CP Daily: Friday May 6, 2022

Published 00:29 on May 7, 2022  /  Last updated at 00:29 on May 7, 2022  / Carbon Pulse /  Newsletters

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

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ANALYSIS: Hydro drought to compound tight EU energy supply, support EUAs

Hydro levels at multi-year lows across Europe will continue to support ETS-covered fossil fuel burn amid an already-tight regional power mix, with analysts expecting that the resulting rise in coal and gas generation could offset reductions from renewable capacity expansion in 2022 and support a year-on-year rise in EU power sector emissions.


BRIEFING: As Ontario election campaign kicks off, legacy of cap-and-trade demise lingers 

Ontario’s opposition parties began campaigning this week to unseat the Progressive Conservatives in the June 2 election, with Premier Doug Ford’s decision to scrap the province’s WCI-linked cap-and-trade programme four years ago still looming large over the jurisdiction’s climate policy.

WCI, RGGI compliance entities build net long positions amid April expiry

Regulated entities in the California and RGGI cap-and-trade programmes added to their allowance holdings this week, while speculators trimmed their positions as the April contracts went to delivery, according to US Commodity Futures Trading Commission (CFTC) data published Friday.

Renewable Energy Group sees LCFS, RIN revenue increase in Q1

Biofuel producer Renewable Energy Group (REG) saw higher year-on-year revenues from selling California Low Carbon Fuel Standard (LCFS) and Renewable Fuel Standard (RFS) credits during the first quarter of the year, according to a company filing published Thursday.


EU lawmaker opposition to ETS2 eases as MEPs eye earlier start for businesses

Senior MEPs negotiating EU carbon market reform may be nearing a deal on accepting a proposed second ETS for buildings and road transport, according to draft compromise amendments seen by Carbon Pulse on Friday.

Euro Markets: EUAs hold on to early gains to post 8.4% weekly increase amid bullish political outlook

Carbon prices posted a weekly gain of more than 8% as robust buying helped the market to a new ten-week high amid a combination of compliance and speculative buying, as EU lawmakers appeared to be closing in on a preliminary deal over ETS reform proposals.

European airlines confident in partial recovery of pre-pandemic demand in 2022

Several European airlines this week reported greater confidence in achieving a sustained rebound in passenger numbers in 2022 due to easing pandemic restrictions, but demand will remain well below pre-pandemic levels meaning any resulting EUA and offset impact is likely to be muted.


Australia Market Roundup: AgriProve sees through new batch of soil carbon schemes, as Labor commits to SM and CER reform

AgriProve Solutions has added additional projects to the Clean Energy Regulator’s (CER) project registry, as opposition energy and climate spokesman Chris Bowen reiterated the Labort party’s commitment to add Safeguard Mechanism Credits and review Australia’s broader carbon market.

Australian waste sector wants more offset market influence, calls for methodology expansion

Australia’s waste and resource recovery industry wants a bigger say in offset methodology issues on the basis that it generates more than one-third of all the Australian Carbon Credit Units (ACCUs) in the market.


UK forest carbon scheme tightens up on additionality

The UK is tightening the rules of additionality for forestry projects after a surge in the number of large-scale woodland planting projects tested the current criteria “to its limits”.

NCX forest harvest deferral credit price holds steady in spring auction 

US forest landowners on the NCX carbon platform received the same credit price for deferring harvests for a single year this spring as they did during the previous quarter, though the number of landowners was much larger compared to a year ago, according to data published Friday.


Shipping firm signs up to carbon credit scheme for vessel retrofits

A second shipping company has joined a unique scheme in the marine industry that allows participants to claim carbon credits for investment in retrofitting of vessels designed to reduce emissions.


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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



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


Extreme measures – India’s PM Narendra Modi has urged states and federally administered territories to prepare heat action plans to avoid deaths due to heat waves and fire incidents, as south Asia swelters under extreme temperatures well above 40C. India recorded its warmest March in over a century, with the maximum temperature across the country reaching 33.1C degrees Celsius, nearly 1.86C above normal, according to the India Meteorological Department. Over two dozen people have died in India from exposure to extreme heat since late March. Scientists have linked the early onset of an intense summer to climate change, and say more than one billion people in India and neighbouring Pakistan were in some way vulnerable to the extreme heat. (Reuters)

What’s the point? – A major international energy body has warned that efforts to blend hydrogen into mains gas supplies could be costly and impractical, and push up household energy costs for minimal emissions reduction, Renew Economy reports. The new report from the International Renewable Energy Agency warns that blending hydrogen in mains gas networks is a complicated way of cutting household emissions and would likely cost more than $500 per tonne of emissions abated. The findings suggest that the use of hydrogen in residential appliances like stove-tops and water heating would be prohibitively expensive, and electrification could serve as a cheaper path to cutting emissions. While the exact abatement cost would depend both on the cost to produce hydrogen and the prevailing market price for fossil gas, even dramatic reductions in the cost of hydrogen would still likely see the effective abatement cost exceed $200 per tonne, according to the research.

Flare-way to heaven – Global progress to reduce gas flaring, the wasteful industry practice of burning natural gas during oil production, has stalled over the last decade, according to the World Bank. Globally, gas flaring resulted in nearly 400 Mt of CO2e in 2021, further underscoring the urgency to accelerate the decarbonization of the world’s economies. Satellite data compiled and analysed for the bank’s latest Global Gas Flaring Tracker Report shows that 144 bln cubic meters of gas was flared at upstream oil and gas facilities last year. Ten oil-producing and flaring countries accounted for three-quarters of all gas flaring, seven of which – Russia, Iraq, Iran, the United States, Venezuela, Algeria, and Nigeria – have remained the top seven consistently over the last ten years. The remaining three – Mexico, Libya, and China – have shown significant flaring increases in recent years.  Gas flaring occurs due to a range of issues, from market and economic constraints, to a lack of appropriate regulation and political will. The practice results in a range of pollutants released into the atmosphere, including CO2, methane, and black carbon (soot).

Even more lawsuits – Obscure international investment treaties could allow oil and gas investors to sue governments for up to $340 bln if climate policies hurt their profits, according to a study in Science. That’s more than the $321 bn of public money for climate finance in 2020, Climate Home reports. “It means that money countries might otherwise spend to build a low-carbon future could instead go to the very industries that have knowingly been fuelling climate change, severely jeopardising countries’ capacity to propel the green energy transition forward,” wrote the authors. Countries have signed thousands of treaties that protect foreign investors from government action. These treaties allow investors to sue governments for compensation when contracts have been interrupted, drilling permits refused or policies affecting their operations are introduced. They are known as investor-state dispute settlements (ISDS). The study warns that these treaties create “a chilling effect” on governments, deterring them from implementing ambitious climate policies. This “could lock countries into high carbon growth trajectories” and “choke the climate transition,” said co-author Kevin Gallagher, professor of global development policy at Boston University.


Not so slow Oslo – The New Yorker profiles the climate efforts of Norway’s capital, Oslo, including its world- first zero-emission construction site in 2019 that led to the city’s elders committing to making all municipal construction projects zero-emission by 2025. Through an annual process known as climate budgeting, every department in the city identifies specific policies and actions to reduce its emissions. All of these separate interventions, with their impacts regularly quantified and monitored, are aimed at reducing the city’s GHG emissions 95% by 2030 from their 2009 levels.

Tenfold Thierry – Electrolyser manufacturers in Europe committed this week to increase their manufacturing capacity tenfold – to 17.5 GW per year by 2025 – as part of a joint declaration with the European Commission in Brussels. The joint declaration was agreed upon during an electrolyser summit in Brussels and signed by 20 industry CEOs and the EU’s internal market Commissioner, Thierry Breton. The increase in capacity will enable the annual production of 10 mln tonnes of renewable hydrogen in Europe by 2030, the Commission said in a statement. The target aligns with plans presented in March by the EU executive to end the EU’s reliance on Russian gas “well before 2030” and accelerate the shift to clean energy sources. (EurActiv)

Land-locked? Berlin’s got you covered – Germany will show solidarity with EU countries seeking alternatives to Russian gas and oil, for example helping eastern states without ports in the North or Baltic Seas access LNG, Chancellor Olaf Scholz said Thursday. Speaking after meeting with Czech PM Petr Fiala, Scholz said many countries faced an even bigger challenge than Germany in reducing reliance on Russian energy imports. Russian gas imports that arrive via pipeline account for more than 90% of gas consumption in Czechia, which is landlocked, Fiala said. Germany earlier on Thursday took steps to ramp up LNG imports, renting four floating storage and regasification units and choosing the North Sea port of Wilhelmshaven as the first handling hub. (Euractiv)

Shell-blocked – Shell has obtained injunctions from UK courts that pave the way for protesters to be fined or put in prison if they block or damage petrol stations and other oil facilities in England and Wales, the firm said on Friday. The move follows several protests in recent weeks by climate activists such as Extinction Rebellion and Just Stop Oil. It mirrors steps taken by other oil firms including Exxon that were backed by Britain’s business department, which says the right to protest should not cause disruption to people’s everyday lives. The injunction orders refer to Shell petrol stations in England and Wales, some of which were damaged with hammers recently, Shell’s main offices in London and an oil terminal, according to court documents shared by Shell and a spokesperson. If found to be in breach of the injunction order, a person can be held in contempt of court and may be imprisoned or fined. British police arrested hundreds of activists in April after demonstrations demanding a swift end to the use of fossil fuels were staged at oil facilities as well as bridges in central London. (Reuters)


Coal poll – Queensland’s Labor government is playing “a dangerous game” with coal that could hurt the party’s chances in inner-city Brisbane in the federal election, according to a political expert, The Guardian reports. On Wednesday, the state Labor government’s energy minister, Mick de Brenni, ruled out closing any of Queensland’s eight coal-fired power plants, despite having plans to achieve net zero emissions by 2050. A spokesperson for de Brenni on Thursday said the minister was answering a question when he made those comments – describing them as a long-held position of the state Labor party – and that three of those power stations were privately owned. Glenn Kefford, a political scientist from the University of Queensland, said the comments appeared to be “part of a broader strategy” that Labor had implemented at the state level. He said the party had “walked away” from “some of the more ambitious messaging around climate change, in particular in Queensland.” “We know what happened in 2019,” he said. “We all can remember the infamous Adani convoy and, I think, that can be taken as part of the messaging strategy here.” Although Queensland voters convincingly re-elected the state Labor government in 2020, at the 2019 federal election the party performed poorly in the state, losing two seats, winning only 6 overall out of the state’s 30.

Import the power – Singapore received 20 proposals to supply it with low-carbon electricity from overseas in what could be a test case for the ability of small countries to access green power, Bloomberg reports. The Energy Market Authority got bids for supply from Indonesia, Malaysia, Thailand, and Laos in response to a tender that sought 1.2 GW of lower-carbon electricity imports starting in 2027. The types of power include solar, wind, geothermal, and hydro, it said. Singapore, which currently generates 95% of its electricity from natural gas, wants to decarbonise its power mix but its tiny land area means it has few domestic options. It’s being forced to look offshore instead, and is aiming to bring in around 30% of its electricity by 2035.

Precious Japanese telecom firm NTT Group has implemented a 6,500 yen ($50) per tonne internal carbon price to aid its decarbonisation process, the company announced on Friday. The price will be used in the decision-making process for whether or not to implement various emissions reductions projects as well as in the company’s procurement processes.


OPG? More like OMG – Ontario’s biggest power producer, Ontario Power Generation (OPG), has been selling clean energy credits outside of a government-approved framework – a revenue-making scheme the Crown corporation created without public knowledge. The power generator told The Narwhal the programme has been running in some form since 2013. That means it started before the previous Liberal government implemented a carbon pricing programme across the province, and has continued after Doug Ford’s Progressive Conservative government blew up that WCI-linked cap-and-trade system in 2018. Energy experts say that by creating its own program outside of a publicly acknowledged framework, Ontario Power Generation may be understating the emissions reported by the province, and undermining efforts to ensure Ontario has a clean electricity grid.

Island carbon drama – Canada’s smallest province may raise its carbon tax after a bill to increase the emissions levy passed its second reading in Prince Edward Island’s legislature. PEI is currently taxing carbon at a rate of C$30 per tonne, set in 2020, while the current federal minimum price is set at C$50 per tonne. The current bill before the legislature would bring the island’s carbon price in line with the federal backstop standard and only requires one final vote before it becomes law. Opposition Green and Liberal parties have opposed the government’s bill to raise the carbon tax because the proposed law wouldn’t return most or all of the tax revenue directly to Islanders’ pockets. The governing Progressive Conservatives hold power with 14 seats and have declared the carbon tax vote a confidence motion, meaning if the government loses the vote the province will go to an election. The Green and Liberals have 12 seats combined, putting PEI only two votes away from going to the ballot box over carbon revenue allocation. (CBC)

Oxy proxy – Occidental Petroleum shareholders on Friday voted against a proposal by activist investor group Follow This to extend the company’s current carbon emissions reduction targets. More than 80% of shareholders backed the board’s recommendation to keep current commitments set by the US oil and chemical producer, during the company’s annual meeting on Friday. CEO Vicki Hollub said the two sides have a “fundamental disagreement on what it means to be Paris aligned.” Follow This, a Dutch climate activist, wanted Occidental to disclose quantitative short-, medium-, and long-term GHG reduction targets consistent with the Paris Agreement. The group’s founder, Mark van Baal, said oil companies need to cut emissions by 40% and that Occidental’s existing commitments do not guarantee that. Occidental’s board told investors it believes the company is already committed to Paris goals, and to reaching net zero emissions by 2050, with 14 metrics aimed at curbing emissions from its operations and products. (Reuters)


Scope 3’s a charm – Offset standard manager and developer Verra on Friday announced it has launched a new Scope 3 Initiative to better understand how its carbon accounting expertise could support increased climate action through a potential Scope 3 GHG Programme. Formed in May 2022, the initiative encompasses a multi-stakeholder working group, which includes a pilot project group, a broader consultative group, and one-on-one exchanges with stakeholders. It investigates key barriers to implementing and scaling climate action in organisational Scope 3 emissions inventories. The working group will explore how the VCS’ reach, carbon crediting methodologies, audit process, and registry could support robust accounting of GHG interventions in corporate Scope 3 inventories, prevent double-counting, and establish flexibility for companies to generate carbon credits or Scope 3 interventions

Wrong trees, wrong places – Nature-based climate solutions can fail if the wrong trees are planted in the wrong places, leading to financial losses, Mongabay reports. The article cites a study in journal Science Direct that concluded that for every dollar that goes into tree plantation programmes, at least half is wasted, according to an analysis of tree planting data in India’s Himachal Pradesh. It found that nearly 40% of afforestation spending was going to places that already had moderate or high tree density, whereas only 14.1% of spending was targeted at areas with low tree-density likely to be degraded forests having high reforestation potential.

No dead REDD – The world’s largest carbon standard Verra has been associated with a dubious carbon offset scheme in the Democratic Republic of Congo (DRC) even though it rejected the project at the earliest phase of the approval process. Last month, a consortium of NGOs in the DRC wrote to the country’s deputy prime minister, and minister of environment and sustainable development, about the massive 72-mln ha REDD+ project by an India-headquartered company called Kanaka Management Services (KMS). KMS used “deceptive and other malicious methods” to force local communities to sign contracts that granted KMS exclusive rights to carbon credits for a period of one hundred years, the letter said. KMS continued to advertise the scheme as Verra-approved, even though the standard body rejected the project at the earliest possible stage in September 2021. In the response to the NGO letter, KMS repeatedly called the project “the Verra VCS REDD+ project 2320.” Verra has asked KMS to “cease and desist” the use of Verra in all project descriptions, and said that it will aim to more clearly identify the status of rejected projects in its registry system. (REDD-Monitor)


Clean Development Midfielder – Mathieu Flamini, a former top European football midfielder, has taken up the position of CEO at the sustainable chemicals startup he co-founded. Flamini, who spent nearly two decades playing midfield for top teams such as AC Milan and Arsenal, will take up the new role at GFBiochemicals. Alongside the appointment, the company said it had raised €15 mln in a first funding round led by Sofinnova Partners with participation from Sparta Capital. The new funding will be used to develop partnerships, invest in research, develop intellectual property, build a production facility and hiring, Flamini said. The company is ultimately aiming to tackle chemical pollution, he said. This investment is a first step of a major journey which will also move in the direction of developing key partnerships and agreements with large producers of household and industrial goods, Flamini added. GFBiochemicals, launched in 2008 and employing around 50 staff, provides companies with solvents derived from the levulinic molecule that the company says are a greener alternative to petrochemical-based products. Regulators including the EU have begun to focus on the role of chemical pollution, and Flamini said that regulatory pressure is accelerating change in the chemical industry. (Bloomberg)

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