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And thanks to our recent hiring drive, below is a new Carbon Pulse daily record: 22 articles… Enjoy!
TOP STORY
PNG REDD+ project hits back at exploitation allegations
A Papua New Guinea REDD+ project developer has rebuffed allegations published by local NGOs that it was unlawfully expanding its project and was exploiting local communities’ lack of awareness on how the voluntary carbon market works.
EMEA
Market Stability Reserve to soak up another 348 mln allowances from EU carbon market
Almost 348 mln carbon allowances will be withdrawn from the EU ETS through next summer and inserted into the MSR, the European Commission announced late Thursday in its annual ‘TNAC’ update, with the market’s oversupply falling 8.2% due to a rebound in emissions in 2021.
Brussels aims to frontload EUA auctions to double Innovation Fund call -leaked draft
The European Commission is planning to frontload more EUA sales this year in order to double the size of an Innovation Fund call, according to a leaked draft of the RePowerEU initiative seen by Carbon Pulse on Thursday.
Euro Markets: EUAs edge lower as market pauses for breath, as energy markets rally on supply concerns
EUAs drifted slightly amid active trading as the market moved in its narrowest range for three weeks on Thursday in the wake of Wednesday’s volatile price action, while energy markets jumped on renewed concerns over supplies of Russian natural gas.
Climate and cost incentives already favour green-over-blue hydrogen in EU -report
Green hydrogen produced in the EU and imported from abroad will be cheaper than all fossil-based hydrogen, according a report published on Thursday, meaning that the bloc must ramp up capacity, build international alliances, and avoid gas-based hydrogen production altogether for climate goals.
Utilities RWE, Fortum spell out costs of exiting Russia ahead of EU energy ban
RWE announced a €850 million writedown on a long-term supply contract for Russian coal ahead of an EU ban this summer, while Uniper’s majority owner Fortum said it will divest all activity away from Russia and reported heavy losses from its exposure to the country’s energy, the firms said on Thursday.
Efficiency gains could half the €62 bln bill for cutting European aviation emissions, finds study
Cutting European aviation emissions 55% by the end of the decade could cost up to €62 billion, with the airline industry itself needing to stump up €14 bln, unless the industry quickly reforms with efficiency improvements that could half the bill, warns a new study.
Switzerland schedules auction for 2021 carbon allowances
Switzerland will in June hold its first carbon permit auction for Phase 3 of its ETS (2021-30), it announced Thursday.
South African startup to fund 100 MW in renewables projects with tokenised carbon credits
A South African startup is targeting funding more than 100 MW of distributed renewables generation through the sale of tokenised carbon credits.
ASIA PACIFIC
ANALYSIS: New Zealand agriculture fights to keep sector out of ETS
A New Zealand agricultural sector group has until the end of the month to submit an emissions pricing scheme proposal to the government, tailor made for the industry, in a bid to keep it out of the nation’s emissions trading scheme in 2025.
Mitsui takes minority stake in Australian offset developer
Japanese trading house Mitsui has taken a 33.7% stake in one of Australia’s biggest carbon credit developers, its third big investment in the Australian offset market in just a year.
AMERICAS
NA Markets: Financial markets weigh on CCAs to negate Scoping Plan bump, RGGI drops below CCR
California Carbon Allowance (CCA) prices were subject to counteracting influences this week as equities sold off and state regulator ARB released the draft Scoping Plan, while RGGI Allowance (RGA) values also declined but were still well bid beneath the Cost Containment Reserve (CCR) trigger price.
Electricity pathways help Oregon Clean Fuels Program notch small surplus in Q4
The Oregon Clean Fuels Program (OCFP) saw credit generation outpace deficits during the final quarter of 2021, spurred by greater volumes from electricity-based pathways, according to state data published this week.
VOLUNTARY
Surge in corporate target-setting not matched by delivery -SBTi
The Science Based Target initiative (SBTi) released its third annual progress report on Thursday, releasing the figures tied to the groundswell of companies that are committing and setting robust climate targets, while also pointing out a lack of reporting on actually delivering on those targets.
LSE proposes tight parameters for carbon funds in its VCM listing plans
The London Stock Exchange (LSE) plans to rule out individual companies for its new Voluntary Carbon Market (VCM) listing, it said Thursday in a consultation note for a label intended to help direct capital from companies seeking to buy carbon credits to complement their net zero strategies.
Ratings firms puts REDD project “on watch” after report questioning legitimacy
A carbon credit ratings agency has put a REDD forest protection project “on watch” for a potential change in its rating after the scheme was the subject of a critical investigation.
Carbon Streaming seals first biochar credit agreement with Restoration Bioproducts
Toronto-based ESG investor Carbon Streaming Corporation broke into the US market with its first biochar carbon stream agreement with Restoration Bioproducts announced Thursday, aiming to help build a biochar production facility in Virginia.
Offset retailer ditches policy of no mark up for buying VCM credits
An offset retailer has ditched its policy of allocating the full cost of buying credits back to the project developer after the surge in demand for nature-based offsets saw some credit prices triple over the last year.
Japan’s SMBC joins bankers’ carbon offset platform
Japan’s Sumitomo Mitsui Banking Corp. has joined an initiative by a group of global banks to set up a settlement platform for voluntary carbon trading transactions.
Crypto carbon group announces token buy-back programme amid price crash
Brazilian company Moss.Earth said late Wednesday it will buy back up to 10,000 of its MCO2 tokens daily in response to the price falling almost 30% over the past week amid turmoil in the crypto market.
INTERNATIONAL
Oil and gas gamble on emissions tech comes with risk to credibility on meeting climate goals, report says
Oil and gas companies are upgrading their climate targets but the sector still faces a credibility gap due to reliance on technologies to mitigate emissions that are expensive and unproven at scale, a report released on Thursday has found.
COMMENT
Can Brussels chase the speculators out of the EU ETS?
EU lawmakers want to clamp down on speculative traders participating in the EU ETS. There’s been a steady drumbeat of complaints over the past few months from MEPs and some member states, claiming that unnamed speculators have driven the price of EUAs too high, and that it’s costing industry too much money. But is restricting speculator access to the EU ETS such a good idea? And is it even feasible?
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- Associate Director of Clean Energy, The Asia Society – Flexible
- Project Manager, Client & Project Management, Radicle – Calgary
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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
Power pact – Utility SSE is leading a group of 11 global companies active in the power sector on a new initiative called the Powering Net Zero Pact to “promote a fair and just transition to net zero,” Renews.biz reports. The partners have worked together since COP26 to develop the pact and promise to uphold a series of social, environmental, and corporate commitments. These include: achieving net zero; working towards 1.5C science-based carbon targets; protecting the natural environment; guaranteeing fair work practices including living wages and freedom of association; targeting human rights risks across global operations; and supporting local communities and supply chains around projects. The other companies in the pact are Subsea 7, Vestas, NKT, RK McLeod, Hitachi Energy, GE Renewable Energy, DEME Offshore, Balfour Beatty, Siemens Gamesa, and Siemens Energy.
Six fix in the mix – The completion of the Article 6 rulebook of the Paris Agreement is a necessary step towards building a robust framework in which participants can use collaborative approaches and a market-based mechanism to promote climate and sustainable development goals, according to researchers in a paper published by the Oxford Institute for Energy Studies. This paper highlights the potential impact of Article 6 on the diversity of carbon credits available for investors and the uncertainty faced by investors when investing and trading in projects and their underlying credits, as well as for corporations, particularly in terms of what claims they can make by purchasing these different carbon offsets.
EMEA
Price stability, whatever it takes – The recent surge in CO2 prices on the EU carbon market has revived the idea of introducing a “price corridor,” with a maximum and a minimum, in order to ensure greater market stability, Euractiv reports. This idea is now being floated by Senators Guillaume Chevrollier and Denise Saint-Pé, who authored an information report titled “Reforming the carbon market to build a sovereign, sustainable and fair European economy”. Published in March, the document proposes a “tool to give economic actors more visibility on the evolution of the price of CO2, for example, by introducing a price corridor on the EU ETS.” In addition to a carbon price floor, the two senators are therefore also calling for a price cap similar to the European “monetary snake” introduced in the 1970s to prepare for the single currency. In the past, French politicians have tended to complain about carbon prices being too low to incentivise investments in low-carbon technologies. “We need a carbon market that works at the European level … We need a European carbon price floor,” French President Emmanuel Macron said in Mar. 2018. Paris again made the suggestion during the COVID crisis in 2020 when oil prices crashed to around $20 per barrel.
Russia retaliates – Germany said Russia is using its energy exports as a “weapon” after Moscow reduced natural gas supplies in retaliation for Europe’s penalties over the war in Ukraine, Bloomberg reported. A unit of Gazprom that was seized by Germany has had its deliveries reduced by about 10 mln cubic meters a day, according to German Economy Minister Robert Habeck, who is also the vice-chancellor in the ruling coalition in Berlin. It appears to be a largely symbolic move by Moscow as Habeck said the cut amounts to about 3% of Germany’s Russian gas imports. He said Europe’s biggest economy can cope with the disruption in part by securing alternative supplies. There’s no need to elevate Germany’s alert level in its emergency plan in response to Moscow’s sanctions against Gazprom Germania, he added.
Vacky, no more – Slovakia has confirmed that the country’s 266 MW Novacky coal power plant will close as planned at the end of 2023, demonstrating that European countries can proceed with their coal phase out plans and reduce their dependence on Russian fossil fuels at the same time. The Novacky coal plant is the country’s second largest carbon emitter, producing 1.16 mln tonnes of CO2 in 2021, and some of the most expensive electricity in Europe. The government announced in 2018 that it would end all subsidies for coal mines by the beginning of 2023, signalling the end for the two mines that feed Novacky, and the plant itself. Plans are already being made to supplement the retired capacity with 80 MW of solar, which will be built on the soon-to-be retired coal sites. In another sign that coal’s structural decline remains firmly locked-in, the Bulgarian Minister of Environment last month announced that operations at the country’s 71 year-old, 120 MW lignite-fired Maritsa III power plant would be suspended following sustained violations of air quality standards. The plant’s operator is appealing the decision (Europe Beyond Coal).
Moldova’s scramble to diversify – Moldova’s main electricity supplier, Energocom, has signed a contract with the Ukrainian hydropower producer, Ukrhydroenergo, for supplying around 30% of demand in Moldova for the period from 12 until 31 May 2022, the Energy Community announced. Director Lorkowski said: “The majority of electricity in Moldova is produced from Russian gas, and the country is fully dependent on this single source of gas which has proved to be unreliable. In that context, the import of carbon-free electricity from Ukraine that de facto replaces Russian gas is truly a very positive development for energy diversification and decarbonisation in Moldova. It also shows that despite the Russian invasion Ukraine has the potential to be a provider of energy security in the region.” The diversification of supply sources will be facilitated further by Electricity Market Rules, scheduled to enter into force on 1 June 2022, which set the basis for a centrally administered balancing mechanism.
Build, back, nuclear – A £120 mln UK government fund designed to unlock and accelerate new nuclear technologies while encouraging new players into the market opened on Friday, the department for business and energy said in a release. The Future Nuclear Enabling Fund will help to realise the government’s ambition to approve eight new reactors by 2030, as committed to in the British Energy Security Strategy in April. It will provide targeted, competitively-allocated government grants which will help nuclear construction projects, including small modular reactors, to attract the private investment they need to help make them a reality. Nuclear power is a key part of the UK’s energy mix, helping to reduce dependence on global gas markets, boosting UK energy independence, protecting consumers from high energy bills, and stimulating investment in nuclear as a clean energy technology of the future, the ministry said. The Future Nuclear Enabling Fund aims to support industry investment in nuclear, offer opportunities to projects in every region of the UK and create high-skilled jobs, as well as boosting the resilience and capability of UK nuclear supply chains.
Xlinks Cable – Still with the UK, Octopus Energy Group has become the latest backer of the ambitious Xlinks project to build an interconnector between giant solar farms in Morocco and the country, predicting the ambitious project could deliver up to 3.6 GW of reliable clean power, BusinessGreen reports. The deal, financial details of which were not disclosed, will see Octopus become a financial and strategic partner of Xlinks as it continues to work on the development phase of the project. Discussions around further future investments are also said to be ongoing, alongside talks that could see Octopus reach an offtake agreement for the power imported by Xlinks. The company behind the project is currently undertaking economic, environmental, and archaeological impact assessments of its plans to lay four 3,800km-long subsea cables to connect a huge renewable energy farm in the Moroccan desert with Devon in South West England. The project aims to become operational in 2027 and deliver clean power at a cost of £48/MWh, which would make it competitive with new offshore wind farms in UK waters. Greg Jackson, founder of Octopus Energy Group, who also personally invested in the project a number of years ago to demonstrate his support, hailed the plans as a means of both boosting UK energy security and slashing emissions.
The magic number – Delivered hydrogen prices of below €3/kg would be needed for break-even green steel production in Europe in the current high energy price environment, industry group Hydrogen Europe said in a new report. The cost of producing renewable hydrogen via alkaline electrolysis in Europe was assessed at €10.70/kg on May 11, according to S&P Global Commodity Insights data. Hydrogen prices would need to fall to below €1.50/kg in an “adjusted prices scenario,” which assumed prices falling to reflect potential future fossil fuel price drops, Hydrogen Europe said in its “Steel from Solar Energy” report, published on Thursday. The estimated breakeven CO2 price in both scenarios is €140/t, it said, much higher than current EUA prices around €85/t. The report models the costs for hydrogen-based direct reduction of iron ore coupled with an electric arc furnace, versus a base case of blast furnace steel production. Blast furnace steel production typically produces around 1.6-2.0 mt of CO2 per tonne of crude steel. With current renewable hydrogen production and delivery costs, the higher costs of the DRI route with hydrogen would add around €100-170 per vehicle for a typical internal combustion engine car. Hydrogen Europe noted that its estimates were based on current electrolyser and solar photovoltaic costs. (S&P Global Platts)
ASIA PACIFIC
Priority list – China has pledged to inject 10 bln yuan ($1.5 bln) into its coal-fired power firms to provide financial relief and support their efforts to guarantee power supplies, state media said late on Wednesday, citing a cabinet meeting, Reuters reports. The new funding was part of a wider package of policies announced by the State Council to try to shore up China’s economy and support employment. It included 50 bln yuan in renewable energy subsidies allocated to central government backed power firms.
Big battery – Australian utility Origin Energy said it has received planning approval from the NSW state government for the 2,800 MWh big battery that will at least partially replace the Eraring power station it plans to close in 2025, Renew Economy reports. The Eraring big battery has planning approval for 700 MW of capacity and four hours of storage, or 2,800 MWh, and would be the biggest in the country if built to full capacity, although it will face a few contenders for that title. It is one of at least two batteries – along with the state government’s planned Waratah “Super-battery” – that will replace the capacity of the Eraring coal plant, which at 2.8 GW is also the biggest in the country. Origin is fast-tracking the closure of Eraring coal to 2025 from 2032 because it no longer sees a long term business case for so-called “baseload” assets as the amount of renewables, and rooftop solar in particular, grows its share of the market.
Verterra – Verterra Ecological Engineering has teamed up with Australian carbon project developer AgriProve to deliver a pilot project in the Fitzroy that explores the link between improved soil carbon and overall soil health, the company said in a LinkedIn post. The pilot project aims to capitalise on several valuable soil carbon co-benefits, including improved farm resilience, increased productivity, income diversification, and a reduction in sediment entering waterways. Verterra promotes itself as Australia’s first full service ecological engineering company, which it defines as designing, building, and managing sustainable ecosystems.
AMERICAS
Taxing borders – US Sen. Sheldon Whitehouse (D) from Rhode Island plans to introduce a carbon border adjustment mechanism (CBAM) bill within the next 10 days or so, E&E News reports. The legislation is expected to create a tariff on imports of carbon-intensive goods like iron, steel, aluminum, cement, glass, pulp, paper, fossil fuels, petrochemicals, and fertiliser without setting a domestic carbon price. The tariff would be calculated by the Treasury department based on average emissions of foreign suppliers above American average emissions. The bill is expected to draw bipartisan support as it gives US companies a competitive advantage over foreign suppliers, but could violate WTO rules and set off a wave of protectionism.
Gates open! – LandGate Corp. has raised $10 mln in Series B funding led by a subsidiary of NextEra Energy Resources and private equity firm Kimmeridge, the company announced Thursday. Proceeds from this round of funding will be used to enhance its product suite with solutions catering to financial institutions, as well as help expand sales and marketing efforts. With the completion of this funding round, LandGate has raised a total of $19 mln in debt and equity. The LandGate platform helps accurately value and assess different land uses across the US, and is also a marketplace for carbon offsets. The new dashboard will generate metrics for investors assessing the projected performance of large energy and resource asset portfolios, connecting developers and investors on its online marketplace.
PODCAST
Tax ourselves – What is “internal” carbon pricing, and why are more and more private companies and institutions using the tool to reduce their emissions? In the latest episode, Yale’s Pricing Nature podcast hears from Elizabeth Willmott (Microsoft, Carbon Program Director), Anirban Ghosh (Chief Sustainability Officer, Mahindra Group), Kim Hellstrom (Strategy Lead, Sustainability, H&M Group), Alex Barron (Assistant Professor, Environmental Science and Policy, Smith College & Co-author, “Internal Carbon Pricing in Higher Education Toolkit”), and Long Lam (Lead Author, CDP’s “How-To Guide to Corporate Internal Carbon Pricing”). A new chapter is released twice a month on Apple Podcasts, Spotify, and wherever else you listen to podcasts.
AND FINALLY…
Back to earth – Carbon trading platform Xpansiv – provider of CBL – has moved on from hopes of a $2 bln-odd IPO valuation, realising investors are in no mood to take a punt in shaky equity markets, the Australian Financial Review reports, without saying where it got the information. Investors around the firm’s IPO roadshow are now talking about a deal valuation of $1.2-1.3 bln, which the paper said raises the question of whether Xpansiv would pursue a listing at those levels or turn to private markets to help fund its $300 mln acquisition of registries business APX.
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