CP Daily: Friday July 22, 2022

Published 03:32 on July 23, 2022  /  Last updated at 03:32 on July 23, 2022  /  Newsletter  /  No Comments

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

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TOP STORY

FEATURE: Italy heads for first climate-dominated elections in the aftermath of Draghi’s downfall

Italy, the EU’s third-largest economy, is heading for months of stagnating energy and climate policy progress as its leadership was toppled this week after days of political turmoil, with elections scheduled for as early as September.

ASIA PACIFIC

ANALYSIS: Australian Parliament returns next week with high-stakes climate legislation

The Australian Parliament returns next week with the Labor government intent on legislating its 2030 emissions reduction target, however it will require the support of the Greens and one independent in the Senate to get through.

CN Markets: CEAs stable, though frustration remains for participants

The spot price for Chinese carbon allowances remained stable this week, but an increase in trading volume failed to excite market participants.

Shenzhen to hold carbon allowance auction in early August

The government of Shenzhen is set to auction off 600,000 carbon permits under its pilot emissions trading scheme in early August, with a price floor well below current market levels.

Chinese bike-sharing giant issues first industry standards, complementing the offset sector

Chinese bike-sharing giant Hello has issued a set of benchmarks for industry peers to better calculate carbon emissions reductions, adding new standards to the country’s voluntary markets, though users will have to work hard to rack up their certificate holdings.

Australian state environmental regulator gets record 750+ appeals against extension of giant NWS gas project

Western Australia’s Environmental Protection Authority (EPA) has received a record number of appeals to its recommendation last month to grant a 50-year extension to Australian Woodside’s giant gas and LNG North West Shelf (NWS) project, it has been revealed.

Lawmakers in Pakistan’s Khyber Pakhtunkhwa pass bill to protect forests, as province eyes carbon market

Lawmakers in Pakistan’s Khyber Pakhtunkhwa on Friday passed a bill to promote the sustainable growth and protection of the province’s forests.

EMEA

Euro Markets: Afternoon sell-off pushes EUAs to heaviest weekly loss since early March

EUAs lost ground on Friday to extend the week’s heavy losses following Wednesday’s publication of the EU’s strategy for cutting gas use, as an accumulation of bearish fundamental signals drove prices below key technical support levels to notch their biggest weekly fall since early March.

EU gas rationing ‘increasingly likely’, says Vattenfall CEO

Gas rationing this winter looks like an “increasingly likely scenario” according to Anna Borg, CEO of Sweden-based utility Vattenfall, which published financial results on Friday that showed a drop in the company’s fossil generation over the first half of 2022.

EU carbon prices to recover to €85-90 in August, analyst predicts

EU carbon prices will recover to the €85-90 level in the next four weeks, an analyst has predicted, as the benchmark futures sank Friday to their lowest close since early March.

AMERICAS

Producers’ CCA length hits 1.5-yr high, speculators trim V22s but scoop up V23s

Compliance entities continued to raise their California Carbon Allowance (CCA) net length to levels not seen since 2020, while speculators aggressively trimmed current vintages but favoured adding V23 units, according to US Commodity Futures Trading Commission (CFTC) data published Friday.

Pennsylvania DEP petitions court to not reinstate RGGI regulation injunction

The Pennsylvania Department of Environmental Protection (DEP) on Friday asked the Commonwealth Court to refrain from reinstating its block on the state’s RGGI-linked cap-and-trade regulation, as the agency’s appeal is considered by a higher court.

VOLUNTARY

Train-powered direct air carbon venture expects huge funding boost

A US startup is planning to use the energy expended when a train slams the breaks on to develop direct air carbon (DAC) technology, and says its soon-to-be concluded first funding round could be the “biggest in the sector”.

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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

Pure, unrelenting profits – The Guardian reports on new analysis showing that the oil and gas industry has delivered $2.8 bln a day in pure profit for the last 50 years. The study – yet to be published in an academic journal, but confirmed as accurate by three experts – finds the vast total captured by petrostates and fossil fuel companies since 1970 is $52 trillion, with the huge profits inflated by cartels of countries artificially restricting supply. The analysis, based on World Bank data, assesses the ‘rent’ secured by global oil and gas sales, which is the economic term for the unearned profit produced after the total cost of production has been deducted. (Carbon Brief)

AMERICAS

On second thought – Hours after Sen. Joe Manchin (D) last week delivered a fatal blow to climate change legislation championed by US President Joe Biden, White House officials began making plans for the president to take matters into his own hands. His aides reportedly worked feverishly on a plan to show he was aggressively, and unilaterally, attacking climate change. They drafted a menu of options, including an emergency proclamation that would unlock sweeping executive powers allowing Biden to potentially block crude exports, fund clean energy construction, and curtail offshore oil drilling. Then, before the speech in front of a shuttered Massachusetts coal plant on Wednesday, Biden himself hit pause. There would be no emergency proclamation – not yet. He sent the aides back to the drawing board, where they remain, trying to chart an ambitious path forward that will not only pass legal muster but yield measurable results for voters, all while delicately handling Senate politics. The new campaign will unfold over the next few weeks, with policy initiatives likely touching manufacturing, transportation, and other sectors. An emergency proclamation is still likely. But the frenzied effort to get there – recounted to Bloomberg by multiple people familiar with the deliberations – suggests that the White House is struggling to work around the narrowly divided Congress, even as it seeks to move independently.

Transmission tussle – The Maine Board of Environmental Protection on Thursday turned down an appeal of an agency permit allowing construction of a $1 bln transmission line from Quebec through Maine. While the board modified a few of the conditions for the project to address concerns about impacts, it decided the permit will remain in place. Now the fate of the New England Clean Energy Connect transmission line rests with the state supreme court, which is expected to rule shortly on two legal challenges concerning the project. The transmission line would carry hydroelectric power generated in Quebec 233 km through western Maine to Lewiston, where it would connect to the New England power grid and serve customers in Massachusetts. The line is being built by Avangrid, a huge energy conglomerate that owns Central Maine Power and New England Clean Energy Connect, a subsidiary formed to handle the construction project. There are two questions before the Supreme Court. The first is the developer’s challenge of a Nov. 2021 referendum in which Maine voters opted to kill the project. And the second is whether NECEC has a valid lease to have the power line cross state land. The justices heard arguments in May and their ruling is expected shortly, but the appeals of the DEP’s original permit for the project were on hold in the meantime. (Portland Press Herald)

Mass transit – A compromise bill mandating some of the steps Massachusetts needs to take to meet a goal of net zero GHG emissions by 2050 was approved by House and Senate lawmakers on Thursday. The bill would increase to $3,500 the rebate for qualifying purchases and leases of zero-emission passenger cars and light duty trucks costing $55,000 or less, and offer an additional $1,000 to purchasers who are trading in an internal combustion vehicle. New vehicle sales would be required to be zero emission starting in 2035, while new Massachusetts Bay Transportation Authority bus purchases and leases would also be required to be zero emission by 2030, with the entire transit fleet transitioning to zero emission by 2040. Republican Gov. Charlie Baker has 10 days to review the legislation and decide whether to sign or veto it. (AP)

EMEA

100 and counting – German business associations have launched an appeal to redouble energy saving efforts in order to avoid gas shortfalls this winter. The heating period is less than 100 days away and is approaching fast, said the nine lobby groups, which include renewable energy association BEE, efficiency advocates DENEFF, and the association of energy intensive businesses VIK. At the same time, a permanent stoppage of Russian gas supplies remains a realistic scenario, they said. According to the appeal, many citizens and businesses can barely cope with today’s energy prices. Lowering energy consumption in all sectors will be crucial over the coming weeks, meaning businesses, municipalities, and private households must make a joint effort. (Clean Energy Wire)

Too big to fail – The German government has announced that it will bail out Uniper, one of the world’s largest gas importers, who had been hung out to dry by Russian gas supplier Gazprom, for €15 bln. Uniper, the fossil spin-off of E.ON, relied on Gazprom for an undisclosed but large share of its gas imports which it then sold to local utilities and industrial customers. With Russian flows significantly reduced, the German government has now acted to prevent a Lehman Brothers-like effect on the gas markets. It will almost quadruple a state-bank loan to Uniper, from €2 bln to €9 bln, while also allocating €8 bln for Uniper shares, leaving the government holding 30% of the company. Another €7.7 bln will be made optionally available in the form of a convertible bond (which will transform into shares as well). Most of Uniper was owned by Finnish state company Fortum, which held 78% of the shares. The Finnish government had said it would not inject additional funds into the ailing company. Instead, Fortum is banned from taking back €4 bln in loans to Uniper, with the option to transfer the loan into shares, and it must offer another credit line worth €4 bln.

Rough going – Centrica has been granted a licence to revive the UK’s biggest gas storage facility, reports the Times, as ministers scramble to bolster energy security. The British Gas owner is now in talks with ministers over a consumer-funded subsidy mechanism for the Rough site, which it hopes to bring back in time for this winter. The company had previously indicated that this could cost as much as £500 mln. The company stopped offering gas storage at Rough, 18 miles off the Yorkshire coast, in 2017 after concluding it was no longer economically viable to repair the ageing infrastructure without subsidies, which ministers had ruled out as poor value for money. Centrica applied for a storage licence in June and was granted it this week, but the firm still needs a funding agreement and other regulatory approvals including from the Crown Estate and the Offshore Petroleum Regulator for Environment and Decommissioning. Rough had the capacity to store gas equivalent to about 10 days of UK demand, but it’s not clear how much of this can be refilled in time for this winter. (Carbon Brief)

Britain in recession – Britain will fall into recession next year as higher inflation, aggressive interest-rate rises, and weaker consumer demand hit growth, Bank of America’s UK economist Rob Wood predicts, as reported by Bloomberg. For 2023 as a whole, Wood sees output shrinking 0.4%, a downgrade from his earlier forecast for 0.2% growth. That is worse than the Bank of England’s May forecast for a contraction of 0.25%. The main reason for his altered outlook is the recent surge in wholesale energy costs that are on track to hammer households even harder than previously thought when regulated household bills reset in October. Earlier this week, the ECB said it did not have a recession factored into its baseline scenario.

Subsidy for switch – Steelmaker Tata Group has threatened to shut down operations at its UK Port Talbot plant – one of two major steelmakers in the country – if the government does not provide it with up to £1.5 bln of financial support to help it cover the £3 bln cost to replace its blast furnaces with electric arc furnaces, and therefore slash the overall emissions produced at the site. (FT)

ASIA PACIFIC

R in ARENA – The Australian government has moved to reverse its predecessor’s attempts to redirect energy funding to non-renewable technologies, issuing fresh regulations to the Australian Renewable Energy Agency. RenewEconomy reports that Climate and Energy Minister Chris Bowen has given the agency a fresh mandate to “maximise the take-up of renewable energy” and to focus on electrification and energy efficiency, “putting the R back into ARENA”. The regulation swaps out the former Coalition government’s reference to broadly worded “clean energy technologies”, with “electrification and energy efficiency technologies”. The former government attempted multiple times to redirect ARENA’s funding towards CCS and blue hydrogen technologies, however it was repeatedly blocked in Parliament, with many legal experts deeming the changes to be unlawful, given that it would be in violation of ARENA’s governing rules. The Labor Party government hopes the new regulations will focus ARENA’s investment and attention on technologies that boost renewable generation from 30% today, to 82% by 2030.

Get to net zero – Indian state-run power major NTPC has signed a statement of intent with government think tank Niti Aayog to develop the roadmap for the public sector company to achieve net zero GHGs, Mint reports. A company statement said that the statement of intent was signed on June 20. “Paving the pathway towards greening the power sector of the country, the SoI seeks to formalise a framework of cooperation between the parties to facilitate NTPC to strategies on diversification of its generation mix to eventually reduce its carbon footprint and support India’s endeavour towards achieving net zero by 2070,” it said.

Let’s co-operate – Itochu and Lotte Chemical Corporation have concluded a Memorandum of Understanding (MOU) on collaboration in the field of hydrogen and ammonia with the aim of realising a decarbonised society, according to an Itochu press release. The two companies will work together in the field of hydrogen and ammonia, ammonia trading, ammonia infrastructure, utilisation research targeting the Japanese and Korean markets, ammonia market research targeting Japan and South Korea, joint investment research on clean ammonia production facilities, and feasibility studies on collaboration in the field of hydrogen.

AND FINALLY…

Pool problems – Limiting the size of new swimming pools in and around Las Vegas might save a drop in the proverbial bucket amid historic drought and climate change in the US West. Officials are taking the plunge anyway, capping the size of new swimming pools at single-family residential homes to about the size of a three-car garage. Citing worries about dwindling drinking water allocations from the drying-up Lake Mead reservoir on the depleted Colorado River, officials in Clark County voted this week to limit the size of new swimming pools to 56 square metres of surface area. (Bloomberg)

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