CP Daily: Wednesday June 12, 2024

Published 04:53 on June 13, 2024  /  Last updated at 04:53 on June 13, 2024  / Carbon Pulse /  Newsletters

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

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TOP STORY

ANALYSIS – Elephants in the room: Diplomats open door for compromise in “constructive” Article 6 Bonn talks, but leave major hurdles for Baku

Negotiators in Bonn have left all the remaining major topics on Article 6 still open for November’s COP29 in Baku, with a heavily bracketed text on international trade rules leaving some sceptical that any progress was made at the inter-sessional event.

CARBON FORWARD NORTH AMERICA

Companies may opt out of SBTi pending outcome of Scope 3 emissions policy

Companies’ desire to be “quick and flexible” in meeting net zero targets may opt out of the Science-Based Targets initiative (SBTi), following recent internal controversy regarding the eligibility of voluntary carbon credits in offset of Scope 3 emissions under SBTi targets, conference attendees heard Wednesday.

EMEA

ANALYSIS: New UK government could fast-track UK-EU ETS link-up, driving price and market parity

The arrival of a new Labour government would clear the way for Britain to link its emissions trading scheme with the EU’s within the next few years, pushing UK prices up to parity as soon as the intention is signalled and aligning the two markets over the longer term, experts said on Wednesday.

BRIEFING: The UK’s implicit carbon price for utility companies to lapse, no substitute in sight

A longstanding UK consumer support scheme for low-income or fuel-poor households that requires energy providers to make payments toward household decarbonisation will expire in 2026, with no substitute in sight and political support unclear ahead of the general election.

Chemical industry urges faster green transition after EU elections

The chemical industry is calling for faster implementation of the European Green Deal after the 2024 EU Parliament elections, saying cheap and abundant renewable electricity will be the cornerstone of the industry’s ability to compete on the global stage in the 2030s.

Brussels to offer €1.2 bln in second green hydrogen auction

The European Commission will offer €1.2 billion in the second auction for green hydrogen projects, accounting for a quarter of the Innovation Fund’s budget this year, the trade group Hydrogen Europe announced on Wednesday.

Study reveals varied drivers of carbon tax regressivity across Europe

Carbon taxes are widely regarded as essential tools in the fight against climate change, but new research highlights significant differences in how they impact households across Europe, challenging the notion that they are uniformly regressive.

Russia faces $32 bln in ‘conflict carbon’ reparations from Ukraine war

A surge in “conflict carbon” from Russia’s invasion of Ukraine – from burning forests, blown up oil and gas structures, infrastructure built to fortify the front lines, and more – could cost Russia billions of dollars in additional reparations, according to research published on Thursday and backed by the Ukrainian environment ministry.

Euro Markets: EUAs remain rangebound ahead of options expiry as funds cut some length

European carbon prices were little changed for a third day on Wednesday as a robust rally along with natural gas after early weakness was erased by the close, while weekly Commitment of Traders data showed that the aggregate net short position among investment funds continued to grow due to an overall reduction in long positions.

AMERICAS

Washington Q2 auction clears above floor, spec participation limited

Washington’s Q2 current vintage auction settled almost $6 above the scheme’s floor price, against most market expectations, with limited speculative participation amid uncertainty surrounding the future of the state’s carbon market.

Oil major, fusion developer team up to power direct air capture facilities

Oxy Low Carbon Ventures, a subsidiary of oil major Occidental (Oxy), and fusion energy developer TAE Technologies announced Tuesday they will partner on the development of technology to provide emissions-free power and heat to direct air capture (DAC) facilities.

FASB proposes unified model for environmental credit accounting by US companies

The Financial Accounting Standards Board (FASB) on Wednesday unanimously voted to standardise how US companies account for environmental credits including carbon offsets.

Alarming rise in US wildfire risk due to climate change, researchers warn

Climate change is increasing the risk of wildfire across the US, a new study shows, with extreme conditions once considered rare now occurring with disturbing frequency.

DEBs-tagged G-CCOs trade at premium during CCA price plunge, ARB offset issuance up in June

Golden CCOs (G-CCOs) with direct-environmental-benefits to the state (DEBs) have been selling at a premium to California Carbon Allowances (CCAs) due to the recent price rout in the joint California-Quebec carbon market, while regulator ARB’s compliance-grade offset issuance increased in June compared to the prior two-week period.

ASIA PACIFIC

South Korea, Kazakhstan sign Article 6 deal

South Korea and Kazakhstan have decided to work together on setting up projects for carbon credit generation under Article 6 of the Paris Agreement.

California-based startup ties carbon deals with Mongolian govt, Mitsubishi

A US-headquartered soil carbon startup has signed an agreement with the Mongolian government to introduce regenerative agriculture and provide carbon finance to farmers and herders and with Mitsubishi for a JCM project in the country.

FEATURE: ‘Dual approach’ to Article 6 projects under discussion in Philippines

In developing the framework to authorise Article 6 projects, the Philippines may allow developers to generate ITMOs as long as they also support the country in meeting its NDC by generating a secondary project for the domestic market.

Australian govt publishes draft environmental plantings ACCU method

The Australian government on Thursday released a draft methodology for environmental plantings (EP) for consultation, outlining proposed changes to the existing method, which is set to expire in September.

Australian, Japanese companies team up on biochar, soil health

An Australian biochar and carbon dioxide removal project developer has formed a partnership with a Japanese agri-tech firm to focus on scaling the global biochar market, they announced Wednesday.

Taiwan may consider introducing cap-and-trade system -media

Taiwan may consider implementing a dual-track carbon pricing scheme, which could include the introduction of a cap-and-trade framework to regulate the total amount of emissions, according to local media reports.

Japan set to add two new energy efficiency methodologies to domestic offset market

The committee steering Japan’s J-Credit programme is considering adding two new methodologies to the domestic voluntary programme, encouraging industrial companies to shift towards greener manufacturing processes.

Malaysian govt fund partners with renewable energy firm to explore nature-based projects

A Malaysian federal government fund has partnered with a Kuala Lumpur-based renewable energy company to explore the development of nature-based solutions (NbS) projects in the Southeast Asian country.

SK Market: Monthly KAU auction sells out, though price remains low amid dim demand

South Korea’s monthly CO2 permit auction on Wednesday was again oversubscribed, though the price outlook may remain bleak in the near term due to persistent low demand in the national carbon market.

INTERNATIONAL

World faces “staggering” oil glut by end of decade, threatening rise in demand, warns IEA

Peak global oil demand will be reached in 2030 amid a “unprecedented” glut of supply after investors were caught napping by the rush to adopt clean technologies, warned the International Energy Agency (IEA) on Wednesday.

DATA DIVE: The state of G7 climate progress, according to the latest data

Leaders of the G7 group of developed economies are gathering on Thursday (June 13) for their annual meeting, with a host of global crises on the agenda to keep them busy.

PREVIEW: Global security takes precedence over climate at G7 summit

The G7 summit starting on Thursday, just a few days after European elections, lays bare security issues and high-level geopolitics as the main obstacles towards phasing out fossil fuels and reaching the Paris climate goals.

Top 20 fossil fuel countries need to ramp up transition in next Paris pledges -report

A third of the world’s 20 largest fossil fuel-producing countries made no mention of oil, gas, or coal in their last round of Paris Agreement pledges, while those that do mention it talk, explicitly or implicitly, about a continuation or increase in production, according to analysis published on Thursday.

VOLUNTARY

Issuances of poor quality credits fall in 2024, finds rating agency

Issuances of the lowest-quality credits have fallen by almost half so far this year as a total share of the market, although the grade continues to house the largest share of credits, according to a rating agency.

DAC developer signs partnership to store captured CO2 in aquifer under the Mediterranean

A developer of direct air capture (DAC) technology is partnering with a carbon storage business in the Mediterranean to use its technology to capture CO2 and store it in a saline aquifer off the shores of Greece.

Removals registry launches new protocol for biogenic carbon capture

A removals registry has developed a protocol for biogenic carbon capture and sequestration (BCCS), with requirements on the sourcing of sustainable biomass, and a bioenergy producer signed on as the first supplier.

BIODIVERSITY (FREE TO READ)

GEF Council to approve $700-mln spending on environment amid heated debate over GBF Fund’s role

The Global Environmental Facility (GEF) Council is set to approve a spending package of over $700 million next week, including the first-ever projects supported by the Global Biodiversity Framework Fund (GBFF), amid mounting debate over the fund’s potential to effectively address the financing gap on biodiversity.

INTERVIEW: Selling biodiversity net gain units might take 10 years, land manager says

Selling all the biodiversity net gain (BNG) units from one large conservation project in England could take up to a decade, if they trade at all, with the current system unable to drive large-scale landscape recovery on its own, a land manager has said.

Voluntary corporate disclosures often ‘insufficient’ to address nature-related risks, study says

‘Well-intentioned’ initiatives such as the Taskforce on Nature-related Financial Disclosures (TNFD) recommendations often fail to provide stakeholders with decision-useful information, as companies tend to highlight their sustainability successes rather than nature-related risks, found a study published on Monday.

WRI-led initiative drafts strategy to restore 50 mln hectares in Latin America by 2030

A regional partnership seeking to advance nature conservation efforts in Latin America and the Caribbean has drafted a new strategy to meet the ambitious goal of protecting and restoring 50 million hectares of land by 2030.

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CONFERENCES

Carbon Forward North America – June 11-12, Toronto and Online: Join us in the Great White North to hear about the evolving carbon pricing and climate policy landscape in North America. Whether you are an emitter, investor, developer, or a new participant in any of the continent’s carbon markets – compliance or voluntary – Carbon Forward North America offers you the opportunity to gain knowledge on both present and future policy developments and market opportunities. Explore the chance to meet the right people or source the right solutions to help you enhance your business prospects or minimise your risk. Come meet the region’s world-leading carbon market experts, compliance players, government officials, investors, project developers, analysts, brokers, and other stakeholders. To express an interest in speaking or sponsoring, please email michelle@carbon-forward.com

Carbon Forward Expo – October 8-10, London and Online: Save the date! More info coming soon…

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BITE-SIZED UPDATES FROM AROUND THE WORLD

EMEA

Slowing growth – Electric vehicle sales are headed for a record year though sales growth is slowing, particularly in developed countries, while developing nations see record sales, according to BloombergNEF’s Long-Term Electric Vehicle Outlook. As EV technology continues to improve, and battery prices fall, adoption moves from being policy-driven to being driven by consumer demand across all markets, the report finds. Passenger EV sales are expected to exceed 30 mln in 2027 in BNEF’s base case scenario and rise to 73 mln per year in 2040, though currently the only segment of road transport fully on track to reach net zero by mid-century is that of three-wheeled vehicles. The analysis calls for strong and carefully structured policy support on all segments to get on track for net zero and says that for the world to achieve a totally zero-emission vehicle fleet by 2050, sales of combustion vehicles will need to stop around 2038. The success of EU ETS2, for road transport and heating fuels set to launch in 2027, hinges largely on EV uptake, with the scheme to be dominated by transport, with over half of total emissions coming from cars, trucks, and vans that will rely heavily on electrification to decarbonise, analysts say.

Chinese EVs benefiting from “unfair subsidies” – The European Commission has provisionally concluded that the battery electric vehicle (BEV) value chain in China benefits from unfair subsidisation, as part of its ongoing investigation. This is causing a threat of economic injury to EU BEV producers, the EU’s statement says, and as a result, the EU has reached out to discuss these findings with Chinese authorities and explore possible ways to resolve these issues in a WTO-compatible manner.

Gas damages – Uniper was awarded more than €13 bln in damages for Russian gas volumes not supplied by Gazprom since mid-2022, prompting concerns in the market about remaining flows to Europe. The German utility said an international arbitration ruling on June 7 allowed it to terminate Russian supply contracts, some of which ran until the mid-2030s. Germany no longer receives any gas from Gazprom but European prices still rose on the news, with traders fearing possible ramifications for exports from Russia to elsewhere in the region. Austria could be hit by ramifications, for example, as it still imports around 80% of its gas from Gazprom, with Austrian utility OMV warning last month that flows could be disrupted. In a worst case scenario, if Gazprom doesn’t pay the damages and the ruling by the Stockholm-based tribunal is enforced strictly, OMV may be forced to redirect payments to Uniper. The German utility was nationalised during the energy crisis in a huge corporate bailout to prop it up after the utility was forced to pay vast sums every day for alternative supplies when Russia stopped supplying gas. Ending the supply contracts is a key milestone to prepare Uniper for its return to the stock market and the decision could also trigger other rulings across Europe, with Italy’s Eni engaged in similar arbitration proceedings. However, it’s unclear as to whether Gazprom will pay the damages. (Bloomberg News)

ASIA PACIFIC

One by one – Japanese oil and gas firm Inpex has signed yet another carbon neutral natural gas arrangement with a local municipality, this time with the Water Bureau of Niigata prefecture and its Itoigawa Gas. Inpex has signed a string of similar deals across Japan over the past couple of years, in which it commits to supply the district with gas that has been made “carbon neutral” through the purchase of carbon credits, mostly from international nature-based projects.

No blackouts – The head of the Australian Energy Market Operator has emphasised the organisation is not forecasting blackouts in the future, and is confident of a successful energy transition, Renew Economy reported. It comes as the Coalition opposition party has claimed that Australia’s transition to 82% renewables by 2030 was unachievable, and risks creating blackouts in the country. AEMO Chief Daniel Westerman told a conference in Melbourne Wednesday that it was able to respond to significant weather events over the summer, saying the bulk of the power system coped remarkably well. Westerman said AEMO’s 1-year demand supply forecast, which the opposition and media have pointed to claiming blackouts are on the horizon, had been misunderstood and misreported. Around 4.6 GW of new wind, solar, and storage had been included in the energy system in Australia in the past year.

For sale – The boom in carbon offsets – and confidence in the robustness of the regulations that sit behind the market – have not gone unnoticed by international dealmakers. Now, Sydney-based buyout firm Adamantem Capital plans to test the appetite of offshore and local parties looking for an established local beachhead, and has hired UBS to help it find a buyer for its carbon farming services provider, Climate Friendly. (AFR)

Transition investment – The government of the Philippines has secured $500 mln in investments from the Climate Investment Funds (CIF) to transition from coal to renewable energy. The Accelerating Coal Transition (ACT) investment plan, approved by CIF’s governing board, aims to accelerate the retirement or repurposing of coal-fired plants, including the Mindanao plant, targeting the retirement of up to 900 MW of existing coal-fired generation by 2027. It aims to reduce GHG emissions by 33 mln tonnes of CO2 by 2030, helping the government towards its goal to reduce GHG emissions 75% by that date.  The funding will support the addition of 1,500 MW of renewable energy capacity by 2030, including battery systems, offshore wind, floating solar, and pumped hydro projects, to help the Southeast Asian country in its energy transition. Currently, coal constitutes 44% of the Philippines’ total installed capacity and 60% of total generation, accounting for over 55% of the country’s GHG emissions.

Going big on green H2 – India’s JSW Energy is developing the largest commercial-scale green hydrogen project in India, and the first in the South Asian nation to produce green steel, the Economic Times reported. The firm has signed a seven-year green hydrogen supply agreement with JSW Steel and the project is expected to be commissioned by the end of 2025. JSW Energy is also one of the companies which has been allotted a green hydrogen production capacity of 6,800 tonnes per annum under the SIGHT Programme by Solar Energy Corporation of India (SECI). Earlier this week, SECI invited bids from potential suppliers of over half a million tonnes of green ammonia annually that will be eligible to earn Article 6-aligned carbon credits.

Better accounting – Researchers have identified ways to enhance the accuracy of Indonesia’s GHG emissions calculations from peatlands and mangroves, which will help the country meet its emissions reduction goals and refine its climate policies. Indonesia, a major GHG emitter due to deforestation and burning of rainforests, has committed to reducing emissions by 31.89% by 2030, or by 43.2% with international support. Deforestation, forest and peat fires, and land-use changes account for about half of Indonesia’s emissions. The country aims to reduce these emissions through forest conservation, fire prevention, and reforestation, targeting a net carbon sink in its forests by 2030. Accurate carbon measurement is crucial for Indonesia’s wetland ecosystems, which hold significant carbon stores. Researchers from CIFOR-ICRAF, including Daniel Murdiyarso, found gaps in Indonesia’s updated 2022 GHG accounting system, particularly in measuring emissions from peatlands and mangroves. The system fails to differentiate between drained and undrained peatlands and doesn’t align with IPCC guidelines, leading to inaccurate emissions and sequestration counts. Improvements are also needed in measuring emissions from forest fires and in mangrove data consistency. Different types of mangroves and their carbon profiles require further study, particularly those growing on peatlands, which are understudied. The study, published in the Proceedings of the National Academy of Sciences, provides a roadmap for improving Indonesia’s GHG inventory. Enhanced data quality and transparency will support Indonesia’s emission reduction targets, bolster confidence in climate investments, and aid in reporting commitments for the 2028 Paris Agreement assessment. (Mongabay)

More trading – The Trenggalek Regency Administration in East Java is considering carbon trading as a fiscal strategy to boost local revenue, aiming to support the national net zero carbon target for 2060. Trenggalek emits around 3 Mt of CO2 annually but absorbs about 27 Mt, the administration said, presenting a surplus for potential monetisation through carbon trading. This commitment is part of the Trenggalek Regional Long-Term Development Plan (RPJPD) for 2025-45, which outlines strategies for eco-tourism and sustainable practices. The plan includes detailed steps for carbon trading, such as calculating carbon absorption in various regions and establishing a carbon emission baseline. While exact figures are pending, preliminary estimates indicate that Trenggalek is already a net sink with regards to forest and other land use. (Indonesia Business Post)

AMERICAS

Clean heat in Colorado – Colorado regulators approved Monday Xcel Energy’s $440 mln plan to curb GHG emissions from its natural gas system through a combination of energy efficiency and electrification programmes. The goal of the Clean Heat Plan is to transition more homes and businesses from natural gas to electricity, cutting GHG emissions by 22% by 2030. Xcel Energy projects a 14% decline in its gas sales from 2024 to 2028. Colorado was the first state to adopt a statute regulating emissions from retail gas providers. Vermont and Illinois have followed. (The Colorado Sun)

Long-duration storage boost – Gov. Kathy Hochul (D) announced Wednesday the availability of more than $5 mln for long-duration energy storage projects under New York State’s Renewable Optimization and Energy Storage Innovation Program. The funding is being made available via a competitive solicitation for projects that will support innovative and under-utilised long-duration energy storage solutions that are yet to be commercialised. Proposals must further product development and demonstration projects in energy storage that are 10 to more than 100 hours in duration. The announcement supports New York’s goal to install 3,000 MW of energy storage by 2030, while facilitating further development to 6,000 MW.

Republican riddle – Representative Mariannette Miller-Meeks (R-IA), leader of the Conservative Climate Caucus, appears unlikely to support legislation to study the carbon intensity of US industrial goods, reported E&E News. A House version of the PROVE IT Act is set to be introduced in the coming weeks by Representative John Curtis (R-UT), according to the outlet, and while some Republicans have lauded the proposal as a way to leverage a US advantage in global trade, others have decried it as the stepping stone towards a carbon tax. Earlier this month, a panel of experts debated the possibility that mounting fiscal pressures in the US could lead to a national carbon price in the US, while a series of federal carbon border adjustment mechanism (CBAM) proposals have gained increasing support from both sides of the political aisle.

Unlikely support for solar geoengineering – The Environmental Defense Fund (EDF), which has previously expressed scepticism about technologies that could artificially cool the planet, will finance research into solar geoengineering, with the NGO hoping to start issuing grants this fall, EDF’s Lisa Dilling, told the New York Times. Dilling said research would focus on estimating the likely effects in different parts of the world if governments were to deploy artificial cooling technologies. The intent is to help inform policymakers, she said. “We are not in favor, period, of deployment. That’s not our goal here. Our goal is information, and solid, well-formulated science.”

Partnership cemented – Lafarge Canada and Hyperion Global Energy are collaborating on a pilot project at Lafarge’s Bath Cement Plant in Ontario, using Hyperion’s Tandem Carbon Recycling System. This system captures carbon emissions and transforms them into minerals for making sustainable, low-carbon concrete. The project aims to refine and scale up this technology, which boasts a 98% capture efficiency for CO2 emissions. The minerals produced contribute to greener building practices and improve concrete strength and density. Early results from the pilot indicate the potential to capture up to 1,000 tonnes of CO2 annually, with prospects to increase tenfold next year. This initiative supports local suppliers and skilled workers in Ontario, advancing Lafarge’s decarbonisation and circular construction strategies.

VOLUNTARY

Rice methodology consultation – Verra has opened a public consultation on the draft methodology Improved Management in Paddy Rice Production Systems (ID #M0253) in the Verified Carbon Standard (VCS) program, which is open from from June 11 through July 12, 2024. The proposed methodology applies to projects implementing improved water management practices in continuously flooded rice systems to reduce GHG emissions and adopts the latest scientific principles to ensure the robust quantification of GHG emission reductions of methane and nitrous oxide. While it also incentivizes the adoption of innovative management practices in paddy rice production systems, such as the cultivation of improved rice varieties and the use of methanotrophic bacteria to reduce methane emissions. It builds on the UNFCCC Clean Development Mechanism (CDM) methodology AMS-III.AU.: Methane emission reduction by adjusted water management practice in rice cultivation, v4.0, which Verra permanently excluded from use in the VCS program.

Russian registry transparency – Under new rules for registering a carbon project on the Russian registry of carbon units, the contractor must provide documents to the operator of the registry. These are documents and information submitted by him to an accredited person to carry out the procedure for classifying projects established in accordance with Part 2 of Article 9 of the Federal Law “On Limiting Greenhouse Gas Emissions”, and a report or positive conclusion of an accredited person on the project’s compliance with the criteria for classifying projects implemented by legal entities, individual entrepreneurs, or individuals as climate projects. Since June 1, 2024, the registry operator has been obliged to publish these documents as well as reports on the implementation of climate projects to ensure transparency of the market. All implementors of projects registered before this date are called on to voluntarily disclose this information on the official registry website.

AND FINALLY…

Risky reporting – Nearly four out of every 10 journalists covering climate change and environment issues have been threatened because of their work, including 11% subjected to physical violence, the Guardian reports. In a global survey of more than 740 reported and editors from 102 countries, Internews’ Earth Journalism Network and Deakin University found that 39% of the journalists threatened “sometimes” or “frequently” were targeted by people engaged in illegal activities such as logging and mining, the Guardian said. About one-third were threatened with legal action. In addition, 39% of respondents said they have self-censored their work for fear of repercussions, and 62% said they included statements from climate sceptics based on a misguided belief that it was needed for balance.

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