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TOP STORY
US oil company to purchase $750 mln worth of jurisdictional REDD+ offsets from Guyana
An energy company with a large stake in Guyanese offshore oil exploration announced Friday it will buy at least $750 mln in carbon credits from the country over the next 10 years, marking the first sale of offsets from the jurisdictional-scale Architecture for REDD+ Transactions (ART) programme.
EMEA
Euro Markets: EUAs resume upward march to post 11% weekly gain as buyers drive thin market
EU carbon prices made sharp gains on Friday afternoon to post their seventh double-digit weekly increase this year, after early rangebound trading gave way to a robust rally that clawed back much of Thursday afternoon’s sharp losses despite thin outright trading volume, while energy markets were mixed in relatively quiet trading.
Member states claw back nearly 5 mln free 2022 EUAs in November
EU member states clawed back nearly 5 million free carbon allowances in November that had been allocated to heavy industry and heat producers for 2022, data shows.
French ban on domestic flights gets legal approval from Brussels
The European Commission has greenlighted France’s climate-related ban on domestic flights with train alternatives of two-and-a-half hours or less, a move welcomed by campaigners as a step towards EU-wide restrictions on shorter journeys with viable alternatives.
ASIA PACIFIC
Australia Market Roundup: ACCU issuance rises as New Forests launches landscape, forestry fund
Australian Carbon Credit Unit (ACCU) issuance rose in the Clean Energy Regulator’s latest update, as Sydney-headquartered global carbon project developer New Forests has launched a fund aiming to raise A$600 million ($340 mln) to go towards forestry investments.
NZ Market: NZU price dives as govt yet to make a decision on ETS price settings
The price for New Zealand carbon allowances closed lower on Friday, with the government yet having to announce which price settings it will adopt for the emissions trading scheme next year.
CN Markets: CEA trading volume jumps on rise in block deals
Trading volume in China’s national emissions trading scheme doubled from the previous week thanks to the contribution of four block trades, as spot prices edged down over the past five trading days.
Malaysia’s Sarawak to begin first forest carbon project under new regulations in Q1 2023
Sarawak’s inaugural forest carbon project will go ahead in early 2023, the first since a local law was adopted in May to set up a carbon market in the Malaysian state that will be guided by international protocols.
INTERNATIONAL
KraneShares slashes majority of carbon holdings, boosts UKAs as it shifts out of Dec-22 contracts
KraneShares’ carbon-focused exchange-traded funds mostly reduced their holdings across global cap-and-trade markets as they rebalanced and shifted positions further out on the curve this week, data from the fund showed Friday.
AMERICAS
Emitters’ CCA position reverts to net short, managed money net length reaches 6-mth high
Compliance entities disposed of California Carbon Allowances (CCAs) in the aftermath of the Q4 WCI auction result publication, while financials lengthened their WCI holdings and dumped RGGI permits in a reversal from previous weeks, according to US Commodity Futures Trading Commission (CFTC) data published Friday.
UPDATE – Developer reportedly steps back from Washington state forest carbon project
(Updates Thursday’s story with a statement from Finite Carbon)
A major forest carbon developer has reportedly stepped back from a project in Washington state that is forecast to yield almost 1 million voluntary credits.
VOLUNTARY
Ratings agency upholds scores for renewables, forestry projects
A carbon credit ratings agency has this week reaffirmed its scores for six Turkey-based hydropower projects and two Brazilian forestry schemes, while assigning one new project rating.
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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
Sneaky tweaks – US President Joe Biden said that his nation’s climate subsidy-laden Inflation Reduction Act was never intended to exclude European allies and could be tweaked. Speaking with French President Emmanuel Macron at a joint press conference at the White House, Biden said, “There are tweaks that we can make that can fundamentally make it easier for European countries to participate and/or be on their own,” without giving further details. However, the White House later confirmed that there are no plans to go back to Congress to push for changes to the bill. Biden and Macron also agreed to form a joint task force between the US and the EU to deal with trade disputes around clean energy issues emerging from the act. (Reuters)
Greenflation guess – The global shift to green energy may be “inflationary and even slightly stagflationary,” Bank of France Governor Francois Villeroy de Galhau said Friday, speaking virtually on a panel at a central bank conference in Bangkok, Bloomberg reports. Climate-related shocks – either on the demand or supply-side – may also stoke inflation, the World Bank’s Ayhan Kose said on the same panel. Central banks might have to “reassess” monetary policy frameworks, inflation targets, or both. Read Carbon Pulse’s analysis from earlier this year on how central banks are exploring avenues to manage risks associated with climate change and the price impacts of the net zero transition.
Hydrogen tie-up – The European commissioner for Energy, Kadri Simson, and the Japanese minister of Economy, Yasutoshi Nishimura, signed a Memorandum of Cooperation on Friday to spur innovation and develop an international hydrogen market. The MOU said the EU will work together with Japan for sustainable and affordable production, trade, transport, storage, distribution, and use of renewable and low-carbon hydrogen. Governments, industrial players, research institutions, and local authorities will also be encouraged to cooperate when it comes to policies, regulations, research, project development, as well as education, upskilling, and reskilling for workforces.
EMEA
Just transition – Six Dutch regions will receive €623 mln under the EU Just Transition Fund (JTF) for reaching climate neutrality. Those areas are: Groningen and Emmen, IJmond, Groot-Rijnmond, Zeeuws-Vlaanderen, West-Noord-Brabant, and Zuid-Limburg. The fund will help them move away from an economy centred on fossil-fuel extraction or carbon-intensive industries, as well as support workers with the development of new jobs and new skills for carbon-neutral sectors.
Oh hy there – The EU rules that will govern the requirements for hydrogen to be certified as renewable, so-called additionality rules, are expected to be unveiled on Dec. 15 by the European Commission, Euractiv reports, which may leave little time for consultation. Hydrogen is expected to play a key role in Europe’s decarbonisation efforts. However, its market ramp-up has been slow due to regulatory uncertainty, with rules to govern whether hydrogen is “green” delayed for years. Green, or renewable, hydrogen is produced by electrolysing water using renewable electricity. In order to ensure that electrolyser build-out results in extra renewables instead of cannibalisation of existing wind turbines and solar PV, “additionality” rules come into play. By featuring a temporal and geographical component, the rules want to link actual renewable electricity production to nearby hydrogen production – hydrogen production must be located as near as possible to a wind park, and produce hydrogen when the wind is blowing.
Coal mine controversy – A new coal mine in Cumbria in the UK would produce 400,000 tCO2 a year, according to the Climate Change Committee, the UK government’s independent advisers, The Independent reported. The new mine would “blow a hole” in the UK’s target to reach net zero GHG emissions by 2050 and undermine its climate leadership just weeks after the COP27 climate summit in Egypt, analysis by environmental think-tank Green Alliance found. The mine’s emissions would be the equivalent of the emissions generated by around 200,000 cars or 170,000 homes. Levelling Up Secretary Michael Gove is expected to announce whether the government will approve plans for the UK’s first deep coal mine in 30 years imminently, as the deadline of Dec. 8 approaches. The purpose of the mine is to supply coking coal used in steelmaking, and supporters say it will create jobs and be used to ease Britain’s reliance on foreign imports which have a greater carbon footprint than using British coal.
Helsinki hold – Finland plans to tax 33% of excess profits from power companies in calendar 2023, with the tax applied on top of regular company taxation, covering power producers, as well as firms that sell power forward to consumers or for resale purposes. Fossil fuel-dominant companies will be subject to the tax but smaller-scale power operations will be exempt, although the size exemption has not yet been specified. The tax will hit profits that exceed a 5% return calculated on the equity committed to a firm’s electricity or fossil fuel business. (Montel)
ASIA PACIFIC
Big spend – South Korea’s Posco will invest a total of $40 bln in Australia by 2040 on low carbon items such as green steel and renewable hydrogen together with its local partners, the group’s chairman Choi Jeong-woo said at a meeting with Australian Prime Minister Anthony Albanese in Canberra on Dec. 1, Business Korea reports. “We regard Australia as the most important investment destination in securing hydrogen, which is essential to hydrogen reduction steelmaking,” Choi said at the meeting. “Posco group’s business and investment plans in Australia match policy directions pursued by the Australian government,” Prime Minister Albanese replied. “We will actively cooperate with Posco group in its eco-friendly future materials business in Australia.” Together with local partners, Posco plans to invest $28 bln in hydrogen production including renewable energy and water electrolysis, and $12 bln in green steel by 2040.
X-factor — Global energy consultancy Xodus is working on a green hydrogen project in Western Australia which will scale up to 1 GW of electrolyser capacity, RenewEconomy reports. The project, dubbed MercurHy, will be built in three stages, installing 150 MW electrolyser capacity in the first stage, 500 MW in the second, and 1000 MW by the end of the final phase. The company has gone for a phased approach to allow sufficient time for the green hydrogen market to develop and then capitalise on future electrolyser price reductions. Western Australia, particularly the Mid-West region, is an ideal location to site the project with strong opportunities to decarbonise nearby local industrial loads. To help sell the plan, Xodus has a deal with ASX-listed resource company VRX Silica, to explore the future supply or renewable hydrogen to power the company’s silica sand projects and potential associated manufacturing. In an MoU signed in March, VRX Silica said the deal made sense, given the high quality and volume of silica sand at its Arrowsmith and Muchea projects in the Mid-West, and the close proximity to energy infrastructure. Xodus said it has also had “advanced discussions” with other potential off-takers for the renewable hydrogen plant, and has the support of the state government to lay the foundations for new green industry in the region.
Pipeline ready – China’s longest coal bed methane pipeline, the Shenmu-Anping pipeline, has been put into trial operation with a designed gas transmission capacity of 5 bln cubic meters per annum, China Daily reports. The pipeline will not only lift the gas supply capacity of Shanxi and Shaanxi provinces but also ensure natural gas supply in the Beijing-Tianjin-Hebei region, China National Offshore Oil Corp said. In addition, the pipeline will help to maximize the resource value of the two unconventional natural gas production bases in the Qinshui Basin and the eastern edge of the Erdos Basin, the company said.
AMERICAS
Heavy losses – The Amazon region has lost 10% of its native vegetation, mostly tropical rainforest, in almost four decades, an area roughly the size of Texas, a new report says. From 1985 to 2021, the deforested area surged from 490,000 sq km to 1,250,000 sq km (190,000 sq miles to 482,000 sq miles), unprecedented destruction in the Amazon, according to the Amazon Network of Georeferenced Socio-Environmental Information, or Raisg. The numbers are calculated from an annual satellite monitoring since 1985 from Bolivia, Peru, Ecuador, Colombia, Brazil, Venezuela, Suriname, Guyana and French Guiana. The report is a collaboration between Raisg and MapBiomas, a network of Brazilian nonprofits, universities and technology startups. “The losses have been enormous, virtually irreversible and with no expectation of a turnaround,” said a statement Friday by Raisg, a consortium of civil society organisations from the region’s countries. “The data signals a yellow light and gives a sense of urgency to the need for a coordinated, decisive and compelling international action.” Brazil, which holds about two-thirds of the Amazon, also leads the destruction. In almost four decades, 19% of its rainforest has been destroyed, due mainly to cattle ranching expansion supported by the opening of roads. The country accounted for 84% of all forest destruction in the period. Almost half of Brazil’s carbon emissions comes from deforestation. The destruction is so vast that the eastern Amazon has ceased to be a carbon sink, or absorber, for the Earth and has become a carbon source, according to a study published in 2021 in the journal Nature. As of 2021, the Amazon had 74% of its area covered by tropical rainforests and 9% of other natural vegetation types. The region, with 8.5 million square kilometers, holds a population of 47 million people, according to Raisg estimates. (AP)
Days numbered? – The incoming Brazilian government is considering cancelling a network of gas power plants and pipelines planned by the current president Jair Bolsonaro, according to the likely new environment minister Marina Silva. Last year, the Brazilian congress proposed building 8 GW of gas power plants in Brazil’s north-east and a network of pipelines to supply them. In a legislative trick known as “jabuti” or “tortoise”, the congress successfully made this a condition of them supporting Bolsonaro’s privatisation of Brazilian utility Electrobras. The project was criticised for environmental and economic reasons. Campaigners said that building the pipelines would cost taxpayers R$100 bln ($20 bln) and would only benefit a businessman called Carlos Suarez whose company would carry out the project. (Climate Home)
Grain gains – A Canadian MP’s bill to exempt grain-drying and barn-heating from the federal CO2 levy on fossil fuels will proceed to third and final vote in the House of Commons, but with an added amendment. The carbon tax exemption will expire in eight years unless parliamentarians pass a resolution to extend it at that time. The standing committee on agriculture amended Bill C-234 to include the eight-year sunset clause and sent it back to the Commons for a vote that is now much less likely to occur before Christmas. The bill does appear to have the support of a majority of parliamentarians across all opposition parties. If passed by MPs, the bill would then go to the Senate, which is expected to pass the bill. (Farmers Forum)
Forest fodder – Environmental developer Canada’s Forest Trust (CFT) has launched the Canada’s Land Trust (CLT) initiative on Thursday, offering private landowners of forests partial, or full, support to restore and preserve their land, the company stated in a press release. Private landowners are invited to register with the CLT programme to identify the most appropriate partnership which could include leasing their land to the CFT, selling it at fair market value, or developing a planting and maintenance partnership to ensure “the forest thrives well into the future”, the company added. CFT’s mission is to grow, preserve, and protect millions of acres of forests worldwide in collaboration with programme participants, including businesses, schools, non-profit organisations, charities, communities, Indigenous communities, and individuals.
Last Logan – The Logan Generating Plant, one of New Jersey’s last coal plants to retire, was demolished on Friday. At the demolition, Starwood Energy, owner of the plant, announced plans to build grid-scale battery storage on the site, and will use existing interconnection rights from the old coal plant to connect new offshore wind transmission lines, according to the New Jersey chapter of the Sierra Club. Before this year, a power purchase agreement between Atlantic City Electric and Starwood Energy locked ratepayers into above-market prices for power from the Logan Generating Plant and Chambers Cogeneration Plant, the group argued. Throughout 2021, the Sierra Club and other partner groups organised a series of public meetings and engagements regarding terminating the agreement. In March, the New Jersey Board of Public Utilities approved a deal to end the agreement early, retire the plants in June, and refund Atlantic City Electric customers.
Banking on oversight – The US Federal Reserve Board on Friday invited public comment on proposed principles that provide a high-level framework for the safe and sound management of exposures to climate-related financial risks for large banking organisations with more than $100 bln in total assets. The proposed principles would cover six areas: governance; policies, procedures, and limits; strategic planning; risk management; data, risk measurement, and reporting; and scenario analysis, the press release noted. The proposed principles are substantially similar to proposals issued by the Office of the Comptroller of the Currency and the Federal Deposit Insurance Corporation. The Board said it would work with those agencies to promote consistency in the supervision of large banks through final interagency guidance. The regulator is accepting public comments for 60 days.
VOLUNTARY
Bank buds – Offset standard developer and manager Verra and Brazil’s CaixaBank signed an MOU during COP27 to support CaixaBank’s increasing involvement in the carbon markets as well as the bank’s objective to advance sustainability, Verra announced in a press release Friday. The MOU will also allow Verra to grow its understanding of how development banks are approaching sustainability in the context of the carbon markets.
AND FINALLY…
This spud’s for you – Yara, the first company in the world to land a commercial agreement to sell fertilizers made with 100% renewable electricity, has signed an MOU to deliver fossil-free, green fertilisers to El Parque Papas, the biggest singular potato farmer in Argentina, according to a company announcement. The fossil-free, green fertilisers Yara will start producing next year will significantly reduce the carbon footprint of farming and food because they will be made with renewable electricity instead of natural gas. Using Yara’s green fertilisers for potato production will remove around 28.8% of GHG emissions at the farm level. For potato chips specifically, using green fertiliser will reduce the carbon footprint by around 5-10%.
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