CP Daily: Friday December 23, 2022

Published 02:07 on December 24, 2022  /  Last updated at 02:09 on December 24, 2022  /  Newsletters  /  No Comments

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

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TOP STORY

US Congress approves programme to support voluntary carbon market in omnibus spending bill

US lawmakers on Friday passed a $1.7-trillion spending bill to fund the federal government, which among its many provisions includes establishing a programme to help rural stakeholders participate in the voluntary carbon market.

EMEA

EU carbon emissions hit 30-year low in November despite strong coal burn -report

A drop in power and gas consumption due to high energy prices saw EU CO2 emissions fall to a 30-year low in November despite sustained strong coal demand from the power sector, according to a report from a non-profit.

Euro Markets: EUAs drift higher but encounter selling at key level before early pre-holiday close

European carbon prices posted a 6.6% weekly gain as the market wrapped up ahead of the holiday break, with the benchmark price settling 10 cents higher on the day after encountering selling interest above a key level before trading activity petered out after the 1300 GMT settlement, while energy markets drifted lower again as concerns over supply constraints continued to ease.

UAE steps up green hydrogen plans with announcement of new solar-powered plant

The UAE has stepped up its hydrogen plans after Masdar, the country’s biggest renewable-energy firm, teamed up this week with Germany’s Uniper to build a new plant in the Middle East country.

ASIA PACIFIC

Australia Market Roundup: NSW sets 70% carbon reduction target, as regulator makes 2022’s last ACCU issuance

The New South Wales state government on Friday announced a new target of cutting greenhouse gas emissions 70% below 2005 levels by 2035, while the Clean Energy Regulator in its last issuance of the year distributed 325,000 new Australian Carbon Credit Units (ACCUs).

CN markets: CEA trading volume surges on rise in block deals

Trading volume in China’s national emissions trading scheme reached a new high since the end of the previous compliance cycle over the past week due to a significant contribution of block deals, though spot prices continued to drop over the period.

Shanghai to hold extra CO2 auction for local ETS participants

The Shanghai government will auction off an additional 3 million carbon allowances under its emissions trading scheme on the last trading day of this year, with participation restricted to companies with compliance obligations under the city’s pilot emissions trading scheme.

AMERICAS

California’s potential RNG credits phaseout draws LCFS stakeholder contention

Environmental organisations and market participants are at loggerheads over California regulator ARB’s Low Carbon Fuel Standard (LCFS) reform scenarios that may phase out credit generation from renewable natural gas (RNG), though stakeholders have largely formed a united front in wanting to beef up the stringency of the transportation sector programme, according to public comments.

WCI emitters flip back to net long with V24 disclosure, as financials’ length hits 9-mth high

Compliance players reduced their California Carbon Allowance (CCA) holdings this week as entities’ V24 positions became public, while financials continued to scoop up WCI permits, according to US Commodity Futures Trading Commission (CFTC) data published Friday.

VOLUNTARY

World Bank partners with financial services firm to boost Brazilian carbon credit supply

The World Bank Board of Directors on Thursday approved a $500 mln project to help Brazilian companies implement credible GHG reduction practices and access “high-quality” carbon markets.

BIODIVERSITY (FREE TO READ)

Australia publishes draft nature repair market legislation

Australia on Friday published draft legislation for its planned voluntary biodiversity market, with the main elements unchanged since the initial draft was released in August, ignoring warnings that the scheme as designed is likely to be a commercial failure.

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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

EMEA

Angry farmers – The inclusion of fertilisers in the EU’s carbon border levy has concerned agriculture stakeholders as they fear more costs for farmers and a weakening of the sector in the green transition, EurActiv reports. The final deal has been lambasted by the EU agriculture community, which reserved criticism for the decision to include fertilisers. “This inclusion will make the price skyrocket further, increasing the cost of agricultural production in Europe, whilst making the use of imported food more competitive and attractive,” a statement from EU farmers association COPA-COGECA read. For the association, this “double penalty” for farmers would be “unbearable”, considering the current and foreseeably increasing price of fertilisers, already at a historic high thanks to Russia’s invasion of Ukraine. The war has sparked a global mineral fertiliser crisis, which has hit the EU hard. Soaring energy costs, combined with sanctions curtailing the import of key fertiliser inputs from Belarus, have seen the price of fertilisers the skyrocket as much as 149% in Sep. 2022.

Metallic rhetoric – The newly-agreed 2026-34 timeline for the EU’s carbon border adjustment mechanism (CBAM) to replace free allocation won’t protect metal producers from foreign competition and threatens their survival. “As it stands, the carbon border tax is a death blow, because it will increase the price of metal consumed in Europe,” said Cyrille Mounier, general delegate of the French aluminium industry union. While the industry does not question the underlying rationale behind CBAM, it still warns of future distortions on the EU market, particularly in light of increased production costs caused by rising prices for energy and raw materials. “Europe must urgently combine its climate policy with a ‘carrot’ that competes with other regions,” said Evangelos Mytilineos, president of Eurometaux and CEO of Mytilineos, a Greek aluminium conglomerate. (EurActiv)

Subsidy shout-out – Britain has joined the international criticism of Joe Biden’s massive US package of green subsidies, warning they are protectionist and will hit UK-based makers of electric vehicles, batteries and other renewables. Kemi Badenoch, the UK’s international trade secretary, has written to her US counterpart, Katherine Tai, to protest at the structure of the Biden administration’s $369 bln Inflation Reduction Act (IRA). The EU, South Korea and Canada are among those to claim the act breaches WTO rules by tying aid to US domestic production. Badenoch said in her letter that if special deals were on the table, Britain should get one. (FT)

Pellet protest – Dutch lawmakers have approved a motion that compels the government to stop paying subsidies to wood-pellet manufacturers found to be untruthful in their wood-harvesting practices. On Dec. 14, the Dutch House, by a 150-114 vote, approved a motion introduced by Rep. Lammert van Raan of Amsterdam, a member of the progressive Party for the Animals. In his motion, van Raan noted that up to €9.5 bln has been reserved by the government through 2032 to subsidise the purchase of domestic and foreign-produced wood pellets for energy and heat generation. “The risk of fraud with sustainability certification of biomass is significant,” van Raan wrote. Then, in reference to a Mongabay story published December 5, he added: “A whistleblower who worked at Enviva, the biggest maker of wood pellets, has reported that all of Enviva’s green claims are incorrect [and] according to an important recent scientific study… Enviva contributes to deforestation in the southeastern US”. Van Raan concluded his motion by writing that the House “calls on the government to ensure that all subsidies do not end up at parties that cheat with sustainability certification.” The approved motion requires the Dutch government to seek a higher level of proof under the third-party Sustainable Biomass Program (SBP) certification process. Enviva already participates in the SBP, but critics note that the certification process is inherently weak and unreliable, especially regarding the climate and biodiversity impacts of tree harvesting. (Mongabay)

ASIA PACIFIC

The whole chain – Japanese shipping firm Mitsui O.S.K. Lines (MOL) and power company Kansai Electric Power Co. (KEPCO) on Friday announced they have signed an MoU for a study of marine transportation for the development of a CCS value chain. The plan is to look at opportunities to capture CO2 from KEPCO’s thermal power plants, transport it on ships to storage sites where it can be injected underground – a strategy that a number of Japanese companies are investing in. Last month, KEPCO signed an MoU with deepC Store – a company planning a floating CCS hub off the coast of Australia – to study the potential of capturing and shipping up to 10 MtCO2 to deepC’s hub annually.

Don’t say goodbye – Japan’s Cosmo Energy has signed a new agreement with Qatar Energy to continue its operation in the Al-Karkara and A-Structures oil fields, which came into effect after the expiry of the current contract this month, Reuters reports. The subsidiary of the Japanese oil refiner has been developing and producing crude oil in the fields, located offshore of Qatar, for 25 years since the signing of the current contract in 1997. The fields started production in 2006, and since then have produced a total of 33.5 mln barrels of crude oil, according to Qatar Energy.

Record oil output – The Xinjiang branch of PetroChina, China’s largest oil and gas producer,  has churned out more than 17 mt of crude oil and natural gas this year, hitting a record high, according to Xinhua. The subsidiary has drilled 722 wells in the Junggar Basin this year, producing 14.09 mt of crude oil and 3.75 bln cubic meters of natural gas, it said. To date, the Xinjiang-based company has developed 33 oil and gas fields, with a total output of nearly 430 mt of crude oil and 99 bln cubic meters of natural gas.

Tell us how you really feel – Japan in recent months has developed a 10-year roadmap for transitioning to a low-carbon society, including plans for an emissions trading scheme that will be legislated next year. On Friday, the government opened the strategy up for the public to comment on, with submissions welcome until Jan. 22.

AMERICAS

Seeking the “green” light – The US Treasury Department is weighing new requirements for “green” hydrogen producers, creating schisms among energy groups about how to ensure the fuel is a low-carbon resource, E&E News reports. Green hydrogen production involves extracting the fuel from water molecules using renewable electricity in a process that doesn’t emit carbon. The climate law sought to encourage that by offering tax credits to hydrogen producers that manage to zero out their carbon emissions, rather than just paring them back. Yet some prospective producers of hydrogen want to bend the definition of “green,” say analysts. Instead of building their own wind or solar facilities and drawing power directly from those projects on-site, some producers hope to use grid electricity — including electricity from coal or gas — while buying renewable energy certificates or other offsets so hydrogen can qualify as clean under the law.

Carbon capture quandary – The world’s largest carbon capture project won’t be built at an aging coal plant in New Mexico, E&E News reports. Enchant Energy LLC said Wednesday that it’s “unable to proceed” with a $1.6 bln carbon capture retrofit at the San Juan Generating Station in the state’s northwest corner. The company pointed to a defeat in arbitration proceedings for the city of Farmington, N.M., which was planning to help Enchant gain ownership of most of the plant. The project has been closely watched, as Enchant sought to use interest in slashing carbon emissions to save a facility that dates to the 1970s. The plant had two operating coal-fueled units in recent years. But the San Juan station stopped sending power to the grid in late September, and Farmington through arbitration resisted plans by the facility’s other owners to auction off key equipment at the plant.

Standing down in Sask – The Canadian environment ministry on Friday issued a notice of intent to stand down the implementation of the ‘backstop’ output-based pricing system (OBPS) on Saskatchewan effective Jan. 1. The conservative-led province for years refused to regulate its power and natural gas transmission pipeline sectors under its own OBPS, leading Ottawa to slap the backstop regime on the province. However, after losing a federal lawsuit regarding the constitutionality of the federal Greenhouse Gas Pollution Pricing Act in Mar. 2021, Saskatchewan Premier Scott Moe announced the province would cover the two sectors with its own system, and Canadian PM Justin Trudeau’s Liberal administration approved the plan last month.

VOLUNTARY

“All” in on climate – The Allstate Corporation, one of the US’ largest publicly held personal lines insurers, on Friday announced it has committed to achieve net zero emissions for direct, indirect and value-chain greenhouse gas emissions by 2030. It will also set a target year for achieving a net zero investment portfolio by the end of 2025. These actions are essential to managing climate risk and fulfilling Allstate’s purpose of protecting customers and generating attractive returns for shareholders. Allstate’s pledge means it will exceed by 20 years the 2050 net zero target set in the Paris climate accords. It also reflects Allstate’s decades-long history of integrating strong environmental principles and practices into its business strategy while building community resilience and helping customers prepare for and recover from climate-related catastrophes. The company will accomplish its 2030 net zero goals by reducing the emissions and square footage of Allstate’s offices, purchasing renewable energy where possible, working to reduce emissions of suppliers and removing the impact of remaining real estate through the limited purchase of credible carbon offsets where available.

SCIENCE & TECH

Source to sink in 10 – Tree growth determines the forest carbon balance at the landscape level in northern managed forests. Soil carbon release through decomposition is comparatively less important, and a clearcut starts to sequester more carbon than it releases within ten years of harvesting. This is the finding of a comprehensive study based on a survey of 50 different forest stands in Sweden. The results are published in the highly-ranked journal Global Change Biology. The forests of the northern coniferous belt are important carbon sinks and therefore also important in climate change policy. How much carbon dioxide these areas can sequester from the atmosphere is, however, unclear, and therefore much debated. Current knowledge is largely based on studies in Canada and Russia, while knowledge of the Nordic managed forest landscape has been based on a few single-site studies. The researchers have measured both soil carbon release and vegetation carbon uptake in 50 different forest stands on numerous occasions over a three-year period. This extensive sampling has allowed the researchers to determine the carbon balance for the stands and for the forest landscape as a whole. The sites studied consist of forests of different ages, from clearings to older forests, all in the Svartberget Experimental Park in Vindeln. In total, the study covers a forest landscape of 68 square kilometres. The results provide in-depth knowledge on several of the issues under discussion today. One interesting finding shows that a clearcut changes from being a carbon source to a carbon sink within a decade, and that the release of CO2 from the soil through decomposition appears to be more or less constant regardless of the age of the forest. (SLU)

Oh, please stay with me, lianas – Viewed from above, tropical rainforests look like a blanket of trees, branches extending skyward and leaves fanning out in all directions. But in addition to the trees, up to 40% of the visible foliage can come from a separate group of plants: woody vines called lianas. Rooted in the soil, lianas use the architecture of trees as an energy-efficient way to wind their way up into the canopy, fiercely competing with trees for essential resources like water, nutrients, and sunlight. Scientists have long known that the presence of lianas can impede tree growth and diminish the carbon uptake and storage of tropical rainforests. Recent studies have also revealed that lianas thrive under the warmer, drier conditions wrought by climate change and within increasingly ubiquitous forest patches disturbed by human fragmentation and logging. As a result, the impact of lianas on the global carbon cycle is set to intensify as they grow in abundance around the world. “Lianas store less carbon than trees, mainly because they have a more extensive leaf canopy and less woody tissue because they use the trees for support [rather] than putting a lot of carbon into their own supportive stems,” Catherine Waite, a research associate at the University of the Sunshine Coast, Australia, told Mongabay.

Not the penguins – Two-thirds of Antarctica’s native species, including emperor penguins, are under threat of extinction or major population declines by 2100 under a scenario of very high global CO2 emissions, according to research. The study, an international collaboration between scientists, conservationists and policymakers from 28 institutions in 12 countries published in the journal Plos, identified emperor penguins as the Antarctic species at greatest risk of extinction, followed by other seabirds and dry soil nematodes. “Up to 80% of emperor penguin colonies are projected to be quasi-extinct by 2100 [population declines of more than 90%] with business-as-usual increases in greenhouse gas emissions,” it found. (Guardian)

AND FINALLY…

After cli-fi comes eco-horror – A new series on Amazon Prime combines spectacle, supernatural mystery, and explicit environmentalism. Its concerns range from the global – climate change, fossil fuels – to the local – the continued dependence of the riggers and their Scottish community on North Sea oil. The workers are, as the script puts it, “fossils digging fossils”. The Rig joins a growing number of shows placing the climate crisis at the heart of their work. It stars Iain Glen, Martin Compston, and Mark Bonnar as members of an offshore crew cut off from the outside world by a mysterious fog that presages a series of increasingly alarming, seemingly supernatural events. It is equal parts workplace thriller and eco-horror, the FT writes. Ironically, this drama about an old, fossil-fuel-driven industry was filmed in a factory once hailed as housing the future of renewable energy. Pelamis Wave Power on Edinburgh’s Leith Docks was a pioneer in offshore wave energy before going into administration in 2014. (The building reopened last year as a cavernous new studio complex.)

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