Newsletters > CP Daily: Wednesday January 25, 2023

CP Daily: Wednesday January 25, 2023

Published 02:30 on January 26, 2023  /  Last updated at 00:58 on February 1, 2023  / Carbon Pulse /  Newsletters

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

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TOP STORY

Indonesian coal plant ETS to launch next month

Nearly 100 coal-fired power plants will begin participating in Indonesia’s newly-introduced carbon trading scheme, marking the first of three phases for the sector to cut its emissions to help meet the country’s NDC targets, the Ministry of Energy and Mineral Resources has announced.

VOLUNTARY

EU seen as even less likely to consider offset use amid integrity concerns

The already-slim chances of the EU using international credits for compliance in the bloc’s carbon market have been even further damaged by recent reports of widespread over-crediting of avoided deforestation projects in the voluntary carbon market (VCM), a webinar heard Wednesday.

Climate tech firm claims initial success of its REDD+ dynamic baseline method

A US-based climate tech firm on Wednesday said it has initially validated a dynamic baseline that ensures REDD+ offsets equate to real emissions reductions, in what the company argues is a possible solution to over-crediting controversies that have reverberated through the voluntary carbon market in recent days.

New REDD index price sees trade at $11 in first auction to set assessment

Credits from a well-known REDD project traded at $11 in the first auction on Wednesday to help set a broker’s new index price for the avoided deforestation sector, far higher than equivalent prices for standardised nature-based futures on CME.

Shell delivers first LNG cargo guided by industry GHG neutral framework

Oil and gas major Shell has delivered a GHG neutral LNG cargo to Taiwan’s national oil company CPC, the first delivery aligned with the industry’s recently established framework for the monitoring, reporting, and verification (MRV) of GHG emissions associated with such shipments.

US, European industrial firms failing to implement net zero strategies -survey

Most businesses have failed to take practical steps to implement their net-zero strategies, according to a survey published Wednesday that found nearly half of respondents had cited a reliance on carbon offsets to meet their climate goals.

Rating agency places two REDD projects on watch for potential score change

A rating agency has placed two avoided deforestation projects “on watch” amid the fallout of reports that claimed widespread over-crediting of REDD+ projects.

EMEA

Euro Markets: EUAs erase early losses amid options hedging and strongest UKA auction in a year

European carbon posted substantial gains on Wednesday amid an upsurge in options-related hedging and the strongest UKA auction in a year, reversing an early drop to a week-low while gas and power prices continued to decline and coal dropped by the most in 10 months.

EasyJet expects flight demand to return to pre-pandemic levels from July

Low-cost carrier EasyJet expects its European flight demand to return to pre-pandemic levels as early as the second half of 2023, it said in quarterly results published Wednesday that featured strong passenger and booking numbers for Q4 2022 that may have offered some marginal support to carbon credit prices.

AMERICAS

California compliance offset issuance drops, but DEBs share higher

California regulator ARB reduced the number of compliance offsets during the second bi-monthly issuance period of the year, but credits with direct environmental benefits (DEBs) to the state ticked higher, state data published Wednesday showed.

ClimeCo to expand global nature-based portfolio with forest carbon developer acquisition

Environmental services firm ClimeCo on Wednesday announced it has acquired a forest carbon developer and modelling firm that will help the US-based company expand its portfolio of overseas nature-based offset projects.

ASIA PACIFIC

Indonesia’s coal transition deal needs ramped up ambition to align with 1.5C pathway -report

A recently agreed target to cap Indonesia’s power sector emissions at 290 million tonnes of CO2 per year by the end of the decade can help the Southeast Asian economy reach its net zero emissions by 2060 goal, but is not ambitious enough to transform its carbon intensive power sector to align with a 1.5C pathway, a think tank report released Thursday has found.

INTERNATIONAL

World “recklessly” ignoring carbon impact of wildfires responsible for 20% of emissions -report

The world is “recklessly” ignoring the full impact of wildfires that contribute to one-fifth of current global CO2 emissions, according to a report published Wednesday by an environmental technology firm.

BIODIVERSITY (FREE TO READ)

Triodos Bank funds first nature reserve in rare commercial loan deal

The UK branch of Dutch-headquartered Triodos has loaned £3.75 million to a rewilding charity in the UK for its first of many planned landholding acquisitions meant for nature reserves across the country.

COMMENT

Tropical forest conservation is tricky to measure, but we’re running out of time

Recent claims around the effectiveness of rainforest carbon credits are being hotly debated right now. And rightly so. Companies have reportedly paid over $1 billion for these credits, and they are being used to offset ‘real’ emissions. So, if they’re not genuine, that’s a massive problem for climate action, writes Edward Mitchard of mapping provider Space Intelligence.

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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

IRA racing – Draft conclusions of a Feb. 9-10 EU leaders’ summit suggest they will “back new EU funding for the green tech industry to counterbalance subsidies in the US and China”, Reuters reports, though anonymous officials suggested this issue was very much subject to change amid widespread disagreement about the bloc raising more money jointly. The FT reported Dutch prime minister Mark Rutter saying he was opposed to any new EU raising, arguing the union already has ample cash to support its green transition. Read Carbon Pulse’s extensive reporting on the EU response to the US administration’s subsidy-laded IRA climate package.

Margin stretch – The German government has extended its financial backing for power, gas and carbon trading to year-end to ensure sufficient liquidity amid high margin costs, it said on Wednesday. With the measure, which was due to end on 30 April, German companies trading power, gas or carbon futures on EEX or ICE exchanges will continue to receive financial backing from the state-owned KFW bank if necessary to cover their margin costs, which rose massively last year due to severe market volatility since Russian pipeline gas supplies dwindled amid the fallout from its invasion of Ukraine. (Montel)

Save me a nickel – European Commissioner Thierry Breton urged European financiers this week to provide more funding to suppliers of minerals needed for the energy transition, as the EU prepares its Green Deal industrial plan, Reuters reports. The EU is due to unveil its Critical Raw Materials Act on March 8 to secure the bloc’s supply of critical raw materials including lithium, cobalt, nickel, manganese, and graphite needed for electric vehicles. Breton highlighted the current over-reliance on countries such as major producer China for materials such as magnesium used in electronics, cars and machinery, as well as the expected “colossal” increase in demand.

Hope on the horizon – The German government no longer believes that the energy crisis will plunge Europe’s largest economy into recession this year, Clean Energy Wire reports. The government’s latest economic forecast said the economy is set to grow 0.2% in 2023, following relatively mild winter temperatures that have dispelled fears of a gas shortage. In October, the government had still forecast a 0.4% contraction. “The government has blown the whistle on the economic crisis,” Chancellor Olaf Scholz told the German parliament, adding that the “winter of discontent” expected by many had not materialised because his government managed to secure energy supplies.

On the hunt – Nest and Cushon, two UK pension schemes with combined assets of more than £26 bln, are in a joint search for asset management partners to develop new forestry investment strategies to address climate change pressures, the FT reports. Both pension schemes believe that allocating money to forestry projects will offset environmentally damaging emissions from other investments and deliver attractive returns as the price of carbon rises to reflect the increasing costs of pollution by human activity. The schemes have set aside an initial £600 mln for a joint investment mandate and, by combining forces, aim to secure lower fees with third party managers. This kind of partnership approach has already been employed successfully by some of the largest pension funds in Australia. Nest presently manages about £25 bln on behalf of 10 mln members, as the UK largest workplace pension scheme, and expects to invest some 2% of its assets into forestry and other natural capital projects. Cushon, which expects to have assets of around £1.7 bln by the end of this year, anticipates that it could grow its allocation to natural capital strategies up to 5% of its assets over time, including controversial carbon credits. It has already agreed to act as a seed investor in a new Schroders multi-asset climate fund which is seeking regulatory approval for a launch by the end of the first quarter. Both pension schemes say they will avoid forestry projects where logging contributes to deforestation. Forests in tropical zones, such as the Amazon, offer high carbon sequestration potential, for example, but suffer from local political and fire risk, as well as the effects of climate change.

Tell me lies – Greenpeace has accused the UK government of misrepresenting its stance on burning trees for electricity, giving a minister the impression of the NGO’s public support for the practice in meetings with the power company Drax. Greenpeace is firmly opposed to most forms of biomass burning for power generation, and suspicious of claims that the resulting carbon dioxide can be captured. But in a briefing note to a minister before a meeting with Drax – formerly a coal-fired power station operator and now a major burner of wood for electricity generation – officials cited Greenpeace as having provided a statement in support of bioenergy with carbon capture and storage. The notes, seen by the Guardian, were obtained by the investigative journalism organisation DeSmog under the UK’s Freedom of Information Act. Doug Parr, the chief scientist at Greenpeace UK, said the claim was misleading and damaging.

Don’t bank on it – UK banks have come under fire for continuing to finance fossil fuel expansion from a new celebrity-led campaign that urges customers to switch provider if they discover their bank is funding new fossil fuel projects, BusinessGreen reports. Campaign group Make My Money Matter published an open letter to the chief executives of HSBC, Barclays, Santander, NatWest, and Lloyds asking them to stop financing fossil fuel expansion. According to a study by Rainforest Action Network between 2016 and 2021 HSBC, Barclays, Santander, NatWest, and Lloyds invested around $368 bln in the fossil fuel industry.

Phasing-out fossil-fuel financing – French bank BNP Paribas on Tuesday pledged to slash the money it has outstanding with the oil extraction and production industries to less than €1 bln ($1.1 bln) by 2030, an 80% decline from its current balance of €5 bln, Reuters reported Tuesday. The lender said it stopped financing oil projects back in 2016, but Tuesday’s commitment will accelerate the pace at which it reduces outstanding financing for oil extraction and production as part of its efforts to curb carbon emissions and meet climate goals. It also hiked its target for outstanding financing for the production of “low-carbon, primarily renewable, energies” to €40 bln by 2030, up from an earlier goal of €30 bln by 2025. The bank will also cut outstanding financing for gas extraction and production by more than 30% by 2030, BNP Paribas said in a press release.

NGX – The chief executive of the Nigerian stock exchange (NGX) has disclosed that the bourse was working on a framework for certifications in carbon credits trading. Speaking on Wednesday at the NGX 2022 Market Recap and 2023 Outlook in Lagos, Temi Popoola said this is one of the ways the exchange wants to encourage investments in sustainable projects. “NGX sees sustainability as not just important but also a profitable frontier of its business and work is ongoing on developing a framework for certifications in carbon credits trading, pending regulatory approval,” he said. (Business Post)

AMERICAS

Crude record – The US Energy Information Administration (EIA) forecasted in its January Short-Term Energy Outlook that crude oil production in the US will average 12.4 mln b/d in 2023 and 12.8 mln b/d in 2024, surpassing the previous record of 12.3 mln b/d set in 2019, the agency said on Wednesday. In 2022, US crude oil production averaged an estimated 11.9 mln b/d. Increased production in the Permian region and, to a lesser extent, in the federal offshore Gulf of Mexico, drives EIA’s forecast growth in production. EIA based its forecast on expectations of crude oil prices and infrastructure capacity additions.

Future of flare – ExxonMobil announced Wednesday it will halt the scheduled flaring of natural gas in its US shale production, and will campaign for regulations to force its competitors to follow suit. The move is a bid to reduce its exposure to climate-related lawsuits, which accuse Exxon of contributing to the climate crisis. The largest oil producer in the US is increasingly attempting to cut down on its emissions, devoting $17 bln to do so, and is encouraging legal enforcement on gas leakage. Flaring is seen as low hanging fruit in reducing GHG emissions, as prevention is easy and flare gas in large quantities can be recycled instead of burned during production. The US is the fourth largest flaring oil producer on the planet, with Russia, Iraq, and Iran occupying the top three spots. (Reuters)

Offshore options – The US could potentially waste $20 bln if it does not efficiently connect its offshore wind developments with its existing power grid, according to a study by consultancy firm Brattle published Tuesday. That report comes on the heels of news that the US must invest $22.4 bln in manufacturing facilities to meet President Joe Biden’s goal of generating 30 GW of offshore wind turbine energy by 2030, according to a study released Monday from the Business Network for Offshore Wind and the National Renewable Energy Laboratory. (Climate Nexus)

CORSIA comments – The Federal Aviation Administration (FAA) issued a notice Wednesday inviting submission of public comments by Mar. 27 about its request for federal approval to renew an information collection of Emissions Monitoring Plans and annual Emissions Reports from select airplane operators. The information to be collected is necessary because FAA will use the information to fulfill the US’ responsibilities under the Chicago Convention. The request follows from the Carbon Offsetting and Reduction Scheme for International Aviation (CORSIA) Monitoring, Reporting, and Verification Program, which is a voluntary programme for certain US air carriers and commercial operators to submit certain airplane CO2 emissions data to the FAA to enable the US to establish uniformity with International Civil Aviation Organization Standards And Recommended Practices for CORSIA.

ASIA PACIFIC

Net zero in the west – The McGowan West Australian (WA) state government will introduce climate change legislation this year to establish a framework for responsible emissions reductions to meet the state’s goal of net zero by 2050, the government announced in a press release. This legislation will also formalise its  aim to reduce government emissions by 80% below 2020 levels by 2030. It will provide a framework for the state’s climate change response and give industry, business and investors certainty and stability, the release said. The legislation will create statutory requirements for the state government to set interim emission reduction targets and develop strategies to adapt to the impacts of climate change. It means WA will have clear and necessary policies to reduce emissions, helping to mobilise private sector capital for the net zero transition and enhance climate resilience. The legislation will ensure accountability and transparency requiring the Minister for Climate Action to report annually to Parliament on WA’s net emissions and progress towards reduction targets.

Under water down under – The environment committee of Australia’s House of Representatives on Wednesday commenced a new inquiry reviewing the 2009 and 2013 amendments to the London Protocol. Australia has yet to ratify those, but one of the issues making it relevant now is that the 2009 amendment includes text that makes export and import of CO2 streams for sub-seabed sequestration legal. Several Australian firms, with oil and gas firm Santos leading the way, are exploring opportunities for importing CO2 from nations like Japan and South Korea to store offshore of Australia.

Taking stock – Shares in listed companies tied to India’s Adani Group shed $10.8 bln in value after short seller Hindenburg Research released a report targeting the conglomerate controlled by billionaire business magnate Gautam Adani. Shares in seven listed Adani Group companies fell on average more than 5%, the FT reports. Those falls brought the combined loss in market capitalisation for Adani Group stocks to the equivalent of around $10.8 bln. Adani started as a commodity trader in the 1980s before building India’s largest private infrastructure group comprising more than 10 ports and eight airports as well as other ventures. The group had been looking to expand with a fundraising push to fuel the rapid expansion of existing industrial and fossil fuel outfits as well as green energy businesses. In the report, Hindenburg alleges that Adani Group has engaged in stock price manipulation and accounting fraud over the course of decades, though the company refuted the findings. Gautam Adani’s net worth at roughly $118 bln ranks him as Asia’s richest person.

VOLUNTARY

(In)sure thing – UK-headquartered speciality insurance group Chaucer on Tuesday announced a partnership with carbon credit insurance specialist Kita to bring its products to carbon markets. Kita raised £350,000 in a “heavily-oversubscribed” pre-seed funding round last year, and its first product, Carbon Purchase Protection Cover, insures the buyer of forward purchased carbon credits against delivery risk. Chaucer said it investing an undisclosed sum in Kita while also providing underwriting capacity, while follow capacity will be provided by Munich Re Syndicate and RenaissanceRe.

No sleep for the sustainable – WattCarbon, an energy decarbonisation company, announced Wednesday that it has raised a $4.5 mln seed round led by True Ventures to launch the world’s first net zero 24/7 carbon-free energy market. WattCarbon’s virtual power plants allow energy consumers to offset their energy use on a time and locational basis from renewable energy projects, demand response dispatch, and electrification projects sourced from their own communities, turning local buildings into decarbonisation assets. WattCarbon’s marketplace features clean energy supply from companies that are able to deliver carbon reductions through electrification, demand response, and renewable energy production.

SCIENCE & TECH

On a wing – Europe’s largest budget airline Ryanair has retrofitted its first Boeing 737-800 Next Generation aircraft with winglets with plans to roll out the fuel and carbon saving technology to over 400 of the aircraft. This modification of adding Split Scimitar Winglets will improve aircraft fuel efficiency by up to 1.5%, reducing Ryanair’s annual fuel consumption by 65 mln litres and carbon emissions by 165,000 t. “This winglet technology will help us reach our ambitious environmental targets on our pathway to net zero emissions by 2050,” said Thomas Fowler, Ryanair’s Director of Sustainability.

AND FINALLY…

Big picky eaters – A new study in the Proceedings of the National Academy of Sciences has shown the importance of megaherbivores for maintaining diverse, high-carbon tropical forests, Anthropocene Magazine reported Wednesday. Researchers found that elephants increase carbon stocks by: 1) promoting high wood density trees via preferential browsing on leaves from low wood density species, which are more palatable and digestible; and 2) dispersing seeds of trees that are relatively large and have the highest average wood density among tree guilds based on dispersal mode. Loss of forest elephants could cause an increase in abundance of fast-growing low wood density trees and a 6-9% decline in aboveground carbon stocks due to regeneration failure of elephant-dispersed trees.

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