CP Daily: Wednesday May 23, 2018

Published 22:49 on May 23, 2018  /  Last updated at 22:49 on May 23, 2018  /  Newsletter  /  No Comments

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

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TOP STORY

WCI auction sells out again, with results bucking analyst predictions

The second quarterly WCI auction of 2018 cleared above the floor price and buyers again purchasing all current units available, countering worries that political uncertainty in Ontario would lead to an under-subscribed result.

ASIA PACIFIC

China to include environment and profitability in coal investment restrictions

China will for the first time include environmental capacity and economic return as factors in restricting new investment in coal-fired power generation, according to a leaked note from the National Energy Administration (NEA).

Flexibility options weigh on regulator as it carves out details on Australia’s NEG

Australia’s Energy Security Board backs a limit of around 10% on banking emissions over-achievement under the proposed National Energy Guarantee (NEG), but it has posed a number of questions regarding the use of flexibility options to stakeholders while leaving the use of offsets up to the government.

Japan’s first non-fossil power auction might fuel offset trade

The Japan Electric Power Exchange (JEPX) has held its first auction of non-fossil fuel power certificates, which some observers say might spark more interest in using market-based tools to meet carbon targets.

SK Market: KAUs rise to 5.5-mth highs on strong demand

South Korean carbon permits rose to their highest level of 2018 on Wednesday as many traders remain concerned whether supply will be sufficient for everyone to comply by the annual June 30 deadline.

Shenzhen council pays ETS companies for saved CO2 permits

The council in Shenzhen’s richest city district has extended a funding scheme for local emitters based on how many CO2 permits remain unused when complying with the Chinese city’s pilot emissions trading scheme.

AMERICAS

US forest carbon offset markets could be bolstered through reverse auctions, say experts

The slower-than-planned uptake of forest-based carbon offsetting in the US could be buoyed by a reverse auction system that provides cost certainty and flexibility for landowners, according to experts.

California’s ARB doles out 176k new offsets to three projects

California’s Air Resources Board (ARB) handed out some 176,400 carbon offsets to three initiatives this week, with a new ODS project taking home the bulk of the credits.

EMEA

EU Market: EUAs hold near €16 despite double showing of weak auctions

European carbon prices held around €16 and within sight of recent highs despite two fairly weak auction results on Wednesday.

Another group of carbon trading fraudsters convicted by French court

All 36 people on trial over a €385-million tax fraud using the EU carbon market have been convicted by a Paris court.

VOLUNTARY

Voluntary carbon market unwise to continue outside blurred lines of Paris Agreement, experts warn

Voluntary carbon market developers risk being crowded out of existence by increasingly expansive climate policies worldwide unless they quickly work out a way to earn revenues within the scope of the Paris Agreement, experts said at an event on Wednesday.

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CARBON FORWARD 2018

SAVE THE DATE: Carbon Forward 2018 – Survive and thrive in the global carbon markets

Don’t miss the 3rd annual Carbon Forward conference and training day – Oct. 16-18, 2018 in London.

Spend two days with top experts, players, and decision-makers from the global carbon markets as they address today’s most attractive opportunities and pressing challenges. And join us for the EU ETS pre-conference training day organised by carbon market experts Redshaw Advisors, where you will learn how to effectively manage your carbon risk ahead of the looming overhaul of the bloc’s emissions trading scheme.

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BITE-SIZED UPDATES FROM AROUND THE WORLD

A costly transition – The global transition to electric vehicles and renewable sources of power will see oil company revenue plummet, Bloomberg reports. The roll-out of 540 million electric vehicles by 2040 will cause oil demand to peak in the mid-2020s, slashing income by $19 trillion, according to Oxford-based Aurora Energy Research Ltd. Gas and power will provide more than half of final energy consumption, up from 39% currently.

Hurry up – A new report from the International Energy Agency has found that only 4 of 38 clean energy technologies were on track to meet long-term climate, energy access, and air pollution goals in 2017. Some technologies made tremendous progress in 2017, with solar PV seeing record deployment, LEDs quickly becoming the dominant source of lighting in the residential sector, and electric vehicle sales jumping by 54%. But the analysis found that progress on other key technologies, for example energy efficiency, battery storage, and CCS, has stalled, contributing to an increase in global energy-related CO2 emissions of 1.4% last year. It also highlighted more than 100 key innovation gaps that need to be addressed to speed up the development and deployment of these technologies.

CCUS cash – The UK is providing £21.5 mln in funding for an international challenge to help scale-up carbon capture utilisation and storage (CCUS) technology. Saudi Arabia and Mexico are also backing the initiative, which comes several years after the UK scrapped its own £1 billion CCS development competition.

Short on funds – Recent commitments to increase EU funds for climate action are at risk of being weakened, according to a leaked draft of the European Commission’s regulation on the European Regional Development Fund and on the Cohesion Fund. In its communication on the future EU budget published May 2, the Commission announced that 25% of the EU budget would be dedicated to climate action and implemented throughout all spending programmes. However, according to the draft regulation on the funds outlining future spending in more detail, member states are obliged to spend only 20% in the ‘green and low-carbon transition’ objective. “To reach the monetary equivalent of 25% of the entire EU budget for climate action, the total of €320 billion promised, at least 40% of regional development and cohesion funds, should be dedicated to climate action,” said green group network CAN Europe.

Defeat, but questions linger – More than a quarter of Shell’s shareholders voted against chief executive Ben van Beurden’s €8.9 mln pay package for 2017 at its annual general meeting on Tuesday – but not enough to stop the pay report being approved. During the same meeting Shell “won a vote of confidence in its approach to climate change”, the Financial Times reports, as 94% of shareholders cast votes against a resolution that would have obliged the oil giant to set firm targets for reducing its carbon emissions in line with the Paris Agreement. Activists had been hoping to improve on the 6.3% backing they had for a similar resolution last year, but instead saw support shrink to 5.5%. However, about about half the questions related to climate change during the four-hour AGM, the Guardian notes. (Carbon Brief)

Unavoidable realityLimiting global warming to 1.5C will make the world increasingly dependent on technologies that extract CO2 from the atmosphere, according to new studies published by the Mercator Research Institute on Global Commons and Climate Change. However, technology development and expansion, as well as the start of pilot projects, are considerably lagging behind deployment in climate mitigation scenarios, the institute adds. (Clean Energy Wire)

Minor milestone – The China Emissions Exchange in Guangdong saw a record 600,000 allowances trade on-screen on Tuesday, it said in an announcement, although bigger volumes have gone through in the market before on a bilateral basis. China’s pilot ETS is seeing a notable increase in demand from power companies as the annual compliance deadline nears, with four local electricity providers this week launching tenders asking for a total of over 1 million permits. Power companies – which originally had expected they would be part of the national ETS by now – has contributed two-thirds of compliance buying since Apr. 1, though brokers still account for 60% of the overall market volume.

It’s been a hardship day’s night – Ohio-based refiner Marathon is the latest company to apply for a hardship waiver exempting the company from part of its compliance obligation under the US Renewable Fuels Standard (RFS), reports Reuters. The waiver would apply to one of the company’s facilities for the 2017 calendar year, though Marathon’s smallest refinery still exceeds the 75,000 barrel-per-day waiver cap, meaning that the oil giant may have operated one of its facilities at reduced rates or made the argument that certain parts of one refining complex operate separately. The news drew the ire of RFS supporters, who for months have accused the EPA of undermining the programme’s integrity by relieving billion-dollar companies of their responsibility to blend biofuels or purchase Renewable Identification Number (RIN) credits for compliance with the programme. Marathon reported net income of $3.4 billion last year, and recently announced it was buying fellow RFS waiver recipient Andeavor for $23.3 billion, making it the nation’s largest refiner.

And finally… Scott who? – Embattled US EPA boss Scott Pruitt has a low approval rating, but substantial swaths of the public don’t have a strong opinion about him or know much about the ethics controversies surrounding him, according to a HarrisX Overnight Poll commissioned by Axios. However, the poll also finds that 80% of Americans believe Pruitt should be fired if the EPA’s inspector general finds that he misused his position – even if President Trump thinks he’s doing a good job.

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