CP Daily: Tuesday August 2, 2022

Published 23:29 on August 2, 2022  /  Last updated at 23:45 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: Significant work remains following first Article 6.4 Supervisory Body meeting

The appointed body overseeing the UN’s new carbon crediting mechanism met for the first time last week to hammer out an agreement on several procedural elements crucial to advance Article 6.4, but left much to be done ahead of a targeted end-2023 timeline for trading to begin.

INTERNATIONAL

UN, BIS to develop prototype for Paris-linked carbon units from green bonds

The UN Climate Change Global Innovation Hub and the Bank for International Settlements (BIS) have joined up with a group of financials, tech firms, and industrials to produce proof of concept for a blockchain-based carbon unit derived from green bonds that are linked with country NDCs under the Paris Agreement.

VOLUNTARY

ICE to launch 10 nature-based futures, extending hedging to vintage 2030

Ten new nature-based offset futures will be introduced by the Intercontinental Exchange (ICE) in mid-August as it looks to snatch market share from rival Chicago Mercantile Exchange (CME) by adopting a longer timeframe for companies looking to hedge their carbon emission exposure

New carbon offset protocol on bio-oil sequestration promises durable removals

A US-based firm on Tuesday released the first in a series of “science-led” standards for carbon removals in the voluntary carbon market (VCM), with the new protocol for bio-oil sequestration promising permanent emissions sequestration in contrast to some nature-based solutions.

US company advances VCS project to mainstream carbon credits from agricultural land

A technology company announced Tuesday that its proposed project to scale up regenerative agriculture is the first in the US to enter the validation round under Verra’s Verified Carbon Standard, with the related protocol potentially seeing significant credit issuance from other jurisdictions.

AMERICAS

Massachusetts Q2 GWSA emissions edge higher, on track to exceed 2022 adjusted cap

Emissions recorded under Massachusetts’ Global Warming Solutions Act (GWSA) cap-and-trade system increased in Q2 of this year compared to 2021, according to data updated Monday.

RFS Market: RIN prices near 2-mth high on import buying

US biofuel credit (RIN) values on Tuesday rose to highs not seen since early June, which market participants attributed to demand from Renewable Fuel Standard (RFS) importers and declining ethanol producer margins.

Asset manager Kepos raises $76 mln for new carbon fund

New York-headquartered hedge fund Kepos Capital has raised over $76 million for a new carbon-focused investment vehicle, as financial interest in the space steadies into the late summer.

ASIA PACIFIC

NZ govt, companies partner on seagrass restoration project

A New Zealand marine science research organisation is spearheading a cutting-edge seagrass restoration project, backed by the country’s government and several high-profile companies, hoping it can be applied to larger-scale projects across the country.

Chinese developers take plunge on grassland projects

Despite the lack of policy direction for the national government, some Chinese project developers are moving to develop grassland-based carbon sequestration schemes, initially targeting foreign buyers.

EMEA

Euro Markets: EUAs extend gains amid auction supply cut and anticipated coal demand

EUAs rose for a second day as the annual cut in auction volumes continued to inspire buying interest amid low screen-based trading volumes, while German year-ahead electricity prices set a new record and natural gas prices continued to advance amid continuing uncertainty over Russian supplies.

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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

Waste not, want not – The European Commission said it had approved the German government’s €3 bln scheme to support renewable energy and waste heat-based district heating programmes, which it said would help Germany and the EU achieve their climate change targets. The €2.98 bln scheme would promote green energy by offering government grants until 2028 to new district heating networks run on at least 75% renewable energy and waste heat or to projects decarbonising existing networks. The Commission said the scheme complied with EU rules that require state aid to be “necessary and appropriate”, since, without it, new district heating facilities would likely be based on polluting fossil fuels, or such investments might not happen at all due to their high investment needs and low revenues. “With this measure, Germany will be able to increase the share of renewable energy and waste heat in the heating sector, thereby considerably decreasing its emissions,” EU competition policy chief Margrethe Vestager said in a statement. The German scheme is expected to support the installation of 681 MW of renewable heat generation capacity per year and will cover up to 40% of the eligible investment costs of projects. (EurActiv)

To plug or unplug – German consumers are swarming to shops to buy electric heaters, reports Clean Energy Wire, as fears of a true gas shortage caused by Russia’s war in Ukraine rise, raising the risk of electricity-related challenges experts said. The majority of heating and hot water systems across German households still rely largely on gas and a large-scale switch to heating with electricity could threaten the national grid’s stability. “It is like a flash mob,” said Andreas Jahn, senior associate of Regulatory Assistance Project (RAP) and expert in Germany’s electricity grid. “If they all decide to plug in at once, the system will fail in a second.” That could cause small-scale blackouts, in neighbourhoods for example, he added, as well as impact the country’s ability to export excess power to neighbouring France. Experts urged households instead to invest in heat pumps and energy efficiency measures.

Truss issues – UK Conservative party leadership candidate Liz Truss has fuelled concerns the UK’s onshore renewables sector could face further barriers to development in the coming weeks, after the frontrunner to become the next Prime Minister promised to “change the rules” to ensure farming is prioritised over new solar projects, Business Green reports. Speaking at Conservative leadership hustings, Truss also outlined her support for domestic fossil fuel extraction, promising to “exploit all the gas in the North Sea”, and reiterated her pledge to suspend “green levies” on energy bills, arguing the proposed reforms would bolster domestic energy supplies and ease the cost-of-living crisis for households. In her address to attendees at the event, the current UK foreign secretary said she would allow fracking in locations “where communities supported it” and back the maximum extraction of the UK’s offshore fossil gas resources.

ASIA PACIFIC

Nuclear option – Australian federal opposition and Liberal party leader Peter Dutton has launched a formal internal party process to explore the possibility of Australia using advanced and next-generation nuclear technologies to contribute to cutting power prices and ensuring energy security. A statement from Dutton said it was high time that Australia had an honest and informed debate on the benefits and costs of nuclear energy. This is despite a recent report from peak scientific body the CSIRO which said it “did not see any prospect” for nuclear small modular reactors (SMR) in Australia being viable this decade, due to SMR technology’s commercial immaturity and high cost, and that renewables were the cheapest form of electricity generation. In 2019 the former Coalition government held an independent inquiry into the possibility of nuclear energy in Australia which came to similar conclusions.

Not banking on gas – National Australia Bank chairman Phil Chronican says the government would need to make a compelling case for the bank to consider financing a new gas extraction project, and the country’s top priority in energy should instead be promoting renewables, The Age reports. Amid political debate about the development of new gas projects, Chronican on Monday said the world needed to use less gas to hit net-zero targets, and pointed to the risk to banks from financing projects that would continue emitting carbon for decades. NAB’s latest policy, released last year, said it would not directly lend for new oil and gas projects in Australia unless the government made the case on energy security grounds. Speaking to company directors on Monday, Chronican noted the carve-out, but added: “You’d have to have a pretty compelling argument.” Last week rival Australian bank Westpac outlined new emissions targets, and also pledged to not finance any new upstream oil or gas projects unless regulators deemed them to be justified on energy security grounds. Meanwhile the Conservation Council of Western Australia announced that it had launched a new legal challenge to Woodside’s Scarborough/Pluto LNG project on the grounds that its approval by regulators was unlawful because pollution and environmental harm from GHG emissions were not given proper consideration.

Petronas just loves CCS – Malaysian oil and gas company Petronas has signed a Memorandum of Understanding (MoU) with six South Korean companies to study the feasibility of a full value chain related to CO2 capture, transport, and storage, Offshore Energy reports. The six companies include one of the world’s largest shipbuilders Samsung Heavy Industries (SHI), construction and project management firm Samsung Engineering, as well as energy majors SK Earthon, SK Energy, GS Energy Corporation, and chemical company Lotte. Under the MoU, the companies will evaluate potential CO2 storage sites in Malaysia and explore other areas across the CCS value chain, including cross-border CO2 transportation. “The feasibility studies undertaken through this collaboration will identify suitable technologies for the CCS and transportation value chain, bringing Petronas closer towards establishing Malaysia as a leading regional CCS solutions hub,” Petronas Head of Carbon Management, Emry Hisham, said.

Market rebuild – The New Zealand government has launched a new climate partnership with Samoa, alongside funding to support the rebuild of the capital’s main market, which was destroyed by fire in 2016. A statement from Prime Minister Jacinda Ardern said NZ would provide NZ$12 mln ($7.5 mln) towards rebuilding the market, and NZ$15 mln in flexible funding to support Samoa’s response to climate change. Ardern met with Samoan leaders during a cabinet meeting, where a range of bilateral and regional priorities, including economic resilience and climate change were discussed. Ardern said NZ would work with the Samoan government to determine governance arrangements, and opportunities for future investments.

AMERICAS

Muted Manchin – US Sen. Joe Manchin (D) discussed Democrats’ $433 bln reconciliation package, now dubbed the Inflation Reduction Act (IRA), with the final holdout vote Senator Kyrsten Sinema (D). While Sinema hasn’t made her position on the bill public, Manchin told reporters Tuesday that they had a nice chat on the Senate floor. The bill would bring in hundreds of millions to fund clean energy projects, reduce GHG output, support historically excluded communities in becoming sustainable, and pursue better agricultural practices. Sinema’s vote is crucial to IRA’s outcome. (Bloomberg)

Catherine Stewart 2.0 – Canada has appointed Catherine Stewart as its new Ambassador for Climate Change, where she will promote cooperation on environmental policy around the world, a federal government press release said. Stewart will advise the Minister of Environment and was previously Canada’s chief negotiator on climate change. Canada has committed over C$5 bln to finance global climate projects. The ambassador’s term is three years.

VOLUNTARY

Prime problems – Tech giant Amazon said its carbon footprint grew 18% in 2021, as the company’s rapid growth during the pandemic overwhelmed nascent efforts to cut its contribution to the emissions warming the planet. The world’s largest online retailer emitted 71.54 Mt. Amazon disclosed on Monday in an updated edition of its sustainability report. That’s up about 40% since the company first disclosed the figure, with data from 2019. On the other hand, Amazon’s carbon intensity fell 1.9%, an indication of the company’s success in delivering products and running its warehouses, data centres and offices more efficiently. (Bloomberg)

Ratings exposure Carbon marketplace Emsurge will host ratings for voluntary carbon market offsets on its platform after striking a partnership with ratings agency BeZero, the two companies announced Tuesday. BeZero has made similar deals with several other platforms and information providers, including Xpansiv CBL, AirCarbon Exchange, Cloverly, Patch and AlliedOffsets. Its ratings represent an assessment of the likelihood that a carbon credit will remove or avoid 1 tonne of CO2 equivalent. There are seven possible ratings where AAA represents a high likelihood of avoiding or removing 1 tonne of CO2 equivalent, AA represents a moderate chance, and A represents a low chance, as well as plus and minus ratings to accompany the alphabetical grades. BeZero ratings coverage currently comprises 253 projects rated, accounting for 52% of outstanding VCM credits across 51 countries. Emsurge, part of Emstream, has been used to trade more than 5 mln tonnes of carbon credits, across spot, forward and term deals, since the platform launched in the fourth quarter of 2021.

SCIENCE & TECH

A solid idea – The world’s first ship to be powered using a solid form of hydrogen — said to be far safer and easier to store than compressed or liquid H2 — is due to go into operational trials at the Port of Amsterdam next June, Recharge reports. The Neo Orbis passenger vessel — designed to operate in Amsterdam’s canals and in the channel between the city and the North Sea — will be powered by hydrogen released from a salt called sodium borohydride (NaBH4). This solid chemical is mixed with pure water and a stabiliser to form a non-combustible liquid fuel, with the dissolved NaBH4 then reacting with a catalyst to release hydrogen, which is then used to drive a fuel cell. The Neo Orbis will be built by Dutch shipbuilder Next Generation Shipyards after it won a competitive tender from the Port of Amsterdam and H2Ships project, which is co-funded by the EU. “The major advantage of this hydrogen carrier is its high energy density and that it can be bunkered safely in many places,” said Interreg North West Europe, an organisation sponsoring the H2Ships project. “The ship will pave the way for the scaling-up of this technology for inland and short-sea shipping.”

AND FINALLY…

Whiskey honour – Researchers have found a solution to prevent the Chivas Brothers’ Speyside whiskey distillery from closing during try periods – an occurrence increasingly common with the onset of climate change. Researchers from the University of Aberdeen and James Hutton Institute have worked with The Glenlivet distillery to build small dams in the landscape supplying the distillery, designed to capture water during wet periods and to make this available when water is scarce. As a result of last month’s heatwave, many distilleries have had to temporarily stop distilling because of water shortages, costing the industry millions. During the dry summer of 2018 groundwater supplies to The Glenlivet distillery decreased and did not replenish until the following spring. The project was led by PhD student Jessica Fennell, who has had a special ‘Fennell Reserve’ whisky created by The Glenlivet in her honour. (University of Aberdeen News)

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