CP Daily: Friday October 7, 2022

Published 02:34 on October 8, 2022  /  Last updated at 01:33 on October 20, 2022  /  Newsletters  /  No Comments

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

We’re just a few days away from 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

ICAO agrees non-binding net zero 2050 target, sets new CORSIA baseline

Governments on Friday agreed at UN body ICAO to a long term aspirational goal (LTAG) of reaching net zero aviation emissions by 2050, while adopting a controversial baseline for the CORSIA international aviation offsetting scheme.

ASIA PACIFIC

India won’t ban carbon credit exports -minister

India will not impose a full ban on the export of carbon credits and expects “huge quantities” to be available for purchase by foreign investors, Energy Minister RK Singh has told reporters in New Delhi.

Indonesia boosts ambition to cut GHG emissions, as carbon market regulation to be finalised next month

Indonesia will cut its carbon emissions by more than 232 million tonnes of CO2e over the next three years, according to local media reports, while the finalised regulations governing its domestic carbon market scheme is expected to be released in time for COP27 and the G20 next month.

Advisory group hoses down regulatory fears around Australia’s Safeguard Mechanism

A carbon advisory group believes fears that the Australian government will muck up its overhaul of the Safeguard Mechanism are overstated.

EMEA

FEATURE: War and trade – How Russia’s aggression has transformed the politics of CBAM

The EU’s grand plan to establish a carbon border tax on CO2-intensive goods, once at the core of the global trade debate, is set to enter choppy waters as the bloc strives to secure critical raw materials and energy supply amid a much-shakier geopolitical landscape and enhanced dependency on the US.

EU power sector emissions rise 8% YoY over first three quarters -analysts

EU power sector emissions rose some 8% relative to 2021 over the first three quarters of the year, as nuclear and hydro output dropped, and surging coal output stepped into to meet demand, data from an climate analytics think-tank showed.

Euro Markets: EUAs post 4.6% weekly gain amid wait for REPowerEU clarity

European carbon prices strengthened on Friday, posting a modest daily rise and locking in weekly gains of nearly 5% as traders await clarity from ongoing REPowerEU talks as to how many allowances may be diverted to fund winter energy measures, while energy markets slumped also offering price support.

London green energy conference cancelled due to hotel water leak

FREE READ – A major green energy and carbon markets conference scheduled in London next week has been cancelled due to a water leak at the venue.

VOLUNTARY

US regulator should investigate CME’s carbon futures contracts, says think-tank

The Commodity Futures Trading Commission (CFTC) should investigate the “self-certification of the GEO and the N-GEO futures contracts by the CME Group last year,” and use its mandate to oversee the ‘flawed’ voluntary carbon market (VCM) where fraud may be widespread, a think-tank stated on Friday.

Brazil can meet nearly half of global voluntary carbon credit demand by 2030 -study

Brazil has the potential to meet nearly 50% of all demand for voluntary carbon credits this decade, according to a study.

Flowcarbon to list its tokenised credits on new blockchain offset marketplace

New York-based crypto climate firm Flowcarbon will make its GNT token and other carbon credits available for trading on the recently launched Senken platform.

Cement giant Cemex aims for SBTi validation of climate strategy to align with 1.5C scenario

Cemex, the world’s fifth-largest cement manufacturer, has been working with the Science-Based Targets initiative (SBTi) to validate its 2030 climate targets and its 2050 net zero emissions roadmap to align with a 1.5C pathway, the Mexican-headquartered construction materials company announced.

INTERNATIONAL

UN talks host Egypt pitches for carbon projects among funding aims as domestic efforts downplayed

Egypt is touting several African carbon credit projects for international funding as part of package of investments it aims to showcase at next month’s COP27 climate summit in Sharm el-Sheikh, even as observers look for more climate action from the meeting’s host.

AMERICAS

Nova Scotia announces December auction details

The Canadian Maritime province of Nova Scotia announced the details of its sixth and potentially last cap-and-trade auction Friday, including the number of allowances, reserve price, and date.

Green groups petition Canada to uphold pledge to end fossil fuel subsidies

Canada continues to fall short on its promise made last year at COP26 to end fossil fuel subsidies, with the nation now lagging behind its peers including the UK, France, and Denmark, who have already implemented the agreement, according to a Friday press release from environment groups.

Emitters step further from CCAs while compliance, speculators jump back into RGGI markets

Compliance entities continued to trim their California Carbon Allowance (CCA) holdings this week, but emitters in RGGI reversed course and added to their RGA net positions, while financial players added length in both WCI and RGGI markets, according to US Commodity Futures Trading Commission (CFTC) data published Friday.

CARBON FORWARD

Last chance to join Europe’s premier carbon conference

The seventh instalment of Carbon Forward – the premier annual carbon markets conference – is back next week, and it’s stacked with a first class line-up of speakers ready to discuss the risks and opportunities across the rapidly evolving global climate policy landscape.

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CONFERENCE

We’re just a few days away from 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

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

Joe of the Nile – President Biden will travel to Egypt to attend COP27 next month, the Washington Post reports, citing two anonymous sources. Biden’s planned attendance at the climate conference will give a boost to the gathering, which had been at risk of delivering little concrete action amid disputes over ambition and funding. The developing world has been asking for sharply more assistance from the rich nations that are responsible for the bulk of global warming over history. But those industrialised nations have been reluctant to make any promises. Now Biden, who also attended last year’s conference in Glasgow, will have a chance to showcase the progress his administration has made in the past year – and to cajole other countries to make similar efforts. Climate advocates say the US Inflation Reduction Act will help deliver a boost to green industries that can outlast the Biden administration, helping to bypass some of the climate whiplash that comes from sharply different visions toward global warming from Democrats and Republicans.

Looking for options – Shipping and commodities firms will commission more ships partly powered by LNG next year while ramping up trials for biofuel bunkering as they seek to cut emissions from ship operations, senior executives said this week, Reuters reports. The shipping industry is seeking to reduce its reliance on oil as it tries to meet carbon emission reduction targets set out by the UN’s International Maritime Organisation. LNG, methanol and biofuel are among the more popular alternative fuel options, industry executives said at the Singapore International Bunkering Conference and Exhibition 2022 that ended on Thursday. Several companies, including shipper Mitsui O.S.K and mining firms Rio Tinto and BHP, are set to receive more LNG bunker vessels in 2023 that will help shave off some emissions on voyages.

Too cheap – Maximilian Auffhammer at the Energy Institute at Haas reviews a new paper that suggests CO2 causes over three times as much damage in dollar terms as the figure currently used by the US government – $51/tonne. The new study suggests $185/t of CO2 as the Social Cost of Carbon (SCC). The updated model is superior to previous models, says Auffhammer. It’s also open source, so anyone can use it, criticise it, and tweak the numbers to get different results depending on their own assumptions. Auffhammer describes it as a major step forward in SCC modelling, but says it can still be improved further. Only damage to the four biggest sectors is included: agriculture, energy, sea level rise, and mortality. What about adding species loss, forests, water availability, conflict, and migration? What about “equity weighting”, to reveal how the poor are more affected by the wealthy? And there’s little measurement of the, admittedly, difficult-to-measure “fat tail risk” of a catastrophic event with a low probability of happening. (Energy Post)

EMEA

Model plan – South Africa has submitted an investment plan to donors who have pledged $8.5 bln to accelerate the country’s transition to renewable energy that could serve as a model for other emerging economies, two sources told Reuters. Presidency spokesman Vincent Magwenya confirmed the proposal was ready, but declined to say whether it had been submitted. “A draft of the investment plan, which outlines the investments required to achieve South Africa’s ambitious climate targets … has been finalised and will be shared with key stakeholders before it is submitted to cabinet for approval,” he said on Thursday. Negotiators are racing to conclude the deal before the COP27 climate talks in Egypt start on Nov. 6, as it could form a potential model for other emerging economies seeking to wean themselves off coal.

Borne sober – France unveiled its energy sobriety plan on Thursday, which aims to reduce energy consumption by 10% by 2024. However, the plan has no binding measures, which runs in contradiction with a new regulation adopted by EU countries a week ago, Euractiv reports. The measures are the result of four months of discussion, following Prime Minister Elisabeth Borne’s June announcement of an energy sobriety programme for each sector of the French economy in response to the energy crisis and vulnerabilities in the national electricity network. To reduce energy consumption by 10% in two years, the government has slated 15 key measures, from reducing heating to a maximum of 19C in offices to encouraging people to carpool. The plan also includes specific measures for each of the nine economic and social sectors targeted: the state, companies and labour organisations, establishments open to the public and supermarkets, industry, accommodation, transport, digital and telecommunications, sport, and local authorities. Additionally, private individuals will be advised to practice “eco-gestures”, from reducing shower time to switching off household appliances when they are on standby for too long. But while the government insists on the particular need to reduce energy consumption during peak hours, it did not set binding targets.

It’s a good start, but… – The vast majority of German private households will change the way they heat their homes as a result of rising energy costs, a survey by the German Energy Agency (dena) found. Two thirds of private households have established heating saving measures such as restructuring ventilation habits, changing heating technologies, or improving insulation, while just over a third will bring down their thermostat’s temperature, reduce heating times or heat less spaces, according to the survey. Besides expectations of higher costs, the government has called on consumers to reduce their energy consumption wherever possible in the current supply crisis. Nearly all of those questioned expected higher energy costs, but only half have already seen the increase or been informed about it, the survey found. But despite the positive attitude towards energy savings by many households, gas demand in the country is not being lowered enough, said the federal network agency for electricity (BNetzA). The agency’s head has warned against excessive gas consumption, arguing that savings of at least 20% need to be made across the board to avoid a gas emergency situation. (Clean Energy Wire)

Not on mein watch – The state premier of Brandenburg, Germany’s second largest coal mining region, has rejected calls to bring the end of coal use forward to 2030, becoming the second east German regional government head to do so. Earlier this week, the Western state of North Rhine-Westphalia (NRW) had agreed to end the use of coal by 2030 rather than 2038, the end-date enshrined in Germany’s coal exit agreement. (Clean Energy Wire)

Peak policy – Energy-intensive businesses have criticised the UK government’s refusal to launch a public information campaign encouraging households to cut consumption, as the threat of winter blackouts looms, Bloomberg reports. National Grid warned Thursday that some families could face three-hour power cuts if the UK is hit by particularly cold and still weather. The Grid is offering incentives for some domestic and corporate customers if they reduce their energy use at peak times in the coming months. However, the government appears to have rowed back from plans for a series of advertisements featuring energy-saving tips. A £15 mln campaign was signed off by energy minister Jacob Rees-Mogg before being rejected by the Prime Minister’s office.

Follow the science – The UK has opened a new licensing round for companies to explore for oil and gas in the North Sea. Nearly 900 locations are being offered for exploration, with as many as 100 licences set to be awarded. The decision is at odds with international climate scientists who say fossil fuel projects should be closed down, not expanded. They say there can be no new projects if there is to be a chance of keeping global temperature rises under 1.5C. Both the Intergovernmental Panel on Climate Change (IPCC), the global body for climate science and the International Energy Agency (IEA) have expressed such a view. The government’s own advisers on climate change said in a report earlier this year that the best way to ease consumers’ pain from high energy prices was to stop using fossil fuels rather than drill for more of them. (BBC)

ASIA PACIFIC

Diversify your supply – Energy demand in Southeast Asian countries could triple by 2050 and the region could become a net importer of natural gas and coal before that if the region does not develop alternative sources of energy, a study by the region’s energy sector body found, Channel News Asia reports. For the 10-nation group Association of Southeast Asian Nations (ASEAN), diversification of energy sources would be crucial, not only due to efforts to cut emissions, but also to meet rising energy demand, Nuki Agya Utama, executive director of ASEAN Centre for Energy (ACE) said on Thursday. “The demand is increasing … in line with that we need to provide stable supply, which would become a problem if the supply relies on one or two sources,” he said in an interview. According to a recent study by ACE, rapid economic growth in the region would push total energy consumption to an estimated 1.28 billion tonnes of oil equivalent in 2050, under a baseline scenario. Meanwhile, without significant discoveries or diversification, Southeast Asia could become a net importer of natural gas by 2025 and coal by 2039.

Fortescue forges – Fortescue Future Industries is moving ahead on plans to deliver Australia’s first commercial-scale renewable ammonia plant via a “world-first” conversion of an existing Queensland production facility to run on green hydrogen, Renew Economy reports. FFI and Incitec Pivot said on Friday they would progress planning for the conversion of the Gibson Island ammonia facility, in Brisbane, which also promises to deliver one of the world’s largest renewable hydrogen electrolysers, at 500MW and capable of producing up to 70,000 tonnes a year.

Hydrogen agreement – In its efforts to adopt advanced powering technology to decarbonise power generation in India, NTPC and GE Gas Power signed a Memorandum of Understanding (MoU) for feasibility to demonstrate hydrogen (H2) co-firing blended with natural gas in GE’s 9E gas turbines installed at NTPC’s Kawas combined-cycle gas power plant in Gujarat, Energetica reports. NTPC’s Kawas gas power plant is powered by four GE 9E gas turbines operating in a combined-cycle mode and has an installed capacity of 645 MW. Further, GE’s advance E- Class gas turbine portfolio currently has the capability to burn up to 100% by volume of hydrogen when blended with natural gas. This capability varies depending on the type of combustion system used. For fuels with over 5% hydrogen by volume, gas turbine accessories need to be evaluated and possibly modified to reliably deliver the fuel to the combustors.

AMERICAS

Smith in West Can – Danielle Smith – an ex-journalist, previous leader of the Alberta Wildrose Party, and former leader of the province’s opposition – has been elected to lead Alberta’s ruling United Conservative Party, and thus has become the new premier.  Smith was chosen by party members on Thursday to lead the UCP into the next provincial election, which is seven months away. According to the Globe & Mail, the energy sector wasn’t a huge talking point during the leadership battle but a Smith-led government is expected to favour hydrogen, carbon capture, nuclear energy, oil and natural gas as forming the backbone of Alberta energy policy. The new UCP leader is said to support the province’s emissions-reduction goals, and has said clean technology and innovation will help reduce GHGs and usher in carbon neutrality across the economy. But, much like outgoing Premier Jason Kenney before her, Smith won’t be setting net zero goals for Alberta. The incoming premier has also set the stage for an antagonistic relationship with Prime Minister Justin Trudeau and the ruling federal Liberals, with Smith pledging another legal challenge to Ottawa’s national carbon tax and to push her controversial plan for a sovereign Alberta.

Bad deal – NRG Energy just sold its 50% stake in the world’s largest carbon capture plant for only about $3.6 million, less than a half-percent of the Texas project’s roughly $1 billion construction costs, according to analysis from the Institute for Energy Economics and Financial Analysis (IEEFA). The sale leaves JX Nippon Oil & Gas Exploration Corp. as the sole owner of the 1,904-MW coal-fired Petra Nova power plant. S&P Market Intelligence described the deal as “a setback for supporters of carbon-capture projects at existing fossil fuel plants.” However, it is far more than that, according to IEEFA. The US Department of Energy sank $195 million into the carbon capture and storage plant, hoping to demonstrate the potential for the technology to counteract greenhouse gas emissions of coal plants. The NRG fire sale of its half of the project is a declaration that the taxpayer investment was a technological failure and a financial loss.

AND FINALLY…

Green munchies – PepsiCo on Friday announced plans to phase out use of natural gas at a factory in the Netherlands and adopt a system based on renewable electricity to make its deep fried snacks in an industry first that Pepsi says could become a template. The project in the Dutch town of Broek op Langedijk, where Pepsi makes 1.6 mln bags of Lay’s and Cheetos snacks annually, will replace 4.5 mln cubic meters of gas annually, saving 8,500 tonnes of CO2. Reducing natural gas usage has become a priority in the Netherlands as Russia has cut supplies to Europe and gas prices have quintupled. The system uses an electrical resistance heater to turn electricity into heat, a heat storage system, and heat transfer to circulate the thermal oil that powers the factory’s fryers. This will replace one 25MW gas-fired boiler at the factory in the first phase, cutting emissions in half. If this works, the company said it can replicate the process in other locations around the world. (Reuters)

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