CP Daily: Tuesday September 6, 2022

Published 04:25 on September 7, 2022  /  Last updated at 04:25 on September 7, 2022  /  Conversations, Newsletter  /  No Comments

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

Just over a month until Carbon Forward 2022 – Europe’s leading environmental markets conference. Taking place in London and online from Oct. 12-14, don’t miss the chance to hear about the risks and opportunities presented by the world’s largest carbon markets – compliance and voluntary. Or come network with your industry peers and meet our sponsors and exhibitors.

Early Bird discounted tickets available until Sep. 12. Register Now!

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TOP STORY

Mexican ETS to begin operational phase in 2023 with 100% free allocation

The Mexican Emissions Trading Scheme will kick off next year by freely distributing all allowances before reducing this over time, while the government still needs to determine the programme’s auction mechanism and offset protocols, a conference heard Tuesday.

ASIA PACIFIC

New Zealand auction clears below expectations

New Zealand’s quarterly carbon auction held on Wednesday cleared below the secondary market price as bid levels and participation were lower than expected.

PREVIEW: Market sees upside potential at NZU auction despite prices already at record highs

New Zealand carbon allowances on Tuesday closed at their highest ever level, but market participants still think there is further upside and that Wednesday’s government sale of 4.825 million NZUs might clear even higher.

Japan signs deals to trade carbon credits under Paris Agreement with Azerbaijan, Moldova

Azerbaijan and Moldova have become the latest nations to sign up to Japan’s Joint Crediting Mechanism (JCM), with the aim of generating carbon credits that can go towards all three countries’ emissions targets under the Paris Agreement.

Chinese freight platform to build industry-wide carbon emissions and offsetting option

China’s leading digital freight platform has teamed up with a special trade zone in Tianjin province to build the country’s first carbon offsetting programme exclusively for the road freight field.

Global carbon offset developer forms separate agriculture business

A Sydney-headquartered forestry and carbon offset company has set up a subsidiary that will specifically manage and develop agricultural assets, initially in Australia and New Zealand.

Australian landfill gas operators say they earn too many carbon credits -media

Several landfill companies in Australia say they receive carbon credits for activities they would have done anyway, and that they receive too many offsets even for their additional activities, according to national media.

AMERICAS

PREVIEW: With speculators sidelined, emitters to set tone for Q3 RGGI auction

Traders largely believe the September RGGI auction will break a streak of six straight record settlements, given steady secondary market purchases from compliance entities, global market weakness, and clarity on Virginia’s planned exit from the programme as factors that could influence the clearing price.

EMEA

Liz Truss points to energy cost relief in first major initiative as new UK PM

Liz Truss officially became British prime minister after meeting with the nation’s Queen on Tuesday, going on to deliver her first speech in the new role that pointed to a policy package to be released later in the week to address spiralling energy bills.

Euro Markets: EUAs drop for a third day as ministers eye up more carbon sales

EUAs posted a third day of losses to reach a new six-month low on Tuesday as sentiment continued to weaken as ministers prepare to discuss selling more permits to raise funds to assist the transition away from Russian fuels, while energy also gave up some of Monday’s gains as traders appeared reassured by supply-boosting efforts.

UK bumps up 2022 carbon allowance auction supply

The British government has added a further 803,500 tonnes to 2022 carbon allowance auction supply under the UK ETS, it announced late Tuesday.

VOLUNTARY

Tokenised voluntary carbon credits trading 70% cheaper than OTC -analysis

Carbon credits trading in the voluntary market, largely from renewable energy projects with vintages from 2008-15, are trading at huge discounts as tokens on blockchain compared to the traditional over-the-counter market, according to analysis published on Tuesday.

G7 corporate climate pledges fall far short of Paris goals -study

The climate pledges of companies based in G7 countries are only consistent with a 2.7C global warming trajectory, way off the 1.5-2C Paris Agreement pathway despite wide regional differences, according to a study published on Tuesday.

Firms to launch insurance product for ‘risky’ voluntary carbon market

An insurance product for the voluntary carbon market (VCM) has been launched to cover the risk of third-party negligence and fraud by project developers and auditors, including whether the offset credit removes or avoids a tonne of CO2.

Online carbon marketplace startup raises another €4.2 mln from investors

A nascent, Berlin-headquartered carbon trading platform has raised a further €4.2 million in fresh funding.

SHIPPING

Shipping coalition seeks to cut methane emissions with new initiative

A coalition of shipping industry players including oil major Shell and container firm MSC has launched an initiative to seek out solutions for the maritime industry to measure and mitigate methane emissions, it announced Tuesday.

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CONFERENCE

Just over a month until Carbon Forward 2022 – Europe’s leading environmental markets conference. Taking place in London and online from Oct. 12-14, don’t miss the chance to hear about the risks and opportunities presented by the world’s largest carbon markets – compliance and voluntary. Or come network with your industry peers and meet our sponsors and exhibitors. Early Bird discounted tickets available until Sep. 12. Register Now!

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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

Testing, testing – The response to Gabon’s planned release of a record 90 mln credits onto the voluntary carbon market will be a gauge of how seriously developed economies are taking their commitments ahead of the COP27 climate summit in November, the country’s environment minister said. Gabon, the world’s second-most forested nation, is working with the UN’s REDD+ mechanism to create the credits, which Lee White, the central African country’s environment minister, expects to be ready by early October. “Much of Africa is looking at this sale as a litmus test” of whether rich countries and companies are willing to pay developing nations a fair amount to preserve their carbon-absorbing forests, White told Bloomberg at the Africa Adaptation Summit in Rotterdam on Tuesday. Decision-makers in Gabon are trying to find a way to preserve its carbon-absorbing forest while diversifying its economy away from oil, demand for which is expected to plunge in coming decades at the same time as its own resources of the fossil fuel run down. The credits have been generated based on the country claiming to have reduced emissions from deforestation and forest degradation from 2010 to 2018 compared to a 2009 baseline. They will be marketed by the country’s sovereign wealth fund and sold via a new platform, redd.plus, which is a collaboration between IHS Markit, CBL, and the Coalition for Rainforest Nations. Similar credits are selling on that platform for about $16/tonne and “we have offers above that,” as high as $30, White said. White previously told Bloomberg he won’t accept less than $15 per credit.  Separately, Climate Home reported that while three African presidents flew to the Netherlands for the Summit, only Dutch PM Mark Rutte was there to meet with them. Senegal’s president Macky Sall said: “I cannot help but note, with some bitterness, the absence of leaders from the industrial world. I think if we made the effort to leave Africa to come to Rotterdam, it would be easier for the Europeans and others to be here.” Ghana’s president Nana Akufo-Addo associated himself with Sall’s sentiments, while the Democratic Republic of Congo’s Felix Tshisekedi said “it is my turn to also deplore the absence of leaders of industrialised nations” and Ethiopia’s president Sahle-Work Zewde, speaking by video link, echoed those criticisms.

EMEA

Carbon debt – The EU should consider carbon emissions and defense expenditure part of debt calculations as the bloc discusses easing budgetary rules, Thierry Breton, commissioner for industry, said according to the prepared text of a speech Monday at the Eindhoven University of Technology. He said that “the real whole picture of debt” is quite different if pollution and investments made in national armies are factored in. EU finance ministers meeting in Prague later this week will discuss a review of the Stability and Growth Pact, the EU’s fiscal rules that limit national spending, ahead of a proposal from the European Commission expected this autumn to reform the framework. (Bloomberg)

Italy’s gas curbs – Italy is targeting a reduction in natural gas consumption through the winter season by increasing the use of coal, turning down heating across the country, and pushing to change citizens’ habits, according to a document circulated by the ministry for ecological transition, Bloomberg reported. As the country faces the prospect of paying twice as much for energy imports as it did a year ago, outgoing Prime Minister Mario Draghi has outlined a new savings plan.

On the edge of the crisis – Germany’s fears that soaring power and gas prices could trigger a deeper crisis is starting to get real, Bloomberg reported. Several hundred local utilities are coming under strain and need support, according to the head of Germany’s largest energy lobby group. The companies, generally owned by municipalities, supply households and small businesses directly and are a key part of the country’s power and gas network. To the West, edie reports that UK manufacturers are calling for immediate policy support from government to help combat rising electricity bills, with some 60% stating that expected cost increases are “business threatening”. Make UK, the manufacturer’s association, polled its members on how they are dealing with the energy cost crisis. It found that 42% of manufacturers have seen their electricity bills increase by 100% in the last year, while 32% have seen gas prices increase by more than 100% in the same period. Worryingly, more than half of businesses expect these costs to increase by a further 100% over the next 12 months. As such, 60% claim that the cost crisis is threatening the very existence of their business. Already, 12% of manufacturers have had to make job cuts as a direct result of increased energy bills and if bills continue to rise at their expected rates, many manufacturers will have to turn to more redundancies and site shutdowns to survive.

Greek state aid – The European Commission has approved, under EU State aid rules, a Greek measure with an estimated budget of €341 million to support the construction and operation of storage facilities in the electricity system. The measure will be partly funded by the Recovery and Resilience Facility (‘RRF’), following the Commission’s positive assessment of the Greek Recovery and Resilience Plan and its adoption by the Council. (European Commission)

Indian cooperation – Commissioner for Energy, Kadri Simson, will be in New Delhi, India on Wednesday and Thursday, 7-8 September, to strengthen the EU’s cooperation with the country in the field of renewable energy. On Wednesday, Commissioner Simson will participate in an event on EU-India cooperation in the area of solar energy with Inidia’s Minister of State for New and Renewable Energy and Chemical and Fertilizer, Bhagwath Khuba.

ASIA PACIFIC

New project – The government of Cambodia is exploring the possibility of launching a REDD+ project in the Lumphat Wildlife Sanctuary, which is likely to generate 160,000 offsets per year, Khmer Times reports. The environmental ministry has assigned NatureLife Cambodia, a local NGO, to study the process of selling carbon credits generated from around 150,000 hectares of the sanctuary, according to the report. Proceeds from the sale will be distributed to local communities to help protect and conserve national resources and wildlife, the report said, citing a government official.

AMERICAS

West Texas crypto – High electricity prices have hit bitcoin mining operations across Texas, hurting profitability, and encouraging the sector to demand higher renewable uptake in a state famous for its oil. One operation in Fort Stockton will rely increasingly on wind power, drawing enough electricity to keep the lights on in 60,000 homes. The sheer scale of energy use by bitcoin mining has cast doubt on its branding as a low-carbon facility. (Reuters)

VOLUNTARY

DAC stack – PwC Switzerland has signed a nine-year carbon removal contract with Swiss direct air capture firm Climeworks, which will help the auditing and consulting firm to remove part of its unavoidable emissions on the way to its 2030 net zero goal. Read Carbon Pulse’s latest on how Climeworks has signed a string of multi-year agreements with firms for high-cost removals credits from the firm’s growing portfolio.

AND FINALLY…

Fighting (more) fires – The EU and its member states have agreed to speed up plans to establish an EU fleet of firefighting aircraft, after rampaging wildfires across Europe this summer exhausted the bloc’s capacity to respond. They agreed to explore an advanced purchase of EU-funded helicopters dependent on funding from the bloc’s 2023 budget, having already planned to procure a fleet of crisis-response aircraft to cope with increasing climate-fuelled emergencies, but production was not expected until the second half of the decade. (Reuters)

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