CP Daily: Tuesday May 3, 2022

Published 02:15 on May 4, 2022  /  Last updated at 02:23 on May 4, 2022  /  Newsletters  /  No Comments

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

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TOP STORY

Canada may create standalone forest carbon offset protocol for Crown Lands

The Canadian environment ministry on Tuesday proposed limiting the federal government’s forthcoming forestry offset protocol to private lands in light of numerous technical challenges, and instead may create a separate methodology just for Crown Lands.

AMERICAS

RGGI emissions press higher in Q1 as oil burns overwhelm

CO2 output under the RGGI cap-and-trade programme rose in the first quarter of 2022 as greater oil-fired generation in the Northeast offset steep reductions in the market’s southern region, according to data updated Friday.

Massachusetts GWSA emissions nearly flat in Q1 as state readies advance auctions

Emissions output under Massachusetts’ Global Warming Solutions Act (GWSA) cap-and-trade system barely budged in the first quarter of 2022 compared to the prior year, while the state is preparing to hold its first advance carbon allowance auction next month.

Pennsylvania court to hear combined GOP, coal industry arguments against RGGI regulation

The Pennsylvania Commonwealth Court this week will hear GOP lawmakers and a collection of coal companies and labour organisations make their case for blocking the implementation of the state’s newly-published RGGI regulation, after a previous hearing was cancelled.

Vermont nears final passage of Clean Heat Standard for buildings sector

Lawmakers in Vermont’s Senate last week passed a bill to create the US’ first ever Clean Heat Standard (CHS), a market-based policy designed to lower GHG emissions in the building sector.

LCFS Market: California prices lift as ARB signals tighter benchmarks ahead

California Low Carbon Fuel Standard (LCFS) rose this week despite a bearish Q4 credit data release, as an official for state regulator ARB confirmed the agency intends to propose stricter pre- and post-2030 benchmarks for the programme.

EMEA

EU lawmakers strive for compromise as crunch ETS reform talks begin

Senior EU parliamentarians are due to meet several times this week to discuss carbon market reforms, seeking to iron out most of their outstanding differences that include technical changes to the current cap-and-trade system.

Euro Markets: EUAs approach two-month high amid short squeeze as energy prices edge higher

EUA prices added as much as 7.3% on Tuesday after a bullish auction led to a significant short squeeze, sources said, while energy prices continued to gyrate modestly higher as the market awaited more information on payments for Russian gas.

EU leans on energy saving, renewables as ministers brace for Russia supply cuts

EU energy ministers are united in favour of stronger energy-saving measures and renewable energy expansion, they said on Monday as they brace for more gas supply disruption following Russia’s abrupt halting of deliveries to Poland and Bulgaria last week.

EU, Swiss carbon markets record 3% non-compliance rate for 2021, data shows

More than 3% of eligible installations and airlines covered by the EU and/or Swiss carbon markets were listed as being in non-compliance for 2021, according to data published by the European Commission on Tuesday.

Uniper still in talks over rubles payment, reports fall in ETS-covered generation

Utility Uniper remains in talks with the German government and Russian producer Gazprom over paying for gas in rubles, the firm said in Q1 results on Tuesday as it reported a year-on-year drop in EU ETS-covered fossil fuel output.

Carbon analyst joins Trafigura from RWE

An analyst has left the trading arm of German utility RWE to join commodities firm Trafigura.

ASIA PACIFIC

New Zealand urged to align ETS cap with NDC path

The New Zealand government should update its domestic ETS settings to ensure they align with the country’s NDC under the Paris Agreement to avoid a massive over-auctioning of NZUs in the coming years, an analyst said.

South Korea announces further cuts in KAU auction volume

South Korea on Monday announced it will reduce the amount of CO2 allowances available at its monthly KAU auctions for May and June amid low secondary market prices and sluggish demand.

HK-listed firm struggles to sell pricey carbon asset NFTs

A Hong Kong-listed company has issued two non-fungible tokens (NFTs) backed by VCS credits generated by a China-based biomass project, but is finding interested buyers hard to come by at an asking price more than four times higher than regular voluntary offsets.

Australian farmer group demands A$2 bln fund for ag sector, carbon market assistance

Australia’s National Farmers Federation (NFF) is calling for both major political parties to commit A$2 billion ($1.4 bln) to support the country’s agriculture sector and encourage more farmers to enter the carbon market.

Australia Market Roundup: Cleanaway makes massive ACCU delivery to ERF as Santos AGM sees shareholder support

Companies have continued to deliver Australian Carbon Credit Units (ACCUs) to the government, despite not having to now they can choose to exit their contracts with its Emission Reduction Fund (ERF).

VOLUNTARY

VCM Report: Wider economic uncertainty continues to weigh on VERs

Softening equity markets continued to pressure voluntary emissions reduction (VER) prices as participants expressed concern that the weak economic outlook will keep the voluntary carbon market outlook uncertain and demand quiet for a sustained period of time.

Verra advances plans for carbon units that leverage project finance upfront

Carbon standard developer and manager Verra advanced plans on Tuesday for a new method to allow offset project proponents to leverage financing ahead of the verification and issuance of carbon credits.

Ratings agency assigns views to nine more carbon projects

A carbon credit ratings agency has assigned ratings to nine projects, it said in an update on Tuesday, that takes the firm’s coverage to just over half of the credits issued in the voluntary carbon market.

Major Korean asset manager announces debut carbon credit deal

One of South Korea’s biggest asset managers has made its first purchase of international voluntary carbon credits, as it plans to make offsets a key part of its ESG strategy.

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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

INTERNATIONAL

COP coping – National politics and Russia’s war in Ukraine are hampering negotiations on a series of multi-billion coal phaseout packages in time for November’s COP27 UN climate talks in Egypt, Bloomberg reports, citing anonymous sources. The US and Europeans aim to expand on their deal last year with South Africa to initially mobilise $8.5 bln through grants, concessional loans and investments, and risk-sharing instruments to help the nation clean its power sector. Similar tie-ups are sought with nations including India, Indonesia, and Vietnam.

Japan’s big idea – Japan, home to third largest body of shipowners in the world, has put forward its own proposal for a carbon tax for the sector, which could raise more than $55 bln a year, Splash reports. Japan’s proposal calls for the industry to pay $56/tonne of CO2 from 2025 to 2030, a figure that would then increase every five years, with the funds raised going to the development of zero-emissions vessels. Japan is said to be the first major shipping nation to come out with specific dollar numbers for a carbon tax. The Marshall Islands and the Solomon Islands had earlier proposed a figure of $100 per CO2 tonne. The proposal is one of several emerging ahead of early June’s Marine Environment Protection Committee (MEPC) at the London headquarters of the International Maritime Organization (IMO). China has proposed a so-called International Maritime Sustainability Funding and Reward (IMSF&R) market-based measure, which has been backed by Argentina, Brazil, South Africa, and the UAE. Following on from an earlier submission led by Kiribati, another proposal sent in last month by Australia, Canada, Jamaica, Japan, New Zealand, Norway, Solomon Islands, the UK and the US has called for the IMO to revise its 2050 target to ensure shipping reaches zero emissions by 2050.

Bilateral buddies – Germany and India have signed a declaration of intent on a “Partnership for Green and Sustainable Development” which will include German support for reforestation in India and cooperation on green hydrogen. During a visit by the Indian government to Berlin, Germany promised the country some €10 bln in additional funding for climate action and sustainability. (Clean Energy Wire)

EMEA

Popping off – The European Parliament (EP) said on Tuesday it has adopted its negotiating position for new rules on persistent organic pollutants (POPs), and the management of waste containing them, with 506 votes in favour, 68 against, and 49 abstentions. As POPs do not disappear quickly and stay in the environment for a long time, they pose a threat to the environment and to human health all over the globe, the EP said. In order to protect the circular lifespan of products, materials containing levels of POPs that are too high must be destroyed or incinerated and cannot be recycled. While MEPs recognise that the Commission’s proposal is going in the right direction, they want to introduce significantly lower permitted levels of POPs in products. This would better align the POPs regulation with EU Green Deal goals – including the ambition for a toxic-free environment and a circular economy.

Swiss exemptions – A Swiss court has ruled that natural gas imported to power turbines for compressing gas in the transit pipeline is not subject to the national carbon tax designed to curb the use of fossil fuels and protect the environment. The Federal Administrative Court verdict released on Tuesday upheld an appeal by an unidentified company against the national customs agency, which insisted on imposing the tax that is collected on fuel used to produce heat, generate light, power thermal plants or fuel combined heat-and-power plants. (Reuters)

Highland sink – The Scottish Highlands Rewilding project has raised £7.5 mln to transform an estate near Loch Ness into a carbon sink. During last year’s COP26 climate summit, the project presented its research on how peatland emissions in the region effectively cancelled out the emissions sequestered by woodlands. Now the project is hard at work to reverse that with planting and restoration activities supported by Jeremy Leggett, a former scientific director at Greenpeace who purchased the 1,200-acre Bunloit Estate in 2020 and has encouraged over 50 other investors worldwide to join him in the venture. (The Scotsman)

Workshops – The UK ETS Authority will be hosting a series of workshops to provide further detail on the emissions cap and free allocation proposals in the consultation and provide an opportunity for stakeholders to give in-depth feedback on these areas. The workshops will cover:

  • The details of and background to the net zero cap proposals
  • Free allocation review and industry cap proposals
  • Wider carbon leakage protection policy
  • The use of unallocated allowances and flexible share

The workshops will not cover proposals on free allocation technical changes (activity levels and COVID-19 effects), specific aviation proposals, or expansion of the UK ETS to new sectors. These workshops will take place on Microsoft Teams, and each session will have a maximum capacity of 45 attendees. Each workshop will be the same, and invites have been sent across sectors and types of stakeholders with an interest in the UK ETS. We may offer additional dates if demand is high. Contact the UK ETS Authority to register.

AMERICAS

Pricing plans – The Ontario Liberal Party on Tuesday released its climate plan ahead of the province’s June 2 election, aiming to cut GHG emissions by 50% below 2005 levels by 2030, up from the current Progressive Conservative government’s 30% target. On the carbon pricing front, the Liberals said they will strengthen Ontario’s Emissions Performance Standards for stationary sources and create a carbon offset system. Party Leader Steven Del Duca said he would not reintroduce the previous Liberal government’s WCI-linked cap-and-trade programme because of the federal ‘backstop’ CO2 levy that is now in place. Still, CBC polling shows Premier Doug Ford’s conservative government is on track to win another majority, despite only projected to win 37% of the popular vote. (Canadian Press)

Back for seconds – French utility Engie has entered into a 15-year contract with Texas LNG exporter NextDecade after assurances that the fossil fuel producer would implement significant CCS measures, Bloomberg reports. Less than two years ago, Engie walked away from a deal with NextDecade over emissions concerns after pressure from environmental groups. However, Houston-based NextDecade last year said it plans on reducing its CO2 output at the planned Rio Grande export facility by more than 90% through CCS for as little at $13/tonne. NextDecade said that the first train of its LNG export project is expected to commence by 2026 at the earliest.

Border BBB man – US Sen. Joe Manchin (D) is supporting a border carbon adjustment that would place tariffs on fossil fuels and products such as cement and steel, according to reporting by Bloomberg. Manchin said he is promoting a North American zone that includes Canada and Mexico. Democrats are trying to revive some of the $550 bln in climate and energy spending in the Build Back Better (BBB) bill, which has been stalled since December after coal brokerage-profiting Manchin declared he couldn’t support it. Manchin said the border adjustment could be a potential element within a package that could also include elements such as a streamlined environmental review process and changes to the federal oil and gas leasing process. (For more detail on US carbon border adjustment proposals see the Carbon Pulse’s recent article here)

Border BBB man (2) – Meanwhile, some lawmakers are saying that there are few signs of hope that a bipartisan energy and climate bill will come out of the US Senate. Sen. Sheldon Whitehouse (D) said there’s “literally nothing happening in the bipartisan effort.” With the two parties campaigning against each other this month in primaries ahead of midterm elections in November, the time for working across the aisle is running out. (Politico)

Blackout lawsuit – The owners of Applebee’s and Olive Garden are suing Puerto Rico’s electricity provider for $310 mln to recoup losses from the multiday power outage in 2017. Hurricane Maria plunged the entire island into darkness when a fire at a power plant devastated an outdated grid, the suit argues. The blackout encouraged Puerto Ricans to install private solar panels to shield themselves from the grid’s ongoing unreliability. (Climate Nexus)

ASIA PACIFIC

Long haul – Australian airline Qantas will start offering direct flights from Sydney to New York and London in 2025 which will be some of the longest flights in the world. The company said the flights would be made possible thanks to it ordering 12 next-generation Airbus A350-1000s as part of its Project Sunrise. The company said the jets would have lower emissions, longer range, less noise, and better economics. Qantas CEO Alan Joyce said the new aircraft and engines would reduce emissions by around 15% if running on traditional fuels, and “significantly better” if run on sustainable aviation fuel. He also said Project Sunrise would be carbon neutral from day one.

Ambitious airports – Union Civil Aviation Minister Jyotiraditya Scindia said on Tuesday that India was working to make its airports carbon neutral in the future. To achieve this, airports must reduce CO2 emissions from sources under their control as much as possible and offset the remaining residual emissions by investing in carbon credits. (Bharat Express News)

Big H2 hope – Plans have been submitted to the Western Australia Environmental Protection Authority to build a 5.2GW wind and solar farm to generate hydrogen which would be converted to around 2 Mt/year of green ammonia for export. The project would sit in the Shire of Northampton, around 20km north of Kalbarri in the state’s remote north west. The project is being proposed by Murchison Hydrogen Renewables and Copenhagen Infrastructure Partners. The companies are promising to undertake detailed environmental impact assessments and stakeholder engagement in order to mitigate the project’s impact. It is one of several mammoth hydrogen and renewable energy projects in the state’s north, which has been touted as having some of the best wind and solar resources in the world.

Third time lucky – Technology billionaire Mike Cannon-Brookes’s Galipea Partnership has bought an 11.3% stake in Australian company AGL Energy in a bid to stop the company’s proposed demerger, which would see it spin off its coal-fired power stations into a different entity, the Australian Financial Review reports. It is the third time Cannon-Brookes has attempted to intervene in the company’s controversial business plan, after he previously placed two bids to acquire the entire company alongside Brookfield Asset Management. The bids were part of a plan to shut down the company’s coal-fired power stations and replace them with renewables by the end of the decade. In a letter to the AGL board, Cannon-Brookes described the demerger plan as “globally irresponsible” and “flawed,” and said it “risks a terrible outcome for AGL shareholders, AGL customers, Australian taxpayers and Australia.” AGL released a response to the market, saying the board was committed to the proposed demerger. The interest was secured through derivatives trades between JPMorgan and companies associated with Cannon-Brookes, including CBC Co and Feroniella Pty Ltd, according to a filing late Monday to the ASX.

Carbon negative – The Australian island state of Tasmania has undergone a dramatic shift in its GHG profile thanks to forestry management practices, the ABC reports. New research finds that a reduction in native logging from around 2011 led to a reversal in the state’s GHG inventory. As a result, the state went from emitting 10 MtCO2e/year to sequestering roughly the same amount. Tasmania already had a very low CO2 output, thanks to the majority of its electricity coming from hydropower.

AND FINALLY…

(B)ad men – Ad agencies’ work promoting the fossil fuel industry could open them to legal liability, a new report from Clean Creatives says. The amount of climate-related litigation has risen dramatically in recent years, and lawsuits related to fossil fuel advertising especially so. Multiple states and municipalities have taken legal action to hold oil companies and their industry groups accountable for fraudulently misleading the public over the climate-heating impacts of their products. Public relations and advertising agencies are not protected from liability for actions taken in the representation of their clients as lawyers are. (Climate Nexus)

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