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TOP STORY

ANALYSIS: Hong Kong eyes central carbon market role, but the key to its success lies in Beijing

Hong Kong has set out plans to establish itself as the hub that will bring together the international carbon market and that of China, but the pathway to success is tricky and heavily reliant on decision-makers in Beijing.

EMEA

Experts counter growing push against EU ETS speculation, say better data needed

EU ETS reforms designed to limit speculative trading could cut liquidity in the market, leading to less price transparency and making purchasing more difficult for compliance entities, market experts warned on Wednesday, as EU lawmakers consider proposals to restrict participation by financial firms.

Euro Markets: Carbon steadies after early losses on Russia gas supply cuts

Carbon prices clawed back early sharp losses on Wednesday despite some sustained selling pressure, as the market reacted to news that Russia has suspended natural gas deliveries to Poland and Bulgaria after those countries refused to make payments for the fuel in rubles.

MEPs and experts reject idea of including removals in EU ETS

Two MEPs and several climate experts have rejected the benefit of including carbon removals (CDR) in the EU ETS as is currently under discussion in Brussels, pointing instead to the need to focus on emissions reductions and incentivising removals instead via separate investment funding.

Utility RWE reports 10.5% drop in ETS-covered emissions for Q1 as regulations trump market forces

Germany-based utility RWE, the EU’s top corporate emitter, reported a 10.5% drop in its ETS-covered thermal power output for Q1, it said on Wednesday, as government-mandated plant closures outweighed a stronger market signal.

Iberdrola sees EU ETS-covered gas generation double in Q1 as hydro slumps

Spanish utility Iberdrola marked a 112% year on year rise in CCGT power output covered by the EU ETS in Q1 2022, with the gas-fired output soaring to make up for unusually low hydro supply amid drought-like conditions in Iberia, the utility said in quarterly results on Wednesday.

VOLUNTARY

US-listed ETF launched to track carbon offset futures

A US-listed exchange-traded fund tracking CORSIA-eligible and nature-based offset futures contracts began trading on Wednesday, building on the asset manager’s existing suite of global carbon allowance-focused funds.

Offset retailer creates VCM ‘meta-credit’ to spur higher quality approaches

An offset retailer has created a voluntary carbon market ‘meta-credit’ for corporate buyers, aiming to weed out the vast majority of carbon projects that it says fail to meet basic sustainability checks.

ESG platform to explore carbon offsets from avoided gold mining

A blockchain-based ESG finance platform will launch tokens to preserve in-ground gold deposits from a Canadian mine, and may look at ways for token holders to earn carbon credits from this practice.

CORRECTION – Emsurge originates first carbon trade, concluded on CBL exchange

(Clarifies Tuesday’s article to say this was not the first trade on the Emsurge exchange, but the first trade in partnership with CBL)

ASIA PACIFIC

Exchange staffers live in office during Shanghai lockdown to keep China carbon market open

A group of staffers at the Shanghai Environment and Energy Exchange have been living in the office for nearly a month to ensure the Chinese carbon market operates as normal while the entire city is locked down due to a Covid-19 outbreak.

Gorgon experience highlights doubts on CCS to achieve climate goals, report says

The failure of CCS at the Gorgon offshore gas and LNG project to capture enough CO2 to meet operator Chevron’s own targets has placed doubt on the efficacy of the oil and gas industry’s reliance on the technology to curtail emissions, a report released on Wednesday has claimed.

AMERICAS

DEBs dominate new issuances, reduced invalidations for California Carbon Offsets

Every California Carbon Offset (CCO) project that received new credits or a reduced invalidation period on existing units over the past two weeks provided direct environmental benefits to the state (DEBs), according to state data published Wednesday.

RFS Market: RIN prices gap higher on soybean oil strength, import buying

US biofuel credit (RIN) prices extended multi-month highs on Wednesday as Indonesia expanded its previously-announced cooking oil ban and Renewable Fuel Standard (RFS) importers were seen buying credits.

INTERNATIONAL

UN could help shed light on, not rein in, the credibility of net zero pledges

The UN Secretary-General-appointed expert group tasked with scrutinising non-state net zero pledges is set to provide only high-level guidance rather than authoritative standards, a senior UN official said following the group’s first meeting on Wednesday.

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Premium job listings

• Director of Sales, KOKO Climate – London (Hybrid)
• Vice President, Global Carbon Markets, Climate Finance Partners – Remote (Global)
• Project Manager, Client & Project Management, Radicle – Calgary
• Junior Trader, Voluntary Markets, Radicle – Calgary/Vancouver/Austin
• Project Manager (Germany), South Pole – Berlin/Munich/Frankfurt
• Carbon Technical Lead, Earthshot Labs – Remote
• Freelancer, Carbon Project Development Africa, Volkswagen ClimatePartner GmbH – Munich
• Head of Project Development, Carbon Offset Projects, Volkswagen ClimatePartner GmbH – Munich
• Manager, Due Diligence, Volkswagen ClimatePartner GmbH – Munich
• Freelancer, Carbon Project Development Indonesia, Volkswagen ClimatePartner GmbH – Munich
• Freelancer, Carbon Project Development China, Volkswagen ClimatePartner GmbH – Munich
• Freelancer, Carbon Project Development Brazil, Volkswagen ClimatePartner GmbH – Munich
• Certification Officer (GHG Auditor for Scope 3), SustainCERT – Remote (US/Europe)

Or click here to see all our listings

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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

EMEA

EU’s first time – The European Commission on Wednesday formally triggered a powerful new mechanism that could result in Hungary losing EU funds over rule-of-law violations — the first time the bloc has deployed the authority, Politico reported. Civil liberties groups and international watchdogs say Hungarian Prime Minister Viktor Orban’s government has overseen a decade-long campaign to erode traditional checks and balances, strangle the media, and dole out EU funds to friends and family. The bloc has never before used this authority, which allows it to slash payouts – including climate-related funding – to members when rule-of-law problems threaten the EU budget. The new mechanism was created after existing tools to police wayward member countries proved incapable of changing behaviour.

Divide et Impera – In a response to Russia’s decision to halt supplies of natural gas to Poland and Bulgaria because of their refusal to pay in rubles, European Commission President Ursula von der Leyen said the move was “another reminder that we need to work with reliable partners, and build our energy independence.” The bloc’s strategy will primarily focus on shielding consumers, with von der Leyen saying that Poland and Bulgaria are currently receiving gas supplies from their neighbours. She reiterated the key role of the bloc’s REPowerEU strategy but did not comment when reporters asked about an anonymously-sourced Bloomberg report detailing four European gas buyers that have already paid for supplies in rubles, while ten European companies have already opened the accounts at Gazprombank needed to meet Russia’s payment demands.

Iberian exceptionalism – The European Commission has agreed to allow Spain and Portugal to place a temporary cap on reference prices of €40/MWh for gas and coal used by power plants, the nations’ respective energy ministries said on Tuesday, Reuters reported. European countries are struggling to manage surging gas and power prices, pushed higher by Russia’s invasion of Ukraine, and to cushion their effect on voters’ spending power. “The (political) agreement allows (us) to protect consumers exposed to the market,” Portugal’s Environment Minister Duarte Cordeiro told reporters. “The reference price for gas today (in the wholesale market) is €90. This protects everyone.” The price cap will average out at €50 over the coming 12 months, Cordeiro said.

ASIA PACIFIC

Not banking on coal – Macquarie Group chief executive Wikramanayake has declared the profitability of coal will not last and affected communities must be re-skilled, but warned the transition to renewable energy cannot happen overnight, The Age reports. The comments come as Australia’s Coalition government faces internal division over its climate policy after Nationals Senator Matt Canavan declared the net zero emissions target was “dead” which prompted rebukes from Prime Minister Scott Morrison and Treasurer Josh Frydenberg.

Bonds or bust – The head of Japan’s most powerful business lobby said the government should issue about 2 trillion yen ($15.6 bln) in green bonds a year to achieve carbon neutrality by 2050. “(Moving toward net zero emissions) should be a pillar of economic growth strategies and would represent a huge makeover since the Industrial Revolution,” Masakazu Tokura, chairman of Keidanren, said at a news conference in Tokyo on Apr. 26. Keidanren the same day released a proposal asking the government to become aggressively involved in green efforts to draw investments from the private sector, which it said would lead to a nearly doubling of Japan’s GDP to more than 1 quadrillion yen. The proposal also opposed the introduction of a carbon tax imposed on businesses based on their CO2 emissions, saying such a levy would put too much of a burden on them. Keidanren urged the government to present a road map for technologies needed for practical applications, investment amount and government policies. It also said renewable energies should be “introduced as much as possible as the main source of power”, and that the government should “reveal a new policy” on nuclear power, including the construction of next-generation small modular reactors. (Asahi Shimbun)

Hydrogen venture – The Japan Atomic Energy Agency (JAEA), a national research and development agency, and Mitsubishi Heavy Industries have been contracted by the Agency for Natural Resources and Energy, part of the Ministry of Economy, Trade and Industry (METI), to conduct its Hydrogen Production Demonstration Project Utilizing Very High Temperature, and from this fiscal year initiated a programme to produce hydrogen using a High Temperature Engineering Test Reactor (HTTR). Under this programme, a newly built hydrogen production plant will be connected to an HTTR owned by JAEA, with the aim of proving the technology for hydrogen production utilising the high temperature heat obtained from the HTTR (Mitsubishi).

Big beef – One week after Australian supermarket Coles announced it would be launching its carbon neutral beef products, the project supplying the company with Australian Carbon Credit Units (ACCUs) has already come under scrutiny. The Australian Financial Review reports that Andrew Macintosh, the former chairman of the Domestic Offsets Integrity Committee, says the Armoobilla Regeneration Project had received a boost in ACCUs despite a decrease in forest cover. Macintosh said it appears the project has used a model to estimate tree growth that is now outdated, meaning the project may generate more ACCUs than it has really earned. Coles has denied any wrongdoing, saying it played by the rules. It is the latest attack by Macintosh on the overall integrity of Australia’s voluntary carbon market and the Clean Energy Regulator.

Climate commitments – The Australasian Centre for Corporate Responsibility has accused investors of rubber-stamping mining and fossil fuel companies’ climate plans, describing it as a box-ticking exercise. The NGO analysed the voting records of Australia’s largest superfunds and the world’s largest investment managers on ‘Say on Climate’ resolutions in 2021. It said most were supported by more than 90% of shareholders, with seven superannuation funds supporting all Say on Climate resolutions at companies they held that year, and 15 global investment managers did the same. They included AustralianSuper, UniSuper, CareSuper, and Allianz Global Investors, BlackRock, Goldman Sachs and JP Morgan. ACCR climate director Dan Gocher said in a statement that by endorsing climate plans that include fossil fuel expansion, investors were complicit in ensuring emissions will continue to increase rather than decline. “The Say on Climate mechanism will only be as strong as investors are willing to make it,” he said. The analysis highlighted that most voting does not appear to be based on 1.5C alignment.

Fearful farmers – New Zealand farmers worried about the destruction of rural communities by carbon credit pine forests want to see a plan from the government to invest in the regions where farming jobs have disappeared. Stuff NZ reports that agricultural minister Damien O’Connor fronted up to a packed Pongaroa Hotel in rural Tararua to discuss the proposal to ban exotic plantations in the country’s ETS. The crowd aired their concerns about what forestry has done to sheep and beef farming areas, saying many farms have been converted to carbon credit pine forests at the expense of farming jobs. O’Connor said the changes would bring some balance, but it wouldn’t help where good country had already been turned into forestry. Less farmland is being converted into forestry now than it was in the 1990s, according to Stuff’s analysis. O’Connor said the government would not dictate to farmers who they sold their land to and he wanted to work with the sector. He said New Zealand had the area to plant a billion trees without affecting farmland, but the lazy option had been taken by too many investors. The government is expected to announce its decision whether to ban exotics from the ETS next month.

AND FINALLY…

Fear factor – White House officials are confronting the “real fear” that they will fail to reach any deal with Democrat senator Joe Manchin, even one that leaves out the majority of what president Joe Biden had hoped to accomplish, according to the Washington Post. Manchin – the “ever-elusive 50th vote for the president’s agenda in an evenly divided chamber” – has so far blocked the president’s major climate and social spending plans, the newspaper notes. It says that on Monday a Manchin spokeswoman “reiterated that the senator supports measures to boost US energy production”, adding that despite this “Manchin has not yet made clear to the White House precisely what he would support in a final agreement”. There has been one smaller victory for the Biden administration, according to the Hill, as it has finalised a proposed rule to increase efficiency standards for lightbulbs after the Trump administration rolled back the standards. (Carbon Brief)

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