CP Daily: Monday May 23, 2022

Published 02:54 on May 24, 2022  /  Last updated at 02:54 on May 24, 2022  /  Newsletter  /  No Comments

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

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TOP STORY

Labor claims victory in Australia’s climate election, ACCU market set to be transformed

Anthony Albanese is set to become Australia’s next prime minister as the Labor Party claimed victory in Saturday’s federal election, however it is yet to be determined if the party has won enough seats to form majority government or will be forced to negotiate with a sea of Green and so-called “teal” independents that put climate policy at the heart of their agendas.

EMEA

Path for EU’s MSR carbon sale plan unclear as nations fear revenue loss

The European Commission’s idea to raise €20 billion by selling carbon allowances held in the MSR faces a fierce pushback from many EU capitals, which fear the resulting lower prices would hamper the bloc’s decarbonisation pathway while drastically lowering their ETS-derived revenues.

Analysts slash near-term EU carbon price forecasts on REPowerEU plan

‘The EU’s new REPowerEU strategy risks tapping the brakes on the upward trajectory of the bloc’s carbon permit prices, analysts have warned, thereby threatening to hinder progress on Europe’s climate objectives.

Euro Markets: EUAs drop below key support to five-week low amid continued selling and weak auction

EUAs fell to their lowest in more than five weeks as selling stretched into a fourth day amid a weak auction and continued concerns over the European Commission’s intention to sell as many as 250 million EUAs to fund its shift away from Russian fossil fuels.

VOLUNTARY

VCM Report: Nature-based credit prices resilient as technology offsets extend slump

Technology voluntary emissions reductions (VERs) extended losses for a seventh consecutive week to set a new nine-month low as offsets continued to track tumbling stock markets, while nature-based credits retained their recent resilience to move sideways.

Five multinationals join facility aiming to buy 1 mln carbon removals credits by 2030

Five global firms have joined a facility that seeks to forward purchase one million carbon removal credits (CDR) at a targeted average price of $200 a tonne of CO2e through 2030, aiming to drive nascent technologies to scale.

Indonesia warns double standards undermine its ‘green’ policies

The tricky mix of scaling the voluntary carbon market (VCM) amid the machinations of international trade disputes came to the fore at a conference Monday after an Indonesian minister accused the West of double standards.

US prairie conservation offset project wins AAA rating

A carbon credit ratings agency has awarded ratings to three more projects in the past week, but only one was given a high likelihood of avoiding or removing one tonne of CO2 equivalent, while the other two were given a moderate chance.

ASIA PACIFIC

AU Market: ACCU prices jump by 20% on Labor victory

Australian Carbon Credit Unit (ACCU) spot prices jumped by around 20% in early Monday trade, buoyed by the Labor Party’s victory at the federal election over the weekend.

Investment fund to launch Australia’s first carbon ETF

The Australian branch of US investment firm VanEck will launch the first exchange-traded fund (ETF) on the Australian Securities Exchange that will be tracking global carbon futures prices, the firm said.

China issues first bivalve carbon offsets

A Chinese province has become the first to reward shellfish farming with carbon credits, though market participants were dubious about the new units and many details remain unclear.

AMERICAS

Virginia green group hits back at Dominion’s “politically motivated” RGGI rate suspension request

An environmental organisation this week lobbed heavy criticism at Virginia utility Dominion Energy’s request to suspend its existing rate case to recover RGGI allowance costs, saying the move is designed to provide political support for Governor Glenn Youngkin (R) to rescind the state’s power sector cap-and-trade regulation.

US EPA targets next spring for publishing RFS ‘reset’ rule

The US EPA on Monday published a proposed schedule for finalising 2023 Renewable Fuel Standard (RFS) volumes, which will see the agency exercise more discretion in setting the yearly biofuel quotas.

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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

(Un)checkmate – Unchecked climate change would be a major impediment to economic growth during the next 50 years, costing an estimated $178 trillion in net present value terms during the 2021-70 period, a new study concludes. The study from the Deloitte Center for Sustainable Progress models the impacts of a 3C increase in global average temperatures compared to preindustrial levels, which is consistent with the world’s current pathway. In contrast to unchecked warming, the report states that if countries act quickly to reach net zero emissions by 2050 and hold global warming to below 2C, the global economy would see an expansion of $43 trillion in net present value during the 2021-70 period. (Axios)

We’re climate clubbing – G7 finance ministers and central bank governors have taken the first steps of creating the “climate club” that German Chancellor Olaf Scholz touted to raise ambition and reinforce economic shifts to meet Paris climate agreement goals, the ministers and governors said in a Friday communique. The effort came against the backdrop of rising energy prices spurred by Russia’s war in Ukraine that the officials said “underscores the need to accelerate the reduction of our overall reliance on fossil fuels and strengthen our transition to clean energy.” The idea of a climate club that uses incentives to deepen ties between its members and penalize laggards is a favourite of economists, and relies on a mix of carbon pricing, climate regulations, and trade alliances to lure nations into carbon-cutting action. To that effect, the ministers recognised the “potential of high-integrity carbon markets and carbon pricing,” while reiterating prior warnings that “carbon leakage may increase” without more comprehensive policies to address industry fleeing to countries with laxer climate policies. The G7 nations therefore committed to “cooperate on possible WTO-compatible mechanisms to mitigate this risk and support trade relations,” touching on a subject at the heart of US and EU divisions on how to apply fees on the carbon contents of imported goods. (Politico)

BP, Rio Tinto deal – BP will supply Rio Tinto with marine biofuels to be trialled on the mining company’s RTM Tasman vessel on a mix of trans-Atlantic and Atlantic-Pacific routes, Marketwatch reports. This will be one of the longest-duration marine biofuel trials to date, BP said. This agreement follows a successful journey on the same vessel after it refueled with biofuel in Rotterdam, the Netherlands, in March 2022. BP said this biofuel can reduce carbon emissions by up to 26% compared with standard marine fuel oil.

I quit – A safety consultant has vowed to stop working for Shell after 11 years because of its investments in new oil and gas production, in a first victory for Extinction Rebellion’s (XR) “jump ship” campaign. In an email to over 1,000 Shell employees and directors, Caroline Dennett said she could no longer have Shell as a client because it “is not winding down oil and gas, but planning to explore and extract much more”. “It pains me to end this working relationship which I have greatly valued, but I can no longer work for a company that ignores all the alarms and dismisses the risks of climate change and ecological collapse,” she wrote in her email on Monday morning. Her resignation came the day before Shell’s AGM, where the oil major is expected to resist calls by a shareholder activist group to align its activities with the targets of the Paris Agreement. If adopted, the resolution would result in “unrealistic interim targets”, company directors argued. (Climate Home)

ASIA PACIFIC

Net zero backflip – Former Australian deputy prime minister, Barnaby Joyce, has signalled the Nationals, the junior partner in the conservative Coalition government that was defeated at the polls on Saturday, may abandon their support for net zero emissions, revealing he will consult his colleagues on whether to change course, The Guardian reports. On Monday the leader of the Nationals also refused to rule out a coalition split but said his “preference” was to continue the partnership with the Liberals (the main coalition partner), amid widening recriminations over responsibility for the loss of government after nine years. A Nationals MP Darren Chester warned on Monday that “lurching further to the political right is a recipe for irrelevance” after the “more extreme views of some colleagues undoubtedly [hurt] the chances of our city cousins”. The MP was referring to the losses suffered by former prime minister Scott Morrison’s Liberal party, which lost at least six seats to independent and Green party candidates who campaigned heavily on the issue of climate change. Last year, the Nationals signed up to Scott Morrison’s net zero by 2050 target in return for billions of dollars in infrastructure spending and an extra cabinet position, but they vetoed any chance of formally upgrading the government’s 2030 emissions target.

Clean steel – Hyundai Steel has signed a memorandum of understanding with the Korea Institute of Energy Research to push for comprehensive cooperation on technologies in the energy and environment sectors with the goal of leading the steel industry’s movement towards carbon neutrality, Korea Herald reports. The two sides agreed to work together to develop technologies of carbon capture, utilization and storage, along with technologies that can improve the production of hydrogen and energy efficiency.

Sustainable flight – For the delivery flight of its brand-new Airbus A330neo from Toulouse to Manila, Cebu Pacific used Sustainable Aviation Fuel (SAF) to power the entire flight, Simple Flying reports. As such, the delivery flight makes Cebu Pacific the first-ever Asian low-cost carrier to incorporate the use of SAF into its operations.

AMERICAS

Glick six – The spotlight on US FERC Chair Richard Glick is getting brighter after the White House announced President Joe Biden intends to renominate him to the commission when his term ends next month. While Glick has won the praise of climate advocates and the clean energy industry for his focus on streamlining transmission permitting to allow more renewables onto the grid, GOP lawmakers and fossil fuel interests are increasingly hammering the agency for taking actions they say work against the domestic oil and gas industry. Democratic Senate Energy Chair Joe Manchin and Republicans on the committee blasted Glick earlier this year for the commission’s policy statements that would have increased environmental justice and climate change considerations in natural gas project permitting – a move on which the commission backtracked. (Politico)

McDonnell done – A cabinet secretary who helped shepherd Pennsylvania’s forthcoming entry into the RGGI cap-a-and-trade programme is leaving the administration of Democratic Gov. Tom Wolf. The governor said Monday that Environmental Protection Secretary Patrick McDonnell will be replaced in July by Ramez Ziadeh, who has been a deputy secretary at the agency. McDonnell began working at the Department of Environmental Protection in 1998 and has been secretary since 2016. (AP)

EMEA

Silver bullet – The European Commission has drafted new rules clarifying how green hydrogen produced from renewable energy can be legally counted as additional and verified as such. The draft rules are seen as a boon for the fledgling European industry. Green hydrogen produced from renewable power is seen as a potential silver bullet to decarbonise hard-to-abate industrial sectors like steel and chemicals, which currently rely on fossil fuels and cannot easily switch to electricity. Earlier this month, the EU’s electrolyser industry committed to increase their manufacturing capacity tenfold – to 17.5 GW per year by 2025 – in an effort to boost green hydrogen production in Europe. However, there is concern that the EU’s push for green hydrogen will cannibalise renewable electricity meant for other uses – such as providing clean power for industry or electric vehicles. To avoid this issue, the European Commission is drafting rules to ensure that power installations providing electricity for green hydrogen are additional to other uses of electricity. (EurActiv)

Taps off – Russia on Saturday stopped providing natural gas to neighbouring Finland, which has angered Moscow by applying for NATO membership, after the Nordic country refused to pay supplier Gazprom in rubles. Following Russia’s February  invasion of Ukraine, Moscow has asked clients from “unfriendly countries” – including EU member states – to pay for gas in rubles, a way to sidestep Western financial sanctions against its central bank. Gazprom said in a statement Saturday that it had completely stopped gas deliveries as it had not received ruble payments from Finland’s state-owned energy company Gasum by the end of the working day on May 20. Gazprom said it had supplied 1.49 bcm of natural gas to Finland in 2021, equal to about two-thirds of the country’s gas consumption. However, natural gas accounts for around 8% of Finland’s energy. (EurActiv)

Special partnership – Germany could support Senegal in efforts to exploit fossil gas resources off its coast, chancellor Olaf Scholz said during a visit to the western African country. As Germany seeks alternatives to Russian fossil fuel imports, Scholz said the two countries’ governments had begun “intensive” talks on cooperation on gas extraction and LNG production. However, think-tanks and NGOs say such cooperation would contradict a pledge Germany signed at last year’s UN climate conference, whose signatories vowed to end foreign fossil fuel support by the end of 2022. A climate and economy ministry spokesperson told Clean Energy Wire that Germany stands by the pledge and would implement it. Under the umbrella of Germany’s G7 presidency this year, the group of industrialised democracies could establish a special “climate partnership” with Senegal, said Scholz.

Scandal! – On May 20, WWF Germany announced that “Executive Director Eberhard Brandes will leave WWF Germany to pursue new fields of activity.” But according to reports, Brandes’s exit from WWF Germany had nothing to do with conservation. German newspaper the taz reported that WWF staff members have become “massively critical of the management of the organisation”, with 26 department heads, almost the entire middle management, earlier this month writing to the Foundation Board, WWF Germany’s supervisory and control body, to say they had “lost confidence in our compliance process and our governing bodies.” The letter claimed that the executive board violated WWF’s compliance rules, while the German paper also reported that Brandes allegedly had an affair with WWF Germany’s Executive Director of Finance and Operations, with the two also in charge of budget decisions for the organisation. In March, the unnamed Finance Director reportedly left WWF Germany with a generous severance package, including an expensive training course and a bonus. What’s more, the taz reports that the HR Manager there was informed of the affair and is now suing WWF Germany over how the matter was handled. (REDD Monitor)

Deep waters – The Global Warming Policy Foundation, a climate sceptic think-tank in the UK, has been reported to a commission by the Green politician Caroline Lucas and campaign group Extinction Rebellion. The move comes after the Guardian revealed that the group received funding from fossil fuel interests. The think-tank has charitable status, but climate campaigners say the questions about its funding mean it should be stripped of this. In a letter to the commission, the signatories said the Foundation is not a charity, but a fossil fuel lobby group. The Foundation, set up in 2009 by the former Conservative chancellor Lord Lawson, has enjoyed a recent revival of its influence in parliament. It has current MP Steve Baker as a trustee and has its research promoted by a net zero scrutiny group of Conservative MPs.

VOLUNTARY

No IPO (yet) – Carbon trading platform Xpansiv’s initial public offering has been put on the backburner, while the group works through an unsolicited private equity proposal, AFR reports. It is understood a big New York-based firm has turned up with an open-ended proposal, offering to help Xpansiv meet payments on a $300 mln (A$422 mln) acquisition and kick its mooted IPO down the road. The proposal was juicy enough for Xpansiv to want to head into a round of talks, and it is understood the IPO process has been paused while those talks play out. An IPO bid put together earlier this month could’ve seen the company raise the $590 mln in targeted primary capital at about a $1.2 bln valuation which, while attracting some big names investors, was a far cry from the $2 bln carrot dangled only weeks ago.

SCIENCE & TECH

Sleep on it – Rising temperatures, especially overnight, are reducing the amount of sleep people get worldwide, new research shows. The global study published in One Earth tracked the sleep of 47,000 people in 68 countries for a combined 7 mln nights and found humans are each losing an average 44 hours of sleep per year, leading to 11 fewer days in which they get the recommended 7 hours of sleep per night. Women, the elderly, and people in lower-income countries lost 25%, double, and triple the global average, respectively. Global warming, mainly caused by the extraction and combustion of fossil fuels, is heating overnight temperatures even faster than during the day, and since people’s bodies need to cool at night as they fall asleep, warmer temperatures are delaying that process. (Climate Nexus)

AND FINALLY…

Licence to shrill – HSBC has suspended its global head of responsible investing at its asset management division, Stuart Kirk, pending an internal investigation into a presentation he made where he called climate change warnings as “shrill” and “unsubstantiated” and made light of impacts such as sea level rise, the FT reported on its front page. The bank’s CEO tried to distance the company from the presentation, but it is unclear how the remarks got signed off. Celine Herweijer, Group Chief Sustainability Officer at HSBC, said on LinkedIn that Kirk’s words were “absolutely not views I nor any of the HSBC leadership team share. They couldn’t be further from HSBC’s position.”

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