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TOP STORY

ANALYSIS: Electricity reform could boost affordability, avoid carbon costs

European nations are to overhaul their power markets in a scramble to curb consumer costs and boost energy security while keeping climate goals intact. Renewable-friendly market design that avoids carbon costs is increasingly seen as delivering on all three objectives.

ASIA PACIFIC

Japan’s GX League pilot run takes shape as bigger questions loom for the longer term

Japan has begun recruiting participants to the trial run for its voluntary carbon market with test trading slated to begin in September on the Tokyo Stock Exchange, initially limited to the domestic J-credits, though fundamental questions as to how the scheme will operate remain.

Australian govt to introduce Climate Change Bill, minister lays out offset priorities

Australia’s energy and climate minister has announced the government will introduce a Climate Change Bill when parliament resumes next month, while outlining his priorities surrounding domestic and international offset use to meet the country’s nationally determined contributions (NDCs).

Korean GHG emissions remain well below pre-pandemic levels despite 2021 growth

South Korea’s greenhouse gas emissions rose 3.5% in 2021 as the economy begun its post-Covid recovery, but remained significantly below the levels seen before the pandemic.

Research lays out potential futures of Australia’s Safeguard Mechanism

Polluting facilities covered by Australia’s Safeguard Mechanism (SM) will have to cut emissions by 170 MtCO2e between now and 2030 in order to align with a net zero emissions trajectory by 2050, according to research laying out the ways the policy could be designed.

New NZ voluntary offset product paused just a day after launch

A company that launched a new voluntary carbon credit on Tuesday paused trading and new issuances on Wednesday amid questions regarding the additionality of the units.

EMEA

Euro Markets: EUAs hit one-month high on technical breach before profit taking trims gains

EUA prices rose to their highest in more than a month early on Wednesday as traders followed a technical breakout before profit taking trimmed the gains, while some continued to hedge forward power generation as energy prices continued to advance amid ongoing supply worries.

VOLUNTARY

Frontier taps six companies in its first carbon removal round

Global carbon funding initiative Frontier has announced the winners of its first carbon removal round, picking six companies, including an Australian Direct Air Capture (DAC) project developer.

Indigo Ag to offer carbon credits at $40/t through new soil protocol

US offset developer and farm technology firm Indigo Ag announced on Wednesday a carbon credit offering from enriched agriculture soil projects, verified under a new “soil enrichment” protocol.

CIX teams up with Nasdaq in preparation for early 2023 carbon exchange launch

Singapore-based Climate Impact X (CIX) has formed a strategic technology-based partnership with US exchange operator Nasdaq to enable price transparency and liquidity in its voluntary carbon market operations, it was announced on Wednesday.

ICROA to expand its accreditation beyond IETA members

Voluntary carbon market business association ICROA will be “soft launching” its accreditation programme for non-IETA members, aiming to maintain relevancy amid a swathe of new entrants.

AMERICAS

Court denies Constellation, green groups’ intervention in PA RGGI injunction

Pennsylvania’s Commonwealth Court denied Constellation Energy and green groups the opportunity to intervene in the ongoing case against the state’s rulemaking to join the 11-state RGGI cap-and-trade programme, according to court documents filed on Tuesday.

INTERNATIONAL

Miner Anglo American invests in African waste firm Sanergy, eyeing carbon credits

Diversified miner Anglo American has agreed to lead the latest investment round of Sanergy, an organic waste business with operations in Kenya that is eyeing carbon finance to help generate high value agriculture and energy products.

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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 most promising developments? What are the requirements and next steps for scaling up at the required speed? And when 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, amongst other topics 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 with the code CARBONPULSE15: https://bit.ly/3t4CmH6

Asia Pacific LNG & Gas Summit – July 6-8, Singapore: The Premier Meeting Place for LNG Buyers & Sellers in Asia Pacific. As a Carbon Pulse our reader, you are invited to attend the Asia-Pacific Carbon Markets Session (July 8, 1530-1700 local time) at a special rate of USD 500. Participants will also receive access to the Award Evening (July 7, 1800-2000) and all networking sessions on July 8, as well as the Networking App. You are also welcome to a 15% discount for the entire three-day event. To register, contact Emmanuel Bossman at LNGAsia@dmgevents.com.

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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

Reforestation nations – The world’s total forest cover increased by an area larger than Peru, 131 mln ha between 2000 and 2020, according to research from the University of Maryland and the World Resources Institute. Despite that, planet Earth saw a net loss of 100 mln ha of forest during the same time period. The reforestation is mostly happening in Asia and Eastern Europe, as 36 countries saw their forests increase in size over the past two decades. Separately, a new study has found that companies critical to reducing tropical deforestation have no chance of meeting their greenhouse gas emission targets unless they make much faster progress on ending deforestation in their supply chains.

Let out the reefs, make all sail – The maritime industry is not currently on track to meet the IMO ambition for a 50% cut in GHG emissions by 2050, even under favourable assumptions, according to a new study released by think-tank Nordic West Office. The study suggests that this target could eventually be achieved on the industry’s current trajectory, but it is likely to take several more decades than desired. Using three global decarbonisation scenarios developed by Shell as a starting point, the authors examined in precise detail how the industry – in all its moving parts – might be expected to transition to green fuels over time. The answer suggests that substantially more action and more cooperation will be required under all three scenarios, including the most optimistic option. (Maritime Executive)

Nice one, NATO – NATO aims to cut its civilian and military greenhouse gas emissions by at least 45% by 2030 and be carbon neutral by 2050, Secretary-General Jens Stoltenberg said on Tuesday as he announced the first emissions targets for the organisation. Fossil fuel-guzzling armies, navies and air forces are major contributors to carbon emissions. Indeed, the world’s largest armed forces have been shown to emit more greenhouse gas emissions than many countries combined. Research by Scientists for Global Responsibility estimates that the world’s militaries, and the industries that provide their equipment, account for as much as 6% of all global emissions. Despite this, military activities have quietly enjoyed a sense of exceptionalism from environmental norms that other areas of society are expected to follow. (CNBC)

EMEA

Response to Russia – Finland has revised its energy and climate strategy – due to be released in full on Thursday – because of the impact of Russia’s invasion of Ukraine, according to economy minister Mika Lintila in a statement, with the war resulting in cut energy supplies to Finland and scuppering plans for the Russian-backed Hanhikivi nuclear project. In addition to nuclear investment, the strategy would also outline moves to further boost hydrogen and other sources, with a target of 51% of energy consumption coming from renewables by 2030 and net zero by 2035, he said. The plan is targeting 200 MW of electrolyser capacity by 2025 and 1,000 MW by the turn of the decade. (Montel)

Bailout watch – Energy giant Uniper is discussing a possible bailout from the German government after Russia curbed natural gas deliveries, forcing the utility to buy fuel in the spot market at higher prices. Uniper said it is in talks with the government for a possible increase in state-back loans from KfW or even equity investments to secure liquidity. The supply squeeze prompted the company, Germany’s top buyer of Russia gas, to withdraw its outlook for the year. (Bloomberg)

Charging shortfall – Germany will manage only to get just over 10 mln electric cars on the road by 2030 instead of the targeted 15 mln due to insufficient charging infrastructure, according to a report by business consultancy PwC that came as Germany signed up to an EU member state position for a ban on CO2-emitting cars from 2035. It said the sluggish expansion of the charging infrastructure for electric vehicles jeopardised the government’s climate targets. Germany had 60,400 public charging points in May and currently adds around 330 per week, PwC said. “Without accelerating the pace of expansion, Germany is heading for a massive charging gap, both in the public and private sectors,” the report said. (Clean Energy Wire/Reuters)

Hey big spender – Investment returns from UK power network operators are set to be higher than analysts expected as the regulator unveiled a £20.9 bln budget for expanding the grid for the green-energy transition. According to Bloomberg, Ofgem said it’s proposing tough efficiency targets for the networks, along with a reduction in their allowed rate of equity return to 4.75% from about 6%. While that means consumers will contribute less to company profits, the rate is above analysts’ expectations of 4.5%, according to a Morgan Stanley note. Grid costs currently add about £100 to household energy bills. Grid operators have long argued that investors need a reasonable return to facilitate the clean-energy transition. Ofgem must oversee that drive for renewable power, while ensuring consumers aren’t saddled with funding costly projects that may prove to be outdated as technology advances.

ASIA PACIFIC

CCS partnership – Petronas has signed a memorandum of understanding (MoU) with Mitsui for the conceptual and feasibility studies of the CCS value chain, including the evaluation of CO2 storage sites in Malaysia, TheEdgeMarkets reports. The MoU was signed at a virtual ceremony on June 13. Under the MoU, both parties will evaluate potential CO2 storage sites offshore Peninsular Malaysia in line with Petronas’ aim to establish Malaysia as a CCS regional hub in Asia-Pacific. The scope of collaboration covers the evaluation of other CCS value chains, capturing and gathering strategy of CO2 from various industries, competitive transportation of CO2 and emerging technology in direct air capture.

Joining the club – Japan Petroleum Exploration Co. (Japex) has joined the CCS+ Initiative, an international effort led by oil and gas companies to develop a methodology for creating carbon credits from CCS and CCUS projects. Japanese interest in the initiative is significant, with Mitsubishi and Inpex already members, along with Japan Oil, Gas, and Metals National Corp. (JOGMEC), a government agency, and engineering firm Kajima Corp.

First SAF – China’s Sinopec Corp produced its first aviation fuel from used cooking oil at an industrial-scale facility in east China, the state refining giant said on Tuesday, Marketscreener reports. The biojet facility, built in Sinopec Zhenhai Refining & Chemical Co and able to process 100,000 tonnes of used cooking oil or “gut oil” each year, paves the way for Sinopec to start commercial manufacturing of the biofuel. Biojet fuel cuts the emission of carbon dioxide by more than half over the whole life cycle, Sinopec added.

Heroic biofuels – TotalEnergies Marine Fuels and Mitsui said they have successfully completed the first biofuel bunker operation for a vehicle carrier in Singapore, Manifold Times reports. The local operation was made possible with support from the Maritime and Port Authority of Singapore. The MOL-operated car and truck carrier, Heroic Ace, was refuelled by TotalEnergies-supplied biofuel on 11 June 2022 via ship-to-ship transfer, while the carrier performed cargo operations simultaneously. The biofuel has been consumed during the carrier’s voyage to Jebel Ali, in the United Arab Emirates. The biofuel blend used in this trial composed of VLSFO (Very Low Sulphur Fuel Oil) blended with 20% second-generation, waste-based and ISCC-certified UCOME (Used Cooking Oil Methyl Ester). From a well-to-wake assessment, the biofuel will reduce approximately 17% of Greenhouse Gas (GHG) emissions compared with conventional fuel oil.

A lot of water, a lot of renewables – India will need 115 GW of renewable power generation capacity and 50 bln litres of demineralised water supply to achieve the goal of five mln tonnes of green hydrogen per year by 2030, Economic Times reports. According to a report from EY and non-profit group SED Fund on the future of green hydrogen in India, industrial feedstock-based applications will drive demand, while price parity between green and grey hydrogen production will determine the speed and scale of the transition towards renewable hydrogen. The report, Accelerating the Green Hydrogen Economy, was released at the Green New Energy for a Net Zero India conference.

AMERICAS

Carbon tax holiday – Ideas from across the political spectrum on how to curb consumer price pressures caused by inflation in Canada have ranged from tax holidays to $1,000 cheques, but the federal carbon tax is now in the bullseye of one think tank. Public Policy Forum’s Sean Speer thinks a tax holiday would drive up demand, but a pause on annual carbon tax increases would simply alleviate price pressure where demand exists already. The Canadian federal carbon tax is set to increase by C$15/tonne every year until 2030. (Yahoo News)

Clean-up crew – Oregon’s Department of Environment Quality (DEQ) announced the date of a Public Hearing on July 19, 2022 at 9 a.m. on proposed rulemaking to expand the state’s Clean Fuels Program. The DEQ is looking to deepen the state’s average carbon intensity fuel standard reduction to 20% from 10% currently below 2015 levels by 2030 and 25% by 2035, up from the current target of a 10% cut beneath this baseline by 2025. The state’s Environmental Quality Board is expected to consider adopting the amendments over Sep. 22–23.

VOLUNTARY

A “pittance” – BP is paying subsistence farmers across Mexico pennies on the dollar for carbon offsets in a scheme facilitated by the World Resources Institute, Bloomberg reports. The programme, by which BP would pay subsistence farmers who do not have formal education or access to the internet to not cut down trees and to reforest parts of their land, only pays about 15% of the amount others are paying for Mexican carbon offsets. The mountain village of Coatitila in eastern Mexico, after two years of work, received its first annual payment in late 2021 amounting to $40 per person of his community — about one-third of what a recently-cancelled government programme had paid, and far less than the $330 per person he had hoped to receive. “It’s pretty unjust,” Alvaro Tepetla, the village’s former leader, told Bloomberg. “You only find out about all this afterwards.” Benjamin Rontard, a Mexican climate researcher who wrote his doctoral thesis on Mexico’s carbon market at the Autonomous University of San Luis Potosi, was far more blunt. It’s a “rip-off,” he told Bloomberg. They are preying on “campesinos who don’t have any other option for economic activity.” (Climate Nexus)

Great Gabon – Gabon, the second-most forested nation after Suriname, aims to create 187 mln carbon credits, almost half of which may be sold on the offsets market in what would be the single largest issuance in history, Bloomberg reports. The government is working with the UN’s REDD+ mechanism to create the credits, Gabon’s environment minister Lee White said last week on the sidelines of a Commonwealth group of nations meeting in Rwanda. At the same time, Gabon wants to harvest its forests sustainably to generate income, he added. The carbon credits “will probably come on to market just before COP27,” White said, with 90 mln to be sold and “non-market” mechanisms to be used for the balance. Gabon, which is 88% covered by tropical rainforest, is trying to find a way to preserve its carbon-absorbing wilderness while diversifying its economy from oil, demand for which is expected to plunge in coming decades. The country was the first in Africa to receive funds for protecting the ability of its forests to absorb carbon for reducing deforestation, getting its first $17 mln payment from the Central African Forest Initiative, which is backed by a number of mostly European governments, last year. The programme, launched in 2019, plans to disburse a total of $150 mln over a decade. Earlier this month TotalEnergies acquired 49% of Compagnie des Bois du Gabon and said it would develop a forest management model combining wood harvesting and processing with the production of offsets through reforestation, agroforestry, and forest conservation. CBG controls over 600,000 ha of forest, representing about 2.6% of Gabon’s land mass.

Funding fun – Twelve, a company that turns CO2 into chemicals, fuels and materials, announced it has raised $130 mln in Series B funding, Axios writes. The round, led by DCVC, will be put toward scaling the engineering, manufacturing and deployment of its industrial-scale technology, which is already used to make everything from sunglasses to aviation fuel. Twelve’s partners include Procter & Gamble, Shopify, NASA and the US Air Force. Meanwhile, Cleartrace, a carbon accounting software firm based in Austin, Texas, has raised $20 mln, led by ClearSky, with “strategic financing” from Brookfield Renewable, EDF Energy North America, Tenaska and Exelon. Cleartrace is part of a wave of startups seeking to enable companies to quantify and reduce their emissions. The company tracks decarbonisation for all of Iron Mountain’s US data centres, Brookfield Properties’ premier skyscraper, One Manhattan West, and JPMorgan Chase’s offices.

SCIENCE & TECH

CO2 for energy storage – Energy Dome, an Italy-based company which has developed a novel CO2-based long-duration energy storage system, has closed an $11 mln bridge funding round, Energy Storage News reports. The convertible funding was led by the Evolution Fund of asset management firm CDP Venture Capital, together with existing investor Barclays through the latter’s Sustainable Impact Capital programme targeting early-stage companies accelerating the transition to net zero. Another existing investor, Swiss family office Novum Capital Partners, also participated in the round which brings Energy Dome’s total fundraising to nearly $25 mln, in advance of its Series B round, which is planned for later in the year. The company’s first major project, a 2.5 MW/4 MWh CO2 battery facility is now fully operational and the bridge financing will allow it to accelerate the development of its larger, 10-hour duration 20 MW/200 MWh system. Specifically, it will purchase orders for the turbomachinery equipment needed for that project, which it described as ‘long lead time’ equipment.

AND FINALLY…

What’s mine is ours – The US Energy Department has issued a request for information to help guide a $500 mln programme to turn current or former mine lands into hosts of clean energy demonstration projects, Axios writes. The programme, run through the Office of Clean Energy Demonstrations and funded via the Bipartisan Infrastructure Law, aims to initially fund two-to-five clean energy projects on mine lands. According to the EPA, the US has about 17,750 mine land sites totalling 1.5 mln acres. If each of these sites were to be devoted to producing clean energy, they could produce up to 89 GW of electricity. The programme will be eligible for projects including solar, microgrids, direct air capture, along with advanced nuclear plants. According to the DOE, two of the demonstration projects funded under the programme must involve solar energy.

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