CP Daily: Friday August 26, 2022

Published 23:14 on August 26, 2022  /  Last updated at 23:14 on August 26, 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: Higher coal burn to mute ETS impact of industrial demand destruction

Analysts told Carbon Pulse that higher coal burn will keep support for EUA prices despite a rising number of industrial shutdowns across Europe due to fresh record highs across power and gas markets that will dent demand for emissions allowances.

ASIA PACIFIC

Japan signs carbon trading partnership deals with Senegal, Tunisia

Senegal and Tunisia have signed up to Japan’s Joint Crediting Mechanism (JCM), with a view to begin generating carbon credits aligned with regulations under the Paris Agreement.

Thailand signs MoU with Verra to align domestic carbon market with global standards

The Thailand Greenhouse Gas Management Organisation (TGO) has signed a Memorandum of Understanding (MoU) with offset standard developer and manager Verra to support the implementation of the Southeast Asian country’s voluntary emissions reduction programme, known as T-VER.

CN Markets: CEA trading volume sinks below 100k mark, market outlook still shrouded in policy uncertainty

Weekly trading volume in China’s national emissions market fell below 100,000 units over the past week, as the lack of policy direction continues to mute trading activity.

Australia Market Roundup: Govt announces biodiversity credit scheme, as ACCU issuances tail off

Australia will introduce a biodiversity crediting scheme which will operate in parallel with the nation’s carbon offset market, Prime Minister Anthony Albanese announced Friday, as minting of new Australian Carbon Credit Units (ACCUs) came off from recent lofty levels.

Australian power and gas player Origin sets 2050 net zero target, excludes upstream gas assets

Australian power and gas company Origin Energy has set a new target to reach net zero Scope 1-3 emissions by 2050, as well as raised its short and medium term emissions targets for 2023 and 2030, as it released its first climate change transition action plan (CTAP) on Friday.

Sarawak forest carbon rules must adhere to international guidelines, official says

The Malaysian state of Sarawak’s forthcoming framework for generating offsets from forest carbon activities must learn from international examples as well as comply with standards that are set globally, the region’s premier, Tan Sri Abang Johari Openg, said on Friday.

VOLUNTARY

Offset issuance slump seen helping lift voluntary carbon market prices

Primary supply in the voluntary carbon market (VCM) has continued to thin this month amid ongoing backlogs at key registries, helping lift offset prices from the bear market earlier in the summer.

US real estate company commits $5 mln to smallholder forestry VER programme

A New York-based logistics real estate firm on Thursday announced a nearly $5 million investment into a nascent forest carbon offset programme for small landowners, a move expected to generate hundreds of thousands of VERs.

Veteran offset developer ties up with blockchain marketplace to underline Web3 influence

A veteran project developer has teamed up with a blockchain marketplace to underline the ongoing inroads of decentralised finance and digitalisation in the voluntary carbon market (VCM) that threatens to undermine traditional intermediaries.

Finland to draw up offset guidelines in effort to boost VCM integrity

A project financed by Finland’s environment and land use ministries is drawing up guidelines for those accessing carbon offsetting services and will aim to publish a final set of rules in January 2023.

Ratings firm puts nine forest carbon projects on watch for potential ratings change

A carbon credit rating agency put nine projects ‘on watch’ for a potential change in their gradings on Friday, identifying several ACR-certified US activities and Cambodian REDD projects.

EMEA

Euro Markets: EUAs post late gains to trim weekly loss as German power nears €1000/MWh

European carbon traded sideways for most of Friday, before making a late rally to trim the weekly loss to 7.9% as market participants complained of a lack of direction, even as energy prices continued to race to new records as Europe faced the prospect of energy shortfalls this winter.

AMERICAS

Producers add length, while speculators reduce holdings across CCA, RGGI markets

Compliance entities across both the WCI and RGGI cap-and-trade markets increased their California Carbon Allowance (CCA) and RGGI Allowance (RGA) holdings this week, while managed money shed length in tandem across both markets, according to US Commodity Futures Trading Commission (CFTC) data published Friday.

COMMENT

Climate-positive agriculture: building a self-sustaining carbon sequestration ecosystem

Through working with recognised carbon certification organisations, as well as investing in the development of new and more effective protocols, we can accelerate the move towards climate-positive agriculture and champion farmers as key participants in the climate change solution, argues Mike Frank of agrochemical firm UPL.

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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

AC limits – Spain’s parliament approved the minority government’s energy-saving rules which include limits on air conditioning use as part of an EU-wide effort to reduce reliance on Russian gas, Euractiv reports. Lawmakers voted 187 to 161 in favour of the decree, which came into effect on Aug. 10 but needed the green light of the assembly to remain in force. Under the government decree, air conditioning must be turned down and set at no lower than 27C during the warmest months of the year. The new rules do not apply to home air conditioning, although people are encouraged to consume less energy domestically. The legislation also affects heating in winter, when temperatures can be set no higher than 19C. The decree also requires that from 2200 shops and public buildings switch off window-display lighting. By the end of September, any air conditioned or heated premises must have an automatic door-closing mechanism installed to avoid energy waste.

Unbearable pressure – Energy prices in the UK will increase by over 80% for the average household, after energy regulator Ofgem on Friday announced the price cap will rise to £3,549 per year, from £1,971, on October 1, Politico reported. The new cap sets the maximum price energy providers can charge per unit of fuel between October and December, and reflects what it costs to buy energy on the wholesale market and supply it to households. Ofgem’s CEO Jonathan Brearley said he expected the price cap will rise again after this period, compounding the cost-of-living pressures facing UK households. Speaking on the BBC’s Today program minutes after the Ofgem announcement, Brearley said: “We accept there is significant pricing pressure, not only from today, but also through January and potentially into next year.” He would not indicate the extent to which prices are likely to continue jumping, saying: “What we don’t do is give figures, because things changed massively.”

Not my priority – African leaders are heading for the Netherlands next month seeking delivery on promised cash to help them cope with the destructive forces of climate change, but their European counterparts largely plan to skip the meeting, Politico reported.  Dutch Prime Minister Mark Rutte — whose partly below-sea-level country prides itself on engineering that secures its existence and also hosts the Global Centre on Adaptation (GCA) where the meeting will take place — is the only European leader planning to attend in person. The summit is the first major test of the developed world’s commitment, made at the most recent UN climate summit in Glasgow last November, to double its financial support for climate-proofing projects in poorer countries to roughly $40 bln per year by 2025, although the exact number is disputed.

Save gas importers first –  The German government will revisit the recently adopted regulation to introduce a levy to help gas importers affected by supply cuts from Russia, amid growing criticism about well-off companies pocketing gas consumer money, reports Die Welt. The government introduced the levy for gas consumers to help importers avoid bankruptcies and prevent large-scale distortions in the market. The levy is intended to pay for the extra costs that importers have to bear – due to the curtailment of Russian supplies – for the short-term and expensive procurement of alternative gas.

Sizing up nukes – The UK government will announce its financial commitment for EDF’s new 3.2-GW Sizewell C nuclear plant next week as the country attempts to boost its long-term energy security, Bloomberg reported, citing three anonymous sources familiar with the plans. A final investment decision, including whether the UK will take a 20% stake in the project, will be made early next year, the people said. The plant, which will also be part-owned by EDF, had an estimated price-tag of £20 bln at the start of the year, since when raw material costs have surged.

ASIA PACIFIC

New exchange – Shanghai is to explore the potential of building a national hydrogen exchange in the coming years, as part of its effort to create a new industrial cluster for renewable energy, according to a work plan issued by the megacity’s Development and Reform Commission. The city will work on the research of related standards and methodologies, and connect the emerging industry with the voluntary carbon market, the filing said. Shanghai also plans to construct several ports and storage facilities to support hydrogen transportation, aiming to transform the Lin-Gang Special Area into an international trading hub, the work plan showed.

Showing support –  The People’s Bank of China has announced a ministerial-level plan to support the development of Chongqing’s green finance pilot zone, with a wide range of targets including carbon market initiatives, according to a government filing released Thursday. The pilot zone will develop natural-based carbon sink projects, explore the potential of carbon-related financing services, and study the possibility of introducing an auction scheme for emissions allowances, the filing showed. The plan was jointly published by the central bank and four other government bodies, including China’s environment ministry and two major financial regulators.

AMERICAS

Challenge accepted – Canadian environment minister Stephen Guilbeault on Friday announced the launch of the Net Zero Challenge, a new national voluntary initiative where companies commit to developing and implementing credible and effective plans to transition their facilities and operations to net zero emissions by 2050. The 12 founding members of the initiative include oil major Shell, the Cement Association of Canada, Woodfibre LNG, and four airport authorities from major Canadian cities.

AND FINALLY…

Sweat home, Chicago – Dangerously hot days will occur at least three times more frequently as climate change drives up temperatures, a study published in Communications Earth & Environment finds. Earth’s mid-latitudes will see a three- to ten-fold increase in days with a heat index of 39C if global temperatures increase 2C — the less ambitious goal set out in the Paris Agreement. The tropics could fare even worse, experiencing a heat index of 39C “during most days of each typical year” by 2100. All of these probabilities mean Chicago, which hit a heat index of 39C just four times between 1979 and 1998, would be hitting that dangerous threshold 11 times every year by the end of this century. (Climate Nexus)

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