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TOP STORY
ANALYSIS: US EPA has legal ground for emissions trading pathway in power plant CO2 regulations
US President Joe Biden’s EPA has a strong legal basis for allowing states to implement emissions trading schemes such as RGGI and WCI to comply with its proposed emissions limits on fossil fuel-fired electricity generators, while technology forcing should also stand up to court scrutiny, experts told Carbon Pulse.
INTERNATIONAL
Emissions trading participants temper expectations for pace of carbon price increases
Participants in emissions trading mechanisms worldwide have moderated their price expectations compared to a year ago but are optimistic that reforms will drive compliance carbon values higher in the future, according to an annual survey published on Wednesday, while voluntary carbon market (VCM) stakeholders are confident that the sector will grow to meet increasing demand.
Carbon markets best route to fund transition away from coal, say finance experts
Using carbon markets to fund the global transition away from coal-fired power generation will require a carbon credit price of at least $10-20, but likely much higher, a conference heard on Wednesday.
Per-tonne CO2 payments can broaden from “projects” to “policies” -report
Most carbon credits and results-based payments hinge on individual emissions mitigation projects, but methodologies exist to extend this model to government-run climate policies, where payments linked to the latter would help accelerate these types of broad-reaching climate actions.
Carbon pricing rollout approaching “tipping point” as political momentum builds
The introduction of carbon pricing may be about to rapidly expand across developing countries a conference heard Wednesday, as more and more low-and middle-income economies are now actively implementing or considering taxes and emissions trading schemes.
AMERICAS
Pennsylvania Supreme Court appeals hearing of RGGI injunction centres on taxation issue
Pennsylvania’s attempt to enact its RGGI-linked cap-and-trade regulation faced another skirmish at the Supreme Court of Pennsylvania on Wednesday, as both the state and environmental groups appealed the Commonwealth Court’s preliminary injunction against the rule that opponents have painted as an illegal tax.
California, Quebec announce June workshop to discuss potential cap-and-trade amendments
California and Quebec on Wednesday said they will hold a joint workshop next month to discuss potential amendments to strengthen the jurisdictions’ linked cap-and-trade systems.
California mints largest batch of compliance offsets in 14 months
California this week distributed the highest number of compliance offsets in over a year, with the vast majority of the credits under the cap-and-trade programme accruing to an in-state forestry project, according to government data published Wednesday.
California transportation fuel sales, emissions decline in February
California gasoline and diesel sales dropped year-on-year in February amid recession concerns and a pick-up in gasoline prices, according to state data published Tuesday.
California Q1 power emissions drop to lowest in 10 years
California electricity sector CO2 output sagged over the last two months of the first quarter as hydroelectric generation ramped up following an end to much of the state’s historic drought, recent data showed.
EMEA
Where to next? Market experts clash over EU carbon’s near-term price path
Market experts are clashing in their views as to where EU carbon prices go next, with the bears amongst them predicting a possible re-test of last year’s lows while the bulls foresee another go at the €100 level before the year’s out.
Euro Markets: EUAs slip below key technical level even as data show investors trimming short positions
European carbon prices drifted for a third day on Wednesday, falling below a key technical level as traders awaited exchange data showing market positioning, while natural gas prices declined to near their recent 17-month lows in thin trading.
EU ‘regulatory fatigue’ tests lawmaker resolve on green initiatives
Members of the European Parliament are experiencing what they called ‘fatigue’ in a week stacked full of green policy scrutiny across several cross-party committees, as borne out in an interim Wednesday ballot that saw lawmakers weaken text for a bill designed to curb industrial air pollution.
African minister calls for “integrity index” and ratings agency for global carbon markets
The environment minister of an African nation told an event Wednesday that the best way to utilise carbon markets to save rainforests would be to establish an “integrity index” overseen by a global ratings agency, which could address both sovereign and voluntary carbon needs.
ASIA PACIFIC
Indonesia’s carbon buffer rules creating uncertainty for voluntary project developers, investors
Indonesia’s regulations on taking a portion of carbon projects’ credits is creating uncertainty for proponents, given the slim investment rates of return on projects that could be upended by the rule, a developer has told Carbon Pulse.
VOLUNTARY
Campaigners hone in on Chevron’s use of ‘junk’ offsets in latest critical report
Campaigners slammed Chevron’s use of “junk” carbon credits and “unviable” technologies in a report published on Wednesday, honing in on the oil major’s heavy use of units stemming from large hydropower dams while piggybacking on others’ criticism.
Global fintech company announces multi-million climate impact contribution
A global fintech company on Wednesday announced its latest contribution of $2.35 million towards climate change solutions, with the money collected from an internal carbon tax that it prefers over an offsetting model for its voluntary climate action.
AVIATION/SHIPPING
Supersonic plane maker Boom to buy 5 mln more gallons of SAF as part of net zero strategy
US-based Boom Supersonic, which is developing faster-than-sound passenger aircraft, has signed an agreement with Dimensional Energy to purchase up to 5 million gallons of sustainable aviation fuel (SAF) annually during its flight test programme.
BIODIVERSITY (FREE TO READ)
SBTN launches first science-based targets for nature
The Science Based Targets Network (SBTN) on Wednesday launched methods for companies to set targets for ecosystem protection and restoration, freshwater use, and freshwater pollution, with 17 global firms to pilot the methods ahead of a general launch next year.
EU’s centre-right seeks to block nature restoration law in Parliament
A law to restore 20% of the EU’s nature is at risk of being blocked in the European Parliament by a coalition of centre-right political groups, as a vote in favour of felling the bill passed by a slim majority in an interim committee ballot on Wednesday.
Majority of investor votes since 2010 are against biodiversity resolutions -report
Large investment funds have consistently voted against measures to protect biodiversity at shareholder meetings, a report has found, with proposals supporting nature receiving support of less than 40% of votes cast since 2010 across those analysed.
Australia to deal with offsetting concerns in nature repair market through methodology work, govt official says
Australia could split biodiversity certificates into separate offsetting and non-offsetting methodologies in its nature repair market (NRM), to give buyers and landholders broader choice and confidence in how they engage with the scheme, according to a government official.
G20 urged to push for scaled-up ocean funding through new financial instruments
The G20 should act to catalyse funding for the blue economy transition through targeted financial instruments like debt-for-nature swaps, blue bonds, and outcome-based payments, according to an engagement group set up under India’s G20 presidency.
National Geographic lifts anchor on five-year Pacific Ocean conservation expedition
A five-year ocean expedition set sail on Wednesday under National Geographic Pristine Seas that will see a team of international experts promote ocean protection in the tropical Pacific, providing video links to underwater landscapes and supporting local conservation efforts.
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CONFERENCES
InnovationZero – May 24-25, London: A two-day, free-to-attend, access-all-areas international cleantech congress running taking place at London’s Olympia. Don’t miss out on the UK’s must-attend event to accelerate business action in the low-carbon transformation. Register for free
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
Explain yourself – Glencore is braced for a heated debate over its highly profitable coal mining business when it meets shareholders on Friday as the group comes under pressure to tackle climate change, the FT reports. A growing number of shareholders support a resolution asking the company to explain how its thermal coal production – the largest of any company outside China and India – is compatible with its climate goals. Legal & General Investment Management, Allianz, Scottish Widows, Man Group, and HSBC Asset Management have all backed the measure in recent days, as have proxy advisers Glass Lewis and Institutional Shareholder Services.
Carbon pricing rethink – The imminent Carbon Border Adjustment Mechanism (CBAM) set to be launched by the EU could cause Southeast Asia to reassess its existing carbon policies, according to a report by Sustainable Fitch. The CBAM, which will be fully operational by 2026, will impose an emissions price on carbon-intensive imports to the EU, aiming to balance environmental cost discrepancies and prevent carbon leakage. The tariff will initially cover goods like cement, iron, steel, aluminium, fertilisers, electricity, and hydrogen. Despite the EU being the region’s third-largest trading partner, the Southeast Asian response to the CBAM has been muted, potentially due to the fact that nearly 90% of its exported goods are outside the tariff’s coverage. However, should the CBAM expand to other sectors, the effect on Southeast Asian economies may increase, prompting them to implement relevant domestic environmental regulations and adopt new technologies to retain access to the crucial EU market. Such a policy re-evaluation might not be straightforward due to the need to balance social, economic, and environmental considerations. The report also noted an increased focus on phasing out coal in Asia. While early retirement of older coal plants is gaining traction in Southeast Asia and new finance mechanisms are being explored, the transition to lower carbon-emitting power sources is likely to be slow and uneven due to varying policy priorities, project timelines, and challenges such as competing CCS plans, ensuring a just transition for coal-dependent regions, and increasing renewables capacity. (Business Times)
EMEA
Policy pause – Belgian PM Alexander De Croo on Monday criticised the idea of not growing the economy for environmental reasons, joining calls to stop environmental and health-related regulation to prevent overburdening companies. As EU industry transforms towards net zero emissions, it should not be burdened with additional regulation, De Croo told a conference hosted by the Wirtschaftsrat der CDU, a business group with close ties to the German conservative CDU party. “Let’s not try to do everything at the same time. Let us focus on what is the most important,” De Croo said, calling for a focus on reducing GHG emissions. As an example, De Croo cited the new Euro 7 norms for cars and trucks, aiming to reduce air pollution from combustion vehicles as of 2025, while carmakers would instead concentrate on scaling up the production of electric vehicles. “If we are overburdening people with rules and regulations, we risk losing the public support for the green agenda,” De Croo warned. Similar calls have been made by French President Emmanuel Macron and the European People’s Party (EPP), who have urged for an EU-level “regulatory break” to give companies more breathing space. (Euractiv)
The fighting within – The intensifying quarrel within the German government coalition is increasingly likely to delay a law designed to pave the way towards climate-friendly heating. Following objections from the pro-business Free Democrats (FDP), and contrary to earlier government plans, the economy ministry’s draft law — which stipulates a de-facto ban on the installation of conventional gas and oil boilers from next year — will not be discussed in parliament this week. Economy and climate minister Robert Habeck (Greens) said an adoption of the law before the summer recess in July and August, previously agreed by the coalition, “will no longer be possible with the postponement.” According to media reports, this also increases the likelihood that the law cannot take effect at the start of next year as currently planned. The delay in the draft law, a key piece of legislation to get the country on track for becoming climate neutral by 2045, intensified the conflict within the three-way government coalition between Greens, FDP, and Social Democrats (SPD). Habeck openly accused coalition partner FDP of a “breach of promise.” In response, the FDP said it had argued for weeks that the draft law needed fundamental changes and therefore does not provide a basis for parliamentary discussions – even though the party had agreed to it in the government cabinet in April. According to the current proposal only heating systems that run on at least 65 percent renewable energy can be newly installed from the start of 2024 whenever possible. The draft law is controversial due to the higher costs of climate-friendly heating systems such as heat pumps. (Clean Energy Wire)
Turn the lights off – Half of EU countries have no mandatory energy-saving measures in place for next winter, a new analysis by the European Environmental Bureau (EEB) has found. Part of the European Union’s strategy to wean itself off Russian gas is by saving energy, however this is not happening in a structured, socially just and sustainable way, the EEB said. Only 14 out of 27 EU states have adopted mandatory measures to reduce energy, the report stated. The most robust measures on gas savings are implemented in those countries that import the most gas such as Italy and Germany. Bulgaria, Romania and Latvia have not introduced any national measures to reduce gas and electricity consumption. Portugal is the only country reporting transparently on energy savings implementation and progress.
ASIA PACIFIC
Seek advice — Australia’s governmental department in charge of the Climate Change Authority (CCA) is seeking legal advice over the potential conflicts of interest on the authority’s board, the ABC reports. It comes after think tank the Australia Institute wrote a letter to Minister for Climate Change and Energy Chris Bowen, urging him to review potential conflicts of interest on the authority’s board. Chair of the CCA Grant King holds a number of other positions that appear to overlap with the work of the authority, including chairing Australia’s largest offset developer GreenCollar and a renewable energy company. Jo Evans deputy secretary in the Department of Climate Change, Energy, Environment and Water told senate estimates that they would receive advice on the accuracy of TAIs claims, and then take a decision on how to advise the minister.
Hydrogen taskforce — India and Australia have joined forces to establish a green hydrogen taskforce, H2 Energy News, reports. The taskforce was announced by Indian Prime Minister Narendra Modi and his Australian counterpart Anthony Albanese, saying the taskforce would explore opportunities for collaboration and cooperation in the renewable hydrogen industry. The task force will provide recommendations to the Australian-Indian Ministerial Energy Dialogue. Australia, currently reviewing its green hydrogen strategy, is committed to developing hydrogen hubs, supporting pilot projects, integrating clean hydrogen into gas networks and transportation, and establishing an export industry. India meanwhile aims to produce 5 Mt of green hydrogen by 2030. Smart Energy Council CEO John Grimes stressed the importance of ensuring that the hydrogen produced is truly green, as this will determine its potential for export.
Just don’t do it – Taiwan’s Environmental Protection Administration (EPA) has warned local enterprises to avoid “greenwashing”, which deceptively portrays businesses as eco-friendly while omitting negative impacts like GHG emissions. The EPA is encouraging businesses to track emissions through accurate inventory and establish a platform for third-party monitoring. Such actions have become more important with the Climate Change Response Act, signed into law on Feb. 15. Government agencies and enterprises can undertake voluntary carbon reduction projects, either independently or jointly, potentially obtaining carbon reduction credits. Such credits can be transferred, traded, or auctioned to those needing carbon reduction to meet quotas. Through economic incentives, the government is encouraging businesses to track and reduce their carbon footprint. However, many carbon-reduction activities can be deceptive. (Taiwan News)
AMERICAS
Plenty of Paraguay – Paraguay has roughly 3 mln ha of natural reserves that could generate carbon credits under a regulatory framework bill introduced this year, Senator Patrick Kemper told a legislative hearing in Asuncion this week. The bill, introduced in the Paraguayan Senate in March, would set up a national carbon offset registry and help track the transfer of credits abroad, with the country required to hold back a portion of these units to meet its own Paris Agreement target. The legislation is still awaiting action by lawmakers.
VOLUNTARY
Kenyan deadline – Kenya plans to pass legislation that will regulate the generation of carbon credits in the country by the end of June, a government official said, according to Bloomberg. The new regulations will see the Kenyan government overseeing future project development, and ensuring at least 25% of revenues from credit sales is earmarked to local communities. Kenya will also create a specific REDD avoided deforestation registry. “There will be a provision on how these existing carbon markets will transition to the new regime,” Augustine Kenduiwo, deputy director for climate change at the Ministry of Environment and Forestry, said on a virtual meeting with industry participants on Wednesday.
Another exchange – Zimbabwe’s Victoria Falls Stock Exchange plans to set up trading in carbon credits by September, seeking to capitalise on sweeping changes to how production of the securities will be regulated in the country. The exchange, known as VFEX and which denominates the securities on its platform in US dollars, will allow trade in government-approved securities, CEO Justin Bgoni said on Wednesday. Under the plan, investors will be allowed to list carbon credits on the exchange after approval from the Environment Ministry and admission into the Zimbabwe Carbon Credit Registry, according to the ministry’s carbon framework policy document. Last week, the government decreed that half of the revenue of all carbon credit deals will now go to the government and at least 20% to local investors. All the projects have to be registered with the state, it said, adding that the unregulated nature of the trade had seen most of the proceeds flowing out the country. (Bloomberg)
South Pacific joy – The Solomon Islands and the US have chosen Viru Harbour as the first community in the South Pacific country to benefit from carbon credits generated by a new forestry scheme, a joint initiative by the US Government’s Millennium Challenge Corporation (MCC) and the Solomon Islands Threshold Program. The project is part of larger Forest Value Enhancement Project (FoVEP) in the Solomon Islands, which aims to expand to 6,000 hectares. The MCC-Solomon Islands Threshold Program is a four-year $20 million investment scheme.
AND FINALLY…
Neutral no more – London-headquartered ‘healthy’ fast food chain Leon has begun phasing out claims that its burgers are carbon neutral amidst mounting criticism of carbon offsetting and greenwashing. The company, which first launched its carbon neutral initiative in 2021, was accused of using questionable schemes and “phantom credits”, Footprint reports. Leon’s claims have been removed from its website as regulators in the UK and EU plan to scrutinise and police such green claims more closely. The European Parliament recently voted in favour of a ban on environmental claims based solely on offsetting, and UK lawmakers may follow suit.
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