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Right-leaning European parliamentarians are circulating an idea to auction €30 billion worth of MSR-held and other carbon allowances over 18 months, rather than the four-year stretch for raising €20 bln proposed by Brussels’ RePowerEU initiative, two well-placed sources have told Carbon Pulse, added supply that could amplify bearish market pressure.
Leaked draft shows EU states seek opt-outs to windfall levies, as nations mull alternatives to MSR sales
EU nations are seeking opt-outs to a mandatory revenue cap for non-gas power producers, according to a leaked draft seen by Carbon Pulse on Tuesday, while Bloomberg reported that ministers were still considering alternative ETS auction revenues to fund the RePowerEU plan.
Blocking EU ETS access for financials risks reducing liquidity, raising costs for industrials -industry groups
A coalition of eight European business associations has called on the EU not to limit participation in the bloc’s emissions market, saying that blocking financial institutions from trading EUAs would reduce liquidity, raise the risk of auctions failing and raise costs for industrial companies.
EUA prices shook off the bearish implications of the prospect of boosted near-term allowance sales to end Tuesday little changed, after a better-than-average auction triggered some short covering, while energy markets reversed early losses as the Germany advanced plans to nationalise gas supplier Uniper.
The EU plans to increase the ambition of its nationally-determined contribution (NDC) to the UN Paris Agreement by a “few percentage points” in light of its ongoing work to strengthen domestic climate policies, Reuters reported on Monday, citing a draft document.
Member states risk weakening the EU ETS with their proposals on how to bring shipping into the scheme, and in the process could reduce the industry’s compliance costs by as much as €20 billion, an environmental NGO has warned.
Papua New Guinea has launched its first biodiversity and climate fund and is calling for project submissions that focus on biodiversity protection, climate change resilience, and nature-based solutions.
Guangzhou, the capital of China’s Guangdong province, has announced a new plan to encourage the development of green finance by incorporating companies’ carbon ledgers into existing credit information platforms, a move considered to help improve data integrity and transparency in the sector.
Shanxi has become the latest Chinese jurisdiction to launch a so-called “inclusive” small-scale offset scheme, aiming to drive lifestyle changes that can cut carbon emissions from individuals.
An analysis firm has cautioned that one of the proposed designs of the Australian government’s reformed Safeguard Mechanism is fundamentally flawed, and could lead to the country missing its climate targets if it was used.
The most polluting facilities covered under Australia’s Safeguard Mechanism should not be given special regulatory treatment, according to an environmental group, instead calling for the government to offer strictly limited technology investments as part of a broader shakeup of the scheme.
A major New Zealand dairy company has completed the first phase of its off-farm decarbonisation strategy, as the head of the Climate Change Commission (CCC) urges businesses to focus on cutting gross emissions reductions, rather than relying on offsets.
Australian iron ore producer Fortescue Metals Group (FMG) will spend $6.2 billion by 2030 to eliminate its fossil fuel consumption and reach “real zero” emissions across all its iron ore operations, the company announced on Tuesday.
Compliance carbon markets have only had mixed success in reducing emissions, as insufficient price levels, uncertainty over cap-setting, and loopholes mitigate their effectiveness, according to a report released Tuesday.
The appointed body overseeing the UN’s new carbon crediting mechanism began its second-ever meeting on Monday, with limited time remaining to shape recommendations before the Egypt COP27 UN climate talks this November, including on fee levels related to project registration and credit issuance.
Faltering international collaboration threatens to undermine action to tackle climate change and could delay the achievement of net zero emissions by decades, the International Energy Agency (IEA) warned in a report released on Tuesday.
Venture capital investment in carbon capture start-ups hit a record high in the second quarter of 2022, reflecting growing interest in carbon removal that is likely to continue given a more conducive policy environment for the technology, especially in the US, researchers have found.
A dearth of REDD recent-vintage issuance coupled with news of a slight year-on-year increase in offset retirement levels helped push up nature offset prices over the week, although liquidity remained thin.
A major auditor has validated a methodology for permanent carbon removal through direct air capture (DAC) and underground mineralisation storage, paving the way for using carbon finance to scale up the nascent and costly technology.
US software giant Salesforce launched its Net Zero Marketplace on Tuesday, offering carbon credits vetted by third party ratings agencies while also announcing its inaugural providers and other partners.
A US-based conservation organisation on Monday announced it has gained funds from President Joe Biden’s administration to help extend the reach of its forest carbon offset programme for small landowners.
Aon on Tuesday announced plans to become the first major insurance provider to partner with a project financier to help de-risk nature-based projects vulnerable to fire and other perils.
A Danish startup this week unveiled a data-driven model to significantly fast-track voluntary carbon credit issuances.
New York City’s plan to rapidly slash emissions from its buildings will not include a cap-and-trade option, even as a study required by the Big Apple’s climate law showed benefits of adopting such a mechanism, according to municipal government documents.
California Low Carbon Fuel Standard (LCFS) credit values declined to a five-year low on Monday afternoon before swiftly rebounding, although sell-side pressure continues to influence the clean fuels market.
The world’s second largest aircraft leasing firm will start offering its airline customers carbon credits in its leasing contracts and plans an initial $53.3 million investment to source carbon credits from cookstove projects.
Job listings this week
- *Executive Director, Climate Warehouse/International Emissions Trading Association (IETA) – Singapore
- *Technical Director, Climate Warehouse/International Emissions Trading Association (IETA) – Singapore/remote
- *Multiple Carbon Project Officers, NatureCo – APAC, AFRICA, LATAM
- *Carbon Procurement Manager, KliK – Zurich
- National Lead, Carbon Asset Management, Sumitomo Forestry Australia – Melbourne
- NBS Technical Manager, Shell – Europe
- Technical Climate Policy Analyst, Wildlife Works – Burlington, VT
- Senior Analyst, Carbon Offsets and Voluntary Markets, Wood Mackenzie – Flexible EMEA (London, Edinburgh, Madrid, Amsterdam, Aarhus, Hamburg)
- Analyst, Refineries and Petrochemicals Emissions, Wood Mackenzie – Flexible EMEA (London, Edinburgh, Madrid, Amsterdam, Aarhus, Hamburg)
- Research Analyst, Greenhouse Gases, Wood Mackenzie – India
Or click here to see all listings
Less than a month to go 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. In-person passes are limited and going fast, so Register Now!
BITE-SIZED UPDATES FROM AROUND THE WORLD
Field work – Burning the world’s proven reserves of fossil fuels would emit more planet-heating emissions than have occurred since the industrial revolution, easily blowing the remaining carbon budget before societies are subjected to catastrophic global heating, according to an analysis by NGOs Carbon Tracker and Global Energy Monitor. An enormous 3.5 trillion tonnes of GHG emissions will be emitted if governments allow identified reserves of coal, oil and gas to be extracted and used, according to what has been described as the first public database of fossil fuel production. (The Guardian)
Gore vs. Malpass – Former US Vice-President Al Gore on Tuesday called for an overhaul of the World Bank’s leadership, lamenting that the institution is not doing enough to finance clean-energy projects in poor nations. “We have to take the top layers of risk off the access to capital in these developing countries,” Gore said at a climate event hosted by The New York Times at New York Climate Week. “That’s the job of the World Bank – to coordinate the other multilateral development banks – and they’re simply not doing it.” “We need to get rid of that leadership” and “put new leadership in”, he said, explicitly calling on President Joe Biden to make the change. It “is ridiculous to have a climate denier as the head of the World Bank”, he said. World Bank president David Malpass dismissed criticism of the organisation’s climate work, calling it “unfounded”, and took a swipe at Gore: “He may present as a climate person. I don’t know what impact that’s having.” In an e-mailed statement, the World Bank said it “is the largest multilateral funder of climate investments in developing countries”. However, pressed several times whether he accepted the science that man-made emissions from the burning of fossil fuels are dangerously warming the planet, Malpass said: “I don’t know. I’m not a scientist.” (Bloomberg)
Free pass – The US may be able to avoid the EU’s carbon border adjustment mechanism (CBAM), the bloc’s climate boss said Tuesday. The 27-country EU is negotiating a plan to introduce the world’s first carbon border levy from 2026, forcing companies importing into the bloc to pay GHG costs at the border on certain polluting products such as steel, cement, and aluminium. The levy would apply to goods from countries with weaker climate policies than the EU’s, although the bloc has said some countries could be exempted if they have a domestic CO2 price akin to the one European firms pay under the EU ETS. In particular, Frans Timmermans said the world’s largest economy could be granted this opt-out, Reuters reports. “If the United States has the same trajectory as we have in terms of emission reduction, then … the ‘carbon club’ is on the table. Because that means that the carbon footprint of a ton of steel in the US is comparable to the carbon footprint of a ton of steel in Europe – then you don’t need a carbon border adjustment mechanism,” Timmermans said. “This is probably not going to apply with other major trading partners. But between the EU and US, I don’t fear that … I think we’re still in parallel.” The US appears far from imposing any sort of carbon price on a national level, but experts say the country’s other federal climate policies could be translated to calculate a more implicit cost of polluting.
Debt discerning – The European Central Bank will limit purchases of longer-term debt issued by companies that rank poorly under a new scoring system created to screen out polluters and tackle climate change. The maturity limit will cut the “longer-term exposure of the Eurosystem to transition risks,” the bank said Monday. The ECB will also give “special treatment” to green bonds meeting “stringent” requirements and buy more securities from high scorers. It’s the first detailed look at how the institution will reinvest “sizable redemptions” expected in the coming years. (Bloomberg)
Protestor pressure – German utility Leag had to temporarily shut down two 500 MW blocks of the Jaenschwalde lignite-fired power plant for several hours on Monday morning as climate demonstrators had chained themselves to the conveyor belts of the plant. (Der Spiegel)
Oil wealth – Norway’s $1.2 trillion wealth fund, the world’s largest, has said it would decarbonise its holdings by pushing firms to cut their GHG emissions to nil by 2050, in line with the Paris Agreement. The plan follows a proposal made in April by the Norwegian government, which said the fund should push the 9,300 companies it invests in to cut their emissions to nil by 2050 Still, the fund has previously said it would not divest from big emitters to achieve these targets but instead be an “active shareholder” to effect change. (Reuters)
Irish cash – Ireland will benefit from €1.4 bln in Cohesion Policy funding between 2021-27 to support the sustainable development of its economy. The details and strategy for these investments are set out in the Partnership Agreement between Ireland and the Commission that is formally launched today. These EU funds will help Ireland address regional disparities by boosting innovation and competitiveness, enabling the economy’s digital transformation, investing in social inclusion, skills training and employment, and in the green transition. (European Commission)
Selling out (I) – Australian utility and gas company Origin Energy will sell its stake in its Beetaloo basin gas exploration project at a loss and review all its other exploration permits, The Guardian reports, in a move that will distance it from an environmental controversy and end its association with sanctioned Russian oligarch Viktor Vekselberg. Chief executive Frank Calabria said gas remained “a core part of our business” but getting out of gas exploration would free up money to “grow cleaner energy and customer solutions, and deliver reliable energy through the transition”. Environment groups mostly welcomed the announcement but said the decision had not removed the threat of gas exploration and fracking to the Beetaloo Basin. Meanwhile, the Australasian Centre for Corporate Responsibility stated that “This is just more greenwashing. Divestment is not a solution to reducing real world emissions. Divestment is simply passing the hot potato to the next asset holder”. Origin has also not completely severed links with the Beetaloo project – it has agreed to buy any gas the field produces from its new owner, a group backed by Texas oilman Bryan Sheffield. In August Origin announced a net zero by 2050 emissions target, but excluded three upstream gas exploration assets, including Beetaloo, from it.
Selling out (II) – Australian coal barons Trevor St Baker and Brian Flannery have cashed in on their highly profitable investment in the ageing Vales Point coal fired power station in the Australian state of NSW, agreeing to a sale of their interest in Delta Energy to a Czech family investment group, Renew Economy reports. The terms of the sale to Sev.En Global Investments have not been revealed but will undoubtedly deliver a handsome profit to St Baker and Flannery, who bought the power station for just A$1 million in 2015, and quickly revalued it to A$722 million following the jump in prices after the closure of the Hazelwood coal plant. Vales Point is currently scheduled to close in 2029, and while some analysts expect it could close sooner, although St Baker insists that coal generation has a role in the grid for years to come.
Green launch – Clean energy solutions provider Gentari was officially launched by Malaysian Prime Minister Dato’ Sri Ismail Sabri Yaakob following a brand introduction in June, according to press release from Gentari. The entity, wholly owned by Malaysian NOC Petronas, aims to become a one-stop integrated clean energy solutions provider, beginning with a suite of renewable energy, hydrogen, and green mobility solutions. Gentari plans to have renewables capacity of 30-40 GW, and to produce 1.2 Mt per year of clean hydrogen, by 2030. Meanwhile South Korean conglomerate SK Group stated last week that it will partner with Gentari as part of its own push towards low carbon businesses, Energy News reported.
Hydrogen transport – South Korea’s Ministry of Environment has signed an MoU on the creation of a hydrogen economy eco-system to convert 1,000 city buses and commuter buses in Busan to hydrogen buses by 2025, Korea Joongang Daily reports. The signing ceremony will be attended by officials from the Ministry of Environment, Busan Metropolitan City, Busan Port Authority, Hyundai Motor Company, SK E&S, Busan Technopark, and Busan Metropolitan City Bus Transportation Business Association. In addition, 10 liquid hydrogen charging stations will be built centered on the port area as well as bus depots in Busan, and a plan to convert large trucks (via diesel) mainly operating in the port area will also be promoted.
Ozone protection – Indonesia’s state oil and gas company, Pertamina, used International Ozone Day to inaugurate the Pertamina-UGM Forest in Central Java. The 3000 hectare site will be home to an agroforestry planting scheme. The company said in a statement the project would not also sequester 170,000 tCO2e over 10 years, and protect the ozone layer, but waste products from the forest would be used as feedstock for a biofuel refinery.
Biden bows out – A meeting of G7 leaders on climate change scheduled for Wednesday in New York won’t include US President Joe Biden nor French President Emmanuel Macron. The American president will instead host a Global Fund to Fight AIDS, Tuberculosis and Malaria event across town in Manhattan. The French leader has “other meetings”, according to an aide. The closed-door session was intended to set up the West’s position ahead of the UN COP27 conference in Sharm el-Sheikh, Egypt in November. (Bloomberg)
Treaty time – The US Senate on Tuesday by a 64-30 margin advanced to close debate on ratifying the Kigali Amendment to the Montreal Protocol, setting up a potential vote later this week. The Kigali Amendment called on nations to phase down the production and use of high-global warming HFC gases by 85% over 15 years. Congress already enacted a regulatory regime authorising the EPA to set rules limiting HFCs in appliances as part of the year-end spending bill in 2020, but Republican holds on the treaty have prevented its ratification. The treaty, which was supported by President Barack Obama (D) and then held up by President Donald Trump (R), is expected to receive the necessary 67 Senate votes for ratification, as six lawmakers were absent on Tuesday, a person familiar with the matter told Politico. (E&E News)
DNV and the vault – DNV, the independent energy expert and assurance provider, has been awarded a contract to perform audit services for Climate Vault, an award-winning non-profit founded at the University of Chicago, working on an innovative approach to CO2 removal (CDR). Climate Vault’s method of helping organisations eliminate historical CO2 emissions and reduce future emissions involves purchasing emission allowances from government-regulated compliance markets and “vaulting” these allowances to neutralise the carbon footprints of its contributors. With the support of Climate Vault’s Technology Experts Chamber, the value of the allowances will ultimately be used to support CDR technologies in removing CO2 already in the atmosphere, DNV said. “Our latest estimates show that by 2050, North America will have reduced CO2 emissions by 73% compared with 2019, but 1.58 GtCO2 will remain, in contrast to the region’s pledge, explained Lucy Craig, Director of Growth, Innovation & Digitalization for Energy Systems at DNV. To succeed in the transition to net zero, we need to dramatically accelerate the establishment of carbon removal technologies and foster innovation in this field, carbon capture, use and storage has proven to be a cost-effective solution for industrial decarbonization, and despite being often seen only as a transitional means of preventing fossil fuel carbon lock-in, it presents the advantage of being immediately available for deployment at scale. To scale up, some emerging CDR technologies still need to demonstrate their performance, and as an independent third party, we are uniquely positioned to assess these and give organizations the assurance they need to commit.”
SCIENCE & TECH
Cost-competitive – Hydrogen fuel cell maker Loop Energy said on Sunday that its latest cell system can deliver better fuel economy than a diesel engine at current price levels, Channel News Asia reports. The Burnaby, British Columbia-based company said that – based on a pan-European diesel cost of $1.91 per litre on Sept. 5 and $10 per kg of hydrogen – a truck could travel just over 111 miles (179 km) on $100 worth of fuel using its new S1200 hydrogen fuel cell system versus a little over 109 miles for an equivalent diesel truck. As the auto industry makes the shift to zero-emission electric vehicles (EVs), big freight truck makers like Daimler Truck and Volvo are investing heavily in hydrogen fuel cells to haul freight long distances because batteries weigh too much to make electric trucks viable.
Them crooked vultures – Vultures are hard birds for humans to love. They are an obligate scavenger, meaning they get all their food from already dead prey – and that association has cast them as a harbinger of death since ancient times. But in reality, vultures are nature’s flying sanitation crew. And new research adds to that positive picture by detailing these birds’ role in a surprising process: mitigating GHG emissions. Decaying animal bodies release greenhouse gases, including CO2 and methane. But most of these emissions can be prevented if vultures get to the remains first, a new study in Ecosystem Services shows. It calculates that an individual vulture eats between 0.2 and 1 kg of carcass per day, depending on the vulture species. Left uneaten, each kg of naturally decomposing carcass emits about 0.86 kg of CO2 equivalent. This estimate assumes that carcasses not eaten by vultures are left to decay. But many carcasses are composted or buried by humans, which result in more emissions than natural decay, so vulture consumption can avert even more emissions when replacing those methods. The avoided emissions may not sound like much, but multiply those estimates by the estimated 134 mln to 140 mln vultures around the world, and the number becomes more impressive: tens of millions of metric tons of emissions avoided per year. (Scientific American)
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