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TOP STORY
ANALYSIS: On the hook – the EU wants Big Oil to pay towards the great carbon clean-up
European oil and gas producers are set to face an obligation to help store CO2 at an annual rate of 50 million tonnes by 2030, as set out in the recently-proposed Net Zero Industry Act (NZIA).
VOLUNTARY
South Pole proposes new climate contribution label after “heated debate” over climate neutral
Carbon credit provider South Pole has proposed a new label for climate claims made by corporates in the wake of a backlash against terms such as ‘carbon neutral’, it announced in a statement made Friday.
Verra to streamline offset project review process with faster denials, support climate action in Zambia
Standards body Verra on Friday said it is implementing a new carbon credit project review process that will shorten evaluation requests, while the organisation separately announced an agreement to help foster climate action in Zambia.
Woodside sees significant shareholder vote against directors at AGM over climate performance
In Australia, Woodside Energy shareholders on Friday voted significantly against the re-election of several of its board members over dissatisfaction its performance on climate, however it will unlikely be enough to stop them from being reappointed.
Japanese oil and gas producer makes carbon neutral deal with local gas supplier
Japanese oil and gas company Inpex has signed an agreement for the supply of what it claims to be carbon neutral gas with a local energy company, the two firms announced on Friday.
Standard Chartered toughens emissions target for oil and gas sector
Standard Chartered has toughened its target for curbing greenhouse gas emissions associated with its loans to oil and gas companies, as the bank seeks to align with the IEA’s net zero 2050 emissions scenario.
Brazilian NGO publishes CO2 measurement platform for forest projects
A Brazilian non-governmental organisation on Friday launched a new platform that extends its existing CO2 measurement system to forest restoration projects.
AMERICAS
RGGI states urged to align CO2 budgets with state climate goals, amend reserve price mechanisms
The ongoing third RGGI programme review should result in significantly tighter annual allowance budgets to reflect ambitious climate targets from member states, and also overhaul the prices and design of the power sector carbon market’s two reserve mechanisms, green groups and business organisations said in public comments published Thursday.
California LCFS Q4 net credit generation recedes, but bank grows past 15 mln
Q4 net credit generation in California’s Low Carbon Fuel Standard (LCFS) slightly backed off from recent highs, though substantial volumes of renewable diesel (RD) and electricity outweighed declines in biodiesel and ethanol to push the surplus bank to another all-time high, according to government data published Friday.
US Carbon Markets and LCFS Roundup for week ending Apr. 28, 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 New York reportedly incorporating cap-and-trade in its “conceptual agreement” on the budget, the rescheduling of a hearing for a bill to strengthen California’s 2030 GHG target, and the Texas House of Representatives passing a carbon offsets bill.
Emitters take advantage of CCA and RGGI price dip, financial players take a breather across North American carbon markets
Financial entities stepped back from North American carbon markets across the board as allowance prices dipped, while compliance players took the opportunity to raise their California Carbon Allowance (CCA) and RGGI Allowance (RGA) net holdings, data from the US Commodity Futures Trading Commission (CFTC) showed Friday.
ASIA PACIFIC
Carbon pricing a key policy tool for Asian economies to get on net zero pathway -report
Carbon pricing can be a key policy instrument to help Asian economies adopt a low-emissions pathway, with a price of at least $70 per tonne by 2030 and $153/t by 2050 considered to be high enough to trigger a transition towards low-carbon growth and for regional governments to realise net zero emissions goals, a report from the Asian Development Bank (ADB) has found.
CN Markets: CEA price edges up with sustained liquidity amid concerns over CBAM impact
Allowance prices in China’s carbon market inched up marginally over the past week with trading volume almost unchanged, though observers said recent international trends could accelerate the construction of the Chinese ETS.
EMEA
Euro Markets: EUA and UKA sentiment diverges as British prices slip further
EU carbon prices ended the week on a consolidating note as April trading came to an end with both EUAs and UKAs posting their second monthly loss in a row amid diverging sentiment, while traders appeared to adopt a cautious attitude ahead of the May Day holiday.
Inflation, scarce tenders threaten EU offshore wind power goals -experts
Rising interest rates and inflation, increased supply chain costs, and a lack of consistent government tenders could be an obstacle to offshore wind development in the EU, despite widespread political backing and industry willingness, according to industry experts.
EU nations advance 2023 issuance to 87%, Ireland and Finland yet to begin
EU member states handed out a total of 56 million EUAs to industrial plants over the last two weeks, bringing the total issuance to just over 87% of this year’s maximum, with just two countries yet to begin issuing.
EU plans for green appliances to clash with national rules
European Commission proposals on new “ecodesign” rules, including a 2029 phase out of sales of fossil fuel boilers, are likely to clash with national laws, it emerged from a consultation with member states this week.
INTERNATIONAL
Report calculates huge climate impact of private equity firm investments
The portfolio of one of the world’s largest private equity companies emitted 277 MtCO2e over the 10-year period to 2021, according to an investigative report published this week that calls for greater disclosure regulation of unlisted firms and recommends ways to stem the flow of dirty assets into private hands.
BIODIVERSITY (FREE TO READ)
English region outlines goal to increase nature and climate resilience 30% by 2030
The Kent Wildlife Trust has outlined an ambition to increase wildlife abundance and climate resilience across 30% of Kent in new 2030 strategy, to be partly financed by nature-based solutions such as carbon credits, as well as potentially those which fall under upcoming countrywide biodiversity-supportive regulation, it said Friday.
ICYM
COMMENT: Carbon isn’t just another commodity market
Behind all the noise, opinions, and stakeholders, lies one meta debate in the voluntary carbon market: Tommy Ricketts of BeZero Carbon asks what financial market structure should it ape?
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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. The confirmed attendee list is approaching 250 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
EMEA
EU ETS endgame – In just 16 years from now, the CO2 cap under the EU’s carbon market will reach zero. This is hard to ignore and means no one can indulge into procrastination, argue researchers at the Potsdam Institute for Climate Impact Research (PIK). In a Euractiv piece summarising their recent paper on the subject, one year comes into focus: 2039. “Extrapolating the revised linear reduction factor used to set the cap, this marks the year when no carbon allowances will be issued in the existing EU ETS anymore. In other words, in just 16 years from now, energy companies and energy-intensive industries will only be able to use carbon allowances they have previously banked or bought from other market participants.” The researchers argue that for regulators, policymakers, and firms alike, immediate preparation for the endgame is of the essence. “Waiting too long risks obfuscating the path to climate neutrality or being left behind in walking it,” they added. The paper examines whether a market with fewer and fewer allowances can still function at all, as well as the idea that the ETS may eventually need to be complemented or replaced by a tax. The authors ask whether the Market Stability Reserve will tighten EUA supply beyond what is efficient, and whether an extension of the ETS via linking to other systems or including negative emissions is the answer to dwindling supply and residual emissions.
Bottom line – Potential new fiscal rules would prevent all but four European countries from investing enough to meet their climate targets, a new report by the New Economics Foundation revealed on Friday – two days after the EU Commission adopted a proposal for new fiscal rules. According to the researchers behind the report, Sweden, Ireland, Denmark and Latvia would be the lucky ones. Luxembourg, Bulgaria, Lithuania, Slovenia, and Estonia could increase spending enough to meet at least the more limited EU agreed climate targets, still missing the Paris agreement’s goal. Germany, Austria, Czech Republic, Cyprus, and Malta could increase spending enough to meet the EU climate targets, but are currently classed as a medium debt risk by the Commission and may face limits on spending. The remaining countries, representing 50% of the EU’s GDP, would not be able to invest enough to achieve even the EU’s own limited climate targets without breaking debt or deficit limits.
Mending bridges – There would be mutual benefits to be gained from the UK and the EU linking their respective Emissions Trading Schemes and the British government should approach the EU about this possibility, while the UK government should also engage closely with the EU in relation to the latter’s proposal for a Carbon Border Adjustment Mechanism (CBAM). These were some of the recommendations of a House of Lords committee, in a report published Saturday. The European Affairs Committee released its findings examining the UK-EU relationship, based on an inquiry undertaken between July 2022 and March 2023. The inquiry involved 12 oral evidence sessions, with a total of 43 witnesses, as well as 58 written submissions. The report examines the overarching state of the post-Brexit relationship between the UK and EU, and how this might be developed in the future, across four themes, one of which was energy security and climate change. “After years of tension and mistrust, recommendations focus on actions to be taken as a priority as part of a reset of UK-EU relations following the recent agreement of the Windsor Framework,” it said.
Nuclear strikes – French nuclear power giant EDF said first-quarter sales rose by 34.6% to €47.8 bln thanks to higher electricity and gas prices, though it reported a fall in nuclear output due to reactor outages and strikes in France. The firm confirmed that domestic nuclear production had declined to 85.2 TWh, 6.5 TWh less than in the first quarter of 2022, and underlined its estimate for output in a range of 300-330 TWh for this year. Italian energy group Eni meanwhile reported that its Q1 net profit fell 11% YoY to €2.91 bln on lower oil and gas prices compared with the first three months of 2022, when Russia’s invasion of Ukraine had sent energy prices soaring. (Reuters)
What a steel – US Steel has purchased 1.35 mln EU Allowances for around €107 mln to cover an expected shortfall in its EU ETS permit needs at its Slovakian steel plant for 2023, it said in its Q1 earnings report this week. That roughly works out to an average of €79.25 per tonne. The company also said that as of Mar. 31, the Slovak Ministry of Environment had not yet awarded it its free EUA quota for this year.
AMERICAS
Ethanol lobby – The US ethanol industry is lobbying the federal government to include low-carbon fuels made from ethanol under Inflation Reduction Act (IRA) subsidies, Power Technology reported Friday. The US will require at least 3 bln gallons/yr (11.4 bln litres/yr) by 2030 of sustainable aviation fuel (SAF) to reach a 20% GHG reduction target for the aviation industry, the group maintained. SAFs must yield a 50% reduction in life cycle emissions compared with petroleum-based jet fuel to qualify for a $1.25 tax credit. The group urged the government to use the US Department of Energy’s (DOE) GHG Regulated Emissions, and Energy Use in Transportation (GREET) model to calculate SAF emissions which would show SAF having a lower carbon footprint than currently presented in the IRA. But research published earlier this year, partly funded by the DOE, found ethanol to be at least 24% more carbon intensive than gasoline due to land required to grow crops, processing, and combustion. Geoff Cooper, president of trade group Renewable Fuels Association, blasted the report results as “completely fictional and erroneous” and accused authors of using “worst-case assumptions [and] cherry-picked data”.
Heavy duty California – California regulator ARB on Thursday adopted a new rule to phase in heavy duty zero-emission vehicles (ZEVs) in 2024, with all heavy duty vehicles required to become ZEVs by 2042. Drayage truck fleets, which move heavy loads over short distances, will be required to switch to ZEVs by 2035. Work trucks and day cab fleets must adopt ZEVs by 2039, and sleeper cab tractors are required to make the switch by 2042. Combustion engine truck sales must end by 2036.
Faulty model inputs – Steven Guilbeault, Canada’s environment minister faced criticism on claims of updated scientific and economic models to determine the country’s social cost of carbon (SCC), Epoch Times reported Friday. Last week the minister had raised Canada’s SCC estimates to C$247 ($183) in 2020 instead of C$54. Ross McKitrick, an environmental economics professor at the University of Guelph noted that the Dynamic Integrated Climate-Economy (DICE) model that Canada used allowed researchers to obtain a certain desired number if “you just feed a certain set of assumptions into a computer”. Think-tank Heritage Foundation has called DICE “flawed beyond use for policy-making” as it was too sensitive to initial assumptions. Jack Mintz, fellow at the School of Public Policy at the University of Calgary also criticised DICE for using a 2% near-term Ramsey discount rate in calculations – “an extraordinarily low number” that assumes there will be little risk to the economy while previous SCC models have used a 3% rate. So increasing the SCC, Mintz said, was quite surprising and “could actually push up the costs quite a bit”.
Practicing teacher – A private liberal arts institution Catawba College in North Carolina, become the first campus in the state and the Southeast US, and one of 13 nationwide, to achieve net neutrality seven years ahead of its 2030 target, Energy News Network reported Thursday. The campus eliminated or offset fossil fuels burned on site for heating, cooking, and on-campus transportation with geothermal heating and cooling technology installed in the 1990s. Additionally, the campus created or bought carbon credits by installing 800 kW of rooftop solar and 76 solar thermal modules, as well as implementing energy efficiency measures in ultra-efficient LEED certified buildings. The institution also zeroed out all ancillary emissions further up the supply chain and airplane activity for sports team travel, officials noted. Furthermore, the campus purchased renewable energy credits (REC) from two North Carolina solar farm, and a landfill methane capture project. Together the carbon offsets and REC costs amounted to less than $100,000/yr, Brad Ives, director for the school’s Centre for Environment said. “You lose credibility if you don’t practice what you teach,” Ives added.
ASIA PACIFIC
Green splurge – Japan’s Kyushu Electric Power will issue $1.5 bln in preferred shares to help fund its green transition at a time when high fuel prices are weighing on its profitability, Channel News Asia reports. Japanese utilities were hit by high fuel costs last year as a post-pandemic energy crisis was exacerbated by Russia’s invasion of Ukraine. The government delayed a request from a number of companies to raise energy prices as it tried to rein in inflation.
VOLUNTARY
ARR extension – Offset standard developer and manager Verra on Friday announced it is extending the grace period for projects that are currently in development and planning to two CDM methodologies for afforestation and reforestation. In the coming months, Verra expects to release its new Afforestation, Reforestation, and Revegetation (ARR) methodology, which will replace these two CDM methodologies.
AND FINALLY…
Methane speed cameras – By the end of the year, at least 24 high-resolution satellites with sensors to detect methane leaking from pipelines, unlit flares, storage tanks, and compressor stations are expected to be in orbit, Bloomberg Green reported Friday. The satellites measure methane concentrations from space by analysing the way sunlight reflects from the earth as it passes through methane clouds that absorb light in the short-wave infrared portion of the electromagnetic spectrum. So far at least three satellites have been launched with four more expected to enter orbit before 2024. GHGSat, an emissions monitoring technology firm, and non-profit Carbon Mapper working with Planet Labs are launching satellites specifically designed to detect methane emissions, which in the US exceeded amounts reported by the US Environmental Protection Agency (EPA) by 70% between 2010 and 2019, according to satellite data published this month, the report stated.
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