CP Daily: Friday March 31, 2023

Published 04:55 on April 1, 2023  /  Last updated at 04:55 on April 1, 2023  / Carbon Pulse /  Newsletters

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

**Carbon Forward Asia is coming – May 2-3, Singapore**

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TOP STORY

PREVIEW: Japan takes modest but vital step towards national carbon market with launch of GX League

Japan next week launches the GX League, a nationwide decarbonisation initiative that involves the operation of a voluntary carbon market that over time will be expanded and culminate in an economy-wide mandatory emissions trading scheme in the world’s third-biggest economy a decade from now.

ASIA PACIFIC

China seeks offset methodology proposals, as CCER relaunch moves closer

China’s environment ministry has called for proposals for offset methodologies under the CCER scheme, marking a step towards resuming the country’s suspended voluntary carbon market.

CN Markets: CEA liquidity improves on block deals, CCER sentiment brightens amid regulatory updates

The spot price ticked up only marginally in China’s emissions trading scheme over the past week as two block trades injected some much-needed liquidity into the market, while recent regulatory updates have ignited hope among participants in the long-stalled offset sector.

Japan, India announce intention to forge carbon trading partnership under the JCM

India is set to become Japan’s next Article 6 carbon trading partner, after the two nations on Friday announced they had signed an agreement to initiate talks over signing a Joint Crediting Mechanism (JCM) deal.

Offset surrender falls slightly under Australia’s Safeguard Mechanism in 2021-22  

The number of Australian Carbon Credit Units (ACCU) that were surrendered by facilities covered by the Safeguard Mechanism fell slightly in 2021-22, according to regulator data released Friday.

Australia should start working on a CBAM ASAP, experts say

With the Safeguard Mechanism set to kick off in July, experts have argued that Australia should start work on a carbon border adjustment mechanism (CBAM) as quickly as possible to address carbon leakage risks, and provide investment certainty.

VOLUNTARY

Older carbon project methodologies may not align with CCP, warns Gold Standard

Gold Standard will only need to make a few tweaks to comply with ICVCM’s programme-level Core Carbon Principles (CCPs), the certifier said Friday, despite admitting some of its older methodologies could face alignment challenges and that future credit level assessment could impact individual projects.

Carbon project developer teams up with tequila firm for agave carbon credit methodology

A carbon offset developer has teamed up with the world’s leading tequila brand to create a carbon credit certification methodology for agave plants used in tequila production, it has been announced.

AMERICAS

Watchdog cautions Canadian carbon levy increase to C$65 results in net loss to households

Canada’s ‘revenue-neutral’ CO2 charge that is slated to increase to C$65/tonne ($48) on Apr. 1 will result in a net loss on average to households in all provinces falling under the federal ‘backstop’, a government watchdog outlined Thursday.

Washington offers nearly 40% more allowances in second carbon market auction

The Washington Department of Ecology (ECY) raised the volume of current vintage allowances offered in the jurisdiction’s second cap-and-invest sale, while also tendering future vintage permits for the first time, according to an official notice published Friday.

US Carbon Markets and LCFS Roundup for week ending March 31, 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 North Carolina House budget language to block a RGGI-modelled cap-and-trade regulation and the advancement of a carbon offset bill in Washington state.

Speculators’ CCA net length hits 12-mth high, producers keep steady in WCI and RGGI

Financial players this week saw their California Carbon Allowance (CCA) net long position reach the highest since last March, while compliance entities modestly added to their holdings across North American carbon markets, according to US Commodity Futures Trading Commission (CFTC) data published Friday.

EMEA

EU seeks views on 2040 emissions target, requires increase in removals

The European Commission launched a consultation on Friday as part of its preparation for proposing EU 2040 climate goals next year to ensure the bloc hits its binding net zero emissions goal a decade later.

EU should change definition of fossil fuel subsidies as aid levels soar -report

The EU should refine its definition of fossil fuel subsidies to help keep a lid on rising levels of government aid that is undermining the net zero transition, green groups said in a report this week.

Euro Markets: EUAs post first monthly loss since December despite 4.9% weekly gain amid firm sentiment

EUAs traded higher on Friday, climbing above the €91 level that has offered resistance in recent days and reaching the highest in a week, while energy prices were firmer amid forecasts for cooler temperatures and as Chinese PMI data suggested demand for LNG cargoes may improve.

EDF to shut UK coal-fired power plant

EDF’s West Burton A coal-fired power station will close later this year, the company announced this week.

INTERNATIONAL

Energy transition to leave exporters of ‘simple’ fossil fuel products most at risk, study says

Fossil fuel producers that rely heavily on exports of oil, gas, and coal are more at risk of being left behind from a low-carbon transition than exporters of more sophisticated carbon-intensive products who will be able to diversify their economies more effectively in a greener global economic environment due to their better access to technology and investment streams, a study has found.

AVIATION

Three APAC airlines make SAF deals in efforts to reach 2030 targets

Three Asia-Pacific based airlines have announced Sustainable Aviation Fuels (SAF) deals, reflecting growing commitment among airlines in the region to use the fuel to help meet their long-term net zero targets.

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CONFERENCES

Carbon Forward Asia – May 2-3, Singapore/Online: Carbon Forward is coming to Asia! Join us in Singapore or watch the conference online, and gain valuable insights into the trends and developments in carbon pricing throughout the Asia Pacific region. We will discuss investment opportunities across compliance and voluntary carbon markets, as well as transport initiatives such as CORSIA and SAF for aviation and shipping sector programmes, the impact of the EU’s carbon border adjustment mechanism (CBAM), CCS crediting, developments under Article 6 of the Paris Agreement, corporate climate goals, and other exciting topics. We are curating a high-level programme for this rapidly-evolving region, with the agenda and speaker line-up to be released soon. Early Bird tickets are now available. Purchase yours now

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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

Subtract some flare – The amount of natural gas flared at oil and gas sites dropped 3% last year even as crude output grew, a World Bank analysis finds. According to Axios, the drop is a welcome sign, but researchers warn the problem remains large and persistent despite the progress. “If put to productive purposes, the amount of gas flared in 2022 could generate as much electricity as Sub-Saharan Africa currently produces in a year,” a summary of the data notes. The “methane destruction efficiency” of flaring may be lower than once believed, the analysis also warns. If the average flare is just 5% less efficient than once assumed, “the amount of methane released would be three times higher than currently estimated.”

Another quitter – Reinsurer Munich Re is leaving the Net-Zero Insurance Alliance, a sub-unit of the Glasgow Financial Alliance for Net Zero (GFANZ), due to what it says are “material” legal risks, in a move that marks the latest blow to the world’s largest climate finance alliance. GFANZ has sought to reassure members that efforts to coordinate emissions reductions won’t expose them to credible antitrust allegations. But with the political backdrop in the US growing more hostile, some signatories are balking at the perceived risks. (Bloomberg)

VOLUNTARY

Another exposé – An analysis by independent experts has raised doubts whether Peru’s Cordillera Azul National Park voluntary carbon market (VCM) project has delivered on its promise to counter-balance emissions by oil companies such as Shell, TotalEnergies, and others.  As well, the investigation led by The Associated Press also found that according to satellite analysis, tree loss in the area has more than doubled. Experts say the Cordillera Azul project was flawed from the beginning, with far too many carbon credits generated and exaggerated benefits that allowed the non-profit running the park for the Peruvian government to make more money, even as the tree canopy shrank. But defenders of the project dispute that benefits were inflated. They say the tree loss was virtually all from natural causes, even as satellites showed it’s concentrated on the western and northern borders of the park near large population centres and largely along rivers. These are places far easier to reach and illegally log than elsewhere in the mostly primordial landscape. Documents show more than 28 mln credits have been sold for the Cordillera Azul project, raising millions of dollars in a process that Indigenous Kichwa tribes have complained did not recognise their ancestral claim to the land. Founding documents say the project, launched in 2008 and among the world’s largest such ventures, aimed to prevent “all deforestation” in the park. But satellite mapping firm Space Intelligence found tree canopy loss jumped from an average of 262 hectares per year in the five years before the project launched to an average of 572 hectares/yr from 2009 to 2021, the last year for which data is available. The project’s biggest buyers, Shell and TotalEnergies, defended their participation. TotalEnergies said comparing tree loss before and after the project gave the misleading impression it had failed, because deforestation cannot be halted instantaneously. Shell cited protection of the park as a benefit of its credit purchases, and said “catastrophic deforestation” would have occurred without the programme, though it confirmed that it will conduct an additional review before making further purchases. This is the latest in a series of media articles on the VCM that are raising major concerns ranging from chronic project over-crediting to profiteering and land appropriation, to corporate greenwashing.

Strapped for strategy – L.E.K Consulting presented the topline results of its  survey of business leaders’ net zero strategies, ambition and challenges, at Economist Impact’s Sustainability Week on Friday. The survey, of 400 C-suite and senior executives across sectors and geographies, found that while 82% of respondents have a decarbonisation strategy and plan in place, over 70% are facing costing difficulties. 77% see the cost of decarbonisation is a barrier to achieving ambitions, 72% do not see the affordable alternatives available that they need, 78% are having difficulty obtaining capital to fund necessary decarbonisation investments. Despite these barriers, many firms are successfully implementing initiatives that drive them towards decarbonisation – e.g., changing product designs to reduce lifetime emissions intensity; changing business models; changing suppliers to low carbon alternatives. The full results are due to be released in April.

EMEA

We’re special – The energy ministers from Germany’s 16 states have called on the federal government to examine lowering the electricity tax to the European minimum, and supporting EU ETS-covered energy-intensive industries through a special power price. Such a price would benefit companies that are implementing decarbonisation efforts and/or using renewable electricity, said the ministers after a joint meeting. The German government is working on proposals for industry electricity prices in order to shield companies from rising costs and to help them stay competitive internationally, for example by way of subsidising offshore electricity for industry customers through an auction scheme. (Clean Energy Wire, MDR)

AMERICAS

Half it your way – US President Joe Biden’s administration on Friday granted California the legal authority to require that half of all garbage trucks, tractor-trailers, cement mixers and other heavy vehicles sold in the state must be all-electric by 2035, an aggressive plan designed to clean up the worst polluters on the road. The pioneering truck rule will go beyond federal requirements, which is why the state needed permission from the administration to enact it. It comes on the heels of an ambitious regulation passed last year by California that requires all new passenger vehicles sold in the state to be electric by the same target year, 2035. (NYT)

Carbon blueprint – BC’s Centre of Innovation and Clean Energy (CICE) released the province’s Carbon Management Blueprint on Thursday in partnership with advisory firm Deloitte Canada to guide the emerging carbon management sector. The document provides an understanding of existing carbon management approaches, the value chain, and the market participants that drive the supply and demand of emissions avoidance solutions to help drive investment in the province. Some of the key findings outlined in the press release were: BC has 18 Mt/yr of carbon management capacity, which represents 25% of the province’s 64.6 Mt/yr of emissions; nature-based solutions are ready to be deployed at scale in the near term; engineered solutions are vital for heavy industry but unlikely to be deployed at scale without further research; hybrid solutions such as ocean-based, biochar, and mineralisation are the least mature in terms of commercial readiness; and synthetic fuels hold high potential for carbon utilisation to be deployed in the province.

ASIA PACIFIC

Shell be right — Global oil giant Shell has made its first direct investment in any big battery project in the world, after committing to a 200 MW/400 MWh grid-scale project Melbourne, Australia, RenewEconomy reports. Shell Energy, its local power subsidiary, has teamed up with Green Investment Group run by Macquarie Asset Management to build the Rangebank battery in the Rangebank business park. According to Shell and GIC, the project has already reached financial close and will be completed in late 2024.The two companies say that the two hour battery will deliver a range of services, including allowing more renewables into the grid and delivering essential system services. It will be operated by Shell Energy through a 20-year off take agreement, and will be built, serviced, and maintained by US-based Fluence, using that company’s latest Gridstack product. Shell says it is the company’s first direct equity investment in a grid scale battery anywhere in the world.

CCUS deal – Mizuho Bank announced in a press release a $5 mln investment in MCi Carbon, an Australian clean technology company engaged in decarbonising global industries by carbon capture and utilisation (CCU) to help achieve a circular economy. MCi Carbon uses a chemical engineering process called mineral carbonation to create valuable inputs into building materials and other products using captured industrial emissions. Diverting CO2 from entering the atmosphere, MCi technology reacts CO2 from steel, cement, fertilisers, and mining facilities with mineral by-products of industrial processes, such as steel slag and mine tailings. MCi can create carbon neutral and negative emissions from calcium and magnesium carbonates, amorphous silicas, and other inputs for a range of applications in the circular carbon economy. In February MCi signed a long-term cooperation agreement with Austrian company RHI Magnesita, a supplier of refractory materials for heavy industries such as steel and cement, to help decarbonise its own operations.

AND FINALLY…

EV come, EV go – Potentially millions of petrol and diesel cars could become non-compliant and unsellable in China, as dealers in the world’s largest car market are struggling with new vehicle emissions standards to be implemented in July. The upcoming full implementation of the China VI B emission standards will bring enormous pressure to the survival of auto dealers, according to a statement posted by the China Auto Dealers Chamber of Commerce (CADCC), which has since been deleted from its WeChat account. The glut of high-polluting vehicles sitting in Chinese dealerships also comes as domestic consumers shift rapidly to electric vehicles (EVs). China accounted for around two-thirds of global sales of EVs last year, with over 25% of all new cars sold in the country being electric. (Bloomberg, the Driven)

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