CP Daily: Monday August 1, 2022

Published 09:07 on August 2, 2022  /  Last updated at 09:07 on August 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

ANALYSIS: German policy pivot on nuclear would have muted EUA impact

The lifetimes of German nuclear power plants are increasingly likely to be extended beyond the end of the year, but the downside potential for EUA prices of such a move would be mostly offset by higher coal burn, according to EU carbon analysts.

ASIA PACIFIC

China outlines plans for industries to peak emissions by 2030

China’s cabinet on Monday released an implementation plan for the country’s industrial sector, reiterating its commitment to peaking carbon dioxide emissions by 2030.

India PM may launch carbon trading platform in mid-August, framework bill still to be introduced

India Prime Minister Narendra Modi may decide to launch a national carbon trading platform to begin on Aug. 15 to boost efforts to meet the country’s climate commitments, according to local media reports.

South Korea sets up Article 6 council, announces second round of funding for pilot projects

South Korea has established an International Reduction Council to handle the nation’s involvement in Article 6 of the Paris Agreement, as Korea Environment Corporation (KECO) this week announced a second round of pilot project funding.

Philippines looks to Indonesia as example in carbon markets

The Philippines’ Department of Finance (DoF) is hoping to learn from Indonesia’s foray into carbon markets as a way to develop its own carbon pricing scheme, local media reports.

Queensland govt funds five carbon projects with more on the way

The Queensland state government has selected five new carbon farming projects to receive A$11.5 million ($8 mln) in funding from its Land Restoration Fund (LRF), with more projects being finalised.

Australian start-up wins investor backing for tech to boost electrolyser efficiency, lower green hydrogen costs

An Australian technology start-up firm has raised A$42.5 million ($29.8 mln) from a group of local and international backers to improve the performance of electrolysers and lower the cost of manufacturing renewable-based hydrogen, the company announced on Tuesday.

AMERICAS

RGGI CO2 output ticks up in Q2 as strong burns persist

CO2 emissions under the power sector RGGI cap-and-trade programme increased year-on-year in the second quarter of 2022, as gains in the Mid-Atlantic and upper New England offset steep reductions in Virginia, according to data updated Monday.

Top California LCFS credit holder stops 3-yr skid in Q1

The largest holder of California Low Carbon Fuel Standard (LCFS) credits boosted its net position over the past six months for the first time since 2019, as the programme’s surplus bank exploded to an all-time high, according to data from state regulator ARB.

VOLUNTARY

VCM Report: Bear market continues as GEO price slumps close to CDM offsets

Voluntary carbon offset (VCM) prices slipped lower at the start of the week and then stabilised amid very thin liquidity with some standardised emissions reduction contracts trading only slightly above Clean Development Mechanism (CDM) credits, while nature-based credits continued to command a healthy premium.

Just one-fifth of VER buyers disclosing carbon credit purchases in opaque market -report

Only a fraction of voluntary carbon market (VCM) buyers chose to self-report their offset purchases in 2021, according to a new report published Monday that provided insight on entities’ preferences for credit vintages, projects’ geographical locations, and co-benefits.

US agriculture offset firm loses another senior staffer

The interim commercial director of a major US-based agricultural carbon offset firm has left the company, marking at least the fourth senior employee to depart the firm in the past 10 months.

EMEA

Euro Markets: EUAs post 2.6% gain as auctions start 50% supply cut over peak holiday period

EUAs kicked off the month of August, in which auction volumes are reduced by 50%, on a quiet but bullish note with low trading volume as many participants were on holiday, while energy markets edged higher as demand for cooling was expected to increase in the coming week.

South Africa maps out proposed annual carbon tax increases through 2030

The South African government has proposed tweaking the trajectory of increases to the country’s carbon tax in order to offer stakeholders more predictability.

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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

Cha-ching! – That’s the sound of the major oil companies’ record-smashing $50 bln in Q2 profits — nearly double the gains from this time last year, Politico reports. Ballooning energy prices following Russia’s invasion of Ukraine delivered the cash windfall to the major Western oil powers: Exxon Mobil, Chevron, Shell, BP, and TotalEnergies. For Exxon and Chevron – the two largest oil companies in the US – profits more than tripled from this time last year. The blockbuster earnings come as sky-high gasoline costs eat into consumers’ wallets, helping drive inflation to new heights, and weather disasters spurred by burning fossil fuels wreak havoc across the globe. The untimely cocktail is threatening a political backlash against energy companies as the White House weighs congressional proposals to implement a windfall tax on the profits. President Joe Biden last month said , “Exxon made more money than God this year” and pledged he would “make sure everyone knows Exxon’s profits.” Exxon and Chevron have pushed back, saying they are boosting supply to meet new demand, yet their capital spending remains far lower than before the pandemic brought the economy to a halt. The companies will give more cash to shareholders than they invest in oil and gas production this year, Bloomberg reported, while they also note that they are dealing with the same labour shortage issues playing out across the economy. Oil field jobs have not recovered from the pandemic and recession of two years ago. That may also reflect shifts to new technology and the push for renewable power.

Merger mania – Marex Group will buy ED&F Man Holdings Ltd.’s brokerage business, cementing its position as one of London’s largest commodities dealers and expanding its business in the US. The acquisition of ED&F Man Capital Markets is expected to close by the end of the year, the companies said in a statement Monday. The deal is valued at $220 mln, people familiar with the matter told Bloomberg. The sale will mark one of the final big steps in restructuring ED&F Man after the trader – best known for hauling sugar and coffee – got the green light to ring-fence its commodities business and restructure about $1 bln in debt beyond 2025. Marex has been aggressively growing its business over the past few years by purchasing rival brokerages. The deal will allow Marex to expand into clearing, while adding to its metals, fixed income and equities businesses, according to the statement. The company will also extend its presence to Dubai and Asia Pacific, while growing in the US.

EMEA

Nuclear winter – Germany’s last few remaining nuclear reactors could keep operating through the winter even though they are poised to close permanently by the end of this year, according to industry group Kerntechnik Deutschland. It’s possible that the three plants could generate power until spring in what’s known as ‘stretch-out mode’ that allows them to run at a reduced capacity, according to the lobby group. That way, they won’t need new fuel supplies and would provide an alternative to increasingly scarce natural gas. “It’s not too late to keep the nuclear plants running for winter or to keep them running for a longer time,” said Nicolas Wendler, a spokesperson for Kerntechnik Deutschland said on Monday in an interview. The option could potentially sway German politicians to extend the lives of the units as the energy crisis may only get worse with demand peaking during the winter. Germany’s environment minister and member of Green Party, Steffi Lemke, signalled she’s willing to consider extending the operating life of an EON plant in Bavaria into next year to boost much-needed supplies. (Bloomberg)

Green isle going greener – Ireland has committed to a 25% cut in GHG emissions from agriculture by 2030 after a bitter political battle between farmers, business groups, and environmentalists. The coalition government on Thursday announced binding sectoral targets to slash overall emissions by 51% by 2030, a daunting challenge for a country that has consistently missed climate goals, making it per capita one of the world highest emitters. Eamon Ryan, the environment minister and Irish Green party leader, called the announcement “hugely significant”. The most contested sector was agriculture. It causes about 37% of Ireland’s emissions but farm groups lobbied hard for special treatment, citing its traditional role in society and food security. The 25% target was a compromise between farmers who hoped for 22% and environmentalists and representatives of other sectors who wanted agriculture to cut emissions by 30%. The agriculture cuts will be incentivised and voluntary, rather than mandated, but cattle farmers will face pressure to cull cattle. (Guardian)

Big (sustainable) deal – Shell and Lufthansa have signed a non-binding memorandum of understanding (MoU) for exploring the supply of sustainable aviation fuel (SAF) by Shell to the Lufthansa Group for seven years at airports across the globe, starting in 2024, Biomass magazine reports. The parties contemplate negotiating towards reaching a definitive purchase agreement with the total volume supplied reaching up to 594 million gallons (1.8 million metric tons). If a definitive agreement is reached it would be one of the most significant commercial collaborations for SAF in the aviation sector and Shell’s largest SAF commitment to date.

ACW 2022 – Registration opened for the UN’s 2022 Africa Climate Week (ACW 2022), to be held from Aug. 29 to Sep. 2 in Libreville, Gabon. ACW 2022 will convene key stakeholders, including African ministers, to provide a platform for regional collaboration, the UNFCCC said in a release. Governments, private sector leaders, development organisations, youth, and civil society members are all expected to attend, and the event is aimed at facilitating discussions on the implementation of the Paris Agreement at the regional level.

ASIA PACIFIC

To get it done Japan’s ANA Group will rely mostly on sustainable aviation fuel (SAF) to meet its 2050 net zero target, the company announced Monday. While SAFs will play a modest role this decade, they will grow in importance in the 2030s, and account for some 70% of the airline’s planned emissions cuts by mid-century, it said. ANA has established a green bond framework, which it will use to fund the purchase of SAF, as well as acquire companies and projects involved in SAF production. Technology and infrastructure improvements will also contribute a significant share of its emissions cuts, whereas carbon offsets generated outside the aviation sector will reduce another 300,000-700,000 tCO2e/year, ANA graphics suggested, though they will play a shrinking role after 2040. By 2050, the airline will also rely on DACs and other negative emissions technologies for some 10% of the company’s targets. ANA Group expects to emit around 16 MtCO2e by 2030.

Sustainable reporting – Twenty of Australia’s most influential business and finance peak bodies have come to an unprecedented consensus on the need for sustainability reporting, including action on climate risk through a new reporting regime that aims to set a global baseline, the Australian Banking Association said in a press release. The group stated that it considers clear, transparent, comprehensive, and comparable disclosure of sustainability-related information to be part of the foundation of a well-functioning global financial system. Meanwhile Mark Carney, former governor of the Bank of England and now chair of the Global Financial Alliance for Net Zero, called on investors to develop skills and tools to properly evaluate climate risk in asset portfolios at an investment conference in Melbourne last week, saying investors were increasingly putting more value on companies that were aligned to net zero commitments.

Hydrogen for Shanghai – Shell said it will set up a joint venture with China’s Shenergy Group to build a hydrogen refuelling network in Shanghai, the first of its kind for the European energy major in Asia, ChannelNews Asia reports. The joint venture plans to build six to 10 hydrogen refuelling stations in Shanghai and the surrounding Yangzte River Delta in the next five years and up to 30 stations by 2030. These 30 stations could supply hydrogen fuel to about 3,000 trucks or buses every day, Shell said in a statement.

Get it started – In India’s Union Territory of Ladakh, Prime Minister Narendra Modi laid the foundation for India’s first public use of green hydrogen transportation project, which will be built by National Thermal Power Corporation (NTPC) over the course of the following 1.5 years, Northlines reports. The NTPC and the Union Territory of Ladakh signed a Memorandum of Understanding (MoU) in July last year to construct the first green hydrogen mobility project in the area, and to work together to help the government create a carbon-free economy based on renewable energy and green hydrogen.

Carbon app – The Victorian government is creating an app to help agricultural workers track and reduce their carbon emissions. A government statement said the training and skills and higher education ministry has committed A$1 mln to develop the new app, which will use virtual reality simulations to help sheep producers collect data on pasture utilisation and sheep production and welfare, so they can make decisions on the most effective strategies to manage climate variability while reducing CO2 emissions intensity. The app will also help farmers collect and compile emissions data to meet the emerging Clean Energy requirements from their supply chain and maintain access to domestic and international markets.

AMERICAS

Still in the game – The US EPA plans to use new limits on traditional pollutants like ozone and coal ash to help encourage the retirement of the nation’s remaining coal-fired power plants, after the Supreme Court limited the agency’s ability to impose sweeping climate regulations, according to EPA chief Michael Regan. The approach reflects how the administration of President Joe Biden intends to forge ahead with goals to decarbonise the power sector despite the recent ruling from the court. The power industry is the source of a quarter of the nation’s GHGs and Biden campaigned on a pledge to cut its net emissions to zero by 2035. “Will [the Supreme Court decision] constrain what we could do and the flexibilities that we could allow the power sector to have? Absolutely,” Regan said in an interview with Reuters. “But are we deterred? Absolutely not. EPA is still in the game.” Regan, who was speaking to Reuters during a tour of polluted sites in Puerto Rico, said the court’s ruling would mean that a rule the EPA hopes to unveil next year to tackle carbon emissions from power plants will be narrower than it otherwise would have been. But he said the EPA is also working on several other rules targeting power plants, including requirements for the disposal of toxic coal ash and enhancements to the National Ambient Air Quality Standards for ozone. When combined, the rules will signal to the US power industry that clean energy is the most cost-effective way to comply, he said.

Soil sweetener – American farmers would get more incentive to pursue additional sustainable agricultural methods under the $370 bln climate spending package announced by Senate Democrats last week. The proposed bill includes $20 bln for “climate-smart agriculture practices” largely geared toward reducing carbon and nitrous oxide emissions. Lawmakers hope the added conservation funding – if the bill is approved – will make US farmers less reliant on nitrogen fertilizer, a large contributor to emissions that threaten the ozone and trap heat in the atmosphere. “There’s going to be a lot more opportunity for farmers, who are the best stewards of the land, to adopt practices that will make them less reliant on chemicals, that will sequester more carbon and create a lot of other environmental benefits,” New Jersey Democratic Senator Cory Booker said in a Thursday interview. Booker, who sits on the Senate’s agriculture committee, advocated for inclusion of the farm funding in the bill. The funding should increase approval rates for farmers applying to US conservation programmes, of which less than a third are granted, said Ben Lilliston, a director at the Institute for Agriculture and Trade Policy. (Bloomberg)

‘Round the clock reductions – Emissions from oil leasing mandates in the revived US Democratic energy bill would be tiny compared to carbon cuts expected from the legislation, a new analysis finds. Pro-drilling provisions in the delicate deal have caused some grumbling among activists, even as huge swaths of the climate movement back the overall bill. But research firm Energy Innovation found that for every tonne of GHGs generated by the bill’s oil and gas provisions, at least 24 tonnes are avoided by the other provisions. Energy Innovation added the bill would shove US GHG emissions down to 37%-41% below 2005 levels by 2030, compared to 24% without the measure. That’s largely consistent with separate Rhodium Group estimates published last week, though the Rhodium lower range shows shallower cuts. (Axios)

VOLUNTARY

OVO + South Pole – Britain’s OVO Energy and Swiss-headquartered South Pole have created a new open source methodology of carbon avoidance that enables energy suppliers to align their commercial strategies and product portfolios with their net zero carbon emissions roadmaps. The methodology measures the avoided carbon emissions over a product’s lifecycle in the household energy sector, calculated when a customer switches from their existing technology (like a gas boiler) to a low-carbon solution (like an air source heat pump). The methodology reviewed 18 products from OVO’s low-carbon solution product portfolio – from roof insulation and EV leasing to heat pumps – and compared the emissions from a business-as-usual scenario versus a low-carbon solution. The companies said the results show that the products with the biggest ‘carbon avoidance factors’ were those where customers switched from using fossil fuels to electricity which could be sourced from renewable energy solutions. “This is perhaps an obvious conclusion, but what makes the report valuable is that showing the carbon avoidance factor of each product can more easily help clients determine exactly which measures taken give the biggest climate ‘bang for the buck’ within a limited budget.” Read the report.

Nefarious Nemus? – A Brazilian firm selling non-fungible tokens (NFTs) it says are linked to physical land in the country’s Amazon rainforest has been asked by Brazilian prosecutors to prove its ownership of the land, which is in territory claimed by indigenous people. The prosecutor’s office has given Nemus 15 days to show the land belongs to it and has accused the company of pushing indigenous people in the region to endorse documents they could not understand. “People from the company delivered a sign to the villages, written in English, and asked the indigenous people, who can barely read, to sign documents without clarifying the content or providing a copy,” the prosecutor’s office said in a public statement issued on July 25, without specifying further. Federal Prosecutor Fernando Merloto Soave told the Thomson Reuters Foundation his office had decided to publicise the situation in the media to raise awareness. Soave said his office was trying to work out if the land is privately owned, but added this would be made invalid if the territory is recognised by the federal government as indigenous. He also said it was clear that indigenous communities had not been consulted in this case, as required by the International Labour Organization. Nemus – whose slogan is “Treasure the forest” – sells NFTs it says are a digital representation of real pieces of land in the Brazilian Amazon. Buyers, called “guardians”, do not gain ownership of the land themselves but the company guarantees their money will be used to preserve the forest and support the people living there. The buyers receive a collectable digital card that can be traded for game rewards.

SCIENCE & TECH

Hydro for pyros – Canadian start-up Aurora Hydrogen, which aims to produce zero carbon hydrogen at the point of use, has raised a $10 mln Series A funding round led by Energy Innovation Capital. Aurora CEO Andrew Gillis told Axios that the company’s technology relies on methane pyrolysis, which takes natural gas and uses microwaves to produce hydrogen and solid carbon, with no added CO2 emissions in the process. In contrast, other firms focused on using electrolysers to produce hydrogen require large electricity inputs as well as CO2 water to produce clean hydrogen. Aurora’s methods also do not require infrastructure to transport the hydrogen it produces, since the facilities would be located where the hydrogen is needed. The company plans to build and operate a commercially viable demonstration plant that would produce 200 kg of hydrogen per day, at a plant in Edmonton, Alberta.

AND FINALLY…

It’s about that time… – A fast-growing wildfire, named the McKinney fire, has grown to more than 21,000 ha in two days, becoming California’s largest wildfire in 2022. Two people have been reported dead and nearly 3,000 residents have been asked to evacuate. It is 0% contained, although heavy smoke helped slow the growth on Sunday even as it kept most aircraft grounded. The fire began on Friday in Siskiyou County near the California-Oregon border, and has since exploded to more than 207 sq. km, exacerbated by thunderstorms and high, windy conditions. Climate change is increasing the size, frequency, and intensity of wildfires as well as the length of the fire season. There are currently 53 large wildfires burning across the United States in California, Montana, Oklahoma, Oregon, and Texas. (Climate Nexus)

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