CP Daily: Wednesday June 15, 2022

Published 02:34 on June 16, 2022  /  Last updated at 03:05 on June 17, 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 lawmakers strike provisional deal on ETS reform ahead of repeat vote

Senior MEPs from the centre-right EPP, centre-left S&D and liberals from Renew – the three largest political groups – have sealed a provisional deal on the EU ETS reform late Tuesday that would see an earlier phaseout of free allowances and a slightly tighter annual cap cut than at last week’s failed vote.

AMERICAS

California legislators probe allowance supply changes, salvage banking metrics in revised carbon market bill

California lawmakers on Tuesday released the updated text of a cap-and-trade market reform bill that would address allowance overallocation and supply vis-a-vis offset usage, while also requiring the publication of banking metrics after a similar bill failed this spring.

Nova Scotia June carbon auction clears 75% above floor price, C$19 over November settlement

Nova Scotia’s fifth cap-and-trade auction cleared almost 75% above the 2022 auction reserve price at a record high settlement, rebounding significantly from November’s undersubscribed sale, according to results published Wednesday.

Massachusetts GWSA current vintage sale bounces back in June, first advance auction sells out

Massachusetts’ power sector Global Warming Solutions Act (GWSA) cap-and-trade system saw its current vintage allowance auction clear over $9 above the previous sale, while the programme’s first ever sale for future permits settled at less than half that price, according to results published Wednesday.

Virginia agency approves Dominion Energy request to suspend RGGI rider 

The Virginia State Corporation Commission (SCC) on Wednesday approved utility Dominion Energy’s request to suspend its existing rate case so as to recover RGGI allowance costs, ahead of Governor Glenn Youngkin’s (R) widely anticipated plans to severe the state’s RGGI linkage.

New York power generators request CO2 price in final Scoping Plan

New York state’s power generators are joining labour unions and environmental groups in calling for a CO2 charge in the electricity market ahead of the final Scoping Plan publication, a coalition said in public comments released Wednesday.

VOLUNTARY

Race to Zero campaign tightens rules to help prevent greenwashing

The UN-backed Race to Zero campaign updated its criteria on Wednesday to ensure credible net zero targets from corporates and financial organisations, aiming to overcome greenwashing concerns while specifying requirements for carbon credit use and other elements.

Crypto groups weigh joint effort to destroy HFC-23 carbon tokens

Two main crypto carbon groups are considering to share the responsibility to rid the market of the over 670,000 remaining carbon tokens from a Chinese HFC-23 project brought onto blockchain last year.

Oil major invests in forestry firm to generate carbon credits in Gabon

A European oil major and has purchased a 49% stake in a forestry management firm in Gabon to develop a sustainable forest management model that aims to generate carbon credits from reduced deforestation, conservation, and afforestation.

Shipping operator MOL completes “carbon offset voyage” from Japan to Europe

Japanese shipping company Mitsui OSK Lines (MOL) has completed a “carbon offset voyage” for the transportation of cars from Japan to the UK, the company said in a statement on Wednesday.

Carbon credit ratings agency gives Canadian forestry project its lowest grade

A forestry project in Canada has been awarded only a low chance of achieving 1 tonne of CO2 avoidance or removal by a carbon credit ratings agency in its latest update.

ASIA PACIFIC

China slows fall in thermal power generation as lockdowns ease

Fossil fuelled power generation in China continued to fall in May, though at a slightly slower rate than in the previous month as some of the country’s Covid-driven lockdowns eased.

Lack of policy development holds up PNG carbon sales, official says

The head of Papua New Guinea’s Climate Change Development Authority (CCDA) has told national media that a delay in government policy-making is holding up hundreds of millions of dollars in potential carbon credit revenue.

BP acquires key 40% role in big Australian green hydrogen export project

UK oil and gas major BP has acquired a 40.5% stake and operatorship of the Asian Renewable Energy Hub (AREH), a massive solar and wind project in north-west Australia that aims to export green hydrogen or ammonia, the company announced on Wednesday.

NZ Market: New Zealand auction clears at NZ$76, CCR exhausted

(Updates report in Tuesday’s newsletter with additional analysis)

EMEA

Saudi Aramco to tap new renewables, blue ammonia, offsets in bid for net zero by 2050

Saudi Aramco will invest in new renewables projects and blue ammonia production in an effort to slash its GHG output and achieve net zero emissions by 2050.

Euro Markets: EUAs post second day of gains amid MEP pact, stronger gas prices

EU carbon posted a second day of gains on Wednesday as traders took heart from reports that lawmakers had reached a provisional Parliamentary deal on ETS reforms, while energy markets continued to forge ahead amid further cuts in natural gas supplies.

Netherlands’ ETS-covered firms face greater CO2 tax burden

EU ETS-covered firms in the Netherlands may face greater carbon costs in the coming years as the Dutch government has announced a steeper cut to exemption rights for the policy.

INTERNATIONAL

Post-Covid economic recovery a missed opportunity to lock in lower emissions pathway, report says

The promise of a global green economic recovery from the Covid-19 pandemic has been dashed, sending a warning that the clean energy transition has stalled and making it unlikely that the world will be able to meet critical climate goals this decade, according to a report released on Wednesday.

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CONFERENCES

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

Mega-thane – Possibly the world’s biggest leak of methane has been discovered coming from a coal mine in Russia, which has been pouring out the carbon dioxide equivalent of five coal-fired power stations, The Guardian reports. About 90 tonnes an hour of methane were being released from the mine in January, when the gas was first traced to its source, according to data from GHGSat, a commercial satellite monitoring company based in Canada. Sustained over the course of a year, this would produce enough natural gas to power 2.4 mln homes. More recently, the mine appears to be leaking at a lower rate at about a third of the highest rate recorded in January, but the leak is thought to have been active for at least six months before January’s survey. The leak, which comes from the Raspadskaya mine in Kemerovo Oblast, the largest coal mine in Russia, is about 50% bigger than any other leak seen by GHGSat since it started its global satellite monitoring in 2016. The company believes it is bigger than any leak yet traced to a single source.

Money at risk – Climate change could play out to the advantage of the euro, while China’s yuan and the Japanese yen are set to suffer the most without greater efforts to mitigate the effects of global warming, Barclays said in a report. The British bank mapped the effects of climate change on exchange rates, saying rising temperatures and associated economic costs could pose “rising and costly risk, with tangible FX impact”. In the bank’s most severe scenario, the euro is the outperformer, appreciating 0.5% against the dollar by 2030 and 3.9% on average over the next five decades, with euro zone’s trade openness helping soften the economic impact of global warming. In contrast, Chinese yuan could lose 5.5% by 2030, with a further a 7% depreciation over the next decade, which could worsen to more than 10% per decade over time. Barclays said it used national productivity and capital flows forecasts for the next five decades to model how, given their current conditions, countries’ growth and consequently their currencies could be affected by climate change. Rising sea levels, variation in crop yields, changes in the occurrence of diseases, tourism, or even heat-induced hits on labour productivity were some of the factors included in the analysis. (Euractiv)

Anyone else, please – Asked by Politico if she believed a return to the White House for former US president Donald Trump – or another Republican with similar climate policies – would end any hope of hitting the Paris Agreement’s lower 1.5 C climate change target, outgoing UN climate chief Patricia Espinosa answered: “Yeah. Well, yes.” Speaking to the news outlet at UN climate talks in Bonn, Espinosa said that during Trump’s presidency “that leadership was not there anymore” from the second-largest emitter and biggest economy. (Carbon Brief)

EMEA

What we were waiting for – State-owned Russian gas provider Gazprom has announced that flows from Russia to Germany through the key Nord Stream 1 pipeline will be drastically reduced for an unspecified period, Clean Energy Wire reported. The company said that German engineering company Siemens had failed to provide the equipment needed to carry out repairs just weeks before the offshore pipeline is scheduled to undergo its annual maintenance work. German economy minister Robert Habeck called the move a “political decision”.

Risk of losing steam –  A group of 10 European Union countries, including Germany, Spain and the Netherlands, warned the 27-nation bloc against watering down a massive climate and energy plan designed to align its economy with ambitious 2030 climate goals, Bloomberg reports. The timing of the call, several days before a key vote in the European Parliament and meetings of EU governments, also comes as the continent is caught in the grips of an unprecedented energy crisis, made worse by Russia’s invasion of Ukraine. The situation has triggered concerns that some European governments may now want to slow the energy transition, a stance vehemently opposed by the European Commission, the bloc’s executive arm.

Fair and adequate – For a “fair and adequate” German contribution to efforts to reach the international climate target of keeping the global temperature rise below 1.5C, the country may emit no more than 3.1 billion tonnes of CO2 in the future, German government advisors said, citing new calculations. The German Advisory Council on the Environment (SRU) said that if CO2 was reduced in a linear fashion from current levels to zero, Germany would have to be CO2 neutral by as soon as 2031. The country aims to reach net zero by 2045. The government has yet to accept the SRU’s CO2 budget as guidance for its policy. For context, Germany’s emissions were almost 800 mln tonnes last year. The budget has been criticised in the past for only looking at CO2 and not other GHGs. (Clean Energy Wire)

State stake – The UK government has confirmed plans to take a special share in the £20 bln Sizewell C nuclear power plant, as part of a deal that would see it invest 20% in the project. The deal is expected to result in China’s CGN losing the minority stake it holds in the project amid security concerns. The UK bought the option in Sizewell C’s holding company, owned by France’s EDF and CGN, in January for £100 mln and will convert it into an equity stake if the project reaches a final investment decision. (Bloomberg)

A turn to the dark side – The UK has confirmed that one of its coal plants will remain online to ease domestic and regional reliance on Russian energy this winter, the business and energy minister Kwasi Kwarteng confirmed on Twitter. “In May, I asked National Grid to explore keeping three coal power stations open this winter, if needed. With uncertainty in Europe following the invasion, it’s right we explore all options to bolster supply. I’m pleased EDF has today confirmed West Burton will remain online,” he said. Discussions with two other plants are ongoing. “If we have available back-up power, let’s keep it online just in case. I’m not taking chances. For our long-term energy security, we’re accelerating renewables and nuclear – while maximising North Sea oil and gas production,” he added.

Extra virgin – A three-year EU-funded project has shown that olive, fruit, and vine growers can efficiently contribute to developing a carbon credit market focused on agriculture, creating new opportunities for farmers and producing beneficial effects for the environment. The experimental market set up by the Green Economy and CO2 project (GECO2) allowed the agricultural partners to measure their carbon sequestering capabilities and sell credits. On the other side of the spectrum, GECO2 buyers in the food sector were allowed to offset portions of their emissions by buying those credits. Coordinated by Italian and Croatian officials, hundreds of farmers and entrepreneurs on both banks of the Adriatic Sea participated in the scheme, which encouraged the adoption of many farming best practices. GECO2’s partners created the platform where the actual carbon credit trading occurs. Over the three years of the project, which ended on May 31, GECO2 involved around 160 farmers covering 1,877 hectares and contributing to 205 experimental fields that combined to store more than 6,500 tonnes of CO2. (Olive Oil Times)

ACW 2022 Libreville will be the location for this year’s Africa Climate Week, the event’s organisers announced on Wednesday. It will take place from Aug. 29-Sep. 1 in Gabon’s capital, providing a platform for stakeholders to discuss regional climate action solutions and forge regional partnerships, and marking an important milestone on the road to the UN COP27 climate talks in Egypt this November. “Last year, over 12,000 stakeholders collaborated at three virtual Regional Climate Weeks. Together, we forged partnerships, strengthened national climate action plans and built momentum towards strong outcomes at COP26. This put the powerful potential of regional collaboration squarely in the spotlight,” said UN Climate Change Deputy Executive Secretary Ovais Sarmad. ACW 2022 is hosted by the Government of Gabon and organised by UN Climate Change in collaboration with global partners UN Development Programme, UN Environment Programme, and the World Bank Group. Partners in the region include the Africa Union, the Africa Development Bank (AfDB) and the UN Economic Commission for Africa (UNECA).

ASIA PACIFIC

Mother (lode) Nature – South-east Asia’s nature, from forests and coral reefs to mangroves, provides the region with at least US$2.19 trillion (S$3.04 trillion) in economic benefits, a new report by Malaysia’s highest scientific advisory body has found. The paper is said to be the first to calculate the economic value of the vast diversity of wildlife and swathes of rainforests, peatlands, and mangroves in the region. In 2020, the total combined gross domestic product of the 10 Asean member states was US$3 trillion. Nature’s economic contribution of $3.04 trillion to Asean member states refers to the benefits South-east Asia’s biodiversity provides now, and the figure can rise if nations further act on conservation, said the Academy of Sciences Malaysia. The $3.04 trillion figure was derived from a valuation of biodiversity here, based on a 2018 report by the World Wildlife Fund which estimated the global value of economic activity underpinned by nature to be US$125 trillion. The authors said their valuation considered four domains: A forest’s role in soaking up CO2 and preventing floods, its role as a habitat for wildlife species’ survival, its place in education and tourism, and its provisional services such as the value of timber, food, and medicine from the rainforest. (Straits Times)

Buried in the seabed – Chinese state-owned oil and gas firm CNOOC has completed the country’s first offshore carbon capture and storage project designed to permanently bury carbon dioxide in the seabed, state media reported on Wednesday, Marketscreener reports. The project is located at the company’s Enping Oilfield in the mouth of the Pearl River, about 200 km from Shenzhen, and will store CO2 emitted during the oil extraction process, state broadcaster CCTV reported. CNOOC began constructing the project last September and said it would eventually sequester a total of 1.46 mln tonnes of CO2 in 800-metre deep seabed reservoirs. The stored carbon dioxide is the equivalent of planting 14 mln trees or taking 1 mln cars off the road, the company said.

Sustainability first – Australian and New Zealand fuel company Ampol has established a world-first sustainability-linked debt instrument valued at A$150 mln ($103 mln) to go towards its decarbonisation activities. In a release to market, the company said the proposed issue of subordinated notes is part of its ongoing capital management strategy. The notes include a sustainability feature, whereby the conversion price payable by Ampol is directly linked to key parts of its decarbonisation and future energy strategy – particularly in its goal to reduce emissions in its fuel and infrastructure, and convenience retail businesses by 2025, and to operate or control at least 500 electric vehicle charge points by 2027. The notes are expected to receive 50% equity credit from Moody’s Investors Service, providing support to Ampol’s credit rating, the announcement said. Ampol Group Financial Officer Greg Barnes said the hybrid issue was the first of its kind in global markets.

Market collapse – The Australian Energy Market Operator (AEMO) has suspended the country’s electricity spot market on the east coast, known as the National Electricity Market (NEM), for the first time in its history. In a statement the operator said it was “impossible to continue to operate” while maintaining reliable supply of electricity, after it was forced to direct 5 GW of generation through direct interventions in order to keep the lights on. AEMO CEO Daniel Westerman said suspending the market would simplify operations during significant outages. The development followed electricity generators deliberately pulling back supply, after the operators placed price caps on consumer prices, due to a lack of profitability, with critics describing them as playing a game of chicken. Energy minister Chris Bowen released a statement, welcoming the decision, saying it would help ensure supply visibility while the challengers were being dealt with. The NEM encompasses the states of New South Wales, Queensland, Victoria, Tasmania and South Australia, and has been dealing with an energy crisis similar to what the UK has endured, brought on by a combination of coal-fired power station outages, sky-high fuel costs and cool temperatures leading to an increase in demand.

AMERICAS

Oiled up – US President Joe Biden released a letter to seven oil refiners saying they should produce more oil rather than drive up profits as the Russia-Ukraine war chokes global supply. The president lambasted oil companies for tripling profits while inflation squeezed working class Americans. Biden is staring down an uncertain midterm election in November as consumer prices jumped by 8.6% compared to a year ago as of Friday, the biggest jump in 40 years according to the federal government. (AP)

Renewables to the rescue – Record heat waves in Texas have set new record electricity demand, coming in at upwards of 75 GW in the state this week. Wind and solar generation supplied close to 40% or 27 GW of peak demand on Sunday, according to CNN. Renewables have also helped keep Texas electricity prices in check, given the recent rise in fossil fuel prices. “Because the price of wind and sunlight hasn’t doubled in the past year like other resources, they are acting as a hedge against high fuel prices,” said Joshua Rhodes, a University of Texas energy researcher. The state generates the highest amount of wind energy in the US.

VOLUNTARY

Offset partnership – Sun Air Jets announced a new partnership with 4AIR, the first and only rating system focused on comprehensive sustainability in private aviation, for verification of its programme to offset carbon emissions, Aviationpros reports. This commitment to 4Air, along with other company sustainability initiatives, reinforces Sun Air Jets’ dedication to reducing its overall environmental impact and will further enhance its sustainability programme, according to the airline.

SCIENCE & TECH

SAF all the way – While speaking at the CogX conference in London, the CEO of Rolls-Royce, Warren East, stated that the first transatlantic flight powered solely by sustainable aviation fuel is likely to happen as soon as next year, Simpleflying reports. If this occurs, 2023 could be a symbolic turning point in aviation’s quest to lower emissions for long-haul travel, the report said.

AND FINALLY…

Helium airships returning to the sky Helium-power is set to make a return to the skies, helping to cut airline CO2 emissions, after a sister airline of British Airways put in the first big order for a new generation of airships. Valencia-based Air Nostrum, a franchisee of British Airways’ holding company International Airlines Group, has struck a deal to buy 10 airships from Bedfordshire-based Hybrid Air Vehicles, the UK’s Telegraph reports. Air Nostrum is hoping to have the 100-seat vehicles running on its regional, short-haul routes as soon as 2026. The 290 foot vehicles — which are around twice the length of a Boeing 737 — will initially burn jet fuel to steer the craft but the company plans to use fully electric motors from 2030.

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