CP Daily: Monday November 7, 2022

Published 01:40 on November 8, 2022  /  Last updated at 01:45 on November 8, 2022  /  Newsletters  /  No Comments

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

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COP27

New demand pledges for forest carbon credits amongst incremental progress to halt deforestation

Several public and private commitments were made to ramp up the financing available to protect the world’s forests at the COP27 UN climate talks on Monday, alongside efforts to better track progress on conserving and enhancing forest carbon stocks that included new demand pledges towards forest carbon credits.

Article 6.4 body publishes “general” removals guidance while politics plagues progress on wider methodology recommendations

The Supervisory Body for the UN’s new crediting mechanism under the Paris Agreement agreed on a “general” set of recommendations for removals at its third meeting in Sharm el-Sheikh on the eve of the COP27 summit.

UK to launch “gold standard” framework for corporate climate disclosure plan

The UK will launch a new disclosure framework on Tuesday for corporate climate plans that it says will outline a “gold standard” for transition strategies, largely based on existing disclosure rules in force in the country that cover all three scopes of value chain emissions, officials told a briefing at COP27.

Egyptian financials sign deal to establish “first” African voluntary carbon trading platform

A group of Egyptian financial organisations has signed a framework agreement to establish what they are calling Africa’s “first” voluntary carbon trading platform.

Roundup for Day 1 – Nov. 7

It’s the first Monday of COP27 and the climate talks have officially gotten underway in Sharm el-Sheikh. In our daily running blog, Carbon Pulse will report relevant or useful updates throughout each day.

AMERICAS

Guyana in process of having over 30 mln forest carbon credits certified, says vice president

Guyana is in the process of certifying more than 30 million forest carbon credits, the country’s vice president Bharrat Jagdeo has told local media, a move that could see some of the first verified jurisdictional carbon credits hit the market.

NA Markets: CCA, RGGI prices face few near-term impacts from US midterm election

The outcome of the US midterm elections on Tuesday is likely to have few immediate impacts on prices for California Carbon Allowances (CCAs) and RGGI Allowances (RGAs), though the results could have a more profound influence in the longer term.

VOLUNTARY

VCM Report: Nearby N-GEO futures crash below $6

Standardised offset prices slipped sharply at the end of the week, particularly for nature-based offsets, as the expected feelgood factor from COP27 summit in Egypt failed to materialise, although sources noted some over-the-counter sellers were turning bullish.

First Islamic financing facility set up for voluntary carbon market

An investment fund for oil exporting Arabic countries has struck a major Islamic financing carbon offsetting deal at the start of COP27 in Egypt, billed as the first-of-its kind in the Middle East and North Africa (MENA) region.

Carbon trader leaves investment firm to set up own VCM venture

A Seoul-based carbon trader and climate finance expert has left an investment firm to set up their own company, helping develop and market projects for the voluntary market.

EMEA

Green groups team up with industrial ‘front-runners’ to seek EU ETS and CBAM reform

EU legislators must consider making more radical changes to EU ETS reform and CBAM legislation than are currently on the table, climate NGOs and industry representatives said in a joint letter on Monday ahead of negotiations on the bills due this week.

EU must tighten its climate spending reporting to avoid greenwashing, say lawmakers

The EU must adopt a more stringent way of reporting its climate spending to ensure funding is targeting emissions cuts and to avoid ‘greenwashing’, several cross-party committees of the European Parliament said on Monday.

Euro Markets: Carbon eases upwards in patchy trading as market eyes looming EU negotiations

EUAs were slightly firmer in light trading on Monday as the market eyed the resumption of the political process around the REPowerEU initiative and the Fit for 55 reforms, while energy prices dropped amid forecasts for unseasonably mild temperatures.

ASIA PACIFIC

Tonga appoints Singapore firm to study, develop blue carbon potential

The Pacific island nation of Tonga has appointed a Singapore-headquartered firm as its private sector partner for the study and development of blue carbon projects, it was announced.

Japan to fund third-country green hydrogen projects under JCM

Japan has issued a tender for green hydrogen projects where the hydrogen will be produced in third-party countries and utilised in one of Japan’s 24 Joint Crediting Mechanism (JCM) partner countries.

INTERNATIONAL

Startup raises $4.8 mln to scale up emissions-saving AI tech for heavy industries

A UK-based climate tech startup has raised £4.2 million ($4.76 mln) in seed funding to scale up the development and deployment of software to reduce emissions in energy-intensive industries such as cement, it was announced on Monday.

US environmental campaigners add another former veteran climate negotiator to its roster

A US-headquartered environmental campaign organisation has added another veteran UN climate negotiator to its roster of carbon market experts.

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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

Backing a tax – A $8/tonne tax on CO2 emissions could help the Middle East, North Africa, Afghanistan, and Pakistan meet their climate targets, while a $4/t tax in the Caucasus and Centra Asia region would do a similar job, according to a new study released by the IMF. Introducing such a tax would put an increased burden on the economy in the short term, but leave the countries cleaner and more energy efficient, the report said. (Report News Agency)

EMEA

Sinking forests – The EU is losing its forest carbon sink at an alarming rate, with harvesting for biomass fuel a key driver behind the loss, according to research released on Monday, as reported by Euractiv. EU member states have experienced steep declines in their forest and land carbon sinks since 2002, or have lost them altogether, according to research by the Partnership for Policy Integrity (PFPI), a non-profit group. To achieve climate neutrality by 2050, the EU has set targets for increased CO2 storage in forests, soils, and other land carbon sinks. But at the current rates of decline, most EU countries will fail to reach their 2030 land sink targets, the report warns. In Europe, forests are currently a net carbon sink because they take in more carbon dioxide than they emit. But the capacity of European forests to absorb CO2 has been shrinking over the years and needs to be restored, the European Commission admitted two years ago when it presented its climate target plan for 2030.

Danish energy – The EU has approved two state-aid packages from Denmark for over 18 bln that Brussels says will help energy companies recover from the crisis. The Commission approved the schemes, allowing a €16.8 bln guarantee scheme to support electricity producers and gas shippers active in the Danish electricity and gas markets, as well as €1.34 bln loans with subsidised interest rate for energy intensive small- and medium-sized enterprises and large companies across sectors. This will “enable Denmark to mitigate the economic impact of the war in Ukraine and the liquidity shortages,” said Margrethe Vestager, executive vice president in charge of competition policy.

Kazakhstan deal – European Commission President Ursula von der Leyen on Monday signed a MOU with Kazakhstan PM Alikhan Smailov on raw materials, batteries, and renewable hydrogen. The strategic partnership aims to ensure the development of secure and sustainable supply chains, raw materials, and refined materials. It also aims to develop renewable hydrogen and battery value chains, while boosting the green transition. The EU and Kazakhstan committed to develop a Roadmap for 2023-24, with joint actions agreed within six months of the signature of the partnership. “This partnership with Kazakhstan shows Europe’s commitment to work with partner countries on our shared commitments to a greener and more resilient future in line with the Global Gateway Strategy and the objectives of the REPowerEU Plan,” said von der Leyen. On Tuesday, she will meet with Namibian President Hage Geingob to make a similar deal official.

ASIA PACIFIC

Questionable – A group of Australian academics has found that so-called human-induced regeneration projects in Australia have been issued millions of ACCUs despite a reduction in the number of trees covered by their projects, the Guardian reports.  The study, led by ANU professor Andrew Macintosh, is an update of previously released studies, which helped trigger an independent review of Australia’s carbon offset market, expected to conclude before year-end, and which might bring about significant adjustment to the way the market operates and some of the methodologies eligible to earn ACCUs.

Picking winners – The Indian government has identified 10 potential states that could be the key enablers in manufacturing green hydrogen in the country, said two officials aware of the development, Money Control reports. The states – Karnataka, Odisha, Gujarat, Rajasthan, Maharashtra, Tamil Nadu, Andhra Pradesh, Kerala, Madhya Pradesh, and West Bengal – are likely to have green hydrogen or ammonia manufacturing zones or clusters, helping India kickstart its National Green Hydrogen Mission in its initial years. “These states have been identified on the basis of the existing steel and fertiliser industries, refineries, and ports located there, along with the operational and potential renewable energy generation capacity in the regions. At some locations, we have also incorporated the city gas distribution network, as that is another sector that can offtake green hydrogen,” a senior official in the ministry of new and renewable energy said.

Forest sinks – Guotai Junan Securities, one of the biggest securities firms in China, has signed a cooperation agreement with a state-owned forest farm in Fujian’s Longyan city to jointly develop a carbon sink project, according to power news website BJX. The first phase of the project will cover around 57.3 mln square meters of forest, with an expected capability of sequestrating 1.5 mln tonnes of CO2 for the next 30 years.

Trading wetlands – A top official from China Hubei Emission Exchange has suggested the provincial government set up a trading platform for carbon sinks stored in local wetlands, engaging more companies and individuals in voluntary markets, Hubei Daily reports. The government of the landlocked Chinese province has targeted the potential of the Chenhu Lake Wetland Nature Reserve, which is presumably capable of capturing around 125,000 tonnes of CO2 every year, according to another Hubei Daily report.

AMERICAS

Export story  – US crude exports have hit record levels above 5 mln b/d in recent weeks as European refiners have reached further afield for alternatives to Russian crude following the country’s invasion of Ukraine, Argus reports. On a monthly basis, US crude exports hit a record high of 3.8 mln b/d in July, before easing to 3.5 mln b/d in September, according to the most recent monthly data from the US Census Bureau. US crude exports through the first nine months of the year also were at a record, totalling 120.1 Mt, according to shipbroker Banchero Costa.

Clean fuels conundrum – The New York Climate Action Council is poised to decide whether the state should enact a limited clean fuel standard that would incentivise electrification and low-carbon fuels for transportation. A new section in the latest draft of the climate plan’s transportation chapter, obtained by Politico, states that two regulatory agencies “should evaluate and consider adopting” a variation on a clean fuel standard. Environmental justice groups have raised concerns about the proposal for a clean fuel standard, because reductions in co-pollutants are not necessarily guaranteed to accrue in the most heavily polluted and overburdened communities. The draft proposal calls for credits flowing through utilities for at-home charging to be specifically directed to low-income households and disadvantaged communities to alleviate this concern. Additionally, fuels would be screened based on co-pollutant emissions, preventing any fuels with higher harmful emissions than petroleum fuels from receiving any incentives even if they have lower GHG emissions. The proposal also endorses incentives for clean fuel infrastructure including green hydrogen. All the proposed redlines developed by staff will require review and action by the Climate Action Council as it moves to adopt a final scoping plan for the state to achieve 40% GHG reductions from 1990 levels by 2030 and 85% by 2050. The final plan is due by the end of the year and the council is scheduled to have its final meeting for the year on Dec. 19.

PJM’s solar surge – As US wholesale grid operator PJM deals with a logjam of renewable projects seeking to interconnect to the regional grid, the amount of new planned solar projects has so far eclipsed the natural gas-fired resources under development through 2027. Over 23.5 GW of solar capacity is planned for PJM from 2022 to 2027, more than double the amount of new natural gas-fired generation set to come online, an S&P Global Market Intelligence analysis shows. Nearly 11.5 GW of solar is projected to come online in 2023 alone. PJM said it had about 260,883 MW across 2,755 projects under study as of Sep. 20. This includes 114,557 MW of proposed solar and 44,242 MW of proposed wind capacity.

Put up your Dukes – The Duke Energy board has approved the sale of the company’s commercial renewable energy business after receiving “robust” interest from potential buyers, CEO Lynn Good told investors during a third quarter earnings call on Friday. Company leaders have said previously they believe the company’s commercial arm is worth $4 bln. The company expects to announce the details of its sale of commercial renewable energy assets, which includes 3.4 GW of wind and just under 1.7 GW of solar, in early 2023. (Utility Dive)

VOLUNTARY

New screen – TP ICAP has developed its “Fusion” screen technology for the VCM, allowing customers to view live prices inputted by the brokers. The screen can show markets in spot, futures, forwards, spreads, and rolls. Standardised spot and futures will include the CBL GEO, N-GEO, and C-GEO contracts, as well as the ICE NBT future and trailing contracts.  There are also over-the-counter bids and offers, assorted under registry, and including data from Verra, Gold Standard, and the Clean Development Mechanism.

Naturally net zero – The World Business Council for Sustainable Development (WBCSD) released a report on Sunday outlining the role of nature-based solutions in strategies for businesses to achieve net zero, while having a valuable positive impact on climate and nature, in addition to addressing inequality. The report was divided into four technical papers: 1) The role natural climate solutions (NCS) in net zero action; 2) Insetting and using NCS to move toward net zero; 3) Carbon standards for NCS credits; and 4) Natural Climate Solutions and “core benefits”.

Banking on climate – Citizens Financial Group has launched a carbon offset programme for commercial depositors seeking to tap into corporations’ growing demand for sustainability initiatives, American Banker reports. The bank’s Carbon Offset Deposit Accounts programme allows commercial clients to purchase credits using interest generated from their deposits to finance projects that benefit the environment, according to Pat Nuzzo, head of commercial liquidity management at the Providence, Rhode Island-based bank. “Quality carbon offsets allow companies to compensate for emissions that they cannot yet reduce by allowing them to make an immediate impact as they scale sustainability programs,” Nuzzo said in an interview.

AND FINALLY…

Filthy rich – The super-rich emit greenhouse gases at a level equivalent to the whole of France from their investments in carbon-intensive businesses, according to analysis published on the opening of the COP27 climate talks in Egypt, The Guardian reports. Examining the carbon impact of the investments of 125 billionaires, the research found they had a collective $2.4 trillion stake in 183 companies. On average each billionaire’s investment emissions produced 3 Mt of CO2 a year; a million times more than the average emissions of 2.76 tonnes of CO2 for those living in the bottom 90% of earners. In total the 125 members of the super-rich emitted 393 Mt of CO2 a year – equivalent to the emissions of France, which has a population of 67 million. The report by Oxfam called for the investments of the very rich to be regulated and for a wealth tax with a steep rate of top up on investments in polluting industries. Danny Sriskandarajah, Oxfam GB’s chief executive, said: “We need Cop27 to expose and change the role that big corporates and their rich investors are playing in profiting from the pollution that is driving the global climate crisis. It is people in low income countries who’ve done the least to cause it, who are suffering the most – as we are seeing with the devastating drought in East Africa and catastrophic floods in Pakistan.”

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