CP Daily: Tuesday January 10, 2023

Published 00:24 on January 11, 2023  /  Last updated at 00:30 on January 11, 2023  /  Newsletters  /  No Comments

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

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TOP STORY

New York commences development of economy-wide carbon market

New York Governor Kathy Hochul (D) on Tuesday announced state agencies will immediately begin developing a cap-and-invest programme with rebates, aiming to regulate economic activities not already covered by the power sector RGGI scheme and with an eye to linking with other markets.

ASIA PACIFIC

Australia releases consultation on final Safeguard Mechanism framework, Powering the Regions Fund

The Australian government has launched a consultation on its final proposed policy framework for its overhauled Safeguard Mechanism, designed to cut emissions from the country’s most polluting facilities.

Safeguard Mechanism proposal sets strong foundation, but doubts around offsets persist

Groups have welcomed the Australian government’s final policy proposal of the Safeguard Mechanism, saying it vastly improves the existing framework, however concerns remain about facilities’ unlimited access to carbon credits to offset emissions and a failure to deal with Scope 3 emissions.

Taiwan climate bill passes third reading, carbon levy to be introduced in 2024

Taiwanese lawmakers on Tuesday passed a revised climate bill that includes the legislation of the island’s 2050 net zero target and the introduction of a long-awaited carbon pricing scheme, which is set to be launched in 2024 at the earliest.

Indonesia’s East Kalimantan aims to sell credits for emissions reduction in World Bank agreement

The governor of Indonesia’s East Kalimantan province plans to auction carbon credits for emissions reductions that have not yet been compensated for by the World Bank’s Forest Carbon Partnership Facility (FCPF) agreement with Indonesia, local media has reported.

China’s Sichuan, Guangzhou release regional plans for forestry carbon offsets

Two regional governments in China have become the latest to announce plans to develop forest carbon sink programmes, despite a lack of policy clarity due to the years-long suspension of the national offset scheme.

EMEA

ANALYSIS: Lessons from America as EU eyes green subsidy boost

The potential repercussions of the US Inflation Reduction Act (IRA) on the EU have been high on the political agenda in recent weeks, with EU policymakers looking to respond by reshaping state aid rules and bolster industrial policy while navigating arguments that nearly torpedoed the IRA’s passage into law.

Euro Markets: EUAs correct slightly after 5% gain on Monday amid wider energy weakness

EUAs trimmed some of Monday’s 5.3% gain on Tuesday, with some participants suggesting the market had ‘overshot’ in the previous session, while energy markets were mixed as gas fell in the absence of any signals on Asian LNG demand and amid continued mild temperatures.

VOLUNTARY

VCM retirement and issuance totals to increase by more than 20% in 2023 -analysts

Voluntary carbon market (VCM) retirements will rise sharply to 240 Mt in 2023 while issuances will hit 354 Mt, according to projections by a data aggregator published on Tuesday.

Carbon credit provider updates corporate climate target template

A major carbon credit provider has published an updated 2023 version of longstanding blueprint designed to help companies to set near-term voluntary climate goals, but not requiring firms to establish a science-based emissions reduction target.

Maryland approves revolving loan guarantee for family forest offset programme

A US-based conservation group announced on Tuesday a landmark $2.5 million State Revolving Fund (SRF) loan guarantee through the Maryland Department of Environment (MDE) for financing a family forest conservation offset programme in the state.

AMERICAS

RGGI states reduce Q1 auction volumes with ongoing Pennsylvania absence

Auction volumes offered at RGGI’s first quarterly auction for the year dropped again quarter-on-quarter, but are fairly in line with last year’s Q1 auction that also excluded Pennsylvania, the cap-and-trade scheme’s Tuesday notice showed.

California’s Newsom proposes utilising cap-and-trade revenues to shore up budget cuts

California Governor Gavin Newsom (D) on Tuesday aimed to mitigate budget cuts to climate programmes and other initiatives by proposing to allocate proceeds from the state’s quarterly carbon market auctions.

US GHG emissions slowly increase in 2022 on less coal, more natural gas in power sector

US GDP growth outpaced GHG emissions in 2022 for the first time since 2019, as electricity generation was less reliant on coal than renewables but natural gas still took the biggest share, according to a report released Tuesday.

INTERNATIONAL

Renewable tracker sees wind and solar offsetting coal production by 2030

Current and planned renewable capacity worldwide will be sufficient to displace current operating coal capacity by 2030, but fall short of a net zero-aligned growth pathway, according to updated estimates from NGO-managed wind and solar power trackers.

Argentina keeps up pace of reducing deforestation emissions over 2017-18

Argentina cut CO2 output from deforestation by more than 50% over the 2017-18 period compared to historical levels, with the pace roughly in line with reductions earlier in the decade for which the country received international payments, according to data published by the UN on Monday.

BIODIVERSITY (FREE TO READ)

INTERVIEW: Carbon credit review raises questions about avoided deforestation in Australia’s biodiversity market

A government-commissioned review of Australia’s carbon credit system published this week recommended ditching the nation’s avoided deforestation methodology over baseline issues, a move that could create challenges for such projects in finding a place in the country’s emerging biodiversity market.

Forecasters see rapidly growing biodiversity market as nature crisis forces response

Non-profit Inevitable Policy Response (IPR) has released a first integrated climate and nature policy scenario for investors, predicting that on top of nature-based carbon projects a biodiversity credit market is set to emerge that could we worth $18-43 billion by mid-century.

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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

Patent it – Hydrogen technology development is shifting towards low-emissions solutions such as electrolysis, according to a joint study of patents by the European Patent Office (EPO) and the IEA. The report, the first of its kind, used global patent data to provide comprehensive up-to-date analysis of innovation in all hydrogen technologies, covering hydrogen supply to storage, distribution, and transformation, as well as end-use applications. The study found that global patenting in hydrogen is led by the EU and Japan, which accounted for 28% and 24% respectively of all international patent families (IPFs) filed between 2011—20, while also showing significant growth during that period. The leading countries in Europe are Germany (11% of the global total), France (6%), and the Netherlands (3%). The US, with 20% of all hydrogen-related patents, is the only major innovation centre to see international hydrogen patent applications decline in the past decade. International patenting remained modest in South Korea and China but is on the rise. Other countries generating significant volumes of hydrogen patents include the UK, Switzerland, and Canada. Hydrogen production technologies accounted for the largest number of hydrogen patents over 2011-2020. While global hydrogen production is currently almost entirely fossil-based, the patenting data shows that low-emissions innovations generated more than twice the number of international patents across all segments of the hydrogen value chain than established technologies. Overall, technologies motivated by climate concerns accounted for nearly 80% of all patents related to hydrogen production in 2020, with growth driven chiefly by a sharp increase of innovation in electrolysis.

Disastrous – Last year looks to have been one of the costliest on record for natural disasters, with devastating floods and storms, searing heatwaves, and brutal droughts across the globe driving estimated overall losses of $270 bln worldwide, according to Munich Re. The provisional figures from the reinsurance giant are lower than 2021 – which was the second-costliest ever at $320 bln – but insured losses in 2022 remained significantly above the average of the past five years for the second year running, racking up to $120 bln, the company announced. Munich Re warned that many of the world’s worst weather catastrophes are entirely in line with the expected consequences of a warming planet. It therefore reiterated its calls for greater loss preparedness and climate protection as a matter of urgency to help tackle rising climate-related costs, particularly against the current backdrop of challenging economic pressure on insurers from high inflation rates and a shrinking capital base. (Business Green)

Climate funding – Goldman Sachs Asset Management, the fund arm of Goldman Sachs, said on Tuesday it had raised $1.6 bln for its first private equity fund focused on investing in companies providing climate and environmental solutions. The final close of GSAM’s Horizon Environment & Climate Solutions I comes as investors increasingly turn their attention to companies that can help in the world’s fight against global warming. The fund, launched in 2021, provides so-called “growth capital” to companies further along in developing solutions in clean energy, sustainable transport, waste and materials, sustainable food and agriculture, and ecosystem services. GSAM’s Horizon fund has made 12 investments so far of between $80 mln-$90 mln including in Northvolt, a Swedish battery developer and Recover, a company that recycles textile waste to create sustainable fibres. (Reuters)

AMERICAS

Federal Reserv(ed) on climate – Jerome Powell, the US Federal Reserve chair, said that to retain its independence from politics, the central bank must “stick to its knitting” — meaning it is not the right institution to delve into issues like mitigating climate change, the New York Times reports. “Without explicit congressional legislation, it would be inappropriate for us to use our monetary policy or supervisory tools to promote a greener economy or to achieve other climate-based goals,” Powell said at a conference held by Sweden’s central bank. “We are not, and will not be, a ‘climate policymaker.’” Powell’s comments responded to occasional calls from Democrats for the Fed to take a more active role in policing climate change, and to skepticism from some Republicans that it can police climate-related risks to the financial system without overstepping and actively influencing whether industries like oil and gas can access credit. While the central bank is working on ways to better monitor climate-related risks at financial institutions, officials including Powell have been clear that they should not try to incentivise banks to lend to green projects or discourage them from lending to carbon-producing ones.

Net zero transportation road map – US President Joe Biden’s administration on Tuesday unveiled a road map for bringing down emissions from the transportation sector to net zero by 2050, The Hill reports. The new road map, from several federal agencies, has both shorter- and longer-term policies, including selling more electric vehicles, investing in rail and other public transportation, and making walking and biking safer and more convenient options. The blueprint also includes the use of several “levers” to help the transportation sector reach net zero, including federal, state, and local regulations, investment in infrastructure, and new research and development. President Biden has said he hopes that the entire country will become carbon neutral by 2050, and the transportation sector is the country’s biggest contributor to climate change, making up 27% of its GHG emissions in 2020.

Pension fund fuss – The new chair of the US House Committee on Education & the Workforce, North Carolina Rep. Virginia Foxx (R), opposes pensions and retirement funds from considering the environmental and social impacts of investments. The committee has jurisdiction over the Department of Labor and is expected to hold hearings on the issue. US President Joe Biden overturned a Trump-era rule that forbade pensions from making environmental and social considerations. (Sludge)

So long, stoves? – The US Consumer Product Safety Commission plans to take action – up to and including banning methane gas-burning stoves – to protect the public from the “hidden hazard” they pose, agency commissioner Richard Trumka told Bloomberg. Gas stoves release air pollution including nitrogen dioxide, carbon monoxide, and PM2.5 into families’ homes at levels that would be illegal if they were outdoors. Recent research revealed gas stoves are responsible for 12.7% of childhood asthma cases in the US. (Climate Nexus)

EMEA

No retirement yet – The 1 GW Doel 4 and1 GW Tihange 3 Belgian nuclear reactors’ lives will be extended by ten years, the Belgian prime minister Alexander De Croo told a press conference. The announcement follows months of debate with French company ENGIE, the operator of the plants, regarding the conditions of the extension. Belgium’s newest nuclear plants, that together account for 7% of Belgium’s total installed power capacity, were meant to retire in 2025 according to the 2003 Belgian law on nuclear phase-out. In light of Russia’s invasion of Ukraine and the resulting high energy prices, the decision was made to keep the reactors on from 2026. Uncertainty surrounding French nuclear output and analyses suggesting there would be insufficient electricity generation over 2026-27 also contributed to the decision. Nuclear makes up around 34% of Belgium’s installed electricity capacity.

Hunt shunt – The UK government said it’s cutting energy support to businesses from April as finance minister Jeremy Hunt seeks savings to help shore up the public finances. A new 12-month program to help Britain’s companies cope with high energy costs will start in April and be worth as much as £5.5 bln, junior finance minister James Cartlidge told the UK Parliament late on Monday. That compares with £18 bln over six months for the programme it’s replacing to shield firms from soaring energy prices exacerbated by Russia’s war in Ukraine. (Bloomberg)

ASIA PACIFIC

BCX backing – The Sarawak state government in Malaysia has urged Bursa Malaysia to continue holding discussions and sharing information with the state on the newly-established Bursa Carbon Exchange (BCX), Malaysia’s VCM platform and the world’s first sharia-compliant carbon exchange platform, Dayak Daily reports. Sarawak’s deputy minister for energy and environmental sustainability supported the establishment of BCX, according to the report. The Malaysian state last year passed legislation to establish a framework for forest carbon activities, while BCX was formally launched by Bursa Malaysia in December.

VOLUNTARY

Scope 3 software boom – Global voluntary action and regulatory moves to bolster climate-related financial disclosure are causing a spending boom on carbon management software, according to a new report from research and advisory firm Verdantix. Banks, insurers, private equity, and investment managers are gearing up to meet regulatory disclosure standards while also improving climate transparency in-line with the Task Force on Climate-Related Disclosures (TCFD) recommendations. Verdantix’s forecasts predict global spending on carbon management software across the finance industry will rise fivefold to $256 mln by 2027 compared with just $51 mln in 2021. Software is particularly salient for tracking data needed to estimate Scope 3 emissions – those associated with a company’s full value chain. The 2022 TCFD status report found 43% of financial institutions interviewed rated Scope 3 GHG emissions as a ‘very difficult’ recommended disclosure. Verdantix estimates that the total market for carbon management software, when including specialised service providers, could hit $1.49 bln by 2027. The EMEA region will be the fastest-growing and it is projected to overtake North America as the biggest global market by 2025 and will be worth more than $650 mln two years later.

Sustainable spirits – In its Sustainability Report FY21/22 on Tuesday, The Absolut Company predicted that partnerships and green funding are going to “make or break” the ability to hit carbon reduction goals, the company said in a press release. Its prediction comes against a challenging and uncertain backdrop. Three years on from the pandemic, the spirits industry is still striving to recover amid fragile supply chains, an energy crisis, sky-high inflation, and rising interest rates. The Sustainability Report highlights that Absolut Vodka’s 2030 carbon road map remains on track and that The Absolut Company’s two other main brands, Kahlua and Malibu, have reached key milestones. The strong progress has been underpinned by partnerships and collaborations the brands have fostered across the farming, packaging, and logistics sectors over many years. Production of Absolut Vodka is carbon neutral through Scopes 1 and 2 emissions and is on track to be a carbon-neutral product by 2030 (incl. Scopes 1, 2, and 3 emissions), with its main distillery emitting 98% fewer emissions than the average.

SCIENCE & TECH

Warm warnings – Last year was the fifth-warmest on record globally, with temperatures about 1.2C (2.16F) above pre-industrial levels, according to the EU’s Copernicus Climate Change Service. The ranking, released Tuesday morning, continues the long-term trend of a warming planet, as the past eight years were the eighth-warmest on record. The third year in a row of La Nina conditions in the tropical Pacific Ocean helped depress global average surface temperatures slightly, keeping 2022 from hitting the top three warmest years. There are signs, however, that La Nina may soon wane, and potentially give way to an El Nino event during 2023. If this were to happen, it would raise the chances for a new all-time record warm year. (Axios)

AND FINALLY…

They come in peace – A jury of linguists and journalists has picked the expression ‘climate terrorists’ (Klimaterroristen) as Germany’s ‘non-word’ (Unwort) of the year 2022, the initiative “Unwort des Jahres” said. The term has been used to ‘discredit’ actors that “advocate an implementation of climate measures and meeting the Paris Climate Agreement’s targets,” added the jury of the critical award conferred since 1991. “The jury criticises the term’s use because climate activists are equated with terrorists, which criminalises and defames them,” the organisation argued. Terrorism would denote the “systematic spreading of fear and loathing by radical physical violence,” which perpetrators would carry out using “destruction, death and murder”, the group added. Denoting peaceful climate activists, who use no violence to further their cause, as terrorists aims to paint them as aggressive “enemies of the state” and shift the debate away from their “legitimate” demands about environmental protection, the jury said. The term “climate terrorists” has been used mainly in the context of actions by the Last Generation (Letzte Generation) group, Germany’s version of the UK’s Extinction Rebellion, which uses non-violent acts of civil disobedience, such as blocking roads, to bring attention to their environmental policy demands. (Clean Energy Wire)

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