Newsletters > CP Daily: Monday April 17, 2023

CP Daily: Monday April 17, 2023

Published 04:41 on April 18, 2023  /  Last updated at 04:41 on April 18, 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**

Presenting CP Daily, Carbon Pulse’s free newsletter. It’s a daily summary of our news plus bite-sized updates from around the world. Subscribe here

TOP STORIES

G7 finds compromise on gas, pledges to boost efforts for fossil fuel phase out by 2050

G7 energy ministers pledged to accelerate efforts to phase out unabated fossil fuels to reach net zero emissions by 2050 and set specific solar and wind power targets, but in a compromise allowed for continued investment in gas to meet shorter term energy security priorities in a communique released by the group after its weekend summit concluded in Sapporo, Japan.

G7 outlines carbon credit integrity principles in sign of push towards markets

A document published by the G7 countries following its meeting in Japan, seen by Carbon Pulse, details the principles which should underpin high-integrity carbon markets in an overall signal of support towards mitigation actions which generate carbon credits.

EMEA

EU ETS reforms heat Strasbourg up, but expected to pass Parliament’s final scrutiny

A small minority of members of the EU Parliament raised concerns over EU ETS-related reform bills on the eve of a final vote on Monday, although their approval is not in doubt, sources told Carbon Pulse.

Minimal immediate carbon price impact seen as Germany closes its remaining nuclear power plants

European carbon market analysts believe that the impact of the German nuclear phaseout which concluded over the weekend has already been long-priced into the EU ETS, though the extension of plants’ lifetimes over the past winter avoided a significant amount of power sector emissions.

Green groups sue EU over its inclusion of fossil fuels, nuclear in taxonomy

Climate NGOs on Tuesday filed a lawsuit against the European Commission over its decision to include gas and nuclear energy in its taxonomy list of sustainable investments, making good on an earlier pledge.

Euro Markets: EUAs drift for a fourth day as compliance demand seen winding down

EUAs prices sank on Monday as demand appeared to decline as the end of the compliance season came nearer despite the daily auction clearing at the largest premium for nearly eight months, while energy prices gave back initial gains amid news of plentiful Asian gas supplies.

UK CCS ambition insufficient despite “rubicon moment”

UK progress on the rollout of carbon capture usage and storage (CCUS) is too slow despite fresh funding in the government’s recent financial statement, according to experts at an event Monday, with overall ambition, regulatory clarity, and supply chain transparency cited as the main challenges ahead.

UK airlines project demand for up to 9 million tonnes of removals by 2050

An industry coalition representing over 90% of UK airlines and industry outlined a roadmap on Monday consisting of technological and efficiency improvements coupled with up to nine million tonnes of carbon removals by mid-century that would see the sector comply with its net zero emissions pathway.

UK government to roll out new digital MRV platform for UK ETS

The UK government is developing a new digital system for installations covered by the UK ETS to monitor, report and verify their emissions that will replace the existing ETSWAP system starting in the summer.

ASIA PACIFIC

Australia Market Roundup: New report charts “credible” decarbonisation course, issuance inches up

A new report by an energy investment group has laid out what it describes as a credible pathway for Australia to decarbonise its electricity grid, while the Clean Energy Regulator has minted 240,000 new Australian Carbon Credit Units (ACCUs).

UAE becomes latest country to sign JCM partnership with Japan

The United Arab Emirates has become the 26th country to agree to a bilateral carbon trading framework with Japan under the Joint Crediting Mechanism (JCM).

Japanese conglomerate teams up with local rice husk provider for biochar carbon offsets

Marubeni Corp. has signed a deal with one of Japan’s largest producers of rice husk biochar to increase its production capacities and create carbon credits, according to a press release published Monday. here

Australia needs carbon removal targets to spur investment, Climate Change Authority says

Australia should introduce carbon removal targets in order to incentivise investment in both natural and technology-based solutions, according to the Climate Change Authority (CCA), which said sequestration is a crucial element to the country meeting its climate targets.

China should learn from pilot markets to introduce CO2 allowance auctioning, govt think-tank says

China has not yet introduced auctioning in its national carbon market, but regulators could easily formulate rules for paid allowance allocation based on the lessons learned in the pilot markets, researchers from a government-run think-tank have suggested.

VOLUNTARY

VCM Report: Avoidance offsets slide futher to extend the bearish trend

Prices for avoidance offsets continued to sink over the past week as the spectre of recession distracted corporate attention from voluntary emission mitigation.

Canada-based carbon credit seller sees mid-June closure of African reforestation project deal

A Canadian-headquartered firm has attracted a number of potential buyers in a bidding process for carbon credits from one of its African reforestation projects, and is expecting to close its first major transaction by mid-June.

Commodity trader ACT acquires software firm to boost ESG offering

Commodity trader ACT has acquired a controlling stake in a US-based software firm, expanding the Amsterdam-headquartered company’s offerings in the fast-growing environmental, social, and governance (ESG) space.

AMERICAS

Washington to trigger reserve allowance sale during Q2 carbon auction -analyst

The Washington state cap-and-trade programme will see the May auction settlement exceed at least one of the scheme’s reserve tier prices as 2023 compliance and hedging demand exceeds supply, with permit values heading to the ceiling in the not-too-distant future, an analysis firm said Monday.

RGGI Market: RGAs dither as programme review yields near-term uncertainty, long-term opportunity

RGGI Allowance (RGA) values remained rangebound over the course of the week, leaving traders to speculate on a potential catalyst from the power sector cap-and-trade system’s programme review and New York’s upcoming economy-wide carbon pricing system.

BIODIVERSITY (FREE TO READ)

G7 commits to increase biodiversity funding, provides little detail

G7 ministers over the weekend committed to increasing their international spending on biodiversity and to implementing the Global Biodiversity Framework, though a communique from the Sapporo summit was light on details.

Non-profit receives $60 mln to remove deforestation from crucial supply chains

A Canada-based non-profit has received $60 million from a funding initiative to scale up low-impact and circular clothing, paper, and packaging solutions that will eliminate the use of ancient and endangered forests from the supply chains of those industries, it announced Monday.

Eating it up: Food industry tops biodiversity impact short list

Just 20 food producers account for almost a fifth of the biodiversity impact from a group of the 250 biggest nature loss contributors in the world, a study has found.

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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. The confirmed attendee list is approaching 200 people. Purchase your tickets now, before they sell out!

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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

Ranking climate risk – Investment research firm Morningstar’s Portfolio Sustainability Score that ranks global stock exchanges for their level of sustainable stocks, placed the Netherlands in the top spot for the fourth year in a row, Investors Observer reported Monday. Hong Kong’s stock market ranked third behind Finland, overtaking France, with the US at 16 and UK down to 20. Morningstar’s index covers 97% of global market capitalisation and applies only to those stock markets where more than 67% of companies reflect ESG risk scores. Risk is high in the energy sector, from carbon risk and fossil fuels. Other economic sectors that have significant risk include utilities, industrials, and basic materials. the report noted. The UAE equity market has the lowest score in ESG risk with 85.3% coverage, according to Morningstar’s report.

Vulnerable countries’ ITMOs – Ministers and senior-level representatives from the Vulnerable Twenty Group of Ministers of Finance (V20) met on the sidelines of the International Monetary Fund (IMF) spring meetings in Washington on Sunday. The resulting dialogue document outlining the group’s position on several international climate change issues includes a call for mechanisms to lower the cost of capital for climate-related investments as well as urging “a decisive way forward to deliver climate finance through an ambitious share of world GDP”. On carbon markets, the V20 highlighted a desire to pursue country-to-country trade of internationally transferred mitigation outcomes (ITMOs), defined under Article 6 of the Paris Agreement. The document also emphasised that governments should enable private actors to pursue ITMO deals, where units could be transferred to the “G7 or G20 country where the private actor is domiciled”. The V20 was formed in 2015 and now includes membership from 58 economies.

Fire with fire – The Global Trade and Investment Research Institute (GTRI) has advised the Indian government to develop a WTO-compatible retaliation mechanism in response to the EU’s proposed Carbon Border Adjustment Mechanism (CBAM). The CBAM aims to levy a carbon tax on imports from countries with lower environmental standards, which the institute warns could negatively affect Indian exports. The GTRI suggests that India should adopt a proactive strategy and collaborate with other affected countries to negotiate better trade terms and avoid discriminatory treatment. It suggested industry calculate the monetary impact of the tax, check if the CBAM will enhance competitiveness against competitors, hire an auditor to prepare documents for submissions to the EU, increase the use of green power, and explore the feasibility of switching to low-carbon technologies. The Indian government has said it plans to file a challenge to the CBAM with the WTO. (PTI)

EMEA

Nuclear’s not Finn-ished – Finland’s much-delayed OL3 nuclear reactor began regular output early on Sunday, EurActiv reports, becoming the new largest in Europe. Nuclear power remains controversial in the region primarily due to safety concerns, and news of OL3 generating power comes as Germany switched off its last three remaining reactors over the weekend. Sweden, France, the UK, and others plan new developments. OL3’s operator TVO, owned by Finnish utility Fortum and a consortium of energy and industrial companies, has said the unit is expected to meet around 14% of Finland’s electricity demand, reducing the need for imports from Sweden and Norway. The new reactor is expected to produce for at least 60 years, TVO said in a statement on Sunday after completing the transition from testing to regular output.

Feeling Blue – The European Commission opened an in-depth investigation into whether certain Romanian support measures in favour of the airline Blue Air Aviation are in line with EU state aid rules. Since Nov. 2022, the EU ETS-covered airline has no longer been operating as the Romanian authorities temporarily halted its operations due to its financial situation. The Romanian airline has been in a financially precarious situation since 2019. In Aug. 2020, the Commission approved €28 mln public guarantee to compensate for damages related to the coronavirus pandemic and travel restrictions and around €34 mln on a rescue loan to partly cover Blue Air’s liquidity needs for six months after approval. The aid was meant to stop after six months or the Romanian government would either communicate a liquidation plan or comprehensive restructuring plan for Blue Air to the Commission for state aid assessment. Romania sent a restructuring plan to the Commission extending from Aug. 2020 to Sep. 2025, which would include six years of rescue loans, allowing for a repayment of the aid until 2026. The Commission will now look into the restructuring plan’s long-term viability without additional state aid and any possible market distortions caused by the aid.

Energy savings – New EU rules to reduce the energy consumption of electrical appliances like washing machines, TV sets and hand-held video games consoles were adopted today by the Commission. By requiring reduced electricity consumption of products when they are in low power mode, the Commission estimates that 4 TWh of energy will be saved per year by 2030, the equivalent of CO2 savings of 1.36 million tonnes of CO2 equivalent. Manufacturers will have a transition period of two years until these new rules apply. The revised rules introduce a number of amendments to the 2008 ecodesign regulation on standby, off mode and networked standby, last updated in 2013, following an extensive consultation exercise and scrutiny from the European Parliament and the Council.

Jet Zero – The UK’s Jet Zero Council – made up of industry, academic and government leaders – met at the Sustainable Skies World Summit to outline a workplan towards net-zero for the aviation sector, part of a strategy dubbed ‘Jet Zero’. Through its two-year plan, ministers, and aviation chiefs have revealed actions to meet the goal and will work alongside the government as they decarbonise and invest in green jobs. The Jet Zero Council’s objectives include delivering 10% SAF in the UK fuel mix by 2030 and zero emission transatlantic flight within a generation. The plan sets out how the Council will help to accelerate the production of SAF, by continuing to invest millions of pounds in first-of-a-kind plants to produce green fuels, supporting crucial scientific research on a larger scale, and helping to drive down production costs. (International Airport Review)

Swiss switcheroo – The Swiss pension fund Aargauische Pensionskasse (APK) for employees of Aargau canton, one of the 26 cantons forming the Swiss Confederation, has switched its emerging market equities benchmark to the MSCI Low Carbon Target Index, the company said in its recent financial statement, IPE reported Monday. The management board expanded its climate strategy to also cover equity investments in emerging markets, addressing physical risks, and risks resulting from climate policies, similar to the fund’s Swiss bond portfolio. At the end of last year, the pension fund had invested 4.7% in emerging market equities of its CHF12 bln (€12.2bln) assets under management, which declined around CHF1.1 bln YoY. The company’s Swiss bond portfolio returned -15.2% in emerging market debt hard currency and -7.9% in emerging market debt local currency in 2022. Equities also delivered negative results, with emerging market equities -20.1%, according to the financial statement.

AMERICAS

APA alarm – Guayana’s Office of the Vice President has responded to a recent public statement by the Amerindian Peoples’ Association (APA), which last month lodged a formal complaint with the Architecture for REDD+ Transactions (ART) Secretariat over claims that the Guyanese government did not receive consent from communities to distribute tens of millions of avoided deforestation carbon offsets. The APA claimed that the government’s proposal did not accurately reflect their comments on consultations with indigenous villages and that the National Toshaos Council’s support for the government’s Low Carbon Development Strategy (LCDS) document did not comply with the principles of free, prior, and informed consent (FPIC). According to the Guyana Standard, The VP’s office contested these claims, stating that it was APA that violated the FPIC principles by not consulting or informing indigenous villages, the National Toshaos Council, or any representative group of the Indigenous Peoples of Guyana before filing its complaint. It also argued that the APA was aware that every report of the ART TREES process is publicly available for perusal and its complaint referred to the structure of the verification reports and the sections of the Guyana application documents under ART.  The Vice President’s office also claimed that APA was deliberately withholding its involvement in the very audit process about which they were complaining. According to the office, the independent verifier conducted an assessment mission to Guyana in April 2022, and APA participated in the verifier’s session. Additionally, the APA was allegedly invited to follow up with the auditor should this be needed, but it apparently made no such request and expressed no concern to the auditors in the audit process. The VP’s office “contended that APA cannot justifiably say it was not engaged as the evidence available to the public proves otherwise,” the Standard reported. “In fact, for over two years, the VP’s office said APA has been invited by the Office of the President to participate in, and to help lead, consultations across Guyana concerning the LCDS 2030 and ART-TREES. However, APA was very selective in engaging in the consultation that it has now raised grievances about.” Separately, the chairman of Guyana’s National Toshaos Council Derrick John has also expressed his alarm over a complaint lodged by the APA against Guyana’s National Forest Carbon Programme. In a statement to the media, he said the complaint was filed without consultation or consent from the NTC, which represents indigenous peoples in Guyana.

Ever pricey Evergreen – Washington state average unleaded gasoline prices clocked $4.50/gallon on Monday according to AAA data, up from $4.38/gal during the prior week, The Centre Square reported. Following the launch of the state’s clean fuel standard and cap-and-invest emissions reduction schemes in January this year, fuel prices have recorded 13 weeks of price increases. The Evergreen State’s average gasoline price tag is 83 cents higher than the US national average of $3.67/gal. The first auction of CO2 allowances that settled at $48.50/tCO2 equates to about $0.39/gal of gasoline and $0.47/gal of diesel according to a report from the Washington Policy Centre, based on Department of Ecology data.

ICE good as EVs – Tests show that “renewable gasoline” partly made from renewable fuel feedstocks such as cooking oil produces 40% less emissions than regular gasoline, Chevron said in a statement Monday, according to Bloomberg. A Toyota hybrid RAV4 running on renewable gasoline would have a similar carbon footprint to a pure EV in 2040, the company forecasted. Although battery vehicles require no fossil fuels to run, they can be linked to emissions from the power supply that charges the vehicle if it originates from natural gas or coal. Renewable gasoline “can get to lower carbon for 95% of the existing fleet” without consumers needing to buy a new car, Balaji Krishnamurthy, vice president of strategy and sustainability at Chevron said. The company plans to demonstrate renewable gasoline capability by taking three Toyotas on a road trip across the US Gulf Coast. Commercial viability for the fuel requires incentives like those built into California’s Low Carbon Fuel Standard (LCFS), Andy Walz, president at Chevron’s fuels and lubricants Americas division said. Exxon Mobil is also working on a low-carbon fuel blend, the report noted.

ASIA PACIFIC

Japan-Oman deal – Mitsui announced that it had signed a memorandum of understanding (MoU) on comprehensive cooperation for a low CO2 iron metallics business with the Omani Public Authority for Special Economic Zones and Free Zones (OPAZ), and a Land Reservation Agreement with the Port of Duqm Company (PODC), along with Kobe Steel, the company stated in a press release. OPAZ is an Omani authority that oversees the Special Economic Zone at Duqm and PODC is an Omani entity that operates the Port of Duqm. Mitsui and Kobe Steel have also been in discussion with the Sultanate of Oman’s Ministry of Energy and Minerals on detailed condition for natural gas supply. Mitsui and Kobe Steel, which has a track record of constructing MIDREX plants globally, have been jointly studying the possibility of establishing a low CO2 iron metallics production plant in the Special Economic Zone at Duqm, Sultanate of Oman. The project is expected to produce five million tonnes of direct reduced iron (DRI) through the MIDREX process. By using technically and commercially proven production methods, Mitsui and Kobe Steel aim to provide a near-term decarbonisation solution to the steelmaking industry. In the long run, the project will aim for further decarbonisation through measures such as replacement of natural gas with hydrogen and carbon capture, utilisation and storage (CCUS), with a goal to expand production capacity as well.

Regulate us, please – Australia’s motor industry is urging the government to be ambitious in imposing CO2 limits on car makers, saying its own figures show there is room for the government to go harder than it previously thought, the ABC reports. Australia is just one of a handful of countries without fuel efficiency standards, the industry says the lack of a standard has put it at the end of the waitlist for in-demand EVs or efficient hybrids and petrol cars. The industry is in the unusual position of asking to be regulated so that it can solve its supply issue, and is in lock-step with environment groups that Australia should set mandatory CO2 targets on car makers as soon as possible. Climate Change Minister Chris Bowen is due to announce the government’s electric vehicle strategy this month, which is expected to include a discussion paper on the next steps towards a standard. The Federal Chamber of Automotive Industries reported car makers were tracking well on its voluntary target for passenger vehicles, but that cutting SUV and ute emissions had proved more difficult.

TNC in action – US-based environmental organisation The Nature Conservancy (TNC) is studying various conservation initiatives in Asia Pacific, with the aim of turning them into projects investors can get involved with. They include a plan to reverse the degradation of grasslands caused by grazing in Mongolia, a mangroves restoration initiative in Australia and a collaboration in China to foster nature-based carbon storage projects, the global head of impact finance and markets Matthew Arnold told SCMP. “There are over 20 shortlisted nature-based projects [globally] to be supported by philanthropic money raised by TNC, in which certain successful ones we expect investors will be able to participate [for returns],” he said in an interview. In Mongolia, TNC is exploring a project with shepherds to reduce herd sizes to sustainable levels, partner with local government to limit the movement of new herders, and sell carbon credits to supplement the reduced income resulting from sustainable grazing. In Australia, the group is doing a feasibility study into converting 1,500 hectares of privately-owned agricultural and pastural land on coastal flood plains that had been drained back to their original state as mangroves. In China, it is collaborating with a national think tank linked to the Ministry of Ecology and Environment on policies to incentivise nature-based climate mitigation projects that can generate credits tradeable in the country’s carbon market.

VOLUNTARY

Ad(d) carbon neutral designation – Dublin-based advertising technology firm Snigel announced Monday that environmental consultancy Carbon Footprint had awarded it a carbon neutral designation. Carbon Footprint holds ISO14001 certification and operates a quality management system to ISO9001 standards. From the summer of 2022, Snigel started work in minimising its carbon footprint, receiving funding from London-based private equity firm CBPE who invested in Snigel in early 2023, the press release said. Remote work, use of nearby co-work spaces, green energy usage, server infrastructure that activates only on demand, minimising business travel, alternatives to air travel, cutting out unnecessary ad requests, monitoring progress through industry standard KPIs, and educating their workforce were some of the steps the company undertook to achieve carbon neutrality.

AND FINALLY…

Death and tax extensions – Hurricane and tornado seasons are getting longer because of climate change. So is US tax season. The US Internal Revenue Service granted extensions to taxpayers in seven states to file their taxes this year because of federal disaster declarations. Filers in parts of Tennessee, Arkansas, and Mississippi have until July 31 to submit forms and payments because of severe storm and tornado damage. Those in certain areas of Alabama, California, and Georgia have until Oct. 16, because of winter storms, flooding, mudslides, and tornadoes. And a winter storm in portions of New York means taxpayers there have until May 15 to make filings and payments. Since 2021, the IRS has postponed the April tax deadline for parts of 15 states with federally declared “major disaster areas”. It has granted relief for other tax due dates — including for quarterly tax — to parts of 27 states in the same period. That means for millions of Americans, tax season is getting longer, and the country’s national tradition of a rush to the mailbox, or tax-filing software, is changing by the year. (Washington Post)

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