CP Daily: Friday August 19th, 2022

Published 23:44 on August 19, 2022  /  Last updated at 23:51 on August 19, 2022  /  Newsletter  /  No Comments

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

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TOP STORY

Huge REDD project plans to slash carbon credit issuance rate amid wider market revamp

One of the world’s largest REDD+ tropical forest protection projects is set to slash its annual crediting allocation by a third, a move that could foreshadow cuts to issuance rates across similar initiatives worldwide as they integrate into jurisdiction-wide programmes amid criticism of ongoing over-crediting.

EMEA

Euro Markets: EUAs and UKAs set new highs, closing in on triple-digits amid energy-driven buying

EUAs reached a new record high on Friday, extending gains for a ninth session for a 10% weekly rise after one of the strongest auctions this year, while UKAs also broke new ground near £100 and energy markets continued rising amid emerging discussion on whether German industry can stay competitive.

EUAs set new record amid utility buying, while UKAs also set new marker

EU carbon prices set a new record on Friday as sustained buying interest amid thin volumes drove prices closer to €100, taking strength from energy markets that have risen four-fold since the start of the year, while UK allowances also recorded a new all-time high.

Brussels approves plans by four EU states to compensate industry for indirect ETS costs

The European Commission on Friday approved plans by four EU member states including Germany to compensate their ETS-covered industries for indirect costs caused by power producers passing on the cost of paying for their carbon allowances.

AMERICAS

Pennsylvania removes allowances from Q3 RGGI auction

Pennsylvania on Friday withdrew its allowances from the September RGGI auction after a court did not rule on a request in time to temporarily lift an injunction against the state’s power sector cap-and-trade rulemaking.

WCI allowance surplus to increase by over 25% in 2030 on steeper fuel sector abatement

The 2030 allowance surplus in the WCI-linked cap-and-trade system will rise due to greater renewable diesel penetration and zero-emissions vehicle uptake in California, analysts said in recent report.

Speculators build CCA position before Q3 auction, emitters’ holdings inch lower

Financial players continued adding to their California Carbon Allowance (CCA) holdings this week ahead of the Q3 WCI auction, while regulated entities shortened their positions, according to US Commodity Futures Trading Commission (CFTC) data published Friday.

Nova Scotia premier rebuffs federal CO2 price in climate plan submission

Nova Scotia Progressive Conservative (PC) Premier Tim Houston on Thursday submitted an emissions reduction plan to Ottawa that does not contain any form of carbon pricing, while the future of the province’s cap-and-trade system remains uncertain.

ASIA PACIFIC

New Zealand releases strategy spending NZ$1.3 bln in climate finance

The New Zealand government has outlined how it will spend its NZ$1.3 billion ($830 mln) in international climate finance, in a new strategy it says could potentially help pave the way for developing nations to set up carbon market mechanisms.

Australian regulator flags tree growth checks for regenerative projects as priority issue

Australia’s Clean Energy Regulator has given priority status to so-called “regeneration checks” in its compliance and enforcement procedures, it announced Friday.

Australian offset developer rolls out APAC expansion plans

An Australia carbon offset developer is establishing offices in regional hotspots across the Asia-Pacific, eyeing potential new business opportunities across a range of markets and project types.

China prepares to launch unified emissions data accounting system

China’s National Development and Reform Commission (NDRC) on Friday released a plan to develop and launch a unified emissions data measurement and accounting system, a move that would enhance data quality and bolster the credibility of the ETS while also aiding climate policy making and international negotiations.

CN Markets: CEAs rigid again, as regulatory uncertainty drags on

The allowance price in China’s carbon market has remained unchanged for more than one week with shrinking trading volume, as the still-unclear market outlook due to the lack of policy directions continues to mute market activity.

VOLUNTARY

Frontier announces second carbon removal purchase cycle

Frontier has announced a second request for proposals for the funding of global carbon removal projects, with DAC, synthetic biology, and ocean alkalinity enhancement schemes among its priorities in this round.

COMMENT

Same old August…. or is it?

European carbon prices have followed their now-traditional course in August by rising on the back of the 50% reduction in auction volumes. This has happened every year since 2008 – with one exception – and is pretty much baked in to trading strategy, writes Alessandro Vitelli.

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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

Industry risk – Europe’s industrial heartland faces a potential exodus as manufacturers of German car parts, chemicals and steel struggle to absorb power prices that rocket to new highs almost every day, Bloomberg reports. The publication quoted the CEO of BIW Isolierstoffe, a maker of silicone parts for the auto, aerospace, and appliance industries, citing fears de-industrialisation of the German economy. Evonik Industries, the world’s second-largest chemical producer with plants in 27 countries, said it is substituting as much as 40% of its German gas volumes with liquefied petroleum gas and coal, and passing some higher costs on to customers but believes the notion of relocating is a nonstarter. Europe’s largest copper producer Aurubis aims to minimize gas use and pass on power costs to customers, while sugar giant Suedzucker devised emergency energy plans in the event Russia completely cuts off gas supply to Germany. Read Carbon Pulse’s report on how EU industry is switching away from gas.

ASIA PACIFIC

Carbon tax, maybe – The Philippines’ department of finance (DOF) is studying the viability of imposing a carbon tax in a bid to generate much-needed revenues and address environmental concerns, Philstar reports. On the sidelines of the Economic Journalists Association of the Philippines-San Miguel Corp. economic forum yesterday, Finance Undersecretary Zeno Ronald Abenoja said the DOF has partnered with an international organisation to look at carbon taxation, reported to be UN agency UNOPS. Finance Secretary Benjamin Diokno has said that a carbon tax is one of the measures that the administration may consider “if feasible”.

Ammonia blend – Japanese engineering company IHI will introduce ammonia at a coal-fired power station in India, providing a potential way to lower carbon emissions, Nikkei Asia reports. The project, a partnership with Adani Power, will modify a facility to take up to 20% ammonia fuel mix, with plans to gradually transition to ammonia, which generates no carbon emissions when burned.

Here comes the sun – The developers behind the Sunshine Hydro pumped hydro renewable energy project in Australia have this week partnered with the Gidarjil Development Corporation and Burnett Mary Regional Group (BMRG) to help in the development of the mammoth project, Renew Economy reports. Sunshine Hydro and its partner Energy Estate unveiled the “world first” super-hybrid green hydrogen project earlier this year, which has been valued at up to A$5.5 billion and will combine as much as 1.8 GW of new wind generation and 600 MW of pumped hydro with 18 hours of storage. The project, dubbed the Flavian super hybrid project, will also provide power to 300 MW of hydrogen electrolysers, 50 MW of liquefaction, and a 50 MW hydrogen fuel cells, and would have the capacity to produce 65 tonnes of green hydrogen a day.

AMERICAS

Carbon-free spree – The US is now on track to source 62% of its electricity from carbon-free sources by 2040 thanks to recent state policy developments and the rising cost of fossil fuels, especially natural gas, according to a second-quarter briefing by S&P Global Commodity Insights. Although coal will see some short-term gains as a result of rising gas prices, wind will come to dominate new generation additions by 2030, the analysts said Thursday. However, it remains to be seen which emerging generation resources will most benefit from the newly passed Inflation Reduction Act. (Utility Dive)

Blue ammonia – CF Industries Holdings announced it is evaluating a site in Ascension Parish for construction of a proposed $2 bln blue ammonia production facility, Louisiana’s governor, John Bel Edwards, announced in a press release. The proposed export-oriented facility would be developed jointly by CF Industries and Mitsui. By employing carbon capture and sequestration, the ammonia production process would result in significantly lower carbon emissions than conventional ammonia processes, qualifying it as a “blue” process. CF Industries and Mitsui expect to begin a front-end engineering design (FEED) study once the site and technology provider for the new plant are finalized. A FEED study typically takes 9-12 months from the start date to complete. A final investment decision by the companies is expected to occur in 2023. Construction and commissioning of a new world-scale capacity ammonia plant typically takes approximately four years from that point.

AND FINALLY… 

If the world went Dutch – The Netherlands is famous for many things but perhaps nothing is so uniquely Dutch as their embrace of the humble bicycle. And if the whole world biked as much as they do in the Netherlands, over 680 MtCO2e could be avoided every year, more than the annual emissions of Germany, according to a study published in the journal Communications Earth & Environment. In most countries, bikes accounted for less than 5% of all trips, the study found. In the Netherlands more than one in four trips were made on bicycles and the Dutch cycle an average of 2.6 km per day.

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