CP Daily: Wednesday May 17, 2023

Newsletters > CP Daily: Wednesday May 17, 2023

CP Daily: Wednesday May 17, 2023

Published 03:59 on May 18, 2023 / Last updated at 04:03 on May 18, 2023 / Carbon Pulse / Newsletters

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

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TOP STORY

ANALYSIS: Experts caution “opportunistic” Zimbabwe carbon deals bonfire to have wider-ranging consequences for voluntary market

Zimbabwe’s decision to void all existing carbon credit agreements and cream off future revenues from credit sales is an opportunistic move that could render offset projects in the country and elsewhere unattractive or unviable, while also potentially spurring other nations demand similar concessions, stakeholders told Carbon Pulse.

EMEA

Kenyan government steps in to oversee cash from carbon projects

Kenya is going to ensure a healthy share of carbon revenue stays in the east African country in the future under new legislation proposed to meet its updated climate targets for 2030.

EU carbon border mechanism enters into force, faces long road ahead

The EU’s carbon border adjustment mechanism (CBAM) regulation entered into force on Wednesday, but a long road ahead befalls policymakers that will iron out the details of implementation, including the CBAM’s role in securing EU producers’ global competitiveness.

Euro Markets: EUAs slip as data shows small drop in fund short positions as UKAs snap back after firm auction

EUA prices dropped on Wednesday as Commitment of Traders data showed a modest cut in investment funds’ net short position, though the final EU auction of the week appeared to steady the market, while UKAs jumped sharply after one of the strongest auctions in the market’s two-year history.

EU seeks to grant Icelandic aviation sector an extra year of free ETS allowances

Iceland and the European Commission have reached a preliminary agreement for Iceland’s aircraft operators to continue to receive free EU ETS emissions allowances up to and including the year 2026, it was announced at a press conference following the Council of Europe summit in Reykjavik.

INTERNATIONAL

Switzerland becomes first nation to publish official UN report detailing Article 6.2 activities

Switzerland has become the first country to submit an initial report to the UN detailing accounting and reporting information under Article 6.2 of the Paris Agreement for its international mitigation activities with three other countries, which are estimated to collectively reduce emissions by nearly 2 Mt by 2030.

UK backs Biden’s removals and CCUS plan

The UK is to back the US President Joe Biden’s programme to remove and store global carbon emissions, the government said in a release Thursday, stating that the London wants to forge closer links with the Washington on energy security.

Financial firms developing global decarbonisation database targetting ‘Scope 4’ emissions

Thirteen financial institutions, including AXA IM and Natixis Investment Managers, are developing a new worldwide database of avoided emissions factors and related company-level avoided emissions, aiming to provide clearer metrics in the drive towards net zero.

AMERICAS

Alaska lawmakers pass voluntary carbon offset bill for state forestlands

The Alaska legislature on Tuesday passed a bill to establish a statewide voluntary carbon offset programme for its forestlands, leaving only Governor Mike Dunleavy’s (R) upcoming signature standing in the way of the bill becoming law.

Major US bank sees upside policy risks ahead for carbon, clean fuels markets

Analysts from a major US bank remain bullish over the medium term for California Carbon Allowance (CCA) prices as balances turn the corner from surplus to deficit, but expect the near-term environment to remain challenged for Low Carbon Fuel Standard (LCFS) credits and voluntary carbon offset (VCO) prices which await policy-driven upside catalysts, in a report published Monday.

VOLUNTARY

Costly value chain emissions keeping Unilever off course to meet emissions targets -report

Global conglomerate Unilever will need to address its Scope 3 emissions in order to align itself with an emissions reduction trajectory consistent with the Science-Based Targets initiative (SBTi), a report has argued, with the financial cost of inaction due to carbon pricing alone to hit nearly $3 bln by 2030 and over $7 bln by mid-century.

US farmer-owned cooperative pays out $5.1 mln last year for 262k tonnes sequestered carbon

A US farmer-owned cooperative has paid out over $5.1 million in 2022 for around 262,000 tonnes of CO2e sequestered, outpacing prices paid by a leading rival.

New CEO for asset manager of Apple nature-based solution fund for carbon removals

A climate veteran has taken on a new role as CEO at an asset management company dedicated to natural capital, and already serving tech giant Apple’s nature-based carbon removal fund.

ASIA PACIFIC

Australia Market Roundup: ASIC touts progress in combatting greenwashing, ACCU price slips

The Australian Securities and Investment Commission (ASIC), the nation’s stock market watchdog, has highlighted the need for transparency, as it seeks to clamp down on greenwashing by corporate entities, while the price for Australian Carbon Credit Units has fallen.

BIODIVERSITY (FREE TO READ)

No role for biodiversity credits to meet global $20 bln goal for nature -minister

The funds to meet a $20 billion finance target for biodiversity by 2025, a key component of last year’s landmark Global Biodiversity Framework (GBF), should not come from biodiversity credits, according to the Samoan minister for environment speaking during an event on Wednesday, with other stakeholders also suggesting the nascent market is not likely to be ready to scale sufficient finance within less than three years.

Australian banana plantation project earns Verra plastic credits

EU continues exports of bee-killing pesticides while banning them at home -report

The EU is exporting more than 10,000 tonnes of “bee killing” pesticides a year to developing countries, despite having banned the use of these chemicals in its own fields, according to a report published Wednesday.

ICYM

Zimbabwe voids all existing carbon offset agreements, lays claim to half of future proceeds -report

The Zimbabwe government has declared all current carbon offset deals in the country “null and void” and will take a 50% revenue cut of all future contracts, a media outlet reported Tuesday, in what could further imperil a large, already beleaguered REDD+ project and set a precedent for other countries to extract similar concessions.

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CONFERENCES

Grow to Zero! – June 26-27, London: Insightful discussions on carbon market evolution? Thought leadership on blended finance for impact? Networking with impact investors and sustainability professionals? Find it all at Gold Standard’s Conference, Grow to Zero! 26-27 June 2023 at Kings Place, London. Tickets and agenda details available here: www.growtozero.co.uk

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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

Facilitated emissions – A group of banks led by Barclays and Morgan Stanley is working on a compromise deal to unlock a months-long stalemate that has stalled efforts to calculate and disclose the carbon footprints of the industry’s capital-markets operations, Bloomberg reports. Assigning responsibility for so-called facilitated emissions remains a divisive subject, which is the main reason climate accounting has so far focused on direct lending. But the Partnership for Carbon Accounting Financials (PCAF), a global alliance of banks, initially indicated that a deal may be reached during the Q1 2023 but the target was missed after banks involved in the talks disagreed over how much banks should disclose, with some calling for 100% of facilitated emissions and others 17%. Now, there seems to be some consensus building around a 33% figure which could end the stalemate.

Speak up – Norway’s $1.4-trillion oil fund will step up its use of shareholder proposals to send messages on ESG topics to US companies after quietly testing them out at a small number of annual meetings. The world’s largest sovereign wealth fund filed shareholder proposals on climate for the first time this year at four US companies but did not publicise them until now, its head of corporate governance told the FT. Two companies — Packaging Corporation of America and Marathon Petroleum — gave commitments on climate so the fund withdrew its proposals while in two others — NewMarket and Westlake — the annual meeting voted on the oil fund’s motion. The fund considered the trial a success and would probably step up use of shareholder motions in the future. Norway’s oil fund is one of the most influential investor voices on ESG, owning on average 1.5% of every listed company in the world. For decades it was worried about being too outspoken as a shareholder, but in recent years it has taken a more active stance, becoming the first big shareholder to declare how it will vote at the annual meetings of all 9,000 companies it owns five days in advance.

EMEA

Seizing control – Russia’s economic confrontation is entering a dangerous new stage, after it created a legal framework for the temporary nationalisation of foreign assets in the country, the FT reports. Projects including energy infrastructure mean that billions of dollars are at stake, and the government could exercise a personalised approach to every foreign stakeholder. The first victims of the new policy – the Russian assets of two European energy firms, Finland’s Fortum and Germany’s Uniper – were recently put under provisional management by a decree of Russian president Vladimir Putin. The Kremlin’s actions appear to have been triggered by the federal administrative court in Leipzig, which dismissed a claim by Rosneft against the German government and its decision in September to put the company’s assets in Germany under the supervision of the national energy regulator, the newpaper continues. Putin’s decree now gives the federal property management agency the right to control western assets hit by the need to stop operations in Russia and recent actions against Fortum and Uniper’s assets may simply be a taste of things to come.

An even greener Emerald Isle – Ireland has approved the 2023 Climate Action Mandate on Tuesday, which hopes to provide a consistent approach meeting climate goals across the public sector, including a 51% reduction in GHG emissions and a 50% improvement in energy efficiency by 2030. According to Euractiv, the actions outlined in the plan include a ban on disposable cups, plates, and cutlery outside of clinical and healthcare settings. Private transport is also an area targeted in the mandate, with a plan to phase out parking spaces in buildings alongside a planned promotion of greener transport options such as cycling and shared mobility options. There is also a push towards further digitalisation in the public sector, eliminating the need for paper-based processes. Ireland’s public sector employs an estimated 350,000 people, in a country with a population of just over 5 million, giving it significant purchasing power.

Greener taxes – The French government plans to budget half a billion euros annually for a new tax credit for environmentally-friendly investments as part of a bill presented to green the industrial sector, finance minister Bruno Le Maire said. The tax credit makes France the first EU country to take advantage of a loosening of European state aid rules in recent months in response to new tax subsidies in the US via the Inflation Reduction Act. Le Maire’s ministry said the tax credit, which will be available on a temporary basis in line with the new EU rules until 2025 with the possibility of an extension to 2029, was expected to generate private investments totalling €23 bln by 2030 and directly create 40,000 jobs. (Climate Home)

Vetternwirtschaft Bobby – The right-hand man of German vice-chancellor Robert Habeck, state secretary Patrick Graichen, will step down following allegations of cronyism during the appointment process for the state-owned energy think-tank dena. The decision came after a review showed Graichen had signed off on a project backed by a Berlin-based group on which his sister sat as a board member, said Habeck in a statement. Graichen, formerly the chief of Berlin-based think-tank Agora Energiewende, was appointed to the post of state secretary when the new German government was formed in 2021. He quickly gained a reputation for his handling of the energy crisis and his role in engineering the country’s energy transition. Germany’s currently most controversial law, a ban on fossil heaters from 2024, is largely his doing. He has also been accused of failing to disclose his close personal relationship with designated government think-tank chief Michael Schafer. (Euractiv, Montel)

Survey says – Six in 10 UK businesses are unlikely to be ready to meet the Jan. 2024 deadline for enhanced climate disclosures set by the EU, a survey of 801 firms has found. Should they fail to disclose their Scope 3 emissions in line with the requirements of the new European Corporate Sustainability Reporting Directive (CSRD), they will face potential fines and other penalties. Supply chain management firm 7bridges polled 801 UK-based businesses to assess their readiness for enhanced Scope 3 disclosures under the CSRD. All of them are in scope for the mandate in terms of their size and the international markets they operate in. While 96% had heard of the CSRD and 71% had measured their carbon footprint across all scopes, one-quarter said they are concerned that they will not be able to meet the deadline. 7Bridges’ conclusion was that just 40% of the businesses will certainly be ready to comply. A key challenge, the survey revealed, was choosing where responsibility for collecting and reporting emissions data should sit. There is also the matter of properly financing and resourcing the team responsible for this. (Edie)

Cemented partnership – Building materials supplier Cemex and Ecocem, both European companies in lower-carbon construction technologies, today announce a new partnership that will see the two companies work together from June 2023 to test and implement lower-carbon solutions in France. Cemex and Ecocem have a long history of collaboration, with Ecocem supplying Cemex France with raw materials for many years. With this extension of the partnership the two companies will explore opportunities to use lower-carbon cementitious material in concrete production, in line with Cemex’s European aspiration of hitting a 55% reduction in CO2 emissions in its operations by 2030. Initially, the partnership will trial lower carbon solutions in ten of Cemex’s French readymix production plants, with the ambition to extend in France and potentially the wider region as part of a portfolio of initiatives in the sector. Developing innovative partnerships with key industry players such as Ecocem is an important pillar of Cemex’s dedicated climate action strategy, Future in Action.

ASIA PACIFIC

Risky business – Japan’s energy companies were quick to embrace the G7’s support for natural gas investment in their statement last month but analysts caution that relying on the fossil fuel may open the companies up to long-term problems. Resource poor Japan, the world’s biggest buyer of liquefied natural gas (LNG), is committed to gas as a transition fuel to reach its net zero carbon emission goals while ensuring energy security but that conflicts with the demands from other G7 members to curb all fossil fuel use sooner rather than later. But analysts warn that in the long-term Japan’s goals to cut out carbon emissions from its energy sector will reduce the value of future gas projects. (Reuters)

Hydrogen partnership — Australian hydrogen project developer Infinite Green Energy (IGE) has signed an MoU with Korea’s Samsung C&T to develop and build its Arrowsmith hydrogen project in Western Australia, which was welcomed by the state’s government in a statement. The wind and solar-powered plant is forecast to produce up to 300 tonnes of green hydrogen per day, or 100,000 tonnes per year for domestic and export markets. IGE is aiming to be Australia’s first zero carbon commercial hydrogen producer. It is also progress another renewable hydrogen project in the state, also in development with Samsung C&T. The company is aiming for the Arrowsmith plant to be operational by the end of 2024 after it completed an A$8 mln acqusition of a solar farm in the state and signed an offtake agreement with haulage business Fuel Cell Electric Vehicle. The company is chaired by former Woodside Energy CEO Peter Coleman.

Arm wrestle — Australia’s proposed Middle Arm industrial development on Darwin harbour, in which the federal government is taking a A$1.5 bln stake, is seen as a key enabler for the export of gas from the Beetaloo basin, according to a government document released under freedom of information, the Guardian reports. This is despite being labelled a sustainable development precinct. the document, a background briefing that officials in the environment department sent to the office of the environment minister, Tanya Plibersek, in July, described the Middle Arm project as central to the expansion of gas production in the Northern Territory’s Beetaloo basin as well as to the feasibility of proposed offshore CCS, which could be associated with projects such as the Barossa offshore gas field and pipeline. Other documents from the Northern Territory government have described the development as a new gas demand centre in its original 202 pitch to Infrastructure Australia. It has prompted calls from the Greens and the crossbench for the federal government to drop its financial support for the project. However, a government spokesperson said the government’s planned equity investment was for marine infrastructure that could support a range of industries, such as green hydrogen, renewable energy storage, and advanced manufacturing to support the energy transition.

AMERICAS

Millions for management – The US Department of Energy on Wednesday announced $251 mln to support 12 selected projects across seven states that will bolster the country’s CO2 management capabilities. The projects, funded by President Joe Biden’s Bipartisan Infrastructure Law, will expand carbon CO2 transportation and storage infrastructure to help significantly and responsibly reduce CO2 emissions from power generation and industrial operations. In addition, DOE announced the second opening of a five-year $2.25 bln funding opportunity to provide for the continuous development of commercial-scale carbon storage infrastructure.

Readying the RVOs – The US EPA has sent a final rule on the amount of ethanol and other biofuels that refiners must blend into their fuel over the next three years to the White House for review, according to a federal website, putting it on track to meet a June deadline to finalise the mandates. The EPA’s proposed rule, unveiled in December, increased Renewable Volume Obligations (RVOs) and – for the first time – included a pathway for electric vehicle manufacturers to generate lucrative credits from using biofuels to charge EVs. It is unclear whether the final rule sent to the White House this week included any changes. (Reuters)

Colorado hydrogen – The Colorado legislature has passed a bill that, if signed by Gov. Jared Polis (D) would create state-level tax incentives for the use of clean hydrogen. To qualify for the tax credits, hydrogen producers must add new renewable energy resources to the grid and match their energy use to hourly emissions data. The hydrogen must be put to use in heavy-duty vehicles, aviation, or other hard-to-decarbonise, primarily industrial sectors. The Natural Resources Defense Council praised the bill as setting an important national precedent. But the Fuel Cell and Hydrogen Association says the bill’s narrow definitions and strict standards will limit the production of hydrogen in Colorado. (Utility Dive)

Moe problems – It would be against the law for Saskatchewan to run its coal-fired power plants after 2030 unless the greenhouse-gas emissions from those plants are captured, federal Environment Minister Steven Guilbeault said Wednesday. His comment comes as electricity generation becomes the latest jurisdictional battle over climate policy between federal and provincial governments. Canada’s current climate plan aims for all electricity to be CO2-free by 2035, and regulations to enforce the target are expected later this year. The draft policy published last year suggests that by 2035, all electricity will have to be clean — such as hydroelectricity, nuclear, wind or solar. Either that or the emissions will have to be abated somehow, such as with carbon capture and storage systems. Saskatchewan Premier Scott Moe said Tuesday his province can’t meet the federal rules and keep the lights on at an affordable price. Instead he proposed a clean electricity target of 2050, 15 years later than what Ottawa wants. And he said he expects his province will keep operating its three coal plants until the end of their lifespans, which would see the first one close three years after the 2030 phaseout date. The other two would extend beyond that date by 12 and 14 years. Guilbeault said Wednesday that the coal regulations exist within the Canadian Environmental Protection Act and violating them would be illegal. (Canadian Press)

Sun money – US private equity firm Pegasus Capital Advisors announced on Wednesday a planned $43 mln Subnational Climate Fund (SCF) five-year investment in LUXUN, according to a press release. LUXUN, a Mexican renewable energy company, would offer rooftop solar installations for businesses without upfront investment. SCF is expected to finance the construction of +160 MW of solar panels and battery storage projects resulting in 256,000 MWh/yr of clean energy for industrial and commercial use and an estimated abatement of 119,311 tCO2/yr from 2027 onwards, the press release noted. SCF is a global blended finance initiative that aims to invest in and scale mid-sized ($5–75 mln) subnational infrastructure projects in sustainable energy, waste and sanitation, regenerative agriculture, and nature-based solutions in developing countries.

REC sale – Brokerage Evolution Markets on Wednesday announced it will conduct an auction of Renewable Energy Certificates (RECs) on behalf of the Massachusetts Clean Energy Center (MassCEC). The auction is slated for May 24, 2023 and includes RECs from three separate projects. For this auction, MassCEC plans to offer 3,209 Vintage 2022 Massachusetts Class I Renewable Certificates and 88 Vintage 2022 Massachusetts Solar Carve-Out II Renewable Certificates generated in 2022.

AVIATION

Boeing showing – As the aviation industry wrestles with meeting its net zero emissions goal by 2050, airplane manufacturer Boeing is offering a new tool meant to help executives, policymakers, and other leaders explore the risks and rewards of potential pathways. Boeing’s new modelling tool, launching publicly Wednesday, will help stakeholders play around with different scenarios over time before deciding how best to invest their capital resources. The software, dubbed Cascade, allows users to consider advancements in technology, energy, and aircraft operations in the context of future growth in aviation demand. It can also factor in emissions offsets and carbon removal opportunities. (Axios)

SCIENCE & TECH

Threshold breach – For the first time ever, global temperatures are now more likely than not to breach 1.5C of warming within the next five years, the World Meteorological Organization (WMO) said on Wednesday. This does not mean the world would cross the long-term warming threshold of 1.5C above preindustrial levels set out in the 2015 Paris Agreement, but a year of warming at 1.5C could offer a glimpse of what crossing that longer term threshold. With a 66% chance of temporarily reaching 1.5C by 2027, “it’s the first time in history that it’s more likely than not that we will exceed 1.5C, with last year’s odds at about 50-50 and the reason partly down to the El Nino weather pattern expected to develop in the coming months. (Reuters)

Brace Eur-selves – Southern Europe is bracing for a summer of ferocious drought, with some regions already suffering water shortages and farmers expecting their worst yields in decades. As climate change makes the region hotter and drier, years of consecutive drought have depleted groundwater reserves. Soils have become bone dry in Spain, southern France and Italy. Low river and reservoir levels are threatening this summer’s hydropower production. With temperatures climbing into summertime, scientists warn Europe is on track for another brutal summer, after suffering its hottest on record last year – which fuelled a drought EU researchers said was the worst in at least 500 years. (Euractiv)

AND FINALLY…

Cooking with gas – A planned vote in the US Senate on an Energy Department nominee was cancelled on Wednesday because Senator Joe Manchin (D) opposed the department’s planned regulation of gas stoves. The vote was scheduled for the Energy and Natural Resources Committee, chaired by Manchin, to confirm Jeff Marootian as the assistant secretary of the Energy Department’s Office of Energy Efficiency and Renewable Energy. The department would be in charge of implementing the rules on gas stoves, which Manchin acknowledged only applied to new sales of home appliances. However, he claimed the rules were part of a broader effort by the Biden administration to eliminate fossil fuels. (Bloomberg)

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