CP Daily: Wednesday May 4, 2022

Published 23:38 on May 4, 2022  /  Last updated at 23:38 on May 4, 2022  /  Newsletter  /  No Comments

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

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TOP STORY

VCM price surge puts intermediary profits in crosshairs

Rapid inflation in nature-based voluntary carbon offset prices has left the industry facing criticism this week for cashing in at the expense of environmental causes.

EMEA

EU ETS ‘functioning’ but decarbonising industry presents significant challenge -panel

The EU ETS is working as intended but incentivising industrial sectors to decarbonise will present a significant future challenge with hydrogen and removals expected to be key to meeting European net zero emissions targets, according to several market experts speaking at an event on Wednesday.

EU lawmakers at odds on how quickly to phase in carbon border measures

Senior MEPs remain fiercely divided on how quickly to replace EU ETS free allocation with carbon border measures following crunch talks, a well-placed source said on Wednesday, despite identifying more ambitious elements among all the main political groups.

Brussels seeks to set gradual EU import ban on all Russian oil

Brussels is proposing to progressively ban Russian oil imports from the EU as part of a sixth package of sanctions against Moscow since Russia invaded Ukraine on Feb. 24, European Commission President Ursula von der Leyen said on Wednesday.

Euro Markets: EUAs post marginal gain amid dip-buying as Russian oil ban talk stokes energy rally

Carbon ended marginally higher on Wednesday amid volatile price action, while energy markets rose sharply on news that the EU is to implement a ban on Russian oil imports this year.

Switzerland adopts temporary measure to extend climate policies through 2025

Switzerland’s executive on Wednesday amended its CO2 ordinance as an emergency measure to extend to 2025 several of the country’s climate action instruments, as well as its overall emissions reduction goals, ahead of its new law in the works.

VOLUNTARY

VCM could grow to equivalent of 10% of today’s emissions, says analyst

Current corporate commitments could see the voluntary carbon market (VCM) grow to the equivalent of 10% of current global emissions, an analyst told a conference on Wednesday, despite other experts warning that the market’s integrity risked being undermined by fuzzy accounting.

Latam firms hold first green mobility offset auction to promote bicycle use

A group of entities based in Brazil has held the world’s first sale of voluntary carbon credits related to micro-mobility, with the units sold via an auction hosted by Singapore-based exchange AirCarbon (ACX).

Digital nature-based offset trading platform raises €5 mln

A German venture has raised €5 million in pre-seed funding to develop a platform that will offer trade in tokenised credits from nature-based offsets and project co-ownership.\

AMERICAS

Wildfires, diseases show insufficiency of California offset buffer pool -researchers

Intensifying wildfires and tree-based pathogens may completely wipe out the portions of California’s forest offset buffer pool that are filled by those risk categories, researchers argued in a new study.

New California entity seeking to raise $200 mln for WCI allowances

A new limited partnership that appears associated with a US family investment office is aiming to raise $200 million to put towards California Carbon Allowances (CCAs), according to a document filed Wednesday.

INTERNATIONAL

Cement’s net zero emissions path to feature mounting costs, offsets -report

Cement manufacturers will need to commit only a modest level of investment to achieve a 17% cut in emissions intensity by 2030, but the industry will need to allocate $1 trillion worth of investment by 2050 if it is to reach net zero emissions status by that year, analysts said in a report published this week.

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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

Slicing the pie – Scientists at the University of Technology Sydney have defined what share of the remaining global carbon budget should go to each of the world’s 12 major industrial sectors for a good chance of limiting temperature rise to 1.5C. The research‘s findings and datasets are being provided open-source to encourage financial, political and real-economy actors to apply the same 1.5°C alignment. The UN-convened Net-Zero Asset Owner Alliance, representing 71 institutional investors with more than $10 trillion under management, is already using the results to inform the investor group’s net-zero target-setting protocol and reporting framework. (Energy Monitor)

EMEA

Too much, too soon – Berlin’s city government has rejected a popular petition calling for Germany’s capital to become climate neutral by 2030. The city must now use all our energy to come up with really effective, concrete measures for climate protection and climate adaptation in the crucial sectors in Berlin – instead of always just writing new climate protection targets into laws, the state’s environment minister Bettina Jarasch from the Green Party said. Jarasch said she agreed with the main aim of putting climate protection at the centre of policymaking, but added that compliance with certain emission reduction targets could not be influenced by Berlin alone. Therefore, the capital cannot achieve climate neutrality on its own 15 or 20 years earlier than Germany or the EU. (Clean Energy Wire)

Greens go gauche – France’s Europe Ecologie Les Verts (EELV) and Jean Luc Melenchon’s La France Insoumise reached an agreement on Sunday to set up a joint programme and share electoral districts in the upcoming legislative elections. The ‘New Popular Ecological and Social Union’ aims to obtain a left-wing majority in June’s legislative vote which will see French voters elect 577 members of the National Assembly. If this were to happen, the newly re-elected President Emmanuel Macron would be forced to appoint a prime minister and government that would be politically opposed to him. The two left-wing parties have negotiated a government programme that includes an increase in the minimum wage to €1,400, fixing the legal retirement age to 60, freezing the prices of essential goods, and eradicating poverty. The environment and its protection are also at the heart of the project through the implementation of ecological planning and a so-called ‘golden climate rule’. (EurActiv)

Taxing times – Zimbabwe’s High Court has refused to endorse a carbon tax on fuel imposed two years ago on the grounds that it could not be levied by executive action through a statutory instrument, but rather it had to be imposed directly by parliament. The Ministry of Finance and Economic Development introduced the tax in June 2020 using powers granted by parliament in the Finance Act. The High Court first found that Parliament did not have the constitutional power to delegate the setting of a tax rate and had to do this itself, thus causing the statutory instrument to fail. Zimbabwe’s carbon tax is payable in foreign currency at the rate of US$0.03 per litre of petroleum and diesel products or 5% of cost, insurance, and freight value (as defined in the Customs and Excise Act), whichever is greater. (All Africa)

ASIA PACIFIC

Smarting Senator – As Australia heads towards its May 21 election, a Liberal senator, Andrew Bragg, has asked the charities regulator to urgently investigate whether the Smart Energy Council (SEC), an industry body with over over 1,000 members in the renewables, clean tech, and energy efficiency sectors, should be deregistered for what he called “clear, direct, and repeated” breaches of laws forbidding charities promoting political parties or candidates. However, SEC spokesman Wayne Smith told The Age “I would expect Australians would be outraged to think there are such things as prohibited activities against the current government.” He said the SEC supported any political party that supports smart energy policies and strong action on climate change.

Forestry over farms – New Zealand research has found actively managed carbon forestry projects create 25% more local jobs than sheep and beef farming on low productivity land. The research was carried out by PwC, on behalf of forestry group Climate Forestry Association. Specifically, the research found that transitioning from exotic to indigenous forests creates the most local jobs with an estimated 6.3 local full-time-equivalent per 1,000 hectares, compared to 4.7 for sheep and beef farming on low productivity land, and 2.0 for permanent carbon forestry. The larger numbers of jobs created by transitioning from exotic to indigenous forests were due to additional management activities required to achieve the regeneration, according to the study. The report was released as the country’s farming and forestry industries are at loggerheads over the government’s proposal to ban permanent exotic plantings in the country’s ETS.

Kiwi clutching – The UK’s largest commercial forestry manager, Gresham House, has acquired a 25% stake in a New Zealand forest carbon portfolio comprising eight different forests. The portfolio is expected to generate nine mln NZ ETS carbon units over the next 25 years by being retained as permanent forests and not being used for commercial timber. It adds to Gresham’s other foreign investments since 2019 in Ireland and acquisition in South Australia.

AMERICAS

Oilsands’ big ask – Alberta oil companies are asking governments to cover 75% of their potential carbon capture costs even as profits soar. The federal government has already offered to cover half of CCUS costs through tax credits, but oilsands firms aren’t yet biting. MEG Energy CEO told a conference call he thinks large-scale investment in carbon capture is still three to four years away. Oil companies are now lobbying the provincial government in Alberta to come up with the remaining 25%. In the same conference call, the CEO of Cenovus also said they need more help from the government, even while announcing quarterly profits were seven times higher than at the same time last year and dividends would triple. Six oilsands companies applied to the provincial government last month for pore space for a carbon sequestration project. The Alberta government is waiting for more details from the federal programme before committing to a tax credit of their own. (Financial Post)

Pennsylvania package – The Republican-controlled Pennsylvania House of Representatives on Monday passed a package of bills that would permit fracking in the environmentally protected Delaware River Basin. Fracking was banned in the river basin when evidence of drinking water contamination was discovered. The package of bills would speed up the environmental approvals process and weaken the oversight body of the river basin. This follows the passage of an earlier bill on Mar. 30 that would prevent Pennsylvania from joining a carbon programme like RGGI without legislative approval. Pennsylvania Gov. Tom Wolf (D) backs RGGI and is likely to veto these bills. Though the Republicans control both the Senate and the House in Pennsylvania, neither have a large enough majority to override a veto based on past votes on anti-RGGI legislation. (NorthcentralPA.com)

Green mountain heat – Vermont’s legislature approved the Clean Heat Standard legislation on Tuesday, sending the bill through for final signature by Gov. Phil Scott (R). The act will allow the Public Utility Commission (PUC) to create a market-based regulation for the state’s fuel supplies for the building sector. Under the policy, wholesale fuel suppliers and importers would be required to retire a predefined volume of Clean Heat Credits each year, where these credits would stem from low-carbon fuels as well as from projects that result in carbon intensity improvements, such as installing insulation and heat-pumps. The Senate passed the bill on Monday with the inclusion of an important amendment from the House version, requiring the PUC to report back to the Legislature with estimates on the cost of the policy to ratepayers before it is approved and implemented. Once the bill reaches the governor’s desk, he will have five days for signature.  **Read the Carbon Pulse article on Vermont’s Clean Heat Standard here**

RD or yes – California regulators unanimously approved two landmark renewable diesel (RD) projects planned for the northern part of the state which involve converting petroleum-based refiners into renewable fuel production facilities. The Contra Costa County Board of Supervisors late May 3 approved the land use permits necessary for both Marathon Petroleum and Phillips 66 to move forward with the conversions of Marathon’s Martinez plant and Phillips 66’s RodeoRenewed project, which involves repurposing its Rodeo refinery into one of the US’s largest renewable fuel facilities. The Board also approved Marathon’s Final Environmental Impact Report, concluding the required environmental review process under the California Environmental Quality Act. Phillips 66 had received approval for their FEIR in March. (S&P Global Platts)

VOLUNTARY

Microsoft procurement – Tech giant Microsoft has opened its Fiscal Year 2023 CO2 removal procurement cycle, with a July 15 deadline. Microsoft purchased 1.5 mln carbon credits in its last procurement cycle, though it lamented the challenges in buying high-quality CO2 removals.

Private parts – Offset standard SOCIALCARBON on Tuesday proposed a methodology for carbon removal in Brazilian private areas that will determine the annual removal of atmospheric CO2 by native vegetation that is not eligible for REDD projects. The methodology applies to “managed primary formations” and “managed secondary formations” of native vegetation, arising from anthropogenic conservation or natural regeneration on legally declared private property, independent of any legal instruments for mandatory or voluntary environmental conservation. Public comments are due by June 2.

African first – Tamuwa, Kenya’s largest biomass company, is starting what it says is Africa’s first verifiable emissions reduction platform in a bid to benefit its own projects and those of other companies in the region that cut the production of GHGs. The platform, to be known as CYNK, will use the Hedera Hashgraph public decentralised ledger to track emissions reductions, enabling them to be sold to buyers seeking offsets. Hedera said the blockchain technology used is energy-efficient. Tamuwa, a unit of Singapore-based Tamu Group, wants to ensure more income from VERs sales accrues to companies that undertake the cut their carbon footprints. Tamuwa plans to generate 5 million tokenised VERs over the next five years and CYNK is in talks with other companies to join the platform. (Bloomberg)

Offset by sea – Rotterdam-headquartered bunker supplier Delta Energy is offering ARA clients the option of offsetting their petroleum product cargoes or marine fuel purchases. The company has offset its own GHG emissions since it was established in 2021. It currently supplies bunker fuel in the ARA ports and in the UK and offsets the emissions from the gasoil consumed by its barges through the purchase of Verra and Gold Standard credits, working in partnership with Numerco. Delta Energy has now extended carbon offsetting opportunities to its ARA-based bunker purchasers, and also to the cargo clients of its parent company, Delta Corp Shipping. (Bunkerspot)

SCIENCE & TECH

Green H2 breakthrough – ArcelorMittal has successfully tested the use of green hydrogen to reduce iron ore at one of its industrial sites in Canada, in what the world’s second-largest steelmaker claims is a milestone for the industry, Financial Post reports. Engineers at the company’s operations at Contrecoeur in Quebec replaced about 7% of the natural gas typically used to reduce iron ore with hydrogen made from renewable electricity during the 24-hour test earlier this month. Arcelor partnered with a local hydrogen producer that uses electricity from the Quebec grid, which is powered by renewable hydroelectricity, to source the gas. The initiative marks another step in the global effort to improve the green credentials of an industry that accounts for 7-9% of all direct fossil fuel emissions. Some of the world’s biggest steelmakers, including ArcelorMittal, ThyssenKrupp, and China’s Baowu Steel Group Corp have launched various initiatives to reduce their carbon footprint.

AND FINALLY…

Shroomburgers – Substituting just a fifth of meat from cattle with microbial protein – a meat alternative produced in fermentation tanks – by 2050 could halve deforestation, according to a new analysis by the Potsdam Institute for Climate Impact Research (PIK) published in Nature. The market-ready meat alternative is very similar in taste and texture, but is a biotech product which – by replacing beef – involves much less land resources and GHG emissions from agriculture and land-use change. This goes under the assumption of a growing world population’s increasing appetite for beefy bites, and it is the first time researchers have projected the development of these market-ready meat substitutes into the future, assessing their potential impact on the environment. The team of researchers from Germany and Sweden included microbial protein in a computer simulation model to detect the environmental effects in the context of the whole food and agriculture system, as opposed to previous studies at the level of single products. Their forward-looking scenarios run until 2050 and account for future population growth, food demand, dietary patterns as well as dynamics in land use and agriculture. Microbial protein is made in specific cultures, just like beer or bread.

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