CP Daily: Thursday February 2, 2023

Published 00:51 on February 3, 2023  /  Last updated at 01:56 on February 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

FEATURE: After head start, the UK risks falling behind on climate policy

The UK is at risk of slumping behind international rivals on green growth after bold policy moves by the US and EU over the past year, with Britain already potentially lagging in key elements of policy including a lack of clarity over carbon leakage and pricing reform.

VOLUNTARY

Voluntary carbon market data firm publishes first ratings of corporate activity

A data aggregator published Thursday what it claims is the world’s first rating of corporate activity in the voluntary carbon market (VCM), assigning a score to over 300 firms that have retired credits based on their share of emissions offset and the profile of units purchased.

Voluntary carbon market standards must require price transparency to eliminate profiteering, watchdog argues

Industry standards like the Integrity Council for the Voluntary Carbon Market (IC-VCM) should require VER price information from project developers in order to stamp out profiteering in the voluntary carbon market, as the vast majority of intermediaries refuse to publish their fees or profit margins on offset sales, according to a climate campaigner report published Thursday.

JP Morgan acquires US forestland valued at $500 mln as part of carbon management initiative

JP Morgan Asset Management on Wednesday announced that one of its wholly owned subsidiaries has acquired US forestland valued at $500 million, which the company will utilise in part for sequestering CO2 emissions.

UPDATE – Japanese conglomerate forms US forest carbon venture as part of $780 mln investment

*Updates Wednesday’s story with further details*

The forestry arm of a Japanese global trading company on Tuesday announced the launch of a US-based investment firm focused on nature-based carbon credits, with an eye to potential expansion outside of North America.

INTERNATIONAL

Carbon pricing can spur green industrialisation of emerging economies, conference told

The growth of carbon pricing mechanisms, such as through the development of voluntary carbon markets with transparent standards, or compliance markets, can be of benefit to developing economies as it would open opportunities for them to develop green supply chains, a conference on emissions markets in Asia was told on Thursday.

EMEA

Euro Markets: EUAs give back gains ‘to the tick’ despite positive technical signals

EUAs gave up the previous session’s gains on Thursday as traders appeared to take profit after Wednesday’s 2.6% increase, despite persistent positive technical signals and an analyst report indicating that any delay to the injection of additional EUA auction volumes this year could be bullish for prices.

UK to finance pilot to convert industrial waste gas into consumer products

A cross-sector collaboration has secured UK government decarbonisation funding to demonstrate how industrial waste gases can be converted into raw materials for consumer products.

Insurer invests £38 mln in UK forest restoration scheme

A UK-headquartered global insurer is investing £38 million to restore Britain’s lost temperate rainforests, the first part of a £100 mln programme into nature-based carbon credit projects in the UK and Ireland.

ASIA PACIFIC

Japan opens for first-phase GX League applications, confirms first compliance deadline to fall after 2025

Japan’s GX League has released a set of application guidelines for companies to participate in the first phase of its domestic voluntary carbon trading scheme, with the application open to both corporates and financial institutions until the end of April.

Japan backs New Zealand-based project for JCM

Japan has agreed to co-fund the development of a second third-country project under the Joint Crediting Mechanism (JCM), that aims to utilise green hydrogen produced in New Zealand.

Blue carbon projects in PNG and Indonesia awarded A$3 mln in grant funding from Australia

The Australian government has committed A$3 million ($2.1 mln) in grant funding to four blue carbon projects in Indonesia and Papua New Guinea, as the region looks to financially benefit from preserving and restoring their coastal ecosystems.

AMERICAS

WCI Markets: CCAs bounce back from 2-mth low as February begins, as Washington programme outlook provokes debate

California Carbon Allowance (CCA) prices erased an entire week’s worth of declines on Thursday as traders wondered if fund flows had turned positive, while analysts provided insight behind the stagnant Washington Carbon Allowance (WCA) market and upcoming inaugural auction.

BIODIVERSITY (FREE TO READ)

Biodiversity Pulse Weekly: Thursday February 2, 2023

A weekly summary of our biodiversity news plus bite-sized updates from around the world. All articles in this edition are free to read (no subscription required).

South Korea announces raft of biodiversity actions, gets to work on 5-year plan

South Korea on Thursday announced a number of biodiversity initiatives while confirming that its 5th national biodiversity strategy, covering 2024-28, will be finalised before the end of the year and designed to ensure the nation will meet its commitments under the Global Biodiversity Framework.

Australia commits A$3 mln to Indian Ocean marine park conservation projects

The Australian government has committed A$3 million ($2.1 mln) in grants to projects in the Christmas Island and Cocos Islands marine parks, however scientists warn that the level of protection in the country’s marine parks is still relatively low.

World Climate Foundation launches biodiversity network

The World Climate Foundation (WCF) has launched the World Biodiversity Network, a cross-sectoral, partnership-driven initiative that will support the implementation of the Global Biodiversity Framework.

Environment ministers from 12 countries urge the EU to better protect the grey wolf

The environment ministers of 12 EU member states have written a letter to environment commissioner Virginijus Sinkevicius, urging him to preserve the protection of the grey wolf.

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CONFERENCE

North American Carbon World (NACW) 2023 – Mar. 21-23, Anaheim: For 20 years, the NACW conference has been the place for carbon professionals working in North American carbon markets and climate policy to learn, collaborate, and network. Taking place Mar. 21-23 in Anaheim, California, NACW 2023 will dive into new policies and developments that will shape and scale carbon markets and climate solutions with integrity, ambition, and equity. Register now to gain actionable insights for bold climate solutions and participate in premier networking opportunities with an active and engaged audience to strengthen your organization’s strategy for navigating the carbon landscape.

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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

Gassing up – Shell’s natural gas business can continue to grow after making record profits in 2022, as the global thirst for the fuel no signs of slowing, said its CEO Wael Sawan. After years of questions over how oil and gas producers can deliver strong returns to shareholders while also cutting carbon emissions, Shell’s new boss gave an early insight into how he sees the Russia’s invasion of Ukraine reshaping both global markets and the opportunities for his company. “Our natural gas business continues to grow in a world that is desperately in need of natural gas at the moment, and I think for a long time to come,” Sawan said in an interview with Bloomberg on Thursday. “Gas has a critical role to play in the transition” to lower-carbon energy. The news came on the same day that the oil and gas giant reported annual profits of $39.9 bln in 2022, double the 2021 total and the highest in its 115-year history. ExxonMobil this week reported a $55.7 bln profit for 2022, Chevron made $36.5 bln. BP and France’s TotalEnergies are due to report next week. Sawan added that Europe remained in an energy crisis despite a substantial drop in energy prices over the past few months.

EMEA

Money money money – The European Investment Bank (EIB) signed a record amount in new financing for renewables, efficiency, storage and grids in 2022, the group announced on Thursday. Total EIB financing signed for sustainable energy projects inside the EU reached an unprecedented €17.06 bln, as the Bank began rolling out a special package of support for the REPowerEU plan to end dependency on Russian fuel imports. Green financing increased to €36.5 bln. Overall financing signed last year was €72.5 bln, which is expected to support around €260 bln in investment and create 950,000 jobs by 2026. Overall, the EIB Group declared to be “well on track” to achieve its objective of supporting €1 tln in green financing this decade, having already backed €222 bln in investment over the past two years.

Disclosure clamour – The number of ESG investment funds securing Article 8 classification under European sustainable finance disclosure regulations has more than doubled in the past year, despite concerns over a lack of robust environmental reporting, according to investor services firm MainStreet Partner’s annual ESG barometer report. It counted almost 2,250 funds classified under Article 8 of the EU Sustainable Finance Disclosure Regulation (SFDR), up from just under 1,000 the previous year. Under the regulations, Article 8 classification is reserved for funds which promote environmental or social characteristics, provided the companies in which investments are made follow good governance practices. (BusinessGreen)

Expanding African energy access – The World Bank has signed an agreement with four West and Central African nations worth $311 mln to fund renewable energy projects, Reuters reported Wednesday. The funds will finance around 106 MW of solar power generation capacity with battery energy and storage systems, and 41 MW expansion of hydroelectric capacity. The countries are Sierra Leone, Liberia, Togo, and Chad. The funds will support electricity distribution and transmission interventions. Sierra Leone President Julius Maada Bio, who presided over the signing ceremony on Wednesday, said the deal was the beginning of a revolution in energy supply and access in the respective countries. West Africa and Central Africa has one of the lowest electrification rates coupled with some of the highest electricity costs in Sub-Saharan Africa.

ASIA PACIFIC

Steel warning – The apparent end of the unofficial Chinese ban on coal imports from Australia is unlikely to have a significant impact on Asian seaborne thermal coal markets but it may have some impact on metallurgical coal, of which Australia is by far the largest exporter, a research note from think tank International Institute for Energy Economics and Financial Analysis stated. Distant clouds may be starting to gather for metallurgical coal, and miners and financiers already appear to be noticing. China’s crude steel production dropped for the second successive year in 2022. The end of COVID lockdowns and a recovery in its slumping property market could see a rise this year, but in the longer term China’s maturing economy is going to need less steel. In addition, the Chinese government is targeting peak steel emissions no later than 2030 and an increase in production from scrap steel recycling through electric arc furnaces that don’t use coal from 9% to 15% by 2025. While India becomes the key steel growth market, demand for imported metallurgical coal in China – which produces the majority of the world’s crude steel – is heading for long-term decline. Peak carbon emissions in the Chinese steel sector may be achieved sooner than 2030.

Emissions reduction funds – The New South Wales state government in Australia has announced it will support four of the state’s highest emitting manufacturers to transition into low-carbon facilities, RenewEconomy reports. Treasurer and Minister for Energy Matt Kean said the companies are chemical manufacturer Orica, metal manufacturer Tomago Aluminium, cement producer Boral, and starch manufacturer Manildra Group. The combined A$855,000 in funding will be matched by contributions from each of the four companies, and will assist in studies, trials, business case development, and deployment. “We are working with industry to transform NSW into an innovative, thriving low carbon economy. Accelerating the deployment of deep decarbonisation technology will help industry prosper in a net zero economy and open up new markets for NSW-made products,” Kean said.

Hydrogen on the move – Japan’s Honda said it will start producing a new hydrogen fuel cell system jointly developed with General Motors this year and gradually step up sales this decade, in a bid to expand its hydrogen business, Channel News Asia reports. Honda will target annual sales of about 2,000 units of the new system in the middle of this decade, the company said, aiming to boost that to 60,000 units per year in 2030. The Japanese carmaker is seeking to expand the use of its new system not only for its own fuel cell electric vehicles (FCEVs), but also commercial vehicles such as heavy trucks, as stationary power stations and in construction machinery. Honda will start production of the hydrogen fuel cell system through its joint venture with GM this year, Honda senior managing executive director Shinji Aoyama told reporters during a company event in Tokyo.

Friendly neighbourhood battery – Australia’s Queensland state government has rolled out the first neighbourhood batteries in a A$10 million ($7.1 mln) initiative. The state government announced Energex and Origin Energy deliver 35 neighbourhood batteries across Ipswich as part of the its energy and jobs plan. Hydrogen and Energy Minister Mick de Brenni said the batteries offered numerous benefits to communities including increased energy reliability, reduced energy costs, and a cleaner energy supply. The government said the neighbourhood batteries would complement the large-scale network connected batteries being rolled out across regional Queensland. The government’s energy and jobs plan is targeting the state to be powered by 70% renewables by 2032.

Overseas expansion – Ecoceres, a unit of Hong Kong’s gas distributor Towngas, will soon start building a second plant to turn waste oil into low-carbon fuel for aircraft and vehicles, as it aims to tap strong demand for such fuels in Europe, according to South China Morning Post. With the first plant in China performing well, the startup is designing its second plant in Malaysia, which will soon proceed to the construction phase, said CEO Philip Siu Kam-shing. The planned plant in Johor Bahru, Malaysia will be able to produce 350,000 tonnes of low-carbon transportation fuel a year from used cooking oil and wastewater from palm oil mills, the company said.

AMERICAS

Ag-climate clash in Congress – Forget electric vehicles, wind turbines, or pipelines. The US Congress’ most consequential climate battles this year are more likely to revolve around dirt and cows, E&E News reported Wednesday. The five-year farm bill is scheduled to expire by Oct. 1, making it one of the few must-pass legislative items under this divided Congress. Both advocates and critics increasingly see the farm bill as a potential climate bill. That’s thanks in part to the Inflation Reduction Act allocating about $20 bln of climate money to preexisting farm bill programmes. Some Republicans are eyeing the farm bill as a chance to redirect climate money to other agriculture programmes, such as crop subsidies, while other conservative lawmakers want across-the-board spending cuts. Those GOP divisions have some observers worried that the latest farm bill could get delayed or derailed in the House, like it was in 2012. Democrats and climate advocates are more united; they’re trying to defend the climate funding they’ve already passed while building the case for more.

Poised for takeoff – US production capacity for renewable diesel could more than double from current levels by the end of 2025, based on several announcements for projects that are either under construction or could start development soon, according to analysis published Thursday by the US Energy Information Administration (EIA). Two factors behind growing US renewable diesel capacity are rising targets for state and federal renewable fuel programmes and biomass-based diesel tax credits. The Inflation Reduction Act of 2022 extended the biomass-based diesel tax credits through 2024. The EIA estimates US renewable diesel production capacity was 170,000 b/d, or 2.6 bln gal/y, at the end of 2022. The EIA said that although it expects some announced projects will be delayed or canceled, if all projects begin operations as scheduled, US renewable diesel production capacity could reach 384,000 b/d, or 5.9 bln gal/y, by the end of 2025. Renewable diesel is a fuel that is chemically equivalent to petroleum diesel and nearly identical in its performance characteristics.

Consignment choices – The Quebec environment ministry on Thursday disclosed the three types of projects eligible for payment from consignment-based allowance sales under the province’s WCI-linked cap-and-trade programme. The three project types are: studies of the technical and economic potential of GHG reductions; GHG reduction projects, and technological innovation projects in the realm of GHG reductions. The province finalised cap-and-trade amendments last year to cut the number of free allowances handed out to industrial emitters from 2024, with a portion of these formerly no-cost permits being consigned back to the companies to invest in carbon-cutting projects.

About face – Costa Rica’s Congress on Wednesday blocked the country’s ratification of a UN-backed environmental treaty named after one of the Central American country’s municipalities, after it lost support from the administration, Reuters reported. The treaty, known as the Escazu Agreement, was signed in the Escazu area west of Costa Rica’s capital in 2018, when Carlos Alvarado was president. He was succeeded in May by Rodrigo Chaves, who opposed the agreement, arguing Costa Rica already has sufficient regulations on environmental matters. The Escazu Agreement, which came into force in 2021, provides a sweeping framework for countries in the region to strengthen environmental policy, notably imposing requirements regarding the rights of environmental defenders. Costa Rica’s congress overwhelmingly rejected a motion to extend the ratification period, effectively shutting the door on joining the treaty, with 41 of the 57 deputies voting against it.

VOLUNTARY

Token vote – Tech firm KlimaDAO has ratified 250,000 USD coins, stablecoins that maintain parity with the dollar, to fund the development of SCB Group’s improved cookstoves project in Bangladesh after three months of discussion on KlimaDAO’s Community Forum and a token vote via the snapshot platform, it announced Thursday. “This collaboration represents a significant milestone for KlimaDAO and the wider DCM, as the community’s first DAO-wide token vote to allocate funding towards a project financing initiative,” said Drew Bonneau, a founder of KlimaDAO. The funding will enable the issuance of 31,250 Gold Standard certified carbon credits between 2023 and 2025, with the goal of providing liquidity for consumers within the Digital Carbon Market (DCM) on the Polygon blockchain. SCB Group announced last March it was investing in the cookstove project, which will lead to at least 1 Mt of CO2 abatement over a five-year period, generating at least 200,000 carbon credits a year. SCB is working in partnership with the Bangladesh Bondhu Foundation (BONDHU) supported by the Government of Bangladesh, and VNV Advisory.

Patchwork – Developer ShiftCarbon announced Thursday a partnership with technology platform Patch to expand access to ShiftCarbon credits, according to a company press release. ShiftCarbon’s credits from verified global projects will be listed on the Patch marketplace that offers access to credits through product integrations, direct purchases, and multi-year offtake agreements. Jointly headquartered in London and San Francisco, Patch received $55 mln in Series B funding last September from Energize Ventures and backing from investors such as Coatue Management, Version One Ventures, Andreessen Horowitz, and others, the company noted in the statement.

Cattle credits – Farmers in the Okavango Delta, a UNESCO world heritage site in southern Africa, plan to participate in the CLAWS Conservancy Project that could generate carbon credits, the Okavango Express reported. The programme arranges with farmers to put cattle from its herding programme in to the farms after the harvest season so the cattle eat the residue, help fertilise the fields, and further put carbon in the soil to improve field productivity. Dr. Edwin Mudongo, ecologist for the project, noted that large heads of animals improved soil quality as the collective dung served as organic matter, containing a lot of carbon. Since programme roll out, farmers have been motivated to participate enticed by the benefits. The project plans to expand the heading programme from the base in Eretsha to the neighbouring village of Gunotsoga before June this year, where farmers have pledged 400 cattle to participate. In Beetsha there are 700 cattle waiting to enrol in the project.

AND FINALLY…

Space race – France is seeking a waiver to EU bioenergy rules that would allow the forest-covered territory of French Guiana to receive subsidies to produce biofuels for the space industry. The overseas department in South America is home to the EU’s spaceport where the European Space Agency launches its satellites. Local lawmakers argue the dispensation is necessary to protect French Guiana’s forestry sector and accelerate its energy transition. But campaigners have warned the exemption risks setting an incentive for increased logging in Europe’s corner of the Amazon forest. (Climate Home)

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