CP Daily: Monday July 4, 2022

Published 03:20 on July 5, 2022  /  Last updated at 03:25 on July 5, 2022  /  Newsletter  /  No Comments

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

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TOP STORY

ANALYSIS: Could Australia’s carbon market review see methodologies revoked?

Australia’s carbon market is set for a shake up thanks to a combination of the government’s independent review of the market and companies getting up to speed with a soon-to-be enforced compliance market, according to analysts.

EMEA

EU lawmaker resolve against taxonomy may fall short -sources

The European Parliament could fall 60 votes short of rejecting EU plans to apply a green label to gas and nuclear investments, EU sources told Carbon Pulse on Monday, though this week’s ballot remains in the balance with up to 100 lawmakers yet to make up their minds.

Ukraine seeks green rebuild even as Russia’s war rages on

Swiss President Ignazio Cassis hosted leaders at the Ukraine Recovery Conference in Lugano on Monday, aiming to pave a way towards an eventual rebuild and recovery for the war-torn country, including through low-carbon infrastructure investment and the development of a green export sector.

Netherlands to expand energy-curb orders to EU ETS-covered firms

The Netherlands is to expand its mandatory energy efficiency measures to EU ETS-covered firms from 2023, the government said on Monday, deepening its efforts to cut emissions and end reliance on Russian fossil fuels.

Euro Markets: EUAs slip in lacklustre trading amid energy surge on continuing gas supply worries

EUA prices slipped in very thin Monday trading despite significant rallies in energy markets, where record highs in German power and imminent strikes at Norwegian gas production boosted prices in those markets by as much as 10%.

Vitol, Nigerian sovereign wealth fund unveil carbon project joint venture

Commodities traders Vitol and the managers of Nigeria’s sovereign wealth fund have agreed to create a joint venture to invest in a series of carbon avoidance and removal projects.

Kenya strikes deal with AirCarbon to set up carbon exchange

AirCarbon Exchange (ACX) has signed an MOU with the newly-launched Nairobi International Financial Centre (NIFC) to start a carbon exchange in Kenya as a basis for attracting low-carbon finance to East Africa.

Switzerland schedules aviation permit auction for September

Switzerland will offer 157,300 spot aviation carbon allowances from 2022 at auction in September, it announced late last week.

AMERICAS

US Supreme Court ruling limits EPA but doesn’t quash it completely, say lawyers

The US Supreme Court’s ruling against the EPA creates roadblocks for reducing carbon emissions but the agency can still enforce the current rule on the books in more creative ways, according to legal experts.

Washington state carbon market prices to be substantially lower under linking -analysis

Washington state’s proposed cap-and-trade programme could launch with prices of $41/tCO2e next year if the market is expected to link with the WCI California-Quebec system in 2025, according to independent analysis published late last week that projected prices up to 65% higher under non-linked scenarios.

VOLUNTARY

VCM Report: Nature credits extend multi-week slump amid lack of support

Standardised nature credits this week extended their slump to more than a month, as offsets continue to take cues from a weak macroeconomic picture and as traders see few signs of support in the near future.

Companies lag at global level in setting science-based climate targets -report

Global corporations have been found lacking in setting viable emissions reduction pathways, with only 2% of 60,000 companies surveyed having made a “climate neutrality” pledge and with only a small share of those applying science-based targets (SBT), according to a survey released on Monday.

Campaigners in tropical forested nations take aim at illegal logging

NGOs in eight heavily forested tropical countries on Monday launched a mapping system aiming to crack down on illegal logging as a low-cost alternative to REDD projects, as another nation has banned all timber exports and a further country has put a block on the voluntary carbon market.

Spain’s BBVA joins bankers’ carbon credit transaction platform

Spanish financial services bank BBVA has joined an initiative set up by a group of international banks to create a settlement platform for voluntary carbon trading transactions.

ASIA PACIFIC

Australian govt heavy industry initiatives lack net zero focus -report

Australia’s funding and policy initiatives for the industrial sector lack coherency and focus, and urgently need to be aligned with the country’s net zero emissions goals in mind if it is to succeed in meeting its decarbonisation goals, according to research released on Monday.

Industry group pushes for Korea ETS link to international voluntary market

A major South Korean industry group is pushing for the government to allow access for emitters covered by the nation’s emissions trading scheme to import Paris-aligned voluntary credits.

Japan co-funds new batch of JCM projects

Japan’s environment ministry has identified another 16 projects under the Joint Crediting Mechanism (JCM) that it will subsidise in a bid to earn more carbon credits that will be used towards its Paris Agreement target.

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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

EMEA

Let’s stick to 30 – EU leaders should promptly reduce the price of CO2 allowances, Mateusz Morawiecki, Poland’s prime minister, argued in an op-ed for the FT, explaining that doing so would strategically enable industries to spend their cash to support renewable expansion while slowing galloping inflation.  “Rather than stimulating the development of green energy, the current ETS drives inflation and threatens to send millions of citizens into fuel poverty,” he wrote, explaining that “Such high costs make it difficult for manufacturing companies to invest in the development of new green technologies, such as renewable energy or hydrogen.” Reiterating Poland’s long-standing calls to curb speculative behaviours in the market, Morawiecki said he now expects that anti-speculation measures will make it into the final law. Furthermore, while Poland finally endorsed a general approach (that did not feature anti-speculation measures) crafted by the Council last week,  Morawiecki made clear that Warsaw will keep fighting against the inclusion of heating and road transport into a parallel ETS in forthcoming legislation.  “The next step is to revise plans to extend the ETS to other sectors of the economy,” he said, adding that Poland is proposing to freeze the CO2 permits price at €30 for a year, possibly up for an extension of two years.

Heat pumps wanted – Hoping to achieve its 2024 target of producing 500,000 heat pumps a year, the German government is pushing the industry to make the necessary investments amid fears it will end up like the solar panel industry, Euractiv reported. Heat pumps, a pivotal technology to decarbonise space heating, are far from as prevalent as policymakers want. Various EU countries such as Germany, Austria, and the Netherlands have resorted to bans on traditional heating systems like gas boilers. Now, they seek to foster the production of heat pumps to have the volumes available to replace conventional fossil fuel heating. “500,000 newly installed heat pumps per year from 2024 is a strong commitment and a strong signal that comes from today’s heat pump summit,” said Germany’s Robert Habeck, minister for economy and climate, on 29 June.

Berlin’s “whatever it takes” – German Chancellor Olaf Scholz on Sunday hinted that a Lufthansa-like bailout was on the table to rescue gas giant Uniper, Politico reported. Referring to the €9 bln package to save the German airline, Scholz said that his government was looking into options to help Uniper, Germany’s largest gas importer. “During the last crisis, we developed very precise instruments — and I drove this forward as finance minister — in order to support companies that have come under pressure from circumstances for which they are not responsible,” Scholz said on Sunday in an interview with public broadcaster ARD. Uniper declined to comment to Bloomberg on the matter. The company, which is one of the biggest importers of Russian gas, said last week it was in talks with the government to secure liquidity. Its shares sank 28% on Monday, taking the company’s market value to €4.14 bln. Analysts estimate that curbed Russian flows are costing Uniper €30 mln a day.

The biofuel fraud – The European Commission has rebuffed a request by Parliament lawmakers to turn over information related to used cooking oil (UCO) imports, maintaining that it is not in possession of the documents requested. However, it did admit that the risk of “false claims” surrounding UCO imports represents “a particular concern,” Euractiv reported. EU Environment Commissioner Kadri Simson responded in writing to a petition from Greens MEPs that the EU executive release data on the origins and quantities of UCO imports – a biofuels feedstock that has been linked to fraud concerns. Five Greens lawmakers – Ciaran Cuffe, Jutta Paulus, Ville Niinisto, Martin Hausling, and Rasmus Andresen – sent letters to the EU executive in April formally asking for all data obtained under voluntary UCO certification schemes to be made public.

Dutchies fall behind – The share of renewable energy in the Netherlands’ energy consumption decreased by 2% in 2021, meaning the Hague is no longer on track to hit its EU green goals, new data from the government’s statistical office shows, Euractiv reported. The share of renewable energy in the country’s 2021 total energy consumption stood at 12%, a drop from 14% in 2020, according to Statistics Netherlands. This means the Netherlands is no longer fulfilling the EU’s 20-20-20 targets. Part of the reason for this drop in shares was the decline in renewable energy imports. In 2020, 2.5% of the total energy share came from energy imports while in 2021, there were no such imports, according to NL Times.

Windhoek watch – The EU is planning a deal with Namibia to support the country’s nascent green hydrogen sector and boost its own imports of the fuel, EU and Namibian officials told Reuters, as the bloc works to reduce its dependence on Russian energy. The EU’s energy strategy in May set a goal of importing at least 10 mln tonnes of green hydrogen by 2030, with another 10 mln to be produced within the bloc. Under the plan, the EU would sign an MoU with Namibia on hydrogen and minerals at COP27 in November, one EU official said. The director-general of the southwest African country’s National Planning Commission, Obeth Kandjoze, told Reuters work was underway for a deal on green hydrogen, but did not comment on minerals.

ASIA PACIFIC

Hydrogen finance – A new S$25 mln research institute aimed at making green hydrogen a commercially viable clean fuel to power Singapore’s needs was launched last Friday as the country moves to decarbonise its energy sector, Straits Times reports. The National University of Singapore’s (NUS) Centre for Hydrogen Innovations will help create breakthrough technologies that will make hydrogen a viable green energy source. Professor Ho Teck Hua, NUS Senior Deputy President and Provost, said that both the new centre as well as NUS’ Green Energy Programme – which focuses on carbon capture and utilisation technologies – are part of the university’s strategy of coming up with innovative ways to reduce Singapore’s reliance on fossil fuels. The centre, the first of its kind in Southeast Asia, has received a total investment of S$25 mln, of which S$15 mln is an endowment gift from government investment firm Temasek.

Hydrogen study – Green hydrogen can substantially spur industrial decarbonisation and economic growth for India in the coming decades and help abate 3.6 billion tonnes of cumulative CO2 emissions by 2050, Niti Aayog, an Indian government think tank, said in its latest analysis, Polymer Update reports. The report provides a pathway to accelerate the emergence of a green hydrogen economy, which is critical for India to achieve its net-zero ambitions by 2070. The report underscores that green hydrogen –produced by renewable energy through electrolysis of water – will be crucial for achieving decarbonisation of harder-to-abate sectors such as fertilizers, refining, methanol, maritime shipping, iron & steel, and transport.

Gas map – The Australian state of Victoria has published its Gas Substitution Roadmap, designed to wean the state off natural gas in order to cut its emissions in half by 2030, on the way to net zero by 2050. The state is Australia’s larges domestic user of natural gas, primarily in the residential sector for heating. RenewEconomy reports that the roadmap starts with a focus on existing technologies such as energy efficiency and renewable electricity, and particularly rooftop solar, and is then looking to those technologies that will play a larger role in the future, such as hydrogen and bio methane. Incentives for all residential gas products will be phased out in 2023, new incentives to move away from gas will be introduced, and the current planning requirement for new developments to be connected to gas will be removed.

Look before you reap – Farmers have been urged to “look before they leap” when it comes to participating in carbon farming schemes. The warning was issued by Australia’s National Soils Advocate Penny Wensley during her visit to the South East late last week. “There are a lot of people out there promoting different schemes so you do need to tread carefully and be cautious when making decisions,” she said. Wensley said soil had been “moving up the agenda” of governments in Australia and overseas because of wider recognition of the importance of soil organic carbon, as well as increasing interest in carbon sequestration and using soil to adapt to a changing climate. “[But] I think that farmers need to be cautious of carbon farming,” she said. “Farmers plan a long way ahead, so if you’re getting into the business of carbon credits, you’ve got to ask yourself: When am I going to realise this benefit or this dividend? What am I committing myself to? Who’s going to help make the decisions? Who’s going to be regulating it? [And] who’s going to be maintaining that integrity? We’re pretty advanced in Australia, but you really have to look before you leap. Ask yourself: Are you wanting to get more carbon into your soil to get carbon credits? Or are you wanting to get more carbon into your soil to deliver productivity benefits? I think it’s the latter that’s ultimately more important, because I want to see everyone improving their soil health.” (ABC)

VOLUNTARY

Measuring CO2 – The World Bank released a report last week on digital monitoring, reporting, and verification (MRV) systems and their application to future carbon markets. The report highlights the importance of MRV to underpin and streamline verification approaches to GHG emissions inventories and mitigation outcomes. Examples of such technologies include smart sensors, satellites and drones, cloud computing, artificial intelligence, the internet of things, and blockchain encryption. The report discusses the merits of digital MRV systems and emerging technologies as well as the use of blockchain technology to strengthen transfer records. Read Carbon Pulse’s analysis on the digital revolution for carbon project verification.

Cost AND carbon cutting – The manager for strategic partnerships at Climeworks, Barbara Truyers, has stated that the cost of Direct Air Capture technology is set to drop as low as $250-300/mtCO2e by the end of 2030 while hoping to reach multi-megaton capacity. Climeworks has recently announced Carbon Dioxide Removal (CDR) purchases by well known companies like Zendesk, BCG, Svarovski, LTG, SwissRe, and several others. The company also received $650 mln in investment capital to support its growth, and has announced the construction of Mammoth (the worlds largest DAC facility with a nominal capacity of 36,000t per year). Barbare Truyers elaborated on costs and pricing: “While prices of Climeworks CDR credits have not been disclosed to the market, they vary by the amount purchased and duration of the contract. The price of Climeworks carbon credits is strongly impacted by the high cost of developing the plants, but these prices are expected to drop over the coming years, thanks to economy of scale and increased efficiency. An entire carbon removal industry will need to develop over a period of the next 10-20 years, creating capacities of at least 5 billion tons of carbon removal by 2050.” (Clean Technica)

Looks who’s interested in carbon – The firm involved a landmark soil carbon deal with Microsoft has been appointed asset manager for a $200 mln Montana ranch that was purchased by media tycoon Rupert Murdoch earlier this year. Armidale-based asset management company Impact Ag last year brokered the $500,000 soil carbon deal from projects on properties owned by the Wilmot Cattle Company in the New England region of New South Wales. The 138,000ha Beaverhead Ranch ranch is largest in Montana, with about a 15,000 head cattle capacity and significant environmental assets near Yellowstone National Park. Beaverhead is primarily a breeding operation, with a portion of livestock finished on grass and the majority sent to the feedlot. Impact Ag has two carbon generating projects in the pipeline on the Montana ranch – one sequestering soil carbon and another making methane reductions using asparagopsis seaweed. The company plans to use a different carbon credit scheme to the one used on the Wilmot/Microsoft deal – this time going with Verra. (Beef Central)

AND FINALLY…

Chemmy’s heroes – The chemical industry is the hidden climate hero, as it can act as a key enabler for the decarbonization of many other industries, according to Jan Secher, CEO of chemicals innovator Perstorp, who in an interview with Politico considers impacts of the current crises and showcases Project Air, the highly innovative collaborative project to facilitate a net-zero emissions chemical industry. Secher pointed out that as much as 96% of everything that is produced needs chemicals, which means that, when chemical products become more sustainable, there is a huge multiplier effect.

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