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EU carbon prices broke above €20 in a surging 4% move early Thursday, as a strong auction result triggered further buying.
EU carbon allowances could rise to €25 before the end of the year, according to growing number of analysts, extending a year-long rally that has already seen prices quadruple to their highest level in a decade.
The UK will publish a technical notice focused on the EU ETS by the end of next month, which will set out a plan and provide advice in the case that Britain leaves the bloc with no deal in 2019.
California carbon prices rose this week following Tuesday’s publication of the linked WCI market’s sold-out quarterly auction result, recovering after some entities had looked to turn a profit immediately after the data was made public.
New Zealand carbon allowances reached NZ$24.65 ($16.45) on Thursday, just 35 cents below the government’s fixed price option, with some market participants expecting to see trades above that level soon.
CARBON FORWARD 2018
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BITE-SIZED UPDATES FROM AROUND THE WORLD
Be reasonable – The Trump administration’s replacement for the Clean Power Plan, known as the Affordable Clean Energy (ACE) rule, relies upon a shaky legal basis that could affect a future administration’s ability to alter the rule’s GHG controls. Legal experts say the EPA’s proposal targeting GHGs from existing power plants appears designed to block a future administration from pursuing broader emissions controls because it all but says the Clean Air Act restricts such standards to those “within the fenceline” of the plant. EPA would be expected to rely on the inside-the-fenceline argument to defend a near-certain lawsuit from environmentalists and states if the agency finalises ACE as proposed. But according to InsideEPA, some say the policy position might not be an explicit prohibition on a future president imposing stricter “beyond the fence” standards, instead hoping the rule would set a precedent preventing such tougher approaches. Analysts at ClearView Energy Partners said they believe the EPA could deliver a final rule sometime in H1 2019, clearing the way for a review to begin later next year and continue into 2020 at the DC Court of Appeals, where the appeals to the exiting CPP are being held in abeyance. “The DC Circuit may agree with the new plan’s opponents that climate change is a problem that demands a response from policymakers, but we are not yet convinced that the courts will direct EPA to stretch interpretation of the existing statute when the agency declines to do so,” ClearView said. “This matters. Even if voters elect a new president in 2020, should federal courts uphold ACE, it may take Congress (rather than a regulatory pendulum swing by a greener president) to replace or otherwise strengthen the rule.” In contrast, in a blog post for Legal Planet, University of California-Berkeley Law professor Dan Farber writes that the ACE relies upon a judicial approach known as the Chevron doctrine, which says that if a statute is ambiguous, the court will accept a reasonable interpretation of the statute by an administrative agency. Farber notes that the EPA proposes to adopt the more limited interpretation of the statute and prevent broader emissions reductions within the power sector, relying upon the notion of “reasonableness” to defend its argument. He adds that the EPA nowhere addresses in its arguments regarding reasonableness that its approach allows for far smaller GHG cuts and significantly more deaths, which means that a future EPA could revert to the original Obama-era broader interpretation by arguing its approach is even more reasonable than the Trump administration’s.
Can’t see it yet – With just a week left for Canadian provinces and territories to submit their carbon pricing plans to Ottawa, the Nova Scotia government says it will not share its final proposal with the public until it’s approved by the feds. Premier Stephen McNeil said Thursday that Nova Scotians won’t be told what the final plan initially looks like or what sort of regulations there will be, adding that there’s no point in revealing it before it gets the green light that it meets federal guidelines. The province’s Liberal government has previous announced it will implement a cap-and-trade programme covering around to build on Nova Scotia’s success in cutting emissions by over 30% below 2005 levels. Future participants have called for the scheme to include auctions, while also providing for more industry protection and linkage opportunities – features that did not appear in the government’s original blueprints. Read more about the plan here. (Canadian Press)
Long countdown – Germany’s states are upping pressure on Chancellor Angela Merkel to keep coal-fired power for as long as 30 years as the nation approaches a deadline for setting an exit date from the fossil fuel, Bloomberg reports. Merkel’s administration is committed to shuttering about 120 lignite and hard-coal plants to cut emissions and plans to set a final exit point in October. As the deadline nears, six states where coal power is concentrated have banded together to keep an extended lifeline for the stations. “A 25- to 30-year time frame to close the chapter on coal power is realistic,” said Saxony’s Prime Minister Michael Kretschmer in an interview in Leipzig on Tuesday. “We need time to reset regional economies now dependent on coal.” The German coal exit commission has set out on a tight schedule to devise a plan for phasing out the fossil power source – but shortly before its third official meeting federal states and opposition politicians have complained about a persistent lack of solid foundations of facts and goals to reconcile the interests of many different groups having a stake in a German coal exit. (Clean Energy Wire)
Doubtful double – Understanding how national conditions will affect countries’ Paris Agreement NDCs is a difficult task, particularly for developing countries like India, write two researchers in a guest post for Carbon Brief. However, by analysing a range of predicting India’s emissions, the authors conclude that the country’s GHGs will at most double from 2012 levels by 2030. While achieving this upper bound would be significant, the researchers note that this would still put India’s emissions at less than half the level of China’s from 2015.
Imbalance buds – Public Service Co. of New Mexico, the state’s largest utility, has applied to join California’s Western Energy Imbalance Market (EIM) starting in 2021. The EIM, managed by California’s independent system operator (CAISO), currently has eight participants across several western states and British Columbia, which have entered the programme seeking financial benefits and emissions reductions provided by trading electricity over a larger footprint in the voluntary market. CAISO said that the market helped reduce emissions by over 55,000 Mt in the second quarter of 2018 and absorbed 129,100 MWh of renewable energy that would have otherwise been curtailed. California regulator ARB is also proposing a more permanent measure to assign compliance obligations to utilities participating in the EIM as part of the state’s cap-and-trade programme. (Utility Dive)
Ship shame – Nearly every cruise ship in Europe is still using high-polluting fuels, leading to calls for ports to ban them altogether. The German environmental watchdog Nabu tested 77 vessels for toxic heavy fuel oil, finding that all but one used what the group described as the “dirtiest of all fuels”, emitting the same amount of toxic gases and particulates as 700 trucks. Heavy fuel oil is the lowest grade product to come out of refineries, with Nabu CEO Leif Miller calling it “scandalous” that ships are still coming onto the market in 2018 that are still powered by the fuel. (The Independent)
Ship fame – Danish shipping giant Maersk will send the first cargo container vessel unaided through the Arctic’s Northern Sea Route, a journey now made possible due to the effects of climate change. The route, which used to require uneconomical nuclear-powered icebreakers to make it through the frozen conditions, begins this week from Vladivostok, Russia, passes the Bering Strait on Sep. 1, and arrives in St. Petersburg by the end of the month. (Axios)
And finally… When you know, you know – While a majority of American voters (68%) are either “very” or “somewhat” concerned about the effects of climate change and its impacts on the environment, most are extremely pessimistic about Congress’ willingness to do something about it. A new poll from Politico/Morning Consult showed that only 3% of the nearly 2,000 registered voters surveyed had “a lot” of confidence that Congress would act on climate change. Another 17% of voters said they had “some” confidence, while 40% and 28% respectively said they had “not much” or “none at all”. (Politico)
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