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TOP STORY
PREVIEW: RGGI Q4 auction settlement expected to align with secondary market
Traders largely believe the December RGGI auction will clear in line with secondary market pricing, as steady compliance demand runs up against regulatory uncertainty in Virginia and Pennsylvania, and a low capacity for returns scares off speculative participation.
EMEA
Ahead of COP15, EU legislators agree to halt imports of deforestation-linked goods
The EU has reached a provisional political agreement on a bill to prevent the import of goods linked to deforestation, after late-night trilogue talks on Monday between negotiators from the Parliament, Commission, and Council of member states.
Industry groups urge EU to include export support in carbon border measures
Industry representatives are piling pressure on European institutions to introduce WTO-compliant ‘export adjustments’ to the proposed carbon border adjustment mechanism (CBAM) as talks over the mechanism near closure.
EU legislators bid to resolve differences on aviation’s place in the ETS
EU co-legislators are meeting late on Tuesday to try to reach agreement on how aviation should be treated in the bloc’s carbon market, though one well-placed source expected the talks to need more time.
Euro Markets: EUAs rebound as pre-expiry positioning props up prices
EUAs recorded modest gains on Tuesday as speculative positioning kept support for the Dec-22s ahead of an imminent options expiry, though a late sell-off saw most of the earlier strong gains erased.
VOLUNTARY
US airline JetBlue scales back VER purchases to focus on nature-based credits, operational improvements
Low-cost airline JetBlue on Tuesday announced it will next year end its strategy to automatically offset emissions from all domestic flights, and instead invest that capital in destination-specific nature-based carbon credits and reducing GHGs from its own operations.
Developer tries again with mammoth batch of new REDD projects
An Indian developer and consultancy, which has previously seen a large forestry scheme rejected, is behind three huge new REDD projects attempting to bring fresh annual supply of more than 38 million carbon credits into the voluntary carbon market (VCM).
New standardised cookstove-based carbon contract starts with a flourish
Several companies traded Xpansiv CBL’s new standardised contract for cookstove offsets on its launch day on Monday, with units representing some 210,000 tonnes of CO2e changing hands.
Emissions exchange eyes free market, blockchain-based CO2 pricing platform concept with technology firm
A blockchain technology company signed an agreement with a North American commodity exchange to develop a carbon pricing platform, the companies announced Monday.
ASIA PACIFIC
NZUs dip below NZ$80 mark in final 2022 auction
New Zealand on Wednesday sold all the allowances on offer at the final ETS auction of the year, with the sale clearing below NZ$80 ($50.57) amid a slight dip in demand.
Shanghai gets to work on regional offset scheme to be launched by 2025
Shanghai has announced a work plan for the establishment of its regional carbon offsetting programme, which will be linked to the city’s emissions trading scheme by 2025, though questions remain as to what offset types will be allowed to use for compliance under the local ETS.
SMC bill hints at potential future changes to Australia’s Safeguard Mechanism, analysis says
New analysis has highlighted potential future changes that could be made to Australia’s Safeguard Mechanism after changes in the policy’s framework in the government’s below-baseline crediting legislation.
Australia’s NSW launches A$10mln grant scheme for carbon abatement projects
The NSW state government will allocate A$10 million ($6.7 mln) in the first round of a grants scheme to assist groups in the agricultural and land sectors with carbon abatement projects, it announced on Tuesday.
AMERICAS
California legislators reintroduce proposal to strengthen 2030 climate target
California lawmakers on Monday put forth related bills to ramp up the state’s 2030 emissions reduction target, coming after the proposal failed in the most recent legislative session and state regulator ARB’s Scoping Plan aims for deeper climate mitigation.
Argentina’s Cordoba province hosts pilot VER auction
The Argentinian province of Cordoba last week held a blockchain-based pilot voluntary carbon credit auction for GHG mitigation activities not registered with international standards.
INTERNATIONAL
IETA lays out ground rules for crediting of CO2 geostorage activities
The International Emissions Trading Association (IETA) has released a set of principles to govern the trading of CO2 reductions and removals that use technology-based carbon sink enhancements, the group announced on Tuesday.
BIODIVERSITY
COP15 opens with heavily bracketed text, long road ahead for new agreement
The UN’s biodiversity negotiations opened in Montreal on Tuesday, with high-level statements noting the significant challenges that lie ahead in forging a new global framework to halt and reverse the alarming rate of nature loss, as global delegates brace for intense negotiations over a currently heavily bracketed text.
Canada pledges C$350 mln in international biodiversity funding as COP15 gets off ground
Prime Minister Justin Trudeau committed C$350 million ($256.4 mln) in funding for biodiversity conservation efforts in developing nations as he officially opened COP15 in Montreal Tuesday, though green groups say the amount falls well short of what Canada should contribute.
Companies largely clueless about their impact on nature
Fewer than 5% of global companies have assessed the impact they have on nature and fewer than 1% understand how their businesses depend on natural ecosystem services, according to a survey published this week.
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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
Age of renewables – The IEA has drastically revised upwards its forecast for renewables capacity expansion over the next five years, and now expects global capacity to grow by 2,400 GW over 2022-27 according to its latest annual renewables outlook released on Tuesday, about 30% higher than what it forecast in last year’s edition. Renewables are also set to account for over 90% of global electricity capacity expansion over the IEA’s five-year forecast period, with growth driven by China, EU, US, and India. Furthermore, renewables will also become the largest source of electricity in 2025, surpassing coal, with its share of the global power mix reaching 38% by 2027. Electricity from wind and solar PV more than doubles in the next five years, providing almost 20% of global power generation in 2027, the IEA projects. These variable technologies will also account for 80% of global renewable generation increase over the forecast period, which will require additional sources of power system flexibility, according to the agency. Solar PV alone will surpass gas power capacity by 2026, and coal capacity by 2027, due to capacity growth of 1,500 GW over the next five years. “Renewables were already expanding quickly, but the global energy crisis has kicked them into an extraordinary new phase of even faster growth as countries seek to capitalise on their energy security benefits. The world is set to add as much renewable power in the next 5 years as it did in the previous 20 years,” said IEA Executive Director Fatih Birol (IEA).
Bioenergy blast – In the lead up to COP15 biodiversity summit in Montreal, 650 scientists have sent a letter to world leaders arguing that countries need to stop burning trees for bioenergy, the Guardian reports. According to the newspaper, the letter argues that bioenergy has “wrongly been deemed ‘carbon neutral’” [as some of it is under the EU ETS ] – adding that “the best thing for the climate and biodiversity is to leave forests standing – and biomass energy does the opposite”. Prof Alexandre Antonelli, a lead author of the letter and director of science at Kew Gardens, said: “Ensuring energy security is a major societal challenge, but the answer is not to burn our precious forests. Calling this ‘green energy’ is misleading and risks accelerating the global biodiversity crisis.”
EMEA
Dutch alternative – A Dutch proposal to cap the price of EU gas, shared with EU countries and seen by Reuters, said government-backed gas buyers and companies obliged by law to buy gas to fill storage had contributed to surging gas prices in Europe this summer, as countries raced to replace dwindling Russian gas deliveries and were willing to pay sky-high prices to do so. The Netherlands therefore proposed capping gas transactions by those buyers at a level below the cap proposed by the EU, and which would be reviewed each month. EU countries are negotiating a European Commission proposal for a cap to limit gas price spikes as countries attempt to pull down high energy costs in their economies, and are racing to reach a deal by Dec. 13.
HSE does it – Slovenian state-owned power utility HSE, the largest domestic producer and seller of electricity on its wholesale market, has received a capital hike of almost half a billion from the state to shore up its liquidity amid major problems at its core hydro and coal generation facilities, Euractiv reports. The first instalment of €300 mln has already been paid, and the second round of €192 mln will follow in mid-December, Slovenian Sovereign Holding, which manages state-owned stakes in companies. The purpose of the capital increase is to “bridge the liquidity deficit at HSE and secure its stable operations,” Slovenian Sovereign Holding said. The HSE group has found it challenging to cope with the energy crisis and has been affected by record-low water levels, which severely reduced the output of its hydro plants. The group’s coal production has also faced problems, particularly with the Sostanj coal-fired power station, which was restarted earlier this week, having to shut down for more than a month due to coal supply problems. What is more, commercial banks have been unwilling to provide additional liquidity financing despite an €800 mln state guarantee put in place last month, HSE said. The company said the crisis will have a negative impact to the tune of €460 mln by the end of the year, a shortfall it cannot offset. The money comes from a special €750 mln appropriations in this year’s budget designed explicitly for recapitalising state-owned energy companies.
Just transition – Croatia’s Istria and Sisak-Moslavina will receive €179 mln from the European Just Transition Fund (JTF), following the approval of a programme under the EU Cohesion Policy. The money will support the switch towards renewable energy in Istria, the only territory with a still operating coal-fired power plant in Croatia to be phased-out at the latest by 2033 and it has a carbon-intensive cement industry. Investments should help diversify the economy thanks to reskilling and upskilling activities, the creation of hubs for sustainable technological innovation and new circular business models in the manufacturing sector. The EU-supported investments in Istria are estimated to create 300 direct and 300 indirect jobs, and to reskill 200 people. Moreover, the fund will support diversification in Sisak-Moslavina, where highly polluting industries account for a significant share of greenhouse gas emissions. The EU will invest in small and medium-sized businesses, including through collaborations with universities. It will also support the reskilling and upskilling of workers in the local chemical and refining industries.
You gotta fight for your (Nitrogen) rights – The Schiphol Group has bought out a number of livestock farmers to own sufficient space and hence nitrogen emissions rights to continue operating Schiphol and Lelystad Airport. In order to comply with the nitrogen regulations newly in force, the owner of Schiphol and Lelystan airports bought out a number of farmers in North and Holland, Utrecht as well as Naardermeer and the Veluwe, EenVandaag reported. Back in mid-June, the Dutch cabinet announced plans to slash nitrogen emissions by 50% – rising to 70% in some areas – by 2030 as per EU regulations on nitrate pollution, which, in practice, would force many livestock farms either to downsize or close altogether. In an effort to comply with the regulations themselves, companies are now reaching out to livestock farmers to buy up ’nitrogen space’ and obtain sufficient nitrogen emission rights. The practice is causing a backlash both from farmers and the government, which maintains it has first purchase rights. Last month, government agency Rijkswaterstaat partially bought out six farmers in the Veluwe region, in the province of Gelderland to improve a local ring road. This move caused a lot of tension amongst parties, as GroenLinks called it a “nitrogen robbery” and the People’s Party for Freedom and Democracy (VVD) said it fears that Gelderland will be abused as a ‘wingewest’ (conquered land) for nitrogen space, de Volkskrant reported. Some lawmakers have also expressed their opposition to the group’s move. (Euractiv)
ASIA PACIFIC
Onboard CCS progresses – A consortium of global energy and shipping organisations said it was seeking proposals to study ways to offload captured CO2 from ships during port calls, Channel News Asia reports. The call for proposals is part of the world’s first project aimed at building and testing a full-scale CO2 capture system aboard an oil tanker. CO2 retained in ships instead of released into the atmosphere in engine exhaust would be unloaded in a port. The consortium, which includes the Global Centre for Maritime Decarbonisation (GCMD) in Singapore, announced the project in October (see the Carbon Pulse story here). The GCMD said it expected by the second quarter of 2023 to choose a proposal for a study into means of offloading CO2. The study should be completed in nine months, it said.
CCS agreement – The Japan Organisation for Metals and Energy Security (JOGMEC) and Inpex have executed a Joint Research Agreement to evaluate the potential of the Bonaparte Basin in Australia to become a world-scale, carbon storage location, the two announced in a press release. The joint agreement covers the fiscal years 2022-25. The joint research between JOGMEC and Inpex will support Inpex as it assesses the feasibility of using GHG Permit G-7-AP1 for long-term geological storage of CO2. Inpex is the operator for the Bonaparte CCS JV and is working with its joint venture partners to assess the potential for CCS in the permit. Success in this venture will provide for storage of CO2 from the Ichthys Project and support the realisation of the Darwin-based, low-emissions carbon dioxide capture, utilization and storage (CCUS) hub as proposed by the Northern Territory government.
Regulatory loophole – China needs to close a regulatory loophole for state-owned enterprises (SOEs) issuing green bonds to end market fragmentation and ensure all proceeds are used for green projects that support the country’s climate goals, South China Morning Post reports. China published its Green Bond Principles in July, which clearly require that all of the proceeds from green bonds fund green projects, instead of the previous 50-70%. Despite that, a compliance loophole remains in the country’s green bond market as green bonds issued by SOEs have yet to apply the new principles. SOEs accounted for about half of onshore green bond issuance from 2019 to 2022, and many of them, including coal-dominated power producers, are regular green bond issuers with a growing pipeline of coal projects, according to the report.
AMERICAS
A first for floating wind – The US’ first sale of offshore wind development rights off the coast of California attracted nearly $150 mln in bids early on Tuesday from companies seeking to gain a foothold in the domestic industry’s expansion to the Pacific Ocean’s deep waters, Reuters reports. The auction is a major milestone in President Joe Biden administration’s push to put wind turbines along every US coastline to help decarbonize the electricity sector and fight climate change. It puts the US, which has lagged Europe in the development of offshore wind farms, at the forefront of the expansion of floating turbines, an emerging technology needed when ocean depths preclude the use of standard, fixed equipment.
Westerly windfalls – In a special legislative session, California Governor Gavin Newsom (G) outlined a proposal asking the state legislature to enact a yet-to-be-determined “maximum gross gasoline refining margin” to cap refinery profits in the state and reduce future gasoline price spikes, the Los Angeles Times reported. The profit cap would be based on a monthly calculation of the average profit per barrel earned from refining wholesale gasoline in the state, and will likely be defined in subsequent negotiations between Newsom’s office, the Senate, and the Assembly. The profit cap would adjust annually to reflect changes in the market price and could also change at the discretion of the California Energy Commission (CEC), with the agency granting exemptions to the cap if the refiner showed “reasonable cause”, the proposal noted. The proposal would allow the CEC to impose an administrative civil penalty for violations of the profit cap. Any penalties would go into a new “Price Gouging Penalty Fund,” which lawmakers could return to residents as a refund through the state budget. The governor’s proposal also calls for new regulatory review and oversight, giving the CEC expanded authority to investigate fuel supply and price issues. Fossil fuel lobby Western States Petroleum Association said Newsom’s proposal reads like a continuation of the “bans, mandates, and public policies affecting our industry” from the governor during his tenure.
“What a joke” – Enviva, the world’s largest wood pellet producer, lies about its use of tree waste at its North Carolina production facilities and substantially overstates the environmental sustainability of its product, a whistleblower says, corroborated by Mongabay reporting. Demand for wood pellets has increased in recent years due to EU rules allowing power generators to count it as renewable energy. Enviva claims it only uses wood from forests that will be replanted and uses ‘waste’ wood, like branches and treetops, that would be discarded after normal lumber processing. Even if all its trees were replaced — a claim Mongabay’s reporting refutes — the replanted trees would be a far cry from the forests they replace in terms of both biodiversity and carbon sequestration. The whistleblower, who left the oil industry and moved to Enviva in 2020, seduced by its claims of environmental sustainability, says the company is clearcutting forests and using wood from the entire tree — not just branches and treetops. “What a joke,” the unnamed whistleblower told Mongabay. “We use 100% whole trees in our pellets. We hardly use any waste. Pellet density is critical. You get that from whole trees, not junk.” (Climate Nexus)
Appalachian air – American Electric Power, the parent company of the Northeastern US utility, Appalachian Power will shut down more than half its coal fleet by 2028, according to a November investor presentation. AEP plans on cutting its coal production to just 5% of its total operations, from 11% in 2021 and 26% in 2010. The only state where AEP will continue to generation is West Virginia, where just three of the company’s coal power plants will survive by 2032. AEP plans on reducing carbon emissions by 80% before 2030 and achieve net zer0 by 2045, using renewables and carbon capture projects to get there. (West Virginia Public Broadcasting)
VOLUNTARY
Credit for cuts – French bank Credit Agricole detailed its intermediary targets and action plans to reach carbon neutrality by 2050 on 5 sectors, consisting of oil &=and gas, automotive, power, commercial real estate, and cement, according to a company press release. The lender will disclose the targets for five additional sectors – shipping, aviation, steel, residential real estate, and agriculture in 2023. These commitments are very ambitious, as these ten sectors represent over 75% of global GHG emissions and around 60% of Credit Agricole Group’s credit exposure. Credit Agricole has also committed to decrease its own direct carbon footprint by 50% by 2030.
SCIENCE & TECH
A splendid idea – New research has shown that adding biochar to a dairy’s manure-composting process reduces methane emissions by up to 84%, according to a study by the University of California, Merced, Yahoo News reports. Scientists believe that biochar – commonly used by gardeners – could be an important way to stop gases such as CO2 being released from soil, according to the World Economic Forum. Life and environmental sciences professor Rebecca Ryals said: “This is a wonderful example of an untapped climate solution. Biochar reduces pollutant emissions from open burning of biomass and methane emissions from decaying biomass.” She added that “composting the solid manure isn’t common practice, but if we go from stockpiling to composting, now we’ve gone from a carbon source to a carbon sink. Composting in and of itself is a very climate-beneficial practice. And you can basically double your impact by adding a little bit of biochar into that compost”.
Methane leaks – Comparing national GHG inventories against satellite-based calculations has the potential to support effective climate policy, a recent multidisciplinary study has concluded. The findings, recently published in Earth Science Data, describes how scientists working within the Regional Carbon Assessment and Processes (RECCAP-2) project, supported by ESA, combined satellite measurements of atmospheric CO2 and methane, and in-situ measurements of nitrous oxide, with a model that factors in the movement or ‘flux’ of these GHGs between the land surface and atmosphere. This “inversion method” allowed the authors to determine emissions to the atmosphere of three GHGs for a selection of high-emitting countries, as well as the overall flux of CO2 over managed land. The managed land flux accounts for the absorption of CO2 from the atmosphere due to the growth of crops and trees, their export and import across borders, and the anthropogenic component of rivers carrying carbon across borders, as well as CO2 emissions from managed land owing to fires and other disturbances. Significant discrepancies between these inversion values and the corresponding national reports were found. Methane emissions were found to be higher using the inversion method compared to most national reports. In particular, emissions from oil and gas extracting states in Central Asia and the Gulf were several times higher than officially reported. (Climate Home)
AND FINALLY…
Greenwash watch – A new artificial intelligence tool claims to be able to identify whether a company is greenwashing. Permutable AI, which has a database of 100,000 companies, logs each and every company’s history of climate pledges and then reviews evidence over whether they are supported by sufficient action or initiatives, providing highly granular data and insights that breaks down into project type and area in the world. The tool also looks for excessive use of greenwashing language in corporate literature – for example, in company and brand websites or literature as well as on marketing and publicity messaging and activity. “Our new greenwashing identification tool now makes it infinitely harder for companies to get away with greenwashing, by making their pledges and actions much clearer,” said Wilson Chan, chief executive and founder or Permutable.
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