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TOP STORY
Turning REDD into green: Solving the integrity issues of forest carbon credits
REDD forest protection project developers should rapidly overhaul their activities regardless of the pace of reform by certifiers, according to an analysis published on Thursday that draws on in-depth assessments representing 94% of REDD credits on the market and flags extensive over-crediting.
EMEA
ANALYSIS: EU power emissions likely fell in Q1 2023, reversing 2022 increase and raising bearish flag
After the European Commission released partial verified data this week that showed emissions falling by 1.4% in 2022, stakeholders are left wondering whether the increase in coal-fired power generation last year was as significant as had been anticipated, and data from early 2023 suggests that fossil generation may be on the wane, raising the prospect of reduced demand for EUAs.
Euro Markets: EUAs hold on to week’s gains, targeting €100 as activity thins ahead of Easter break
Carbon trade activity fell away on Thursday, the last session before the four-day Easter break, with EUA prices fading from levels just below Wednesday’s three-week high after yet another strong auction result.
Developers launch Europe’s first seagrass methodology as French offset scheme takes flight
A French public-private partnership has established the first carbon accounting methodology in Europe dedicated to the protection of seagrass beds via the country’s carbon credit certification programme.
VOLUNTARY
Early mover REDD projects feel brunt of market downturn, says brokerage
The overhang of REDD avoided deforestation credits weighing on the voluntary market is particularly acute from projects derived from one early-stage blueprint, a brokerage firm has pointed out, calling for radical action to delist the resulting carbon credits and cancel all back issuance.
Ratings agency awards rare upgrade to in-focus Latam REDD project
A carbon credit ratings agency has upgraded its score for a Latin American REDD forest protection project that has been the focus of a court case surrounding the credibility of climate neutrality claims.
AMERICAS
WCI Markets: CCAs meander on macro fluctuations, WCAs spike again
California Carbon Allowance (CCA) prices fell following an up and down week driven by macroeconomic sentiment, while Washington Carbon Allowance (WCA) values continued to set new record highs due to limited supply.
US Carbon Markets and LCFS Roundup for week ending April 6, 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 further progress to block North Carolina’s RGGI plans, a market-based climate policy bill in Connecticut, a Washington state bill to exempt farm fuels from carbon pricing, and a California proposal to restrict Low Carbon Fuel Standard (LCFS) crediting from dairy digesters.
California records second-lowest December and annual gasoline consumption figures in 2022
California’s transportation gasoline sales for December and full year 2022 dropped to the second-lowest level in a decade along with gasoline-linked emissions, trailing behind 2020 totals during COVID-19 lockdowns, according to state data released Wednesday.
Nova Scotia includes reserve allowances in June cap-and-trade sale
A third of the volume offered at Nova Scotia’s June carbon market sale will come from a reserve account as the Canadian province winds down its cap-and-trade programme, according to a notice published Thursday.
ASIA PACIFIC
Australia’s ERF contracts 7.9 mln ACCUs in latest auction as price dips
Australia signed optional contracts to buy 7.9 million Australian Carbon Credit Units (ACCUs) at last week’s Emission Reduction Fund auction, the Clean Energy Regulator announced Thursday, saying it expects private offset demand to increase.
Safeguard Mechanism reforms can drive CCS investment to meet tighter emissions compliance, consultant says
Australia’s revised Safeguard Mechanism could trigger a round of investment in CCS projects as gas producers scramble to comply with a requirement that new gas fields supplying LNG facilities must be zero emission developments, analysis released on Thursday has said.
Japan announces $114-mln budget for latest JCM project finance push
Japan has issued a first FY2023 call for business proposals under the bilateral Joint Crediting Mechanism (JCM), with a total budget of around 15 billion yen ($114 mln) over the coming three years, as the government seeks to boost the generation of carbon credits.
INTERNATIONAL
China offsets global trend of coal phase-out with new capacity additions in 2022 -report
While almost all countries and regions are gearing up for the transition away from existing and new coal, China’s renewed coal power boom in 2022 offsets the shift away from new capacity in the rest of the world, a report has found.
Sustainable aviation fuel market set for explosive growth by 2030 -report
The sustainable aviation fuel (SAF) market will see a 30-fold surge in production by 2030, analysts predict, growing tot a value of nearly $30 billion.
BIODIVERSITY (FREE TO READ)
Biodiversity Pulse Weekly: Thursday April 6, 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).
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Premium job listings
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CONFERENCES
City Week 2023 – April 24-26, London: City Week event brings together more than 1,000 top-level senior decision-makers from UK and overseas financial institutions for a comprehensive programme of cutting-edge presentations, panel discussions, and networking. This year’s forum will feature many well-known names from the global financial services industry, the world of politics and the international regulatory community. Day 1 has been set at the Climate Change, Green Finance and Sustainability Summit. The 13th annual edition of City Week will be held in-person at Guildhall, London, and also streamed live on our media channels. As in previous years, CW2023 is being organised in partnership with the UK Government, the City of London Corporation, TheCityUK, UK Finance and leading City institutions. Carbon Pulse readers can enjoy a 20% discount on tickets. Register here and use code CITY14CP.
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. Purchase your tickets 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
G’s up – As this year’s G7 chair, Japan wants to push for the G7 economic powers to agree on accelerating decarbonisation efforts through collaboration on a ‘realistic energy transition’ at the ministers’ meeting on climate, energy and environment in Sapporo on April 15-16, ahead of the full G7 summit on May 19-21, its industry minister Yasutoshi Nishimura said. He suggested that natural gas will be needed for about 10-15 years. The draft is still being negotiated by the G7 countries, and may change significantly before it is adopted. Commitment on LNG investments, if kept in the final communique, would be a win for the G7 meeting’s host Japan, which calls LNG a ‘transitional fuel’ to cleaner energy that it says could be needed for at least 10-15 years. But such investments would run counter to assessments by global energy watchdog the International Energy Agency, which has said no new investments in fossil fuel supply can be made if the world is to stop global warming exceeding 1.5 degrees Celsius – the limit that would avoid its most severe impacts. (Reuters, Climate Home)
Safer harbours – Global companies that form alliances such as NZIA and GFANZ to help them to tackle climate change need clear “safe harbour” guidelines from governments to allay fears they could be tripped up by antitrust rules, legal experts said. They noted that both Britain and the European Commission had offered “relatively timid” guidance when what was needed were “explicit safe harbours for companies.” Both jurisdictions have published draft guidelines on how companies can co-operate within the law, but have not released guidance specific to financial institutions and net-zero alliances. Separately, Zurich Insurance is the latest firm to leave the NZIA, following Munich RE’s decision days earlier. (Reuters)
Beyond borders – Nearly 10,400 foreign companies are set to face reporting requirements under the EU’s Corporate Sustainability Reporting Directive (CSRD) starting in the next few years, according to estimates by financial data firm Refinitiv provided to the Wall Street Journal. EU officials have estimated more than 50,000 European companies will have to report, but they haven’t said how many non-EU businesses they expect to be covered by the rules. Of the total number of companies Refinitiv has identified, 31% are American, 13% are Canadian and 11% are British. Read Carbon Pulse’s extensive reporting on the CSRD and other climate risk and ESG disclosure initiatives worldwide.
EMEA
Coffin flop – Green group T&E has warned that the EU could be hammering the ‘nail in the coffin’ of the EU’s green taxonomy to guide private sector investments, commenting on the European Commission’s consultation for an updated delegated act released on Thursday and open through May 3. T&E is concerned about plans to allow ‘efficient’ fossil-fuel burning ships and planes to attain the green label are too loose, and would enable more than 90% of Airbus’ order book and nearly a third of Ryanair’s future fleet to pass the threshold while allowing LNG-powered ships because the criteria ignores downstream emissions leaked from such operations.
Up and away – T&E has also calculated that Ryanair and Wizzair’s emissions last year surpassed those of 2019. New analysis of aviation industry data by the Brussels-based organisation finds that Ryanair was again Europe’s top polluting airline last year, emitting 13.3 Mt of CO2, while 8th ranked Wizz Air emitted 3.7 Mt. “This rapid recovery goes against all pledges made by airlines of building back better after the pandemic,” says T&E. Long-haul airlines, on the other hand, are not yet back to pre-COVID levels of flying – in part due to greater Covid restrictions on routes outside Europe. Lufthansa and Air France emitted 8.7 and 8.1 Mt respectively. Lufthansa is back to 67% of its 2019 emissions and Air France at 84%. “The sector has clearly not been building back better. This talk of a green recovery during the pandemic was misleading. Airlines should get their act together and pour more money for green fuels and clean aircraft,” T&E added. Long-haul carriers like Air France and Lufthansa paid very little for their pollution in 2022, when taking their global emissions into account. Air France paid an average of €7 per tonne in 2022 for its flights worldwide, T&E analysis of new data on the EU carbon market shows – a fraction of the €44/t that Ryanair paid. “Neither of these are sufficient to tackle the growing problem of aviation emissions in line with the demands of the planet,” says T&E.
Looking brighter – Firms in Konjic, a town in the south of Bosnia and Herzegovina, have established a joint company for the production of green electricity for self-consumption to fulfill conditions to continue exporting goods to the EU without paying the upcoming cross-border CO2 tax. According to Balkan Green Energy News, the businesspeople that established the group are aware they will require carbon-free electricity for manufacturing to remain competitive in exports as taxes for CO2 emissions will be charged, so they want to secure green energy on time. The EU is set to introduce a carbon border adjustment mechanism (CBAM) in 2026.
ASIA PACIFIC
Cut car emissions — Indonesia, the world’s biggest palm oil biodiesel user, is now working to introduce bioethanol mandates for gasoline to further cut fuel imports and carbon emissions, Reuters reports. However, it will first have to secure more bio feedstock and solve thorny technical problems. Indonesia imported about 60% of the gasoline it burned last year at a cost of $17 bln, and it aims to replicate the success it had with biodiesel mandates that cut billions of dollars from diesel import bills. While much of Indonesia’s emissions reductions will come from forest management and shutting coal-fired power plants, it also expects significant cuts from burning edible oil and hydrogen fuels and greater use of EVs. This year the government plans to test gasoline with 5% bioethanol in Surabaya, capital of East Java province, energy ministry official Dadan Kusdiana said. Indonesia plans eventually to mandate bioethanol content for gasoline at 15% and use it nationwide by 2031, an aggressive target when it has only two bioethanol plants that struggle to secure enough sugar molasses feedstock. Indonesia’s energy ministry estimates overall fuel demand will grow more than 70% by 2040 from 2020 levels, complicating Indonesia’s aim to reach net zero emissions by 2060.
Green incentives – India plans to give green hydrogen fuel producers incentives worth at least 10% of their costs under a $2 bln scheme set to begin before the end of June, a top government official said, Reuters reports. New Delhi this year approved a 174.9 bln rupee incentive plan to promote green hydrogen in a bid to cut CO2 emissions and become a major exporter in the sector. The government will give incentives worth at least 30 Indian rupees per kg for production of green hydrogen fuel, the official, who is directly involved but did not want to be identified because the discussions are private, told Reuters. The cost of manufacturing green hydrogen, which is made using renewable energy rather than power derived from fossil fuels, in India is currently at about 300 rupees per kg. In response to a query from Reuters, India’s Renewable Energy Secretary Bhupinder Singh Bhalla said the incentives will be awarded through a competitive bidding process, and the incentive amount will taper down annually.
Net zero investment – Taiwan is planning to spend at least NT$15 bln ($491 mln) on the development of net zero technologies every year, Liberty Times reports, citing remarks made by Premier Chen Chien-jen on Thursday. The National Science Council (NSC) and government-backed research institute Academia Sinica have joined forces with other ministries to propose a net-zero technology programme for the island, with funds partially from the Forward-looking Infrastructure Development Programme and the Greenhouse Gas Management Fund. Taiwan has introduced a net-zero carbon target for 2050, with plans for an upcoming carbon levy scheme.
AMERICAS
Tailpipe limits – The US EPA is planning to propose new federal standards for cars, light trucks, and heavy-duty trucks on Wednesday in Detroit, and rules for power plants later in the month, Bloomberg reported Thursday. The proposed standards are expected to govern tailpipe emissions of CO2, NOx, and other pollutants for vehicle model years 2027 through 2032.
Flip flop – Major oil companies on Wednesday accused the federal government of “flip-flopping” when it told the US Supreme Court that a lawsuit filed by several Colorado municipalities seeking climate change-related damages belongs in state court. The justices had requested an opinion from President Joe Biden’s administration on a petition filed by ExxonMobil and Suncor challenging a Feb. 2022 federal appeals court’s ruling that sent the case back to state court, a venue generally considered more favourable to the municipal plaintiffs. In its brief, the government largely agreed with the Denver-based 10th US Circuit Court of Appeals, which concluded none of the grounds cited by the companies to change the venue supported federal court jurisdiction. But the oil companies said Wednesday that the government’s opinion was an about-face from the position taken just two years ago by the Trump administration and suggested the new thinking reflected a “desire to signal virtue” to political allies – not a genuine disagreement on legal theory. (Reuters)
Sinking offsets – A new study published Thursday in the Nature Geoscience journal highlights the risks of using forest-based carbon offsets to cancel out GHG emissions, Grist Magazine reported. Using a multi-method synthesis of contiguous US forest aboveground carbon storage potential at both regional and species levels through a fusion of historical and future climate projections, extensive forest inventory plots datasets, machine learning or niche models, and mechanistic land surface model ensemble outputs, researchers concluded that substantial risks of carbon losses were found in regions where forest carbon offset projects are currently located. The first approach, which is based on ecosystem dynamics and does a poor job modeling the effect of wildfires, suggested American forests might store an average of 45% more carbon by 2100. A second model based on machine learning projected US forests would store 4% less carbon within the same time frame, and a third based on data from more than 100,000 long-term forest monitoring plots across the US ended up somewhere in the middle. It predicted forests in the eastern US would store more carbon but that this growth would be largely offset by dying trees in the wildfire-plagued West. William Anderegg, director of the Wilkes Center for Climate Science and Policy at the University of Utah and a co-author of the study considered the third model most reliable. The paper cautioned that using a single approach to project forest-based carbon storage potential is likely inadequate. The middle-ground model conservatively predicted that 36% of the area of forests designated as offsets by the ARB would lose carbon to wildfires, disease, and other climate-related stresses by the end of the century. The machine learning model’s projection was even worse, forecasting that carbon storage would decline for three-quarters of the regulator’s offset projects by 2100.
VOLUNTARY
Pressure on Total – Investors including activist group Follow This have filed a resolution to pressure TotalEnergies to vote for more ambitious emissions targets when the company holds its annual general meeting next month. The resolution — backed by 17 institutional investors from France, Belgium, the Netherlands, the UK, and the US wants TotalEnergies to align its 2030 target for Scope 3 emissions in line with the 2015 Paris Agreement. The company’s AGM is scheduled for May 26. (Bloomberg)
Erratum issued – Certifier Verra has issued a document to clarify the requirements under its VCS standard pertaining to projects undergoing gap validation in Sections 3.22.4 and 3.22.6 of the VCS Standard, v4.4. These updates are effective immediately and will be incorporated into the next version of the VCS Standard.
Rating game – Carbon market analyst firm Trove has launched a carbon credit assessment tool, covering 4,000 projects against 50 criteria, building on the work of the programme-focused Carbon Credit Quality Initiative and ICVCM, it said in a statement. Projects can be assessed across a wide range of risk types – including sustainable development impacts, legal/ethical risks, as well as additionality, quantification, and permanence. Trove is holding a webinar on Apr. 18 to showcase the service.
Blue tool – Imaging company Planet Labs and green group The Nature Conservancy (TNC) on Thursday announced collaborative efforts on the Blue Carbon Explorer, a digital tool developed by TNC that aims to map mangrove and seagrass blue carbon around the world. The tool also enables governments and coastal managers to make data-informed decisions on the protection and restoration of coastal ecosystems.
Digital outreach – The Open Collaboration working group led by certifier Gold Standard into digital carbon markets has launched a consultation seeking views on proposed recommendations for digital systems that will support the growth of the voluntary carbon market. The consultation aims to identify initial areas of digital infrastructure for standardisation and establish public-facing API recommendations for carbon market stakeholders. The collective welcomes feedback on the approach it should take in advancing digital infrastructure to support the growth and scaling of reporting and verification processes required for certifying carbon offsets.
SCIENCE & TECH
Stable force – Biochar can largely be considered inert, according to a peer-reviewed study examining the material in the Mekong Delta by Danish academics and published in the journal International Journal of Coal Geology this week. The work found that within biochar, irrespective of biochar type, over 97% of the total organic carbon consists of highly refractory, residual carbon that geochemically is considered to possess long-term stability. The findings are supportive of the use of biochar as a carbon removal method.
DAC development – Dozens gathered near Denver on Tuesday to watch as Global Thermostat – a climate research and development company – unveiled a direct air carbon capture machine that the company says can draw about 1,000 tCO2 out of the atmosphere a year. The company says it’s the largest direct air capture unit in the US and the second-largest in the world. Once the carbon is absorbed, low-temperature heat separates out the CO2, which can then be sequestered underground or re-used for making products like concrete. The machine is currently venting CO₂ as the company seeks a partner to sequester it or put it to use. (KUNC)
AND FINALLY…
CliFi update – In the latest ‘climate fiction’ instalment, “Extrapolations,” a new, star-studded Apple TV+ series, depicts humanity’s future under ever-worsening — yet largely realistic — climate change scenarios in strikingly ambitious ways, Axios writes, adding that the series is arguably the most far-reaching and experimental portrayal of climate change yet attempted. “It sputters in some respects, with characters weaving in and out of episodes in sometimes confusing arcs. But it is startlingly well-grounded in climate science and specifically references likely consequences of higher emissions scenarios from UN IPCC reports.” Creator, producer and writer Scott Z. Burns told Axios that the show explores the “messy middle” of the climate story. Extrapolations is not an end-of-days, apocalyptic disaster series, where nothing can yet be done to rein in global warming. Rather, it examines timeframes in which humans still have some agency to shift course on GHG emissions. “For climate professionals, it may be a show that stays with you long after it is finished, be it a rabbi struggling to save his congregation’s place of worship in a sinking Miami, or a frighteningly realistic rogue geo-engineering initiative involving Edward Norton,” Axios adds.
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