CP Daily: Wednesday May 11, 2022

Published 01:45 on May 12, 2022  /  Last updated at 01:45 on May 12, 2022  /  Newsletter  /  No Comments

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

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TOP STORY

ANALYSIS: Mapping carbon project pathways for Paris Agreement era

Once thought to be at death’s door, the UN’s Clean Development Mechanism (CDM) lingers in the Paris Agreement-era, although there is a deep well of complexity on how its credits may be issued and used – resulting in many project proponents jumping ship for clearer waters in the voluntary carbon market.

EMEA

MEP push for higher ETS ambition risks failure amid energy cost concerns, says lead lawmaker Liese

A deal by senior MEPs to raise ambition in the EU ETS is likely to be shot down by the full European Parliament, the assembly’s lead lawmaker on the issue said on Wednesday, citing the intense pressure on politicians to curb sky-high energy costs.

Euro Markets: EUAs recover losses after lawmaker move to restrict speculators

EUAs erased early losses to post a 1.7% rise on Wednesday, after prices briefly plunged when a senior EU lawmaker confirmed that MEPs were backing plans to limit participation in the EU carbon market.

UK company secures $150 million for ‘game changer’ CCS technology

A UK carbon capture company has secured $150 million in equity funding to scale up its technology that could drive down heavy industry capture costs to $30/tonne, it claimed Wednesday.

VOLUNTARY

FEATURE: Carbon credit NFTs are here, but who are they for?

The wave of carbon asset NFTs is upon us, and while many regular market participants will look down their noses at the prospect, some are pushing to take carbon credits to places they have never gone before.

PNG NGOs lash govt agency over REDD+ safeguard workshop failings

Papua New Guinea environmental NGOs have accused the government’s Climate Change Development Authority (CCDA) of failing to provide stakeholders with enough time to scrutinise REDD+ safeguard documents, and to properly enforce its moratorium on such projects to be developed for the voluntary market.

Unilever, AXA unveil €1 bln regenerative agriculture fund

Consumer goods company Unilever and insurance and asset management firm AXA on Wednesday unveiled plans to invest €100 mln each in a new €1 billion regenerative agriculture fund to be managed by French-headquartered Tikehau Capital.

Cargill expands eligibility, raises credit price under its carbon soil sequestration scheme for US farmers

Commodities trading firm Cargill has expanded the eligibility and raised the tonnage price for its voluntary carbon market-based regenerative agriculture programme.

NGO launches $15/t consumer-focused climate credit initiative

A non-profit has launched an initiative to sell carbon credits as part of packages to consumers that want to offset their annual activities at a market rate of $15/tonne, the group said in a release on Wednesday.

ASIA PACIFIC

Singapore to use CORSIA eligibility criteria for offsets in carbon tax scheme, door open for greater credits role

Singapore will use the eligibility criteria set out in CORSIA, the global aviation offset mechanism, for emitters who will be allowed to offset a small portion of their emissions under the country’s carbon tax scheme, an official from the country’s National Climate Change Secretariat (NCCS) said on Wednesday.

India faces challenges, opportunities in building carbon market framework

India’s plans to establish a uniform and more effective framework for a voluntary carbon market (VCM) has wide backing domestically from industry players, but moves to facilitate the rapidly growing interest in carbon credits also face complex challenges for regulators, according to analysts.

Japan to require no emissions targets, offset acquisitions in GX League pilot phase

Participants in Japan’s voluntary emissions trading scheme will not be required to set specific emissions targets for the current financial year, but instead focus on the preparation for the full-scale launch of the market in April next year, the government said Wednesday.

Secretive Chinese offset scheme triggers doubts over legitimacy

A newly established carbon trading platform in China is being met with suspicion among market participants after refusing to disclose information about its projects and the offsets it has issued.

SK Market: Korean auction clears at lowest level for 2021 compliance cycle

South Korea’s monthly KAU auction cleared Wednesday at the lowest level seen for the 2021 emissions year, with less than half the volume on offer picked up despite the government making cuts in the available number of units.

AMERICAS

US regulator to host voluntary carbon market meeting in June

US Commodity Futures Trading Commission (CFTC) Chairman Rostin Behnam on Wednesday announced the agency will convene a meeting on voluntary carbon markets next month, as futures contracts are changing the landscape of voluntary emissions reduction (VER) trade.

Pennsylvania to offer 15 mln allowances at September RGGI auction if linkage goes through

Pennsylvania will offer roughly 15 million permits at the Q3 auction if it successfully joins the RGGI cap-and-trade system this summer, a government official told a court hearing Wednesday as the coal industry warned of devastating economic impacts from the programme.

California offset issuance drops to 4-mth low, Quebec mints first credits this spring

California regulator ARB handed out the fewest number of compliance offsets this week since December, while Quebec’s environment ministry awarded its first batch of credits since February, according to government data published Wednesday.

Vermont House fails to override veto of Clean Heat Standard legislation

Vermont’s Clean Heat Standard (CHS) bill is dead until at least January after a House of Representatives vote to override the governor’s veto on Tuesday failed by just one ballot.

Brazil to issue presidential decree for carbon market this month -media

Brazil will soon create a carbon market by presidential decree, bypassing legislation that has stalled in Congress since last fall, a media outlet reported Wednesday.

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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

Renewables record – Renewable energy is set to break another global record in 2022, despite headwinds from higher costs and supply chain bottlenecks, according to the International Energy Agency. The IEA said in its latest Renewable Energy Market Update that global renewable energy capacity additions is expected to rise this year to 320GW, compared to 295GW in 2021. Solar PV is on course to account for 605% of global power growth in 2022, followed by wind and hydropower. In the EU, annual additions jumped by almost 30% to 36GW in 2021. The IEA said 2022 and 2023 could see a significant increase in renewables capacity, as the bloc attempts to wean itself of Russian oil and gas, however it noted this would depend on the success of parallel energy efficiency measures to keep the region’s energy demand in check. The update said renewables growth so far this year is much faster than initially expected, driven by strong policy growth in China, the EU, and Latin America, which are more than compensating for the lower than expected growth in the US. China and India are also expected to be major growth sectors, thanks to their respective policies supporting renewables. The IEA said however that renewable power’s global growth could lose momentum next year and plateau, without stronger policy measures. The installation cost of wind and solar is expected to remain higher than pre-pandemic levels in 2022 and 2023 as a result of high commodity and freight prices, reversing a decade of price declines. However they will remain competitive, given that fossil fuel costs have jumped much faster.

Carbon bombs – The world’s biggest fossil fuel firms are quietly planning scores of “carbon bomb” oil and gas projects that would drive warming beyond internationally-agreed temperature limits, a Guardian investigation shows. The data found these firms are placing billion-dollar bets against humanity halting global heating with huge investments in new fossil fuel production that could pay off only if countries fail to rapidly slash carbon emissions. The oil and gas industry is extremely volatile but extraordinarily profitable, particularly when prices are high, as they are at present. ExxonMobil, Shell, BP, and Chevron have made almost $2 trn in profits in the past three decades, while recent price rises led BP’s boss to describe the company as a cash machine. The investigation published in the newspaper demonstrated that the fossil fuel industry’s short-term expansion plans involve the start of oil and gas projects that will produce GHGs equivalent to a decade of CO2 emissions from China, the world’s biggest polluter. These plans include 195 carbon bombs – gigantic oil and gas projects that would each result in at least a billion tonnes of CO2 emissions over their lifetimes – in total equivalent to about 18 years of current global CO2 emissions. About 60% of these have already started pumping. The dozen biggest oil companies are on track to spend $103 mln a day for the rest of the decade exploiting new fields of oil and gas that cannot be burned if global heating is to be limited to well under 2C.

EMEA

LNG over lawsuits – Germany has submitted a legislative proposal to speed up the permitting process and construction of onshore and floating LNG terminals, as well as the necessary pipelines to connect them to the grid. Germany had set out a timeline of achieving independence from Russian gas by the middle of 2024. The new law would allow public authorities to waive certain procedural requirements made mandatory by EU law, like environmental impact assessments. The government added that it considered this to be compliant with the law, given the exceptional circumstances. Other licensing requirements, like an assessment as per water law, would not be changed. Germany’s environmental NGOs, incensed by the rushed construction of LNG terminals they deem to be unnecessary and climate-damaging, are already preparing lawsuits to challenge the government’s push for additional fossil fuel infrastructure. (EurActiv)

ENVI votes – The European Parliament’s cross-party environment committee (ENVI) has voted in favour of a Commission Fit for 55 proposal to that would effectively ban new petrol and diesel car sales from 2035, but the lawmakers failed to back an amendment to increase interim ambition by any more than the proposed 55% cut in CO2 emissions from cars by 2030 versus 2021 levels. The whole European Parliament is due to vote in June, with a final then to be struck with the Council of member states. The Commission proposed the targets as part of a bigger package of climate change policies last July, on the basis that new cars stay on the roads for 10 to 15 years – meaning that 2035 is the latest date that sales of polluting cars could halt, without jeopardising the bloc’s plan to have net zero emissions in all sectors by 2050.  In a separate vote, ENVI backed largely procedural proposals that make use of EU ETS infrastructure to allow EU airlines to meet their obligations under the UN’s CORSIA international aviation offsetting mechanism. As foreseen under CORSIA, EU member states should calculate and inform airlines of their offsetting in respect of 2021 emissions by Nov. 30, with no offsetting expected to be required due to the pandemic restrictions keeping flight emissions well below the 2019 baseline year.

Equi-nope – Equinor’s shareholders approved the oil and gas company’s energy transition plan on Wednesday, while rejecting proposals from campaigners to strengthen climate ambitions by also setting targets for tougher emission cuts. The call for absolute reduction of Scope 3 emissions, which account for the majority of total lifecycle emissions from oil and gas, has become a new battleground between activists and the petroleum industry. In the short term, absolute emission targets could only be reached by selling or shutting down profitable oil and gas production, Chairman Jon Erik Reinhardsen of majority state-owned Equinor told the annual general meeting. “Right now the world is dealing with a situation where energy security is high on the agenda, particularly in Europe. In this situation, it is important to be a reliable supplier of energy, both of oil and gas and renewables,” he said. The motion to set absolute targets for Scope 3 emissions was proposed by Greenpeace and WWF, which said Equinor should stop investing in petroleum exploration and in the development of new fields. (Reuters)

ASIA PACIFIC

Maori legal threat – New Zealand’s Maori Forestry Association head, Te Kapunga Dewes, has warned of potential legal action against the government if it goes ahead with its proposal to ban exotic plantings from permanent registry of the the country’s ETS. Radio NZ reports that Dewes said forestry was often the only way some iwi, hapu, and Maori trusts were able to make money from their remaining land, describing the ban on exotics as an outrage. Dewes was one of several Maori leaders who met last week with Minister of Forestry Stuart Nash, and he said he was due to meet soon with Minister of Climate Change James Shaw. But unless significant changes were made, legal challenges were likely, Dewes said. The proposals are driven by concerns that significant tracts of land are being converted to pine, a tree that grows quickly, to take advantage of soaring prices under the ETS. But this comes at the expense of planting natives, which are more expensive and take longer to grow but are better for biodiversity.

Apply some pressure Three European asset managers, including the largest, Amundi, said on Wednesday they had jointly filed climate-change resolutions at Japanese electricity generator Electric Power Development Co Ltd (J-Power), according to Reuters. In what they say are the first climate-related proposals by an institutional investor group to a Japanese firm, Amundi, hedge fund Man Group and HSBC Asset Management called on J-Power to set credible emissions-reduction targets and to disclose plans to achieve them.

Putting the cap on The government of Shandong province in China, one of the nation’s industrial hubs, is capping the production capacity of its emissions-intensive industries, according to local news outlet Dazhong Daily. Any company wishing to add new big-emitting production capacity must remove existing capacity with a similar carbon emissions potential, according to new regulations. The new control plan will remain in place for three years, starting Apr. 28.

Aussie H2 for Rotterdam – Australia’s Queensland state government has signed a memorandum of understanding with the Port of Rotterdam in the Netherland to work together to develop a green hydrogen supply chain. The agreement was formalised at the World Hydrogen Summit in Rotterdam, as a large delegation of Australian government and business leaders attended the conference to tout Australia’s potential as a green hydrogen exporter. The Queensland government has committed A$2 bln to its Renewable Energy and Hydrogen Jobs Fund to partner the state’s public utilities with private sector projects to ramp up hydrogen development work. He also noted the state was developing three Renewable Energy Zones (REZs) which would be able to supply renewable electricity to green hydrogen projects. Last year the Western Australian government signed a similar MoU with the Port of Rotterdam, as it too hopes to eventually export green hydrogen to Europe.

Nippon green steel – Japan’s biggest steelmaker, Nippon Steel, has announced plans to begin supplying carbon neutral steel from 2024, Reuters reports. Nippon Steel president Eiji Hashimoto said the company will initially supply 700,000 tonnes of steel that would not emit CO2 in the manufacturing process, either by shifting to alternative energy sources or by capturing any CO2 that is emitted. He did not specify a timeline for when the company could produce the product in higher quantities. The company currently faces an array of challenges, including lower demand for steel in China, market volatility triggered by war in Ukraine, as well as a weak yen.

AMERICAS

Beault and arrow – Environmental groups are suing the Canadian government over its approval of an oil extraction project two days after the world’s leading climate science authority warned fossil fuel infrastructure needed to be downsized. The Bay du Nord project off the coast of Newfoundland, developed by Norwegian company Equinor, would extract 300 mln barrels of oil over 30 years with production expected to start from 2028. But veteran campaigner turned environment minister Steven Guilbeault approved the $12 bln project last month after an environmental assessment concluded it is “not likely to cause significant adverse environmental effects” if mitigation measures were imposed. The move didn’t impress his former colleagues. Environmental law charity Ecojustice filed a petition at Canada’s Federal Court to overturn the decision on behalf of the Sierra Club Canada Foundation and Equiterre, which Guilbeault co-founded and led until November 2018. Campaigners will argue the project is incompatible with Canada’s climate obligations and that the environmental impact assessment was “deeply flawed” and failed to take into account emissions from burning the oil. (Climate Home)

Change of priorities – Colombia will prioritise signing contracts for oil and gas blocks with companies making greater strides to cut carbon emissions, a government official said on Wednesday, adding the country needs to assign an average of 10 blocks a year to maintain fuel self-sufficiency. Colombia’s oil and gas industry is a major source of income for the Andean country, where efforts to boost reserves pushed the government of President Ivan Duque to sign 69 exploration and production contracts over the last four years. However, while companies have historically presented their bids on how many wells they will drill, moving forward they will base them instead on how much carbon they can reduce from operations, said Armando Zamora, president of Colombia’s National Hydrocarbons Agency (ANH). “The idea is that the dominant criteria is saving carbon, because that is what is required,” Zamora told journalists at an oil and gas conference organised by the Colombian Petroleum Association (ACP) in the Caribbean city of Barranquilla. “It’s a change of priorities,” he added. Duque’s term finishes in August and Colombia’s oil and gas industry has voiced concerns about potential future policies which would weaken the country’s energy sector. (Reuters)

VOLUNTARY

A Minnesota minute – Pipeline firm Enbridge on Tuesday announced it is the first company to join the Minnesota Million project of reforesting 1 mln acres (404,700 ha) of forest in the state by 2040. But Enbridge won’t have to wait for carbon credits in return. Participating private property owners like Enbridge will receive credits just one year after planting the trees through Los Angeles-based Climate Action Reserve’s Climate Forward programme. The Minnesota Association of Resource Conservation and Development Councils running the reforestation plan decided Climate Forward would be the most attractive option to landowners because of the rapid credit issuance. Climate Forward plans on verifying the credits on a six-to-12-year cycle, permitting some of the trees to be cut down for lumber. Enbridge estimates if a corporation buys credits on reforesting pine over 40 ha on a perpetual basis, that company could earn $200,000. Enbridge plans on investing $100,000 in the Minnesota Million plan. (Read Carbon Pulse’s article on how Climate Action Reserve issued guidance for reforestation credits issued under Climate Forward to transition into the standard’s more traditional offset programme)

AND FINALLY…

Biofools – Coldplay has partnered up with Neste, an oil refiner based in Finland, to cut its CO2 emissions ‘by half’ from its upcoming Music Of The Spheres world tour, but green group T&E has accused the British band of naively supporting greenwashing in its supposedly ‘sustainable’ partnership. Neste has documented links to deforestation and dubious biofuels, T&E said as the climate group called on lead singer Chris Martin and his team to drop the partnership and choose verified sustainable fuels made from renewable electricity for future tours. T&E said that Neste has a track record of scandals, including sourcing from palm oil mills linked to deforestation and the firm does not release much information on the feedstocks they use to create biofuels, but they are among the largest users of crude palm oil and also palm oil derivatives. Their sustainable fuels are also based on used cooking oil (UCO). With half of the EU’s UCO supplies imported – mostly from China, Indonesia and Malaysia – there are serious questions as to whether this kitchen waste is truly ‘used.’ Another key feedstock for Neste are animal fats, mostly sourced from industrial animal farming. Separately, United Airlines has entered into a purchase agreement with Neste that provides the right to buy up to 52.5 mln gallons of sustainable aviation fuel (SAF) over the next three years for United flights departing from Amsterdam’s Schiphol Airport, and potentially other airports as well. According to GreenAir, the deal makes it Neste’s largest to date with a passenger airline and also the first by a US airline to sign an international SAF purchase agreement. United’s Chief Sustainability Officer, Lauren Riley, said the airline had invested more than any other airline so far in SAF production and that it made sense to expand its network of partners internationally. Neste will provide United with 2.5 mln gallons of SAF at Schiphol in the first year, with the airline having the right to purchase up to 20 mln in the second year and up to 30 mln in the third.

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