CP Daily: Friday January 20, 2023

Published 07:25 on January 21, 2023  /  Last updated at 07:31 on January 21, 2023  /  Newsletters  /  No Comments

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

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TOP STORY

REDD sceptics highlight risks of avoided deforestation projects after claims of over-crediting

Carbon market stakeholders traditionally sceptical about the use of REDD credits for offsetting purposes reiterated their concerns this week, responding to claims of vast over-crediting under the programme.

VOLUNTARY

Nature-based VER prices dip below tech units following claims of REDD over-crediting

Standardised nature-based carbon credit prices softened on Friday as the impact of this week’s highly critical reports of over-crediting among REDD projects appeared to diminish corporate appetite.

Trafigura steps up emissions targets after hitting goals early

Commodity trader Trafigura has set tougher targets for cutting Scope 1 and 2 emissions over the next decade and set out a roadmap for achieving carbon neutrality by 2050 after meeting short term targets a year earlier than planned.

UK forestry fund completes £19 mln investment across 11 projects

A UK forestry fund has added 11 new nature-based projects to its portfolio from activities across Scotland and Wales and has secured planning permission for another three, the firm announced Thursday.

Climate fintech firm Aspiration becomes foundational investor in nature-based restoration project developer Compassionate Carbon

California-headquartered climate fintech firm Aspiration has become a foundational investor in nature-based restoration project developer Compassionate Carbon, with the two partnering to build several “innovative” initiatives.

EMEA

Euro Markets: Carbon posts 6.6% five-day gain as gas erases weekly losses

EUA prices registered a 6.6% weekly gain as a volatile week ended with the narrowest daily range since late December, while natural gas prices wiped out the week’s losses despite having reached the height of the winter season with plentiful supplies amid mild temperatures.

ASIA PACIFIC

CN Markets: CEA liquidity improves as China power sector faces challenges

The spot price for Chinese carbon allowances edged up ahead of the Lunar New Year holiday with an uptick in the weekly trading volume, though the improvement in trading activity may not be enough to ignite market participants’ enthusiasm, given the challenges faced by the country’s power sector.

NSW environmental regulator to set sectoral targets, adopt market-based approach to cutting emissions

The Environment Protection Authority (EPA) of Australia’s New South Wales (NSW) state government released on Friday final versions of its climate change policy and action plan, both of which outline how the regulator seeks to reduce, within its remit, GHG emissions in the country’s most populous state.

AMERICAS

Nova Scotia to hold at least two more cap-and-trade auctions beyond programme’s January phase out

Nova Scotia announced this week that it will hold two carbon auctions to cover 2022 emissions and one reserve auction, even as the Canadian Maritime province transitioned to an output-based pricing system (OBPS) at the start of the year.

US Carbon Markets and LCFS Roundup for week ending January 20, 2023

A summary of legislative, regulatory, and policy action on carbon and clean fuel standard markets at the US federal and subnational levels this week, including a Pennsylvania Senate letter to new Governor Josh Shapiro (D) regarding the state’s RGGI-aligned cap-and-trade regulation.

Speculators favour CCAs over RGAs, as emitters consolidate RGGI holdings

Financial entities added to California Carbon Allowance (CCA) net positions but continued to trim RGGI Allowance (RGA) net length, while regulated entities added to their RGGI net holdings for the second week in a row, according to US Commodity Futures Trading Commission (CFTC) data published Friday.

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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

Trillion-dollar opportunity – The world’s search for new, cleaner, and more secure sources of low-carbon power — including the use of fossil fuels fitted with CCS technology — presents a major opportunity, according to analysis by BloombergNEF published on Thursday. In the net-zero scenario (NZS) from BloombergNEF’s New Energy Outlook, supply-side investment in low-carbon power totals $45.8 trillion by 2050, comprising 97% of all power generation spending. Underpinning the transformation of the power system, power grids will play a pivotal role. In the NZS, BloombergNEF anticipates that $21.4 trillion of the investment will be required for grids as sectors like road transport electrify. Conversely, reliance on fossil fuel processes will decline. In 2050, investment will fall to $175 bln, compared with the $778 bln observed in 2021.

Off track – Clean hydrogen will most likely play an important role in the future energy system – particularly in decarbonising sectors that cannot be realistically electrified; the so-called “hard-to-abate” sectors, according to a report by Deloitte published Friday on Energy Central. By 2030, clean hydrogen is expected to be used in sectors such as methanol, refining, aviation, and road freight, and expand into other sectors such as shipping thereafter. According to Deloitte analysis, announcements of clean hydrogen supply projects are accelerating, but it is uncertain whether many projects will materialise, and they are not sufficient to meet the expected demand outlined in the IEA ‘Net-Zero Emissions by 2050’ Scenario (NZE). Indeed, three times the capacity announced so far will be needed by 2030 to stay on track for the NZE Scenario by 2050.

Cover your assets – The Sustainable Markets Initiative (SMI) has launched a transition categorisation framework to help asset managers reach net zero, ESG Clarity reports Friday. SMI’s asset manager and owner (AMAO) taskforce, made up of 34 asset managers around the world, will introduce the framework. Its intention is to categorise assets that fulfil the objectives for a pathway to a net-zero transition, at a company and project level. The aim is to ensure investors are not just disinvesting from the more difficult sectors, especially in emerging economies. Hendrik du Toit, founder and chief executive of Ninety One, and SMI and AMAO taskforce member, said the motivation is to “find scalable ways for institutional investors to facilitate the reallocation of capital toward sustainable solutions.”

EMEA

Old McCarbon had a farm – Incentivising farmers to plant new woodlands, restore peatlands, and create other forms of nature-based carbon sinks would be hundreds of billions of pounds cheaper than relying heavily on carbon capture technologies to reach net zero emissions in the UK, research by think-tank Green Alliance found. The report claims the UK can achieve its statutory net zero emissions targets for the land-use sector by supporting farmers and land managers to create healthy natural carbon sinks, such as woodlands, peatlands, and soils. Such an approach could also significantly benefit British farmers, potentially improving incomes for almost two-thirds of UK farmers, while also helping to reverse the decline of UK wildlife, according to Green Alliance. However, creating enough natural land-based carbon sinks to support the UK’s wider climate goals would require a significant shift in how farmland is used in the UK. The report estimates around 10% of the UK’s least productive farmland would need to be managed for carbon and nature – such as wetlands, woodlands and extensively grazed grasslands – by 2030, up from just a fraction today. The share of least productive agricultural land returned to nature would then need to increase to more than a third by 2050, according to the study. (BusinessGreen)

War on greenwashing – EU member states will be in charge of imposing “dissuasive” penalties on companies making unsubstantiated environmental claims about their products under a draft new EU law. The aim of the proposal, due to be tabled by the European Commission on Mar. 30, is to help consumers make better-informed choices about the products they buy. Whether “green”, “eco” or “environmentally friendly” – almost half (40%) of the environmental claims made about products are “unsubstantiated”, the Commission says in the draft. To ensure green claims are demonstrated, EU member states will be requested “to set up a system of verification for the substantiation of environmental claims” that will have to be carried out by “independent verifiers”. (EurActiv)

Grants coming – The EU has awarded granted €1.8 bln to 16 clean technology projects through its EU ETS-financed Innovation Fund after they successfully completed their grant agreement preparation. The projects are expected to prevent 125 MtCO2e from being released over their first 10 years of operation and cover activities including green hydrogen, synthetic sustainable aviation fuel, and methanol production from renewable hydrogen. The projects are part of the Innovation Fund’s second call for large projects, the 17 winners of which were reported by Carbon Pulse last July – with those getting cash including big-emitters such as RWE and Uniper. Two projects failed to complete the grant process, allowing the EAVOR-LOOP geothermal project in Germany to come off a reserve list. A third call for large-scale projects was launched on Nov. 3 with a deadline for applications of Mar. 16.

Blow on – Germany on Friday said it has drawn up new development plans for offshore wind turbine sites to reach a target for 30 GW of installed wind power capacity by 2030. The plans by the Federal Maritime and Hydrographic Agency (BSH) will ensure that the target can be met, the Economy Ministry said in a statement. Moreover, there would be enough space for 40 GW by 2035, and possibly more than 10 GW on top of that by that date. When the current government took power in late 2021, its coalition agreement stipulated 30 GW wind power, adding 10 GW to previous plans. (Reuters)

Slow down, lads – A new study has found that Germany could save almost three times more CO2 than previously thought by introducing a speed limit on its highways, increasing pressure on Berlin to reconsider the politically sensitive issue. Data from the Federal Environment Agency (UBA) published on Thursday showed a speed limit of 120 kilometres per hour (75 mph) on motorways in Germany, where there are currently no speed restrictions, could cut total CO2 emissions from passenger cars and light commercial vehicles by about 6.7 Mt a year. In an earlier study, with a different methodology, the agency expected such limit to result in 2.6 Mt in CO2 cuts. The transport ministry was not immediately available for comment on the new study findings. (Reuters)

AMERICAS

Game changer – The Inflation Reduction Act (IRA), flagship legislation focused on accelerating decarbonisation in the US, will significantly boost private sector annual investment into renewable energy deployment in the region, according to a study released Thursday. A rise to nearly $114 bln is expected by 2031 from $64 bln in 2022, according to report by Wood Mackenzie. “The IRA will completely reshape the renewables supply chain in the US, incentivising the reopening of shuttered facilities as well as provide opportunities to build entire equipment supply chains from scratch,” said Daniel Liu, principal analyst at Wood Mackenzie, and lead author of the report. Two key provisions of the IRA are likely to be game-changing for renewables equipment manufacturers. First, the Act provides a tax credit, known as the advanced manufacturing production credits, for US-made renewable equipment. Second, the act incentivises developers of US renewable projects to purchase domestically produced equipment by providing an additional tax credit if they meet domestic content requirement (DCR) thresholds.

Rumble in the jungle – Brazil’s first raids against illegal deforestation in the Amazon rainforest under President Luiz Inacio Lula da Silva got underway this week, reports Reuters, after the new leader’s pledge to end destruction that surged under his predecessor Jair Bolsonaro. The newswire exclusively accompanied raids led by environmental agency Ibama in the rainforest state of Para to stop loggers and ranchers illegally clearing the forest. About 10 Ibama agents set out in pickup trucks on Thursday from their base in the municipality of Uruara, Para, along with a dozen federal police, heading toward an indigenous reserve where satellite images showed loggers and ranchers recently at work clearing the forest illegally. The mission aims to stop or scare off loggers to avoid further incursions into the forest and to issue fines to those caught with illegal wood. Further raids have been launched in the states of Roraima and Acre. Ibama agents told Reuters that they already felt more empowered by Lula announcing environmental protection as a top priority. This follows a Bolsonaro government that had gutted staff and funding for environmental enforcement by Ibama in his four years in office.

Mergers and climate ambitions – The Environmental Defense Fund (EDF) and Ceres released the first ever climate-conscious guide for oil and gas firms buying other companies on Thursday. The EDF’s Transferred Emissions report said acquisitions are a significant source of climate risk, as buyers in oil and gas take on great climate exposure without taking on the seller’s responsibilities. The Climate Principles for Oil and Gas Mergers and Acquisitions aim to encourage firms to carry on climate responsibilities from the firms they buy, as well as be aware of what risk they’re taking on before they make a purchase.

Three’s company – Software company Computer Modelling Group (CMG), oil and gas industry consultants McDaniel & Associates Consultants, and global engineering firm Hatch announced a strategic agreement on Thursday to develop CCS projects globally. The group plans to deliver comprehensive, end-to-end solutions for the planning and execution of CCS projects, the press release stated. “This collaboration is an incredible opportunity for CMG to contribute our critical simulation technology and decades of experience in subsurface CO2 injection to a partnership that will deliver a comprehensive CCS advisory service, supporting projects from ideation through to execution,” said Pramod Jain, CEO of CMG. “This three-party partnership delivers comprehensive and integrated CCS solutions from geological and reservoir engineering, subsurface modelling, and facility design in one cohesive group,” said David Jenkinson, executive vice president from McDaniel. “Being able to bring to the partnership our decarbonisation roadmapping and surface facility design for the capture of CO2 from industrial sources and tie them together with subsurface components of carbon capture projects will help our clients navigate this rapidly emerging space, eliminate the interfaces between multiple service providers, and deliver complete solutions to help decarbonise their operations,” stated Paul Krawchuk, global director at Hatch.

ASIA PACIFIC

Urchins to the rescue – Cadman Capital Group, the family office and alternative asset investment firm, announced that it has taken a strategic equity stake in Urchinomics, the pioneering aquaculture venture that turns ecologically destructive sea urchins into high valued seafood, which in turn helps restore and establish the world’s dwindling kelp forests, Fish Site reports. It was announced in December that Urchinomics had secured the world’s first kelp restoration blue carbon credit, issued after a successful research project in Kunisaki and Nagato, Japan. Cadman Capital are owners of the largest licensed urchin aquaculture facility in Canada, Quoddy Savour Seafoods, which ran a pilot study for urchin ranching with Urchinomics in 2022. Cadman’s involvement will allow Urchinomics to progress ranching for the North American market, and will allow kelp restoration to start across the Bay of Fundy and the east coast.

VOLUNTARY

Desk bound  – Solvay, a Belgium-headquartered international chemicals company, is rolling out a new initiative to cut the company’s emissions, firstly by highlighting every employee’s individual carbon footprint and then encouraging them to travel less. The group wants to schedule fewer in-person meetings, cut the number of international flights, suppress one-day air trips and recommend switching from business to economy class or from air to rail when those alternatives exist. Tracking Solvay’s travel footprint will finance a fund to be used for sponsoring sustainability projects with a carbon-offset focus wherever feasible. Global business units will contribute a monetary amount based on the entity’s travel footprint calculated at €100 per ton of CO2. That amount will be charged to each entity and transferred to the Group Travel Carbon Contribution Fund. Since 2019, Solvay has reduced its overall carbon usage linked to air and rail travel by nearly 70%, due in large part to the COVID-19 pandemic, but also to the implementation of Solvay’s New Way of Working, where digital tools have made virtual visits easily accessible to all.

SCIENCE & TECH

Hy-flyers – A hydrogen-powered 19-seater plane has flown in UK skies in what its makers claim is a world-first. ZeroAvia, an Anglo-US startup backed by Shell and United Airlines, conducted a 10-minute long test flight of its Dornier 228 aircraft on Thursday. It claims that the 19-seater is the biggest plane powered with a hydrogen-electric engine to take to the skies. The aircraft, which has a hydrogen-electric engine on one wing and a jet fuel-powered turboprop engine on the other. In this testbed configuration, hydrogen tanks and fuel cell power generation systems were housed inside the cabin. In a commercial configuration, external storage would be used and the seats restored. The landmark flight forms part of the HyFlyer II project, a major research and development programme backed by the UK Government’s ATI Programme, which targets development of a 600 kw powertrain to support 9-19 seat aircraft worldwide with zero-emission flight. ZeroAvia will now work towards its certifiable configuration in order to deliver commercial routes using the technology by 2025. The Dornier 228 will conduct a series of test flights from Kemble in the UK and later demonstration flights from other airports.

AND FINALLY…

Where’s your polo neck/turtleneck? – Tokyo Governor Yuriko Koike has called on the public to cut power consumption by wearing a polo neck/turtleneck as energy costs continue to rise due to the Ukraine war, according to South China Morning Post. Metropolitan government officials are showing their solidarity with the governor’s campaign by changing what they wear at work – “Seemingly overnight, staff and senior personnel rushed to purchase turtlenecks to help drive the message home to the public and not to stand out from others by sticking to regular shirt-and-tie attire,” the Asahi newspaper reported. As part of the megacity’s effort to cut emissions, the municipal government already launched a similar energy-saving campaign, the so-called “Cool Biz” initiative, to encourage people to ditch formal ties and jackets for open-neck, short-sleeve shirts on sweltering summer days. 

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