CP Daily: Thursday June 30, 2022

Published 08:10 on July 1, 2022  /  Last updated at 08:15 on July 1, 2022  /  Newsletter  /  No Comments

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

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TOP STORY

US Supreme Court dramatically weakens EPA ability to regulate CO2 emissions

The conservative-dominated US Supreme Court ruled on Thursday the EPA cannot pursue generation shifting and cap-and-trade as a means to reduce power sector CO2 emissions, in what critics described as a massive blow for President Joe Biden’s climate change mitigation efforts.

EMEA

Restricting EU ETS access could have ‘undesired consequences’ -Commission official

Restricting the access of speculators in the EU ETS would achieve little and could lead to undesired consequences, a senior European Commission official told a conference Thursday in remarks that reinforce the EU executive’s scepticism about lawmaker efforts to curb carbon market access.

EU ministers seek automatic EU ETS supply injection to curb price spikes

EU environment ministers want an automatic EUA supply injection to prevent excessive price fluctuations in the bloc’s carbon market, according to a document published on Thursday that suggests legislators are all-but certain to agree to beef-up the market’s Article 29a mechanism.

EU co-legislators to begin trilogue talks on ETS reforms in mid-July -sources

EU legislators are striving to avoid any delays on ETS reforms, with inter-institutional talks set to start as early as July, a senior diplomat told Carbon Pulse on Thursday, just two days after member states reached a unified approach on five key Fit for 55 climate policy proposals.

Euro Markets: EUAs rise to six-week high as trilogue negotiations on ETS reform set to start in July

EUAs rose to a new six-week high on Thursday amid continued steady buying, after sources in Brussels said the European Council, Commission and Parliament would start negotiations over a final compromise set of reforms to the EU ETS in July.

EUAs to suffer €10 hit if current industrial demand destruction continues -analyst

European carbon prices for 2022 and 2023 will suffer downside in the region of €10 if current levels of industrial demand destruction in the face of soaring energy prices were to continue, an analyst told a conference on Thursday.

Shipping’s inclusion in EU ETS will further fuel rampant inflation, says expert

EU plans to including shipping in its ETS will fuel further inflation and could change trade flows as vessels try to evade carbon costs, a conference heard on Thursday.

UK launches tender for platform to host carbon emission auctions

The UK government has launched a tender to select a platform to host auctions for UK emissions trading allowances (UKAs), with a decision expected to be taken in the coming months ahead of the first auction at the start of next year.

EEX changing EU carbon contract ISINs to improve trade reporting

European energy exchange EEX is changing the International Securities Identification Numbers (ISINs) of its spot EU emissions allowance contracts following a joint request from the European Securities Markets Authority (ESMA) and the European Commission.

VOLUNTARY

VCM should brace for mass changes on carbon credit credibility -experts

Experts at Sylvera’s carbon market summit on Thursday said that huge changes are coming to the voluntary carbon market (VCM) over the coming months as private and public initiatives shore up guidance to address credibility concerns.

Start-up carbon investors in $100 mln “ultra-high quality” credit deal

Two start-up carbon investment firms have inked a deal to develop and sell $100 million worth in “ultra-high quality” credits from emerging markets.

Verra opens consultation on offset labelling ahead of IC-VCM principles

Offset standard manager and developer Verra on Thursday proposed four new carbon crediting labels to meet the Integrity Council for Voluntary Carbon Markets’ (IC-VCM) Core Carbon Principles due out later this year, including on project type, removals, and Paris Agreement compatibility.

Cities secure funding for biochar as market backs carbon capture technologies

A philanthropic organisation has announced a multi-million-dollar distribution of funding across seven cities from Europe and the United States for the adoption and scaling of biochar carbon removal.

New carbon market methodology published for ‘elephant bush’ regeneration

A new crediting methodology was published on Thursday to quantify carbon removals through the regeneration of Spekboom Thicket, known locally as ‘elephant bush.’

AMERICAS

WCI jurisdictions unveil accounting mechanism to track compliance instrument transfers

California and Quebec on Thursday presented a bookkeeping mechanism to help account for cross-border allowance and offset transfers under the WCI-linked carbon market and prevent double counting.

NA Markets: CCAs spring to life at end of quarter, RGGI prices calm above churn   

California Carbon Allowance (CCA) prices surged towards the end of the week as the end of the quarter approached, while RGGI Allowances (RGAs) continued to hold steady as Pennsylvania appeared set to enter the power sector carbon market.

Fewer California-registered WCI speculative accounts opened in Q2

The number of California-registered carbon market accounts slowed during the second quarter of the year, according to state data published Thursday, as this coincided with a stagnation in allowance prices in the WCI programme.

ASIA PACIFIC

Australia announces independent review of offset framework

Australia on Friday announced an independent panel will carry out a review of the integrity of its domestic carbon offset methodologies and the governance of the scheme, after a raft of criticism has threatened to undermine confidence in the programme.

Environmental regulator approves 50-year extension for Australia’s North West Shelf with net zero conditions

Western Australia’s (WA) EPA has recommended that the life of the giant North West Shelf (NWS) LNG and gas project, Australia’s largest carbon-emitting establishment, be extended for a further fifty years provided that its operator, Woodside, and its project partners commit to staged net reductions in GHG emissions until reaching net zero in 2050.

Japanese firms develop clean ammonia supply chain with UAE

Three Japanese companies have successfully demonstrated a clean ammonia supply chain to link Japan to the oil and gas-rich United Arab Emirates, they announced Thursday.

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CONFERENCES

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

LCOE update The cost of new-build onshore wind has risen 7% year-on-year, and fixed-axis solar has jumped 14%, according to the latest analysis by BloombergNEF. The global benchmark levelised cost of electricity, or LCOE, has temporarily retreated to where it was in 2019. Cost rises are linked to increases in the cost of materials, freight, fuel and labour. BloombergNEF’s estimates for the global LCOE for utility-scale PV and onshore wind rose to $45 and $46 per MWh respectively in H1 2022. Despite losing some ground, this still marks an 86% and 46% reduction since 2010 in nominal terms. The cheapest renewable power projects in H1 2022 were able to achieve an LCOE of $19/MWh, as in best-in-class onshore wind farms in Brazil, and $21/MWh for tracking PV farms in Chile, and $57/MWh for offshore wind in Denmark. If the offshore transmission costs are excluded, the latter estimate falls to $43/MWh. Despite temporary cost rises for renewables, the gap to fossil fuel power generation continues to widen due to fuel and carbon prices rising even faster. New-build onshore wind and solar projects are now around 40% lower than BNEF’s global benchmarks for new coal- and gas-fired power. The latter cost at $74 and $81 per MWh, respectively. While demand for low-carbon technologies in the energy sector bounced back strongly in the second half of 2021, supply has struggled to keep up. Global supply chains were weakened by investment deferrals, staff layoffs, early retirement of assets and lockdowns. Trade flows have been disrupted by challenges in logistics and transportation, trade barriers, and a re-wiring of relationships following Russia’s invasion of Ukraine.

EMEA

Bad coal in bad times – The Polish government is seeking to suspend rules banning the worst-quality coal from the market, citing soaring coal prices and risks of shortages of the fuel for homeowners. Poland’s climate ministry submitted a draft decree to suspend the restrictions introduced in 2020 for 60 days, citing the adverse changes the coal market stemming from Russia’s action in Ukraine. The government in April introduced an immediate ban on imports of Russian coal used mostly by individual households and heating plants in smaller towns, assuring Poles there would be no shortages of the fuel. Meanwhile, coal prices for homeowners have roughly tripled this year compared to 2021 to over 2,000 zlotys per tonne, pushing the government to introduce subsidies for retail coal buyers. Millions of Poles use coal to heat their homes. (Reuters)

Leading in misleading The Netherlands’ advertising watchdog has ruled that an ad campaign by Shell about its efforts to reduce CO2 emissions is misleading and must be pulled from circulation. Shell’s advertisements say customers can pay extra when they buy fuels in order to “compensate” for the pollution generated by those products. The campaign is itself a reboot after the regulator ruled last year that ads saying Shell customers could “drive CO2 neutral” were misleading. “Just like CO2 neutral, CO2 compensation is an absolute environmental claim, and absolute environmental claims are subject to a strict burden of proof,” the Advertising Code Committee said in a statement. “Shell has no way of demonstrating that CO2 compensation by protecting forests or planting trees eliminates the climate damage of petrol.” It’s the fourth time this year the committee accused Shell of overstating its green credentials in promotional campaigns. Shell has two weeks to appeal the decision, which is not legally binding, after which the committee will publish a final ruling. In response, a company spokesperson said carbon offsetting is recognized globally as a tool for preventing and reducing emissions, and Dutch consumers understand that carbon-dioxide compensation doesn’t eliminate all adverse climate effects. The company is considering its next steps. (Bloomberg)

Borne priorities – The French government is unlikely to follow through on its climate ambitions, the independent executive group the High Climate Council said in its fourth annual report published on Thursday that featured about 60 recommendations to the government. The office of Prime Minister Elisabeth Borne has already acknowledged that it did not know how to follow up on all of the recommendations made by the council. Borne’s office did, however, assure that it is already focusing on key issues of adaptation such as high temperatures and flooding. Some measures are already being implemented, with the rest slated to start soon. The government’s aim is to align with the EU’s programmes such as the Horizon Europe-funded Mission Adaptation to Climate Change, which offers a framework for developing resilience measures in EU territories. (EurActiv)

Not a mate of Czech – The European Commission has opened an in-depth investigation to assess whether public support that Czechia plans to grant for the construction of a new nuclear power plant in Dukovany is in line with EU State aid rules. The beneficiary of the measure would be the Elektrarna Dukovany II, a company set up to carry out the project, which is fully owned by the CEZ Group, in which the state holds 70% of shares. In March, Czechia notified the Commission of its plan to support the construction and operation of a new nuclear power plant in Dukovany, with an electricity generation capacity of up to 1200 MW. Dukovany is already the site of an existing nuclear power plant. The new plant, which is scheduled to start operating in 2036, should increase the security of electricity supply for Czechia and for neighbouring countries, helping the decarbonisation of the energy sector and diversifying the Czech energy mix.

VOLUNTARY

Too little, but not too late – Mexican President Andres Manuel Lopez Obrador has called for regulation of the country’s carbon offset market in response to a Bloomberg Green investigation that showed oil giant BP is paying subsistence farmers a fraction of market rate. BP paid just $4/tonne to more than a dozen Mexican communities under an agreement signed in 2021. The project’s own research showed buyers were willing to pay more than double that for offsets, which are now worth an average of $12 to $16 on the market. Asked at his morning press conference Thursday if the market needed regulation to ensure better pay for landowners, Lopez Obrador replied “Yes, of course,” and said his administration would also look into BP’s project for paying “too little.” A day after the investigation was published, government officials met with carbon offset standards bodies and called for a “just distribution of benefits.” (Bloomberg)

Nudge, nudge The Financial Accounting Standards Board (FASB)’s multi-year effort to draw more stakeholder input to help set its priorities drew 522 responses and a three-fold jump in investor feedback, ultimately reshaping its agenda and leading the board to add accounting standards for crypto, environmental and carbon offset credits as well as software costs to its list of standard setting priorities, according to a report released Wednesday. The lion’s share, or 445 of the responses received, addressed digital assets. The initiative led the board to expand its research agenda to include accounting standards related to exchange-traded commodities, financial instruments with ESG-linked features, hedging and possible changes to the definition of a derivative, government grants, consolidation for business entities, key performance indicators (KPIs) for business entities and statement of cash flows. (CFO Dive)

CDM revival – Slow government progress in developing new rules and standards for carbon markets under Article 6 of the Paris climate accord and interference in the functioning of existing carbon markets are growing risks for the industry, Renat Heuberger, chief executive of South Pole, said in a recent interview with S&P Global Platts. Heuberger said the existing carbon market infrastructure has been built over the past 17 years, but governments are now looking at rethinking the entire architecture under Article 6, which is essentially the renewed CDM. “Instead of thinking from the beginning and spending another 17 years to build it up, I strongly recommend using as much as we can from what we already have, because it has been proven functional and we have no time to completely reinvent,” he said. Article 6 has given significant authority to host countries to manage their carbon abatement mechanisms. “My fear is that every country starts a slightly different accounting mechanism, a slightly different way to do it,” Heuberger said.

ASIA PACIFIC

H2 in the skies – Queensland airline Skytrans has announced plans for what it claims will be Australia’s first hydrogen electric aircraft, according to The Guardian. The airline, which operates out of Cairns and flies to Cape York and the Torres Strait, says the first plane will be in the air by 2026. Skytran says it will work with aircraft company Stralis to retrofit a 19-seat Beech B1900D-HE aircraft. The converted plane will have a range of 800km, seat 15 people, and will initially operate at similar costs to conventionally powered aircrafts. European aircraft manufacturer Airbus last year announced plans for a hydrogen fuelled, zero emission commercial aircraft that could take to the skies by 2035.

AMERICAS

Another lawsuit – A coalition of environmental groups has sued the Biden administration for restarting oil and gas lease sales on US federal lands, the Hill reports. The sales are the first since a temporary freeze in Jan. 2021, issued by President Biden shortly after entering office. The current administration’s first sales garnered thin industry interest. A drilling industry group blamed the limited interest on policies that have made oil and gas development on federal lands more difficult, such as higher royalties on production and Biden administration efforts to stop new leasing. The auctions are taking place after a federal court blocked the administration’s attempt to suspend such sales because of climate change worries. (Carbon Brief)

The R stands for renewables – Rhode Island Gov. Dan McKee (D) on Wednesday signed legislation requiring the state’s electricity use to be completely offset by renewables by 2033. According to the governor’s office, it is “the most aggressive renewable energy standard among any US state.” The legislation outlines a firm 10-year commitment to achieve RI’s climate change mitigation goals, McKee said in a statement. State law currently requires 1.5% increases each year in the amount of electricity generated from renewable sources through 2035. The new law accelerates the requirements to achieve a 100% renewable energy standard by 2033. (Utility Dive)

SCIENCE & TECH

Not proud – Monthly and all-time records have been shattered in at least a half-dozen countries, from Europe to Asia during the past week. None of these events have been typical for June, either, Axios writes. Japan, Italy, Norway, Iran, and Finland are a few of the latest nations to see heat records fall like dominoes in an extraordinary month. Studies show that as the climate warms, the frequency of heat waves dramatically increases, as do the severity and longevity of such events. causing heat waves to be more intense, more frequent and longer-lasting. It is also stressing power grids, especially in drought-afflicted countries and amid a global energy crunch in the wake of Russia’s unprovoked invasion of Ukraine.

AND FINALLY…

More mice – Researchers say warming temperatures and milder winters have increased the population of mice in the US, which could lead to cascading health and hygiene implications, as well as greater demand for pest control. Associated Press reports that warmer winters fuelled by climate change mean fewer mice die before spring, according to Christian Floyd, a wildlife biologist at the University of Rhode Island. Scientists say the rodent’s spread could mean more mice around homes, which would require pest management. Experts also warn of even greater public health implications, given that white-footed mice are natural reservoirs for Lyme disease bacteria, which can then infect ticks that can pass on the disease to humans.

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