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TOP STORY
US MIDTERMS PREVIEW – PART 2: Pennsylvania’s RGGI linkage uncertainty, legal woes to continue past elections
A Democratic sweep in Pennsylvania’s Nov. 8 election would not immediately spell an end to the state’s existing legal challenges to its RGGI-linked carbon market regulation, while there is no doubt what Republican control would mean for the future of the programme, experts told Carbon Pulse.
ASIA PACIFIC
China releases 2021-22 carbon market allocation draft for consultation
China’s environment ministry is planning to make slightly fewer reductions in the number of CO2 allowances it will hand out for 2021 and 2022 in the national emissions trading scheme compared to the 8% cut it has previously suggested, according to an updated draft released Thursday.
Thailand boosts 2030 emissions target to 30% cut from BAU scenario, sees role for Article 6 cooperation
Thailand has raised its 2030 climate target in its 2nd updated NDC submitted to the UNFCCC this week, with the revised commitment also stating that the Southeast Asian country’s aims to reach carbon neutrality by 2050 and net zero emissions by 2065.
IPCOS credits use depends on review outcomes, Australian government says
The Australian government has yet to rule on how carbon offsets generated under its Indo-Pacific Carbon Offset Scheme (IPCOS) will be used, and will await the outcome of domestic carbon market review processes before making a decision.
Australian $44-bln pension fund adopts EU climate reporting benchmarks to avoid exaggerated results
An Australian pension fund with $44 billion under management has adopted EU and Paris aligned reporting standards, as it released a roadmap on Thursday outlining ways it will cut emissions from its portfolio.
VOLUNTARY
VCM integrity bodies tout ‘incremental’ approach as work continues
The VCM is set to be the topic of several events organised on the margins of COP27 in Egypt this week, where experts are due to debate its merits over its weaknesses, while initiatives aimed at improving integrity highlight progress to date.
Ratings agency finds minority of REDD+ credits are good quality
The “misconception” that all forestry conservation (REDD+) projects are low quality is not true, according to a ratings agency that has classed more than 143 mln carbon credits as coming from projects with little risk of overstated claims, although they are still a minority of the offsets issued so far.
One quarter of a million Delta Blue Carbon credits snapped up at auction
A large volume of credits from a major Pakistan-based blue carbon project have been snapped up in auction to add to a flurry of trades this week.
Global reforestation company launches accelerator funding for carbon credit projects
A global reforestation company on Thursday launched a ‘seed to carbon forest’ accelerator, helping to guarantee high-quality offsets to investors in exchange for early-stage project finance.
Carbon blockchain company partners with NZ company to launch $100 mln climate fund
A carbon blockchain company is partnering with a New Zealand aviation enviro-tech company to launch a $100 million climate fund.
Start-up to offer carbon credits for shutting oil and gas wells
A group of oil and gas industry veterans on Thursday launched a company that will issue carbon credits for closing economically viable oil and gas wells.
Canadian VER investor teams up with Maine biochar developer
A Toronto-based ESG investor signed a carbon credit streaming agreement with a developer to build a biochar pyrolysis pilot facility in Enfield, Maine, the companies announced Thursday.
ClimeCo absorbs VER retailer’s network after organisational rebrand
US-headquartered offset developer and intermediary ClimeCo on Wednesday announced it has acquired the VER inventory and customer networks from a carbon credit retail firm that recently shifted its operational focus.
EMEA
EU emissions dropped 5% in three months to October -researchers
EU emissions fell by 5% in the last three months, as the energy crisis encouraged a speedier roll-out of low-carbon energy alternatives and high energy costs dampened industrial output in the bloc, according to real-time emissions tracking analysis.
Brussels confirms a near-doubling of EU Innovation Fund cash in latest call
The European Commission is launching the third call for large-scale projects under the EU ETS-funded Innovation Fund, confirming an earlier intention for the call to be at €3 billion.
Euro Markets: Weakening sentiment drags EU carbon lower for fourth session
EU carbon fell for a fourth session on Thursday, shrugging off a strong daily auction as sentiment continued to weaken after last week’s strong gains, while energy markets weakened despite a report that predicted Europe will face challenges in rebuilding gas stocks next year.
Brussels confirms a near-doubling of EU Innovation Fund cash in latest call
The European Commission is launching the third call for large-scale projects under the EU ETS-funded Innovation Fund, confirming an earlier intention for the call to be at €3 billion.
Enel reports 45% rise in ETS-covered output, as Uniper posts record loss
Italy’s Enel reported a 45% increase year-on-year in EU ETS-covered fossil generation, while German firm Uniper published a record quarterly loss due to a cease in Russian gas imports, according to utility reports published Thursday across two of Europe’s largest energy companies.
UK govt to push ahead with new ETS data publication rules, shelves plans for daily permit holdings reports
The UK ETS Authority will proceed with legislating to introduce new legal obligations to publish compliance and other scheme data, it announced late Thursday, while shelving plans to release regular reports on permit holdings.
AMERICAS
NA Markets: Market volatility hits CCAs, RGAs reach 2-mth highs
California Carbon Allowance (CCA) prices traded through a volatile week alongside Scoping Plan enthusiasm and broader market sentiment, while RGGI Allowance (RGA) prices continued a steady trek higher to levels not seen since the end of August.
Canadian speculator boosting offset holdings in Alberta TIER programme by nearly 20 fold
A Calgary-based investment firm is betting big on carbon credits under Alberta’s Technology Innovation and Emissions Reduction (TIER) regime, seeking to significantly ramp up its offset holdings next year after a large capital raise.
INTERNATIONAL
Carbon pricing coverage rises to 40% of global emissions -OECD
The share of greenhouse gas emissions covered by either explicit or implicit carbon pricing rose to 40% in 2021 from 32% in 2018, with average carbon prices rising in 47 of the 71 countries looked at, the OECD said in a report on Thursday.
ICYM
US MIDTERMS PREVIEW – PART 1: Oregon climate programmes seen at risk as GOP candidate within reach of governor’s office
Prospects of a Republican winning Oregon’s surprisingly tight governor’s race are raising alarms that the state’s ambitious climate programmes could be put on the chopping block, leaving Oregon’s GHG reduction commitments in jeopardy and its agenda in limbo.
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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
New gig – Former Executive Secretary of the UNFCCC, Patricia Espinosa, has announced she is launching an ESG consulting firm – onepoint5 – focused on supporting private companies and public institutions to succeed in addressing climate change. Espinosa served in the role from May 2016 to July 2022. Prior to her UN appointment, Espinosa was Minister of Foreign Affairs of Mexico from 2006 to 2012. “Motivated by the urgent need to turn the goals of the Paris Agreement into effective action and tangible results, Espinosa has founded onepoint5 to help private and public institutions navigate the challenging transition to sustainable practices and limit temperature rise,” a press release said. Espinosa said her new venture allows her to share her expertise on climate change with businesses, governments, and civil society organisations that are ready to commit to ambitious climate action and to adapt to major economic and regulatory changes underway around the world. onepoint5 partners with organisations that want to introduce ESG friendly practices and explore internal operations. The firm helps identify weaknesses, opportunities, disruptive technologies, regulatory risks, tech partners and sources for green financing.
Hydrogen partnership – Australian green energy developer Fortescue Future Industries (FFI) and Italian-based Enel Green Power (EGP) have today announced a partnership to jointly explore green hydrogen value chain developments in Latin America and Australia, H2View reports. Through the collaboration, the companies hope to increase the role of green hydrogen in decarbonising hard to abate sectors such as chemical production, fertilisers, steel, shipping, and aviation. In pursuit of establishing further large scale green hydrogen and ammonia production sites in Latin America and Australia, FFI and EGP intend to establish a framework to identify and assess possible projects in the regions. In 2020, EGP revealed plans for a ‘first of its kind’ green hydrogen production plant in Chile, working in partnership with AME, ENAP, Siemens Energy, and Porsche. Additionally, the partners hope to make green hydrogen cost-competitive with fossil fuel-based alternatives by the end of 2030.
EMEA
TotalProblem – TotalEnergies is facing accusations of vastly underestimating its carbon emissions, as scrutiny intensifies over how the oil and gas industry reports on climate change goals. In a study based on the French energy group’s own disclosures, campaign group Greenpeace estimates that Total’s carbon emissions from 2019 could be almost four times higher than the levels disclosed by the company and that some excluded activities should be included in its reporting. Greenpeace, which said it had applied emissions standards used by French state environmental agency Ademe to Total’s operational figures, found that the company was responsible for 1.6 bln tonnes of CO2e in that year, compared with the 455 Mt reported. It said it had flagged its findings, which have not been independently verified, to French market regulator AMF. Total rejected Greenpeace’s methodology and said the group was double-counting some of its activities. The AMF declined to comment. Greenpeace estimated that Total’s 2019 emissions linked to crude oil sales and trading alone reached 610 Mt of CO2e, or more than what the company reported across its entire business. Total challenged the methodology, and said the Greenpeace figures were not realistic given the company’s small share of the energy market. The estimates “did not take into account TotalEnergies’ integration along the oil and gas value chain, and therefore count emissions … several times over”. It added that it had deepened its climate disclosures since 2019 — the year assessed by Greenpeace before oil demand plummeted during the coronavirus pandemic. (FT)
Cheap tickets – Germany is to introduce a discounted ticket of €49 a month for unlimited travel on local public transport next year to encourage people to cut down on car driving and help the country to achieve its emissions targets. Berlin aims to become climate-neutral by 2045 and cut 65% of emissions by 2030 compared with 1990. The country has managed an overall cut so far of around 40%, but the transport sector has lagged behind, with 2021. A more heavily discounted €9 per month nationwide ticket that was valid just for the past summer is estimated by Germany’s transport companies association to have prevented some 1.8 billion tonnes of CO2 emissions, but only replaced about 10% of car journeys. (Reuters)
Lender beware – The European Central Bank has said lenders have until the end of next year to reflect climate risks in their governance, strategy and risk management. “A wait-and-see approach still prevails in most banks,” the ECB said. The first milestone will be for lenders to ensure they adequately categorize climate and environmental risks and carry out a full assessment of the impact on their businesses by March next year. The ECB has already imposed “binding qualitative requirements” on more than 30 banks in its annual review of the risks that individual lenders face. A “small number of banks” also saw the outcome of the ECB’s climate exercises this year have an impact on the scores used in those risk assessments that impact their capital requirements. (Bloomberg)
Contain it – Mediterranean Shipping Company (MSC) has become the latest major carrier to advise customers of the potential financial costs that it expects to pass on related to the potential expansion of the EU ETS to the shipping industry. The world’s largest container carrier acknowledged that the final terms are not resolved but decided to issue a customer advisory. “Should the EU fully implement its plans, we anticipate higher operating costs in order to be compliant. We therefore plan to pass on the cost of compliance, as we have done with other forms of environmental regulatory costs in the past,” MSC said. The customer advisory sets out costs ranging from a low of approximately $30 per dry forty-foot equivalent unit (FEU) to a high of approximately $160. The average forecast for each dry FEU is $85. Similarly, the range for each reefer is between approximately $100 and nearly $500 – an average of approximately $250. The model was developed based on an average EUA price of approximately $90 per tonne applied at 100%. (Maritime Executive)
ASIA PACIFIC
CCS agreement – Malaysia’s state-owned energy giant Petronas has teamed up with Storegga, a UK independent developer of carbon storage and clean fuels, to assess and determine the commercial, regulatory, and economic factors required for the development of carbon capture and storage (CCS) hub and cluster projects in Malaysia, and potentially beyond, Upstream reports. A memorandum of understanding signed Wednesday progresses both companies’ efforts to combat climate change through the development of CCS and carbon management globally, noted Storegga. “CCS is a vital tool. A reverse carbon cycle at scale is urgently needed to reduce and remove CO2 from the atmosphere. We are looking forward to working with Petronas in Malaysia and beyond to catalyse CCS hubs and clusters. These hubs will accelerate the development of important carbon reversal technologies such as direct air capture,” said Storegga chief executive Nick Cooper.
Sustainable loan – Orica has converted $1.3 billion of existing bank debt facilities to sustainability-linked loans (SLLs), the Australian mining and infrastructure solutions company announced in a press release. Under the SLLs, Orica’s progress against sustainability key performance indicators will be measured against agreed performance targets aligned with its public commitments. Performance against agreed target milestones is rewarded with discounts on the loan margin and underperformance is penalised with a higher loan margin. Key performance indicators include reducing Scope 1 and Scope 2 greenhouse gas (GHG) emissions, reducing potable water intensity, and increasing representation of women in senior leadership.
Biofuel buy – Shell Eastern Petroleum, a wholly-owned subsidiary of Shell, has acquired EcoOils, a waste oil recycling firm, Biodiesel Magazine reports. This acquisition is part of Shell’s ambition to increase production of sustainable low carbon fuels for transport, including sustainable aviation fuel. The acquisition will include 100% EcoOils’ Malaysian subsidiaries and 90% of its Indonesian subsidiary. EcoOils uses recycling technology to reduce waste going into landfill and produce spent bleaching earth oil, an internationally recognized biofuels feedstock that can be used to produce sustainable low carbon fuels.
No deal – The head of industry organisation Dairy New Zealand, has slammed the government’s proposal for a split-gas farm-level emissions pricing scheme for the agriculture sector. Dairy NZ chair, Jim van der Poel said in a statement that the government’s proposal threatens the viability of farming businesses and rural communities, and is not acceptable for farmers. He said the government should adopt the original proposal put to it by industry climate partnership He Waka Eke Noa. He described the government’s changes to the scheme as significant and unnecessary. He noted the agriculture sector – the country’s most polluting industry – must reduce emissions, but added that it cannot “drive blindly towards targets at all costs”.
More tech – China has pledged to work on high-tech solutions to make use of innovations in big data, biotech and artificial intelligence to tackle pollution and climate change, Reuters reports. In a new action plan, the Chinese government said it would build a “green technology innovation system” over the 2021-2025 period, develop carbon capture, utilisation and storage (CCUS) technology, and support large-scale demonstration projects. It also plans to support research into “deep decarbonisation technologies” in a variety of industrial sectors, including steel, cement, thermal power and agriculture. The world’s biggest greenhouse gas producer has promised to bring emissions to a peak by 2030 and to become carbon neutral by 2060.
New alliance – State Grid, the largest utility company in the world, has teamed up with three other Chinese state-owned power groups to jointly develop an emissions monitoring platform, according to power news website BJX. The alliance – which includes China Southern Power Grid, Inner Mongolia Grid, and the Xinjiang Production and Construction Corps – aims to launch a digital platform that could monitor emissions at the national level, the report said.
AMERICAS
Clean credit Canada – Canada will introduce refundable tax credits for clean technologies worth up to 30% of investment costs, in a bid to close competitive gaps with the US in scaling up green technologies, the government said on Thursday. It will also launch a growth fund, first announced in April, by the end of the year with a capitalisation of C$15 bln ($10.92 bln) to help mitigate the risks private investors take on when investing in new technologies and infrastructure. One of the investment offerings foreseen by the growth fund are so-called “contracts for difference”, which PM Justin Trudeau’s administration has said could help investors in carbon capture and storage mitigate the risk that a future government eliminates Canada’s carbon pricing system. (Reuters)
Renewable rest – US construction on renewable energy is down 18% compared to last year because of supply-chain issues and tax uncertainty. In Q3, wind installations were down 78% while solar fell 23% year-on-year. Solar panels have been hard to come by and confusion over incentives on grid installation has slowed down some of the progress. The industry believes the Inflation Reduction Act passed this year should change both of those issues. (Bloomberg)
Counter Rica – Costa Rica will no longer lead an international initiative to phase out oil and gas production, the country’s environment minister told Climate Home. Denmark and Costa Rica jointly launched the Beyond Oil and Gas Alliance (BOGA) at last year’s COP26 summit along with six other core members. This “group of first movers” committed to phase out or rule out fossil fuel development in their countries. But after a change in government in early 2022, the alliance is not a priority for COP27, said Franz Tattenbach, Costa Rica’s newly appointed environment minister. “Costa Rica will not be very active in BOGA … I don’t think this is a great example. Costa Rica will not lead by saying ‘we are in BOGA’. Costa Rica has much more to teach (the world) than by saying ‘we are banning this’,” he said during a press briefing on Tuesday. “It’s more interesting to stop deforestation in the Amazon, in tropical Africa and in Latin America in general. That can do more to stop climate change and it serves us better. That doesn’t mean we will exit BOGA, but we won’t have a leading voice.”
Small fish, big bill – Large refiners are paying less for credits to comply with US biofuel blending regulations than smaller refineries, according to a US Government Accountability Office (GAO) report published Thursday. The EPA had earlier denied smaller refineries exemptions to the blending biofuels requirements under the Renewable Fuel Standard (RFS). Refiners are required to blend billions of gallons of biofuels of buy RINs from refineries that do. The GAO report said the EPA had not thoroughly assessed the risk to smaller refineries when denying them exemptions. (Reuters)
Tree plan – A commission chaired by the Maryland Department of the Environment has formed a plan to plant millions of trees and capture GHG emissions that contribute to climate change. “Final Plan for Growing 5 Million Trees in Maryland” charts a pathway to reach the goal of planting and maintaining 5 million native trees in Maryland by 2030. A key focus of this effort is supporting equity through the targeted planting of at least 500,000 of these trees in underserved urban communities. The plan was produced by the Maryland Commission for the Innovation and Advancement of Carbon Markets and Sustainable Tree Plantings, which was established by the Maryland General Assembly as part of the Tree Solutions Now Act of 2021. (Conduit Street)
Jujuy + ALLCOT – The government of the Argentinian province of Jujuy, through the Ministry of Environment and Climate Change, has signed an agreement with developer ALLCOT to promote projects qualified to the carbon market, and finance the protection of Jujuy’s native forests within the framework of Jujuy’s Carbon Neutral Green Jujuy 2050 strategy. Through the deal, Jujuy reaffirms the policy of achieving a “Carbon Neutral Green Jujuy 2050” by strengthening forest conservation through international financing, where ALLCOT will be a strategic ally. The province would enable beneficiaries of the Forestry Law, i.e. those who own land with forest areas having some level of conservation, to submit projects qualified for the carbon credit market developed by ALLCOT, and “allowing them to access international financing to better manage forests for climate change adaptation and reduce the risk of forest fires”. The parties agreed to join efforts to achieve the eventual implementation, development, validation and verification of a project grouped with VERRA’s specific methodology. ALLCOT said it will be in charge of listing the project, determining the additionality criteria, conducting the VCU potentiality study based on the analysis of the management plans, conducting the legal and political characterisation at the provincial scale, conducting the preliminary characterization of the community climate and biodiversity component (CCB), establishing the potential of the sustainable development goals (SDGs), and establishing the requirements and deadlines of the Forest Stewardship Council.
VOLUNTARY
Free fall – A handful of major corporations that founded the Frontier climate initiative have been rocked by financial and legal challenges, raising questions about their nearly $1 bln bid to remove carbon from the atmosphere, E&E News reports. The valuations of four Frontier founders — Google parent company Alphabet, Meta Platforms, Shopify, and Stripe — have collectively dropped by more than $1.5 trillion this year. The market capitalisation of online payments platform Shopify and Meta, the company formerly known as Facebook, have been particularly hard hit: each has plummeted by more than 70% since the end of 2021. And global consulting partnership McKinsey & Co., the other member of Frontier, is under investigation for tax fraud in France and is facing corruption charges in South Africa. “Taken together, the financial tumult battering the high-profile coalition for advancing carbon-catching technologies illustrates the danger of relying on corporations to fund climate innovations that scientists say are essential to prevent the worst effects of warming,” E&E News said.
Speaking of McKinsey – The consultancy has launched a Net Zero Built Environment Council – a cross-sector coalition of industry leaders and scale-ups to create new pathways and technologies to reduce the 40% of CO₂ emissions caused by buildings. The Council aims to align siloed supply chains, construction projects and markets, and help tap into an estimated $800 billion-$1.9 trillion in potential green markets. The launch of the Council comes in the wake of new McKinsey research showing that 76% of emissions from an average building are caused by operations while 24% come from construction, which demonstrates a need for collaboration across the built environment lifecycle.
Corporate flying curbs – Some 74% of employees believe that to reduce levels of corporate flying, a business must set targets and include travel policies, according to a poll of 2,506 employees across the US, the UK, France, Germany and Spain, conducted by Ipsos for green groups including T&E. The survey also finds that nearly three-quarters of employees believe that an important factor for reducing a business’s carbon footprint is curbing levels of corporate flying.
A force for good – Salesforce is launching three new environmental initiatives to bolster world leaders’ efforts to advance climate solutions, committing additional funds and resources to accelerate climate justice and climate action at scale through nature advocacy and policy engagement. At COP27, Salesforce and a global coalition of ocean leaders will announce the “High Quality Blue Carbon Principles and Guidance” – a framework that “provides a consistent approach to ensuring that blue carbon credits optimise outcomes for people, biodiversity, and the climate”. The principles also provide “guardrails” for the development and management of blue carbon projects “that are equitable, fair, and credible”. Salesforce is also announcing the launch of a Nature Accelerator, a new initiative that leverages resources from across the company to help non-profits innovate and scale urgently-needed climate solutions. It will provide a cohort of non-profits with flexible capital to pursue big ideas, test new solutions, and scale successful climate programs faster. Lastly, Salesforce is announcing it will support the Global EverGreening Alliance (GEA) in a five-year initiative to restore and grow 30 mln trees across Zambia, as part of its commitment to 1t.org, the global movement to conserve, restore, and grow 1 trillion trees by the end of the decade. “Zambia faces land degradation and poor environmental governance, which negatively impacts the country’s natural resources and the rural communities that depend on them,” the company said. The project is part of GEA’s Restore Africa Programme, which aims to scale regenerative farming practices across Africa, and significantly contributes to the African Forest Landscape Restoration Initiative to bring at least 100 million hectares of degraded land under restoration by 2030. Salesforce achieved net zero residual emissions in 2021, and this year launched a carbon credit marketplace where organisations can find and purchase voluntary units.
Edging up – US-based carbon forest developer NCX announced on Thursday a new methodology for harvest deferral, aiming to “set a new standard for quality”. The NCX flagship methodology is based on short-term harvest deferrals, with the company issuing carbon credits to private landowners that have delayed their timber harvests for as little as one year. The new methodology continues to allow this minimum one-year time commitment, but has made changes to benchmarking, leakage provisions, harvested wood products, and increased the overlying uncertainty threshold. Taken together, these improvements could help muster additional credibility and trust, the company said, where the short-term harvest deferral programme has garnered past criticism and has not yet been approved by the world’s largest carbon credit certification programme under Verra.
AND FINALLY…
Goodbye glaciers – The major glaciers that top Mount Kilimanjaro in Tanzania, mountains in Yosemite and Yellowstone national parts, and the Dolomites in Italy will all melt by 2050, even with a reduction in global emissions, according to a UNESCO report. Even if global temperatures rise by only 1.5 degrees Celsius, one third of the glaciers at World Heritage sites will disappear. Those heritage sites are already losing 58 bln tonnes of ice each year. Half of the human population relies on water from those glaciers, the report said. (CNBC)
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