CP Daily: Monday May 30, 2022

Published 01:49 on May 31, 2022  /  Last updated at 01:58 on May 31, 2022  /  Newsletter  /  No Comments

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

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TOP STORY

EU leaders strike deal to ban Russian oil, opposition builds to MSR sale idea

EU leaders struck a deal late Monday to rapidly end Russian oil imports, while sources said as many as nine member states could voice opposition to MSR carbon allowance sale plans that are due to be discussed Tuesday.

ASIA PACIFIC

China to back continued use of renewables-based offsets in ETS

China’s central government will support the use of carbon credits from “qualified” new energy projects in its emissions trading scheme, it said on Monday, though without clarifying exactly which projects would qualify.

Australian carbon group puts ACCU exports back on agenda, urges govt rethink of Safeguard credits

An industry group representing Australian’s carbon market industry on Tuesday outlined its list of priorities for the newly elected Labor government, including opening up to exporting ACCUs and reconsidering the need for introducing a new credit type for Safeguard Mechanism companies.

Australian market regulator takes hands-off approach to benefit sharing framework

Australia’s Clean Energy Regulator has finalised a benefit sharing framework between landholders and project developers who choose to exit their contractual obligations with the government.

Maori leader blasts land development fund as Microsoft to monitor NZ forest cover

The New Zealand government has announced a NZ$10 million ($6.5 mln) Maori landholder development fund, but some observers have described it as a weak bid to make up for the proposal to ban exotic plantings from the country’s ETS, which would largely affect Maori landholders.

INTERNATIONAL

NGO report casts doubt over Qatar football World Cup carbon neutral claims

The FIFA football World Cup to be held in Qatar in late 2022 aims to be the first to be carbon neutral, according to the event’s organisers, but a green group report published Tuesday argues that emissions may have been understated and the carbon credits used are unlikely robust enough.

AMERICAS

Brazil’s sectoral climate plan to spur domestic offset demand, say developers

The Brazilian government’s bottom-up sectoral climate plan is set to drive domestic demand for offsets despite many details that are yet to be made clear, carbon project developers told Carbon Pulse.

VOLUNTARY

VCM Report: VER price slump continues as market shrugs off Verra token decision

Key standardised prices for technology voluntary emissions reductions (VERs) failed to gain for an eighth consecutive week, while nature credits moved sideways amid a dearth of buyers, as participants dismissed the potential for Verra’s ban on tokenising retired units to significantly shift prices.

Malaysian stock exchange teams up with Verra for voluntary market launch

Malaysia’s stock exchange has teamed up with carbon credit standard manager Verra ahead of the launch of a domestic voluntary carbon market in the Southeast Asian nation later this year.

EMEA

Norwegian companies ‘greenwashing’ by mistake, finds report

There are likely no Norwegian companies with significant CO2 emissions that are climate neutral currently, although the firms have not been deliberately greenwashing, a report claimed Monday in findings that reflect the uncertainty faced by companies worldwide in implementing climate strategies.

Euro Markets: EUAs drift in light trading despite looming auction pause

EU carbon prices drifted in very thin trade on Monday morning as traders dialled down activity amid holidays and ahead of a pause in EUA auctions, as well as an EU summit where leaders were expected to discuss energy and a proposal to auction EUAs from the market stability reserve.

COMMENT

Carbon markets – how to stop worrying and COPe with change

Recent actions by Indonesia and Papua New Guinea to pause the authorisation of new voluntary carbon market (VCM) credits represent the start of country level accounting impacting the VCM, as the mechanisms laid out in Article 6 of the Paris Agreement begin to be implemented, writes Sebastien Cross of ratings firm BeZero Carbon.

WE’RE HIRING!

Greater China Environmental Markets Correspondent, Carbon Pulse – Greater China

Carbon Pulse is seeking a Greater China Environmental Markets Correspondent.

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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

Climeworks’ DAC Summit – June 30 in Zurich/online: Carbon removal and Direct Air Capture technologies have been experiencing a watershed moment in recent months.   Scientists have deemed them indispensable in the latest IPCC report, governments have stepped up their funding and policy efforts, and investors have committed large amounts to scale up. Where does the industry stand today, and what are its recent most promising developments? What are the requirements and immediate next steps for scaling up at the required speed? And when the industry works together, what could the future look like? The Summit provides a unique opportunity to get answers to these questions from DAC insiders and experts. Register here

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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

Gazprom strikes again – GasTerra of the Netherlands said on Monday that Russia’s Gazprom would stop delivering gas to it on May 31 after the Dutch company refused to agree to Moscow’s demands to be paid in roubles, the Financial Post reported. GasTerra, which buys and trades gas on behalf of the Dutch government, said it had contracted elsewhere for the 2 bln cubic metres of gas it had expected to receive from Gazprom through October. The Netherlands became the fourth European nation to be left without the Russian fossil fuel after Poland, Bulgaria, and Finland.

Looking at Strasbourg – Some 51 NGOs from 12 countries sent a letter to MEPs on Monday urging them to raise CO2 targets for carmakers, a goal that they argue may pave the way to European energy independence, one of the most pressing goals as the bloc scrambles to wean itself off Russian fossil fuels. “Electric cars consume zero oil, and so are a key structural measure to wean Europe off its oil habit,” the groups told MEPs. They added: “As EU policymakers, you have the opportunity – via the revision of the EU CO2 standards for cars and vans – to decide how quickly Europe transitions away from the combustion engine and towards affordable emission-free mobility, with all the additional benefits that will bring for the environment, drivers, and public health.” The crucial vote is set for Jun. 7 next week, when parliamentarians will gather in Strasbourg for their monthly plenary meeting.

Steel will – Separately, CEOs of the EU steel industry wrote an open letter to the European Parliament and member states, urging them to reject proposals on the EU ETS and the Carbon Border Adjustment Mechanism (CBAM) that undermine their capacity to invest in decarbonisation projects and threaten to derail the transition to green steel production in Europe.  The signatory companies have plans and projects to reduce the sector’s CO2 emissions by at least 30% by 2030, and to achieve climate-neutral steel production in the EU by 2050.  “These commitments represent a truly industrial revolution that requires a massive €30 billion capital investment in breakthrough technologies over the coming eight years and a significant increase in operational costs stemming from the use of decarbonized electricity and hydrogen,” they added. The CEOs argue that the proposals weaken carbon-leakage protection of their industry, favouring international competitors that are not subject to equivalent carbon costs. “In Europe, new allocation rules will suddenly reduce the main CO2 benchmark by around 40 percent – because of one plant that was previously not in the scope – and set a value which no company can achieve in just three years. This is due to a premature transition from the free allocation and indirect cost compensation system to a CBAM which has not yet been tested. Circumvention and resource shuffling are only a few of the many risks that could undermine the CBAM’s effectiveness. Moreover, the CBAM does not yet foresee any measure to preserve the EU’s 20 million metric tons of steel exports per year, worth €45 billion, and the 30,000 jobs that are directly dependent on these.”

EU overspend – Spending on climate action in the EU’s 2014-20 budget was “not as high as reported” in official documents, the European Court of Auditors (ECA) said in a report published on Monday. The court said the European Union had missed its target of spending at least 20% of its budget on climate action by around seven percentage points. The European Commission, which manages and implements the EU budget, previously reported that €216 bln was spent on climate action during the 2014-20 budgetary period. In reality, relevant climate spending was more likely to be around 13% of the EU budget – or €144 bln – rather than the reported 20%, ECA found. Current reporting is done before the expenditures are actually spent, meaning figures are inflated by unused or non-disbursed funds, a senior member of the ECA said.  The Commission’s figures also ignore potential drawbacks such as declining agricultural productivity and rising grain imports from countries with less stringent environmental rules. (EurActiv)

Comeback king – Some of the British coal-fired power plants slated for closure this year might need to stay open to ensure electricity supply this winter, the government said on Monday. Countries across Europe are drawing up contingency plans against potential disruption to flows of Russian gas because of the war in Ukraine. Russia typically supplies about 40% of Europe’s gas. “In light of Russia’s illegal invasion of Ukraine, it is only right that we explore a wide range of options to further bolster our energy security and domestic supply,” a government spokesperson said via email on Monday. Britain can generate about 50% of its electricity from gas. Although Russia only meets about 4% of Britain’s gas needs, a significant disruption in supply would affect prices in Europe and make it harder for Britain to secure gas from others. “While there is no shortage of supply, we may need to make our remaining coal-fired power stations available to provide additional back up electricity this coming winter if needed,” the spokesperson said. The government is planning for a range of scenarios PM Boris Johnson’s spokesman said on Monday, expressing confidence that Britain will have sufficient energy supplies.

Rough going – Separately, the UK government is in talks with energy firm Centrica about re-opening a giant gas storage facility in case European supplies from Russia are cut off. The discussions form part of contingency plans being exploring ahead of winter amid the war in Ukraine. Centrica’s Rough facility in Yorkshire was mothballed in 2017 when the government refused to subsidise it. The BBC understands the government may now be prepared to contribute to re-establishing a strategic gas reserve. The talks are part of plans for a “reasonable worst case scenario” in which Russia shuts off all gas supplies to Europe resulting in Norwegian gas supplies being redirected from the UK to Europe. Those plans also include extending the life of the few remaining coal fired power plants in the UK. Business Secretary Kwasi Kwarteng wrote to the owners EDF, Drax, and Uniper in April, and on Friday instructed National Grid’s Electricity System Operator to explore what would be needed to extend production.

NEIRF herding – Innovative projects to restore and rewet peatlands, create green urban spaces, and improve flood resilience are among 50 schemes to benefit from the final round of a pioneering UK fund to drive private investment in nature and tackle climate change. The second round of the Natural Environment Investment Readiness Fund (NEIRF), announced Tuesday by DEFRA and the Environment Agency, will provide grants of up to £100,000 to environmental groups, local authorities, businesses and other organisations to help them develop nature projects to a point where they can attract private investment. The funding will help to develop projects so they can demonstrate a return on that investment by capturing the value of carbon, water quality, biodiversity and other benefits provided by natural assets such as woodlands, peatlands and rivers – with revenue generated through the sale of carbon storage, improvements in biodiversity, natural flood management benefits and reduced water treatment costs. Examples of projects include rewetting lowland peat near Doncaster to grow plant fibre material to use as padding for clothes – an initiative that will also earn carbon credits. As well, generating carbon finance through restoring peatlands and developing a pilot seagrass carbon code to attract investment in seagrass beds as a carbon sink and biodiversity-rich habitat. Projects from the first round of funding announced in July 2021 are making good progress, the government added.

ASIA PACIFIC 

Emissions respite – China’s CO2 emissions fell by an estimated 1.4% in the first three months of 2022, making it the third quarter in a row of falling emissions, a new analysis from Carbon Brief finds. Based on official figures and commercial data, the findings show that the three consecutive quarters, when seen together, represent the longest emissions decline in China for at least a decade. Emissions peaked in summer 2021, as the government tightened policies on real estate to mitigate speculation and financial risk, before starting to fall in the third quarter last year. The fall in early 2022 was driven by the continued real estate slowdown, strong increases in clean energy and – in March – harsh Covid-19 control policies. Furthermore, the second quarter of 2022 appears highly likely to extend the trend of falling emissions – even as the construction sector slowdown bottoms out – due to the impact of Covid lockdowns becoming much more pronounced. China has previously seen only two periods of stable or falling CO2 emissions in the past decade. First, during the construction and industrial slowdown of 2013-16, emissions growth halted for three years, with quarterly growth rates alternating between positive and negative. Then, in the first quarter of 2020, the initial nationwide Covid-19 lockdowns resulted in a steep – but short-lived – drop in emissions.

Hydrogen game plan – Korea Gas, one of the world’s largest liquefied natural gas importers, expects to win benefits from its current business as it shifts to a future focused on hydrogen, The National reports. “We’ll completely transform our LNG-driven operations into hydrogen by 2050 in line with South Korea’s carbon neutrality target,” Lee Jae Hoon, a general manager of the company’s hydrogen business development team, said in an interview. “We have advantages over utilising our existing gas infrastructure, technology, and experience.” The state-run gas distributor, also known as Kogas, expects to begin green hydrogen imports from 2027, and intends to invest in production of the zero-emissions fuel in places including Australia and the Middle East, as it currently does with LNG. Kogas is joining several global energy majors in pushing the case for hydrogen, and BP confirmed this week it would press ahead on projects with two of the UAE’s biggest energy companies.

De-merger, interrupted – Australian utility AGL Energy has abandoned its plans to demerge its coal-focused generation business and has announced its chief executive, Graeme Hunt, and chairman Peter Botten will leave the company, ABC reports. In a statement to the Australian Stock Exchange, the company said it had insufficient shareholder support and would now undertake a strategic review of its operations. Four board members will resign. Tech entrepreneur and founder of software company Atlassian, Mike Cannon-Brookes, who is also AGL’s largest shareholder, had been calling for the de-merger to be dumped since he launched an unsuccessful takeover bid of AGL earlier this year. Mr Cannon-Brookes had been urging shareholders to reject the de-merger, arguing that if AGL offloads its assets it will do nothing to reduce emissions and address climate change.

The crux of it – Shell said it had given the go-ahead to develop the Crux gas field off Australia, which analysts estimated would cost around $2.5 bln, Reuters reports. Construction is expected to start in 2023 with first gas expected in 2027, which will feed the 3.6 mln tonne a year Prelude floating liquefied natural gas (FLNG) facility, the oil and gas major said in a statement. Shell said the project would help its Asian customers move from coal to gas, and also provide a secure supply source, a key factor following the imposition of sanctions on Russia. Last week it was widely reported that a safety consultant at Shell had resigned, and in doing so urged executives and management at the company “to look in the mirror and ask themselves if they really believe their vision for more oil and gas extraction secures a safe future for humanity,” according to a report from CNBC.

AMERICAS

Ontario’s election countdown – Reiterating their campaign pledge from earlier this month to reinstate a modified version of Ontario’s scrapped cap-and-trade programme, the province’s left-wing New Democratic Party (NDP) stands apart from other provincial parties vying for power at the upcoming June 2 elections, according to the Globe & Mail. Incumbent Progressive Conservatives (PC) led by Premier Doug Ford, who had ended cap-and-trade when elected in 2018, do not favour the WCI-linked carbon market scheme – a stance similar to Ontario’s Liberal Party, which had established the programme in 2017 while in power. The Liberals and NDP have pledged a 50% reduction below 2005 levels in the province’s emissions by 2030, while the PCs, which have a comfortable lead in the polls, expect to achieve a 30% drop by 2030 through EV manufacturing and making steel production greener.

Tax break – Drivers in Canada’s province of Newfoundland and Labrador (NL) can expect an 8 cents/litre break on gasoline and diesel fuel sales if changes to a bill introduced in the House of Assembly on Monday gets passed. The 50% reduction in the provincial portion of the fuel tax would be applied as early as this week, according to Premier Andrew Furey. The fuel tax break is slated to continue till Jan. 2023 across the province. (VOCM)

Exporting green H2 – Argentina’s public sector, private actors, academics, and various stakeholders met on Monday in Rio Negro province to discuss advancing the country’s hydrogen export strategy and a 2030 national hydrogen strategy. Associated rules promoting investment in green hydrogen are part of the framework of a renewable energy and energy efficiency bill submitted to congress, according to BNAmericas. Last November, Australia’s Fortescue had unveiled plans for an initial investment of $8.4 bln in a green hydrogen plant in the province with the goal of reaching hydrogen export capacity of 2.2 Mt/year by 2030.

SCIENCE & TECH

I(CL) believe I can fly (sustainably) – Imperial College London is establishing a groundbreaking research institute dedicated to developing clean, safe, and sustainable air travel. Supported by a £25 mln philanthropic donation. The Brahmal Vasudevan Institute for Sustainable Aviation will pioneer the breakthroughs and technologies needed to support the aviation industry’s transition to zero pollution. Its researchers will look at all elements of air transport, from fuel and aircraft design to airport infrastructure, air traffic control, and aviation policy. The donation – one of the largest in the College’s history – comes from Aeronautical Engineering alumnus Brahmal Vasudevan, Founder and CEO of private equity firm Creador, and his wife Shanthi Kandiah, founder of legal firm SK Chambers.

AND FINALLY…

Elevator action – Researchers from the International Institute for Applied Systems Analysis (IIASA) have come up with a new energy storage concept that could turn tall buildings into batteries to improve the power quality in urban settings. In their study published in the journal Energy, the researchers propose a novel gravitational-based storage solution that uses lifts and empty apartments in tall buildings to store energy. This original idea the authors call Lift Energy Storage Technology (LEST), stores energy by lifting wet sand containers or other high-density materials, which are transported remotely in and out of a lift with autonomous trailer devices. The most important benefit of LEST is that the power capacity is already installed in lifts with regenerative braking systems. There are over 18 million lifts in operation globally, and many of these spend a significant amount of time idle. The idea is that when the lifts are not being used to transport people, they can be used to store or generate electricity.  Empty apartments or corridors could also be viable options to store batteries or the weights on which the system relies.

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