CP Daily: Wednesday June 1, 2022

Published 01:39 on June 2, 2022  /  Last updated at 01:39 on June 2, 2022  /  Newsletter  /  No Comments

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

*Thursday and Friday are bank holidays in the UK so expect a lighter news flow*

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TOP STORY

EU Parliament lowers sights on ETS ambition ahead of vote

The full European Parliament is likely to scale back its ambition for EU ETS reform in a vote next week, with senior lawmakers targeting a 63% emissions cut by 2030 as a compromise between the 67% level sought in an interim parliamentary ballot and the 61% goal proposed by Brussels.

EMEA

MSR sale plan would lead to tighter EU ETS by end of Phase 4 -analyst

A plan to sell roughly 250 million EUAs from the Market Stability Reserve would depress EUA prices in the near term, but would lead to an overall tightening of the market later in the current phase, an analyst said on Wednesday.

Euro Markets: EUAs climb sharply at end of day on short squeeze in illiquid market

EUAs made robust late gains in another thinly-traded session on Wednesday amid a short squeeze ahead of a long weekend in the UK, as attention focused on events in Brussels where lawmakers were setting out positions ahead of next week’s full Parliament vote on the EU ETS reform package.

EU carbon price inflation is undermining competitiveness, finds survey

Carbon inflation has become the new “normal” for participants in the EU Emission Trading System (ETS) who warn the cap-and-trade market is undermining competitiveness, a global survey finds.

Post-pandemic shift in EU policies to cut fossil power 31% by 2030 -report

EU nations have accelerated their shift away from fossil-based power generation by almost a third since the pandemic and war in Ukraine, analysis by environmental think-tanks showed on Wednesday.

Dutch firm buys controlling stake in Europe-based transportation emissions auditor

A Europe-based transportation emissions auditor has been acquired by a Dutch TIC firm, they announced Friday.

VOLUNTARY

Paris-aligned climate actions could see cost of carbon credits rise to $150 by 2035, report says

Carbon credit trade is set to increase 30-40-fold by 2035, in turn driving their price as high as $150/tonne by the middle of the next decade, according to a report released Wednesday modelling global market scenarios consistent with meeting the goals of the Paris Agreement.

New £200-mln fund launched to help British farmers decarbonise

A new £200-million fund has been launched to help British farmers decarbonise.

Impact investment fund injects $4 mln into African cookstove manufacturer

An impact investment fund has invested $4 million in a Kenyan-based manufacturer of cookstoves to help accelerate the company’s African expansion.

South Pole hires rival firm CEO to head up climate solutions division

Offset project developer and consultancy South Pole has hired the CEO of a rival firm to lead its climate solutions division in Europe’s DACH region.

AMERICAS

Australian investment manager plans to enroll California forest purchase in WCI offset programme

A Sydney-headquartered offset project developer on Wednesday announced it has acquired an estate in northern California that will be used almost entirely to manage carbon stocks and sequester atmospheric CO2 under the state’s compliance offset market.

Oregon sets baseline emissions levels for electricity companies in 2040 decarbonisation pursuit

Oregon’s Department of Environmental Quality (DEQ) has set baseline emissions levels for electric companies and the amount of GHG reductions necessary for retail electricity providers, as part of the state’s Clean Energy Targets legislation passed last year.

ASIA PACIFIC

China’s Guangdong delays ETS compliance deadline due to Covid

The Guangdong provincial government has pushed back the annual compliance deadline under its emissions trading scheme by two months amid Covid-related restrictions to business activities.

J-Credits rise to new record high in latest government auction

Japanese J-Credits from renewable energy projects sold above 3,000 yen ($23.18) for the first time in the latest government sale, as demand continues to rise ahead of the launch of the domestic voluntary carbon market.

Lower Safeguard Mechanism emissions baselines would drive hydrogen use in Australia, Asia set to dominate global demand -regulator

Any move to lower the emissions baseline for major emitters participating in Australia’s Safeguard Mechanism will drive investment in hydrogen and other low carbon technologies, the chair of the country’s Clean Energy Regulator said at a conference on Wednesday.

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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

Argus Carbon Markets and Regulation Conference – June 30-July 1 in Lisbon, Portugal: The event will deliver critical updates on regulation, the future of the EU ETS, and key developments in the voluntary carbon markets space, amongst other topics that will be tailored for the European and global audience. Featuring panel discussions, fireside chats, presentations, and collaborative problem-solving sessions. Participates will gain knowledge and insight from expert opinions and take advantage of the opportunity to network and discuss with their industry peers in-person for the first time in two years. CP Daily subscribers can get a 15% discount by registering with the code CARBONPULSE15: https://bit.ly/3t4CmH6

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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

Energy access – The COVID-19 pandemic has been a key factor in slowing progress toward universal energy access, the IEA said in the 2022 edition of its reporting tracking the issue. It said that, globally, 733 mln people still have no access to electricity, and 2.4 bln people still cook using fuels detrimental to their health and the environment. At the current rate of progress, 670 mln people will remain without electricity by 2030 – 10 mln more than projected last year. The report finds that despite continued disruptions in economic activity and supply chains, renewable energy was the only energy source to grow through the pandemic. However, these positive global and regional trends in renewable energy have left behind many countries most in need of electricity. This was aggravated by a decrease in international financial flows for the second year in a row, falling to $10.9 bln in 2019.

Funds funA new international fund backed by wealthy nations aims to invest at least $500 mln in protecting nature in developing countries and giving indigenous people a bigger role in conserving their environment and tackling climate change. The Climate Investment Funds, one of the world’s largest multilateral climate financing instruments, launched its “Nature, People, and Climate” (NPC) programme on Wednesday at a major UN environment conference in Stockholm. The programme expects to invest in efforts to expand approaches like carbon storage, mangrove restoration, and climate resilience in small island developing states, sub-Saharan Africa, and forested countries around the globe. Backed so far by Italy and Sweden, and with a target of raising $500 million by November, the NPC will provide finance and expertise to initiatives that conserve wildlife, plants, and forests, promote sustainable agriculture and food supplies, and enable people to cope with rising seas and extreme weather. “Nature-based solutions help reduce emissions, support communities adapting to a changing climate and protect biodiversity,” Matilda Ernkrans, Sweden’s international development minister, said in a statement. (Arab News)

Too cheap – Chile and South Africa seek cheap policy options to decarbonize their power sectors because their carbon taxes are too low to be effective. Government and state power officials in South Africa and Chile pulled back the curtain on the problem at a workshop during an event this week hosted by the World Bank and IETA. Power services in emerging markets are often low-quality and unreliable, according to a blog by international development consultancy Oxford Policy Management, but using carbon pricing to spur low-carbon spending in poorer countries is not as effective as in high-income countries, as networks must be developed before power investments take place. Also, electricity tariffs in emerging countries are not always cost-reflective, and consumers and investors may not respond to carbon pricing signals. Questions linger over whether carbon taxes can drive state-owned monopoly power suppliers to invest in decarbonisation. (S&P Global Commodity Insights)

ASIA PACIFIC

Change in (policy) climate – The newly elected Australian government announced on Wednesday it would established a new Department of Climate Change, Energy, the Environment and Water, as part of a broader departmental and administrative changes. A statement from Prime Minister Anthony Albanese’s office said the new department would be created to “deliver the government’s job-creating climate change and energy agenda and give Australia’s environment the protection it deserves”. There was no specific department focussing on climate under the previous government, with emissions reduction activities handled by the Department of Industry, Science, Innovation and Resources. The departmental reshuffle follows the new government ministers being sworn into their official jobs. Climate Change and Energy Minister Chris Bowen told reporters his first steps would be to introduce legislation that included Labor’s emissions reduction target of 43% by 2030, as well as remove import tariffs and the fringe benefits tax on electric vehicles, according to The Guardian. Labor’s policy estimates the tax cuts could cheapen the price of a A$50,000 ($36,000) EV by between A$2,000-$9,000.

Trenchless – Rio Tinto – the world’s second-largest metals and mining corporation – is targeting a 50% reduction in scope 1 and 2 emissions by 2030 and is looking for solutions throughout their business to reduce their carbon footprint. Rio Tinto defined a section of a potable water pipe that supplies the remote mining town of Paraburdoo in Western Australia as a high risk due to its condition. The 1-km long section of the pipeline crosses a creek and runs through areas of cultural heritage sensitivity. Instead of replacing the main by traditional dig and lay, Rio Tinto decided to look for a non-invasive, more eco-friendly approach. By using trenchless relining technology, the life expectancy of the asset will be extended by at least 50 years, according to Mining Magazine. By using the trenchless technology, the CO2 emissions on site as well as the amount of earth movements can be reduced by over 90% compared to traditional dig and lay.

Green spend – State-owned Gas Authority of India Limited (GAIL) will invest 6,000 crore ($1.5 billion) in the next three years on renewables, a top official has said, NDTV reports. The investment can go up by an additional 20,000 crore by 2030, GAIL India chairman and managing director Manoj Jain also told reporters. The company is undertaking a liquid hydrogen capacity addition right now and the progress done on the prototype will influence its overall investments, Manoj Jain said, adding that a call on the same will be taken after 18 months.

AMERICAS

Cali runs dry – Hydroelectric power generation in California is at risk of being 48% weaker this summer than if water were at normal levels because of the drought plaguing the Golden State. California’s snowpack is 40% below the median between 1991 and 2020, according to the US EIA. As a result, wholesale power prices in the western US are expected to jump 5% above normal levels, and CO2 emissions are expected to rise by 6% in California. Nationwide, the US is expected to lose 2% of its hydroelectric power capacity, according to the North American Electric Reliability Corporation (NERC). Many power grid operators are not taking climate change into account, putting their energy security in danger. (CNN)

MOPR out – The Federal Energy Regulatory Commission (FERC) last week approved ISO New England’s proposal to phase out the minimum offer price rule (MOPR) by 2025. A total of 700 MW of state-subsidised capacity resources – wind and solar power generation – will be able to participate in the next two capacity auctions, with the cap scheduled to be fully lifted by the Feb. 2025 auction. The auctions, which offer a source of revenue for generators, are designed to ensure that there are enough resources available to meet peak electricity demand in the region three years down the road. The contentious MOPR rule that set a minimum price for bids into the six-state regional capacity market had been debated over the last three years. Clean energy advocates and energy generators have long considered the MOPR as a federal interference into state electricity reform policies that provided subsidies for clean energy generation in their efforts to transition away from fossil fuel power generation. In 2021, natural gas accounted for more than half of the electricity generation in New England. Last year PJM eliminated its own MOPR rule, which is presently under appeal in the 3rd Circuit, while the New York ISO removed its MOPR earlier this year. (E&E News)

Cost cut – US President Joe Biden’s administration on Tuesday said it would substantially reduce the cost of building wind and solar energy projects on federal lands to help spur renewable energy development and address climate change. The new policy comes after years of lobbying from clean power developers who argued that lease rates and fees for facilities on federal lands were too high to draw investment. In a statement, the Department of Interior said rents and fees for solar and wind projects would fall by about 50%. The administration also said it would boost the number of people processing renewable energy environmental reviews and permit applications through the creation of five coordinating offices in Washington, Arizona, California, Nevada and Utah. (Reuters)

Retroactive raise – Meanwhile, the Biden administration is likely to raise ethanol blending mandates for 2021 under the Renewable Fuel Standard (RFS) above the figure it proposed in December to align with actual US consumption levels, two sources briefed on the decision told Reuters. In December, the US EPA proposed that refiners blend 13.32 bln gal (50.42 bln L) of ethanol into the fuel pool, a move that angered Farm Belt lawmakers and biofuel producers who said it was too low. However, recent federal figures show US consumption of ethanol at about 13.94 bln gal, leading the administration to now consider lifting the 2021 mandate to around that level, the sources said. Administration officials huddled at the White House on Tuesday to review options for the mandates for the years 2020-22, which are being set retroactively because of disruptions caused by the fallout of the COVID-19 pandemic, the sources added. A consent decree will require the agency to finalise the 2020-22 biofuel quotas by June 3.

The 59’ Sound – The US Department of Energy (DOE) on Wednesday announced $59 mln to accelerate the production of biofuels and bioproducts to reduce emissions in hard-to-decarbonise sectors and create good-paying jobs in rural America. In a press release, the DOE said it is focused on applied research, development, and deployment to improve the performance and reduce the cost of biofuel production technologies and scale-up production systems in partnership with industry. By reducing costs and technical risks, these efforts can help pave the way for the biofuels industry to deploy commercial-scale integrated biorefineries.

Ambitious attempt – The Canadian government is set to launch a new programme in which it will attempt to work separately with each province and territory to build new low-carbon industries, as it seeks to overcome intergovernmental squabbling that has plagued climate and energy policy. Natural Resources Minister Jonathan Wilkinson announced new federal-provincial working groups – called Regional Energy and Resource Tables – meant to identify and pursue opportunities around sectors such as hydrogen, critical minerals and electric-vehicle manufacturing. In an interview with The Globe and Mail, Wilkinson described what he hopes will be a rapid process – co-led by the two levels of government, and bringing in Indigenous, industry and labour leaders – to develop “place-based economic strategies” for each part of the country. First, he said, they will settle on a small number of priority sectors – ideally between two and four. Next, they will try to identify ways they can work together to pursue those goals, including better aligning spending programs and regulations. Then, they will home in on specific projects in those sectors. It’s an ambitious attempt to somewhat reorient the country’s climate discourse away from environmental concerns and toward economic ones. Ottawa contends that beyond any moral obligation to reduce GHGs, the country needs to move collaboratively on building low-emissions industries to compete in a decarbonising world. But there have been some bumps in the road that indicate how difficult it will be for Wilkinson to get buy-in from some of his provincial counterparts – especially from provinces where he is most eager to show that the economic focus will help get past long-standing disagreements.

Rotten Apple – Apple’s membership in multiple trade associations that undermine climate action stands in sharp contrast to its cultivated image as a supporter of environmental action, a new report says. Apple publicly left the US Chamber of Commerce more than a decade ago over the group’s opposition to climate action, but the Campaign for Accountability’s Tech Transparency Project says Apple’s ties to the US COC’s Texas affiliate, the Texas Association of Businesses, contradict its public climate claims. Apple also plays a leadership role in the Business Roundtable, which lobbied hard to torpedo the Build Back Better Act, and is a member of multiple international groups that have worked to undermine climate action, according to the report. “The Texas Association of Business is doing as much, if not worse, than the Chamber of Commerce in terms of fighting against climate action and the transition off of fossil fuels,” Luke Metzger, head of Environment Texas, told E&E. “They haven’t been called out over it before, and so they would clearly think they have more to gain from membership in TAB than they have to lose.” (Climate Nexus)

EMEA

Everyone loves an over-achiever – The EU slashed GHG emissions 34% below 1990 levels by 2020, overshooting the bloc’s target of 20%, according to official data submitted on Wednesday to the UN. The European Environment Agency submitted official EU data to the UNFCCC, with the 961-page inventory report confirming preliminary data suggesting the bloc was on track to smash its 2020 climate goal. The EU had already reduced its emissions by 26% in 2019 and had achieved its 20% target before the COVID-19 pandemic lockdowns started to impact emission levels, the EEA said. Emissions dropped by 11% in 2020 alone as EU countries shut down their economies to contain the coronavirus outbreak, the EEA indicated, admitting that the COVID-19 lockdowns “had a substantial impact on reducing emissions in 2020.” Still, “the data confirms a 30-year downward trend which led to the EU achieving its 2020 target to reduce emissions by 20% compared to 1990 levels,” it said in a statement. (Euractiv)

All-uminium’s not wellA new report for the European aluminium industry by commodity analysts CRU highlights the negative impacts of a wrongly-designed Carbon Border Adjustment Measure (CBAM). The study shows that European aluminium smelters will become cost uncompetitive if the CBAM covers indirect emissions and existing carbon leakage measures are removed. The report also anticipates costs for aluminium production will rise by 24% to 31% and provides insights into the complexities of designing a circumvention-proof CBAM Regulation. The study shows that European producers’ higher indirect carbon costs under the Emissions Trading System (ETS) mean primary aluminium imports for semi-fabrication could increase up to 43% and a total loss of up to 77% in the event a large share of EU production is replaced. Furthermore, if indirect emissions are included in the CBAM and carbon leakage measures are fully phased out, European smelters will lose competitiveness as they will continue to face higher indirect carbon costs than importers due to the EU ETS, CRU said, all of this in the context of a historic production loss of over 900,000 tonnes in 2021-22. (Aluminium Today)

Steel slippage – The UK government’s initiatives to support decarbonisation of the nation’s steel industry lacked ambition compared with other countries, according to the cross-party environmental audit committee of MPs. The committee has written to business minister Kwasi Kwarteng to warn that unless action is taken the industry risks further contraction in the UK and the country may become more reliant on imported steel in the future. The MPs heard that Tata Steel, one of the UK’s two major remaining steel plants, was reluctant to invest in hydrogen-based technologies because of the uncertainty surrounding the abundance and affordability of hydrogen supplies. (The Times)

AND FINALLY…

Stranded in Stockholm – Fridays for the Future climate activists from Sierra Leone and Nigeria have been left stranded and hundreds of dollars out of pocket after the Swedish government failed to provide them with visas to attend the Stockholm+50 environment summit they had been invited to attend and speak at, Climate Home reports. The Swedish foreign ministry said that youth involvement was a “priority” and the government “has done its best to facilitate visa applications”. It said that it was “naturally very unfortunate [that] some participants will not be able to attend because they lack a visa”. They added: “Many visa applications were received at a very late date, which means that not all of them will be approved” but did not immediately respond when asked whether they would provide compensation and when the activists could expect their passports back.

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