CP Daily: Tuesday January 3, 2023

Published 01:02 on January 4, 2023  /  Last updated at 01:07 on January 4, 2023  /  Newsletters  /  No Comments

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

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TOP STORY

Brazil’s Lula re-activates Amazon Fund on first day as president

Brazilian President Luiz Inacio Lula da Silva reopened the country’s Amazon Fund at his inauguration on Sunday, prompting a release of forest protection funds from Norway and Germany while Britain suggested it could join.

VOLUNTARY

VCM Report: Year-end jump in retirements prompts lift in standardised prices

Standardised carbon credit prices rose over the holiday period as corporates rushing to fulfil end of year compliance obligations caused a jump in retirements, but the rally still failed to move the demand needle significantly from 2021 levels as the market nurses the headache of an increasing credit overhang.

Indonesia validates first REDD+ project under new carbon trading regulation

The Indonesian Ministry of Environment and Forestry (MOEF) has validated the first REDD+ project under the country’s new carbon trading regulation, marking the first step in restarting offset generation after the government suspended issuances earlier this year as it crafted the rule.

Brazil’s Bolsonaro publishes decree to boost VER generation from public forest concessions

Outgoing Brazilian President Jair Bolsonaro this week edited a provisional decree to make it easier for public forest concessions and conservation units to generate voluntary carbon credits.

Developer forecasts VER price inflation of up to 15% a year

A Dutch carbon project developer that has quickly expanded to seven nature-based projects forecasts that credit prices will inflate by up to 15% a year until 2035.

US carbon fintech firm acquires South African hemp producer, forms biomass partnership

A carbon project developer and technology services firm on Thursday announced it has purchased a South African agriculture group and formed a joint partnership with a New York-based biomass company, as it prepares to launch a product next year that will “leapfrog” traditional carbon credit generation approaches.

Singapore-based investor leads latest funding round for ACX

AirCarbon Exchange (ACX) has successfully closed its latest funding round, with Singapore-based decarbonisation investor TRIREC leading the capital injection.

AMERICAS

California offset issuances crater to 8-year low in 2022, as DEBs volume inches up

California regulator ARB in 2022 granted the smallest amount of compliance offsets in eight years, though the number of these credits with direct environmental benefits to the state (DEBs) increased over 2021 levels, according to state data published Wednesday.

California carbon market approaches 800 participants in Q4 as more funds open accounts

The number of registrants in the California cap-and-trade programme set a new all-time high in the fourth quarter amid a continued influx of financial players, according to data published Friday.

Compliance entities boost CCA holdings amid Dec-22 expiry, speculators slim down

Regulated parties built up their California Carbon Allowance (CCA) net length but pared back their RGGI Allowance (RGA) position this week, as financial players trimmed their overall WCI holdings as the Dec-22 contract went to expiry and fell below a reporting threshold, according to US Commodity Futures Trading Commission (CFTC) data published Friday.

Canada reports enhanced GHG reduction efforts, but still falls short of 2030 targets

Additional emissions abatement actions modelled in Canada’s Fifth Biennial Report show the country still falling short of meeting its enhanced Paris Agreement Nationally Determined Contribution (NDC) of a 40–45% GHG reduction below 2005 levels by 2030, Environment and Climate Change Canada (ECCC) figures showed Tuesday.

New York-based fund manager seeks to launch second carbon allowance ETF

A New York-headquartered investment manager on Wednesday applied with the US Securities and Exchange Commission (SEC) to register a carbon-focused exchange-traded fund in the US, having already done so earlier this month in Australia.

EMEA

Euro Markets: Volatile EUAs slump 3% on weak fundamentals amid thin volume

Low liquidity, bearish fundamentals, and the periodic break from spot auctions saw a volatile and bearish end to 2022 and start to 2023, with the EUA market extending last week’s weakness on Tuesday as the benchmark Dec-23 contract traded down more than 3%.

New €4 billion ‘green’ steel plant planned in Finland

Norwegian company Blastr Green Steel is planning to build a new €4 billion steel plant in Finland sourcing green hydrogen, the company announced on Tuesday in a move defying fears that heavy industry could opt to invest outside the EU amid high energy and carbon costs.

Tech company launches exchange for trading UK nature credits

A tech company has launched an exchange for trading UK woodland and peatland carbon credits in expectation of a leap in demand for the British units.

Turkey publishes solar and nuclear-focused 2035 energy plan, with 4 GW coal rise

Turkey’s ministry of energy has announced a national energy plan through 2035 as part of a 2053 net-zero target, focusing on ambitious solar expansion targets to meet expected strong energy demand growth, nuclear growth, as well as a 4 GW buildout of coal plants.

ASIA PACIFIC

Major Chinese foresty firm commits to developing carbon sink projects

One of China’s major forestry groups has agreed to cooperate with a Hong Kong-listed investment bank to develop forest carbon sink projects, as part of its plan to further tap into the emissions market.

Shanghai carbon auction clears at floor price

Shanghai sold only around half of the 3 million CO2 allowances on offer at its latest auction, which was held for emitters still needing to acquire units for 2021 compliance, with the sale clearing at the floor price.

No room for new coal and gas projects in Australia’s Safeguard Mechanism, report shows

Scope 1 emissions from existing coal and gas facilities alone could exceed their entire emissions budget in Australia’s Safeguard Mechanism by 2030, according to a research report.

India’s IEX sets up carbon trading exchange subsidiary

The Indian Energy Exchange (IEX) on Tuesday announced it has established the International Carbon Exchange, a wholly owned subsidiary that will serve the nation’s emerging domestic voluntary carbon market as well as foreign carbon offset buyers.

INTERNATIONAL

KraneShares slashes carbon holdings by nearly 20% after announcing large 2022 dividend

Investment manager KraneShares on Wednesday chopped allowance holdings in its flagship global carbon exchange-traded fund after disclosing an annual dividend that significantly exceeded its payout to shareholders during the previous year.

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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

Expanded climate funding – The World Bank is seeking to vastly expand its lending capacity to address climate change and other global crises and will negotiate with shareholders ahead of April meetings on proposals that include a capital increase and new lending tools, according to an “evolution roadmap” seen by Reuters on Monday. The roadmap document – sent to shareholder governments – marks the start of a negotiation process to alter the bank’s mission and financial resources and shift it away from a country- and project-specific lending model used since its creation at the end of World War Two. The World Bank management aims to have specific proposals to change its mission, operating model, and financial capacity ready for approval by the joint World Bank and International Monetary Fund Development Committee in October, according to the document. The development lender will explore options like a potential new capital increase, changes to its capital structure to unlock more lending, and new financing tools such as guarantees for private sector loans and other ways to mobilise more private capital, according to the document.

Global CCS I – SK earthon, part of the South Korean SK conglomerate, has signed an MoU with UK-based CCS developer Azuli to identify and develop CCS projects globally, with a main focus on Australia and the US. The Korean firm has major ambitions to scale up CCS in coming decades as part of the company’s goal of reaching net zero emissions in 2050, and wants to make use of Azuli’s technology, which the UK firm so far has deployed in two US-based projects in the Gulf.

Global CCS II – Japanese oil and gas company Inpex has taken a stake in Dutch start-up CarbonOrO Holding, whose technology Inpex said in an announcement will reduce the cost of enabling the capture and desorption of CO2. Inpex is working towards capturing and storing at least 2.5 Mt CO2/year by 2030.

EMEA

Carbon coffers – The EU ETS and national carbon pricing system brought Germany a record €13.2 bln from in 2022, the Federal Environment Agency (UBA) said. European emissions trading in the energy and industry sectors generated €6.8 bln in revenues, and €6.4 bln came from the national system for transport and heating fuels. The revenues will go directly into the Climate and Transformation Fund (KTF), which for example supports the further development of electromobility, the development of the hydrogen industry and measures for energy efficiency. In 2021, the German Emissions Trading Authority (DEHSt), which is responsible for emissions trading in the country, had already reported a then-record sum of €12.5 bln. (Clean Energy Wire)

New year, new mix – Germany received its first shipment of liquefied natural gas at a new floating terminal in the North Sea port of Wilhelmshaven, Bloomberg reports. A tanker arrived Tuesday with enough gas to supply 50,000 German households with energy for a year, according to a joint statement from terminal operator Uniper SE and Venture Global LNG. The vessel loaded at the latter company’s Calcasieu Pass project in the US. The import is part of Germany’s plan to diversify its energy supply mix away from Russian gas.

Coal exit clash – Germany’s economy minister Robert Habeck has called for pulling forward the country’s coal exit to 2030 from 2038 in the east of the country, following an agreement in the west to reconcile with the coalition government’s headline goal. “The generation of electricity from coal after 2030 is no longer economically viable with the certificate trading system, which has now been tightened up once again,” the Green politician told newswire dpa on Monday. The federal government and the state government of western coal mining and heavy industry state North Rhine-Westphalia, along with energy company RWE, agreed in late 2022 to push forward the coal phaseout in the state to 2030. Eastern German coal mining state premiers renewed their objections. Conservative Saxony-Anhalt state premier Reiner Haseloff told newspaper die Welt that questioning the previous agreement on a 2038 phase-out date during an energy crisis was “disastrous and naive”. Saxony state premier Michael Kretschmer, also a conservative, rejected Habeck’s initiative. “I don’t understand why the economy minister is bringing up this discussion on the first day of the year. Germany has an energy problem,” Kretschmer told tabloid Bild. (Clean Energy Wire)

Another lawsuit – Oil company ExxonMobil has filed a lawsuit against the EU’s new windfall tax on oil groups, the FT reports. ExxonMobil says that Brussels exceeded its legal authority by imposing the levy, with the lawsuit seen as the most significant response yet against the tax from the oil industry, which has been targeted by western governments amid a surge in energy prices following Russia’s invasion of Ukraine. The European General Court will decide whether to rule on Exxon’s case. If it does, any future judgment may be appealed at the European Court of Justice, with proceedings potentially dragging on through much of next year. (Carbon Brief)

Casual-trees – Millions in UK taxpayer money has been spent to plant trees that may not have survived, according to analysis of council data by the Telegraph. At least 80 local authorities are failing to record whether trees planted to help climate change are surviving, despite them spending more than £11 mln in council and central government funds. Others report survival rates well below expected, with some projects leaving no trees alive amid concern that planting schemes are being undertaken without adequate expertise. Experts say a survival rate of 90-95% should be expected if tree-planting schemes are well planned and have adequate aftercare. The high rates of failure, and lack of monitoring, among local authority schemes raise concerns that money is being wasted on rushed planting projects. Some local authorities said failed trees would be replaced, requiring additional resources and manpower. The deaths of trees planted for carbon offsetting purposes also raises concerns that councils and businesses may be able to greenwash their pollution, by claiming to have offset their emissions with trees that do not survive. The UK government has pledged more than £9 mln to plant hundreds of thousands of trees in communities across England, to help hit its targets of 30,000 hectares of new woodland annually across the UK by 2025.

Rebellion in retreat – The British arm of the Extinction Rebellion environmental group has announced that it would take a break from acts of public disruption in order to bring more people on board its campaign for urgent action to counter climate change. The grassroots group’s protests have previously included closing key roads and bridges in central London, blockading oil refineries, smashing windows at Barclays bank headquarters and spraying fake blood over the finance ministry building. In a statement entitled “We quit”, Extinction Rebellion UK said that in the four years it has been taking direct action, very little had changed, with emissions continuing to rise. “As we ring in the new year, we make a controversial resolution to temporarily shift away from public disruption as a primary tactic,” the group said. “What’s needed now most is to disrupt the abuse of power and imbalance, to bring about a transition to a fair society that works together to end the fossil fuel era. Our politicians, addicted to greed and bloated on profits, won’t do it without pressure.” The group said it would focus on strengthening in number and bridge-building to increase its power and influence. The UK government is in the process of passing a new law to make it harder for people to stage disruptive protests such as halting public transport networks or disrupting fuel supplies, giving the police greater powers to manage and prevent them. Extinction Rebellion said it planned to surround the Houses of Parliament from Apr. 21 with 100,000 people. (Reuters)

AMERICAS

Uruguay goals – Uruguay plans to reduce its methane and nitrous oxide intensity from beef production, by 35% and 36% respectively, below 1990 levels by 2030, according to its second Nationally Determined Contribution to the Paris Agreement submitted Friday. The South American country’s 2030 plans include keeping all 849,960 ha of its native forest stock held since 2012, all 1,053,693 ha of its forest plantation management area held since 2020, and all 88,348 ha forest plantations destined for shade and shelter it held since 2018. Uruguay is also leaving open the possibility of participating in international trade for GHG mitigation under Paris’ Article 6. International transfers of GHG reductions in Uruguay must be approved by the Ministry of the Environment, while unauthorised mitigation outcomes will be counted towards the country’s own GHG targets.

Quebec cap-and-trade updates – Quebec has amended its provincial regulation of the mandatory reporting of emissions to allow companies to enter its WCI-linked carbon market before they are required to, and stay in the market if they are no longer required to so that they may improve the profitability of GHG reduction projects, according to a government update last week. Under the new amendments, which took effect Jan. 1, the province now only requires third party verifiers to visit the site of cap-and-trade emitters once every three years, harmonising the regulation with California. The amendments also implement annual updates on emissions factors from imported electricity.

Final $ale – The final Nova Scotia cap-and-trade auctions in 2022 raised just over C$52 mln and nearly C$126 mln since 2020, according to provincial data published last week. All of the money raised through the auctions went into the province’s Green Fund, which invested in rebates for solar panel installation on houses, energy efficiency upgrade incentives for building and homeowners, as well as research funding. The Canadian Maritime province’s Progressive Conservative government moved to scrap its cap-and-trade programme in favour of a Nova Scotia-run output-based pricing system on Jan.1, and a federally-imposed backstop on fossil fuels will go into effect July 1.

Willie or won’t he? – Willie Phillips (D) will become the first Black person to take the gavel of the US Federal Energy Regulatory Commission (FERC), where he will shape rules crucial to the electric grid and natural gas infrastructure, a White House official told Bloomberg Law. The White House official said Tuesday that Phillips, who joined the commission about year ago, will serve as acting chair of the commission following the departure of outgoing chair Richard Glick. Phillips will take the reins of a commission split 2-2 between Democrats and Republicans.

Unspecific plan – The North Carolina Utility Commission (NCUC) submitted a Carbon Plan on Dec. 30 for utilities and other electricity providers to reduce emissions by 70% below 2005 levels by 2030 and reach carbon neutrality by 2050. HB-951, which was was ratified in Oct. 2021, required the state to submit a plan by Dec. 31, 2022. While ordering the closure of remaining coal-fired generation by 2035, the state’s plan does not specify how utility Duke Energy should reduce emissions, but requires the utility to use a mix of energy sources and submit a proposal by Sep. 2023. Critics are concerned the lack of specifics on the state’s plan leaves the door open for Duke Energy to build new gas plants, as much of the utility’s carbon reductions have come from retiring coal plants, according to a report from local outlet WRAL. Environmental groups believe the state’s first Carbon Plan lacks specifics, while other critics are concerned that too much reliance on renewable energy will be costly to the state. Some customers believe increasing renewables will mean a less reliable grid, the report stated. Other mandates of the plan include: the purchase of more solar by 2024 to be online by 2028, maintain and consider expanding the nuclear fleet, increase battery storage, upgrade transmission facilities, study offshore wind generation, and engage low income, minority, and rural communities. The NCUC is required to review the Carbon Plan every two years.

Load $haring – As part of a multi-state clean energy effort, the Massachusetts Department of Energy Resources (DOER) has determined it would make sense to have the Bay State ratepayers cover 40% of the Longroad Energy’s King Pine 1GW onshore wind project planned for northern Maine along with the associated LS Power Base’s 345kV transmission line buildout. The net cost of the two projects is $1.7 bln over 30 years. The DOER said that its determination and willingness to join forces with Maine will terminate if “the projects do not have sufficient contracting commitments to support project viability by Feb. 28.” (CommonWealth Magazine)

ASIA PACIFIC

New position — The Singapore government has appointed its first chief sustainability officer to help ramp up the country’s efforts in the area, the Strait Times reports. The Ministry of Sustainability and Environment tapped its chief science and technology officer, Lim Tuang Liang, for the role, who will also take on the concurrent role of deputy secretary of special duties. Lim, 50, will drive sustainability efforts, such as the Singapore Green Plan 2030, which puts the country on the path to being more resource-efficient and climate resilient, the ministry said. Lim will oversee Singapore’s progress at meeting its SDGs coordinating public sector agencies, and partnerships with business and civil society.

Social licence — Fossil fuel interests have signed more than 500 sponsorship deals with Australian arts, sports, education, and community organisations, prompting accusations they are “engineering a social licence to operate”, the Guardian reports. The list was compiled by author Penny Tangey and expanded by climate advocacy group 350. Woodside Energy was the most frequent entrant on a list of 535 sponsorship agreements, having signed 56, deals, fellow oil and gas player Santos had 41 known sponsorships. Researchers working in partnership with the Australian Conservation Foundation have previously estimated the value of fossil fuel sponsorships to Australian sport were between A$14m ($9 mln) and A$18m a year. “It’s a subtle way of trying to engineer social support, or continued social support, for these polluting products,” Belinda Noble from PR advocacy group ComsDeclare said. “Most of these companies don’t sell to the general population. There’s no reason for them to be spending millions of dollars on sports and arts sponsorships. What they’re trying to do is sell their brand”.

Broader targets – Japan’s Mizuho Financial Group has set targets for reducing GHG emissions in its oil and gas and thermal mining sector portfolios. For oil and gas, Mizuho will lower the Scope 1 emissions of its portfolio to 4.2 gCO2e/MJ by 2030 compared to 6.6 gCO2e in FY2019, while at the same time reducing absolute Scope 3 emissions by 12-19% by 2030, also compared to FY2019. For thermal coal mining, the group will seek to achieve a zero balance in absolute Scope 1, 2, and 3 emissions in OECD countries by 2030, and in non-OED countries by 2040. It had previously set targets for the electricity sector. Mizuho also said it plans to increase its support for clients seeking to decarbonise.

VOLUNTARY

Methane math mystery – Shallow-water coastal ecosystems can absorb and store large amounts of carbon from the atmosphere through vegetation buildup and long-term sediment burial, according to a study published in the journal Nature Communications. This ecosystem function has raised worldwide interest in the scientific community, conservation organisations, and governmental bodies about the potential of these ecosystems in short-term climate mitigation. However, some of this organic carbon is metabolised and returned to the atmosphere as methane. While aquatic methane emissions can partly offset the GHG sink estimate of the terrestrial landscape and of some vegetated coastal ecosystems, such as mangroves, the magnitude of methane fluxes and their contribution to the net atmospheric GHG exchange remains unknown for the majority of coastal environments and challenges our ability to develop informed climate mitigation strategies for these ecosystems.

A first for forestry – Guyana’s Senior Minister with Responsibility for Finance, Ashni Singh, announced that Guyana has successfully transacted its first carbon credit sale, INEWS Guyana reported Friday. This is part of a multi-year agreement for the sale of carbon credits to US oil company Hess Corporation to the tune of $750 mln – a significant portion of which will be injected into the development of Indigenous communities across the country. This deal with Hess, signed last month, came on the heels of Guyana being the first country to receive certification of over 33 mln credits by the Architecture for REDD+ Transactions (ART) programme on Dec. 1. The agreement will see Hess, which is one of the partners operating in the Stabroek Block offshore Guyana, buying 2.5 mln credits per year for the period 2016 and 2032.

AND FINALLY…

Kelp can help – The Guardian profiles the seaweed, noting that the vast underwater forests absorb CO2 and have high nutritional value, but are is under threat from rising temperatures, pollution and invasive species. The article explains that there is still a sizeable gap in understanding of seaweed’s long-term ability to sequester carbon, because it lacks a root system to lock the carbon into the ground, unlike other marine plants such as mangroves and seagrass that have been subject to carbon credit-generating projects. Whether carbon stays locked up also depends on what happens to the seaweed, and there is still scientific debate on how effective it is at storing the element.

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