Newsletters > CP Daily: Friday February 17, 2023

CP Daily: Friday February 17, 2023

Published 00:56 on February 18, 2023  /  Last updated at 01:01 on February 18, 2023  / /  Newsletters

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

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TOP STORY

ANALYSIS: Scoping solutions – why value-chain footprinting is poised to incentivise climate action

Companies will soon be on the hook to disclose their full scope of value-chain emissions, but while many are already including these under their own climate targets, the process is riddled with technical complexities that are dampening the incentive to act.

SHIPPING

Shipping industry proposes fresh carbon levy plan ahead of crunch UN talks

The International Chamber of Shipping is proposing a fast-starting $50/tonne “fund and reward” carbon levy for governments to adopt at upcoming crunch UN talks to address the maritime sector’s climate impact.

AMERICAS

Carbon credit investor pursues offtake from “largest” forest project in Western Hemisphere

A US-based carbon offset investor and consultancy this week advanced a strategic partnership that could see the firm eventually acquire tens of millions of offsets from a proposed Canadian improved forest management project, which it said will be the largest in the Western Hemisphere.

ICE to launch three Washington carbon allowance futures next month

Exchange operator ICE on Friday announced it will list three Washington Carbon Allowance (WCA) futures contracts for trading next month, coming several months into the operation of the WCI-modelled cap-and-trade system.

US Carbon Markets and LCFS Roundup for week ending February 17, 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 accelerated clean power targets in New Jersey and Maine.

EMEA

Researchers stress need for enhanced EU ETS oversight ahead of rule changes

Researchers have urged the EU to bolster the market regulator’s powers to scrutinise EU ETS trading activity, according to consultation responses this week that revealed others wanting rule changes due this year to only be the first step in a progressive deepening of oversight into the bloc’s carbon market.

Euro Markets: EUAs slip in thin trade but post 3.5% weekly gain as market maintains record target

EUAs gave up early gains after reaching a new six-month high on Friday morning, but still ended the week 3.5% higher amid very light trading as participants continued to eye a test of the €100 level.

Uniper charts 15% drop in ETS-covered fossil output, EDF posts record loss

German utility Uniper reported a 15% drop in fossil fuel burn covered by the EU ETS in full-year results published Friday, also taking a €4 billion hit to revenues after losing its Russian subsidiary due to the war in Ukraine, while France’s EDF posted a record loss due to extreme lows in nuclear availability.

UK govt hands out £8.7 mln in new EU ETS non-compliance fines

The UK government has issued £8.7 mln in new fines resulting from EU ETS non-compliance.

ASIA PACIFIC

Papua New Guinea says will finalise carbon market rules within weeks, following damning investigation

The Papua New Guinean government has attempted to quell fears over its governance of carbon market projects in the country, following a critical investigation by Australian news programme Four Corners.

CN Markets: CEA liquidity up on rise in block deals, but price remains flat

The spot price ticked up only marginally in China’s emissions trading scheme over the past week as two block trades adding some much-needed liquidity to the market, though companies remain eager for fresh policy direction.

South Korea to fine companies for making misleading sustainability claims

South Korea’s environment ministry is planning to punish companies that make forged sustainability claims with a fine of up to 3 million won ($2,300), following a string of legal complaints against large companies accused of greenwashing, including through carbon offset use.

BIODIVERSITY (FREE TO READ)

Expert warns of the massive risks of the ‘green rush’ to create biodiversity markets

A market expert has urged the Australian government to take its time to develop its nature repair market, warning that other jurisdictions pursuing similar schemes were sleep walking into a “massive greenwashing nightmare”.

Festival partners with biodiversity credit developer in early voluntary market move

Adelaide Festival in South Australia has partnered with developers Wilderlands to give attendees the opportunity to buy voluntary biodiversity credits from a wetlands conservation project, an early example of small-scale community events using the emerging market to help prop up nature protection.

Carbon standard releases methodology to address out-of-control algae

Brazil-headquartered SocialCarbon on Friday released a methodology for public consultation that will award carbon credits for dealing with harmful algae blooms in freshwater, its latest in a growing number of carbon methodologies with strong biodiversity components.

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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 extended to Feb. 28, 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

Lending a hand – The World Bank, under pressure to do more to help developing countries cope with climate change, may change its internal lending guidelines to free up $4 bln in lending capacity each year, its outgoing president has said. David Malpass commented that the bank’s IBRD arm may lower its equity-to-lending ratio by one percentage point to 19%, as reported by Reuters via Climate Home. This means the bank will take on a bit more risk, in line with an independent report prepared for the G20 major economies last year. One of the bank’s main focuses is reducing GHG emissions and helping countries adapt to climate change. An ongoing reform process is making this mission more central to how the bank spends money.

EMEA

Just a phase(out) – EU countries are preparing to endorse a diplomatic stance on Monday calling for a global phaseout of fossil fuels, as they prepare for this year’s UN climate change talks, Reuters reported, citing a draft document. The EU conclusions on climate diplomacy, which member countries’ foreign ministers aim to approve at a meeting on Monday, seek to anchor the bloc’s priorities ahead of COP28 in Dubai later this year. A draft of the conclusions acknowledged a commitment nearly 200 countries made at previous UN climate talks to phase down coal-fuelled energy – but said this must go further, to phase out all CO2-emitting fossil fuels, including oil and gas. “The shift towards a climate neutral economy will require the global phase-out of unabated fossil fuels, as defined by the IPCC,” the draft said, referring to the UN climate science panel. “The EU will systematically promote and call for a global move towards energy systems free of unabated fossil fuels well ahead of 2050.” Last year’s UN climate summit disappointed some countries for not yielding a deal on phasing down fossil fuel energy. A proposal by India to include this had gained support from more than 80 governments, including EU countries, but was opposed by Saudi Arabia and other oil- and gas-rich countries.

Waterbed leak – Germany’s economy and climate ministry wants to cancel all EU ETS certificates that will be freed up by the country’s coal exit, a ministry spokesperson told newsletter Table.Media, adding that it expects this to be a “residual amount”. NGOs and climate experts had expressed fears that the country’s coal phaseout, which the government hopes to pull forward to 2030 from the agreed 2038 phaseout date, would do nothing for the climate if the freed-up emissions certificates can be used elsewhere – a phenomenon often referred to as the “waterbed effect”. The newsletter said such a move is expected to be met with resistance from the finance minister as it would forgo billions in revenue. The economy and climate ministry believes pulling forward the coal exit to 2030 in the western Rhineland region will save a total of 280 Mt of CO2 emissions, some €28 bln at today’s prices. (Clean Energy Wire)

Taxonomy up in the air – Campaign group T&E has urged the EU to rethink its green taxonomy plans that give a climate-friendly label to “best in class” currently-produced aircraft if they replace an older, less fuel-efficient plane in the fleet. It said around 90% of Airbus’s order book, or more than 7,000 planes, could be eligible as “best in class” under the criteria. T&E said the 15-20% emissions saving offered by more efficient planes was too small and urged Brussels to only endorse technologies with “true emissions reduction potential”, such as zero-emission aircraft and sustainable fuels. (Reuters)

Cleaning steel – The EU Commission have given the green light to two measures to support steelmaker ArcelorMittal in Germany and in Spain, worth €55 mln and €460 mln respectively. The former will contribute to partially decarbonising steel production at the firm’s Hamburg site, taking the form of a direct grant that will support the construction and installation of a demonstration production facility using 100% renewable hydrogen. The plant will have an annual capacity of 100,000 tonnes of direct reduced iron, starting from 2026. The second aid aims to partially decarbonise steel production in Gijon via a direct grant to support the construction of a renewable hydrogen-based direct reduced iron plant. The plant is expected to produce 2.3 mln tonnes of low-carbon direct reduced iron per year, as it will eventually operate with syngas produced from waste and metallurgical gases, starting from 2025.

Windfallout – Spain’s Repsol plans to launch a legal challenge to the country’s new windfall tax on energy companies, claiming the levy violates Spanish and EU law, EurActiv reports. The oil and gas firm joins bank and utilities associations in objecting to the temporary levy on banks and energy companies approved by Spain in December, intended to raise €7 bln by 2024 to fund measures to ease the cost of living. Spanish banking and electricity associations have lodged appeals against the tax in a court on the grounds that it distorted competition and was discriminatory, as it did not exist in other European countries.

ASIA PACIFIC

Renewables boom — China’s National Energy Administration has reported that the country installed a combined 125 GW of new wind and solar capacity in 2022, bringing its total cumulative renewable energy capacity to over 1,200 GW, RenewEconomy reports. Out of the new renewable energy capacity added was 37.6 GW of new wind energy capacity and a whopping 87.4 GW of newly installed solar power, according to Wang Dapeng, an official with the National Energy Administration (NEA) speaking during a news briefing held in Beijing on Monday. While the impact of new generating capacity installed during 2022 will only really be felt when looking at 2023’s numbers, the NEA also reported that renewable energy account for 47.3% of China’s total power generation capacity at the end of 2022, up 2.5% compared to 2021. Interestingly, as highlighted by Bloomberg News, China’s wind and solar is now generating almost enough electricity to power every home in China.

Hydrogen export – South Australia remains firmly at the fore of the increasingly lucrative hydrogen trading market as work begins on a multi-million dollar hydrogen production project which will see green energy exported to Indonesia, the Australian state’s premier announced in a media release. The A$12.5 million project – based at Bolivar, north of Adelaide – is part funded by Japan’s Ministry of the Environment and Japanese company Marubeni. In October last year Japan’s environment ministry agreed to co-fund the project where it will earn carbon credits under the Joint Crediting Mechanism. The demonstration plant is anticipated to be operational by August, with transportation to Indonesia taking place in late 2023.

Costly fossil fuels – Bangladesh’s energy and power sectors continue to experience the pinch of its reliance on expensive and highly volatile imported liquefied natural gas (LNG), coal and oil, according to a research note from the Institute for Energy Economics and Financial Analysis (IEEFA). This reliance is increasing the country’s fiscal burdens, prompting the government to pass the cost on to consumers. For instance, amid the high fossil fuel costs, the government raised the price of electricity twice by 5% in a span of 20 days in January. Between these electricity price hikes, the government increased gas prices from between 14-179% for different sectors. While the government cited fiscal reasons for such price hikes, the country’s average power generation cost will increase considerably without any major overhaul of the imported fossil fuel-dependent energy system. Moreover, high fuel and electricity prices will affect industries, and the power sector may still struggle to ensure an uninterrupted electricity supply. However, the latest adjustments in electricity prices make clean energy investment an even more compelling case for Bangladesh to attenuate its fiscal burdens, according to IEEFA.

AMERICAS

Strike three – The US Commodity Futures and Trading Commission (CFTC) for the third straight Friday did not publish its weekly Commitments of Traders (CoT) report, as due to an ongoing issue with a third-party software provider ION that continues to impact the submission of timely and accurate data. As a result, Carbon Pulse has not been able to report on CCA and RGGI positions for the period of Jan. 25 – Feb. 14, nor the past several weeks of COT data for European carbon markets.

Consent required – Canada’s Alberta province on Feb. 16 offered to collaborate with the federal government to spur CCS investments, but only if Ottawa secures Alberta’s consent on climate policies that impact oil and gas, Reuters reported Thursday. In an open letter to PM Justin Trudeau, Alberta Premier Danielle Smith said those policies include a proposed oil and gas emissions cap, clean power regulations, and legislation to help workers retrain for green energy jobs. Canada, the world’s fourth-largest oil producer, wants to cut carbon emissions 40% to 45% below 2005 levels by 2030. The oil and gas sector is the country’s highest-polluting industry, accounting for more than a quarter of all emissions.

Climate-smart farms – The Department of Agriculture (USDA) could do more to link farm programmes to GHG reductions, including making climate-smart farm practices a condition for crop insurance subsidies, the Government Accountability Office (GAO) said, E&E News reported Thursday. In a report requested by Rep. Chellie Pingree (D), the GAO on Thursday outlined 13 options for enhancing agriculture’s climate resilience and reducing the potential cost to the government from weather-related crop failures. The GAO said its staff interviewed industry sources, farming experts, and agency officials to reach the conclusions, although the report recommended only that the USDA analyze the options and consider integrating them into its climate resilience planning.

VOLUNTARY

No longer ‘neutral’ – Swiss-based non-profit Climate Neutral Commodity has changed its name to Carbon Offset Certification in a rebrand that the initiative said reflects a shift in industry practice. The entity developed the first independent certification standard for carbon neutral commodity transactions or services. In a note on its website, it said the “large consensus” had emerged the view that ‘climate neutral’ or ‘carbon neutral’ terminologies shall be reserved for when GHG emissions are reduced to a minimum and residual emissions are offset only after a long-term reduction plan. It added that claims for ‘carbon offset’ commodities, products or logistic solutions instead of ‘carbon or climate neutral’ are strongly recommended to avoid risk of criticism and to respond to companies and partners’ demands.

AND FINALLY…

Sticky situation – Swedish furniture giant Ikea’s path to achieving its 2030 climate goals is paved with the usual tactics, including boosting renewable energy use and reducing the climate footprint of its materials. But tucked among those challenges is a rather unexpected carbon culprit: the glue that holds some of the flat-pack furniture giant’s most popular products together and currently makes up 5% of the company’s total carbon footprint. (Bloomberg)

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