CP Daily: Friday May 13, 2022

Published 02:06 on May 14, 2022  /  Last updated at 02:06 on May 14, 2022  /  Newsletter  /  No Comments

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

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TOP STORIES

ANALYSIS: Demand for nature credits to persist as far curve spreads widen

Nature-based carbon credit futures have largely withstood a wider voluntary carbon market (VCM) shakedown in recent months, with robust demand expectations and near-term economic woes blowing out spreads along the curve.

Carbon Pulse hires its way to record reporter headcount, doubles article output

Carbon Pulse has further boosted its coverage of regional and global carbon markets after completing a hiring drive that allowed it to welcome another four talented journalists, giving the unrivalled news provider a record staff size and doubled story count.

AMERICAS

Brazilian cap-and-trade decree to cover agricultural sector, incorporate voluntary market

Brazil’s national cap-and-trade system will go beyond the industrial and power sectors to include agriculture, and also allow voluntary market projects to generate credits eligible for compliance use, according to a draft of the presidential decree seen by Carbon Pulse.

LCFS Market: California prices rise and fall with Scoping Plan release, as ARB releases 2021 compliance data

California Low Carbon Fuel Standard (LCFS) prices marched to a one-month high this week on optimism that regulator ARB will propose more stringent GHG goals from the programme, but fell over the latter half of the week after the agency’s draft Scoping Plan provided few new details on this ambition.

Two companies required to make up Oregon Clean Fuels Program shortfall for 2021

A pair of finished fuel providers will need to meet their 2021 Oregon Clean Fuels Program (OCFP) compliance shortfalls through the clean fuel standard’s Credit Clearance Market (CCM) this summer, a state agency announced Friday.

WCI emitters stretch net long position, speculators shed as Q2 auction approaches

Regulated entities’ California Carbon Allowance (CCA) net length reached a year-high this week before the May 18 WCI auction, while speculators’ allowance holdings dove to a year-low, according to US Commodity Futures Trading Commission (CFTC) data published Friday.

Multiple Massachusetts GWSA emitters holding excess 2022 allowances

More than half of the entities regulated under Massachusetts’ Global Warming Solutions Act (GWSA) hold excess V22 allowances than their annual average 2020-21 emissions, according to a quarterly market report published this week.

ASIA PACIFIC

Taiwan climate bill passes first reading, but legislators vague on carbon pricing

Taiwan’s Legislative Yuan on late Thursday signed off on the first reading of the island’s revised climate bill that would put the government’s 2050 net zero target into law, but the document remains vague on the level of a planned carbon levy as well as potential use of international offsets.

CN Markets: CEAs barely budge as traders continue to cry out for policy direction

Chinese carbon allowances have remained unchanged for the past two weeks with no regulatory news on the emissions market and the government’s attention firmly fixed on the Covid situation.

Australian Market Roundup: Trading activity erupts ahead of assumed Labor victory

Australia’s carbon market has seen a flurry of spot deals in the last 48 hours, as buyers take advantage of relatively low prices and as the market starts to price in a Labor Party victory at the upcoming election.

Chevron, Pertamina to collaborate on offsets, low carbon projects in Asian markets

Indonesia’s national oil company (NOC) Pertamina has formed a partnership with US major Chevron to co-operate on low carbon business opportunities in Indonesia and other Asian markets, the companies announced Friday.

Vietnam signs carbon market MoU with US bank

The Vietnamese government has partnered with a US-headquartered banking group to drive the development of a carbon credit market and offset projects to help the nation achieve its climate change ambitions.

European insurance firm invests big in Australian forests

A major European reinsurer has committed to invest A$354.1 million (€234 mln) in Australian forestry assets, aiming to derive incoming from logging and carbon credits.

JPX to operate exchange for Japan’s voluntary carbon market -media

The Ministry of Economy, Trade, and Industry (METI) will work with Japan Exchange Group (JPX) to build a trading platform for the country’s domestic emissions market that will be operated as part of the Tokyo Stock Exchange, Nikkei reported Friday.

EMEA

Euro Markets: EUAs give up early gains for 3.3% weekly loss

EUAs gave up most of their Friday morning gains to post a 3.3% weekly loss as interest tailed off ahead of the weekend and before next week’s vote on ETS reform proposals in the European Parliament’s environment committee, while energy prices weakened as gas flows from Russia showed no sign of declining after sanctions were imposed on German-controlled former units of Gazprom.

Garbage disposal: Norway lines up London’s waste emissions for burial at sea

Norway is lining up a deal to bury London’s waste emissions at its massive offshore CCS initiative in what it hopes will be one of many European contracts, while advancing plans to bury a lot of its own output.

Loophole for biomass means 15% of EU ETS emissions currently ignored -report

A loophole in EU policy that means CO2 emissions from burning biomass for energy not currently included in the ETS could add an additional 15% to the scheme’s total emissions, according to a report from an environmental group.

Nations make tiny progress in 2022 EUA allocations, with two yet to start

Countries made marginal progress over the past fortnight towards handing out this year’s free carbon permit allocations under the EU ETS, with two governments still yet to start the annual process.

British man has conviction quashed from 2010 EU carbon cyberheist

A British man has been cleared after spending 3.5 years in jail for his alleged involvement in a 2011 EU carbon allowance cyberheist.

VOLUNTARY

Toucan Protocol moves to block on-chain access for some ‘zombie credits’

Blockchain bridging service Toucan has taken steps to reduce the risk of bringing so-called zombie credits on chain, in response to criticism that its service has provided an opportunity for units that would otherwise not find any buyers.

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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

EMEA

Dormant but dangerous – Environmental NGOs warn that leaving the unused Nord Stream 2 pipeline at the bottom of the Baltic Sea could cause environmental damages, but legal uncertainties mean it’s unclear what will happen to the €11 bln German-Russian gas project. As soon as regular servicing and monitoring stops, decay will set in, including the disintegration of the pipeline’s plastic coating and rust on its steel tubes, according to a nature and biodiversity conservation union (NABU). NGO Environmental Action Germany (DUH) warns of climate-damaging methane leaks, given that Russian company Gazprom filled the pipeline with 360 mln cubic metres of gas – currently worth around €400 mln and enough to heat 225,000 detached houses for a year. It is unclear whether Nord Stream 2 must be dismantled if it remains unused, and if so, who would do it and who would pay for it. In theory, the pipeline’s operator Gazprom Subsidiary Nord Stream 2 AG is liable for dismantling the pipeline if necessary, which would also require comprehensive talks with Poland and Russia. But Nord Stream 2 AG could be close to declaring bankruptcy, while Gazprom could reject financing, and most investors have written off their engagement. If the owner can’t be forced to repair leaks, Germany would have to shoulder the costs given the absence of other legal provisions. The gas in the pipeline could be replaced with nitrogen to prevent a fire hazard, but it’s also unclear who would buy the gas. (Clean Energy Wire)

We need to talk about buildings – With the current legal framework for energy and climate policy, Germany’s building sector climate target would be missed by a wide margin, said energy industry association BDEW in a report. The country must “massively” expand renewable energies and remain open to all climate-friendly heating options to reach its GHG reduction targets in the buildings sector, the lobby group said. “Alongside electricity generated from renewable sources in heat pumps and green district heating, hydrogen can become part of a climate-neutral heat supply of the future,” said BDEW head Kerstin Andreae. The report shows that a “building-oriented” heat supply is needed, where, for example, heat pumps could be used in buildings with a high efficiency standard and district heating should be used in urban areas. By 2030, the buildings sector’s emissions are to be reduced by 68% compared to 1990. However, in 2021 the sector missed its prescribed climate target. As of 2024, every new heating system has to be operated on 65% renewable energies if possible, the government coalition decided recently. As the vast majority of homes are still heated with fossil fuels, installing electric heat pumps and connecting houses to district heating networks are part of the effort to become climate neutral and cut dependence on Russian fossil fuels. (Clean Energy Wire)

ASIA PACIFIC

A fracking mess – A senior environmental bureaucrat in Australia’s Northern Territory (NT) warned that fully implementing a key commitment to limit fracking emissions could scare off the gas industry, confidential government correspondence reveals, the ABC reports. The document, obtained by the ABC under Freedom of Information laws, also warns there might not be enough carbon credits in Australia to offset all emissions from fracking in the Beetaloo Basin. The basin is a large shale gas field that has formed a critical part of the federal government’s post-COVID “gas-led recovery”. When the NT government lifted a ban on fracking in 2018, it agreed to “seek to ensure” there would be no net increase in Australia’s life cycle GHG emissions from producing gas, a recommendation known as “9.8” in a landmark fracking inquiry. However, in an email from within the NT Department of Environment from March last year to Chief Executive Joanne Townsend, public servant Paul Purdon asks “how ambitious” the government wants to be, saying the “preferred approach” was to focus on emissions within the NT’s control, as well as the net-zero by 2050 target.

JERA (I) – JERA, Japan’s biggest power generator, said it had agreed to buy all stakes in two thermal power stations in the US with a total capacity of 1.63 GW from investment firm Stonepeak for an undisclosed sum, Reuters reports. JERA plans to pursue decarbonisation paths at the plants, including low-carbon biofuels in place of traditional fuels, renewable power, blending hydrogen in gas turbines, and energy storage solutions, the company said in a statement. JERA had also announced earlier in the week that it targets a 65% reduction in CO2 emissions from its domestic operations by 2035, from a 2013 baseline, by expanding renewables capacity and promoting co-firing of thermal power generation with hydrogen and ammonia.

JERA (II) Chiyoda Corporation, JERA, and The Research Institute of Innovative Technology for the Earth (RITE) have commenced a technology development and demonstration project of large-scale CO2 separation and recovery from gas-fired power generation exhaust gas, under the New Energy and Industrial Technology Development Organization’s Green Innovation Fund program. The project will cost approximately 10 bln yen over its nine-year schedule from 2022-30 and will be executed in three phases (JERA).

Look to the future The Korea Exchange is preparing to launch a carbon credit futures contract to help bring price signals to what it says would be the new derivatives market, the Korea Herald Investor reports, citing unnamed exchange officials. The bourse operator and the environment ministry are running a separate independent study on how trading carbon credits would affect not only the South Korean markets, but the country’s financial sector in general.

Climate cash – US president Joe Biden will announce $150 mln in new US spending in Southeast Asia to promote development of renewable energy and infrastructure, as well as maritime security, when he hosts leaders of ten ASEAN nations on Friday, Argus Media reports. The spending package includes $40 mln in development finance that could unlock up to $2 bln in private investment in southeast Asian power systems, increasing regional energy trade, and accelerating the deployment of clean energy technologies, a senior US official said. The Biden administration will also launch a “climate solutions hub” to provide technical assistance to ASEAN members — Brunei, Cambodia, Indonesia, Laos, Malaysia, Myanmar, the Philippines, Singapore, Thailand, and Vietnam — in implementing their emissions goals set under the Paris climate accord.

Hydrogen deal – State-owned GAIL will build one of India’s largest proton exchange membrane (PEM) electrolysers at Guna in Madhya Pradesh to produce green hydrogen by the end of 2023, as it looks to supplement its natural gas business with carbon-free fuel, Business Standard reports. In a statement, India’s largest gas transporting and marketing firm said it has awarded the contract to set up the PEM-based project that will produce 4.3 tonnes of green hydrogen per day (about 10 MW capacity), which will be mixed in natural gas for supply to industries.

City gas – Matsumoto Gas has announced an agreement with INPEX to buy gas entirely offset by reforestation projects on Friday. Matsumoto  also says they’ll convert the natural gas they use at their head office to carbon neutral gas using credits. The company plans on providing carbon neutral gas to customers in Matsumoto City, Nagano prefecture, Japan. INPEX says it will continue to make its oil and gas business cleaner, facilitated less carbon-intensive energy for residents in the city. (ENP Newswire)

AMERICAS

The future is certain – The Canadian government is in talks with heavy industrial emitters about ways to ensure Ottawa’s planned carbon price increases will remain in place even if PM Justin Trudeau’s Liberal government is voted out of power. Federal Natural Resources minister Jonathan Wilkinson told Reuters most of the discussions have focused on “carbon contracts for differences”, which set a price on tradable carbon permits that emitters can get if they reduce pollution. If the market price for the credit falls below the minimum in the contract, the government would make up the difference. Wilkinson said the government expects to finish the talks by year end. His comments shed more light on the government’s intention to provide carbon price certainty, which was flagged in its Emissions Reduction Plan released in March. Environment Minister Steven Guilbeault at the time said the plan to “future-proof” Canada’s carbon pricing programme could include legislation to enshrine the federal ‘backstop’ tax and its upward trajectory into law, or potentially agreeing legal contracts with investors guaranteeing them compensation if their investments are impacted by the price not increasing as promised. Some heavy emitters such as oil sands producers say lack of pricing certainty has held them back from making significant investments in emission reduction projects like carbon capture and storage. They are also concerned that costly projects could be a waste of money if carbon pricing is scrapped in future. “The government will take on to provide some kind of certainty guarantee around the price. If a future government makes a decision to abandon carbon pricing it would be on the hook,” Wilkinson said. Guaranteeing the value of reducing emissions would be a “game-changer” for investors in capital-intensive projects, RBC Capital Markets said in a note. Canada’s carbon price is set to rise to C$170 a tonne by 2030 from C$50 a tonne currently, and is key to Ottawa’s commitment to cut emissions 40-45% below 2005 levels by 2030 and reach net zero by 2050.

Salty by the sea – A California coastal panel on Wednesday rejected a long-standing proposal to build a $1.4 bln seawater desalination plant to turn Pacific Ocean water into drinking water as the state grapples with persistent drought that is expected to worsen in coming years with climate change. The state’s Coastal Commission voted unanimously to deny a permit for Poseidon Water to build a plant to produce 50 mln gallons of water a day in Huntington Beach, southeast of Los Angeles. Poseidon said it was disappointed in the decision. The vote came after a heated meeting before the commission attended by dozens of supporters and critics of the plan. It was considered a crucial decision on the future of the plant after years of other hearings and delays. Poseidon’s long-running proposal was supported by Gov. Gavin Newsom but faced ardent opposition from environmentalists who said drawing in large amounts of ocean water and releasing salty discharge back into the ocean would kill billions of tiny marine organisms that make up the base of the food chain along a large swath of the coast. (AP)

INTERNATIONAL

FFI goes to Washington Australian billionaire Andrew Forrest of Fortescue Metals Group announced the launch of a feasibility study to convert the former Centralia coal mine in Washington state into a green hydrogen production facility. The clean energy unit, Fortescue Future Industries (FFI), said it had entered into a binding exclusivity agreement with the Industrial Park at TransAlta, and noted that the proposed green hydrogen plant would help decarbonise hard-to-abate sectors of the North American economy. The Centralia coal-fired power station is set to close in 2025. FFI said depending on the outcome of the feasibility study, it would look to employ the existing coal workforce for the proposed project and help them transition into the emerging green economy. FFI also announced it would apply for the US Department of Energy’s hydrogen hub grant programme, in collaboration with Pacific Northwest stakeholders. FFI North America CEO Paul Browning noted that the electric power grid of the Pacific Northwest is one of the lowest carbon power grids in the world and could be used to produce green hydrogen for long-haul trucking, ports, aviation, and heavy industry. Pacific Northwest stakeholders include Puget Sound Energy, Washington Marine Blue, Twin Transit, and Lewis Country Energy Innovation Coalition. (Times Live)

SCIENCE & TECH

Big Plans on Big Island Startup Heimdal has pioneered ocean-assisted carbon removal in Hawaii at a cost of $475 per tCO2. From a shipping container located near a desalination plant and running on solar power, the small pilot plant can capture 36 tCO2 per year. The next plant, either in Portugal or Dubai, is expected to capture 5,000 tCO2 per year at $200/t. The company has ambitious plans to scale up to capturing 5 MtCO2 per year within three years. Heimdal’s innovative approach uses electricity to split seawater molecules into hydrochloric acid and de-acidify seawater that is returned to the ocean, thereby achieving carbon sequestration and reducing ocean acidification. (Fast Company)

AND FINALLY…

Missing in Virginia A document few people have seen – and some deny the existence of – holds the answer of whether or not the Governor of Virginia, Glen Youngkin (R), can remove his state from RGGI without first passing a vote through both houses of the Virginia General Assembly. Gov. Youngkin campaigned on getting Virginia out of RGGI by executive order, but instead directed the state air pollution board to do so after he was elected. A member of that board said they received a document from Virginia’s Attorney General stating that RGGI is state law and the General Assembly must pass a withdrawal bill to exit the agreement. Virginia’s state senate is narrowly controlled by the Democrats, while its state House of Representatives is narrowly controlled by the Republicans. A spokesperson for the Attorney General’s office said there had never been an opinion issued on RGGI after the matter was brought up in a board meeting. However, a special counsel at the Attorney General’s office contradicted that statement, saying there was a document with an opinion, but she wasn’t obliged to disclose it. (Richmond Times-Dispatch)

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