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COP27
UN talks flounder on guidance for international emissions trade
The creation of rules on international emissions trade risk being delayed for another year as negotiations stumble in Sharm el-Sheikh over whether host countries can amend or even revoke their authorisation for the transfer of carbon credits.
Nations poised to punt decision on UN carbon credit mechanism for a year
Decisions on what type of projects will be eligible under a new UN carbon credit mechanism are expected to be delayed for a year, as governments approach the halfway point of two-week COP27 negotiations in Sharm el-Sheikh and discussions focus in on how to treat carbon removals specifically.
UN talks consider sectoral approaches in effort to scale up emissions cuts
Key topics are emerging in a newly-formed segment of COP27 UN climate talks in Sharm el-Sheikh, with negotiators considering sectoral approaches as they scramble to spur greater near-term emissions cuts to keep the Paris Agreement’s 1.5C temperate goal within reach.
US announces initiatives to slash domestic oil and gas, international emissions
The US will implement stronger methane regulations for the domestic oil and gas sector and bolster international efforts to crack down on the potent GHG and emissions from other sectors, President Joe Biden announced at COP27 on Friday.
Indonesia to submit 2021-30 REDD+ strategy to UNFCCC next week
Indonesia has updated its national REDD+ strategy and plans to submit it to the UNFCCC next week, a government official told a panel discussion at COP27, as a UN REDD Programme report pushes for greater investment in forest-rich nations.
Saudi investment fund announces opening up of Islamic finance to carbon credits
Billions of dollars from oil rich countries in the Arab Gulf could soon be flowing into voluntary carbon market (VCM) projects after senior representatives from Saudi Arabia’s public investment fund (PIF) and the Islamic Trade Finance Corporation (ITFC) announced a fatwa, or legal ruling based on Islamic law, that will allow Islamic finance to be used for carbon credits, a side event at COP27 heard on Friday.
Ghana in advanced talks for bilateral trade with Singapore, developing framework for carbon market involvement
Ghana plans to agree to a deal with Singapore for the trade of internationally transferred carbon credits, said a senior official from the west African nation during a side event at COP27 on Friday.
Bursa Malaysia provides further details on country’s voluntary market
Malaysia’s stock exchange has revealed some key details about the set up of its voluntary carbon market (VCM) platform at the COP27 conference in Egypt, as it confirms its launch by the end of the year.
Singapore establishes S$15 mln fund to improve credibility of nature-based projects in Southeast Asia
Singapore has set up a S$15 million ($10.9 mln) project to support the establishment and monitoring of high-quality nature-based carbon projects across Southeast Asia, it announced.
Roundup for Day 5 – Nov. 11
It’s Friday – Decarbonisation Day – at COP27 in Sharm el-Sheikh, and Carbon Pulse rounds up today’s other, related news from the summit. Timestamps in local time (EEST, GMT+2).
EMEA
EU negotiator agrees on ETS price spike measure, market oversight -MEP Liese
EU negotiators have agreed a united position on an ETS price spike measure and market oversight provisions but failed to make headway on major sticking points during trilogue negotiations on reforming the bloc’s carbon market this week, the European Parliament’s lead negotiator Peter Liese said on Friday.
Euro Markets: EUAs recover to post modest weekly loss after ETS reform talks boost sentiment
EUAs erased almost all of the sharp midweek loss to end the week less than 1% lower on Friday, after European co-legislators agreed on elements of reforms to the bloc’s carbon market including a more responsive price-damping mechanism.
EU strikes provisional deal on land use emissions
EU legislators early on Friday struck a provisional deal to deepen cuts in land use (LULUCF) emissions in line the the bloc’s overall 2030 climate target, enabling ministers to head to COP27 UN climate talks next week with three major elements of their flagship Fit for 55 climate package in place.
AMERICAS
US EPA proposes hiking social cost of carbon to nearly $200/tonne
The US EPA on Friday presented new analysis to significantly raise the social cost of carbon (SCC) compared to current values, as a working group under President Joe Biden’s administration works to develop a final figure amid ongoing legal challenges.
UPDATE – California’s ARB launches second probe into Wisconsin offset project
*Updates Thursday’s story in CPD with new details about the offset project’s compliance status with a state permit*
California regulator ARB on Thursday announced an investigation into a Wisconsin-based livestock project, coming just two years after the agency invalidated offsets from the same dairy digester for non-compliance with state permit requirements.
Canadian forestry investment firm inks C$50 mln land deal to develop “high-integrity” offsets
A Canadian forestry investment platform has spent nearly C$50 million to acquire a chunk of private land in Northern Ontario to develop it into a carbon offset project.
ASIA PACIFIC
Timor-Leste to develop nature-based projects, seek role for Article 6 in latest NDC
Timor-Leste will focus on ‘nature-positive growth and transition’ as one of four key climate policy commitments, and will seek international cooperation under Article 6 guidelines in developing local carbon markets, according to its NDC submitted to the UNFCCC this week.
CN Markets: CEAs remain rangebound, CCER trading volume plunges amid limited supply
Allowance prices in China’s national emissions trading scheme remained stable over the past week despite the update on the long-awaited allowance allocation plan, while the offset market saw a plunge in trading volume amid severely limited supply due to policy uncertainty.
ICYM
POLL: Analysts cut short-, medium-term EU carbon price forecasts on worsening outlook
Analysts have cut their short- and medium-term EU carbon price forecasts over a mix of bearish factors including Europe’s energy crisis, the continent’s worsening economic outlook, and increased allowance sales through the bloc’s REPowerEU plan.
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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
Green ads – GroupM, WPP’s media investment group, has announced the creation of a client coalition that unites nearly 20 leading advertisers — collectively representing $10 bln in global advertising investment — with a shared commitment to accelerate the decarbonisation of the world’s media supply chain, exchange4media reports. GroupM’s establishment of the coalition follows the introduction of a proposed global framework for measuring ad-based carbon emissions in July 2022. Coalition members are committed to the establishment of a common approach to measuring ad-based carbon emissions and will work with GroupM and the industry more broadly to test and improve GroupM’s proposed measurement framework.
EMEA
ejECT – Germany announced Friday that it will leave the Energy Charter Treaty (ECT), an initiative from which countries such as France, the Netherlands, Spain, and Poland have also withdrawn for standing in the way of the climate targets set in Paris. The ECT, originally designed to regulate cross-border energy trading in the aftermath of the Cold War, has been criticised for slowing the world’s exit from fossil fuels, in part by creating grounds for fossil fuel users to claim compensation when they are forced to shut plants. The relevant law could be brought before the German Bundestag at the end of November. “The Energy Charter Treaty is a toxic treaty, which slows down the energy transition,” said Anna Cavazzini, a German Green legislator in the European Parliament, urging the EU Commission executive to follow suit in initiating the 27-nation bloc’s own exit from the treaty. Participating countries are in the process of reforming the agreement, but observers warn this campaign and the treaty itself may not survive with the growing number of withdrawals. (Reuters)
Taxing the rich – The Spanish government will not modify the structure of the future taxes on large energy companies and banks despite the ECB warning this could distort EU competition, Euractiv reports. The government has decided to maintain the format initially approved for both levies, which are expected to collect €7 bln in two years, according to official sources. The deadline for partial amendments to the bill – including the two new fiscal tools in addition to the tax on the wealthy and the limitation on consolidated groups to offset losses of their subsidiaries – formally closed on Thursday. Both coalition partners filed their respective text amendments, yet according to government sources, none proposed major changes to the original draft. The banking tax, which aims to collect €3 bln in 2022 and 2023, applies a tax rate of 4.8% on the margin of interest and commissions charged by financial institutions that in 2019 would have earned more than €800 mln, adding these two concepts together. Several financial institutions, among them voices in the ECB, have recently expressed a negative opinion on the banking tax, warning of possible distortions of competition in the EU and criticising the fact that the new levy would pass on its cost to final customers. However, sources in the Spanish Finance Ministry recalled this week that the ECB’s opinion is not binding and stressed that the Frankfurt-based European institution has only asked Madrid to redefine a few technical issues.
Keeping its stock home – Energy giant Uniper will not build any power plants in Sweden, the company that will be wholly owned by the German state from next year announced Thursday, flouting plans of its Swedish subsidiary Barseback Kraft, Euractiv reports. No new nuclear power plant will be built in Sweden by the German energy company Uniper, Sveriges Radios Ekot reported on Thursday. Uniper is part owner of all three active nuclear power plants in Sweden, Oskarshamn, Ringhals, and Forsmark. It is also the owner of the Barseback powerplant, which is being dismantled. Recently, Asa Carlson, CEO of Barseback Kraft, a subsidiary of Uniper, expressed her hope for a new energy park in the area that could include nuclear power in the first half of the 2030s. But the German company reiterated that this was not on the cards. From the start of next year, Uniper will be taken over by the German state, who decided to close all remaining nuclear power plants in the country from April next year. German lawmakers have approved a plan to keep the country’s three remaining nuclear power plants running until mid-April, extending their lives beyond the originally planned shut-off at the end of this year, AP reported. The lower house of parliament voted 375-216 to approve the extension, with 70 abstentions. Friday’s vote came after Chancellor Olaf Scholz last month ordered ministers to prepare the plan, putting his foot down on an issue that had divided his three-party government.
The solution under our feet – The vast potential of geothermal energy generation for heating has so far been under-utilised in Germany, but a new exploration process launched by the economy and climate ministry (BMWK) aims to better exploit the renewable energy source underground. The ministry said it will consult policymakers, industry groups, and other stakeholders in potential geothermal energy generation regions to unlock the energy source that can “improve heating supply year-round”. Economy and climate minister Robert Habeck said the energy source “is reliably available throughout the whole year, does not depend on the weather, is crisis-proof and almost nondepletable.” His ministry has developed an initial concept including several concrete measures to improve geothermal heating use. Habeck previously announced that the government aimed to use up to 10 TWh of geothermal energy by the end of the decade, which should be achieved by opening at least 100 new projects in the next few years. Deep geothermal energy can make a major contribution to the decarbonisation of Germany’s heating sector, a study published earlier this year found. It could cover more than a quarter of Germany’s annual heat demand (over 300 TWh) and generate additional revenue and jobs. The technology has been used for decades in many European cities, such as Paris and Munich, but has not yet received much attention elsewhere in Germany’s heating sector transition, where oil and gas still dominate and cause high CO2 emissions. (Clean Energy Wire)
Food for thought – The United Nations Industrial Development Organization (UNIDO) and climate and impact fund manager Camco have signed an MOU to ramp up investments in climate-resilient agriculture in Southern Africa. Rural populations across Southern Africa are heavily dependent on rain-fed agriculture for subsistence farming, which puts them at the frontline of worsening climate variability across the region. Under the agreement, UNIDO and Camco will promote access to climate finance, which will support developing countries in meeting their climate commitments and in achieving the Sustainable Development Goals (SDGs) through accelerating sustainable industrial and economic development. The collaboration between UNIDO and Camco will aim at delivering tangible climate resilience via the Resilient Investment in Southern Africa (RISA) programme, which is currently being prepared for submission to the Green Climate Fund. RISA will enhance the climate resilience of some of Africa’s most vulnerable groups by investing in small-to-medium-size enterprises (SMEs), since SMEs in the agricultural value chain are the best source of innovative adaptation solutions for the short to medium term. RISA will seek to address climate vulnerability and risk by building resilience through the cost-effective deployment of products and services via SMEs within the agricultural value chain. The programme will consist of two interlinked components: a technical assistance facility, managed by UNIDO, and an investment facility, managed by Camco.
Italian vessels – A €500 mln scheme in Italy will help maritime companies to acquire clean and zero-emission vessels and retrofit the old ones. The European Commission approved the state aid on Friday. The measure, which contributes to the objectives of the Green Deal and ‘Fit for 55′ package, will be funded through its Complementary Fund set up with national resources to supplement Italy’s National Recovery and Resilience Plan. The scheme will be open to shipping companies registered in Italy that provide maritime transport connections between an Italian port and European and/or Mediterranean ports or operate within Italian ports. According to the executive vice-president Margrethe Vestager, in charge of competition, the initiative “will help companies operating in the Italian maritime transport sector to reduce harmful emissions and achieve greater energy efficiency”.
Just transition – The French regions of Auvergne-Rhone-Alpes and Grand-Est will receive €190 mln in grants from the Just Transition Fund to deal with the socio-economic consequences of the decarbonisation. The support covers carbon-intensive industries areas with metallurgy, coal, cement, and chemical industry: the two departments of Isere and Rhone, which will benefit from investments of nearly €78 mln, and the departments of Meurthe-et-Moselle, Moselle, and Haut-Rhin, which will receive more than €112 mln from the Fund.
ASIA PACIFIC
Hydrogen trio – Indonesia’s state-owned energy firm Pertamina will explore the development of green hydrogen and ammonia projects in the country, along with Singapore-based Keppel Infrastructure and global oil major Chevron as part of a joint study agreement, Reuters reports. The companies intend to explore the feasibility of developing a green hydrogen facility in Sumatra, Indonesia, with a production capacity of at least 40,000 tonnes per annum, powered by 250-400 megawatts of geothermal energy in the initial phase. “The hydrogen production facility could have the potential to scale up to 80,000-160,000 tonnes per annum, depending on the availability of geothermal energy as well as market demands,” the statement said.
Give me benchmarks – The government of China’s Hebei province is set to publish emissions benchmarks for the steel sector this year, as part of a broader commitment to strengthen emissions management, according to an official notice. The provincial government also plans to release benchmarks for several emissions-intensive industries – including cement, glass and petrochemical – by next year, the notice shows. Hebei, once accounted for roughly a quarter of China’s total steel production, has been working to transform its coal-reliant industries to curb emissions, China Daily reports.
Do better – The government of Sichuan, a province in Southwest China, has released a set of comprehensive plans to improve its carbon market, with a special focus on talent cultivation and data quality management. The regional authority will encourage emitters to set up their carbon management units and establish 5-10 “talent cultivation sites” by 2025, it said. The government also plans to implement stricter requirements for data quality and conduct assessments on the work of verifiers every year. Sichuan, home to around 83 mln people, has been running one of China’s seven pilot markets since 2011.
AMERICAS
On Wisconsin – The Eau Claire County Parks and Forest Department has recommended the county participate in a carbon credit offset programme, The Leader-Telegram reports. The Eau Claire County Board of Supervisors in Wisconsin will be reviewing a resolution requesting entering a contract with offset project developer Anew to earn additional revenue and work towards sustainability and carbon neutrality goals at its next meeting. The Parks and Forests department has been working with Anew since May 2021 on a voluntary carbon market proposal, with the country having nearly 38,000 acres (15,400 ha) eligible to participate. These lands are estimated to produce over 700,000 voluntary credits over the first ten years of participating in the programme. With the current market price, those credits would produce an estimated $9.46 mln of net revenue within the first 10 years of the programme, the resolution states.
Ranch hand – EnrichedAg, a carbon insights platform for the cattle industry, launched on Wednesday with $9 mln in seed funding led by two venture capital firms – Radical Ventures based in Toronto, and California’s Future Ventures. The platform provides cattle ranchers with operational tools to improve resilience and quantify soil carbon value, the company’s press release stated. Ranch land in the US represents over 600 mln acres (242.8 ha), which equates to about 28% of the total landmass. Enriched Ag’s Grazing Insights product provides granular ranch-level information on forage biomass, drought status, precipitation, vegetation health, and bare ground, the company noted. The platform also provides producers with estimated value of carbon credits developed on their ranch and insight into practices that can maximize the carbon potential value of grazing lands and foster healthy ecosystems.
VOLUNTARY
SAF over offsets – Australia’s Qantas Airways has allied with five of its domestic corporate customers, which have committed to contribute to the cost of the airline buying sustainable aviation fuel (SAF) to reduce their GHG emissions, Argus reports. Qantas has launched the SAF Coalition programme with state-owned Australia Post, Boston Consulting, KPMG Australia, Australian investment bank Macquarie Group and Australian independent Woodside Energy signing on as foundation members. Members will pay a premium to reduce around 900 tonnes of their GHG emissions generated from their staff flying each year by contributing to the incremental cost of SAF, rather than using traditional carbon offsets, Qantas said. The coalition will initially contribute to the incremental cost of up to 10 mln litres (172 b/d) of SAF sourced by Qantas at London’s Heathrow Airport, which represents around 15% of the fuel Qantas consumes on flights out of London. From 2025, a further 344 b/d each year will be sourced out of Los Angeles and San Francisco. The SAF represents a fraction of the 77,000 b/d of jet fuel consumed domestically in Australia and for international flights departing Australia. The airline has committed to using 10% SAF in its overall fuel mix by 2030 and around 60% by 2050.
Fiat – Blockchain carbon group KlimaDAO has put in place an arrangement through which companies wishing to buy and retire tokenised carbon credits can do so without having to set up a crypto wallet. Using fiat payment gateways provided by C3.app and Offsetra, companies can pay with regular currency, a move KlimaDAO said would help overcome one of the key barriers to access the blockchain market for companies with little experience in or appetite for operating Web3 wallets.
SHIPPING
Climate-conscious cargo – Green freight Cargo owner-led network Cargo Owners for Zero Emissions Vessels (coZEV) has released a ‘Roadmap to 2040,’ which outlines action areas cargo owners can start taking in 2023 to enable full decarbonisation of their ocean freight by 2040, Offshore Energy reports. The roadmap includes the creation of a new maritime freight buyers alliance, a cargo owner policy coalition, and a green corridor advisory board. Among actions in the ‘Roadmap,’ coZEV will work with cargo owner companies to establish the Zero Emission Maritime Buyers Alliance (ZEMBA) to accelerate commercial deployment of zero-emission shipping, enable economies of scale, and maximise cargo owners’ collaborative emissions reduction potential.
AND FINALLY…
Sordid past – A UN agency has cancelled an initiative to mobilise African private energy investments — including for gas projects — after Climate Home revealed that one of its coalition partners was led by a convicted fraudster and alleged money launderer. The UN Economic Commission for Africa (UNECA) has scrapped its flagship Team Energy Africa initiative after reviewing the involvement of the African Energy Chamber, a trade group headed by oil and gas lobbyist NJ Ayuk. In 2007, Cameroon-born lawyer Ayuk pleaded guilty to fraud in the US after impersonating a congressman to obtain visas for fellow Cameroonians. Then in 2015, he was investigated by Ghana’s central bank on suspicion of laundering $2.5 mln. Team Energy Africa, a coalition of African investors and institutions, was created earlier this year to mobilise $500 bln of private sector investment into 250 GW of “clean” energy across Africa by 2030. The group was due to launch a dashboard at COP27 in Sharm el-Sheikh to showcase how African energy investments are being used.
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