CP Daily: Friday July 29, 2022

Published 23:30 on July 29, 2022  /  Last updated at 23:30 on July 29, 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: Huge looming REDD+ issuance sparks unease in voluntary carbon market

A massive REDD+ carbon credit issuance expected in the coming months has sparked unease from some experts that say the tens of millions of forest protection units are not fit for the voluntary market, while the willingness of buyers to support the efforts remains in the balance.

EMEA

Spain to propose placing a cap on EU ETS prices

Spain will send a proposal to the EU to cap prices in the bloc’s carbon market to try to curb energy prices and inflation, Prime Minister Pedro Sanchez said Friday.

European utilities flag increase in ETS-covered fossil generation

Several European utilities confirmed a surge in their fossil-based generation covered by the EU ETS in H1 results this week, as plunging hydro output due to drought-like conditions across Iberia, and nuclear availability issues tightened supply margins.

Coal burn to drive 2022 EUAs to mid-€80s and EU power sector emissions above 2021 levels -analysts

European carbon prices are expected to bounce back from their recent dip as increased coal burn and EU market reforms will offset the impact of the bloc’s recent gas use agreement to drive power sector emissions above 2021 levels, according to analysts.

IAG commits to double SAF buying as European airlines feel squeeze from carbon markets

European airlines were keen to highlight environmental credentials in results this week, with British Airways’ owner IAG announcing on Friday it will double its sustainable aviation fuel (SAF) buying.

Euro Markets: EUAs post 3% weekly gain as market tests technical support amid consolidation

EUAs trimmed a weekly advance on Friday as the market consolidated after the previous session’s near-4% gain, holding above a key technical support as energy markets pared the week’s strong rises.

AMERICAS

California LCFS surplus storms to all-time high after Q1 renewable diesel deluge

The credit bank for California’s Low Carbon Fuel Standard (LCFS) spiked to a record high during the first quarter of 2022, as the usage of renewable diesel (RD) and electricity-based transportation fuel pathways continued to proliferate.

Speculators’ CCA net length continues to decline, producers add to 1.5-year record

Financial participants trimmed their California Carbon Allowance (CCA) holdings for a third week in a row amidst price weakness across financial markets, while compliance entities continued to increase their net position, according to US Commodity Futures Trading Commission (CFTC) data published Friday.

ASIA PACIFIC

CN Markets: CEA price barely changes amid lukewarm sentiment

The spot price for Chinese carbon allowances barely moved over the past week due to lukewarm market sentiment, while the offset sector experienced a breath of fresh air from the Guangzhou bourse.

China’s Hainan to develop first blue carbon projects as trading platform launch nears

The government of China’s Hainan province has issued a plan to roll out its first batch of blue carbon projects as plans move ahead to launch a purely ocean and marine-based offset exchange on the island later this year.

NZ govt likely to delay decision on exotics ETS ban  

The New Zealand government has indicated that it is unlikely to implement a ban on permanent exotic plantings in its ETS next year, sparking outrage from the agricultural industry.

Mining outfit signs deal to use blockchain platform to certify carbon neutral pig iron

An ASX-listed mining company has signed an agreement with an Australian tech company focused on sustainability to provide Guarantee of Origin (GO) certification for the full supply chain and production of “green” pig iron.

COMMENT

Transparency holds the key to a $100 billion opportunity

Today’s voluntary carbon market (VCM) and the use of carbon credits to support net zero are at a crossroads. Embracing transparency offers a way forward, argues Tommy Ricketts of BeZero Carbon.

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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

Coal sticking around – Global coal consumption is expected to increase slightly over 2022-23 by a total of around 1%, following a sharp rebound in demand in 2021 of 5.8%, according to the IEA in its July coal market update. In 2020 global coal consumption fell by 4.4% due to the impact of Covid-19, but more than regained that loss last year as the global economy bounced back. “The world’s consumption of coal is set to rise slightly in 2022, taking it back to the record level it reached nearly a decade ago,” the IEA stated. Following expected growth of 0.7% in 2022, coal demand growth is expected to slow to 0.3% in 2023, according to the IEA. “Global coal demand is being propped up this year by rising natural gas prices, which have intensified gas-to-coal switching in many countries, as well as economic growth in India. Those factors are being partly offset by slowing economic growth in China and by the inability of some major coal producers to ramp up production.” In 2022 coal demand is expected to fall slightly in China and the US, but increase most noticeably in India and in Europe.

Climate finance – Rich countries have fallen almost $17 bln short of their pledge to collectively deliver $100 bln of climate finance a year by 2020, according to the latest data by the OECD. The data shows that in 2020, rich nations mobilised $83.3 bln, a 4% increase on the previous year. Developed countries are now only expected to meet the $100 bln goal in 2023, with previous research suggests that the US is responsible for the vast majority of the shortfall. The bulk of the funding was in the form of loans rather than grants and went to Asian and middle income countries. Asia received 42% of the finance, roughly equal to its share of the global population, while Africa got 26% and the Americas received 17%. (Climate Home)

EMEA

Facing Waterloo – In the European energy crisis, all of the attention is focused on Germany and gas from Russia. But France and its fleet of struggling nuclear reactors are at least as important, writes Javier Blas for Bloomberg. Indeed, the first European city to suffer a blackout as temperatures drop toward the end of the year may well be Paris rather than Berlin. As winter approaches, the outlook in France is increasingly dire. EDF, the state-owned utility, is running only 26 of its 57 reactors, with more than half of its chain undergoing emergency maintenance after the discovery of cracked pipes. With atomic reactors generating the lowest share of the country’s power in 30 years, France faces an electricity ‘Waterloo.’

CBAM slam – The EU is inching closer to implementing a carbon border adjustment mechanism (CBAM), but the proposal is complex and too ambitious. The war in Ukraine warrants a more cooperative method to raise climate ambition in third countries, according to German academics Karsten Neuhoff and Andreas Goldthau in an article for EurActiv.

AMERICAS

Manchin in Paris – The budget reconciliation deal between US Senate Majority Leader Chuck Schumer (D) and conservative Senator Joe Manchin (D) called the Inflation Reduction Act (IRA) would reduce emissions by 31% to 44% below 2005 levels in 2030, according to Rhodium Group analysis. That’s below the US target of a 50-52% reduction the country put forward in the Paris climate agreement. Current policies in the US have the world’s largest historical emitter reducing its output by 24% to 35% in 2030. (Rhodium Group)

The nuclear option – California’s last operational nuclear facility is scheduled to shut down in 2024 or 2025, but operator Pacific Gas & Electric is now saying it’s looking at extending the plant’s lifecycle. Known as Diablo Canyon, the plant generates 15% of the state’s zero-emissions electricity, and closing it will put California’s climate goals in jeopardy. (Utility Dive)

Scotian standoff – The Canadian maritime province of Nova Scotia has not made a decision on whether to maintain its current cap-and-trade system, revert to the federal carbon pricing programme, or implement some combination of the two as the national minimum price on CO2 output increases. Nova Scotia environment minister Tim Halman asked for reprieve from the federal hike, but was denied by his federal counterpart. Canadians in jurisdictions where the federal pricing system is in effect receive a carbon tax rebate greater than the hike at the pumps, while the provincial cap-and-trade system doesn’t offer that cheque in the mail. (CBC News)

ASIA PACIFIC

Capturing carbon – Japex has signed an MoU with JGC and Kawasaki Kisen Kaisha (K Line) on a joint study for CCS in Malaysia, Marketscreener reports. Japex had earlier signed an MoU with Petronas, Malaysia’s national oil company, in January to study CCS as well. In the joint study, investigations of suitable sites for CO2 storage in Malaysia and their technical evaluations are being conducted, aiming to be completed in 20 months. This includes consideration of methods to capture and transport CO2 from the Petronas LNG complex located in Bintulu, Sarawak, and from outside Malaysia as a future possibility. To promote the conceptual studies conducted by Petronas and Japex, the joint study welcomes two companies, JGC and “K” LINE.

Ammonia deal – Mitsui and CF Industries have formed an agreement to jointly develop a clean ammonia production project in the US, Marketscreener reports. The project will produce at least 1 mln tonnes of clean ammonia per year in the Gulf of Mexico, with CF as the operational partner, and will leverage CCUS*1 processes to reduce CO2 emissions by more than 60% compared to conventional ammonia production methods. The two companies have agreed to advance the development with CF having 52% ownership and Mitsui having 48% ownership, and plan to jointly conduct a FEED*2 study with the aim of making a final investment decision in 2023 and starting production in 2027.

Another ammonia deal – Australia’s Yara Clean Ammonia and the Pilbara Ports Authority (PPA) have signed a collaboration agreement to jointly facilitate the uptake of clean ammonia as a marine fuel in the Pilbara region in Western Australia, Safety4sea reports. The purpose of the agreement is to jointly assess the potential ammonia demand and required bunker infrastructure, leveraging off the existing world-scale ammonia production facility of Yara Pilbara, and its clean ammonia potential in the region. The agreement will also ensure safe ammonia bunker operations within PPA ports through collaborative safety analysis and the creation of transparent ammonia bunkering guidelines.

AND FINALLY…

In fine Vettel – Four-time Formula One motor racing world champion Sebastian Vettel has announced he will retire at the end of this season. The 35-year-old admitted that his concerns over the climate emergency and F1’s role as a contributor to the problem played a part in his decision-making process and that he was “scared” at what the future might hold. “When it comes to the climate crisis, there is no way that F1 or any sport or business can avoid it, because it impacts all of us. Maybe it’ll be pushed back or be more quiet, but it’s only a matter of time – that we don’t have,” he said. (The Guardian)

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