Newsletters > CP Daily: Monday November 28, 2022

CP Daily: Monday November 28, 2022

Published 01:13 on November 29, 2022  /  Last updated at 01:15 on November 29, 2022  / /  Newsletters

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

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TOP STORY

US forest carbon firm lays off nearly half its workforce amid weak voluntary demand, buyer cynicism

A US-based forest carbon tech firm has laid off nearly half of its workforce as a result of sluggish voluntary credit demand and widespread buyer cynicism surrounding nature-based solutions.

ASIA PACIFIC

China releases spot power market trading draft for consultation

China’s energy regulator on Friday issued a draft of trading regulations for the country’s spot power market, a move considered crucial to make a transition towards market-based electricity pricing and improve the effectiveness of the national emissions trading scheme (ETS).

Singapore firm, certification agency to develop emissions performance rating system

A Singapore-based company has formed a partnership with a German certification provider to help companies measure their emissions and develop a rating system of their performance, they announced on Monday.

Australia Market Roundup: Climate Impact Partners retires nearly 6 mln CERs, ACCU issuance falls

Voluntary carbon offset provider Climate Impact Partners retired nearly 6 million Certified Emission Reductions (CERs) units in November, as issuance of Australian Carbon Credit Units (ACCUs) dropped off.

Saudi power firm signs $7 bln agreement to develop green hydrogen in Thailand

Saudi Arabian energy company ACWA Power has signed a Memorandum of Understanding (MoU) with two state-owned Thai companies to launch a $7 billion deal to develop green hydrogen capacity in the Southeast Asian country for domestic use and exports, it announced over the weekend.

CNOOC natural gas unit to develop forestry carbon sinks in Hainan

A natural gas subsidiary of state-owned China National Offshore Oil Corp. (CNOOC) has teamed up with a local government in Hainan province to jointly work on forestry carbon sink projects, as it prepares to get into the domestic offset market despite the years-long absence of national voluntary regulations.

EMEA

Expected size of Innovation Fund critical to design of EU industry support schemes

The European Commission is honing its support policies for clean hydrogen and other low-carbon solutions – with the first pilot Contract for Difference (CfD) expected next year – but uncertainty over the future volume of the Innovation Fund leaves questions hanging over the best design details.

Too much ‘hype’ around bioenergy CCS ahead of EU proposal, say campaigners

The potential of carbon capture and storage bioenergy (BECCS) carbon removal projects is being inflated, campaigners said in a report published on Monday as Brussels prepares a proposal on how carbon removals can integrate into EU climate policy.

Euro Markets: EUAs erase early 2.5% loss after technical bounce to end marginally lower

Carbon prices erased almost all their early losses on Monday after the market failed to break below key technical support and buyers re-entered the market, while energy prices also trimmed their losses after a weak start.

AMERICAS

RFS Market: RIN prices rise to 1.5-mth high amid refiner buying, imminent biofuel quotas

US biofuel credit (RIN) values lifted on Monday to levels not seen since June 2021, as traders said steady demand from obligated parties and the imminent release of blending quotas for the US Renewable Fuel Standard (RFS) were driving prices higher.

Producers’ CCA length surges, financials keep adding RGGI

Compliance entities added to their California Carbon Allowance (CCA) position in the lead up to the release of the Q4 WCI auction results, while financials shortened their CCA holdings and added to their RGGI length, according to US Commodity Futures Trading Commission (CFTC) data published Monday.

Canadian sustainable commodities supplier launches environmental trading desk

A Canadian sustainable commodities supplier is launching an international environmental commodities trading desk.

VOLUNTARY

VCM Report: Value of trades falls sharply amid bargain-hunting

Prompt carbon credit prices edged lower over the past week, but the slight moves masked a much heavier bearish step identified by data aggregator AlliedOffsets, which flagged a slide in transactional value that likely reflects bargain hunting at the expense of fresher and more expensive vintages.

New carbon credit marketplace aims to woo institutional investors

A startup tech company that secured $28.5 million in its Series A funding round this month has teamed up with a project developer to build a blockchain-based carbon exchange, with plans to launch a new standardised nature-based product for its target audience of institutional investors.

ICYM

INTERACTIVE: Mapping international emissions trade agreements as interest gathers pace

As the number of countries announcing bilateral emissions trade agreements and partnerships has increased, Carbon Pulse has launched a tracker to monitor such arrangements as updated national climate plans also point towards a rise in the use of cooperative approaches.

SPONSORED

Companies turning to futures to meet carbon reduction goals -CME

Promoted content – Sponsored by CME Group: As the voluntary carbon offset market grows, price risk is becoming a bigger factor. “Having a clear price signal is important for companies, giving them the confidence to move forward.”

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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

INTERNATIONAL

Reviewing the review – BP is considering ending the publication of its Statistical Review of World Energy, over 70 years after it first published the benchmark report, as the energy major focuses on its shift to renewables, the company told Reuters. The Statistical Review has been a go-to resource for the wider energy sector since it was first published in Apr. 1952, providing detailed data on global oil, gas and coal production and consumption. Led by BP’s Chief Economist Spencer Dale in recent years, the report was expanded to include data on renewable energy and even minerals used for batteries. However the report has been seen by some BP executives as detrimental to the company’s new direction, sources told Reuters. A BP spokesperson confirmed the company has launched an internal review of the report.

Down under LNG –Australia’s Woodside Energy Group announced Monday it had shipped an LNG cargo from its Northwest Shelf facility to Europe for the first time, with the buyer, Uniper, saying it would help make up for supply lost from Russia, Reuters reported. The 75,000-tonne cargo, equivalent to 100 mln cubic metres of LNG, was delivered over the weekend to Uniper Global Commodities in Rotterdam. “We continue to work on securing the much needed gas supply into Europe from reliable sources like Australia and thus helping to strengthen security of supply during the ongoing crisis triggered by the Russian war,” Uniper’s director LNG Andreas Gemballa said in a joint statement with Woodside. Almost all LNG from Australia goes to Asia, with rare shipments going to South America. In August, amid Europe’s hunt for gas to replace Russian supply, an Australian cargo was transferred onto a ship in Malaysian waters to go the UK.

Talking heads – The EU and South Korea will on Tuesday hold its first policy dialogue meeting on emissions trading, the Korean environment ministry said on Monday. The dialogue will see working-level officials get together to discuss elements of their respective carbon programmes. Korea sees the process is an important step in ensuring the EU’s CBAM will have as little impact on its trade with the bloc as possible.

Indexing status quo – IHS Markit will retain existing weightings of its IHS Global Carbon Markets Index for 2023 when it rebalances on Wednesday, the company announced on Nov. 26. The index will be composed of 60% of EUAs, 30% of CCAs, and 5% each of RGAs, and UKAs. Within its 60% EUA weighting, 55% would be composed of Y+1 EUAs and 5% towards Y+2 EUAs. Of the 30% of CCAs, 25% would continue to be composed of the current vintage year and 5% towards the second-year vintage, the company noted.

RiNGing endorsement – Shell will buy Nature Energy Biogas from hedge fund Davidson Kempner Capital Management for nearly $2 billion, Bloomberg reports, as the oil major expands its transition from fossil fuels. The deal will make Shell the largest producer in Europe of what’s known as renewable natural gas, known as RNG, according to a statement. It taps into Shell’s plan to leverage its existing expertise producing and marketing gas for a lower-carbon economy.

EMEA

Better late than never – The UK government has launched a major new push to accelerate the adoption of domestic energy efficiency measures and encourage households and businesses to save more energy, BusinessGreen reports. Business minister Grant Shapps confirmed the new £1 bln ‘Energy Company Obligation’ (ECO+) grant scheme and plans for a new £18 mln public information campaign to offer advice on how to cut energy use. The new schemes are likely to be broadly welcomed by green groups that have long argued for a more ambitious energy efficiency programme to help reduce energy bills and carbon emissions, while also bolstering energy security. But the latest package of measures also sparked accusations that the government’s plans were long-overdue and remained well short of the level of funding needed to tackle the UK’s chronically inefficient housing stock. The government said the £1 bln extension of the existing ECO scheme, which is primarily focused on fuel poor households, would allow hundreds of thousands of more homes to access grants to help them fund insulation and other energy efficiency improvements. Of the £1 bln of funding available through the ECO+ scheme, around 80% will be made available for those households who are in some of the least energy-efficient homes in the country. Around a fifth of the fund will also be targeted to those who are the most vulnerable, including those on means tested benefits or in fuel poverty. A consultation is now set to be launched on the new plans, with the government signalling that it intends to lay necessary legislation for the scheme to launch in Spring 2023 and run until March 2026. Separately, the UK government said it has provided £32.9 mln in government funding  to projects across the country to develop new energy storage technologies, such as thermal batteries and liquid flow batteries as part of an ongoing competition.

Capped – In a bid to shield households and businesses from the drastic increase in energy prices, Germany’s government has approved a draft law to cap the price of electricity and gas by granting customers a fixed volume of supplies at reduced rates. The “price brakes” devised by the economy and climate as well as the finance ministry will become effective in March 2023, but will also retroactively cover higher costs in January and February. The caps will remain in place until at least April 2024. The windfall levy remains in place until at least the end of June next year and can be prolonged until April of the following year if necessary, according to the draft law, which still requires approval by parliament. The cap on gas at 12 ct/kWh for households, smaller companies, and public institutions like hospitals or universities will apply to a consumption level equalling 80% of their estimated annual consumption. Prices for larger industrial customers will be capped at 7 ct/kWh for gas, and will apply to 70% of their consumption in 2021. Electricity prices for households and small companies will be capped at 40 ct/kWh for 80% of the estimated consumption and at 13 ct/kWh for larger industrial companies covering a volume equal to 70% of last year’s consumption. (Clean Energy Wire)

Northern invariability – A new analysis of North Sea oil and gas production by S&P Global Commodity Insights illustrates the degree that GHG intensity can vary from one oil and gas asset to the next, and the factors that ultimately determine it. The average GHG intensity of production in the UK and Norwegian areas of the North Sea was 12 kg of CO2e per barrel of oil equivalent (kgCO2e/boe) in 2021. A deeper analysis revealed that nearly two thirds of total production was found to have an intensity below that basin-wide average. Meanwhile, assets responsible for just 20% of total production generated half of the basin’s total GHG emissions. Overall, individual assets across the basin displayed a wide variability, ranging in GHG intensity from less than 1 kgCO2e/boe to nearly 150 kgCO2e/boe. Such a wide range is consistent across all the regions that have been explored to date and highlights the challenges of averages, the report finds. The findings are derived from a new S&P Global Commodity Insights capability that provides a novel and comprehensive approach to estimating upstream oil and gas production emissions.

Three more years – European Energy Exchange has won the contract to auction German EUAs for another three years from Jan. 2024, the Leipzig-based bourse said on Monday. Before the start of the auctions under the new mandate, EEX must be included or confirmed in the Annex of the EU Auctioning Regulation, which is an obligation under EU rules. EEX has auctioned more than 1.5 bln EU allowances on behalf of Germany since 2010, earning the government around €26 bln in revenues, it said. EEX also sells allowances for Poland once a fortnight and hosts three auctions each week on behalf of the Commission and 25 other EU member states.

Madrid’s move – Spain is readying a new aid package for power-intensive companies including EU ETS-covered ceramic and fertilizer makers which are struggling due to Bloomberg reported, citing anonymous sources. The government, which is currently discussing the size of the package and whether to extend mounting energy costs, it to more sectors, could approve the new measures as soon as next month but a final decision has not yet been made. The socialist government has already spent about €35 bln to shield the economy from the impact of near-record inflation on households and companies with the use of tax breaks and subsidies, including €375 mln of direct aid to gas-intensive businesses. The new fiscal package could condition new aid to plans to spend in energy-efficient plants and to cut the carbon footprint, while the government is also reviewing the allocation of current relief measures to focus on most vulnerable sectors of the economy.

Berlin baulks – The German government will delay the start of a planned windfall levy for power producers, the Economy Ministry said.  Instead of applying the tax retroactively from September, it will go into effect starting December until the end of June 2023, according to a statement. The decision came after energy lobby groups had criticized the planned levy, which is designed to fund parts of a broader effort to cap gas and power prices for households and businesses. The package was approved by cabinet on Friday, German Chancellor Olaf Scholz said in Berlin. (Bloomberg)

Poor man’s pits – Across the world, coal is going through a revival as Russia withholds gas supplies needed to generate electricity because of the war in Ukraine. That clamour is even more acute in Poland because a disproportionate number of households still depend on coal for heating and there’s a shortage the government is struggling to address. With energy prices skyrocketing and the uncertainty around gas supplies growing, coal, the dirtiest of fuels, is coming back into fashion. In Poland, so-called “poor man’s pits”, illegal coal mines, have sprouted up in forests, fields and shrubland. Learn more.

ASIA PACIFIC

Capital hydrogen – Tokyo Governor Yuriko Koike announced plans to build a hydrogen supply network of pipelines in the capital as an energy resource to cut down on GHG emissions, Asahi Shimbun reports. Koike made the pitch Nov. 8 at a meeting on “green hydrogen” during the COP27 summit in Egypt. During the meeting, Koike spoke about green hydrogen being a pillar to achieve a decarbonised society once the system is up and running in Japan’s capital. “We have plans to build a supply system, including pipelines, to receive ‘green hydrogen’ generated around the world,” she said. Plans call for constructing pipelines that connect Kawasaki Port in neighboring Kanagawa Prefecture to the capital’s waterfront area to supply Tokyo residents with hydrogen transported to the port from overseas, according to the Tokyo metropolitan government. Meanwhile, a Japanese industry-government-led consortium will study building a hydrogen supply chain in Muroran in north Japan’s Hokkaido, with the aim of supplying cheaper hydrogen. The consortium, led by local gas firm Muroran Gas and the Muroran city government, announced that a study would be conducted on constructing a hydrogen plant with a storage and distribution system, Argus Media reports.

More efforts to be made – China’s petrochemical sector may reach peak carbon emissions only by 2035, five years later than the national target, given current emission trends, South China Morning Post reports, citing a report issued by Peking University. However, a low emissions push, such as industrial restructuring and increased electrification, could help the industry achieve peak carbon as early as 2025, and produce only half of the carbon emissions compared to the baseline scenario by 2060, according to the report. The petrochemical sector accounts for about 4% of China’s total CO2 emissions.

Go explore – The board of directors of the Indian Energy Exchange (IEX) in their meeting held on Nov. 25 accorded its in-principle approval for the formation of a wholly-owned subsidiary company in India to explore carbon market business opportunities, IEX announced over the weekend. Details will be shared at a later date, according to an IEX spokesperson.

Pricing it in – South Korean conglomerate SK will introduce an internal price on carbon worldwide across eight of its subsidiaries, the company said over the weekend. The price will vary somewhat depending on where companies are located, and will be set at $40-95/t in 2025, $60-105/t in 2027 and hit $200 in some regions in 2040, SK said. The company will take the internal carbon price into account in all business decisions, and expects it to drive cleaner investment decisions.

AMERICAS

Manchin v Glick – The US energy sector is treading carefully in publicly choosing sides in Sen. Joe Manchin’s (D) refusal to advance the renomination of Richard Glick, chair of the Federal Energy Regulatory Commission, torn between two powerful figures with sway over electric and natural gas projects. The lack of intensive and public lobbying on Glick’s behalf – particularly from oil and gas trade groups – dims hopes from his supporters that Manchin will change his mind. That risks leaving the commission split 2-2 between Democrats and Republicans, a situation that energy lobbyists say would tie up approvals for many natural gas pipelines, transmission lines, and other vital projects. The West Virginia Democrat – who chairs the Energy and Natural Resources Committee – said this month he wouldn’t hold a confirmation hearing for Glick, whom the Biden administration renominated in May and who must leave his post at the end of the year. The White House would then have to renominate Glick or nominate someone else next year, a process likely to take months. Manchin’s influence over energy policy and FERC’s oversight of electric and natural gas infrastructure have complicated the political calculus, energy lobbyists said in interviews with Bloomberg. Glick’s record has angered fossil energy groups who viewed his push in February to look harder at the economic need and environmental costs of natural gas infrastructure as slowing down project reviews.

VOLUNTARY

The weather outside is Weathering – Verra is establishing an Enhanced Weathering and Mineralization (EWM) Advisory Group (AG) and on Monday invited interested stakeholders to apply. The EWM AG will be a strategic resource for the development of an EWM initiative in the VCS Program by evaluating its readiness, merits, and risks and its potential acceptance in carbon markets.​ Details about the EWM AG’s scope, qualifications, criteria for participation, and application instructions are in the Call for Expressions of Interest: Enhanced Weathering and Mineralization Advisory Group (PDF). The deadline for applying is Dec. 18, and Verra intends to select EWM AG group members by mid-January 2023 and hold the first meeting in February.

SCIENCE & TECH

Easy hydrogen – Rolls-Royce and low-cost airline easyJet have tested the world’s first commercial airline engine powered by hydrogen fuel, the companies announced. A Rolls-Royce AE 2100 turboprop engine, which is usually used on the C-130 Hercules military transport aircraft, was tested on a ground rig at the Ministry of Defence’s Boscombe Down airfield in the UK. Green hydrogen for the tests was supplied by EMEC (European Marine Energy Centre), generated using renewable energy at their hydrogen production and tidal test facility on Eday in the Orkney Islands. easyJet recently announced it will soon stop automatically purchasing carbon credits in January to offset flight emissions as part of its net zero roadmap, and instead focus on a suite of other GHG mitigation strategies in its SBTi-aligned plan. The airline’s roadmap to net zero carbon emissions by 2050 involves a focus on new technology, such as hydrogen, as well as a combination of fleet renewal, operational efficiencies, airspace modernisation, sustainable aviation fuel (SAF), and carbon removal technology. Additionally, it includes an interim carbon emissions intensity reduction target of 35% by 2035.

AND FINALLY…

Nano feeding oceans – A team of researchers with lead scientists from the University of Leeds have published an assessment of data from 123 studies in the journal of Nature Nanotechnology on Monday, concluding that engineered nanoparticles (ENP) could be used to grow blooms of phytoplankton in the oceans, as a way of removing carbon from the atmosphere. ENPs ranging in size between 10-100 nanometres, where a nanometre is one billionth of a metre, can be specifically designed to transport nutrients to phytoplankton blooms that reduce CO2 when applied at concentrations lower than those that might cause toxicity to marine ecosystems, the scientists said. Coated with environmentally-friendly polymers, ENPs would be buoyant and would stay in the phytoplankton zone in the ocean rather than sink to the seabed, the paper noted. The nanoparticles could also be shaped to facilitate fast export of carbon-locking phytoplankton cells to deep sea, the researchers outlined and designed to deter marine organism that feed on the phytoplankton – which might result in unintended consequences.

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