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TOP STORIES
ANALYSIS: Canada’s new carbon offset system has a demand problem
The newly finalised Canadian federal offset system needs to look beyond the shrinking coverage of the ‘backstop’ output-based pricing system (OBPS) to solve its weak demand problem, according to market stakeholders.
ANALYSIS: CER cancellations against Colombian CO2 tax jump in 2022, Verra retirements dive as supply pool shrinks
Voluntary cancellations of certified emissions reduction (CER) credits against Colombia’s domestic carbon tax via the UN’s Clean Development Mechanism (CDM) have jumped this year, with the offsets cancelled over the last two years coming almost entirely from a handful of hydro projects.
AMERICAS
RGGI delays programme review completion, Pennsylvania addition expands annual allowance cap
The 12 RGGI states on Tuesday pushed back completion of the power sector carbon market’s third programme review by a year, while also publishing the scheme’s new allowance budget with Pennsylvania’s inclusion.
INTERNATIONAL
Europe eyes green hydrogen imports from Australia but focus needed on its best use, analysts say
Australia is positioning itself to be a key hydrogen exporter to markets in Europe, as major energy-importing economies such as Germany aim to reduce their dependence on fossil fuels over the longer term to meet their emissions reduction and energy security goals, however the need to identify where hydrogen can best be used as a low carbon solution needs to be addressed, according to analysts.
ASIA PACIFIC
Hong Kong Exchange, major banks form council to tee up China carbon market move
Hong Kong Exchanges and Clearing (HKEX) has partnered with a number of major banks and other corporations aiming to carve out a strategy for turning Hong Kong into a major international carbon trading hub, based around its position as a link between Mainland China and the rest of the world.
HK-listed carbon firm to expand in Southeast Asia, Chinese renewables and emissions firm eyes Shanghai listing
A Hong Kong-listed investment holding company specialising in carbon markets is poised for an expansion in Southeast Asia with two newly formed subsidiaries in Singapore, while the renewables and carbon trading arm of a major Chinese SOE eyes a listing on the Shanghai Stock Exchange.
Australian Market Roundup: Regulator issues 1 mln ACCUs as four projects revoked
Australia’s Clean Energy Regulator has minted just over 1 million new Australian Carbon Credit Units (ACCUs), a noticeable uptick in issuance, while revoking four existing projects from generating units.
VOLUNTARY
Demand for nature credits set to outstrip supply for tropical forest nations -analysis
Corporate demand for forest-related carbon credits is set to vastly outstrip available supply over the next 30 years, according to research published Tuesday that suggests a sufficient enough pool of carbon finance to allow governments to take on more ambitious measures to save and restore tropical forests.
Varo sets 2040 full-scope net zero goal, aims to scale up nature-based removals
Swiss-based fuel supplier Varo Energy announced on Tuesday a plan to reach net zero emissions by 2040 via a strategy that will plough most of its earnings into clean energy while acquiring carbon removals via its experience-laden intermediary business.
German forest carbon startup raises $2.5 mln in seed funding
A Munich-based startup that helps forestry owners develop carbon offset projects has raised $2.5 million in seed funding.
EMEA
Euro Markets: Carbon’s negative correlation with natural gas resurfaces as TTF prices continue surge
Carbon weakened for a third day on Tuesday as trading activity continued to languish while prices appeared to have renewed their negative correlation to natural gas, and most energy markets rose for a third session on the back of continuing worries over natural gas supply.
South African cookstoves project delivers first credits to chemicals firm
More than 100,000 carbon credits have been delivered from a South African cookstoves project to a large energy and chemicals firm as part of an agreement signed last year for offsets able to be used under the country’s carbon tax regime, according to an announcement on Tuesday.
Brokers Vertis hire well-known carbon expert as new research head
Brokerage Vertis has hired a well-known emissions trading expert as its new head of research, Carbon Pulse has learned.
COMMENT
Are we missing the point of offsets?
The landscape for voluntary carbon offset types today is complex, with many buyers in a state of “analysis paralysis”. We need to think about the implications of a company using a carbon offset while observing the key principles that make offsetting a powerful tool, argues Lauren Mechak, Director, Program Development at ClimeCo.
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- Sales Manager, Carbon Project Development, Carbon Offset & Green Energy Services, ClimatePartner – Munich
- Carbon Offset Sourcing Manager, ClimatePartner – Munich
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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
It’s a gas – Global natural gas demand will sputter for the next three years, as soaring prices and the threat of further Russian supply cuts discourage consumption. Gas use is expected to slip 0.5% this year as reduced economic activity in Asia and a sharp drop in European gas demand overshadows more buoyant markets in North America, the International Energy Agency said in its quarterly market report. Global demand growth to 2024 is forecast to shrink 60% compared with a previous IEA forecast. “Today’s record prices and supply disruptions are damaging the reputation of natural gas as a reliable and affordable energy source,” the Paris-based agency said in the report. The downward revision of future growth is “mostly the result of weaker economic activity and less switching from coal or oil to gas.” (Bloomberg)
EMEA
Relying on the unreliable – EDF may have to reduce output at some of its French nuclear reactors during the summer as a drought reduces the amount of river water available for cooling, Bloomberg reports. The power-production cuts, which already happened at one plant a few times in June, would add further strain to Europe’s energy supply. France may have to import more power in the coming months because about half of EDF’s 56 nuclear reactors are currently halted for repairs or planned maintenance. The utility’s struggle is partly to blame for soaring electricity prices in several European countries, exacerbating a crisis caused by dwindling Russian gas supplies. French power for 2023 closed at €389 MWh on Monday after rising more than 28% in just ten days of trading.
Lex Uniper – Germany is introducing legislation which would give the state power to take stakes in utilities and allow energy companies to pass on increased procurement costs in certain situations, as the government aims to increase energy supply security, Clean Energy Wire reports. Under what has been branded “lex Uniper” by some media outlets, following the example of the financial crisis and the coronavirus pandemic support, systemically important utilities and traders would receive funds according to clear guidelines. Energy company Uniper faces soaring costs to meet obligations to customers because it must procure volumes, which Russia is no longer delivering, on spot markets at much higher prices. The cabinet today decided the relevant changes to the Energy Security Act (EnSiG), which now have to be debated and decided in parliament. “The situation on the gas market is tense and unfortunately we cannot rule out a deterioration of the situation,” said energy and climate minister Robert Habeck on Tuesday. The minister emphasised that the changes in legislation provided new possibilities to tackle a worsening crisis in the future. “These instruments are sharp swords that we give ourselves but do not want to use yet. We would only use them with great caution.” Habeck said that should parliament pass the legislation this week, it could of course be applied, but it was “yet to be decided” whether Uniper would have to be supported. And according to official documents seen by Euractiv, the government is also seeking to limit companies’ capacity to claim compensation or cancel contracts under circumstances of ‘force majeure,’ after several wholesalers made calims under this clause when electricity prices first spiked. Once the revised law is passed, claiming force majeure will require permission from the federal network agency, as intended to ensure security of supply for the country.
Clean dream – Renewables provided 49% of Germany’s electricity in the first six months of 2022, according to preliminary data released by energy industry association BDEW and research institute ZSW. That was six percentage points more than during the same period in the year before, Clean Energy Wire reports. Wind turbines, the most important renewable power source, increased their share from 17 to 21% and solar panels from 10% to 12%, while power consumption in the country fell slightly by 2 billion kWh to 281 billion kWh. In total, renewables produced 139 bln kWh and 17 bln kWh were exported. “Shrinking gas flows from Russia have put Germany’s energy supply into an exceptional situation. The safest way to prevent such a situation in the future is a quick buildout of renewable energy installations,” BDEW head Kerstin Andreae said, adding that a lack of construction area for wind power would continue to be among the biggest obstacles to renewables expansion in the country. Germany’s government coalition parties, meanwhile, agreed on measures designed to achieve a massive expansion of renewable power installations within the next years, after the parties’ parliamentary factions cleared last hurdles standing in the way of the government’s so-called Easter Package of renewable energy legislation.
Ukraine weighs in – In a letter addressed to senior MEPs, the Ukrainian energy ministry called on lawmakers to positively consider proposals to label gas and nuclear as green transition technologies under the EU’s sustainable finance taxonomy, EurActiv reports. As Carbon Pulse reported on Monday, the European Parliament will vote on the matter on Wednesday and the ballot is still in the balance. The vote will be closely watched by the nuclear and gas industries, which are hoping to receive a boost from their inclusion in the EU’s globally-renowned green finance taxonomy. Ukraine has been closely following talks in Europe over whether gas and nuclear will be given a green label, according to the letter signed by German Galushchenko, the country’s energy minister. The post-war reconstruction of Ukraine will require a predictable and conducive investment climate for all technologies including nuclear and gas, the minister argues, saying both nuclear and indigenous gas production will remain a strong backbone for ensuring security of energy supply and sovereignty of Ukraine in the next decade up to 2030. In a separate three-page document, Kyiv also outlines its vision for how it could strengthen Europe’s energy security. The document was circulated to Ukrainian embassies around the world after the country’s ambassador to Germany wrote an open letter calling on MEPs to reject the proposal. “Ukraine shares the objectives of the European Green Deal, however has to admit that gas may still be needed as the transitional fuel,” the document said. “In this regard, inclusion of gas in the taxonomy is an important element of the energy security in Europe.” Similarly, it says Ukraine’s nuclear power capacity can contribute to Europe’s energy independence and efforts to decarbonise its energy mix.
This is the way – A panel comprising of randomly selected Austrian citizens has presented its conclusions on climate issues to the government in the hope of paving the way for more support for climate protection measures. One hundred randomly selected Austrian citizens had debated for six weekends, accompanied by moderators and 15 scientists. They presented their conclusions to the government on Monday. Climate Minister Leonore Gewessler has expressed her willingness to examine the 90+ conclusions. “But I cannot promise that we will be able to implement them all,” she added. Their suggestions include enshrining the fundamental right to climate protection, abolishing fossil subsidies, creating an independent climate commission, introducing a carbon border tax, renovating existing houses, and higher tax rates on climate-damaging vehicles. While Austria’s goal to be climate neutral in 2040 could not be achieved with just the recommendations by the council, the scientists that advised the citizens throughout the process are optimistic. (Euractiv)
Hy time – The European Energy Exchange (EEX) is entering into a partnership with the data solutions provider TYCHO Solutions to enhance transparency in the hydrogen market. Both parties will bring in their respective expertise to provide hydrogen-related data on the EEX Transparency Platform, by using TYCHO’s business intelligence tool NOVA. TYCHO Solutions is a young start-up based in Mexico City which provides data solutions for renewable energy developers. “Through their cooperation, TYCHO and EEX will provide trustworthy and relevant information on hydrogen markets on the EEX Transparency Platform”, they said.
ASIA PACIFIC
Nuclear to net zero – South Korea will build four more nuclear reactors by 2030, and extend the life of 10 older units, according to Bloomberg. This means that nuclear energy will provide more than 30% of the nation’s electricity generation by 2030, compared to 27.4% last year, according to the government, however it did not break down targets for the rest of the energy mix. The energy ministry said Tuesday that renewable energy’s share will be adjusted from 30% under the old roadmap to a “reasonable level”, and that a detailed plan will be formed in the fourth quarter. Greenpeace East Asia’s Janh Daul interpreted this to mean that the government will likely lower the target. Separately, South Korea will expand its strategic reserves for oil and liquefied natural gas in a bid to increase price stability, according to Tuesday’s statement. Crude stockpiles will increase to more than 100 mln barrels by 2025, from 96.5 mln barrels currently, while LNG reserves will rise to 18.4 mln kilolitres by 2034 from 13.7 mln.
AMERICAS
Carbon rebate – Canada’s carbon tax rebate to residents living in jurisdictions that don’t have cap-and-trade or other regional programmes will be delivered quarterly, rather than annually, beginning July 15, according to the Government of Canada. The total tax rebate for a family of four this fiscal year will be C$745 in Ontario, C$832 in Manitoba, C$1,101 in Saskatchewan, and C$1,079 in Alberta, with an additional 10% top-up for rural residents. The rebate is higher than the increase to the cost of living that the carbon tax adds, the government said, and the move to quarterly payments is meant to ease inflationary effects on consumers.
Gamification – A cap-and-trade computer game was unveiled Monday at the University of Waterloo in Ontario, Canada where students learn about how the market reduces CO2 emissions. Users can choose to play as a regulator, or as market participants in one of four regulated industries. A series of dice roles are used to simulate if an event like a forest fire damages projects and users compete to create permanent offsets.
SCIENCE & TECH
Waste not want not – Energy transition technology company Technip Energies (Technip) has been awarded an engineering, procurement, construction (EPC) contract that will see it developing what will be a world-first for carbon capture and storage (CCS), Gasworld reports. Worth somewhere between €250m and €500m, the contract – supplied by Norway heating firm Hafslund Oslo Celsio – will see Technip integrating the carbon capture plant into Hafslund’s waste-to-energy plant located in Oslo, ready to capture 400,000 tonnes of carbon dioxide (CO2) per year, equivalent to 17% of the city’s emissions. Shell’s amine based CANSOLV CO2 Capture System will be used to capture CO2 from the plant’s flue gas before being liquefied and transported to Northern Lights as part of the Longship project. **Read Carbon Pulse’s article on Norway’s plans for CO2 disposal here
AND FINALLY…
Mushroom for improvement – Vast fungal networks below ground play a crucial role in helping forests absorb carbon and limit climate change, two Boston researchers have found. Known as the “fifth kingdom of life on Earth,” there are millions of species of fungi and they are present everywhere: in water, in the air, in the soil, and on trees, according to an article penned by the World Economic Forum. Most people know that mushrooms grow in the damp and shady areas of forest floors, but a species called mycorrhizal fungi can grow underground among the roots of trees. A particular variant known as ectomycorrhizal fungi helps trees and forests absorb CO2 more quickly, according to the scientists. This fungi can also slow down the speed at which carbon returns from forest soils into the atmosphere, helping forests keep carbon locked up in trees and soils for longer. However, fungal networks are under threat because of agricultural expansion, the use of chemical fertilisers and pesticides, deforestation, and urbanisation. Fungal networks can’t survive without their plant partners, and any damage can take decades to repair.
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