CP Daily: Monday November 21, 2022

Published 02:47 on November 22, 2022  /  Last updated at 17:34 on November 22, 2022  /  Newsletters  /  No Comments

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

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TOP STORY

ANALYSIS: Streamlining Washington offset market’s borrowed framework necessary to ensure supply

Compliance offsets in Washington state’s cap-and-invest programme that kicks off in January will garner robust demand and competitive prices, but officials must incorporate lessons-learned and other changes to the California-modelled carbon market design in order to attract project developers from the voluntary market, experts told Carbon Pulse.

ASIA PACIFIC

Singapore signs bilateral Article 6-aligned carbon market agreement with Peru

Singapore and Peru signed a Memorandum of Understanding (MoU) on the sidelines of COP27 in Sharm el-Sheikh to collaborate on carbon markets in alignment with Article 6 guidelines, both countries have announced.

Global offset developer signs partnership with Australian agribusiness investor

A global developer of carbon credit projects has entered into a strategic partnership with a Melbourne-based firm to roll out offset projects in the Australian agribusiness sector.

Taiwan needs to unlock potential for ocean carbon sinks -report

Taiwan should allocate more resources to explore the potential of blue carbon, an emerging field that could absorb roughly one-third of the additional offsets from carbon sinks pledged by the government, an NGO report has found.

China’s efforts not enough to peak emissions from fossil energy consumption, analysts say

Efforts to achieve CO2 emissions and clean energy targets have made China the world leader in deploying renewable energy and nuclear power, but have not yet been sufficient to peak the country’s CO2 emissions from fossil energy consumption, a report published on Monday found.

EMEA

EU recyclers urge faster free ETS allocation phaseout, more resource saving

The EU ETS reforms should replace free allocation with border measures more quickly and better take into account resource saving to boost the market’s effectiveness, a recycling industry group has urged as the latest round of legislator negotiations looms.

Lead lawmaker urges swift EU exit from Energy Charter Treaty

The EU should made a swift exit from the Energy Charter Treaty (ECT) rather than the “reflection period” Brussels has advocated, a leading EU Parliamentarian on the issue urged on Monday just ahead of a crunch meeting of Charter member countries.

Euro Markets: EUAs rally as focus turns to weather, ETS reform talks and auction pause

EUAs got off to a robust start to the week on Monday, with prices climbing as much as 3.8% to erase the prior three daily losses as demand appeared to be returning amid cooler weather prospects, upcoming market reform negotiations, and the end of this year’s auction programme.

AMERICAS

RGGI states delay programme review meetings, but hold firm on completion date

The 11 RGGI member states will delay public meetings to consider changes to the power sector carbon market as part of the third programme review, but are still aiming to finish an updated Model Rule for the cap-and-trade system in their previously scheduled timeframe, the jurisdictions announced Monday.

US govt grants $1.1 bln to extend life of California’s last-remaining nuclear plant

The US Department of Energy (DOE) on Monday announced $1.1 billion in conditional federal grants to help prevent early closure of the Diablo Canyon Power Plant, the last-remaining nuclear reactor in California and a major source of zero-carbon electricity under the state’s carbon market.

INTERNATIONAL

Post-COP27 pressure set to mount on who foots bill for climate change

Climate-related finance demands are very likely to grow in the coming weeks and months, as nations meet in high-stakes nature negotiations in Montreal, and discussions escalate elsewhere on broader global-financial-system reform pursuant to the climate crisis.

VOLUNTARY

VCM Report: Slight uptick in N-GEO activity a bright spot in moribund market

The rise in open interest in the N-GEO future and a slight uptick in the spot N-GEO proved the bright spots for a voluntary carbon market that remained stuck in the doldrums last week amid a lack of year-end mitigation demand.

ACX to list American Carbon Registry units

Singapore-based Air Carbon Exchange (ACX) has partnered with the American Carbon Registry (ACR) to list the latter’s Emissions Reduction Tons (ERTs) on its platform, it announced Tuesday.

ICYM: COP27

UN negotiators agree on climate loss and damage facility as talks run long due to energy row

UN climate talks closed early Sunday morning with an agreement to establish a loss and damage fund for vulnerable countries, but negotiators failed to agree a peak year for emissions or extend a global coal phasedown to all fossil fuels.

Negotiators sign off text on UN carbon market rules that defers much to next year

Government officials adopted text on UN carbon markets on Saturday afternoon and the documents were subsequently adopted by the full COP27 in Sharm el-Sheikh, with negotiators deferring many battles until next year.

ANALYSIS: UN lays down marker for the future of the voluntary carbon market

Negotiations on a new UN carbon crediting mechanism took only limited steps at COP27 climate talks in Sharm el-Sheikh this month, but some believe the process is providing a clear signal to the shape of the current voluntary carbon market (VCM) that will be hard to ignore.

Reactions to the Sharm el-Sheikh Implementation Plan and a snapshot of key announcements

Here are selected expert reactions to the Sharm el-Sheikh Implementation Plan, which was concluded at the UN COP27 summit early on Sunday, along with a snapshot of key announcements made at the two-week event.

CP Daily: COP27 Special

That’s a wrap. The final gavel came down in Sharm el-Sheikh shortly after 0700 local time on Sunday morning, making COP27 the second-longest running round of UN climate talks. Here’s a recast of the *103 articles* published by Carbon Pulse relating to both weeks of the summit.

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CONFERENCE

Asia’s largest carbon markets event is back! The International Emissions Trading Association (IETA) looks forward to welcoming delegates to its flagship Asia Climate Summit (ACS) 2022, being held Dec. 6-8 at the Marina Bay Sands Convention Center in Singapore. Everything you need to know about carbon markets in Asia in 3 days! Held in a hybrid format with both in-person and virtual offerings, the programme brings together leading private sector experts and policymakers from both the carbon and energy world to discuss the current state of play, and what’s next for compliance and voluntary markets. An ideal forum to take stock of the world’s evolving net zero landscape and clean growth opportunities. Organised by IETA, in collaboration with ICAP and the IEA.

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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

VOLUNTARY

‘Junk’ credits – Junk carbon offsets are what make large corporates ‘carbon neutral’, according to analysis from Bloomberg. The piece looked at more than 215,000 offset transactions in public datasets over the past decade reveals for the first time that dozens of global brands have bought so-called low quality offsets. Airlines, online retailers, industrial firms, and energy producers now rely heavily on the cheapest and most suspect type of offset — those tied to renewable-energy projects, they said. Most of these renewable energy offset purchases are not credible, according to one of six researchers who reviewed the data, citing additionality issues and the rapidly falling cost in recent years of wind and solar. Yet as of last year, renewable offsets remain widespread, despite the doubts about their efficacy. Bloomberg analysed 190 Mt of carbon offsets purchased in more than 50,000 transactions in 2021 and close to 40% came from renewable energy projects. Transactions amounting to at least 47% of the carbon offsets purchased last year did not have enough information to attribute them back to a buyer. Even with the limited disclosures, hundreds of global companies confirm they are erasing emissions off their books in this way, the analysis suggested. Read Carbon Pulse’s September report of retirement data collated by a climate analytics firm that found energy, heavy industry, and aviation companies tend to pay below-average for their carbon offsets.

Biochar boost – Environmental consultancy and product developer Net Zero Markets (NZM) on Monday announced its GER Supervisory Committee has agreed to accept VERs from biochar schemes approved by Verra as eligible for inclusion under NZM’s Global Emission Reduction (GER) contract and its Carbon Capture Contract that forms part of the GER. The change will be implemented early in 2023, the NZM said in a press release. The approval follows on from Verra’s recent update to its methodology on how to quantify GHG emission reductions from producing biochar and using it in approved soil and non-soil applications. As a result, VERs produced under this methodology will be the first long-lived carbon removal credits to be issued by any of the big four standard providers for voluntary carbon markets, NZM added.

Chimp change – Carbon project developer Dutch Green Business Group (DGBG) on Monday announced its Bulindi Chimpanzee Habitat Restoration Project in Uganda has entered the development phase. In a press release, DGB said the project seeks to rapidly restore the dwindling chimpanzee habitat in Bulindi, Uganda, by means of active reforestation. The project will generate some 45,000 carbon credits per year over its 30-year lifespan, and DGB expects to sell all 1.3 mln credits expected over this timeframe on the voluntary market prior to the first issuance, as the company added it has already received offers to forward sell the units.

INTERNATIONAL

Taking advantage – India’s oil refiners are looking to pick up a bit more Russian crude in last-minute purchases just weeks before new sanctions take effect, Bloomberg reports. At least four companies are seeking Russian cargoes that can load by Dec. 5 and discharge before Jan. 19, according to people familiar with the matter. That timeframe fits with a grace period being granted on oil purchases under a US-led measure to cap the price of Moscow’s sales. The price cap is scheduled to be implemented alongside European Union sanctions on Russian seaborne imports on Dec. 5, and is designed to keep crude flowing but crimp the Kremlin’s revenues as it wages war in Ukraine. The cap level is set to be announced this week.

EMEA

EU helps – Energy-intensive companies in Austria will receive €1.1 bln in state aid to face increased costs. The initiative, approved by the European Commission on Monday, will take the form of direct grants up to €400,000 per company and up to €2 mln for energy intensive businesses, which are also eligible for increased support if they have incurred operating losses (up to €25 mln) and if they are active in particularly affected sectors (up to €50 mln). The scheme was approved as “the EU economy is experiencing a serious disturbance”, the Commission stated, “in the context of Russia’s war against Ukraine”. Executive vice-president Margrethe Vestager, in charge of competition policy, said this “will enable Austria to mitigate the impact of the rising input costs on energy and trade-intensive companies and support the continuation of their activities in this difficult context.”

Windfall-out – One of the UK’s biggest energy firms has warned that it will have to review its investments in renewables because of the government’s new 45% windfall tax on electricity generators, the BBC reports. The boss of utility SSE said it may have to give up on some green energy plans when the levy comes into effect. The levy, unveiled in the Autumn financial statement, hopes to raise £14 bln. UK finance minister Jeremy Hunt said there were “extraordinary returns” to be made from low-carbon generators. But Alistair Phillips-Davies, the CEO of SSE, said while the company believes in paying their fair share in taxes, the decision “is going to take money away from us”. Asked whether the company will have to review some of its key investments, the CEO said “there is no doubt”. Shell has also said it will “evaluate” its plan for as much as £25 bln of UK investments and push for changes to the expanded windfall tax.

Green grocer – UK supermarket Waitrose is putting heat pumps in all its shops as it brings forward net-zero plans in an effort to tackle spiralling energy prices, reports the Daily Telegraph. The company said it was replacing the gas boilers that have been heating its 332 stores with electric heat pumps. Waitrose said the pumps would replace gas heating in all the stores before 2035. It currently has five installed and is planning another 10 next year. Neil Coleman, from parent company the John Lewis Partnership, said: “No business is immune to rising energy costs. We’ve already set an ambitious plan to reduce our energy consumption and reach our goal of net zero emissions by 2035. With energy prices rising, we’re accelerating this.”

ASIA PACIFIC

Ammonia deals – Japanese shipping company NYK and JERA have signed a memorandum of understanding (MoU) to study the transportation of fuel ammonia, according to a JERA press release. The study will include examining the transport of fuel ammonia to the Hekinan Thermal Power Plant, where JERA aims to begin using fuel ammonia in commercial operations in the late 2020s. In order to procure fuel ammonia in large volume for power generation at a lower cost, it is necessary to increase the size of ships for transportation, JERA stated. The MoU provides for the two companies to jointly study the development of enlarged fuel ammonia carriers and the establishment of a safe transportation system. Mitsui O.S.K. Lines (MOL) also announced that MOL and JERA have signed aN MoU to launch a study of transporting ammonia for use as fuel, also including shipments to JERA’s Hekinan Power Station, according to a MOL press release.

Store it away – Malaysian energy giant Petronas has forged another energy transition partnership as it advances the nation and the region’s carbon capture and storage (CCS) ambitions, Upstream reports. Petronas and Dutch tank storage company Vopak on Monday signed an MOU to develop the value chain for CCS in Southeast Asia. One of the key initiatives will see the companies jointly focus on CO2 emitted by industries in Singapore. The study will include transportation of CO2 from a Vopak terminal for potential injection into regional storage hubs developed by Petronas. The aggregation of CO2 emissions from various emitters in the Southeast Asia region is also part of the feasibility study. Both companies intend to invest in the development of CCS value chain solutions, noted Vopak.

AMERICAS

Maritime mess – A $C500 mln clean energy investment from Nova Scotia Power’s parent company, Emera, is now on hold despite a jump in the company’s profits, because the Canadian maritime province’s government is putting a cap on rate payments, CEO Scott Balfour said in a conference call earlier in November. The proposed $C5 bln Atlantic Loop is now also on hold, which would import hydro power from Labrador and Quebec to Canada’s four Atlantic provinces in an effort to decarbonise their electrical supply. The Nova Scotia Progressive Conservative government is limiting rate hikes to 1.8% over two years, well below the 14% that Emera had requested. The provincial government is also limiting a rate of return on equity to 9.25%, below Emera’s requested 9.5%. The government says it’s attempting to prevent price hikes for Nova Scotians amid inflationary pressures. (Canadian Press)

SCIENCE & TECH

Hydrogen solution – Critics of hydrogen state that it well never take-off because it is too expensive and difficult to transport, but a UK-based startup, HiiROC, believes it could be part of the solution, the Financial Times reports. The company has developed technology that, it says, will produce low-cost, zero-emission hydrogen from micro to industrial scale. The gas is produced at the point of use, thereby avoiding the cost and practical problems of storage and distribution. The company says its technology — thermal plasma electrolysis — can convert biomethane, flare gas, or natural gas into clean hydrogen at a cost that is comparable to steam methane reforming but without the associated emissions. It is also cheaper than water electrolysis. Put simply, HiiROC uses a very strong electric field inside a plasma torch to rip apart the methane molecules to create hydrogen and a solid byproduct called carbon black. The process results in something Tim Davies, one of the start-up’s founders, describes as “emerald” hydrogen — which, he says, differs from “turquoise” hydrogen, which is created through the pyrolysis (heating in an inert atmosphere) of methane or other hydrocarbons. HiiROC’s process, says Davies, is “electrically driven”.

AND FINALLY…

Reforest failure – A new study by a large international team of scientists has reviewed the success of reforesting programs at 176 sites in tropical and sub-tropical Asia. The researchers scoured the literature for published records of tree survival and growth data in areas where forest restoration has been attempted. The results of their analysis, published in the Philosophical Transactions of the Royal Society B: Biological Sciences, make for sobering reading. They found that, on average, 18% of planted saplings died within the first year, and that this mortality rose to 44% after five years. However, survival rates varied greatly between sites and species, with some sites seeing over 80% of trees still alive after five years, while at others a similar percentage had died. (earth.com)

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