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COP27
FEATURE: Nations scramble to get ready for international carbon trade despite UN-level Article 6 talks stumbling
Buyer and seller nations of carbon credits are rushing to develop legislative frameworks, strategies, and broaden their understanding of how best to engage in the Paris Agreement’s Article 6.2 international emissions trade provision, despite negotiations floundering at the UN level during the ongoing COP27 summit in Sharm el-Sheikh.
EU proposes fossil fuel-funded UN climate loss and damage facility, with shipping and aviation contributing
The EU broke a longstanding deadline at UN climate talks on Thursday by proposing to establish a loss and damage fund for the most vulnerable countries, using money that could be raised partly by a levy on aviation, shipping, or fossil fuels.
Australia climate minister meets China’s counterpart, voices support for EU’s loss and damage fund
Australia’s energy minister has met with China’s climate envoy on the sidelines of negotiations at COP27, agreeing to cooperate on climate issues, as he used a plenary session to support the EU’s establishment of a loss and damage fund.
Pledge to slash global methane emissions tallies 150 countries without China
The count of countries committing to global action to address methane emissions has risen to 150, according an event at COP27 on Thursday, an increase of 50 nations over the initial signatories made during last year’s UN climate talks, but yet to include some large emitters such as China.
Nations launch alliance for countries committed to develop engineered removal projects
Several nations on Thursday launched an alliance of countries developing carbon dioxide removal (CDR) projects, with participating countries committing to building a 1,000+ tonne a year CDR project by 2025 and vowing to collaborate to share the resulting knowledge and data to help scale the technology.
Southeast Asian nature-based carbon removal venture to kick off in the Philippines
A new nature-based carbon removal initiative for Asia was launched at COP27 on Thursday, starting with an initial $15 million investment in the Philippines that will restore 33,000 hectares of land and capture more than 4 mln tonnes of CO2.
South Korea to deepen Article 6 ties with Mongolia, seeks CBAM reassurances from the EU
South Korea and Mongolia will cooperate to identify project opportunities under Article 6 of the Paris Agreement, while the Korean environment minister on the sidelines of COP27 has also been seeking reassurances from the EU that the proposed Carbon Border Adjustment Mechanism (CBAM) won’t act as a trade barrier.
East African nations learn valuable lessons on Article 6 removals from VCM -report
A group of seven East African nations are successfully using Clean Development Mechanism (CDM) activities to generate climate finance, however the sheer scale of new finance required raises questions on how to expand and transition to Article 6, according to a report launched at the COP27 conference on Thursday.
Web3 firms launch climate platform initiative to offset Ethereum’s historical emissions reductions
A group of Web3 companies launched on Thursday at COP27 a new platform that seeks to invest in carbon mitigation projects with the initial goal of offsetting the historical emissions of Ethereum, the world’s second-largest blockchain.
UAE’s green energy investor signs green hydrogen deal with Egypt as climate talks host seeks key supplier role
UAE green investment firm Masdar and two consortium partners have signed a framework agreement with a group of Egyptian state companies to develop a 2 GW green hydrogen production facility, adding to a series of deals the COP27 host has signed this week in an effort to boost its role as a green hydrogen supplier.
Roundup for Day 11 – Nov. 17
It’s Thursday – Solutions Day – of week two at COP27 in Sharm el-Sheikh, and Carbon Pulse rounds up today’s other news and announcements from the summit. Timestamps in local time (EEST, GMT+2).
VOLUNTARY
World Cup offsetting probe puts GCC’s governance in the spotlight
A probe into the offsetting of the upcoming FIFA World Cup football tournament in Qatar has shone a light on GCC’s governance, with the carbon project certifier insisting that its conflict of interest safeguards are robust despite links between two of its steering committee members and the handful of projects it has so far registered ahead of hundreds in the pipeline.
Ocean-based blue carbon venture agrees deal with blockchain firm
A UK-based company specialising in nascent ocean-based blue carbon projects and eyeing up to 1 billion tonnes in annual removals from 2031 has signed an exclusive deal with a crypto carbon venture to tokenise the credits, it announced Thursday.
Aviation sector firms invest in Canadian DAC tech company
An airline and an aircraft manufacturer have invested in a Canadian direct air capture (DAC) technology firm.
EMEA
Brussels releases new guidance on 2021-30 EU national energy plans
The European Commission released guidance to member states this week to help them update their 2021-2030 national energy and climate plans (NECPs), calling on governments to raise their renewable targets and consider the changed global circumstances since the plans were last updated in 2019.
Euro Markets: EUAs extend losses as steady drumbeat of selling overwhelms modest demand
EUA prices on Thursday fell for the third day out of four as buyers remained largely on the sidelines after a weak auction, while gas prices declined for a second day as the demand outlook remains modest amid extended warm weather in Europe.
ECJ weighs in on Austrian carbon trading tax fraud case
The EU’s top court has weighed in on an Austrian case relating to tax fraud committed via the bloc’s carbon market.
AMERICAS
NA Markets: CCAs hold steady amid Q4 auction and Scoping Plan publication, RGGI stagnates
California Carbon Allowance (CCA) values slid early in the week ahead of the Q4 WCI auction before rising after state regulator ARB published the final Scoping Plan update, while RGGI Allowance (RGA) prices held in a narrow range amid few drivers.
Massachusetts GWSA allowance holdings outpace steeper 2022 emissions
All but a few of the power generators regulated under the Massachusetts Global Warming Solutions Act (GWSA) carbon market hold permits in excess of their compliance obligations, even as CO2 output under the in-state cap-and-trade programme has shot up this year, according to a report published Wednesday.
Ontario facility to develop first-of-its kind nuclear power offset protocol
An Ontario nuclear power generation facility plans to develop a nuclear power offset protocol with a technical advisory firm and registered with a Canadian standards body, the company announced on Tuesday.
ASIA PACIFIC
New Zealand plans centralised carbon trading platform as part of ETS governance overhaul
New Zealand on Thursday began a consultation process for an intended regulatory overhaul of its ETS to guard against various market risks, including plans to set up a platform to host NZU trading.
Chevron, policy reforms fuel rapid growth in Australia’s offset market
Australia’s carbon offset market is seeing rapid growth, Clean Energy Regulator data showed Thursday, with oil and gas firm Chevron’s pledge to make up for its CCS shortcomings and expected changes to the Safeguard Mechanism the main factors.
China’s Liaoning rolls out small-scale offset scheme
Liaoning, a coastal province in Northeast China, has become the latest Chinese jurisdiction to launch a so-called “inclusive” small-scale carbon offset scheme in the years-long absence of a national market.
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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
Supermajor black box – A report published Thursday by US-based green group Environmental Defense Fund focused on non-operated joint ventures (NOJVs) in the oil and gas industry found that climate targets to reduce methane emissions from the world’s largest publicly traded oil companies – dubbed ‘supermajors’ – only apply to assets they operate directly. Instead, emissions from assets in which they have no operating interest are largely unmanaged and unknown in under-regulated regions of the world. The report focuses primarily on NOJV arrangements where a supermajor partners with a national oil company (NOC), which are not subject to the regulatory, financial, and public pressures that apply to supermajors. NOJVs are central to how the oil and gas industry does business, allowing supermajors a share in valuable assets controlled by other companies – often state-owned entities – in exchange for the supermajor’s access to capital and technical expertise in exploration and production. The complicated nature of these governance structures makes complete emissions accounting nearly impossible, obscuring companies’ climate risk, EDF said.
EMEA
Just cap it – A potential EU-wide cap on gas prices remains in the balance with the European Commission yet to present a legislative proposal needed for its creation, while countries remain split on the issue ahead of a meeting next week where ministers were expected to adopt it. In October, the European Commission outlined proposals to introduce a “dynamic price ceiling” for gas imported in the EU, leaving the details of how this should be done for later, saying it first needed input from EU member states. But with seven days to go before a Nov. 24 meeting of EU energy ministers, Brussels is yet to table a formal legislative proposal on the matter. Instead, the EU executive circulated another “non-paper” to EU capitals outlining what the gas price “correction mechanism” could look like, also highlighting the “advantages and risks” of such a measure. The paper, seen by Euractiv, sets out the core elements of the Commission’s upcoming legislative text, with “a view to submitting a legal proposal” to EU minister at a later stage. “This outline aims to serve as a basis for further discussion of the mechanism at issue,” the paper says, without specifying when the discussion will end. EU energy commissioner Kadri Simson said the Commission, which drafts EU policies, would propose a cap after a meeting of EU energy ministers on Nov. 24 where they are expected to instruct the bloc’s executive to move ahead with the proposal.
Cutting budgets – The new Swedish government’s budget and heavy cuts to the environment and climate budget were sharply criticised by former Social Democratic prime minister Magdalena Andersson on Wednesday as the country is set to take the EU Council presidency in Jan. 2023. The Swedish six-month presidency was discussed in the Riksdag and several left-wing party leaders noted that the government would cut the environment and climate budget by several billion euros in the recently presented budget, Euractiv reports. They are concerned that climate targets for 2030 will not be achieved with the announced policies and that Swedish emissions will increase in the near future. Sweden will lead negotiations in a number of areas, including several important climate issues that are expected to be decided in spring.
Autumn statement – Britain’s carbon tax will continue to be frozen at £18/tonne until April 2025, government budget documents showed on Thursday. As the UK finance ministry outlined an interim autumn budget, minister Jeremy Hunt said he would lift an oil windfall tax to 35% (from 25%) and extend it until early 2028, with a 45% tax on the profits of low-carbon power producers for power prices above £75/MWh, well below current market prices. “Any such tax should be temporary, not deter investment and recognise the cyclical side of the energy industry,” Hunt said. Help with energy costs will also eventually be scaled back next year, with typical household bills rising from £2,500 a year to £3,000 from April. The taxpayer bill for bailing out failed energy supplier Bulb was also announced to be £6.5 bln, according to official documents released alongside the statement. In another move to combat the energy crisis, Hunt pledged £6 bln of funding from 2025 to 2028 for energy efficiency measures. Elsewhere, electric vehicles will also no longer be exempt from vehicle excise duty from April 2025, the government announced. The government confirmed plans to build the controversial Sizewell C nuclear plant will go ahead.
No solar – The UK’s de facto ban on solar farms will be continued by Rishi Sunak’s government, the environment secretary, Thersse Coffey, signalled fresh from her visit to Cop27. Under the previous short-lived government, environment ministry officials had placed a pause on building solar on certain types of farmland. The move means 60% of all agricultural land would be off-limits to solar farms. (Guardian)
More rejECTion – Slovenia will soon no longer be a party to the Energy Charter Treaty after the Parliament’s Foreign Affairs Committee unanimously endorsed the government’s proposal to withdraw on Wednesday. The committee endorsed the government’s initiative without a single vote against it and without debate. Slovenia joins Italy, which has already withdrawn from the treaty, while Germany, Poland, Spain, the Netherlands, and France are poised to do the same. (Euractiv)
German consultation – The German Emissions Trading Authority (DEHSt) conducted an annual consultation this year under the country’s carbon leakage ordinance (BECV). The aim of the consultation was to determine the effects of CO2 pricing through national fuel emissions trading and carbon leakage compensation in accordance with BECV on the competitive situation of companies based in Germany. The process included an online survey and a discussion of the results at an expert forum. The final report summarises the findings of both.
ASIA PACIFIC
Vietnam’s turn – Vietnam is set to follow Indonesia and South Africa with a climate financing package of at least $11 bln to shift its economy away from coal and boost the rollout of renewable energy sources, Business Times reports. Vietnam and its donor countries, led by the EU and the UK, are aiming to announce the Just Energy Transition Partnership funding deal – which could total as much as US$14 bln – at the EU-ASEAN summit on Dec. 14, according to people familiar to the matter. Between $5 bln and $7 bln will come from public loans and grants, with the rest from private sources. About 85% of the package has been done, but the issue of decarbonising the country’s power sector still needs to be finalised, one of the people said. Vietnam was understood to have been analysing Indonesia’s deal, announced earlier this week, and key members of the country’s leadership still need to be won over, the person said.
SAF mandate – The Indian government is thinking of making it compulsory for airlines to blend sustainable fuel with the aviation fuel they use, pointing to the need to achieve lower carbon emissions, a senior official said, Mint reports. “We, the ministry of civil aviation, along with ministry of petroleum are working to mandate a certain percentage of blending as we go forward. That is still work in progress,” Civil Aviation secretary Rajiv Bansal said on Tuesday. “We do realise that unless we mandate a certain percentage of blending over a time period, the demand will not be created and unless there is demand, the production won’t be there,” Bansal added. The government has discussed the proposal with airlines, which are in agreement with the mandate on blending jet fuel with sustainable fuel, he said.
Transition spend – Japan’s No.2 oil refiner Idemitsu said on Wednesday it will invest $5 bln over the next three years to March 2026 to step up its energy transition while scaling down fossil fuel assets to tackle climate change, Reuters reports. “Our plan is to reduce fossil fuel business assets by 20% by 2030 through streamlining refineries and other operations,” President Shunichi Kito told a news conference. Under a new three-year business plan starting next April, Idemitsu aims to lower the contribution from fossil fuel businesses to 70% of total profit from 95% now, it said. To boost profits from non-fossil fuel segments, Idemitsu plans to spend $2 bln in cleaner fuels such as sustainable aviation fuel and ammonia, as well as lithium solid electrolytes among others.
Hand in hand – China’s environmental regulator has signed a memorandum of cooperation with Agricultural Bank of China, one of the country’s big four banks by asset size, for the development of green finance, according to a statement issued Wednesday by the Ministry of Ecology and Environment (MEE). The two parties said they will cooperate on issues including environmental protection and climate finance, ensuring sufficient financial support for the domestic environmental sector. As of the end of October, the bank’s green loan balance reached more than 2.5 trillion yuan ($350 bln).
AMERICAS
House hang up – The Republicans winning control of the US House of Representatives squashes hopes of President Joe Biden’s promise of $11.4 bln/yr by 2024 towards climate action in developing countries, including an overdue $2 bln to the Green Climate Fund (GCF), Climate Home reports. In March, the US Congress approved $1 bln in international climate finance for 2022, only $387 mln more than the funding allocated during the previous Trump presidency. Of the $11.4 bln pledge, Biden has requested that Congress appropriates half – or $5.3 bln – with the remainder from various development agencies, such as the Development Finance Corporation and the Trade and Development Authority. While Congress still appropriates funds to these agencies, this budget is not climate-specific and individual organisations can set their own priorities, the report said. However, even with a GOP-controlled House, climate and clean energy is one of the legislative areas that has received the most bipartisan support over the past two years, according to a report by international non-profit Clean Air Task Force (CATF).
Farm fixated – Cheap credit could be offered to farmers for integrating cattle and grain production on the same land in Brazil under President-elect Luiz Inacio Lula da Silva’s incoming administration, Bloomberg reported Wednesday. The plan is to both boost food production and decrease emissions from the agricultural sector by offering cheap credit and offering low interest rates to producers that make environmental commitments. Those could involve projects designed to curb CO2 emissions, including efforts to integrate cattle and grains production onto the same land, and preservation of native vegetation beyond existing requirements. Brazil is currently one of the biggest exporters of food staples while simultaneously sequestering more carbon than other countries in the Amazon rainforest.
Going carbon neutral – Avangrid, a sustainable energy company and member of the group of companies controlled by Spanish electric utility Iberdrola, is now targeting to reach carbon neutrality in Scop 1-2 emissions by 2030 and is developing a strategy to address Scope 3 emissions, North American Windpower reports. Avangrid plans to increase renewable installed capacity by 190% by 2030 versus 2015, supported by investing $1.8 bln in its renewables business through 2025. In addition, Avangrid is exploring new technology solutions such as hydrogen and storage, and will green its buildings by committing to 100% renewable energy in its corporate buildings by 2030. The company will also convert 100% percent of its light duty vehicles to cleaner energy by 2030 (scope 1).
Fliers for forests – The International Test Pilots School (ITPS) has partnered with LivClean, a top-ranked carbon offset retailer, to help achieve the company’s environmental goals, according to a company press release. Through the partnership, ITPS’s carbon offset purchase will support the Great Bear Forest Carbon Project, located inside the traditional territories of the Haida Nation, British Columbia, Canada, and home to the largest remaining intact coastal temperate rainforest in the world. By supporting the Great Bear Forest Carbon Project, ITPS is offsetting the equivalent of planting and protecting approximately 20,000 trees. ITPS already offset 25% of its 2021 emissions, and is committed to being 100% carbon neutral for 2022 and beyond.
From A to Zefiro – Elsewhere in British Columbia, Vancouver-headquartered Zefiro Methane Corp. in a press release Thursday announced it has applied to have its common shares trade on the Canadian Securities Exchange. The firm is an originator of carbon offsets from “capping” orphaned and abandoned oil and gas wells, and is led by founding members of JP Morgan’s carbon trading desk.
Check yourself before you REC yourself – Barely a month after issuing guidelines for compliance with Local Law 97 (LL97) – which mandates that property owners start reducing carbon emissions from buildings in 2024 – New York City officials say they have to close a loophole that could weaken the impact of the law. Under the heading “Cap the Credits,” a statement posted on his website Monday by City Comptroller Brad Lander said that an “unanticipated supply” of projects offering Renewable Energy Credits (RECs) to building owners could moot the impact of LL97 as owners choose to purchase RECs to avoid costly retrofits. Lander is proposing to cap RECs to no more than 30% of a building’s electricity emissions above its limit. Under NYC’s original guidelines for LL97 compliance, application of RECs was limited to emissions generated by electric power, but no cap was specified. The Big Apple government has already ruled out cap-and-trade for allowing building owners to comply with LL97. (Globest.com)
VOLUNTARY
TCFD help – Atlanta-headquartered Intercontinental Exchange (ICE) on Thursday announced the launch of a new service to help asset managers and other financial institutions comply with Task Force for Climate-Related Financial Disclosures (TCFD) requirements. ICE’s TCFD service leverages the company’s climate transition data and analytics, corporate entity data, as well as green bond data, to provide the data and information needed for the metrics and targets reporting required in the TCFD framework. By utilizing multiple primary sources of data and sophisticated modelling, ICE offers a broad range of emissions and targets data for companies globally, the company said in a press release.
Clothing cuts – In a bid to achieve its goal of net zero emissions by 2040, Swedish multinational clothing company H&M has announced at COP27 its interim target to reduce the group’s absolute scope 1 and 2 emissions and scope 3 emissions by 56% respectively by 2030. The company has also launched an internal carbon price initiative, which is a consisting tool within the H&M Group to drive behavioural change within its buying, design, and merchandising teams as well as in production and logistics, that steers toward the purchase of low-carbon materials for its products and the selection of low-emission production units. The company this year also signed a multi-year carbon removal agreement with direct air capture firm Climeworks, which covers the removal of 10,000 tonnes of CO2. (Fibre2Fashion)
Beautiful net zero life – Global luxury jeweller Tiffany & Co has set new 2030 climate goals to support a new vision of achieving a net zero supply chain and operations base by 2040. The brand, based out of New York, has committed to reducing its scope 1 and scope 2 emissions by 70% in absolute terms by 2030, against a 2019 baseline. Tiffany notably exceeded its 2013-20 goal to reduce scope 1 and 2 emissions by 15% while growing the business. The new energy efficiency commitments build on an existing ambition to reduce electricity intensity in stores by 10% between 2018 and 2025. Tiffany has additionally pledged to reduce its scope 3 emissions by 40% by 2030 against a 2019 baseline. Engaging with suppliers will be crucial, here, as most of the business’s emissions footprint occurs upstream in supply chains, edie reports. Tiffany’s 2020 sustainability report states that, in any given year, scope 3 emissions account for around 90% of the firm’s overall footprint. Around three quarters of scope 3 emissions are associated with purchased goods and services. Moving towards sourcing 100% of its gold, silver, and platinum from traceable, recycled sources will play a key role in reducing emissions associated with materials. Increasing the provision of low-emission and zero-emission transport is another key focus area.
SHIPPING
Voyage value – China Merchants Energy Shipping (CMES), BHP, and DNV have signed a MOU to collaborate on industry value chain GHG management. The MOU seeks to enable close cooperation between ship owner and charterer with the aim of achieving further energy efficiencies and GHG savings through improved voyage data collection, verification, and sharing via DNV’s Veracity data platform in collaboration with the industry partners’ digital management systems. (Bunkerspot)
AND FINALLY…
A little more love for nature – The boom of carbon-neutral weddings has spread to China, where some couples have considered making their special life event more eco-friendly. Li and Hu, a couple based in Guangxi, are one of the Chinese couples that decided to be more environmentally conscious about their wedding – they chose reusable celebrations and cutlery items over disposables, ordered vegan catering, and reduced the plastic packaging for wedding gifts, according to Caijing. To make their big event as green as possible, they encouraged family members and friends to reduce their carbon footprint by taking public transport or carpooling, and purchased a Chinese Certified Emission Reduction (CCER) certificate with the help of a third-party service provider to offset the rest of the emissions generated from the wedding.
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