CP Daily: Tuesday June 21, 2022

Published 02:25 on June 22, 2022  /  Last updated at 02:31 on June 22, 2022  /  Newsletter  /  No Comments

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

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TOP STORY

Emissions trading participants double carbon price outlook across global markets

Participants in emissions trading mechanisms around the world have near-doubled their outlook for carbon prices when compared last year, according to an annual report published on Tuesday, but their expectations still fall well short of levels thought needed to limit global warming to 1.5C.

EMEA

ANALYSIS: Flatlining EU carbon prices help coal margins improve as Europe hastens to conserve gas

Stable EU carbon allowance prices have enabled margins for coal-fired generation to improve dramatically in 2022, as the bloc turns to the solid fuel as a means of helping wean itself from an overwhelming dependence on Russian natural gas.

EU could tap ‘hidden treasure’ by cutting carbon market’s free allocation, says Delbeke

The EU could consider phasing out free allowances in the EU ETS more quickly to help meet the bloc’s greater investment needs in the aftermath of Russia’s invasion of Ukraine, the European Commission’s former top climate official told a conference on Tuesday.

Euro Markets: Prices stabilise ahead of June options expiry and Parliament vote on ETS reform

Trade in the EU ETS was quieter than usual on Tuesday with numerous participants attending an industry event and few participants focusing on tomorrow’s Parliamentary vote on ETS reform, while prices advanced ahead of the expiry of the June options contract on Wednesday.

AMERICAS

Guyana being courted by international buyers for its forest carbon, says VP

Guyana has received a number of foreign offers to buy forest carbon credits, the country’s vice president has said, as the government assesses the proposals on the table.

Campaigners urge more ambition, less trading for California’s Scoping Plan

Environmental advocacy groups are urging California Governor Gavin Newsom (D) to set higher climate ambition for the state ahead of a Thursday hearing to discuss Air Resources Board (CARB)’s 2022 Draft Scoping Plan.

ASIA PACIFIC

Australia Market Roundup: Large batch of ACCUs delivered to government, biomethane consultation launched  

Offset project owners have delivered over half a million new Australian Carbon Credit Units (ACCUs) to the Emission Reduction Fund despite the option to exit their contracts, according to Clean Energy Regulator data, while the government seeks feedback on its biomethane methodology draft.

Indonesia’s Pertamina signs HoA to develop domestic carbon offset projects

Indonesia’s state-owned energy company Pertamina has signed an agreement with a local carbon project developer to pursue nine domestic carbon offset projects which could deliver almost 12 MtCO2e/year, it claims.

Major Chinese forestry firm seals carbon market partnership

One of China’s biggest logging companies has teamed up with a local trading firm to form a carbon market partnership that includes a platform for transacting forestry-based offsets.

INTERNATIONAL

PREVIEW: Germany’s G7 climate club plans remain hazy amid energy security woes

With G7 leaders due to gather in less than a week in the Bavarian Alps, many expect Berlin to champion a long-trumpeted idea of a climate club to spur climate cooperation beyond the EU.

Asian steel set to forge ahead with blast furnaces as EU wobbles over border protection

The steel industry in China and India is set to shun the move away from blast furnaces to less polluting electric arc furnaces (EAF), while the global industry has ignored the impact of metallurgical coal mining from its carbon accounting, according to a report published on Tuesday.

VOLUNTARY

Canadian carbon credit companies ink $20m deal to scale up domestic ‘grouped’ projects

Two Canadian-based offset companies have partnered to scale up a series of domestic ‘grouped’ decarbonisation projects.

Finnish biochar project aims for $200/tonne CO2 removal after premium sale

An inflated price paid for carbon removal credits is going to enable a Finnish biochar project to scale over the next few years and hopefully drive its cost of removing a tonne of CO2 down to around $200 a tonne, a webinar heard on Tuesday.

DAC must shift from primary to secondary VCM to reach required scale, finds report

Market forces must be brought to bear on direct air capture (DAC) projects, shifting interest from the primary to the secondary voluntary carbon market to help drive the costs of the technology down to scalable levels, according to a study published on Wednesday.

Offset ratings agency puts two afforestation projects on “ratings watch”

Two Gold Standard-accredited reforestation projects have been placed on watch for a potential change in their grading by a carbon credit ratings agency in its latest update.

AVIATION/SHIPPING

Airline group calls for net zero incentives, SAF uptake costs can be managed with policy support -report

Aviation industry group IATA urged governments to adopt an aspirational net zero emissions goal with a diminishing role for offsets, as a report has found that a growing market share for Sustainable Aviation Fuel (SAF) can be achieved with manageable costs to industry provided there is policy support.

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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

After the Thiaw Mauritanian diplomat and head of the UN body to combat desertification Ibrahim Thiaw has been appointed interim executive secretary of UN Climate Change. He will take over the role when Patricia Espinosa, who has been in the job for six years, steps down next month and “until the selection process for the new executive secretary is completed,” according to a letter to parties seen by Climate Home. A UN Climate Change spokesperson previously told Climate Home that Espinosa’s last day would be July 15, with Thiaw due to start two days later. Thiaw has served as the executive secretary of the UN Convention to Combat Desertification (UNCCD) since January 2019. In this role, he called for land management to be more closely linked to climate action.

COP swap – The long-delayed UN biodiversity summit COP15 will be held in Montreal, Canada, over Dec. 5-17 this year rather than in the Chinese city of Kunming as originally planned, the Convention on Biological Diversity (CBD) has confirmed. The Chinese government had previously said it would postpone it until 2023 due to Covid-19, with the meeting intended to agree a new deal on halting the loss of biodiversity globally by 2030 and resolve thorny issues on how to enforce the measures. Read Carbon Pulse’s reporting on the first half of the meeting that took place last year, a session that outlined implications on how forest and land protection plays into climate mitigation and how funders can claim credit.

EMEA

Burn, baby, burn When it comes to energy and the environment, the priorities of the Czech EU Presidency are clear: emphasis will be placed on energy security and breaking the EU’s dependence on Russian fossil fuels, an objective considered in Prague to be more pressing than the green transition. “We basically have a repeat of the 1973 oil shock,” said Vaclav Bartuska, the Czech Ambassador-at-Large for energy security. “If there is a gas cut out this winter, we will burn anything we can to keep our people warm and to make electricity,” he said. Bartuska was speaking to Brussels-based journalists ahead of the start of the Czech EU Presidency, which begins on July 1 for a duration of six months, as France’s stint ends. During its presidency, Prague intends to push the implementation of the European Commission’s REPowerEU plan presented in May, which seeks to reduce Russian gas imports by two thirds before the end of the year. The plan also places the emphasis on energy savings and the acceleration of the transition to low-carbon and renewable energy sources in order to reduce the bloc’s reliance on Russian gas. In its programme, the Czech Presidency states that the focus will be “especially on thorough implementation of the main short-term objective, i.e. removing dependence on Russian fossil fuels”. According to Bartuska, diversification of gas supply can be achieved if European buyers can sign long-term contracts, which need to be vetted by Brussels. “We talked to possible suppliers of LNG and they all wanted long-term contracts – 20 or 15 years but most of them 20,” he said. And although the EU Commission has been reluctant about long-term contracts in the past, it is now open to them, Bartuska said. “There’s a clear understanding on their side that the member states need to survive, the governments need to survive the winter,” he said in comments cleared for Euractiv.

Coal shoulder – RWE, Germany’s largest energy company, has halted early retirement of employees in reaction to the government’s decision to increase the use of coal-fired power while gas supplies are low, Clean Energy Wire reports. In order to keep the lignite-fired power plants running longer than previously expected, the company will also use trained and external workers to cover personnel requirements, involving hundreds of jobs, an RWE spokeswoman told local media. RWE has three 300MW power plants that are currently on security standby and can be restarted at the request of the federal government. German economics minister Robert Habeck is aiming to reduce the use of gas for power generation and industry in view of reduced Russian deliveries. To that end, more coal-fired power plants are to replace electricity generation from gas-fired plants to the extent possible. That will make it possible to fill Germany’s gas storage tanks.

Belgian backup – Belgium’s energy minister Tinne Van der Straeten announced on Tuesday that a contingency plan aimed at securing gas supply has been finalised. “We hope we’ll never have to activate it but it is ready and in the course of refining,” she wrote on Twitter. Belgium’s plan adds up to similar moves taken on Monday by Germany, Austria, and the Netherlands, as reported by Carbon Pulse, in a bid to strengthen national energy reserves in the face of further blackmailing from Russia. Moscow significantly cut deliveries of the fuel last week, just after leaders of Italy, France, and Germany paid homage to Ukraine in the form of a highly-symbolic joint visit.

Au revoir Amelie de Montchalin, France’s minister for ecological transition and territorial cohesion since May 20, was defeated in this weekend’s parliamentary elections by a candidate of the new left-wing alliance NUPES, which means she will have to leave the government. With only 46.6% of the votes in her constituency, de Montchalin, who is also a regional councillor for Ile-de-France, was defeated by NUPES candidate Jerome Guedj and thus missed out on the opportunity to establish herself as an influential figure in French politics. President Emmanuel Macron requested in 2017 that any minister defeated in an election must resign. Government spokeswoman Olivia Gregoire also announced on France Inter radio station on Monday a government reshuffle would take place “in the coming days.” De Montchalin held one of the key positions in the newly-formed government of Prime Minister Elisabeth Borne. As predicted, Macron took full advantage of his re-election as French president to stress the importance of environmental issues. To this end, he put in place a trio of women to run France’s new ‘super’ green ministry. (Euractiv)

Looking elsewhere – North African nations could contribute 20-25 bcm of additional gas supply to the EU to help the bloc wean its dependence on Russia, according to Gonzalo Escribano of Spanish think-tank Elcano Institute. “If swift investments were made in Algeria and Libya was stabilised, we could count on 20-25 bcm more in the medium term, about 4-5 years,” he told Montel, including the 9 bcm of additional Algerian supply secured by the Italian government.

M&Asdar – State-owned Abu Dhabi National Oil Company, UAE energy company Taqa, and holding company Mubadala have formalised the purchase of stakes in renewable energy company Masdar, as the UAE accelerates efforts to reach net zero ambitions by the middle of the century. The new Masdar joint venture is valued at $1.9 bln on a 100% equity basis, the companies said in a statement. Taqa will take a 43% in Masdar’s renewables business, with Mubadala and ADNOC retaining 33% and 24% interests respectively. The partners also took stakes in Masdar’s green hydrogen business as they look for alternative energy sources to crude. ADNOC, which has been prioritising investment in hydrogen, will take a 43% stake, with Mubadala and Taqa retaining 33% and 24% respectively. Taqa will also contribute to a minimum of 40% share in the Abu Dhabi emirate’s renewables and green hydrogen projects. The transaction is pending regulatory approvals, which are expected to take few months. The new partnership will look at deploying more than 50 GW of capacity by 2030. This comes as the UAE, OPEC’s third-largest producer, speeds up its plans for energy transition. (S&P Global)

Sticky situation – A group of 10 Extinction Rebellion climate activists on Monday glued themselves to the entrance doors of the European Commission’s Berlaymont building in Brussels, Politico reports. Around 25 activists in total, coming from Germany, Austria, France, the Netherlands, and Italy among others, were present to call on the EU to do more against environmental damage and to criminalise ecocide — the deliberate and systematic destruction of ecosystems. In December, the Commission presented a revision of the Environmental Crime Directive, with the aim of expanding the list of environmental crimes in EU legislation and toughening sanctions against damages done to nature. But it stopped short of adding ecocide to that list.

ASIA PACIFIC

Coal digs a hole – Including coal plants in a new ‘capacity mechanism’ aimed at avoiding power shortages will only make Australia’s energy crisis worse, according to analysis from two energy experts in The Conversation. In a proposal from the federal government’s Energy Security Board, Australia’s electricity generators would be paid extra money to be available even if they don’t actually generate any electricity. However, the proposal is unlikely to work. “Will this capacity mechanism lower energy prices for households? Probably not, because it includes unreliable coal-fired power stations, and consumers are likely to pick up the cost when the plants ultimately fail,” the opinion piece noted.

Big budgets – Australia’s Queensland and New South Wales state government’s handed down their respective budgets on Tuesday, highlighting previous commitments of billions of dollars into renewable energy and transmission upgrade projects. The Queensland government has promised more than A$2 bln ($1.3 bln) to go to large scale storage, renewable energy projects, and generation and transmission investment, complementing the pre-existing A$2 bln Renewable Energy and Hydrogen Jobs Fund. It will also deliver funds via its state-owned energy companies, Stanwell, CleanCo, and Energy Queensland, to deliver new renewable projects in renewable energy zones. The funding commitments have been described as light-hearted compared to New South Wales, which includes an already announced A$1.2 bln commitment to electricity transmission upgrades, as well as $200 mln in new funding to replace Sydney’s bus fleet with electric equivalents.

Ta-ta Te Rapa – New Zealand-based Contact Energy has told the local stock exchange it will shut its 44MW Te Rapa power station in June 2023, a move that is expected to cut the company’s emissions by some 200,000 tonnes of CO2/year. The company noted the gas-fired cogeneration plant has been operating since 1999, providing steam and electricity to Fonterra’s Te Rapa dairy factory, and sending the excess to the grid. Contact said its contract with Fonterra expires in June next year, after which Fonterra will acquire the plant’s auxiliary boiler, but the gas turbine will be retired. Contact CEO Mike Fuge said the power capacity lost from the station would be replaced with renewable electricity over the coming years.

Woodside on watch The Australian Conservation Foundation has launched legal proceedings against Woodside Energy, in a bid to stop its A$17.3 billion ($12.3 bln Scarborough gas project in Western Australia. WA Today reports that ACF’s evidence will show that Scarborough’s emissions would significantly impact the World Heritage listed Great Barrier Reef in Queensland. ACF chief executive Kelly O’Shanassy pointed to findings by the International Energy Agency that no new coal, oil or gas projects could be sanctioned if the world was to keep global heating at 1.5C. She added that a successful case against Woodside’s project, which will see the company develop the Scarborough field and send it to an expanded Pluto LNG facility, would set a precedent that all new fossil fuel projects must be assessed for their climate impact. The development still has several federal regulatory hurdles to clear before the project in its entirety is approved. In a statement, Woodside said it would “vigorously defend” itself against the legal action.

AMERICAS

Play to your strengths  Canada is launching an industrial strategy for its natural resources, with critical mineral infrastructure, hydrogen production, and other low-carbon projects set to be a major focus. The strategy, formally known as the Regional Energy and Resource Tables, will see PM Justin Trudeau’s government partnering with each province to “identify, prioritise and pursue opportunities.” The rollout began this month in BC and Manitoba in the west, and the east-coast province of Newfoundland and Labrador, with the programme set to reach every other region by early 2023. “It’s being a little bit more thoughtful about economic strategy,” Natural Resources Minister Jonathan Wilkinson said in an interview, describing the effort as an industrial strategy. “It’s about actually pulling together the kinds of resources, and looking at the kinds of processes that typically prohibit rapid movement towards securing those opportunities.” Wilkinson said the primary goal is to accelerate the energy transition from fossil fuels in each region, and to engage Indigenous groups and industry players on how to best achieve quick results. The types of projects each region is keen to advance with the government is already becoming clear, the minister said, with at least six or seven large-scale hydrogen production projects using wind being targetted in Newfoundland, battery manufacturing in Quebec, electric vehicle production in Ontario, and carbon capture projects in oil-rich Alberta. (Bloomberg)

Diesel dismay – The projected renewable diesel boom in the US over the next three years won’t make up for the petroleum diesel refining capacity lost since 2019, a Reuters analysis of federal data found. COVID caused a decline in U.S. refining capacity, with shuttered plants sending prices soaring. Some facilities are being converted into clean-diesel refineries, but won’t match the lost output. Current and new renewable diesel plants are expected to produce 135,000 barrels per day by 2025. The U.S. has lost 180,000 barrels per day of diesel refining capacity since 2019.  (Reuters)

VOLUNTARY

Cote cooking – Eni Cote d’Ivoire on Tuesday launched the distribution of improved cookstoves to vulnerable households. Under the project, Eni will distribute 100,000 stoves over a six-year period starting this year, targetting more than 300,000 people in the Gbeke region. Eni said all the stoves are produced by a local manufacturer, contributing to the development of local content and in-country value creation. The initiative aims to substitute the traditional wood-based cooking devices, reducing exposure to unhealthy smoke for people and decreasing the pressure on the forest resources, which is a primary concern in the country. The initiative is in line with the commitments of the Memorandum of Understanding signed with the country’s Ministry of Energy and Petroleum last December, and is implemented in partnership with the non-profit organisation AVSI. Eni said these activities will enhance the company’s decarbonisation strategy in the country, as it seaks to offset the Scope 1 and 2 emissions from its Baleine offshore oil discovery. Eni expects the project to yield around 1 mln VCUs over the next decade.

Eat up Food and drink companies worldwide are falling short of the goal for reducing carbon emissions and must collaborate to improve their efforts. That’s the conclusion of a report by consultants AlixPartners, which found that at best food and beverage manufacturers, suppliers, and retailers may manage to reduce emissions by 29% by 2030. That will still miss the goal of 38% set out in the UN’s 2015 Paris Agreement and by the Science Based Targets initiative. The research comes as many parts of Europe are recovering from a heat wave, which are becoming more common as the climate warms. Food and drink producers, some of the biggest contributors to global warming, face a particular challenge when it comes to reducing their scope 3 emissions – those produced by their value chains, including suppliers and customers. AlixPartners analysed the carbon commitments made by 235 food and beverage companies across Europe, the Middle East, Africa, and the US, as well as by the world’s 13 largest food and beverage packaging firms. The firm also surveyed 200 executives focused on sustainability and operations. (Bloomberg)

No idea – Unilever CEO Alan Jope said he had “no idea” how the consumer giant would meet a target of reducing Scope 3 carbon emissions, which includes those generated by consumers using its products. The company’s goods range from Dove soap to Knorr noodles and Surf detergent, and the energy used by consumers to cook food, wash clothes or clean their hair and skin “accounts for 60% of our total carbon footprint,” Jope said at the Consumer Goods Forum in Dublin on Tuesday. The energy output from its factories and distribution network is “almost immaterial” by comparison, the CEO added. Jope was outlining the challenges in meeting scope 3 goals, which the company has less influence over, by 2039. He said it would require significant changes in consumer behaviour and action from governments, including the adoption of much higher use of renewable energy worldwide. Unilever focuses on advocacy to help promote the changes needed as part of its overall carbon reduction strategy, he said.  The consumer giant is on track to meet its scope 1 and 2 emissions, which are those directly under the control of the company, said Jope. (Bloomberg)

SCIENCE & TECH

Italy’s new calamity – The Lazio region announced the forthcoming adoption of a drought state of calamity on Monday and the Po valley’s regions are considering doing the same as Italy faces its worst drought in 70 years, Euractiv reported. In the last few days, the heat wave has worsened the drought situation. Lazio regional governor, Nicola Zingaretti, said he would declare a state of calamity by Wednesday in a bid to start rationing water. “We have to be prepared for a highly critical situation, and we will have to focus on saving water in all activities starting with household consumption and also seeking forms of supply,” the governor said.

Whatever floats this boat – Proman Stena Bulk, a joint venture (JV) between a leading global methanol producer Proman and one of the world’s largest tanker shipping companies Stena Bulk, confirmed that the first methanol-powered newbuild vessel under its partnership has been delivered and is preparing for commercial operation, Hellenic Shipping News reports. The methanol-powered 49,990 DWT Stena Pro Patria is the first of six state-of-the-art, IMOIIMeMAX dual-fuel mid-range (MR) tankers being built in China for Proman Stena Bulk and Proman. Meanwhile Finnish shipping company ESL Shipping will become the world’s first shipping company to start utilising new low-emission Neste co-processed marine fuel in its vessels, Hydrocarbon Processing reports. The marine fuel enables up to 80% reduced GHG emissions over the lifecycle compared to fossil fuels.

AND FINALLY…

Ivy beleaguered- Students at Harvard and MIT have signed a letter criticising the schools for their planned use of carbon offset credits to meet the town of Cambridge, Massachusetts’ proposed Building Energy Use Disclosure Ordinance. Large properties in Cambridge would have to either reduce emissions, pay $234/tonne of excess output, or buy carbon offsets. The 90 students who signed the letter say they want emissions reductions in Cambridge, not elsewhere in the world. (Harvard Crimson)

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