CP Daily: Friday July 1, 2022

Published 03:52 on July 2, 2022  /  Last updated at 03:53 on July 2, 2022  /  Newsletter  /  No Comments

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

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TOP STORY

Integrity guidance “could strangle VCM”, warns standard body official

Initiatives seeking to boost the integrity of the voluntary carbon market (VCM) could stifle demand and deter investors, an official at a leading standard warned on Friday, while referencing the work of a Voluntary Carbon Market Integrity (VCMI) initiative.

AVIATION

Pending CORSIA baseline decision ‘critical’ for aviation decarbonisation pathway

A decision on whether aircraft operators should use set a baseline of 2019 emissions, or the 2019 and 2020 average, to measure obligations for CORSIA international aviation offsetting scheme will be critical for the decarbonisation of the industry, a senior aviation stakeholder told a conference Friday.

AMERICAS

Pennsylvania becomes 12th RGGI member as injunction ruling awaits

Pennsylvania’s power sector cap-and-trade regulation took effect Friday, allowing the state to become the newest member of the US Northeast and Mid-Atlantic RGGI programme as a court decision regarding the state’s participation awaits.

Alberta proposes more stringent large emitter benchmarks, higher credit utilisation

The Alberta government is seeking to tighten output-based standards for stationary sources and raise offset and performance credit limits for its Technology Innovation and Emissions Reduction (TIER) regime in order to meet Canada’s post-2022 carbon pricing benchmark.

California power sector emissions stay below 2021 levels through May

Electricity sector CO2 output in California remained beneath last year’s levels in April and May, according to recent data from the California Independent System Operator (CAISO), though much of the state remained in severe drought that will hamper low-carbon hydropower.

Financial players’ CCA position plunges to 13-mth low amid June expiry

Speculators saw their California Carbon Allowance (CCA) holdings drop precipitously this week as the June contract went to delivery, while compliance entities’ position ticked up, according to US Commodity Futures Trading Commission (CFTC) data published Friday.

EMEA

UK must guard against calls for ETS suspension as energy bills rise, industry representative warns

Britain should guard against calls for extreme measures to protect its industry from the impacts of higher power and gas costs this winter, including suspending the UK ETS, according to an energy industry representative.

France proposes factoring inflation into RePowerEU’s MSR sale plan -Bloomberg

EU nations are examining an informal proposal that would amend the design of the distribution of REPowerEU disbursements, including some €20 billion stemming from the sale of carbon allowances currently held in the MSR, Bloomberg reported, citing a document.

Euro Markets: EUAs drop sharply after weak auction as traders eye MSR sale approval

EUA prices began the new quarter and half on a weak note, falling by the largest daily margin in nearly four weeks, as the daily auction cleared at a significant discount after three positive differentials in a row, and traders anticipated a fast-track approval process for the European Commission’s plan to sell additional EUAs from the market stability reserve.

ASIA PACIFIC

Australia boosts blue carbon at home and abroad

The Australian government has committed A$9.5 mln ($6.4 mln) to support five domestic blue carbon projects around the country, designed to restore mangroves, seagrasses, and tidal marshes, while also co-funding a batch of global schemes to ramp up project pipeline development.

CN Markets: China ETS in zombie mode, as Tianjin postpones compliance deadline

The price for Chinese carbon allowances has come down slightly over the past week though only on the back of a handful of largely symbolic transactions, while Tianjin has pushed back the annual compliance deadline in its municipal market due to disruption from anti-Covid policies.

VOLUNTARY

S&P Global launches first index for voluntary carbon market futures

S&P Dow Jones Indices has launched a new index to track the price of the two most liquid voluntary carbon market (VCM) futures currently in the market, although more contracts could be added every six months.

INTERNATIONAL

Switzerland considering bid to host COP31 UN climate summit in 2026

Switzerland is considering submitting its candidacy to hold the COP31 annual UN climate summit in 2026.

US court hands British men jail sentences over carbon credit investment fraud

A US court has sentenced two British men to a total of nearly eight years in prison for defrauding elderly victims for over $16 million through fraudulent stock and carbon credit investment schemes.

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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 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

“Not guten,” says Morgan – As host of the G7 this year, German Chancellor Olaf Scholz pushed his counterparts to agree on a deal that opens the door for new gas investments. But his climate envoy, former Greenpeace boss Jennifer Morgan, wasn’t impressed. At the summit in Bavaria on Tuesday, leaders signed a communique that would allow the most developed countries to support some overseas investment in new gas projects – weakening a commitment to stop that financing by the end of this year. The final language was designed to secure energy supplies threatened by Russia’s invasion of Ukraine, without compromising their climate goals. “It’s not what I would have hoped to have seen the G7 do,” said Morgan in an interview with Bloomberg. The final agreement was full of caveats, reflecting the controversial nature of Germany’s proposal. Leaders said new gas projects should be supported only on a “temporary” basis and in a way that avoids them becoming “locked in” to the energy system. Morgan said it was unclear exactly what kind of gas project the world’s most powerful politicians are seeking to support: new drilling, pipelines, or power stations?

EMEA

Plan of steel – Sweden’s H2 Green Steel has received the go-ahead for the construction of the plant from the Land and Environmental Court in Umea, Bloomberg reported. The court also granted approval for rerouting a stream, while stipulating that the company must take measures to protect local people and the environment. The company plans to start production by 2024-2025, with annual capacity expected to hit 5 Mt by 2030. H2GS is looking to raise about €4 bln to finance the plant in Boden, just south of the Arctic Circle. It has so far secured about $105 mln, Chairman Carl-Erik Lagercrantz said in an interview last week. Early backers include Spotify co-founder Daniel Ek.

Blade runner – The closure of Germany’s last wind turbine rotor production facility has led to concerns within the renewable power industry that the country risks losing its domestic manufacturing basis for achieving the planned build-out of non-fossil energy infrastructure. Wind turbine producer Nordex completed the plant’s shuttering in the northeastern coastal city of Rostock at the end of June, which according to public broadcaster NDR means about 600 employees are losing their jobs. The plant’s end comes just days before the federal parliament is to pass legislation aimed at speeding up the rollout of wind and solar power installations. Labour union IG Metall said the company’s decision to relocate production to India would not only mean Germany loses a valuable industry sector but make the manufacturing of low-carbon energy production installations less climate friendly as rotor blades would now have to be transported over thousands of kilometres for their use in the country. “This is a worrisome development for the supply chain of onshore wind power,” renewable power foundation Stiftung Offshore Windenergie said. (Clean Energy Wire)

Grid riddance – German transmission grid operator Amprion has announced that it will cut CO2 emissions in its operations by a minimum of 63% by 2032. Amprion, one of Germany’s four transmission grid operators in charge of over 5,800 km of power lines, wants to reduce the emissions it causes itself (scope 1) and emissions that occur when it buys energy (scope 2) by the same percentage, and is currently working on a target for emissions in its value chain (scope 3). An analysis for the company’s sustainability report showed that around 95% of GHGs are related to grid losses, for example when power lines heat up, and are usually compensated for by buying more electricity, which has the carbon footprint of the current energy mix. The remaining 5% are due to the energy consumption of buildings and the vehicle fleet and emissions of sulphur hexafluoride (SF6) from existing plants. (Clean Energy Wire)

Redirecting aid – The UK will take money it had earmarked for poorer countries to cope with climate change and give it to Ukraine as part of a £1 bln military aid drive, reports Politico. PM Boris Johnson announced the additional military support at the NATO summit in Madrid on Thursday. Business secretary Kwasi Kwarteng confirmed in a tweet that his department “has contributed to the effort by surrendering climate finance and foreign aid underspends”, the outlet reports. It notes that the UK “has fallen short of spending all of its allocated budget on climate finance in the past”, but a spokesperson for the Department for Business, Energy and Industrial Strategy (BEIS) “refused to say how large the current underspend on climate finance or aid was, nor how much the office had diverted to the call for military aid”. (Carbon Brief)

On marche! – ExxonMobil said on Friday that a strike by workers over pay was forcing it to gradually shut down operations at its Fos refinery plant in southern France, Reuters reported. “We have started preparations to gradually shut down the plant in the coming days. This situation may impact our customers, contractors, suppliers and employees in a challenging energy market environment,” said EssoFrance, a unit of the US oil major.

Every little helps – The European Commission has approved a €5 bln French scheme to support energy-intensive companies across sectors in the context of Russia’s invasion of Ukraine, the EU’s executive said in a press release. The scheme was approved under the State aid Temporary Crisis Framework, adopted by the Commission on 23 March 2022, recognising that the EU economy is experiencing a serious disturbance. “Energy-intensive companies have been hit particularly hard by the current geopolitical crisis and the consequent increase of energy prices,” Executive Vice-President Margrethe Vestager, in charge of competition policy, said. “At the same time, we continue working closely with member states to ensure that national support measures can be put in place in a timely, coordinated and effective way, while protecting the level playing field in the Single Market.”

Degraded duty – In a bid to restore degraded land in Africa, the Global Ever Greening Alliance and Climate Asset Management have resolved to engage farming communities across Africa to restore millions of degraded land. This will directly improve the lives of over 9 mln people by scaling up the adoption of appropriate agroforestry practices across the East and Southern African regions. The project will significantly contribute to restoring 1.9 mln hectares of land and directly support the livelihoods of 1.5 mln small-holder farming families. The interventions are aimed at bringing at least 100 mln hectares of degraded land under restoration by 2030. (Capital Radio)

ASIA PACIFIC

Climate sanction – Australia will be exposed to sanctions for missing climate change targets under a new trade deal with the EU that holds out the promise of boosting A$94 billion in two-way trade, The Age reports. EU trade commissioner Valdis Dombrovskis told The Sydney Morning Herald and The Age an agreement could be reached next year but insisted climate change targets would have to be part of the outcome, exposing Australia to sanctions if it failed to honour pledges to cut greenhouse gas emissions. “There are two important elements: one is respect of the Paris Agreement and the second, in the case of the G20 economies, we are seeking a commitment on carbon neutrality. And that’s something the new Australian government has announced. But we cannot micromanage other countries’ adjustment path, so we cannot expect all countries to have exactly the same reduction pathway. So if it’s 43 or 55 by 2030, countries take their own decisions,” he said.

Moo news – The first global sale of asparagopsis – the seaweed that can cut methane emissions when fed to cows and sheep – was announced this month, according to ABC News. Asparagopsis producer CH4 announced the sale, one of three business licensed to sell the feed additive in Australia. The sale comes after four years of research and development by the CSIRO, Meat and Livestock Australia and James Cook University. The asparagopsis feed additive was patented in 2020 and production was rapidly scaled up. CH4 General Manager Adam Main said the company would exclusively deal with large-scale feedlots and meat processors before expanding its offering to other types of farm in the future. The international patent rights to sell asparagopsis as a feed additive are held by FutureFeed, an offshoot of the government-owned CSIRO with private backing from Woolworths Group, GrainCorp, Harvest Road and Sparklabs Cultiv8. Licences to grow and sell the seaweed, which is endemic to Australia and New Zealand, have been granted overseas.

Onboarding – Japan Airlines on Friday became the latest in the industry to launch a carbon offsetting programme for corporate customers. The JAL Carbon Offset programme will allow businesses buy carbon credits to offset business trips taken by its employees. The credits will be provided by environmental services firm Chooose, which has a partnership with developer South Pole. Japan Airlines has had a similar programme for individual travellers since 2009.

Getting with the times – A group of Japanese firms, led by carbon management firm Wastebox and including Chubu Electric Power, Toyota Tsusho, and Nippon Life Insurance, has established the Carbon Accounting Advisors Association. With the government and a large amount of companies setting net zero emissions targets and Japan in the process of launching a voluntary carbon market, the association’s aim is to train individuals to ensure a stable supply of qualified carbon verifiers. The training will include courses related to the Paris Agreement, emissions markets, and SDGs.

AMERICAS

Bay State abatement – The Massachusetts Office of Energy and Environmental Affairs on Thursday published a roadmap for the state to achieve its emissions reductions targets, including cutting GHG emissions 50% by 2030 relative to 1990 levels. The Clean Energy and Climate Plan for 2025 and 2030, or CEC, also sets the state on a path towards carbon neutrality by 2050. The plan takes two main approaches – electrification of end uses, and the decarbonization of Massachusetts’ electricity system – to reduce emissions from buildings, the transportation sector, power generation, industrial processes, and other sources. (Utility Dive)

Greenidge in the face – New York’s Department of Environmental Conservation (DEC) has denied an air permit renewal by Greenidge Generation to continue to operate a Bitcoin mining data centre using a gas power plant. Originally a coal-fired power plant that was shut in 2009, Greenidge Generation was brought back online in 2017, providing power exclusively for cryptocurrency mining, which began two years later. It initially housed 7,000 mining rigs, consuming 14 MW of power, but last year the company said that it was expanding the facility to use up to 85 MW of the total 107 MW potential output of the Greenidge plant. But the Finger Lakes fossil fuel plant was operating under an old air permit license, and sought to renew it after it expired last year. New York Governor Kathy Hochul (D) delayed making a decision due to a gubernatorial primary race where she sought both money from crypto interests, and votes from the environmentally conscious. (Data Center Dynamics)

VOLUNTARY

Mineralsoft – Microsoft, one of the world’s largest investors in tech carbon removal technology, is looking to diversify its carbon credits portfolio with mineral-based removal credits, said Lucas Joppa, the company’s chief environmental officer. Joppa, who was speaking at the Climeworks Direct Air Capture Summit 2022 held in Zurich on June 30, said he would like to see more enhanced weathering and mineral credits in Microsoft’s portfolio but also gain more experience with all types of carbon removals currently available. Microsoft’s carbon purchase strategy is also becoming more global in terms of credits’ geography and it’s shifting towards the signature of multi-year contracts as a way to increase efficiency, Joppa told delegates at the summit. (S&P Global)

AND FINALLY…

Back to the future – Commodity trader Cargill, one of the world’s biggest charterers of ships, is to add state-of-the art sails to a vessel early next year to test whether wind power can cut its emissions. It will start testing a cargo-laden dry bulk vessel with two wind sails in Q1 2023, if the 3-6-month trial is successful, the company will order more ships, with a ship fully optimised for wind capable of cutting emissions by 30%. BAR Technologies is developing the sails that are being built by Norway’s Yara Marine Technologies. (Reuters)

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