CP Daily: Monday September 26, 2022

Published 00:53 on September 27, 2022  /  Last updated at 00:53 on September 27, 2022  /  Newsletters  /  No Comments

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

Two weeks 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!

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TOP STORY

ENVI lawmakers seek to fund RePowerEU from frontloaded EUA auctions over three years -source

Key European lawmakers from four major parties endorsed on Monday a provisional stance that would help finance the REPowerEU strategy with €20 billion worth of carbon allowance sales solely sourced from frontloaded member state auctions spread over three years, a parliamentary source told Carbon Pulse.

EMEA

Euro Markets: EUAs erase Friday’s 6.6% loss after lawmakers reach deal on REPowerEU funding

EUA prices recovered from a sharply lower open on Monday before shooting higher and clawing back all Friday’s 6.6% loss after European Parliament representatives stuck a compromise on how they want allowances to be sold to fund the bloc’s REPowerEU recovery plan.

Italy’s decarbonisation path at risk as far-right alliance takes helm

Italy, the EU’s third-largest economy, is poised to be run by a hard-right coalition led by Giorgia Meloni after the leader of populist party Fratelli d’Italia (Brothers of Italy) came out as the absolute winner of the country’s snap elections, in a history-making victory set to put domestic gas supply and nuclear resurgence at the core of the national energy debate.

UK government eyes rapid review of net zero strategy as opposition targets green growth

The newly-appointed UK government aims complete its ‘pro-business’ net zero review by the end of the year, it said at the launch of the initiative on Monday as the main opposition party laid out a competing vision.

EU ETS emissions flat to slightly higher in 2022 amid switch to more carbon intensive fuels -analysts 

Emissions under the EU ETS are likely to increase in 2022 as thermal generation increases, but also as more industrial companies are turning to petroleum-based fuels as an alternative to natural gas, according to bank analysts.

ICE to allow EUAs to be used as margin cover

Exchange operator ICE is changing its rules to allow market participants to use EU Allowances as margin cover, it announced Monday.

AVIATION

UK airline EasyJet to halt VER purchases in new net zero plan

Low-cost air carrier EasyJet on Monday announced it will soon stop automatically purchasing carbon credits to offset flight emissions as part of its net zero roadmap, and instead focus on a suite of other GHG mitigation strategies in its SBTi-aligned plan.

AMERICAS

INTERVIEW: Mexico’s Queretaro state rolling out US$27 carbon tax next year

The Mexican state of Queretaro will implement the highest CO2 levy in Latin America next year, and is considering several offset protocols to allow emitters to buy credits in lieu of paying the tax, a government official told Carbon Pulse.

Government clean energy funds to further weigh on CCA prices -analysis

The recent passage of federal and subnational legislation to incentivise clean energy will keep the lid on an already soft California Carbon Allowance (CCA) market, analysis from a major US investment bank said Friday.

ASIA PACIFIC

China’s aviation regulator rolls out plan to cut emissions, though no mention of CORSIA

China’s aviation regulator has unveiled an action plan to encourage green development in the sector, though it made no mention of the nation’s attitude towards participation in ICAO’s CORSIA offsetting programme covering international flights.

Indonesia makes slight increase to 2030 climate target in enhanced NDC

Indonesia has modestly raised its 2030 climate targets in an enhanced NDC submitted to the UNFCCC, which has also outlined the country’s requirement for finance to meet its “conditional” emissions-cutting goal that is based on receiving international support.

Australia to review beef herd carbon method amid questions over additionality

Australia has launched a review of its beef herd carbon offset method after the Emissions Reductions Assurance Committee (ERAC) questioned whether projects still meet additionality criteria.

VOLUNTARY

VCM Report: Interest rate hikes and dollar strength weighs on market

Standardised nature-based offsets slumped lower over the past week as the wider marco-economic gloom and the strength of the dollar weighed on the market.

Unresolved Rimba Raya issuance hangs over Canadian VER investor’s 2022 fiscal results

A Toronto-based VER investor expects to generate cash flow in 2023, though there is still no timetable for resolution to the Indonesian government’s temporary halt of offset issuances to the Rimba Raya REDD project, the company announced Monday.

Carbon management firm targets financials tracking portfolio emissions

A carbon management platform has launched a new product to help financial institutions track their indirect investment emissions in light of a range of disclosure regulations being developed worldwide.

Singapore partners develop interactive dashboard for carbon projects

A group of Singaporean organisations has launched an interactive mapping software that will support the prospecting, development, and management of nature-based carbon credit projects worldwide.

US-based NBS project developer loses CSO to partner firm

A US-headquartered nature-based solutions project developer has lost its Chief Sustainability Office to one of its partners.

INTERNATIONAL

Interoperability between compliance, voluntary carbon markets emerging -panel

More linkages between compliance and voluntary carbon market is arising as both governments and corporates beef up net zero commitments, but stronger policy signals and targets will be necessary if the energy transition is to succeed, speakers at an oil and gas conference in Singapore claimed Monday.

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CONFERENCE

Two weeks 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!

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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

NGMI – Almost all the world’s governments have failed to improve their climate plans this year, breaking a promise made at last year’s UN climate summit in Glasgow. At COP26, all countries agreed to “revisit and strengthen” their 2030 climate plans, to close the gap between national action and the temperature goals of the Paris Agreement. Sep. 23 was the cut-off date for inclusion in a UN Climate Change progress report and was highlighted as a deadline by COP26 President Alok Sharma. As that date passed, just 23 of the nearly 200 countries that signed the Glasgow agreement had submitted updated 2030 climate plans. Of these, most offered more policy detail rather than strengthening headline targets. Top three emitters the USA, EU, and China worked on implementing pledges made last year but did not increase their ambition. India formalised promises made by PM Narendra Modi at COP26 into an official four-page document. Climate Analytics CEO Bill Hare told a webinar last week: “The bottom line is there has been really little progress since COP26. Politics and geopolitics is dominated by the illegal Russian invasion of Ukraine which then sent energy markets into turmoil but still, we feel countries should be moving ahead.” He added: “There’s a massive emissions gap remaining and the IPCC assessment has been very clear that we do need to get down and close that gap if we have much of a chance of limiting warming to 1.5C.” (Climate Home)

Gee whiz, GFANZ – Pension funds Cbus Super and Bundespensionskasse have become the first institutions to leave a financial alliance on tackling climate change spearheaded by former Bank of England governor Mark Carney, the FT reports. Australia’s Cbus left the Net-Zero Asset Owner Alliance in recent months citing resourcing problems, while Austria’s Bundespensionskasse left the Paris Aligned Asset Owners group this year, also due to a lack of internal resources, the PAAO said. The coalitions form part of the Glasgow Financial Alliance for Net Zero (GFANZ) that was launched with great fanfare last year. Members under the GFANZ umbrella must comply with complex data tracking and reporting requirements that they say consume significant amounts of time and personnel, something that banks in the alliance have also complained about. Cbus said it left the alliance in order to “focus our resources on our internal climate change activities,” adding that it had not altered its net zero emissions by 2050 target. And Bundespensionskasse declined to comment on why it left the alliance, but said its “long-term goal is a climate-neutral investment approach”. Read Carbon Pulse’s recent coverage of trouble in the GFANZ. (Carbon Brief)

Future trading – A new publication from Cambridge Elements Earth System Governance has highlighted the challenges associated with carbon markets, including how to make them compatible with a net zero emissions world. The Carbon Market Challenge provides a comprehensive overview of global carbon markets and also provides recommendations on how to improve carbon markets in the future. The publication noted for example, that carbon market trading under net zero scenarios will necessitate the inclusion of carbon dioxide removal (CDR) credits which would allow the covered sector to reach net zero on aggregate.  “Regulatory challenges in these markets will continue to evolve, however, as the climate policy objectives they serve become more ambitious and converge around net zero emissions, the value of traded units gradually increases, and markets become more interconnected,” the authors wrote.

EMEA

Just Transition – Czechia will receive €1.64 bln in EU grants to support the country’s efforts to phase out coal-fired power by 2033 and ensure a fair transition to climate neutrality, from the EU’s Just Transition Fund (JTF) programme adopted by the Commission. The JTF will help the Czech regions of Karlovarsky, Ustecky, and Moravskoslezsky where there is a high concentration of carbon-intensive industries with some 21,000 jobs linked to the coal and chemicals industry.

EV growth – The share of electric vehicle registrations tripled from 3.5% in 2019 to 11.6% in 2020, including 6.2% full electric vehicles and 5.4% plug-in hybrid electric vehicles, data published Monday from the EEA showed. Despite the shrinking overall market for new cars due to the pandemic, the total number of new electric cars registered in 2020 increased to over 1 million. About 1.4 million new vans were registered in Europe in 2020 with average emissions 1.9 % lower than in 2019. The share of electric vans increased from 1.4% in 2019 to 2.3% in 2020.

AMERICAS

Right of refusal – Canadian fossil fuel companies are steadfastly refusing to invest significantly in new decarbonisation projects, even though they’re flush with record amounts of cash, green group Pembina Institute reports in a new analysis. Instead, the industry’s capital spending has hit an historical low as a percentage of available cash, while companies pay out dividends to their investors and buy back shares. That may be a fatal error, Pembina warns, since this may be Canadian fossils’ last chance to make serious moves to decarbonise their operations, as global oil demand declines through 2030 and competition for low-emission energy ramps up. The industry’s Pathways Alliance formed more than a year ago amid great fanfare, and now represents 95% of Canada’s tar sands/oil sands production. The Pembina study “examined the decarbonisation promises made by each company in the Pathways Alliance, and compared them with actions the companies are taking to reduce their carbon footprint,” the Globe and Mail noted. (The Energy Mix)

RGGI repeal responses – Virginia Governor Glenn Youngkin’s (R) administration on Monday kicked off the public commenting period on his move to repeal the state’s membership in RGGI. Youngkin had resorted to drafting a regulation to repeal the RGGI programme after Virginia’s Democrat-controlled Senate had stonewalled attempts by the GOP governor and House of Delegates to do so through legislative means. The administration is targeting a Dec. 2023 exit date from RGGI. The comment period on the repeal ends Oct. 26.

Transmission for transition – The US high-voltage transmission system needs to grow 2.3% a year, up from its 1% annual growth rate over the last decade, to meet the Inflation Reduction Act’s GHG emissions reduction potential, according to a report released Friday by the Princeton University-led REPEAT Project. The law’s CO2 emissions reduction potential falls by 80% if the pace of transmission additions remains unchanged and falls by 25% if transmission growth increases to only 1.5% a year, the REPEAT Project analysis found. (Utility Dive)

A loss and a win – A loss for Jair Bolsonaro in the upcoming Brazilian presidential election could lead to Amazon deforestation in his nation falling by 89% over the next decade, according to new analysis conducted for Carbon Brief. A victory for left-wing challenger and current frontrunner Luiz Inacio Lula da Silva could avoid 75,960 square km of Amazon rainforest loss by 2030, the analysis shows – an area roughly the size of Panama.

VOLUNTARY

Crypto consultation continuation – Offset standard and manager Verra on Monday extended the consultation on its approach to third-party crypto instruments and tokens to Nov. 1. Verra kicked off the long-awaited consultation in August by proposing detailed KYC checks as well as rules governing the immobilisation of tokenised voluntary carbon market (VCM) offsets. The organisation in May barred companies from tokenising carbon credits in its registry.

Microsoft buys RECs – Microsoft will buy clean energy credits from Ontario Power Generation’s hydroelectric dams and nuclear reactors, the two companies will announce Monday. Though details of how many credits Microsoft will purchase, or how much it will pay, were not disclosed, the 10-year agreement represents the first marquee customer for OPG’s clean energy credit trading business. It could also represent a milestone in efforts to establish a market for clean energy credits in Ontario. Microsoft said it’s buying the credits to help meet its global commitment to purchase all of its electricity “matched by zero carbon energy purchases” by 2030. The credits from OPG will help achieve that objective in Ontario, where Microsoft has data centres and some offices. (The Globe and Mail)

AND FINALLY…

Misleading message – Products advertised as “climate neutral” mislead consumers because the vast majority of people don’t have a clear idea what the claim means, according to a survey by a German consumer advice centre. “Only 3 out of 100 respondents know in detail what is behind the label ‘climate neutral’,” said North Rhine-Westphalia’s consumer protection centre. Even particularly environmentally conscious consumers are unaware of the label’s full meaning, the survey revealed. (Clean Energy Wire)

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