Newsletters > CP Daily: Friday February 10, 2023

CP Daily: Friday February 10, 2023

Published 04:18 on February 11, 2023  /  Last updated at 04:18 on February 11, 2023  / /  Newsletters

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

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TOP STORY

FEATURE: Carbon arbitrage on the rise as public firms offload dirty assets to avoid scrutiny

The transfer of big-emitting assets from publicly-listed firms into private ownership is on the rise as increased shareholder scrutiny tempts companies to offload facilities to those under no obligation to disclose their carbon footprint, with such carbon arbitrage posing a real threat to climate goals.

EMEA

EU leaders unite to usher in new era of green subsidies

EU leaders gave the green light to the European Commission’s Green Deal Industrial Plan in the early hours of Friday at a summit in Brussels, seeking to bolster the bloc’s global competitiveness on clean technologies as major trading partners scale up support.

EXCLUSIVE: Veteran carbon analyst launches venture to put physical EUAs on blockchain

A well-known carbon analyst has launched a new venture that buys EU Allowances and turns them into digital tokens that can be traded in a virtual secondary market, offering buyers the choice of holding the permits as an appreciating asset or cancelling them to help tighten supply in the world’s largest cap-and-trade market.

Euro Markets: EUAs record modest weekly drop after early rally gives way to consolidation

EUA prices posted a robust rally on Friday morning, clawing back much of the week’s losses after having settled just above €90 for the four previous sessions, while energy prices ended a week-long run of losses as wind generation was forecast to drop in the coming week.

Shipping firms ink deal to launch joint venture to provide EU ETS compliance services to sector

Two shipping firms have signed an agreement to launch a joint venture to provide EU ETS compliance services to the sector.

AMERICAS

US Carbon Markets and LCFS Roundup for week ending February 10, 2023

A summary of legislative, regulatory, and policy action on carbon, clean fuel standard, and clean energy markets at the US federal and subnational levels this week, including a proposal for the Washington state government to sell carbon offsets, and the return of a CO2 tax and dividend bill in Hawaii.

ASIA PACIFIC

Japan destined for domestic emissions trading scheme as Cabinet approves GX policy

Japan’s Cabinet on Friday approved its basic GX plan, a 10-year roadmap for the country towards realising decarbonisation, including initial arrangements for a domestic carbon pricing scheme that will transition to a full-fledged emissions trading system from 2033.

Australia Market Roundup: ACCUs issued to just one project, as minister seeks to curb LNG exports

The Clean Energy Regulator has issued its lowest number of Australian Carbon Credit Units (ACCUs) in recent months, as the federal government released a consultation that would see its resource minister have sweeping powers over the country’s LNG export market.

Toyota seeks carbon credits from Saudi solar power plant

Japan’s Toyota Tsusho Corp. is investing in a 100-MW solar power project in the Wadi ad-Dawasir region in southwestern Saudi Arabia that will generate carbon credits under the Joint Crediting Mechanism (JCM), and on Friday secured support from the government, which will co-fund the project development.

Japanese company launches forest carbon credit programme in the Philippines

A major Japanese conglomerate has teamed up with government, business, and academic partners in the Philippines to establish the nation’s first reforestation-based carbon credit project.

CN Markets: CEA price stable as policy uncertainty lingers, CCER sentiment picks up

Spot prices remained shackled to the same level in China’s emissions market over the past week despite an uptick in the trading volume, while reported progress in setting up the nation’s new CCER platform in Beijing is sparking some hope that the offset programme might be nearing a return.

INTERNATIONAL

Corporate sustainability group releases guide for hydrogen to align with net zero

A CEO-led group focussed on sustainability released a set of guidelines on Thursday to help companies include alignment with 1.5C criteria to their investment decisions for hydrogen projects.

VOLUNTARY

Ratings firm downgrades scores for three Brazilian REDD+ projects

A rating agency has downgraded three Verra-accredited Brazilian REDD+ projects, amid shaken market confidence in the avoided deforestation market following reports of widespread over-crediting.

BIODIVERSITY (FREE TO READ)

INTERVIEW: Australian coral restoration tech company hoping to tap into biodiversity markets

An Australian company looking at a novel approach to restore coral populations has suggested future biodiversity markets could provide the scale needed to save the fast-eroding species where blue carbon markets so far have not.

Bank identifies heightened investor interest in biodiversity, and ways to get involved

An increasing number of investors are looking to integrate biodiversity into their investment frameworks, according to Morgan Stanley, one of the largest global investment management and financial services companies, describing options for portfolio integration.

Global Biodiversity Framework provides “clear call to action” to financials on nature

The Global Biodiversity Framework (GBF) can have a catalysing effect on the sector to protect and restore nature, providing a framework under which business and finance can begin to redirect capital away from negative activities towards nature-positive investment, experts from financial institutions told a webinar Thursday.

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CONFERENCES

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.

European Climate Summit (ECS 2023) – Mar. 28-30, Lisbon: Registration for the 5th edition of the European Climate Summit organised by IETA and partners is open. The ECS brings together leading private sector experts and policymakers from both the carbon and energy world, to analyse and discuss the current developments and pressing challenges. The summit provides a discussion and networking forum for policymakers, business leaders, and innovators involved in building, scaling, and collaborating on markets for net zero. The event will feature high-level plenaries, cross-cutting deep dives, interactive side events, and quality networking opportunities. Registration here.

ANNOUNCEMENT

Call for Expression of Interest to join the Climate Action Data Trust User Forum. Climate Action Data Trust has launched a Call for Expression of Interest to join the CAD Trust User Forum. The Initiative is looking for a variety of stakeholders across the carbon market value chain, from both the public and private sector. The purpose of the User Forum is to act as a market sounding board for the Council and the Technical Committee on business, policy, and technical matters. CAD Trust is a decentralised meta data platform that links, aggregates and harmonises all major carbon registry data to enhance transparent accounting in line with Article 6 of the Paris Agreement. Deadline for Applications: Feb. 15, 2023.

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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

Mass adoption – The adoption of EVs is rising sharply as the global push for net zero carbon emissions accelerates. EVs will make up about half of new car sales worldwide by 2035, according to a report by Goldman Sachs Research published Friday. While the EV sector is beset by some major crosscurrents — rising prices for electrical power, inflation for the materials that make up battery components, and government policies like the Inflation Reduction Act in the US and Europe’s response to the IRA — our strategists expect technology innovation to supersede these forces in the coming years. EV sales will soar to about 73 mln units in 2040, up from around two mln in 2020, according to forecasts by Goldman Sachs Research. The percentage of EVs in worldwide car sales, meanwhile, is expected to rise to 61% from 2% during that span. The share of EV sales is anticipated to be well over 80% in many developed countries.

EMEA

Existential threat – South Africa has declared a national state of disaster over the country’s worst-ever spate of rolling blackouts, reports the Financial Times, as the government scrambles to remove obstacles to investing in energy supply outside the broken Eskom power monopoly. During a state of the nation address yesterday, President Cyril Ramaphosa announced the measure would take immediate effect, as he warned that the power cuts that have hit Africa’s most industrial nation every day this year were “an existential threat to our economy and our social fabric”. It’s unclear if the country’s carbon tax regime will be impacted. Eskom has had to cut off swaths of customers for up to 10 hours per day in recent months in order to prevent the accelerating collapse of ageing coal power plants, the mainstay of South Africa’s power network, turning into a total grid breakdown. As a result, Ramaphosa’s governing African National Congress is facing the wrath of South Africans in national elections next year, as factories grind to a halt, crops wither without irrigation and food rots in refrigerators. The declaration of a disaster “will enable us to exempt critical infrastructure such as hospitals and water treatment plants from load shedding [and] will enable us to accelerate energy projects and limit regulatory requirements,” Ramaphosa said. However, the paper notes that the South African government “has already made ambitious policy changes to unleash private power production outside Eskom, but experts and investors have warned that these will take years to bear fruit”. (Carbon Brief)

Huge hydrogen – The transformation of Germany’s energy system away from fossil fuels must quickly be reinforced by sufficient “molecule-based” power plant capacity that can back up the country’s energy system during times of little wind and solar power generation, economy and climate minister Robert Habeck said. “Planning and auctioning needs to start now,” Habeck said at an event organised by German renewable power industry association BEE, adding that the government would be auctioning a “huge number” of hydrogen-fired power plants and other backup capacity still in 2023. “We need a lot of power plant capacity that is not running continuously,” the Green Party minister said, explaining that these plants will be primarily required to provide flexibility to the energy system and stabilise the grid whenever wind and sunshine are insufficient. “We have to act before the demand is there,” Habeck said. (Clean Energy Wire)

Pollute now, pay later – British bank NatWest has announced it will stop offering loans to new customers hoping to fund oil and gas exploration, extraction, or production projects, as part of a wider climate transition plan due to be unveiled next week, the Guardian reports. The bank’s chief executive Alison Rose said similar steps would be taken to phase out the same funding for existing customers, meaning the bank would refuse to renew, refinance, or extend loans for upstream gas projects from the start of 2026. The bank is about to release a plan that will give a sector-by-sector breakdown of how it will halve the emissions created by the projects and companies it finances by 2030. NatWest is 48% owned by the UK government and the amount of carbon-heavy projects that it funds as a proportion of its overall loan book is relatively small, accounting for 0.7% of its outstanding loans, worth about £3.3 bln as of last year.

Whiffy calculations – Estimates of the UK’s methane emissions from upstream oil and gas operations from offshore activities largely underestimated the data for 2019, a new study suggests, reports Chemistry World. Denise Mauzerall from Princeton University in the US, and Stuart Riddick from Colorado State University, have concluded that these methane emissions are underestimated because they rely on outdated emission factors (some of which are based on unpublished research), incomplete activity data and incomplete data on vented emissions.  According to Mauzerall and Riddick’s method, estimates for 2019 methane emissions from offshore gas and oil activity would be at 289 gigagrams – rather more than the 52 gigagrams reported by the UK. “A highlight of this study is that methane emissions from offshore facilities are currently largely unknown and that suggested methods for future measurement, i.e. survey methods using satellite, fixed-wing or drones, will probably only observe around 25% of emissions,” said Riddick. “The remaining 75% of methane emissions are of short-duration and are unlikely to be observed unless measurement efforts are coordinated with the oil and gas industry.” During COP26, the UK signed the Global Methane Pledge that commited to reduce global methane emissions by at least 30% by 2030.

ASIA PACIFIC

No rush – Sumitomo Mitsui Banking (SMBC) will phase out corporate and project finance exposure to coal mining by 2040 but does not have a concrete timeline for reducing support to trade finance, Japan Times reports. The main banking arm of Sumitomo Mitsui Financial Group said in disclosures to investors last year that it would halt funding for new mines, expansion of existing ones and related infrastructure, but stopped short of giving a timeline on ending corporate finance for companies linked to coal mining. Rajeev Kannan, SMBC’s Managing Executive Officer and Co-Head of Asia Pacific Division said Thursday there would be no project and corporate finance exposure to coal mining or coal-fired power plants by 2040. Critics have previously pointed to the ambiguity on corporate financing, potentially providing a loophole for banks lending to pure-play coal miners. “Some level of trade finance” could still be available for coal dealers shipping critical fuel supplies for power plants, Kannan said in an interview. “But even that kind of support, over a period of time, will go away,” he said.

Hydrogen takes flight – Six international businesses have launched a new consortium to bring zero emissions aviation to life in New Zealand, according to a press release from Fortescue Future Industries, the green energy arm of Fortescue Metals Group, Australia’s big mining company. The Hydrogen consortium’s vision is to support the country to pioneer the commercial deployment of green hydrogen-powered aircraft. The partners are Airbus, FFI, Air New Zealand, next generation energy company Hiringa Energy, liquid hydrogen solution pioneers Fabrum, and New Zealand’s Christchurch Airport. The Hydrogen consortium was launched at Christchurch Airport, which is developing a 400-hectare renewable energy precinct.

AMERICAS

CFTC second week outage – The US Commodity Futures Trading Commission (CFTC) announced Friday that reporting firms were “continuing to experience some issues with respect to the submission of timely and accurate data” after its third-party service provider, ION Derivatives, had experienced a “cyber-incident” last week which has delayed the commission’s weekly Commitments of Traders (COT) report for the past two weeks. ION Derivatives supplies the CFTC with cleared derivatives, the management and execution of orders, and trade processing. Although the impact of the incident had been mitigated, the agency said the COT report would continue to be delayed until all trades could be reported. As a result, Carbon Pulse has not been able to report on CCA and RGGI positions for the period of Feb. 1-7, as well as last week’s COT data for European carbon markets.

Heavy duty objections – A group of 34 Republican senators are seeking to overturn US Environmental Protection Agency’s (EPA) rules that were finalised in December updating emission standards for heavy-duty trucks in the 2027 model year, and are set to take effect Mar. 27, Reuters reported Thursday. The new EPA rules tighten yearly emissions limits and change key provisions of existing rules to ensure emissions reductions in long-term road use. The rules also toughen test procedures, regulatory useful life requirements, and emission-related warranties, the report noted. The rule would reduce smog-forming nitrogen oxide emissions by as much as 48% by 2045, according to the agency. The new standards are 80% more stringent than current standards, which the senators say are overly challenging to implement, would make the cost of trucks prohibitive for small business owners, and would increase supply chain costs. Republican Senator Deb Fischer of Nebraska, who is leading the effort to repeal the rule, said the “aggressive” EPA rule would incentivise “operators to keep using older, higher-emitting trucks for longer”. Under the Congressional Review Act, a simple majority vote in both chambers of Congress can reverse recently finalised rules. Republicans control the House by a 222–212 majority, while Democrats hold 48 seats with 3 Independents to Republican’s 49 in the Senate.

Quitting coal – Duke Energy has boosted its five-year capital plan to $65 bln, with about 80% aimed at low-carbon energy, company executives said on a call on Thursday, Reuters reported the same day. Charlotte, North Carolina-based Duke increased its spending proposal through 2027 by $2 bln from its prior five-year plan, the company said while reporting its most recent financial earnings to investors. In its North Carolina utility operation, Duke plans to exit coal by 2035, and replace it with low-or-no carbon alternatives, executives told investors. One of the largest US energy companies, Duke expects to spend about 55% on the power grid with much of the rest funneled toward renewable electricity generation, as the company shifts to a low-carbon energy network.

Concrete CO2mpact – Holcim US, a subsidiary of Swiss-based global building materials firm, announced the launch of ECOPact low-carbon concrete in Twin Cities, Minnesota and Fargo, North Dakota, in a press release on Thursday. ECOPact concrete provides 30–90% lower CO2 emissions compared to standard concrete, with 80% less carbon achieved primarily through the use of lower CO2-intensive materials and without the purchase of offsets. Where conditions allow, ECOPact products can even integrate construction and demolition waste in the process, the company noted in the statement. The company is facing litigation launched earlier in February by four individuals on Indonesia’s island of Pari that was struck by tidal waves in 2018, demanding that the company reduce its emissions by 43% by 2030, among other demands. Presently, Holcim has committed to reduce Scope 1 & 2 emissions by 25% by 2030 from a 2018 baseline year.

A “well done” burger – Ohio-based fast-food burger chain Wendy’s has announced targets to reduce GHG emissions by 47% across its system, including company operations, franchisees, and top suppliers, by 2030 through new science-based targets, the Nation’s Restaurant News reported Friday. Wendy’s announced near-term targets to reduce Scope 1, 2, and 3 GHG emissions and said the goals were recently approved by the Science Based Targets initiative. Wendy’s estimated that achieving the goal would avoid about 7.2 Mt of CO2e compared to business as usual, which is equal to removing more than 1.5 mln gas-powered vehicles from the road in a single year.

SCIENCE & TECH

Getting the sense of it – Blue carbon ecosystems (BCE) include mangrove forests, tidal marshes, and seagrass meadows, all of which are currently under threat, putting their contribution to mitigating climate change at risk, according to a journal article in Earth Sciences Review. Although certain challenges and trade-offs exist, remote sensing offers a promising avenue for transparent, replicable, and cost-effective accounting of many BCE at unprecedented temporal and spatial scales. The UNFCCC has issued guidelines for developing blue carbon inventories to incorporate into Nationally Determined Contributions (NDCs). Yet, according to the article, there is little guidance on remote sensing techniques for monitoring, reporting, and verifying blue carbon assets, but this review by the authors constructs a unified roadmap for applying remote sensing technologies to develop cost-effective carbon inventories for BCE – from local to global scales.

Oxford in the sun – The UK government is backing plans to build a new prototype nuclear fusion reactor, that replicates the process that powers the sun and offers the promise of abundant clean energy, as it steps up efforts to crack the “holy grail” of energy production, reports the Daily Telegraph. Tokamak Energy will develop its reactor at the UK Atomic Energy Authority’s fusion centre near Oxford, helping it access the authority’s expertise and facilities. Chris Kelsall, chief executive of Tokamak Energy, said the planned prototype was a “major step forward on our mission to demonstrate grid-ready fusion energy by the early 2030s.” Nuclear fusion is extremely difficult to achieve as it requires massive amounts of energy to create the heat and pressure needed to stimulate the fusion reaction. Tokamak’s spherical reactor managed to create temperatures of 15 mln degrees Celsius in 2018, then broke through the 100 mln C fusion threshold in Mar. 2022. The company’s reactor design uses magnets that can operate at exceptionally high temperatures, enabling smaller, more powerful reactors. This should make them faster and cheaper to build, helping to commercialise fusion technology.

AND FINALLY…

Do look up – A growing body of evidence warns methane pollution from offshore oil and gas operations could be far greater than official statistics suggest, and can even cause helicopters to fall out of the sky, DeSmog reports. Methane traps more than 80 times more heat in the atmosphere than CO2 of a 20-year period and dramatically reducing methane emissions from oil and gas operations is one of the most cost-effective ways to limit near-term global warming. A study published last year in Environmental Research Letters by NASA’s Jet Propulsion Lab, Carbon Mapper, and multiple universities found pollution from shallow water oil and gas drilling platforms is far greater than from land-based operations, with methane pollution relative to production as much as 30 times higher than Permian Basin operations. Invisible and odourless, even low levels of methane, can cause helicopter engines to fail. The Bureau of Safety and Environmental Enforcement, a division of the US Department of the Interior, efforts to require methane detectors on aircraft over offshore oil and gas operations were shot down by the oil and gas industry in 2017. (Climate Nexus)

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