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TOP STORY
US MIDTERMS PREVIEW – Part 3: GOP wins could slow IRA implementation, block North Carolina RGGI membership
A Republican takeover in the US Congress on Nov. 8 could create barriers to implementing Democrats’ climate-focused Inflation Reduction Act (IRA), and a strong GOP showing at the state level could scuttle North Carolina’s planned RGGI linkage and Arizona’s clean energy plans, experts told Carbon Pulse.
AMERICAS
California cap-and-trade emissions rebound 5% in 2021, coming in below expectations
GHG output under the California cap-and-trade programme bounced back in 2021 as the state emerged from earlier rounds of the COVID-19 pandemic, according to data published Friday, with the emissions figure coming in at the lower end of market stakeholders’ expectations.
Financials roar back into WCI and RGGI, producers take a time out
Compliance entities reduced their California Carbon Allowance (CCA) and RGGI Allowance (RGA) holdings across the board this week, while speculators added to RGA holdings and lifted CCA net length to four-month highs amid the October contract expiry, according to US Commodity Futures Trading Commission (CFTC) data published Friday.
Brazilian forest protection scheme takes shape in wake of Lula victory
A market-based forest conservation programme in Brazil appears poised for firmer backing under President-elect’s Luiz Inacio Lula Da Silva administration given his pledge to end deforestation and his party’s implementation of laws to protect the Amazon.
EMEA
EU lawmakers want to use ETS for climate finance, ‘jumbo’ trilogue expected in December
At least 10% of revenues from EU ETS auctions should be allocated to finance climate action in poorer nations, senior MEP Peter Liese said in a briefing on Friday, signalling that the bloc’s parliament will push the issue at the upcoming COP27 UN climate conference in Sharm el-Sheikh.
The EU carbon removals certificate is on its way, but NGOs raise greenwashing fears
A Brussels proposal for carbon removal labelling is due out by month-end, though NGOs have already raised concerns about a leaked draft, questioning its effectiveness and whether it risks undermining EU climate ambition.
Brussels idea to tap ETS revenue to pay CBAM costs divides EU nations
EU finance ministers will next week discuss a Brussels idea to fund the early running costs of the bloc’s carbon border adjustment mechanism (CBAM) with ETS auction revenue, though they are not expected to reach agreement as they are too divided on the issue, an EU source said on Friday.
Euro Markets: EUAs post 6% weekly loss as auction-fuelled morning rally fades amid selling pressure
European carbon recovered solidly on Friday morning and flirted with a key technical level after a second successive strong auction result triggered buying, while energy markets were left unimpressed by a cut in nuclear output forecasts in France.
RWE posts strong 16% increase in EU ETS-covered generation in quarterly results
German utility RWE announced a 16% increase in coal, lignite, and gas generation covered by the EU ETS over the first nine months of 2022, it said in preliminary data.
Norway updates NDC to 55% to align with EU amid climate policy linking
Norway, the largest oil producer in Europe, has raised its emission reduction target to at least 55% of 1990 levels by the end of this decade, keeping step with the EU’s goal as it looks to increasingly link its climate policy with the 27-nation bloc.
South Africa calls for $83 bln and more grants over next five years to move from ‘coal to clean’
South African president Cyril Ramaphosa has said that his country’s transition from coal to clean energy and wider transition will require 1.5 trillion rand, or around $83 billion, over the next five years, in an online address Friday.
EU member states make scant progress in 2022 ETS permit allocations in October
EU member states made scant progress in the past month in handing out free carbon permits for 2022, data published late Friday showed.
ASIA PACIFIC
Shell teams up with three companies to develop massive China “open source” CCUS project
Oil major Shell has partnered with Chinese national oil company Sinopec, steelmaking giant Baowu, and chemicals company BASF to explore the feasibility of developing an “open source” CCUS project in eastern China that could potentially handle “tens of millions” of tonnes of CO2 annually, the partners announced on Friday.
CN markets: CEA price stable, though observers express concern over oversupply
The spot price for Chinese carbon allowances remained unchanged throughout the past week but with improved liquidity, though observers said trading activities might not improve significantly in the near term despite a possible reduction in allowance allocation due to lasting oversupply issues.
ETS data reporting frequency stretches capacity levels of auditors in China’s Hebei province, raises fraud concerns
A new rule requiring all national emissions trading scheme participants in Hebei to measure and report the carbon content in their coal on a weekly basis is almost impossible to comply with due to a lack of auditors and increases the chances of data falsification, according to sources.
Beijing to hold carbon allowance auction in late November
The Beijing municipal government will auction 2 million carbon allowances under its pilot emissions trading scheme in late November, with the price floor set at a relatively high level compared to previous years.
Australia Market Roundup: Carbon projects deliver 1.6 mln ACCUs to govt, minister to review fossil fuel project approvals
Australian carbon projects delivered some 1.6 million Australian Carbon Credit Units (ACCUs) to the government between July and October, as officials confirmed the approval of 18 fossil fuel projects would be reassessed.
Shell taken to consumer, advertising tribunals in Australia for alleged greenwashing
An Australian legal non-profit that advocates on environmental issues has referred Shell in Australia to corporate and advertising regulators for alleged misleading or deceptive statements about the climate impact of its products and operations, it announced on Friday.
GreenCollar and others urge Australian govt to lead on global forest, land sector pact at COP27
A group of high-profile local carbon and investor groups are urging the Australian government to spearhead the next phase of a global forest and land sector use pact.
VER developer EKI sees second quarter revenues slide amid bearish macroeconomic conditions
The world’s biggest carbon offset developer EKI Energy Services saw its revenue and profit decline in the second quarter, though they still remained above year-ago levels over the first half of the financial term, according to results published Friday.
VOLUNTARY
INTERVIEW: Platform eyes role in explosion of REDD+ projects beyond rainforests
More tree conservation projects could be potentially created in the savannas and shrub lands of sub-Saharan Africa than from the rich rainforests around the continent’s equator, according to one of the founders of a soon-to-be launched free-to-access digital platform that promises to calculate the carbon content of every tree on the planet.
Turkish bank partners with carbon trading platform to provide client access to voluntary market
A major Turkish bank has partnered with an emissions trading platform in the country to help provide access to the burgeoning voluntary carbon market.
Ratings firm downgrades four VER projects to rock-bottom scores
A carbon credit ratings agency has downgraded the scores of four projects and given the same lowest-possible grade for two newly examined projects of similar characteristics in its latest update.
ICYM
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.
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
Fairweather GFANZ – Mark Carney, co-chair of a group of financial firms that has pledged to tackle climate change, told Reuters its members were allowed to drop out of a UN initiative that mandates the phasing out of fossil fuels because of antitrust concerns. Carney’s Glasgow Financial Alliance for Net Zero (GFANZ), whose members include more than 550 financial firms with a combined $150 trillion of assets, said last week it would no longer require adherence to Race to Zero, a UN initiative which requires signatories to phase out fossil fuels. Carney, who is also a UN special climate envoy, said GFANZ members raised concerns about legal liabilities, particularly around antitrust law, if his coalition continued to require adherence to Race to Zero.
Methane fame – Around 40 of the 119 countries that signed up to the Global Methane Pledge at COP26 last year will unveil their plans for cutting emissions at COP27 next week, reports Reuters. According to an unnamed senior US official, the US, Canada, and Vietnam are among the countries that will put forward details. The plans will outline the countries’ regulations, standards and investments in methane reduction and how those strategies fit into their broader climate targets under the 2015 Paris climate agreement. Aside from the US, the official said it is unclear if any of the world’s other top 10 methane emitters would present plans at the summit. The world’s top two largest methane emitters – China and India – are not signatories to the pledge, and other big emitters like Brazil are not expected to have plans in time for the talks. Only 15 countries have published specific targets or detailed national strategies for slashing their methane emissions since signing the pledge. (Carbon Brief)
Coal’s rebound – Last November in Glasgow, the world’s climate leaders were locked in a fierce debate over whether the final draft of the summit’s agreement should include a pledge to “phase-out” or “phase-down” coal. Since then, the more appropriate term would probably be “phase-up,” Bloomberg reports. Even as the globe is increasingly battered by floods, droughts, and storms caused by climate change, the fuel that contributes most to planet-warming emissions is undergoing a renaissance. Global coal power generation could set a record for a second-straight year and remains the world’s biggest source of electricity. Consumption has surged in Europe to replace shortfalls in hydro, nuclear, and Russian gas, while top producer China is extracting record volumes from mines to insulate itself from volatile global energy markets.
Wrong incentives – Oil and gas company executives are still being rewarded for increasing hydrocarbon production growth, finds a new report by Carbon Tracker that calls for a switch to compensation packages that reflect protecting shareholder value under the energy transition. The analysis found that 95% of the 35 largest listed oil and gas producers still directly or indirectly incentivise fossil fuel production growth, an increase from 91% since 2019. The compensation policies of BP, Eni, and TotalEnergies still include targets which directly incentivise oil and gas production growth, despite ‘net zero’ goals and promises to cut oil production, the report claims. Shareholders should demand incentives that prioritise value over oil and gas volume growth to protect the value of their investments as the energy transition unfolds, according to Carbon Tracker. Production targets should be replaced with value-orientated goals, such as relative total shareholder return (TSR) and return on capital employed (ROACE).
Adaptation acceleration – Current international finance flowing to developing countries is between 5 and 10 times below what is needed for climate adaptation, UNEP said in its annual adaptation report. In 2020, money from donor nations set aside for helping poorer countries adapt to climate change was just $29 bln — far below the $340 bln per year that could be needed by 2030. UN chief Antonio Guterres called for an overall, noting he had asked green climate funds to work with public and private financiers to pilot a new accelerator for adaptation investment to help financiers work with developing countries to invest in their adaptation priorities and specific projects. At the UN climate summit in Glasgow last year, developed countries agreed to double support for adaptation financing – within the $100 bln a year overall climate finance provision – to $40 bln per year by 2025.
EMEA
Soften the blow – Italy plans to set aside at least €15 bln in its 2023 budget to soften the impact of sky-high energy costs on firms and families, two government sources told Reuters on Thursday. Prime minister Giorgia Meloni’s government will raise next year’s budget deficit to 4.5% of GDP, from the 3.4% projected in September by the previous administration of Mario Draghi. This would free up budget room for expansionary measures worth some €21 bln.
Missing the mark – Germany will struggle to meet key climate targets under its current trajectory for GHG emissions cuts, a climate expert council that advises the government said on Friday ahead of global climate talks, Reuters reports. Germany aims to become carbon-neutral by 2045 and cut 65% of emissions by 2030 compared with 1990, but current reduction rates are falling short, the first biennial report by the council showed. “The annual reduction amount would have to more than double compared to the historical development of the last 10 years,” with a 10-fold increase needed in the industrial sector and 14-fold in transportation, council member Thomas Heimer said on Friday.
Sizing C up well – A new nuclear power plant in Suffolk is under review and could be delayed or even axed, as the government tries to cut spending, the BBC has been told. Sizewell C was expected to provide up to 7% of the UK’s total electricity needs, but critics have argued it will be expensive and take years to build. A new high-speed rail line in the north of England could also be axed. “We are reviewing every major project – including Sizewell C,” a government official told the BBC. Negotiations on raising funds for Sizewell C are understood to be ongoing. It is not expected to begin generating electricity until the 2030s.
Hydrogen agreement – Centrica and Equinor have signed a co-operation agreement to explore developing a low-carbon hydrogen production hub at Easington in East Yorkshire, further strengthening the region’s growing status as the UK’s foremost hydrogen super place, Hydrogen Central reports. Under the cooperation plan, the Centrica-operated area at Easington could transition to a low-carbon hydrogen production hub over the coming decade. Currently up to one-third of the UK’s total gas supply enters via Easington, much of it from Equinor’s Norwegian facilities. Easington is also situated close to some of the world’s largest offshore wind farm developments, offering huge potential for both blue and green hydrogen production. The area is also earmarked as one of the landing point for the East Coast Cluster’s carbon capture pipeline, which would transport CO2 for safe storage deep under the seabed.
Ceer volume – Saudi Arabia’s sovereign wealth said it will make electric cars in the kingdom under a joint venture with Apple supplier Foxconn as part of a push to build new industries and lessen dependence on oil, Reuters reports. Ceer will be the first Saudi automotive brand to produce electric vehicles in Saudi Arabia, and will design, manufacture, and sell a range of vehicles for consumers in Saudi Arabia and the MENA region, including sedans, and sports utility vehicles, PIF said in a statement. The fund said its cars would be available in 2025, adding Ceer would draw more than $150 mln in foreign direct investment, create up to 30,000 direct and indirect jobs and is projected to contribute $8 bln to the kingdom’s GDP by 2034. The joint venture will license component technology from BMW for use in the vehicle development process.
Europe under the spotlight – The EU must try to regain the trust of poorer countries at COP27, Clean Energy Wire writes ahead of the summit. The EU aims to take on a leadership role when the global community meets in Egypt for the annual UN climate change conference, but a unified European voice is difficult to maintain as member states are hampered by geopolitical tensions and the effects of the energy crisis. European countries stand accused of climate hypocrisy as they call on others to do more to reduce emissions, while at the same time buying up the world’s fossil fuel resources to secure domestic energy supply. Support for developing countries in dealing with the effects of a changing climate – such as more frequent and extreme weather events, droughts, and rising sea levels – will be at the core of the climate talks which take place on the African continent, which is home to many of the world’s regions that are most vulnerable to climate change.
Green bunkering – Shipping giant A.P. Moller-Maersk (Maersk) and the Spanish Government have signed a General Protocol for Collaboration to explore the opportunities for large-scale green fuels production in Spain that, if implemented in full, could deliver up to 2 mln tonnes of green fuels per year, according to a press release Thursday. Last month, the European parliament voted in favour of a 2% mandate for green shipping fuels by 2030 as part of its adoption of the European Commission’s (EC) FuelEU Maritime proposal. Maersk needs approximately 6 mln tonnes of green methanol per year to reach its 2030 milestone fleet emissions target and even larger amounts by 2040 for its fleet to reach net zero. Over the next three years, Maersk will put into operation 19 vessels capable of running on green methanol. The shipping giant has already signed seven strategic partnerships to secure the volume needed for these initial vessels. The Commission, Parliament, and Council are due to later this year complete negotiations to reach a common position on bringing shipping into the EU ETS and under a regulation mandating the monitoring, reporting, and verification of greenhouse gas emissions. Maersk operates in more than 130 countries and employs over 100,000 people world-wide.
AMERICAS
Flogging a dead cow – Green group 350.org has issued a warning to the world: the fossil fuel reserve of Argentina’s Vaca Muerta oil and gas reserve could become a real “carbon bomb”, with detrimental impacts on the country’s development and global temperatures. Vaca Muerta, which translates into English as “dead cow”, contains the second-largest reserve of shale gas and the fourth-largest reserve of shale oil in the world, which are extracted through fracking, a complex and high-impact technique that had not been used before in Argentina. “If fully exploited and burnt, the oil and gas contained in the Neuquen Basin, of which Vaca Muerta is the largest field, will release into the atmosphere a volume of CO2 equivalent to 11.4% of the global CO2 budget, that is the entire volume of CO2 that can be emitted between now and 2050 if humanity wants to limit global warming to 1.5 C,” 350.org said. By way of comparison, if all the oil and gas that exists in Vaca Muerta were burnt in 50 years, the annual CO2 emissions would be equivalent to 49.3% of the total annual emissions that Argentina itself has targeted for 2030 in its NDC, 350.org added. “It is expected that part of the fossil fuels extracted in Vaca Muerta will be burnt in countries other than Argentina, which would reduce this percentage, but even so, the impact on meeting the country’s climate targets tends to be gigantic.”
Truck time – The US EPA said on Thursday it plans to issue tougher GHG emissions rules for heavy-duty trucks and other larger vehicles through at least the 2030 model year by the end of 2023, Reuters reported. Under the EPA’s revised schedule, the agency plans to issue proposed rules in March and final rules by the end of December, a move the agency said will allow it “to put in place ambitious GHG standards for heavy-duty vehicles as soon as possible.” Transportation is the largest source of US GHG emissions, making up 29% of emissions, and heavy-duty vehicles are the second-largest contributor, at 23%, the EPA said.
RVO wait – On Friday, the US EPA and biofuels trade association Growth Energy agreed under their consent decree to delay by two weeks the issuance of the proposed 2023 Renewable Volume Obligation (RVO) under the Renewable Fuel Standard (RFS), according to an organisation announcement. The EPA is now required to propose the biofuel requirements by no later than Nov. 30, 2022. This does not affect the consent decree deadline for finalising the RVOs by no later than June 14, 2023.
Flying SAFe – Canada’s airline WestJet launched the SAF Destination programme which commits the airline to use sustainable aviation fuel (SAF) for all 40 WestJet flights between San Francisco and Calgary for three months, a press release said Wednesday. The airline will source SAF from fuel supplier Neste. The programme aims to reduce 186 tonnes of emissions on these routes, the company announced. WestJet has committed to achieving net zero emissions by 2050.
ASIA PACIFIC
Firing up – Japanese engineering firm Mitsubishi Heavy Industries (MHI) will partner with state-controlled electricity generator Indonesia Power (PLN) to study co-firing of less carbon-intensive fuels at the Indonesian firm’s power plants, Argus reports. The firms signed an initial agreement to conduct three feasibility studies on co-firing, according to Argus Media. The three studies will be jointly conducted by Indonesia Power — a subsidiary of Indonesia’s state-owned electricity provider PLN — and MHI, with the support of MHI’s power solutions firm Mitsubishi Power. The agreement will advance Indonesia’s efforts in decarbonising its energy systems and achieving its 2060 net zero emissions target, MHI said. The first two studies will be conducted at the 4GW Suralaya coal-fired power plant in Banten province’s coastal industrial city of Cilegon. The first study will examine the technical and economic feasibility of using up to 100% biomass. It will focus on the biomass supply chain, including handling, storage, transport and boiler modification. The second study will investigate the feasibility of co-firing ammonia produced by existing ammonia plants in Indonesia. It will focus on the possibility of establishing a blue ammonia supply chain, including production and transportation from ammonia plants, and applying ammonia co-firing technology in existing boilers. The third study will evaluate the technical and economic feasibility of hydrogen co-firing in a gas turbine at Indonesia Power’s Tanjung Priok gas turbine combined-cycle facility.
VOLUNTARY
Puttin’ on the links – Singapore-based MetaVerse Green Exchange (MVGX), which earlier this week teamed up with Indonesia’s stock exchange to help develop the carbon market there, has partnered with blockchain firm Chainlink to improve connectivity between traditional and digital carbon markets. The collaboration will open the door for potential integrations in the form of Cross-Chain Interoperability Protocol (CCIP), Proof of Reserve (PoR), and dynamic NFTs, to help MVGX securely and transparently develop into a next-level Web3 sustainability platform, and to connect the Web3 sustainability community with real-world carbon systems in a compliant manner, the company has announced.
AND FINALLY…
Trouble in paradise – The Maldives are erecting artificial islands two metres above sea level to stave off flooding from climate change, but installing new islands comes at a significant environmental cost. The new islands house resorts for wealthy tourists, and though the Maldives government says it will build artificial islands for locals to live on, the artificial islands could actually worsen the flooding in the long term. Fellow small island nation Kiribati has grown mangrove forests to slow the rising tide, and Fiji created an island from mangrove swamps. (Bloomberg)
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