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CARBON FORWARD 2022

FEATURE: Where are the buyers? Missing demand for voluntary offsets befuddles market stakeholders

Conversations around missing demand echoed in the hallways of London’s Royal Institution on Friday, the final day of this year’s Carbon Forward conference, where navel-gazing voluntary carbon market (VCM) participants opined over the possible reasons, which ranged from a souring global economy, to the increased reputational risk linked to using offsets, to confusion and frustration over a reforming process to meant to make the market less confusing and frustrating.

Voluntary carbon price of $20 required to incentivise high-quality projects -analysts

A minimum price of $20/tonne would be required across the voluntary carbon market for there to be high integrity climate impact from quality projects, according to analysts speaking at the Carbon Forward conference Friday.

Verra still endorsing ICVCM aims, as exchanges say initiative is stunting trade

Offset standard developer and manager Verra still supports the overall goals of the Integrity Council for the Voluntary Carbon Market (ICVCM) despite its numerous concerns, while standardised VER exchanges said the initiative is hindering liquidity, a conference heard Friday.

VER buyers caring less about vintage in some carbon credit purchases

The year in which an offset registry issues a nature-based VER is becoming less important for some carbon credit buyers, as companies focus more on investigating projects themselves, a conference heard Friday.

Compensating fossil fuel shipments to whittle down offset surplus

The surplus of voluntary offsets globally could be quickly whittled away by a rising tide of companies seeking to compensate commodity shipments, a conference heard Friday.

AMERICAS

US senators urge CFTC to pursue strong oversight of voluntary carbon market

A group of progressive US senators on Thursday called on the US Commodity and Futures Trading Commission (CFTC) to implement strong accountability, robust standards, and rules governing the voluntary carbon market, as well as to investigate current VER futures contracts.

Regulated parties boost CCA holdings, while financials’ RGGI net length hits 4-mth high

Compliance entities reversed course and padded their California Carbon Allowance (CCA) holdings this week, while financial players shortened their WCI positions but lengthened in RGGI, according to US Commodity Futures Trading Commission (CFTC) data published Friday.

European energy analysis firm launches US carbon coverage with new hire

A European energy and carbon market intelligence firm will start providing insight on US carbon markets, adding to the growing list of analysts dissecting North America’s  programmes.

ArcelorMittal launches “transformational” low-carbon steelmaking project in Canada

Steelmaking giant ArcelorMittal has announced the launch of a key decarbonisation project in a groundbreaking ceremony at a steel plant in Ontario, Canada, with investment of C$1.8 billion ($1.3 bln) expected to reduce GHG emissions from the site’s operations by up to 3 million tonnes per year by 2030.

ASIA PACIFIC

Thailand, Singapore target bilateral carbon market agreement

Singapore and Thailand will work towards developing an agreement for bilateral cooperation on carbon credit trading under Article 6 guidelines to be finalised next year, the Singaporean ministry of trade and industry has announced.

CN Markets: CEA volume sees modest rise, but sentiment unchanged amid little policy progress

China’s emissions market saw a rebound in trading volume over the past week after a quiet September, though sentiment remains negative as the lack of policy clarity on the next compliance cycle continues to drain both supply and demand.

HK-headquartered firm teams up with new carbon fund

A Hong Kong-headquartered company has signed an MoU to supply a variety of voluntary offset credits to a new carbon fund managed from Singapore.

EMEA

EUAs to take four years to resume uptrend after dropping on REPowerEU sales, recession -analysts

EUA prices are expected to take four years to recover to recent levels as the EU grapples with a darkening economic outlook and record energy costs, as well as an expected shift in supply towards the front of the curve as the bloc sells more allowances, according to an updated analyst forecast.

Euro Markets: EUAs post 2.6% weekly loss as market rues lack of signals from politicians and analysts

European carbon prices posted a 2.6% weekly loss after Friday saw prices drift lower in a narrow range, as traders eyed macroeconomic headlines from the UK and digested presentations from yesterday’s EU ETS sessions at the Carbon Forward conference in London.

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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

Tell it like it is – Climate and energy commentator Michael Liebreich warned about hyping hydrogen, directly to delegates at a hydrogen conference, according to a report from Hydrogen Insight. “I’ve lived through, I think, five [economic] bubbles in my professional career, and I’m afraid to say I start to recognise the pattern,” the founder of Bloomberg NEF said to a large room filled with hydrogen professionals. “The view that hydrogen is a silver bullet or a Swiss Army knife capable of decarbonising everything from heating to transport to heavy industry and power generation is dangerous,” Liebreich said. “This leads us into bubbles.” The use of clean hydrogen in a net zero world would actually be limited, he explained, by the physical properties of the gas, the sheer amount of renewable energy that would be required if green H2 were to decarbonise certain sectors, and the fact that hydrogen is in direct competition with electric options that are likely to be lower-cost and easier, Liebreich told delegates at the World Hydrogen Congress in Rotterdam this week.

EMEA

Net zero sultanate – Oman is aiming to reach net zero carbon emissions by 2050 through an ambitious national plan, The National reports. Oman’s Sultan Haitham this week passed a royal decree to approve the plan, which is in line with Oman’s 2040 Vision, the Oman News Agency reported. He also approved the establishment of the Oman Centre for Sustainability “to supervise and follow up on plans and programmes for carbon neutrality”, it added. Environmentalists celebrated the move. “Oman sets 2050 as its net zero year target with plans to set out a national road map and establishing the Oman Sustainability Centre to oversee and implement plans and programmes to achieve net zero finally,” Omani marine scientist Rumaitha Al Busaidi wrote on Twitter.

Scrap the cap – A deal on capping gas prices in the EU remains elusive as national leaders prepare for next week’s summit to discuss ways of containing an unprecedented energy crunch that’s fuelling inflation and threatening to push the bloc into a recession. The controversial idea of imposing a limit on soaring gas prices continues to divide member states, whose energy sources and economic strength vary across the 27-nation bloc, an EU official told Bloomberg. Proponents of a cap differ on its potential scope and design, while opponents are concerned about endangering the security of supply after Russia cut shipments to the region following the invasion of Ukraine. To rein in the crisis, EU leaders are likely to endorse a set of steps to strengthen the bloc’s resilience and better use its leverage in negotiating gas contracts, according to the official, who asked not to be identified commenting on private talks. Those actions include bolstering the EU mechanism for common gas purchases and establishing a new index for liquefied natural gas after the current benchmark failed to reflect the region’s energy reality. The two-day summit is scheduled to start on Oct. 20 in Brussels.

Plus tard – EDF has postponed the restart of six nuclear reactors amid worker strikes, putting further strain on French power supply as the country grapples with lower-than-usual atomic output. The strike action is blocking maintenance works and repairs at the reactors, CGT union leader Sebastien Menesplier said in a statement Friday. The delays in the restarts range from one day to three weeks, Bloomberg reports. France earlier this month unveiled a sweeping plan to trim heating and power use in everything from public administrations and residential buildings, to shopping malls, stadiums and spas in a bid to avoid energy shortages this winter as EDF struggles with repairs of some of its reactors, while Russia trims gas deliveries to Europe.

ASIA PACIFIC

Banking on coal – Indonesia’s four largest banks handed out loans totaling $3.5 billion of direct loans to the domestic coal industry from 2015-2021, despite their stated commitments to sustainable financial practices, a new report shows, Mongabay reports. The report by a coalition of civil society groups looked at loans made by BNI, BRI and Bank Mandiri, all state-owned lenders, and BCA, the biggest private sector bank in the country. The four banks were pioneers of sustainable financing initiative in Indonesia back in 2018 together with WWF. To look at whether the four banks are walking the talk, the coalition studied the annual reports of the 24 coal companies that are listed on the stock exchange in Indonesia. It found that they received $3.5 bln in direct loans from the four banks since 2015. Binbin Mariana, Southeast Asia energy campaigner for campaign group Market Forces, said banks in Indonesia, the world’s fifth-largest coal producer and top exporter, lag behind lenders elsewhere when it comes to ending financing for destructive activities.

New standard – The Australian government will introduce tighter noxious emissions standards for new trucks and buses. A statement from the government said the new standards, known as Euro VI, will be phase in over 12 months from Nov. 1, 2024, and will save the Australian community A$6.4 bln over 25 years from fewer premature deaths and chronic illnesses. The government noted Euro VI standards are already in place in the EU and UK, and equivalent standards also apply in most developed countries, including the US and Japan. Introducing Euro VI will mean manufacturers must add the advanced safety and fuel-saving technologies to Australian models that other countries already have, which will help improve safety outcomes, and contribute to the country’s emissions reduction targets, according to the government. It added that the government was considering how to best improve fuel quality and enable all new light vehicles sold in Australia meet tighter, Euro 6d, fuel quality standards.

AMERICAS

Carbon capture catch-up – The Canadian Association of Petroleum Producers (CAPP) has requested the federal government to more than double government incentives for carbon capture and other clean energy projects to level the playing field with new US funding from the Inflation Reduction Act (IRA) that increases tax credits by 70% to $85/tCO2. Canada’s April budget had earmarked C$2.6 bln ($1.9 bln) over five years for carbon capture incentives, and then C$1.5 bln/yr until 2030. In CAPP’s estimates, these incentives would not even meet the cost of capital for carbon capture projects, compared to the US funding that would in fact return a positive project cash flow. A fiscal update is due in the coming months, where the government is expected to signal additional incentives ahead of Canada’s federal budget in the first half of 2023. (Bloomberg)

Oil sans emissions – A consortium of Canada’s six largest oilsands companies – The Pathways Alliance – is proposing to spend C$16.5 bln ($11.9 bln) before 2030 on the first stage of a carbon capture and storage (CCS) facility near Cold Lake, Alberta. The project would capture an estimated 10 MtCO2/yr from 20 oilsands facilities in Northern Alberta. Preliminary work on the project is underway, although the group has not made a final decision to go ahead with the project, according to media reports. The Pathways Alliance is also in talks with the federal and provincial governments, expecting to begin construction once financial and regulatory conditions are in place. The group has completed pre-engineering and consulting with Indigenous communities along the route of a proposed 400 km pipeline that will carry CO2 to a storage hub.

Blue mapping – An interdisciplinary team of climate scientists, marine ecologists, biogeochemists, economists, and policy experts—including Fisheries and Oceans Canada, Parks Canada, BC Parks, Oceans North, The Kelp Rescue Initiative, Nature Trust, and BC Parks are collaborating to create the first assessment of the storage capacity of “blue carbon” ecosystems along Canada’s 243,000 km coastline. Blue carbon ecosystems include salt marshes, seagrass meadows, and kelp forests that have the capacity to store two to ten times more carbon than terrestrial forests. University of Victoria researchers have partnered with the University of BC, Dalhousie University, and University of Laval in a C$1.59 mln three-year project supported by the Natural Sciences and Engineering Research Council of Canada and Mitacs. The project will assess storage capacity of marine sediment carbon sinks, as well as evaluate areas of the country’s coastline where protection and restoration would provide the greatest natural climate solutions. (University of Victoria)

VOLUNTARY

Restore order – The body that certifies environmentally-friendly wood products will green-light logging companies who have cut down forests if they restore them and compensate the communities they’ve harmed. Currently, companies who have cut down forests since 1994 cannot get a green certification from the Forestry Stewardship Council (FSC) for their wood products like pulp and paper. As some buyers insist on certification, this restricts their opportunities to sell. But, at the FSC assembly in Indonesia yesterday, members overwhelmingly voted to allow these companies to be certified, as long as they restore the same amount of forests they have destroyed between 1994 and 2020. No deforestation after 2020 will be allowed. The move was broadly welcomed by green NGOs and by logging companies, particularly in Indonesia, who are keen to gain FSC certification. (Climate Home)

The terminal – Royal Caribbean Group’s new Galveston terminal, which is opening Nov. 9, will be the first cruise terminal to generate 100% of its needed energy through on-site solar panels, the company announced Thursday. The terminal will offset its CO2 emissions through the purchase of carbon credits, the company did not specify how many credits it will buy or from which projects.

AND FINALLY…

Exodus at Exxon – The 140-year-old oil company is making more money than ever. Yet the pandemic exposed deep cultural problems – and talent is fleeing. Bloomberg Businessweek reports that the company has experienced the highest attrition since its merger with Mobil in 1999, with layoffs representing less than half of the 12,000 departures globally in the past two years. An investigation involving interviews with more than 40 current and former employees (many of whom requested anonymity because Exxon hasn’t authorised them to speak publicly), as well as reviews of dozens of internal documents, reveals one overriding reason talent is fleeing: a culture that’s increasingly out of step with the world around it. Those interviewed describe an organization trapped in amber, whose insular and fear-based culture – once a beacon of corporate America – has become a drag on innovation, risk-taking, and career satisfaction. Although many expressed pride at working for an industry leader, they were also frustrated by how slow it was to invest in some of the energy industry’s biggest breakthroughs over the past decade, including shale oil and low-carbon technologies, making it a place where the best and brightest no longer want to spend their best years.

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