CP Daily: Thursday May 26, 2022

Published 01:59 on May 27, 2022  /  Last updated at 01:59 on May 27, 2022  /  Newsletter  /  No Comments

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

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TOP STORY

WCI auction sets fifth straight record high clearing price during Q2

The California-Quebec current vintage auction settled at yet another all-time peak during the May sale, with the result coming in on the high end of traders’ expectations, according to results published Thursday.

AMERICAS

California bill tying offset usage to allowance supply passes first legislative chamber

A bill that would tether California cap-and-trade emitters’ offset usage to WCI allowance supply in the event of future linkages with other jurisdictions passed a full floor vote on Thursday, sending it on to the next legislative chamber.

NA Markets: CCA values press higher following bullish Q2 auction result, RGGI slips before June sale

California Carbon Allowance (CCA) prices lifted this week both before and after the release of the May WCI auction result, while RGGI Allowance (RGA) values inched down on continued heavy spread trading and before the programme’s own Q2 sale next week.

EMEA

Euro Markets: EUAs make robust gains in thin holiday trade as auction pause begins

EU carbon prices advanced for a third day despite thin trade on Thursday, as prices breached technical resistance amid a lack of selling interest, while a significant lack of auction supply over the next week was also seen as supportive.

Brokers Vertis seek new lead analyst as research head exits after decade with firm

Brokerage Vertis is looking for a new head of research after its chief analyst resigned after more than 10 years with the firm.

ASIA PACIFIC

Australian developer eyes early 2023 launch of much-anticipated new offset method

A new flexible methodology in Australia’s carbon market expected to attract more landholders to start projects and with the potential to scale up offset supply significantly is likely ready for implementation around February next year, according to its developer.

INTERNATIONAL

Insurance products emerging to guard against Paris-era carbon market risks

Insurance mechanisms are emerging as a way to guard against policy reversal in carbon markets, where some say these products could mitigate the risk of government U-turns or other political risks associated with Paris-aligned emissions trade.

VOLUNTARY

Social media giant snaps up engineered wood removal offsets

One of the world’s largest social media companies has bought carbon removal offsets from timber used in buildings as it steps up its plans to become negative net-zero emissions by 2030.

COMMENT

Statement on the credibility of HFLD credits in global carbon markets

A new crediting approach for High Forest, Low Deforestation (HFLD) jurisdictions is a credible way of incentivising the avoidance of deforestation in areas anchored by the large areas of intact forest, argue members of the Forests for Life Partnership in response to concerns raised about whether such units are appropriate for use in the CORSIA aviation offsetting mechanism.

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CONFERENCES

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

COP for climate finance – Financial assistance for developing countries must be at the top of the agenda for UN climate talks this year, the host country, Egypt, has made clear, as governments will be required to follow through on promises made at the COP26 summit last year. Rania Al Mashat, Egypt’s minister for international cooperation, said the country wants the COP to be about moving from pledges to implementation and will highlight what are the practical policies and practices that can actually push the pledges into action, to bridge that gap between more and less-developed nations. Egypt will host COP27 in Sharm el-Sheikh in November. Most of the world’s biggest economies, and biggest emitters of GHGs, have yet to fulfil the pledges they made at Glasgow last November to strengthen their targets on emissions cuts. Work to turn the pledges of climate finance from rich countries into projects on the ground helping poor countries has also been slow. (Guardian)

EMEA

Fossil relief – The British government’s £5 bln windfall tax plan for oil and gas producers includes an incentive for those producers to pump more fossil fuels, riling climate activists who had called for the tax. The plan is to help pay for a £400 giveaway to every household this autumn to mitigate high energy bills. Tax bills for oil and gas producers, including the new additional 25% levy on profits, can be reduced by 91p for every pound with higher investment specifically in oil and gas projects, the government said. The plan did not list other types of energy investments such as in renewables or electric car charging for the country, which in 2019 introduced the world’s first binding 2050 net zero emissions goal. (Reuters)

Greek gifts – Greece passed on Thursday its first climate law, setting interim targets to cut GHG emissions by at least 55% by 2030 and by 80% by 2040 before achieving net zero emissions by 2050. It also features a 2028 coal power phaseout that might be brought forward to 2025, taking into account security of supplies. On top of a €4 bln power and gas subsidy programme in place since last year, the law added €3.2 bln, stipulating that Greece will cover a big part of the cost increases that households have seen this year. (Reuters)

EU task force – The European Commission has set up a new task force within its Directorate-General for Energy to implement the REPowerEU goal of supply diversification. Following a mandate from the European Council in March, the Commission and member states have established the so-called EU Energy Platform to coordinate measures to secure energy supplies for the EU, including through the voluntary common purchase of pipeline gas, LNG, and hydrogen. The new task force will help deliver on the REPowerEU objective of reducing our dependence on Russian fossil fuels by enabling Member States and neighbouring countries to have access to alternative energy supplies at affordable prices in the coming years.

Make or brake – Ultra-fine particles from brake pad abrasion will for the first time be covered under an EU regulation to curtail vehicles’ contribution to air pollution, a move aimed at reducing the high level of the toxic particles in urban areas. The upcoming so-called Euro 7 regulation, set to be unveiled in July, will force vehicle manufacturers to reduce the quantity of pollutants, such as nitrogen oxides and sulphur oxides emitted by cars. While previous regulations have focused on tailpipe emissions, the upcoming legislation will expand its remit to include particulate matter emitted from brake pads. The European Commission confirmed its commitment to tackle particulate matter in the 2021 zero pollution action plan. Euro 7 is expected to “greatly benefit public health by cutting the mortality and morbidity caused by air pollution that affects urban populations in particular” according to an initial cost-benefit analysis of the legislation prepared by the European Commission. Several pollutants that are of concern today were not included in the past for various reasons, the report notes, a likely reference to non-exhaust particulate matter. (EurActiv)

Transatlantic telling off – The European Commission and the US reiterated their commitment to EU energy security and slammed cutoffs of Russian gas as unjustified and unacceptable in a joint statement. The US and the EC condemn Russia’s use of energy blackmail and reaffirm our commitment to strengthening Europe’s energy security, the statement, released on Tuesday read. It follows Russia’s decision to stop providing fossil gas to Finland as a result of Helsinki’s refusal to pay in rubles, as Moscow originally requested all so-called unfriendly countries to do. (EurActiv)

ASIA PACIFIC

Hydrogen build – Construction is due to start on Vietnam’s first green hydrogen plant next month, Channel News Asia reports, as the Southeast Asian country seeks to boost the use of cleaner energy while reducing dependence on coal in its power mix. TGS Green Hydrogen will build the plant in the southern province of Ben Tre, with trial operations due to start from the first quarter of next year, the government said in a statement. The 19.5 trillion dong ($ 840 million) plant will initially produce 24,000 tonnes of green hydrogen, 150,000 tonnes of ammonia, and 195,000 tonnes of oxygen a year, the government said, adding that capacity would be more than doubled in a later stage.

Hydrogen want to build – The West Australian government wants to lure makers of electrolysers – essential equipment for producing green hydrogen – WA Today reports, so the state offers more than sun, wind, and land to proposed multi-billon dollar projects to produce the clean fuel. The state Labor government’s hydrogen industry minister, Alannah MacTiernan, said the government would help electrolyser manufacturers pay for studies into setting up a highly automated so-called gigafactory in WA.

It’s what you need – Australian oil and gas company Santos has urged South Korea to invest in Australian gas combined with carbon capture and storage to help meet South Korea’s needs until 2050, Reuters reports. Australia supplies about one-third of South Korea’s LNG imports. Its imports are expected to peak in 2039 at just over 48 mln tonnes a year and then ease to about 42 mln tonnes by 2050, Santos Chief Executive Kevin Gallagher said at an energy security conference in Seoul. “This is a great opportunity for trade and investment in Australian LNG, to deliver energy security and cleaner energy for Korea for another three decades,” he told the conference hosted by South Korea’s government, according to a copy of the speech issued by his company.

Great blue carbon reef – Supermarket chain Coles will spend A$10 mln to develop blue carbon projects at the Great Barrier Reef, as it positions itself to appeal to ethically minded consumers. Coles, which recently launched a carbon-neutral beef product line, has moved aggressively to promote its sustainability standards amid heightened competition in the retail space. In a move that associates the retail giant with an iconic Australian landmark, Coles has partnered with the Great Barrier Reef Foundation to invest A$10 mln over 10 years into blue carbon projects – which capture and store carbon in oceanic or coastal ecosystems such as mangroves, tidal marshes, and seagrasses. The funds will seek to reinstate a significant coastal wetland in the Great Barrier Reef catchment, that would restore coastal habitats and serve as effective carbon sinks. (AFR)

New numbers Japan plans to call for moving ahead with a new “green” gross domestic product (GDP) indicator that will reflect the country’s progress in reducing GHG emissions, a draft of its annual economic policy outline seen by Reuters showed. The government will make a mention of moving forward with the safe restart of nuclear power plants, the draft of the long-term policy outline showed.

Tech demands Huawei Technologies has asked its suppliers to adopt green and sustainable operations and the company itself will purchase environmentally friendly products, aiming to lower its supply chain carbon emissions, Sina News reports. Huawei launched an emissions reduction programme in 2013 with 100 suppliers involved. The programme has now expanded to cover all of Huawei’s suppliers and requires the suppliers to cut emissions, although no specific targets were released by the company.

Tech demands II China’s environment ministry will strive to get more thermal power plants to deploy online emissions monitoring systems, it told a press conference Thursday, according to Hongxing News. The ministry launched a pilot programme back in September that included online emissions data from 49 companies in thermal power generation, steel, and oil and gas exploration, but is now looking to expand those numbers.

AMERICAS

Social cost continues – The US federal government will be permitted to use the social cost of carbon metric while it faces lawsuits from Republican-led states, the Supreme Court has ruled. Federal regulations on emissions quantify economic harm from events like hurricanes, wildfires, and flooding. Republican states led by Louisiana say the social cost of carbon metric is a power grab built on speculation and a district judge from the same state agreed, but this has been overruled by the highest court in th country (CNN)

ESG guardrails – The US Securities and Exchange Commission issued draft rules Wednesday aimed at creating more guardrails and transparency around ESG. One would boost funds’ ESG disclosure requirements to make them more easily understood and comparable with other funds. It would also force some funds to report specifically on emissions linked to their investments. A second aims to ensure that funds’ investment strategies are consistent with their branding to prevent misleading fund names. Investors “face a lack of consistent, comparable, and reliable information among investment products and advisers that claim to consider one or more ESG factors,” the disclosure rule states. This can also create a risk of greenwashing, the proposal and other SEC materials say. (Axios)

Chevron says no – Two-thirds of Chevron’s shareholders on Wednesday voted against GHG emissions reductions targets, following the same result from an ExxonMobil shareholder vote. Support for the targets nearly halved from last year’s vote, when the majority of shareholders said they were in favour of reductions targets. The oil giant says it plans to reduce its carbon intensity and the vote is indicative of the company’s track record on the environment. (Reuters)

Missing out – Saskatchewan lags behind other provinces in capturing opportunities in the global transition to a net-zero carbon economy, according to a new report. “I think this needs to be the priority of governments across Canada,” said Jonathan Arnold, senior research associate at the Canadian Climate Institute, a national nonpartisan independent think tank that provides policy advice to governments on long-term issues related to climate change. “The global low carbon transition is accelerating rapidly. We’re really talking here about the future livelihoods, jobs and incomes of workers, families and of entire communities. And there is a risk that if we do not prepare ourselves for this transition, then parts of Canada and some provinces are at risk of being left behind. These markets are already becoming increasingly competitive. So it really is incumbent on governments to take this seriously and make sure that the economy and the workforce are geared up for this.” Saskatchewan doesn’t have as many companies active in the clean hydrogen and low carbon electricity, transportation and mining technology markets, Arnold said.

AND FINALLY…

Moscow missives – The economic crisis, sanctions and strengthened anti-Western rhetoric brought on by Russia’s war on Ukraine have made it more difficult for Moscow to pursue decarbonisation plans, Climate Home reports in a piece detailing how Russian climate action and research is collateral damage in Putin’s war. There have been reports of talks between the government and energy companies over the possibility of relaxing GHG emission reporting and verification. For example, oil firm Lukoil has pushed the government to scrap a legislation compelling large energy companies to third-party verify their GHG reporting starting from Jan. 1 2023. However, although Russia’s parliament, the Duma, debated leaving the Paris Agreement earlier this week, there remains political will to uphold it.

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