CP Daily: Thursday April 28, 2022

Published 01:52 on April 29, 2022  /  Last updated at 01:54 on April 29, 2022  /  Newsletters  /  No Comments

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

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TOP STORY

Tropical tree loss in 2021 casts doubt on COP26 deforestation pledges

Tree canopy loss in tropical forests last year was equivalent to the annual fossil fuel emissions of India, casting doubt on whether COP26 pledges to stop and counteract forest loss by 2030 can be met, a think-tank warned Thursday.

EMEA

Experts downplay chances of raising EU ETS ambition at expense of second market

Efforts by a group of MEPs to raise ambition further in the EU ETS while killing a proposal for a second carbon market are unlikely to survive the full legislative process, experts told Carbon Pulse on Thursday.

UK awaits utilities’ commercial decision on coal plant lifetime extensions

Operators of the remaining coal power plants connected to the UK grid are reviewing a government request to extend the lifetime of the assets through next winter as part of plans to ease the current energy supply crisis, but they told Carbon Pulse on Thursday that any decision hinges on funding.

Euro Markets: Carbon rallies after pause in negative correlation to gas, while bearish bets grow

Carbon prices erased early losses to snap a three-day losing streak on Thursday in light trading, as the negative correlation to natural gas prices reasserted itself while energy markets drifted as traders awaited more information about ruble payments for Russian energy supplies.

ASIA PACIFIC

Japan rolls out programmatic option for domestic offset market

Japan will allow programmatic approaches in its J-credit system, the government announced Thursday, as the nation continues to reform its offset markets in a bid to boost supply ahead of the launch of its planned domestic voluntary carbon market.

Shell, Origin want phased-out access to CDM for Australian offset buyers

Australian companies should over time lose the ability to use carbon credits from the UN’s Clean Development Mechanism (CDM) for offsetting purposes, oil major Shell and power generator Origin Energy have said.

Australian market still in the dark about SMCs, ERF exit fee tax status

A Labor victory at the upcoming Australian federal election will not necessarily guarantee an increase in demand for Australian Carbon Credit Units (ACCUs), analysts Reputex said Thursday, noting there are significant unknowns with the Safeguard Mechanism as well as the Emissions Reductions Fund (ERF) leaving the market guessing.

AMERICAS

California cap-and-trade reform bills clear first committees

The California legislature this week gave first approval to two bills that would reform the state’s cap-and-trade regulation, one that would tie allowance supply to offset usage and another that would add public banking metrics for compliance instruments.

NA Markets: California carbon drops to 1-mth low, RGGI retraces to CCR

California Carbon Allowance (CCA) prices faded over the course of the week as buying interest waned and traders continued to digest the impact of regulator ARB’s preferred Scoping Plan path, while RGGI Allowance (RGA) values receded towards the Cost Containment Reserve (CCR) trigger price.

INTERNATIONAL

IEA launches high level group to advise on coal transition

The IEA has convened a high-profile group of advisors to provide strategic input for an upcoming report on guiding coal-based emissions towards a net zero path amid major energy security and affordability challenges, the Paris-based energy watchdog announced on Thursday.

VOLUNTARY

New nature-based offset token secures $4 mln sale prior to official launch

A US-based technology start-up has pre-sold $4 million of its tokens backed by nature-based offsets to a firm seeking to decarbonise buildings in urban environments.

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CONFERENCES

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

AMERICAS

We hardly knew ye – US President Joe Biden came into office with more aggressive plans to fight what he called the “existential threat” of climate change than any of his predecessors. Three months into his presidency, he vowed to cut the GHG emissions of the world’s second-largest emitter 50-52% below 2005 levels by 2030, a pledge that helped re-establish American climate leadership on the global stage. One year on, that signature climate goal is all but dead. Political allies are now acknowledging what scientists who analyse US policy options have confirmed: There’s virtually no viable path to slashing US emissions in line with Biden’s 2030 target – at least not without major legislation that appears increasingly remote. At the centre of this setback is an evenly split US Senate that puts West Virginia’s Joe Manchin, a Democrat from a coal- and gas-rich state with a personal fortune tied to fossil fuel, in a position to make or break legislation. A proposal championed by the White House to spend around $555 bln on climate and clean-energy measures have stalled, and the approaching midterm elections make passage unlikely. Without that half-trillion dollars in new spending, the scientists who study pathways for cutting US emissions can’t see a way to deliver on Biden’s promise. (Bloomberg)

Well off – Two companies, Shell and Archaea Energy, have met with state environmental regulators to discuss preliminary plans for developing Pennsylvania’s first wells to store CO2. Shell, which is preparing to begin operating its world-scale petrochemical plant in Beaver County this year, told regulators it is considering locating a carbon sequestration well in Beaver County or in Ohio, a manager with the Department of Environmental Protection said at an advisory board meeting this week. Archaea Energy, which opened what it bills as the highest-capacity operational renewable natural gas facility in the world at a northeastern Pennsylvania landfill in December, has not determined where it might locate a well but is looking at Lackawanna County for potential test sites. (Pittsburgh Post-Gazette)

INTERNATIONAL

Glencore pushback – About 24% of investors voted against Glencore’s climate progress report at the miner and trader’s AGM on Thursday, after some cited slow progress in scaling back coal production. Glencore said last year it planned to hit net zero emissions by 2050 and responsibly run down its mines producing thermal coal by the mid-2040s. With opposition to its climate progress passing the 20% threshold that constitutes material dissent, the company responded in its AGM results statement that it would continue to engage with shareholders to ensure their views are fully understood. (Reuters)

EMEA

Skills shortage – Germany’s ambitious plans for making the economy more climate-friendly are in jeopardy because of a skills shortage, industry has warned. The lack of skilled workers and the workload in the skilled trades threaten a successful climate and energy transition, said metalworkers’ union IG Metall in a joint call with other trade associations representing a total of 169,000 companies with 1.6 mln employees. In particular, the groups point to the renovation backlog in more than 19 mln residential buildings. The organisations said the government must back up its emission reduction plans with concrete targets for efficiency and heating decarbonisation, including implementation steps and reliable support schemes for renovations. Training and qualifications should also become a policy focus, they added. The groups also called for digital ecosystems to enable efficient cooperation between the crafts and energy efficiency consultants, authorities, and funding bodies. (Clean Energy Wire)

Wheelie good idea – Europe’s largest motoring association ADAC has called on its members to save fuel and take the bicycle wherever possible to help reduce the reliance on Russian oil imports. In an open letter posted on its website, ADAC president Christian Reinicke emphasised that everyone can do their part to reduce energy imports from Russia quickly. He proposed driving slower and with more foresight to lower fuel use. Those with good access to public transport should make more use of it, the Munich-based association said. Some routes can also be covered by bicycle or on foot, Reinicke recommended. The letter kickstarts a new ADAC campaign on saving fuel during the energy crisis brought on by Russia’s war against Ukraine.

Welcome to the club – Botswana is planning to introduce a carbon tax, which would make it the the latest countries – and one of the first in Africa – to put a price on carbon. The government is finalising consultations and preparations for the measure, Finance Minister Peggy Serame said this week. The tax is aimed at dealing with environmental polluters such as second-hand vehicles, the minister told Forbes Under-30 Summit, in Gaborone on Tuesday. “The carbon tax is a two-pronged affair targeting environmental protection and revenue mobilisation for the country,” said Serame, adding that the tax is now being discussed with environmental stakeholders ahead of its finalisation. She has said the carbon tax – along with a new digital tax – will be targeting big multinational businesses that are operating in Botswana while their headquarters are located in others countries where they pay taxes. According to the finance ministry, it is estimated that the tax could raise as much as 700 million pula (about $58 mln) a year for Botswana.  It’s unclear whether the tax would be related to Botswana’s proposed strategy to tap the international carbon market for finance under the Paris Agreement’s Article 6. The tax was first mooted in the Economic Recovery and Transformation Plan approved by Botswana’s parliament in Sep. 2020, while the digital tax was proposed in the Budget Strategy Paper of October 2020.

ASIA PACIFIC

Inpex in Indo – Japanese oil and gas company Inpex announced on Thursday that it has acquired extra shares in the Muara Laboh Geothermal Power Project in Indonesia, in a bid to ramp up its geothermal business in the country. The acquisition boosts the company’s stake in the project from 10% to 30%, after it acquired the additional 20% interest from Engie Global Development, which jointly operates the project alongside PT Supreme Energy. The project, which began operation in 2019, is based in the Muara Laboh Geothermal Block in the Solok Selatan region in West Sumatra province and produces 85 MW of electricity. Inpex is looking to expand the project, as part of a broader push to boost its renewable energy credentials.

Green ETF – The Lion-OCBC Securities Singapore Low Carbon ETF, with AUM of S$60 mln ($43 mln) at launch, listed today on the Singapore Exchange (SGX), Fund Selector Asia reports. Tracking the iEdge-OCBC Singapore Low Carbon Select 50 Capped Index, the ETF will offer investors access to the top 50 globally-listed Singapore companies and trusts with a lower carbon intensity than their industry peers, according to a statement by SGX. “This listing comes at a time when companies’ decarbonisation efforts are ramping up, and owning a sustainable investment portfolio is becoming increasingly important for investors,” Michael Syn, Head of Equities of SGX Group, stated.

Transition in train – Fortescue Metals Group says its so-called zero emissions “Infinity Train” – one of the key technologies that will come with the $221 mln purchase of the renowned Williams Advanced Engineering company – could be on its private rail network within two years, Renew Economy reports. The infinity train proposes to use the height of Fortescue’s iron ore mines – up to 600 metres above sea level – and the weight of its load (34,000 tonnes) to provide “regenerative power” to its battery electric locomotives. The idea is that it will generate enough power downhill to take the massive iron ore trains all the way to port, and put enough charge in the batteries so they can return the empty trains up hill to the mines. The process could cut diesel consumption by 82 mln litres a year.

VOLUNTARY

Doubling up – Carbon standard manager Verra and the Forest Stewardship Council (FSC) have signed an MOU to develop tools and processes enabling forest managers and communities to concurrently certify their projects in FSC’s forest management standards and Verra’s VCS carbon programme. The two said that generating VCS carbon credits will allow forest managers and communities to scale up their sustainable forest management practices and maximize their climate impacts. Over the next 18 months, Verra and FSC will undertake a close review to develop support for landowners interested in combining the two standards.

Rice age – Offset standard SOCIALCARBON on Thursday proposed a methodology for methane reduction by adjusted water management practice in rice cultivation. The methodology comprises technology and measures that result in reduced anaerobic decomposition of organic matter in rice cropping soils, and is a revision of the CDM’s small-scale methodology AMS-III.AU. The primary deviation to AMS-III.AU is that this methodology supports both small and large scale projects, that can generate more than 60,000 tCO2e annually, and that monitoring can be conducted through peer-reviewed remote sensing technology. Public consultation on the methodology is open through May 28.

SCIENCE & TECH

Turbofan-tastic – Australian start-up Aviation H2 has concluded that after a three-month feasibility study, the use of liquid ammonia in a turbofan engine is the best route to carbon-free flight. The company will soon start modifying turbofan engines on a private jet, with the aim of getting it in the air by the middle of 2023. Liquid ammonia contains 11.5 megajoules of energy per litre, compared to 8.5 MJ/l for liquid hydrogen and 4.5 MJ/l for compressed hydrogen. Ammonia, which is produced by combining hydrogen with nitrogen from the air in an energy-intensive process, becomes a liquid at a temperature of minus 33.6C, although it can be liquefied at room temperature by increasing pressure during production. (Recharge)

AND FINALLY…

Additionality fatality – A flurry of state and local governments in the US are enrolling public-owned forests in carbon projects that could earn them tens of millions of dollars but provide little new help in the fight against climate change. The State of Michigan and five counties in Wisconsin recently inked agreements with offset developer Bluesource to create projects on approximately 323,700 ha, and generate 10 mln credits over the next decade. These claims, however, will be greatly exaggerated. Each carbon credit is supposed to represent one tonne of CO2 that’s been absorbed because the promise of payments caused a landowner to alter their practices. But overseers of each of these public forests aren’t planning to change how they manage their trees, according to public records reviewed by Bloomberg Green and interviews with forest managers. “We’ve already done the legwork to get where we need to be,” says Jeremy Koslowski, forest administrator for Wisconsin’s Rusk County, who says he doesn’t anticipate a carbon project impacting their harvests. In emails and documents obtained through a public records request, state officials repeatedly assured timber companies that the carbon project won’t diminish their harvests. The carbon project is “consistent with our harvest strategies,” wrote state official Scott Whitcomb in an email to a manager with the Michigan Forest Products Council. “We’re not expecting to see a change or difference in management from the working forest model we have now,” he added. (Bloomberg)

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