are ground up to increase their surface area and accelerate the natural reactions through which they absorb carbon from the air, has been found to be a potential large-scale option for carbon removals. Now, researchers have taken a more realistic look at the promise this technique could hold in the UK. The University of Sheffield factored in statistics from past basalt mining and more sophisticated models that account for how soil chemistry affects weathering rates and how the size of the rock particles changes over time. They found that, by mid-century, sprinkling rock dust on UK fields could allow for the absorption of 6-30 Mt of CO2 a year. That is up to 45% of the carbon removals needed for the country’s net zero target. Cumulative removals would be close to the potential from planting new woods. (New Scientist)

AND FINALLY…

Lucy, football, revisited – Conservative Democratic Senator Joe Manchin is exploring an energy and climate package aimed at winning enough Republican support to skirt the US Congress’ partisan budget reconciliation process that has held hostage hundreds of billions of dollars in potential spending on related priorities. Bloomberg reports. Manchin met with other senators from both parties Monday to “gauge bipartisan interest in a path forward that addresses our nation’s climate and energy security needs head on,” said his spokeswoman. Manchin told reporters after the meeting that one area of common ground could be reform of the federal oil and gas leasing process. Manchin also said Congress could focus on increasing domestic production of energy in the near term and provide incentives for climate-related projects in the longer term. The approach could revive some of the $550 bln in climate and energy spending in the Build Back Better Act, which stalled in December after coal brokerage-profiting Manchin declared he couldn’t support it.

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