Newsletters > CP Daily: Tuesday July 4, 2023

CP Daily: Tuesday July 4, 2023

Published 04:35 on July 5, 2023  /  Last updated at 04:35 on July 5, 2023  / /  Newsletters

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

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TOP STORY

EU fossil power generation slumps over 20% in H1 on low demand and renewables uptick

Power generation covered by the EU ETS fell by almost 100 TWh or around a fifth year-on-year in the first half of 2023, according to figures published by an analytics firm, as much lower output driven by demand destruction and a rise in renewables forced coal and gas out of the mix.

VOLUNTARY

INTERVIEW: VCMI Code could add extra less taxing achievement levels to encourage take up

Lower tiers of achievement could be added to the VCMI Claims Code over the next few months to broaden its reach and encourage more companies to start climbing the ladder of mitigation, a senior member of the Voluntary Carbon Markets Integrity initiative (VCMI) told Carbon Pulse.

ASIA PACIFIC

Australia Market Roundup: AgriProve partners with cattle industry group, ACCU issuance plummets

Soil carbon project developer AgriProve Solutions has partnered with industry group Meat and Livestock Australia (MLA) on three demonstration sites across the country’s east coast, as the issuance of Australian Carbon Credit Units (ACCUs) fall to more nominal levels.

NZ Market: NZUs extend losses as govt clamps down on industrial process heat

The spot price for NZUs fell lower on Tuesday amid weak volumes and high regulatory uncertainty, as a ban on new industrial coal boilers comes into effect later this month.

South Korea to auction off 2.15 mln KAU-23s next week

The government of South Korea is to auction off 2.15 million KAU-23s at the upcoming monthly auction as planned as a new compliance cycle begins this month, after previous sales were cancelled due to sluggish demand in the market.

Major Japanese companies form carbon credit alliance, eye Africa potential

A group of Japanese companies have launched an alliance that aims to remove 30 million tonnes of CO2 by the end of this decade through the utilisation of international carbon credits, targeting the potential of African markets.

Former agribusiness commercial director joins AgriProve as Australia general manager

A former commercial and marketing director with an agribusiness company has joined soil carbon project developer AgriProve Solutions as its first Australia general manager.

EMEA

British lawmaker calls for carbon border “alignment” with EU in cross-Channel talks

Alignment on carbon border adjustment mechanisms (CBAM) and decarbonisation regulations can help smooth relationships between the UK and the EU, according to British MP Chris Skidmore at a meeting in Brussels, though he stopped short of suggesting a re-linking of carbon markets.

Euro Markets: EUAs edge lower as early positioning data shows little change in funds holdings

European carbon traded largely sideways on Tuesday in becalmed trade amid a US public holiday and as traders were surprised by the early publication of weekly Commitment of Traders data that showed little overall change in positioning.

AMERICAS

INTERVIEW: US forestry group proposes new concepts for redistributing carbon credit risk

An US forest conservation organisation active in the voluntary carbon market (VCM) is campaigning in favour of two novel project financing concepts that it says would bring a wave of investment to credit-generating forestry projects, and help shift some of the risk burden away from developers, a senior member told Carbon Pulse.

Canadians largely support Clean Electricity Regulations, poll finds

Nearly a year after the public comment period for Canada’s Clean Electricity Regulations were wrapped up, a poll published Tuesday has found a majority of Canadians support the federal plan to reach a net zero power grid by 2035.

INTERNATIONAL

Carbon emissions four times more costly than 10 years ago, researchers say

Researchers have calculated that every tonne of carbon released now is four times more costly to the world than it was one decade ago, requiring an upward revision of the appropriate carbon pricing level, among other policies, to meet global climate goals.

BIODIVERSITY (FREE TO READ)

British association launches ‘nature positive’ guidance for insurers

The Association of British Insurers (ABI) has launched guidance to help insurers and long-term savings providers become ‘nature positive’ in helping tackle the decline in the UK’s nature and biodiversity.

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CONFERENCES

Argus Carbon Markets & Regulation Conference – July 5-7, Lisbon: In the wake of new legislative reforms to the EU ETS being confirmed, and as voluntary carbon markets continue to shift and evolve, the Argus Carbon Markets & Regulation Conference returns to Portugal to provide necessary insights for your company to remain competitive and aware of the upcoming opportunities within Europe and globally. This is your opportunity to stay up to date on the latest market dynamics through panel discussions, fire side chats, and presentations with industry peers and policy makers in-person. Join market-makers in defining both the compliance and voluntary carbon market by booking your place today. Carbon Pulse readers can enjoy a 10% discount with the code PULSE10. To find out more and to book your place, click here

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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

Error, error – Financial institutions frequently underestimate the economic cost of climate change due to misunderstandings of the predictive models used, according to research by the Institute and Faculty of Actuaries and Britain’s University of Exeter. The report suggests a significant disconnect between climate scientists, economists, model creators, and the financial institutions utilising these models. This disconnect leads to some companies reporting minimal economic impact even if global temperatures rise more than 1.5C above pre-industrial levels – one of the goals outlined in the Paris Agreement. The study also indicated that several key risk factors, such as extreme weather events, sea-level rise, and societal impacts from migration or conflict, are often excluded from the models. It emphasised the need for improved understanding of these models’ assumptions and limitations among financial institutions. (FT)

In the doldrums – The UN International Maritime Organisation’s 80th Marine Environment Protection Committee (MEPC) finally tasked a working group to continue to try to find agreement on defining a GHG strategy for the global shipping sector on Tuesday, the second day of its week-long session in London. The resumption of the  closed-door working group’s talks had been held back for a day as government after government took the floor to give opening statements. Read Carbon Pulse’s latest on the fraught process to agree on a 2050 emissions goal, interim targets, and whether to introduce a carbon levy.

Aid stretch – The UK government is drawing up plans to drop its flagship £11.6 bln 2021-26 international climate finance pledge, The Guardian reported, citing a leaked briefing note to ministers and given to the foreign ministry while only reporting the document’s stating of the reasons for dropping the pledge. It notes how meeting the spending pledge would be a “huge challenge” given the UK has since lowered its overall aid budget and recent pressures from the Covid pandemic and supporting Ukraine. It points out that, to meet the goal, the government would have to spend 83% of the total aid budget on the international climate fund and that this “would squeeze out room for other commitments such as humanitarian and women and girls”. The foreign ministry declined to comment on the leak but pointed to PM Rishi Sunak’s previous comments in which he committed to the funding.

EMEA

Captured in a letter – Some 38 organisations representing civil society, academia, and industry steered by the Clean Air Task Force have written to the European Commission to warn against the executive delaying publication of the bloc’s Carbon Management strategy, amid rumours of the policy being postponed. “Without central coordination and planning, we risk overspending on parallel infrastructure and, even worse, potentially locking out CCS as an option for emitters in Central and Eastern Europe,” the letter stated. The Commission’s consultation on the strategy is open through to the end of August.

Talking to China – Looking ahead to the UN Climate Change Conference (COP28) in Dubai in December, the Commission’s climate chief Frans Timmermans, in Beijing for the fourth China-EU High Level Dialogue on Environment and Climate, invited “large emitters, such as the EU and China” to “lead and build global consensus both in terms of increasing climate ambition aligned with the 1.5°C degree temperature limit, and ensuring implementation of existing commitments.” Timmermans also highlighted the importance of effective carbon markets. According to a read out of his meeting with the Chinese first vice premier Ding Xuexiang, “the EU and China have agreed to intensify cooperation on emissions trading”.

CCUS sceptics – NGO Germanwatch has warned against the country’s CO2 management policy opening the door to a permanent extension of fossil fuel business models, Clean Energy Wire reports. In a statement released ahead of the Bundestag’s climate and energy committee hearing on Wednesday on CCUS, Simon Wolf of the organisation said the government had yet to provide a promised definition of residual emissions that are difficult to avoid as part of its carbon management policy, and noted that the production of blue hydrogen was instead being encouraged. Blue hydrogen is made from fossil gas where the CO2 is captured and stored. As a result, the policy is thwarting the basis for a clear roadmap towards renewable energy, he added.

Target timeline – Germany can still achieve its 2030 climate targets as long as a number of requirements are met, the Federal Environment Agency (UBA) concluded in a new report. These include the expansion of rail transport, a reform of the vehicle tax, and a restriction of fossil-fuel heating. In addition, all emissions would have to be priced and paid for by polluters. The agency also called on the industrial sector to increase funding for low- and zero-carbon technologies and for a ‘honest talk’ about how financial burdens can be absorbed and distributed more fairly on lower-income groups. Germany’s Climate Protection Act provides for a 65% reduction in climate-damaging emissions by 2030 compared to 1990. It also aims to reduce emissions by 88% by 2040 and achieve net greenhouse gas neutrality in 2045. To this end, the law sets annual reduction targets by 2030 for the individual sectors.

Inflexible French – France is in talks with the European Commission to avoid penalties for having missed its 2020 objective under the EU’s renewable energy directive and failing to make up for the shortfall. The European Court of Auditors (ECA) has pointed out that France was the only EU country still in breach of its 2020 target on renewables, which required the nation to meet 23% of its energy consumption with renewables by 2020, but government figures show it only managed to reach 20.7%. Five other member states – Luxembourg, Slovenia, Ireland, the Netherlands and Belgium – were in the same situation and used flexibilities of “statistical transfers” bought from other nations or invested in joint projects to achieve their targets. In November, the energy ministry announced that France was negotiating with Italy and Sweden to purchase “statistical megawatts” worth around €500 mln. If it fails to purchase these “statistical megawatts”, Paris could in theory be fined, but there is no formal timeline for Brussels to do so. (EurActiv)

Roman ramp-up – Italy’s current policies are set to cut emissions in non-ETS ‘effort-sharing’ sectors by 35-37% by 2030 versus 2005 levels, Reuters reported, citing an energy ministry document. This would be well short of the binding 43.7% target imposed by the newly-enhanced EU Effort Sharing Directive – read Carbon Pulse’s briefing on how nations are already struggling. Among the scale-up measures under consideration, the ministry document cites incentives to boost home-working, as well as using both private and public investment to renovate buildings to make them more energy efficient. The document said that coal-fired power plants will be shut by 2025, excluding in Sardinia. Coal-fired power made up 7.5% of the country’s total electricity supply last year. (EurActiv)

Electric hook-up – The Municipality of Tjoern on the Swedish West Coast has announced it will develop a facility for local energy consumption that is fossil-free and carbon-negative, in partnership with Wallhamn and Boson Energy, writes Bioenergy Insight Magazine. The first phase of the project will see an investment of €100 mln, and the full project is expected to reach approximately €450 mln with all phases and off-take options completed. Boson Energy’s technology uses otherwise non-recyclable waste to produce electricity and green methanol, while capturing the CO2 for utilisation and storage. The green methanol replaces fossil methanol in the chemical and plastics industry, while also meeting the increasing demand in the marine sector. The company said it plans to serve Wallhamn’s growing need for energy and electricity for vehicle charging, as well as supporting the local power grid when needed. Wallhamn said it considers the project as an opportunity to expand its port operations and realise its goal of becoming the world’s first carbon-negative port.

Get your shovels – Construction has begun on an upgrade to the Silverstone CO2 capture facility at the Hellisheidarvirkjun power plant in Iceland. This upgrade aims to capture nearly all CO2 and hydrogen sulphide emissions from the installation. The goal is for Silverstone to operate at full capacity by 2025, making the plant the world’s first nearly carbon-neutral geothermal power plant. The current plant captures about 30% of CO2 and 75% of H2S from the power plant. The project was granted ISK 600 mln ($4.4 mln) from the EU Innovation Fund in 2021. This upgrade is expected to fulfil 10% of Iceland’s Climate Action Plan’s goals for 2030 within the sectors not covered by the EU ETS.

??? – Emirates NBD has started to offer trade in “compliant” carbon futures contracts for regional clients, the banking group announced Tuesday. The company said it aims to “continue being at the forefront of the rapidly evolving carbon trading landscape in the region, providing clients with the flexibility to deal in carbon credits as they reach their sustainability goals”. “The launch of trading capability in compliance carbon markets will also enhance corporate access to sustainability-linked finance amid a growing demand in ESG-related financing,” it added. However, it’s not clear what type of carbon units will be traded under the contracts, and efforts to get clarification from the bank or the Brunswick Group, its communications advisors, were not successful. Emirates NBD said its carbon contract trading “is aligned with the guidelines” set by the EU and UK ETS, “providing full transparency, credibility, and accountability”. It’s also unclear whether these are physical-delivery or cash-settled contracts. To take delivery of EUAs or UKAs, buyers would need to hold accounts in the appropriate emissions trading registries. What’s more, the announcement suggests the units can be used for offsetting, but it did not explain further. Emirates NBD did not say where the futures would be traded, who will be clearing these transactions, and whether these are simply voluntary carbon contracts modelled after the EUA and UKA futures traded in Europe. “The bank’s carbon future contracts trading facility also gives clients access to a rapidly growing asset class with an estimated value of $850 bln across six global emission trading schemes,” the announcement said, adding further confusion as only two carbon markets were mentioned.

ASIA PACIFIC

Sunny days ahead – The UAE plans to triple its supply of renewable energy and invest up to $54 bln over the next seven years to meet its growing energy demands, the AP reports. Sheikh Mohammed bin Rashid Al Maktoum, the UAE’s vice president and ruler of Dubai, announced the plans on Monday following a Cabinet meeting. They also include investments in low-emission hydrogen fuel and developing infrastructure for electric vehicles. The major oil-producing nation has pledged to be carbon-neutral by 2050, without fully explaining how, and is hosting the COP28 climate summit later this year. The UAE has a nuclear power plant, as well as a large solar park in Dubai that met 15 per cent of the city’s needs last year, leaving it mostly reliant on natural gas imported from Qatar.

Better Monsoon-er than later — India’s forest department will conduct tree plantings across 15,000 hectares of land this year during the monsoon season in the state of Uttarakhand, the Times of India reports. Forestry Minister of Uttarakhand Subodh Uniyal held a meeting with foresters on Monday where he said projects must be carbon market friendly. He said carbon financing should be taken up extensively, and projects should be made by integrating forest activities so that carbon finance can be claimed in the global VCM, he said. Ongoing meetings regarding carbon markets have been held with state-based forest officers, with the main emphasis on driving plantations that go by international norms as a way to increase the chances of being accepted in global carbon credit markets.

Kicking off – Chinese oil giant Sinopec’s green hydrogen pilot project in the Xinjiang Uygur Autonomous Region has commenced operation, it said in a statement this week. The mega project will supply hydrogen to one of Sinopec’s subsidiaries to remove its fossil fuel-based electricity, helping reduce 485,000 tonnes of CO2 emissions annually. With an annual hydrogen production and utilisation capacity exceeding 4.5 mln tonnes, Sinopec’s self-developed megawatt-scale PEM electrolysis hydrogen production station has also entered operation, and its first hydrogen demonstration project in Inner Mongolia was launched earlier this year, the company said.

Bright outlook – Tomakomai, a city in northern Japan, would be able to create a carbon recycling base through inter-industry collaboration by 2050, according to a report commissioned by the country’s New Energy and Industrial Technology Development Organization (NEDO). The feasibility study, conducted by oil and natural gas exploration company JAPEX and Deloitte Tohmatsu Consulting, outlined that a carbon capture, utilisation, and storage (CCUS) project can be developed by establishing three platforms – CO2, hydrogen and renewable energy power – to enable multiple industries located in the Tomakomai area to cooperate and supply raw materials to each other.

Low-carbon shipping – Japanese shipping firm NYK Line has signed a five-year strategic partnership agreement with the Global Centre for Maritime Decarbonisation (GCMD) to conduct pilots and trials of low-carbon solutions, it said in a statement on Tuesday. GCMD, a non-profit that aims to decarbonise the global shipping industry, is developing a framework for quality and quantity assurance of drop-in biofuels and GHG accounting. It is also conducting a green premium cost-benefit analysis of deploying biofuels with NYK and other partners involved in the pilot, according to the statement. NYK is the first shipping company in Japan to independently obtain an approval-in-principle (AiP) for an ammonia bunkering vessel (ABV) from ClassNK and is on track to retrofit an LNG-fuelled tugboat with an ammonia-fuelled engine, it said.

So-Pac pact – Prime Minister Anthony Albanese of Australia and Indonesia’s President Joko Widodo  discussed boosting cooperation on critical minerals, green manufacturing and security partnerships during their meeting in Sydney on Tuesday, reported Bloomberg. The Australian leader also announced a A$50 mln ($33 mln) fund to spur climate investment in Southeast Asia’s largest economy. Australia and Indonesia should build “more substantive and strategic economic cooperation through the joint production of EV batteries,” Jokowi said at the briefing, without elaborating. The three-day visit marks the Indonesian leader’s first trip to neighboring Australia since the beginning of the pandemic in 2020, and comes at a time when the two resource-rich countries are trying to navigate increasingly challenging geopolitical landscapes.

Double trouble – Bangladesh finalised a proposed annual carbon tax as part of budget 2023–24 of a minimum of BDT 25,000 to a maximum of BDT 350,000 ($233-3,265) for owners of more than one vehicle on Wednesday, with the tax imposed on the higher cylinder capacity (CC) car, a local news agency reported. The minimum surcharge will apply to second vehicles up to 1,500cc or with 75-kw engines, while the maximum tax would be applied to 3,500cc vehicles, according to calculations from the Bangladesh Road Transport Authority (BRTA), the report specified. Owner’s econd vehicles with engine capacity between 1,500–2,000cc (76-100kw) would be charged BDT 50,000 annually, vehicles between 2,501–3,000cc (126-150kw) would pay BDT 150,000 per year, while second cars between 3,001–3,500cc would incur BDT 200,000 per year. As of May 2023, there were 57,41,863 registered motor vehicles across the country, according to BRTA data, but ownership information was not available.

Safeguarding the Safeguard — The Australian government is resisting a push by Japan for Santos’ Barossa LNG project to have ‘flexible treatment’ under the reformed Safeguard Mechanism, the Guardian reports. A spokesperson for the Japanese embassy in Canberra said the mechanism could have a significant impact on Japanese LNG in Australia. Japanese state-backed company Jera owns a 12% stake in the Barossa project, as Japan has previously voiced concern on the effects Albanese government energy and climate policies could have on its LNG supply. An Australian government spokesperson backed the Safeguard Mechanism, indicating it would not change in response to the lobbying, and that the changes to the mechanism had been widely supported by business representatives.

AMERICAS

Winter solar – Rooftop solar panels in New England have strengthened the region’s power grid during the winter, research from the power transmission operator has found. E&E News reported last week that the Independent System Operators New England (ISO-NE) discovered that sunshine during the winter had helped shut down the Mystic Generating Station in Massachusetts. The gas power plant was one of the dirtiest in the six-state area, contrary to widely held beliefs from regulators.

H2O for H2 – The proposed clean hydrogen hub in drought-prone Corpus Christi, Texas would require access to millions of gallons of water, posing a challenge during the time when the region is facing a multi-year drought, Reuters reported on Monday. Green groups and local residents are opposing the construction of desalination plants that would “destroy an entire ecosystem, threaten other economies reliant on a healthy bay system, and usurp the water supply for residents”, the Coastal Alliance to Protect the Environment said in a letter to the US Energy Secretary. At a least a half dozen green hydrogen producers are anticipated at the Texas hub, each requiring 3 to 4 mln gallons of fresh water per day. Even with around 100 mln gallons of groundwater supply per day, the city is experiencing drought conditions and limiting the use of sprinklers and irrigation to once a week, according to its drought contingency plan, the report noted. The Biden administration is offering companies $100 bln in tax credits and regions up to $7 bln in grants to build out hydrogen hubs to reach a target of 50 Mt of clean hydrogen fuel by 2050, with the hubs announced in September.

VOLUNTARY

New platform – Comerc Energia, a Brazilian renewable energy company and partner of Vibra Energia, has launched a platform to trade carbon credits and renewable energy certificates (I-RECs) generated by sustainable projects. The company will assist renewable energy firms in mapping their carbon projects, registering with international organisations, and marketing the generated credits. The carbon market in Brazil is currently voluntary, with companies purchasing credits for reputational or strategic reasons. However, a regulated market, where companies must prove investments in government-approved projects to offset taxes, is under review. Comerc anticipates significant growth in the carbon market in the coming years, particularly as companies begin to consider their full supply chain emissions (Scope 3). Vibra and Comerc aim to reach 1.8 GW of centralised renewable generation capacity in the next 12 months and 450 MW by 2025. (BNAmericas)

Shell Man – MAN Energy Solutions and Shell have signed an MoU to collaborate on developing decarbonisation solutions. This partnership will focus on CCUS, clean energy production, and sustainable fuels. The primary goal is to optimise existing CCUS plants using MAN’s CO2-compressing technology, reducing the cost of carbon sequestration. The partnership will also focus on sustainable fuel options for the marine sector, aiming to reduce carbon footprints, provide integrated digital services, and mitigate methane pollution. This collaboration aims to expedite the transition to net zero emissions for both companies and their clients.

SCIENCE & TECH

Heating up – July 3, 2023, was the hottest day ever recorded globally, according to data from the US National Centers for Environmental Prediction. The average global temperature on Monday reached 17.01C (62.62F), surpassing the Aug. 2016 record of 16.92C, as heatwaves sizzled around the world. The southern US has been suffering under an intense heat dome in recent weeks amid extreme weather, probably driven by the human-caused climate crisis, experts said. In parts of China, an enduring heatwave continued, with temperatures above 35C, while wildfires are raging in Siberia, where a state of emergency has been declared. North Africa has seen temperatures near 50C, with, in the Middle East, thousands suffering from unusually scorching heat during the Hajj religious pilgrimage in Saudi Arabia. And even Antarctica, currently in its winter, registered anomalously high temperatures, as glacier melt accelerates and the sun intensifies. Ukraine’s Vernadsky research base, in the vast frozen continent’s Argentine Islands, recently broke its July temperature record with a reading of 8.7C. (Guardian)

Portal to the future – The Met Office, the UK’s national weather service, has today launched a Climate Data Portal to offer organisations improved  access to climate data and other resources, allowing them to better understand and respond to climate change. The portal is built using geospatial technology and will make it easier for any business or government organisation to combine open climate data with their own data to reveal the future impact of extreme conditions on their operations, including heatwaves, floods or droughts. It presents complex scientific climate projections in easy-to-use formats, ready to visualise and analyse in GIS and non-spatial applications or integrate into business processes for improved decision making.

AND FINALLY…

Poo-nzi scheme – A California man has been sentenced to six years and nine months in prison for duping investors by telling them he was using cow manure to create green energy, the US Attorney’s office announced late last month. From Mar. 2014 through Dec. 2019, Ray Brewer falsely told investors he was building machines called anaerobic digesters that “use microorganisms to break down biodegradable material and turn it into methane” in several California counties, the US Attorney’s office said. Brewer told investors they would receive 66% of the profits from this process along with tax incentives. Throughout the scheme, he tricked his investors by sending forged lease agreements with dairy farms, false bank statements showing he had been given loans to build the digesters, forged contracts with multinational companies, and even fake pictures showing the digesters being built. None of this was true, the Attorney’s office said. Over the course of the scheme, Brewer swindled investors for a total $8.75 mln. After receiving the money, he transferred it to various bank accounts and used it for personal expenses, including Dodge Ram pickup trucks, two plots of land, and a 3,700-square-foot custom-built house. (CBS News)

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