CP Daily: Tuesday June 7, 2022

Published 03:36 on June 8, 2022  /  Last updated at 03:39 on June 8, 2022  /  Newsletter  /  No Comments

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

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TOP STORY

Voluntary carbon market initiative publishes provisional buyer guidelines

A cross-stakeholder initiative has published highly-anticipated provisional guidelines to help buyers ensure integrity when purchasing carbon credits for voluntary climate pledges, inviting several global firms to ‘road test’ its proposed grading system over the coming months.

EMEA

As EU ETS vote looms, lawmakers waver on free allocation and second market

Hard-fought compromises on EU ETS reform are at risk of unravelling just a day ahead of crunch European Parliament votes, observer sources told Carbon Pulse on Tuesday, noting that several MEPs are set to break party ranks amid pressure from their home nation industries.

EU lawmakers jostle over ETS concessions for industry on eve of vote

The European Parliament’s position on industry concessions under the EU ETS remains in the balance on the eve of a mammoth series of votes on eight climate policy bills, after the biggest political group introduced a last-minute amendment that could substantially ease carbon costs for big-emitting firms.

Euro Markets: EUAs give up early gains ahead of EU ETS reform voting amid worries over market access

European carbon gave up early gains on Tuesday as the market watched for signals from Strasbourg, where the European Parliament debated the Fit for 55 reform package ahead of votes on Wednesday that included discussions over restrictions on market participation.

Germany mulls adding waste incinerators to domestic CO2 pricing scheme -media

Germany could add waste incinerators and small lignite-fired power plants to its national carbon pricing mechanism (nEHS) that currently covers fuels used for buildings and road transport, media reports suggest.

VOLUNTARY

New exchange targets carbon and LNG with regional futures offering

Carbon and LNG markets are suffering from poorly designed future contracts that undermine trading and hedging, according to executives from a new commodity exchange that aims to launch several tightly defined voluntary carbon futures, alongside three LNG contracts, by the end of the year.

Canada-based VER investor signs agreement with Indian rice farming project

A Canada-based carbon investment company on Tuesday announced a deal with developer CoreCarbonX Solutions to generate over 5 million VERs from rice farming water management improvements in the Indian state of Telangana.

Clarksons introduces VER platform for corporate shipping clients

Integrated shipping services firm Clarksons has launched a carbon mitigation platform that will allow its clients to purchase VERs from two global offset standards.

Carbon rating agency awards moderate grade to forestry project

A carbon credit ratings agency has awarded a moderate rating to a forestry project in Paraguay in its latest update.

INTERNATIONAL

Nodal Exchange, IncubEx include CERs in upcoming voluntary product suite launch

Commodity trading platform Nodal Exchange and environmental products developer IncubEx will add CDM credits with different vintage definitions and other novel renewable energy contracts to their upcoming launch of voluntary carbon futures and options products, the companies said Tuesday.

ASIA PACIFIC

NZ primary sector backs farm-level carbon levy to escape ETS

New Zealand should impose a farm-level split-gas carbon levy on its agricultural sector rather than bring it into the emissions trading scheme, a coalition of primary sector industry groups has recommended.

Japanese corporates strike deal seeking to source hydrogen from the UAE

Japanese industrial players Eneos and Mitsui have agreed with the UAE’s oil company ADNOC to study developing a clean hydrogen supply chain between their two countries, they announced Tuesday.

BHP launches blue carbon grants programme

Mining giant BHP on Tuesday launched a A$3-million ($2.16 mln) grants programme to help drive the development of blue carbon projects in Australia, the latest initiative to boost supply of ocean-based offset credits in the region.

SK Market: KAUs fall to 11-wk low as compliance entities offload surpluses

Spot Korean Allowance Units (KAUs) on Tuesday fell below the 20,000 won mark for the first time since March as Market participants are selling surplus permits they aren’t allowed to bank, though analysts expect financials to soak up most of the supply.

ANZ taps rival bank for new head of commodities, carbon

Australia-headquartered bank ANZ has hired a new head of commodities in Singapore who comes from a similar role at a rival bank.

AMERICAS

Wisconsin-based CCO project seeks LCFS listing as biofuel credit prices crater

A California Carbon Offset (CCO) livestock project in America’s Dairyland has applied to transition into the Low Carbon Fuel Standard (LCFS), according to documents posted Tuesday by state regulator ARB, even as biofuel credit values under several market-based programmes plunge.

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

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

EMEA

Sequel strength – The European Parliament’s proposed EU ETS reform fails to guarantee emission reductions in the housing and transport sector in line with the bloc’s 2030 climate objectives, according to a group of academics and civil society groups writing in EurActiv. The second ETS, or ETS2, is the centrepiece of the Green Deal, they argued. It would cover 41% of EU emissions: those from road transport and buildings. Starting in 2026, permits would be auctioned to fossil fuel companies each year in line with the objective of emission reductions.

Pipedream – Climate lawyers are challenging the EU’s support for gas pipelines, arguing it is incompatible with the bloc’s climate targets. The European Commission has put €13 bln worth of gas infrastructure on a list of priority projects including the Eastern Mediterranean pipeline through Greece, and the Melita pipeline from Italy to Malta. The lawyers from ClientEarth will use a new legal option known as an internal review to challenge the EU’s classification of biofuels as a green investment. ClientEarth  lawyer Guillermo Ramo told Climate Home that energy efficiency savings and renewables funding must come first and many of the gas pipelines will only be built long after they could be useful in the context of the EU diversifying away from Russian fuel.

AMERICAS

Road trip – California should be allowed to set its own tailpipe and zero-emission vehicle standards, argue major car makers like Ford, Honda, Volkswagen, BMW, and Volvo. The automakers backed the US EPA in a court battle effort to restore California’s ability to set its own standards, repealed during the Trump administration. The reinstatement is being fought by 17 states, who have appealed an earlier decision in favour of the environment agency. (Reuters)

State statement – Many climate activists have found some solace in state and local action to combat climate change after sweeping efforts in Congress collapsed late last year. During the Trump administration, state and local governments picked up a lot of the slack to keep emissions in check. But 22 governors from both parties are telling House and Senate leadership today that they can’t do everything and Congress needs to pass a comprehensive climate package. Signatories include the governors of California, Louisiana, Illinois, Vermont, and New Mexico. (Politico)

Taxing solo – California State Senator Anthony Portantino (D) introduced SB-457 on Monday, proposing a car-free incentive program in the state. The bill would allow a credit of $2,500 against the “net tax” for each household member that exceeds the number of registered vehicles beginning on or after Jan. 1, 2023, for taxable years. The bill would limit the credit allowed to $7,500 and would take effect immediately as a tax levy. In a state with 26.87 mln registered automobiles, the proposed bill is aimed at reducing California’s dependence on cars, providing more incentives for public transit, walking and bicycling, while reducing GHG emissions. (Green Car Congress)

Everything’s more dire in Texas – Power demand in Texas is expected to hit an all-time high this week amid extreme heat that will strain the state’s power grid. With the forecast expected to hover in the 30s all week and rise further this weekend, the Electric Reliability Council of Texas is predicting power usage this week will exceed the record set in Aug. 2019. The high temperatures stand to strain a grid that has already run into trouble this year when several power plants unexpectedly shut down over a few abnormally hot days in May, forcing ERCOT to ask consumers to conserve their power use. Texas’ grid and ERCOT’s stewardship are under increased scrutiny following days of blackouts during last February’s freeze, but the regulator is predicting that the new wind and solar capacity installed over the past year will help meet the expected demand this week. Texans are already seeing soaring electricity costs show up on their utility bills – 70% higher than June 2021, the highest since Texas privatised its grid in 1999 – even before summer arrives, thanks to the inflated price of gas that makes up the plurality of Texas’s energy sources. (Climate Nexus)

Lonestar state start – Oil major Shell on Tuesday announced the launch of its Shell Energy brand into the residential power market in the US. In a press release, the company said Shell Energy offers 100% renewable electricity plans to customers in competitive areas of the Energy Reliability Council of Texas (ERCOT) grid, with plans backed by renewable energy certificates (RECs) that support generation from renewable resources.

RE greening – Ontario’s Healthcare Pension Plan HOOPP has released plans to commit to an interim target of reducing GHG emissions by 50% from 2019 levels by 2030 from its real estate portfolio valued at C$20 bln. The fund’s long-term goal is getting real estate assets under its control to net zero emissions by 2050. HOOPP’s entire portfolio is valued at C$114 bln and the real estate carbon reduction goal does not take into account Scope 3 emissions. (Benefits Canada)

ASIA PACIFIC

Court action – Indigenous traditional owners from Australia’s Northern Territory’s remote Tiwi Islands have launched Federal Court action in a bid to stop the development of a multi-billion-dollar gas project off the coast of Darwin, ABC reports. Santos last year signed off on the A$4.7 bln Barossa offshore development, which includes a pipeline from a gas field in the Timor Sea to an existing LNG facility on Darwin Harbour. However, traditional owners claim the gas company and the federal government failed to ensure they were properly consulted about the project’s potential risks to their marine environment, dreaming story tracks, and animals. It is the second court action that Tiwi traditional owners have attempted to take against the development, after they failed last month to get a South Korean court to rule loans for the development should be halted.

Under-invested – Southeast Asia’s green sector will see $1 trillion in economic opportunities by 2030, but only $15 bln has been invested since 2020, a new report by Bain & Company and Temasek has found, Business Times reports. Of this $15 bln, around 45% was deployed between Q3 2021 and Q1 2022. Corporate firms were the largest investors in the green sector, with $11 bln deployed over 86 deals since 2020. Around $6.6 bln went to solar or wind renewable energy, while $2.5 bln went to other renewables like hydro and geothermal energy. Around $1.1 bln in investments were for the built environment. In terms of where capital was deployed, notably, 37% of value was in Thailand-based targets, while 22% was in Philippines-based targets. Other investors in the green sectors include private equity (PE) and venture capital (VC) firms, infrastructure funds, sovereign wealth funds and pure-play green funds.

Carbon capture – Thailand’s national oil and gas company PTT Exploration and Production (PTTEP) is setting the wheels in motion to initiate the country’s first CCS project, in a push to achieve its net zero GHG emission goals, Offshore Energy reports. PTTEP revealed on Monday that it is gearing up to develop Thailand’s first CCS project at Arthit offshore gas field, paving the way toward the company’s net-zero GHG emissions target. The firm also initiated CCS feasibility studies in other areas of Thailand to support the country’s commitment to reducing carbon emissions into the atmosphere.

Bonding China is rolling out so-called low carbon transition bonds to help companies become greener, the country’s interbank bond market regulator said on Monday, as Beijing strives toward carbon neutrality. Under the pilot scheme, companies in eight sectors including electric power, steelmaking, petrochemicals, and civil aviation will issue bonds to fund decarbonisation efforts, the National Association of Financial Market Institutional Investors (NAFMII) said in a statement. (Reuters)

Going for a ride In China, the Guangzhou carbon exchange has teamed up with ride-hailing service provider Dida Chuxing to explore the possibility of developing carbon offset methodologies under Guangdong province’s PHCER scheme. PHCERs, eligible for voluntary use as well as for compliance purposes in the Guangdong ETS, are mostly generated from forestry management and distributed solar, but there are also some methodologies addressing individual activities, such as bike-sharing programmes and second-hand clothing distribution. Some 5.4 mln PHCERs have been minted so far.

Sustainable flight – In keeping with its target of replacing 10% of conventional jet fuel with sustainable aviation fuel (SAF) by 2030, Japan Airlines (JAL) has signed a fuel purchase agreement with GEVO, a Colorado-based biofuels producer. JAL has agreed to purchase 5.3 million gallons per year of SAF from GEVO for 5 years starting in 2027. The agreement is part of an MoU signed in Mar. 2022 between members of the oneworld Alliance of global airlines and GEVO to purchase up to 200 mln gallons of SAF from GEVO.

VOLUNTARY 

What’s up DAC? – DAC experts Carbon Engineering and oil giant Occidental Petroleum have a plan they hope will enable the buildout of the nascent and costly tech. Occidental subsidiary 1PointFive and Carbon Engineering have announced the outlines of what its CEO Daniel Friedmann calls a “franchise-like model” for systems that directly remove CO2 from the atmosphere. “Through this process, plant components and equipment will be modularised, mass manufactured and then assembled on-site using an established supply chain of vendors,” the companies said.  The broad vision of standardised, modular units sees 70-135 plants built worldwide by 2035, each with an annual removal capacity of 1 Mt. Most paths for meeting Paris Agreement goals pair emissions cuts with tech that sucks up already emitted CO2, but direct air capture and other approaches are in their very early stages, even as more investment flows into the sector. 1PointFive and Carbon Engineering are planning their first plant in Texas and hope to have it running in late 2024. (Axios)

So Meta – Meta Carbon, a US-based technology company that helps brands engage their audience on the topic of climate change, announced Tuesday that it has closed a round of financing from Animoca Brands. The terms of the deal were not revealed. The new funding announced today will be used to improve the technology behind Meta Carbon’s value proposition – ‘Engagement’ to make carbon offsetting fun and ‘Transparency’ offering proof of impact for every dollar spent, Meta said. The company’s nature-based carbon offsetting partner, Stand for Trees, has been offsetting carbon for seven  years and in the process has saved over 3.5 mln mature trees, Meta added. By fractionalising carbon in NFTs, it makes it possible to integrate climate solutions into Web3 based games, loyalty programmes, and at point of sale. Meta Carbon also operates the Carbon Creatures NFT platform which sold its first Impact NFTs in March 2021 and is dedicated to capturing carbon and protecting the natural habitats of the world’s most endangered species.  Animoca Brands is a global leader in gamification and blockchain with a large portfolio of over 170 investments in NFT related companies and decentralised projects that are contributing to building the open metaverse.

SCIENCE & TECH

Never tell me the odds – Existing CO2 emissions in the atmosphere mean there is now a 42% chance of the world breaching its 1.5C climate change goal even if global emissions ceased overnight, reports New Scientist. The piece is based on a study, published in Nature Climate Change, which shows an increase on a less than 33% chance just four years ago. However, the researchers put the probability of exceeding 2C at just 2% if we stopped emitting today. And if current emissions continue until 2029, chances of breaching 1.5C dramatically increases to 66%. (Carbon Brief)

AND FINALLY…

Not the red stuff! – Tomato ketchup, a stalwart of dinner tables in much of the western world, may soon be a much rarer commodity as climate change threatens to halve the fruit’s global harvest this century, according to a new study. Ketchup is made from so-called processing tomatoes, which are predominantly cultivated in California, Italy, and China – all of which are at risk from global warming, the Telegraph reports. Soaring temperatures mean the plants, like most crops worldwide, are being increasingly put under stress. A team of researchers led by Aarhus University in Denmark has now created a mathematical model to see how different climate change scenarios would affect production. Overall, the research found that by 2050, there would be around a 6% decline in tomato production. But between 2050 and 2100, there is a stark difference depending on the climate model used and in the worst-case scenario, the tomato harvest could be halved.

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