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COP27
PNG envoy says deal with UAE firm likely to be quashed, joins fresh push on REDD’s role in Article 6
Papua New Guinea’s climate envoy has said the recent announcement by the country’s sports minister entrusting the country’s carbon market regulations to a Dubai-based company is not binding and will likely be quashed by the government, as the nation and its allies lobby for their pre-2021 REDD+ credits to be allowed to count towards Paris goals on the final scheduled day at COP27.
Roundup for Day 12 – Nov. 18
It’s Friday – the final day (?) – of week two at COP27 in Sharm el-Sheikh, and Carbon Pulse rounds up some of today’s developments and announcements from the summit. Timestamps in local time (EEST, GMT+2).
VOLUNTARY
VER surplus likely to persist through 2030 amid expectations for ‘toothless’ ICVCM -analysts
The existing VER surplus is likely to continue growing for most of this decade as baseline demand for voluntary carbon offsets remains low and proposed integrity standards do little to realign supply, analysts said Friday.
Money flows into N-GEO futures amid low carbon credit prices
Money has started to flow into nature-based futures during the last week of COP27, often a bullish signal for the market, although prices have continued to edge sideways.
Urban nature-based solutions often overlooked as a climate measure, finds report
Urban nature-based solutions (NBS) may fail to spark the passions of saving a rainforest but they still deliver high economic and social benefits, a study of European cities has found.
Northern Brazil forest project offering 250k self-certified carbon credits
A forest carbon offset project in northern Brazil is selling 250,000 carbon credits that were registered, issued, and verified through affiliated companies.
EMEA
EU states fail to reunite on divisive Energy Charter Treaty
EU states did not find a compromise on a joint approval of reforms to the Energy Charter Treaty (ECT) when they met late Friday, a well-placed source said, with Luxembourg the latest to say it will drop out due to concerns the pact will hinder its climate efforts.
Euro Markets: EUAs post third weekly loss as traders highlight lack of fundamental drivers
EUAs fell for the third week in a row as activity in the market continued to dwindle amid a lack of fundamental drivers, while extended mild temperatures are damping demand from the power sector.
ASIA PACIFIC
Australia awards A$29 mln in grants to boost soil carbon measurement technologies
The Australian government has awarded nearly A$29 million ($19.5 mln) in funding to farmers and land managers to make it easier for them to measure the amount of carbon in their soils, a joint statement from the ministers for climate change and agriculture announced on Friday.
Japanese steel firm plans national roll-out of blue carbon projects after first issuance
A Japanese steel firm has just received its first blue carbon credits from a project using iron and steel slag to help grow a kelp seaweed bed and now aims to replicate the procedure throughout the country.
Australian bank announces first carbon prepayment deal
A major Australian bank has announced its first carbon prepayment deal as it seeks to ease carbon market access for agribusinesses.
CN Markets: China ETS sees improved liquidity, but sentiment remains tepid
Liquidity continued to improve in China’s compliance and voluntary markets over the past week, though observers remain cautious about market outlook due to unclear policy signals.
AMERICAS
California gasoline and diesel sales in August increase through summer driving
Gasoline sales in California for August rose to the highest levels since May last year, while diesel consumption picked up from last month’s decline, according to state data released Friday.
Producers recover some CCA length, speculators prefer RGGI
Compliance entities reversed course from last week, adding to their California Carbon Allowance (CCA) position amid continued spread trading ahead of the WCI Q4 auction, while financials continued to shorten their CCA position and add to their RGGI length, according to US Commodity Futures Trading Commission (CFTC) data published Friday.
INTERNATIONAL
Decarbonising ammonia’s current uses key to realising its broader energy transition role, report says
Ammonia offers key decarbonising opportunities for sectors such as power generation and shipping in the longer term, but low carbon ammonia may remain an untapped market without strong policy support that focuses on lowering the emissions footprint of its current industrial uses, a report has found.
BAVARDAGE
Carbon Pulse prepares for Greater China market growth with new hire
Carbon Pulse has recently hired its first Greater China correspondent amid a push in Hong Kong and Taiwan to play a larger role in international carbon markets, adding to the news flow already emerging from Mainland China.
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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
Price cap – G7 nations aim to announce at what level they will set a price cap on Russian crude oil next Wednesday, people familiar with the matter told Bloomberg. The US government is expected to privately share a proposed price ahead of a meeting of EU ambassadors scheduled for Nov. 23, the sources said. If EU ambassadors back the proposal, the plan is to announce the cap that evening, but the timing remains fluid. The cap, which is backed by the G7 and the EU, would ban companies from providing shipping and services, such as insurance, brokering, and financial assistance, needed to transport Russian oil anywhere in the world unless the oil is sold below the agreed threshold.
EMEA
Windfall blow – The UK’s oil and gas industry warned that an increase in the windfall tax announced on Thursday threatens investment in the sector, Bloomberg reports. Changes to the tax code make it difficult for companies to plan spending on new infrastructure that could last for decades, the industry lobby group said. Oil and gas production is in long-term decline in the North Sea even as the UK continues to rely on the fossil fuels for much of its heat, power, and transportation. British finance minister Jeremy Hunt increased a windfall tax on the industry to 35%, up from 25% previously, and extended it to 2028. The measure will raise over £19 bln from the oil and gas sector by 2028, bringing the total tax burden to £80 bln in that period, OEUK said.
In the clear – A major gas shortage in Germany during the coming winter has become “highly unlikely,” the country’s gas storage operator association INES has said. In a review of supply scenarios for the winter 2022/2023, INES found that a shortage of natural gas is not to be expected unless the country will be hit by “extremely” low temperatures. According to recent long-term weather forecasts, however, the coming winter will rather be warmer than average, the association said. “The complete filling of gas storages has brought us in a position from where we presumably can safely make it through the coming winter,” INES head Sebastian Bleschke said. The scenarios had shown that filling the storage facilities sufficiently should also be possible for the 2023/24 winter, even if gas reserves are largely depleted during the coming winter. But capacities for renewed filling would be determined by the availability of LNG for the EU’s internal market, INES cautioned. The association said filling levels and consumption across Europe should be monitored closely, as well as LNG import capacities and continued Russian gas flows to Europe through Ukraine and Turkey. “In order to avoid any bad surprises, key parameters of supply security should remain under scrutiny,” Bleschke said. (Clean Energy Wire)
Hamburg wins green ammonia – Germany has chosen the port of Hamburg as the terminal to import green ammonia from Saudi Arabia, with the new facility expected to open in 2026, the government announced Friday. The terminal will be operated by Oiltanking Deutschland. Industrial gas supplier Air Products and the energy company Mabanaft are participating in the project. German Minister for Economic Affairs and Climate Action Robert Habeck called the decision “a milestone in the scaling of the hydrogen economy in Germany and a powerful signal to the entire hydrogen market in Europe.
One we missed – It has been pointed out to Carbon Pulse that the UK Supreme Court this summer refused an appeal to a 2021 Court of Appeal decision to order a retrial in a £60 mln EU ETS tax fraud case. The Court of Appeal ordered the retrial in the suit between plaintiffs Bilta (UK) Ltd and others and defendants NatWest Markets and Mercuria Energy Europe Trading after it questioned the ruling judge’s findings following an “inexcusable” delay between the trial and the verdict. Bilta and Mercuria appealed this decision to the Supreme Court, which in July ruled against them and ordered the retrial to go ahead. The civil suit – initially filed by a group of insolvent companies and their liquidators against defendants RBS and its Sempra Commodities trading division – was heard in the summer of 2018, with the judge’s ruling delivered some 19 months later. Justice Richard Snowden found the financial institutions liable for dishonestly assisting and knowingly facilitating ‘carousel’ VAT fraud via EUA trading in 2009 after he said two emissions traders at the subsidiary ignored obvious risks. In his Mar. 2020 verdict, Snowden found that the traders had deliberately overlooked warnings that one of their clients, London-based trading house CarbonDesk, was connected with VAT fraud and opted to continue trading with the firm. Snowden then last year granted the defendants the right to appeal in order to resolve a number of remaining issues. The date for the retrial has not yet been set. RBS is now known as NatWest Markets, while Mercuria bought RBS’ Sempra Commodities division from JP Morgan in 2014.
ASIA PACIFIC
Coal binge – India’s coal-fired power output has increased much faster than any other country in the Asia Pacific since Russia’s invasion of Ukraine, Reuters reports, underscoring the challenges the world’s third-largest GHG emitter faces in weaning its economy off of carbon. Coal fuels nearly three-quarters of the power output of India, which presented its decarbonisation strategy at the UN’s COP27 climate summit this week – the last of the world’s five largest economies to do so. Use of coal globally, including in power generation, has grown since Russia’s invasion of Ukraine in late February sent prices of other fossil fuels surging, derailing efforts to transition to cleaner fuels. But the increase in India’s coal-fired power output has outstripped its regional peers, data from the government and analysts showed.
Offset it – Brisbane City Council in Queensland, Australia, last year paid A$6 mln for 404,000 carbon certificates, so the city could offset more than 520,000 tonnes of carbon emitted by the council and still claim it was carbon neutral, The Age reports. In 2020, the council’s carbon-offset bill was $4 mln. The council has genuinely reduced the carbon produced day-to-day by 19.25% – from 644,039 tonnes in 2016-17 to 520,075 tonnes in 2020-21. To offset the carbon still produced, international carbon credits financing wind and solar projects in India and China and domestic carbon credits supporting a 150,000 ha Cape York savannah burning project were bought. Meanwhile, in Gladstone, Queensland, an area known for its huge coal and LNG export facilities, the regional council has released a decarbonisation plan, PV magazine reports. “Gladstone Regional Council has launched a 10-year economic transition roadmap outlining a plan to help the industrial centre to thrive in a decarbonising world, navigate the shift away from an economy tied to fossil fuels, and manage the impacts associated with new energy industries,” the article stated.
Regional initiatives – The government of China’s Guizhou province has published its plans for carbon emissions peaking, with a primary target of ensuring at least 20% of non-fossil fuels in total energy consumption by 2025, according to an official notice released Friday. Similar to initiatives issued by other Chinese provincial authorities, the Guizhou government aims to reduce emissions by increasing the use of renewable energy and green building materials, controlling coal consumption, and encouraging technology upgrades. The government of Inner Mongolia also launched its emissions peaking plan this week, with a special focus on controlling emissions from cattle grazing and improving soil quality for the development of carbon sinks.
AMERICAS
Halve mercy – The Colombian Congress on Thursday approved the conciliation of the country’s tax reform, sending it on to President Gustavo Petro for signature. As expected, the legislation halves the offset usage limit under the country’s roughly $4/tonne carbon tax to 50%, a change that project developers and stakeholders told Carbon Pulse would have a major impact on the domestic carbon credit market. The package also will gradually subject thermal coal to the carbon levy over 2025-28, and sets a slightly higher tax rate for 2023 at COP20,500 ($4.25). (Semana)
Republican revamp – House Republican leaders said Thursday the party is preparing an energy and environment package that could emerge in January as one of the first pieces of major legislation passed by the GOP-controlled chamber, E&E News reports. The package would seek to unleash domestic fossil fuel production along with critical mineral mining. The package will follow an edict from current Minority Leader Kevin McCarthy (R), who has indicated on multiple occasions that policies to help attain American “energy independence” and lowering energy prices would be among the House’s first priorities. Separately, Republicans plan to kill a special committee focused on climate change when they take control of the House next year, the top GOP member of the panel said Thursday, Bloomberg reports. The committee was resurrected by House Speaker Nancy Pelosi in 2019 when Democrats took back control of Congress.
Clean transmission – The US Department of Energy (DOE) announced Friday the opening of first-round applications for competitive grants totalling $10.5 bln under the Grid Resilience and Innovation Partnership Programs, as well as $2.5 bln under the Transmission Facilitation Program. Updating aging transmission infrastructure and expanding the transmission system is part of the administration’s goals of reducing GHG emissions by 50–52% below 2005 levels in 2030, and achieving 100% clean electricity by 2035, the White House said in a press release.
Above and Beyond6 – Chevron USA, a subsidiary of oil major Chevron, on Thursday announced it signed a definitive agreement to acquire full ownership of Beyond6, (B6) and its network of 55 compressed natural gas (CNG) stations across the US from Chevron’s current B6 co-owners, a subsidiary of Mercuria Energy Trading and B6 CEO Andrew West. Mercuria and Chevron will enter into a long-term supply relationship to deliver renewable natural gas (RNG) to Chevron as part of the transaction, the Houston-based oil major said in a press release. With this acquisition, Chevron said it can market the RNG it either produces or procures through a nationwide network of CNG locations, with the fuel considered carbon negative on a lifecycle basis under the California Low Carbon Fuel Standard (LCFS).
The PEI price – Canada’s smallest province, Prince Edwards Island (PEI) is deadlocked in negotiations with the federal government as it tries to extend the carbon tax exemption on heating oil past the Apr. 2023 deadline, the provincial government told the legislature Thursday. The Progressive Conservative Premier of PEI, Dennis King, refuses to publish the carbon pricing plan he’s sent to Canadian PM Justin Trudeau because the two are still in negotiations. The Atlantic provinces have all been attempting to delay hikes in the carbon tax, which is set to rise from $50/tonne this year to $65/tonne in 2023 and increase by $15 every year until reaching $170/tonne by 2030. (CBC)
VOLUNTARY
CYNKing feeling – Tolam Earth, a new US-based digital carbon offset marketplace that only launched earlier this month, has partnered with Kenyan biomass firm Tamuwa to operate the CYNK platform, the first trading platform for tokenised carbon credits from Africa-based projects. Tamuwa set up CYNK earlier this year and expects to handle its first trades during Q4, using offsets from Tamuwa’s own biomass projects. However, the company is also in talks with various potential partners to bring nature-based solutions, blue carbon, and regenerative agriculture onto the platform. Tolam brings to the table a system of automated regression market makers, with auto-purchasing mechanisms the company says leads to optimal liquidity and pricing.
AND FINALLY…
Give a dog a bone? – Feeding your dog dry food instead of tinned meat can help to save the planet, reports the Daily Telegraph. Analysis of almost 1,000 pet diets, including both dog and cat menus, by the University of Sao Paulo found that a wet food diet produces almost seven times as much CO2 as a dry food alternative. The difference between wet and dry food is primarily the different water content. Dry food has a moisture content of just 3 to 12%, but this is between 60 to 84% for wet food. A 10kg dog, like a dachshund, needs around 534 cal per day and if they get this entirely from dry meals then their carbon pawprint is 828 kg a year, the study found. However, emissions for a wet food-only dog diet total more than 6.5 tonnes, an increase of 689%. This level of is almost the same as an average Brazilian person’s annual footprint, the scientists write, making a dachshund’s wet dinners as bad for the environment as having another person living in Brazil. Most of the emissions from dog food comes from meat that requires lots of land and water to produce. Almost 90% of the calories in wet pet food comes from animal sources, compared to just 45% for dry meal, which is more vegetable than meat but has the most energy per gram. However, the scientists say dogs and cats are carnivores so going vegan and removing all meat from their diet in favour of more eco-friendly protein options, like peas or beans, could be bad for their health.
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