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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
PREVIEW: In Brazil elections, fate of carbon markets hangs in the balance
In Brazil’s presidential election that kicks off this Sunday, pitting far-right incumbent Jair Bolsonaro against left-wing former president and current front runner Luiz Inacio Lula da Silva, the country’s path forward on climate policy – including the fate of carbon markets – hangs in the balance.
EMEA
EU energy ministers seal emergency package, energy-hungry states seek gas price range
The 27-nation EU rapidly sealed a “political agreement” on an emergency package aimed at mitigating spiralling energy prices on Friday, in what was only the first – and arguably least important – part of a meeting largely dominated by differences on how to intervene in the gas market.
Euro Markets: EUAs post modest weekly gain as bears remain in control despite some short covering
EUAs recorded their smallest weekly move in three months, rising 1.5% from last Friday as the morning’s short covering fizzled while traders closed their books for the month and the quarter, while energy markets eased as EU ministers agreed energy cost safeguards but not a gas price cap.
Chevron-backed “alternative” European energy and carbon trading platform closes Series B financing round
A German-headquartered energy and carbon trading platform, which has branded itself a “digital alternative” to traditional exchanges and brokers, has closed a Series B financing round with the support of oil major Chevron.
VOLUNTARY
Airlines top list of total voluntary carbon credit retirements -analysts
Airlines head up the list of companies by sector that have bought and retired credits in the voluntary carbon market (VCM), according to analysts that nonetheless encountered considerable information gaps.
British Gas latest firm to be found offsetting with old, dodgy carbon credits
British Gas has offset its energy production using hundreds of thousands of old carbon credits from a Chinese industrial gas project that have been banned in Europe due to their questionable environmental integrity.
Japan oil firm releases verified report on its “carbon neutral” LNG, shifts to domestic offsets
A Japanese oil and gas company has become the first to release a third-party verification report of its handling of “carbon neutral” LNG, while announcing that from the current financial year it will use domestic J-Credits instead of international units for such purposes.
Chevron delivers “carbon neutral” LNG cargo from Gorgon in deal with Taiwan’s CPC
US oil and gas major Chevron has delivered its first “offset-paired” LNG cargo, covering the full lifecycle emissions of the shipment in a deal with Taiwan’s national oil company CPC, the company has announced.
European buyers ask for VCM offset prices in euros amid dollar strength
Some European carbon retailers and consultancies have started to request prices for voluntary carbon market credits in euros rather than dollars after the Eurozone’s common currency sunk below the greenback.
REDD credits seen offered $5 cheaper than CCB-certified equivalents
Major clips of VCS-certified REDD credits lacking CCB co-benefit certification were being offered at a $5 discount to VCS-CCB units on Friday, highlighting a hefty premium for nature units that can meet the specification requirements for delivery into futures contracts on the CME exchange.
Finnish report flags gaps in EU law on domestic offsetting
EU nations lack the legal means to apply corresponding adjustments for carbon projects on their territories, a report commissioned by the Finnish government pointed out on Friday, complicating matters for companies seeking to buy carbon credits across the bloc.
Voluntary carbon investor in 2.5-mln credit deal with rice farming project
A Canada-based voluntary carbon investment firm has agreed to buy around 2.5 mln VCUs from a Indian rise farming project.
AMERICAS
California carbon market reaches record number of participants in Q3 amid heightened speculative interest
California’s cap-and-trade programme grew to a record number of accounts in the third quarter amid interest from speculative and compliance entities, according to data published Friday.
Emitters and speculators pare back CCA holdings while financials’ RGGI net length approaches 1 mln
Emitters cut down their California Carbon Allowance (CCA) net length to end five straight weeks of growth, while financial players followed suit in both the WCI and RGGI markets, according to US Commodity Futures Trading Commission (CFTC) data published Friday.
ASIA PACIFIC
CN Markets: Liquidity in China ETS remains near-zero as market still bogged down by regulatory uncertainty
The allowance price in China’s national emissions market edged down over the past week with a slight rebound in trading volume, though doubts linger as to whether the market will see any regulatory progress before year-end.
NZ Market: NZUs dip amid negative market sentiment
The price for New Zealand carbon allowances has slipped in recent weeks, as the government continues its consultation on ETS reform, and the market has attracted criticism that it will fail to adequately cut GHG emissions in its current form.
INTERNATIONAL
Targeted redistribution of carbon revenues best way to stifle cost backlash -researchers
Targeting the distribution of revenues directly to households and users most in need of financial support is the most effective means of defending carbon pricing in the face of mounting political and social pressure to reduce energy costs this winter and beyond, according to research published Friday.
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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
Chucked out – King Charles III has reportedly abandoned plans to attend and deliver a speech at the COP27 climate summit on the advice of British PM Liz Truss. The monarch, a veteran campaigner on environmental issues, had been invited to the summit in Sharm el-Sheikh, Egypt next month. But Truss is understood to have raised objections during a personal audience at Buckingham Palace last month, according to the Sunday Times. Buckingham Palace has confirmed King Charles III will not attend the summit. The news comes amid suspicion that the government may water down, or abandon, the UK’s climate target to achieve net zero by 2050. (Guardian)
Price targetted – A price for CO2 can be both highly effective and socially just – if it’s well designed. This is the result of a new study by the Potsdam Institute for Climate Impact Research (PIK) and the Mercator Research Institute on Global Commons and Climate Change (MCC). At the heart of the idea: a targeted return of the revenues from CO2 pricing, especially to poorer people who need relatively large amounts of energy and can do little about it. So far, political fears of social hardship and possible uproar stand against the increase of CO2 prices. “It is crucial that the revenues from CO2 pricing are returned, and in a targeted manner: Distributing them back in shotgun-mode is only the second-best solution,” explains Martin Hansel, an economist at PIK and lead author of the study, which appeared in the Journal of Environmental Economics and Management (JEEM). “It makes most sense to support the most affected groups with direct transfers. In the study, we identify these particularly affected groups for the first time: Because they are not simply the poorer segments of the population. Rather, within each income group there are households with very high energy expenditures – people who rely on their cars to drive to work because they live in the countryside, people who have old oil-based heating or tenants with little to no influence on insulation, and so on. These are the groups that the government needs to identify and compensate. That’s the fairest and economically most sensible solution looking at society as a whole.” “Especially in the current crisis, with rising energy costs for everyone, people keep saying that a CO2 price is not politically feasible. Yet the opposite is true, and it is precisely now that we need political control here,” added Max Franks, also an economist in Potsdam and co-author of the study. But handing out cash payments to those most in need is not as easy as it may seem for government agencies. Before they can make such payments, they need to know which households are particularly energy-intensive but can do little to change that in the short term.
AVIATION
Ready for (emissions) takeoff – The US is using multilateral talks in Montreal to seek stronger emissions targets for aviation — and the Democrats’ climate law is providing diplomatic leverage, said Transportation Secretary Pete Buttigieg in an interview with Axios. UN body ICAO has moved slowly to set goals for reducing the industry’s emissions. The U.S. is working with other countries to speed things up during an ongoing ICAO meeting in Montreal. Buttigieg said the policy steps the US has recently taken, such as passing the bipartisan infrastructure law and the Democrats’ climate bill, has given the country more credibility as a climate leader at the aviation summit.
SAF and sound – Hong Kong’s Cathay Pacific Airways will acquire 38 mln gallons of blended sustainable aviation fuel (SAF) at San Francisco International Airport from California-based producer Aemetis over a seven-year period commencing in 2025, GreenAir reports. The deal is part of a 350-mln-gallon commitment by the oneworld airline alliance, of which Cathay is a founding member. The product will be a blend of 60% Jet A1 fuel and 40% SAF, to be comprised of cellulosic hydrogen produced from waste wood, then combined with other wastes, non-edible sustainable oils and zero carbon intensity hydroelectric power. It will be produced at the Aemetis Carbon Zero plant, which is being developed in Riverbank, east of San Francisco. The fuel deal coincides with Cathay’s expansion of its Fly Greener carbon offset programme to include air cargo services and follows the launch earlier this year of its Corporate SAF Programme, through which customers can help compensate for business travel and air freight emissions by contributing to the cost of the airline’s sustainable fuels.
EMEA
Nord Stream leaks – Due to the damage to the Nord Stream gas lines in the Baltic Sea, an enormous amount of methane gas has been released into the atmosphere, carbon researchers ICOS have confirmed. The leak is estimated to be equal to the size of a whole year’s methane emissions of a country like Denmark or a city the size of Paris, as Carbon Pulse reported Thursday. The methane emissions are confirmed by ICOS ground-based observations from several stations in Sweden, Norway, and Finland. Observation satellites were not able to see the emission leaks, because the weather was cloudy. The UN Environment Programme said Friday that the ruptures have led to what is likely the biggest single release of climate-damaging methane ever recorded, Reuters reported.
The last blast? – The owners of Britain’s second-biggest steel producer are seeking an urgent package of financial support from taxpayers amid renewed fears for thousands of industrial jobs in the north of England. Sky News reports that Jingye Group, which bought British Steel out of insolvency in 2020, has told ministers that the company’s two blast furnaces are unlikely to be viable without government aid. British Steel, which is headquartered in Scunthorpe, employs about 4,000 people, with thousands more jobs in its supply chain dependent upon the company. While the precise scale of the support being sought by the Chinese industrial group was unclear this weekend, insiders suggested that it would need “hundreds of millions of pounds” to keep the Scunthorpe blast furnaces operational. A British Steel spokesman said: “We are investing hundreds of millions of pounds in our long-term future but like most other companies we are facing a significant challenge because of the economic slowdown, surging inflation and exceptionally high energy and carbon prices.” It is the second time in little more than three years that serious doubt has been cast over British Steel’s future. In May 2019, the Official Receiver was appointed to take control of the company after negotiations over an emergency £30 mln government loan fell apart. British Steel had been formed in 2016 when India’s Tata Steel sold the business for £1 to Greybull Capital, an investment firm.
Cross-border burial – An agreement between the Belgian and Danish governments has cleared the way for Europe’s first trial of CO2 storage in the North Sea, with the nations agreeing to enable captured CO2 to be shipped across their borders to be permanently stored in a sandstone reservoir beneath the seabed of the Danish North Sea. The agreement allows Ineos’ Project Greensand to move forwards with Europe’s first ever trial of the entire supply chain for CCS to be carried out later this year, the chemical company said on Friday. Ineos plans to capture CO2 from its plant at Zwijndrecht to be transported through the Port of Antwerp to its Nini platform in the Danish North Sea to be permanently stored. Project Greensand aims to store 1.5 MtCO2 by 2025 and up to 8 Mt by 2030.
Sea of green – The European maritime sector including associations for shipowners, ports, the cruise sector, shipyards and equipment manufacturers, fuel suppliers, shippers, forwarders, and port operators have joined forces to call on EU member states and the European Parliament to earmark the revenues generated from the inclusion of the shipping sector in the EU ETS for the sector itself. In a joint letter, ECSA, Advanced Biofuels Coalition, CLECAT, CLIA, ESPO, eFuel Alliance, ENMC, ESC, EWABA, FEPORT, SEA Europe, reiterated their support for the objectives of the European Green Deal, EU Climate Law and the Paris Agreement. The groups affirmed that funds must be diverted to the sector to help fund investment in low-carbon fuels. (Safety4Sea)
Welcome back – German energy company RWE is set to bring three lignite power plant units in the western part of the country back online in the coming days to help secure power supply during the coming winter, the company said in a statement. The move is part of a scheme by the federal government to temporarily bring back coal plants from the reserves to replace gas-fired units to avoid gas shortages in the coming months. The three lignite units of power plants Neurath and Niederaussem each have a capacity of 300 MW. They were awaiting final decommissioning (in 2022 and 2023) in the country’s so-called “security standby” of lignite power plants. Their deployment is initially limited until June 30, 2023, RWE said. Earlier this week, Germany’s government adopted new regulations allowing for the reactivation of retired lignite plants by October. With natural gas deliveries from Russia falling away, the government is preparing for a winter without sufficient supplies of the fossil fuel it relies on heavily for heating homes. The European Commission this week approved, under EU state aid rules, a temporary German measure to enable five lignite-fired power plants to be on stand-by and ready to be activated if needed. The measure, under which aid may be provided until the end of Mar. 2024 at the latest, will contribute to safeguarding natural gas availability. Germany notified the Commission its plan to adopt a measure, with an estimated budget of €450 mln, to establish a temporary lignite supply reserve.
Giga what? – German energy group LEAG plans to build the country’s largest renewable energy site in the eastern Lusatia coal mining region with the establishment of a 7GW hub by 2030. LEAG estimates investments of more than €10 bln to set up the “GigawattFactory”, which will combine innovative storage solutions, green hydrogen, and future-proof power plants. The project will also be a powerful job engine for eastern Germany and help make energy affordable again, the company said. PV and wind turbines will also be installed in LEAG’s former mining sites. The hub will be able to supply 4 mln households with green energy. (Clean Energy Wire)
Biggest blower – Swedish wind power developer OX2 AB and investment firm Alandsbanken Fondbolag are developing two offshore wind projects in the Baltic Sea that combined would be the biggest in the world. According to Bloomberg, it’s yet another clear sign that the biggest listed Swedish wind developer sees giant turbines as tall as skyscrapers at sea as the future after almost two decades of building parks at land. In June, it announced another giant offshore wind project and recently sold a 49% stake in three developments to the investment arm of Ikea’s biggest retailing group.
AMERICAS
Banking on climate – The US Federal Reserve announced Thursday that six of the nation’s largest banks would participate in a pilot climate scenario analysis exercise in 2023. Bank of America, Citigroup, Goldman Sachs, JPMorgan Chase, Morgan Stanley, and Wells Fargo will undergo the exercise, which the Fed said will not have capital or supervisory consequences. The Fed plans to publish aggregate findings from the exercise but no firm-specific information. The exercise will mark the first public effort by the Fed to gauge the level and management of risks for banks when it comes to climate change, and could begin a process that ends up informing how banks lend and manage risk in the future. (Reuters)
Advisor attrition – A senior White House advisor to US President Joe Biden is stepping down following the successful passage of the Inflation Reduction Act to “take a little bit of breather”. David Hayes wraps up two years at the climate policy office, shortly after the departure of the president’s first climate advisor, Gina McCarthy. Longtime Democrat John Podesta will now fill Hayes’ shoes. (E&E)
Waiting by the phone – The industry group representing Canada’s First Nations that produce oil and gas says Ottawa failed to consult it on plans for a fossil fuels sector emissions cap, adding that such a mechanism would likely strip away one of the few revenue sources that helps its members gain economic sovereignty. The Canadian federal government on Friday closed public submissions about how to best design and implement the cap, which it says will help reduce pollution from the oil and gas sector – the largest source of GHGs in Canada. Ottawa argues the cap is crucial to ensure emissions drop at the pace and scale necessary to achieve Canada’s 2030 and 2050 climate targets, and allow the sector to compete in a global economy that is transitioning to net zero. Federal officials asked for input on various aspects of the cap, including what activities it should cover, how best to encourage continued investment to abate emissions, compliance options and when a cap should be implemented. Ottawa also asked whether it should be a new cap-and-trade system under the Canadian Environmental Protection Act, or a modification of the current carbon pricing approach. (Globe & Mail)
Coast to coast – New York has begun the process to implement a 2035 ban on new sales of light-duty internal combustion engine vehicles, following the lead of California regulators who adopted such rules in August. Gov. Kathy Hochul (D) on Thursday directed the New York Department of Environmental Conservation to develop draft rules requiring a growing percentage of new light-duty vehicle sales to be zero-emission vehicles, beginning with 35% in model year 2026. (Utility Dive)
Busted – A company in Lincoln City, Oregon that builds electric vehicle charging stations defrauded the Oregon Department of Environmental Quality out of $2 mln in LCFS credits, according to the agency. On Friday, it fined Thompson Technical Services, or TTS Charging, $2.7 mln for falsely claiming credits through a state GHG reductions scheme and selling them to a fossil fuel distributor. That is the largest fine in DEQ history, News from the States reports. The company has 20 days to respond to DEQ and appeal the penalty. Under the Clean Fuels Program, DEQ awards electric utilities and vehicle charging station providers credits for each tonne of CO2 they keep out of the atmosphere by powering EVs with renewable energy. Those companies can then sell the credits to fossil fuel distributors, who are required by state law to lower the carbon intensity of diesel and gasoline they import into the state progressively over the next decade. In June, TTS Charging reported to DEQ that it had provided nearly 15 mln kWh of electricity for vehicle charging from three stations, and DEQ awarded the company about 16,000 credits in turn. The catch? The charging stations didn’t exist. Nevertheless, TTS Charging sold those credits for about $1.8 mln to Calgary-based Elbow River Marketing.
Another lawsuit – The BC government will be in provincial Supreme Court from Tuesday for two days to face allegations from environmental groups that it has failed to provide an adequate plan to meet its climate targets. The lawsuit, filed by Ecojustice on behalf of the Sierra Club BC in March, alleges the government’s plan falls woefully short by failing to include a plan for the 2025, 2040, and 2050 climate targets, and leaves out details on how it plans to cut GHGs from the oil and gas sector. The Sierra Club contends that the failure to do so has left industry and the public in the dark about whether BC is on-track to achieve its emissions targets. The first target is three years away and requires a reduction of 16% below 2007 emissions levels. However, the latest data from the government show that as of 2020, BC had only reached a 1% reduction below 2007 levels. If carbon offsets from forest management projects are included, that figure increases to 3%. (Vancouver Sun)
CI(BC) – The Canadian Imperial Bank of Commerce (CIBC) on Friday announced its target to reduce the carbon intensity (CI) of its financed emissions in the power generation sector by 2030. This target is further to the bank’s recent commitment to reduce the carbon intensity of its financed emissions in its oil and gas portfolio. CIBC’s 2030 target for its power generation portfolio is for a 32% reduction in Scope 1 emissions intensity compared to a 2020 base year.
ASIA PACIFIC
Not taking credit(s) – Carbon offsets are questionable, dangerous, and far from a good investment for companies hoping to reduce their environmental impact, Australia’s richest man has said, Guardian reports. Andrew Forrest, a billionaire turned philanthropist who made his fortune in mining and minerals, is turning his vast iron ore extraction operation, Fortescue Metals Group, into a zero carbon business. Unlike most companies, Fortescue is not seeking net zero greenhouse gas emissions but what Forrest described as “real zero”. To achieve net zero, many companies use carbon credits, awarded for projects such as planting trees or preserving existing forests, to count against their greenhouse gas emissions. “Companies think they can continue piling emissions into the world, and cover their tracks with carbon offsets,” he said. “But carbon credits are really questionable,” he told the Guardian in an interview in London. “We are pushing beyond carbon credits.”
Hydrogen MoU – Sumitomo has signed a memorandum of understanding with chemicals company Lotte on collaboration in the field of hydrogen and ammonia, according to a Sumitomo press release. Sumitomo Corporation and Lotte will jointly invest in hydrogen and ammonia production businesses in regions such as Australia and Chile and build value chains to Japan and Korea, and develop ammonia storage terminals in Japan and Korea. The companies will jointly consider a wide range of business developments, including commercialisation of new hydrogen and ammonia-related technologies and their deployment into the Japanese and Korean markets, and collaborate in the field of CCUS. As part of this collaboration, Sumitomo Corporation, Lotte Chemical, and Syzygy, a U.S.-based hydrogen technology startup with the world’s most advanced technology, agreed in August this year to conduct the world’s first demonstration test of hydrogen production by ammonia decomposition using photocatalysts in Korea.
CO2 study – Japanese firm Chiyoda has entered into a Joint Study Agreement with Indonesia’s national oil company, Pertamina, to conduct a feasibility study on the capture, transport, and storage of CO2 from a dimethyl ether plant in Indonesia, the company said in a press release. The feasibility study will be supported by Japan’s METI.
Tree planting spree — Australia’s Victorian state government is committing A$129 mln, to support a new plantation estate in the Gippsland region. The government announced Thursday the funding would go to Hancock Victorian Plantations to plant an extra 16 mln trees, with the company matching the government’s commitment to buy, lease and manage the more than 14,000 ha of softwood plantations. The government said the new plantations would shore up the state’s timber supply, as well as remove around 7.8 MtCO2e over the next 25 years. Plantations will begin in 2023, subject to final approvals.
SCIENCE & TECH
And then the hurricane – Climate change caused Hurricane Ian to dump 10% more rain on Florida than it would have otherwise, a rapid analysis using well-established methodology has found. The atmosphere can hold 7% more water for every extra degree Celsius it warms, and that, plus water temperatures in the Gulf of Mexico 0.8°C above normal combined to push up total rainfall by 10%, with Ponce Inlet receiving 31.5 inches (80.3 cm). Though a few additional inches may not sound devastating, Kevin Reed, an atmospheric scientist at Stony Brook University who co-authored the analysis as well as a study establishing its methodology earlier this year, told the AP, it can be the difference between overtopping a levee, or coming across a home’s threshold, or inundating water treatment facilities and releasing raw sewage (or phosphogypsum pollution) into nearby communities. Though extreme rainfall was the only aspect of Hurricane Ian assessed in the analysis, it was far from the only characteristic that is consistent with how climate change is making hurricanes more destructive. On top of making major (Cat. 3 and higher) hurricanes more frequent – Ian made landfall with wind speeds just a few mph below Category 5 – the storm also rapidly intensified, exploding from a tropical storm to a Category 4 hurricane in just 72 hours, and brought with it storm surge so extreme it submerged palm trees. (Climate Nexus)
AND FINALLY…
Flare for the climatic – Unburned methane released from oil and gas flaring operations is five times greater than US EPA estimates, a new study in Science finds. This is at least the third study this year finding EPA is undercounting methane pollution. Researchers assessed about 300 flares across the Permian and Eagle Ford fields (Texas and New Mexico) and the Bakken field (North Dakota and Montana) which together account for 80% of US oil and gas extraction. While the EPA assumes flaring efficiency to 98%, the researchers found the actual efficiency is approximately 91%. That faulty EPA estimate, according to the study, means the equivalent of an extra 9 mln cars-worth of climate pollution is being emitted every year, but not reflected in EPA pollution figures. (Climate Nexus)
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