CP Daily: Friday September 7, 2018

Published 00:17 on September 8, 2018  /  Last updated at 01:03 on September 8, 2018  /  Newsletter  /  No Comments

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

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TOP STORY

Q3 RGGI auction clears at premium, pushing secondary market to 2.5-year high

This week’s Q3 RGGI auction cleared at $4.50/short ton – a 7-cent premium to the secondary market – as compliance entities upped their buying following the previous speculator-driven sale.

EMEA

ANALYSIS: EU lawmakers unlikely to pull emergency supply handbrake over carbon price surge

EU carbon allowances are surging to new 10-year highs almost daily, lifting power and gas prices across Europe to dizzying heights in the process, but experts say lawmakers are unlikely to intervene anytime soonby triggering a little-known emergency mechanism.

France, Germany vow to develop carbon pricing policies for all sectors

France and Germany will develop carbon pricing policies for all sectors over the next six months, their respective environment ministries agreed this week, extending the already extensive coverage to more areas of their respective economies.

EU Market: EUAs surge to new 10-yr high above €23 on strong auction, trader absences

EU carbon prices raced to a new 10-year high above €23 on Friday, surging by almost €2 to extend the previous day’s large gains and continue this year’s massive bull run.

ASIA PACIFIC

Australia to toughen offset issuance procedures

Australia’s Clean Energy Regulator (CER) on Friday said it would strengthen checks of offset applications, especially for forest regeneration projects, from which the government has bought around 90 million carbon credits.

CN Markets: Pilot market data for week ending Sep. 7, 2018

Closing prices, ranges and volumes for China’s regional pilot carbon markets this week.

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CARBON FORWARD 2018

CONFERENCE: 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.

Order your passes or read more about Carbon Forward 2018

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BITE-SIZED UPDATES FROM AROUND THE WORLD

FT feature – The Financial Times devoted substantial space on Friday to an article detailing the EU carbon market’s current revival. It details how a select group of specialist traders are churning bumper profits as the EUA price has recovered from a decade-long slump. Those named are hedge funds Lansdowne Partners and Northlander Advisors, and investment banks Morgan Stanley, Goldman Sachs, and JP Morgan. Those quoted include carbon veterans Per Lekander from Lansdowne and Mark Lewis of Carbon Tracker, both of whom will speak at the Oct. 16-18 Carbon Forward 2018 conference, which features a session dedicated to investors. Lewis said: “The European Union is in effect the sole supplier of carbon credits in the market. So the signal the EU has sent on supply to carbon traders is far more powerful than anything OPEC could ever send to the oil market.”

Shell game – Shell has convened regular meetings in the US since early 2016 with key environmental groups and think tanks to build support for a nationwide carbon tax, according to sources. The company initiated meetings during the heart of the presidential race, in part because it was believed that GHG regulations would be strengthened if Democrat Hillary Clinton won the election. The meetings continued after President Trump’s victory, and company officials have hosted talks in Shell’s offices in Washington DC, at restaurants, on conference calls, and over email. Shell met with officials from the Environmental Defense Fund, Nature Conservancy, World Resources Institute and Niskanen Center, a libertarian group that supports taxing greenhouse gas emissions, Shell spokesman Curtis Smith confirmed. Shell has long said it would support a national carbon tax if Congress worked to adopt one. Lobbyists for the oil giant lobbied Senate and House members for a carbon tax this year. (E&E News)

Strategic pointing – A group of seven countries – comprising France, Poland, Italy, Hungary, Greece, Ireland and the UK – have issued a common position on the reform of Europe’s electricity market, saying “strategic reserves” for electricity should not receive favourable treatment from regulators, reports EurActiv. “The statement is a clear reference to Germany, which closed eight lignite power plants in 2015 and transferred them into a “strategic reserve” that can be used as back-up in case of emergency”. The EU’s decisions to approve state support for emergency power plants in France, Germany, Poland, Italy, and Greece will all have to be revisited in light of the ongoing reform of European electricity market rules, the European Commission said on Tuesday. A February state aid ruling by the Commission said support for emergency power generation in Germany – chiefly coal-fired plants – “remains uninfluenced by the future rules on the design of the electricity market” that are currently being negotiated at EU level. The sentence, buried in a footnote on p.20 of the EU decision, remained unnoticed until now because the full text of the decision was published after the February announcement by the EU executive. This raised accusations of double standards by other countries like Poland, which were not offered equivalent safeguards.

Market pilot – For the second time in a month, Bloomberg profiles the World Bank’s $200 mln Transformative Carbon Asset Facility (TCAF), this time focusing on Norway’s $80 mln contribution. Carbon Pulse’s International Mechanisms dossier contains extensive details about the TCAF initiative, plus other facilities both inside and outside the UN such as the Nitric Acid Climate Action Group (NACAG) and Pilot Auction Facility.

Low-cost mix – Deep decarbonisation of the electricity system is likely to be cheaper if it uses a mixture of renewable and other low-carbon technologies, That’s according to a study that argues that the least-cost approach includes not only cheap wind and solar but also “one or more firm low-carbon resources [such as nuclear, carbon capture and storage, biomass, geothermal or large hydro]”. Excluding these options would raise the cost of a zero-carbon power system by 10-62%. (Axios)

Look internallyA new online consultation paper from Ecofys explains how organizations can use internal carbon pricing (ICP) to future-proof supply chains. The Navigant-owned company writes that while many organisations are focused on GHGs from energy consumption and processes, a large part of their carbon footprint actually comes from the materials and products they buy. It proposes nine options for governments and companies to use ICP in procurement. These options are based on information from a subset of organisations that use ICP in their procurement decisions, lessons from other sustainable or responsible procurement practices, and insights from carbon pricing and procurement experts. The paper also aims to inspire more organisations to use ICP to work with suppliers to discover new value creation opportunities, unlock the vast decarbonisation potential in their supply chains, and make them more resilient in a low-carbon future.

Desert mirage? – Installing large numbers of wind and solar farms in the Sahara desert would change the region’s rainfall, vegetation, and temperatures, according to research reinforcing the view that large-scale renewables could transform the region. The change in weather patterns – with rainfall potentially doubling –  could encourage plant growth.  (BBC)

And finally… Steely moonshot – Tata Steel has unveiled new technology that is able to reduce the carbon emissions from iron and steel production by more than 50%.  The steel giant has implemented the new technology at its Ijmuiden site in the Netherlands. Called HIsarna, the technology injects iron ore at the top of a reactor and is then liquefied in a high-temperature cyclone and drips to the bottom where powder coal is injected. According to Tata, the technology removes numerous energy-intensive steps – including having to pre-process the ore and coal in separate coke, sinter or pellet factories. Test campaigns were conducted using steel scrap and biomass and created carbon reductions of more than 50%. The HIsarna plant will now become a permanent feature of the production chain at the IJmuiden site. Tata is also designing an industrial scale version of the technology, capable of making up to 20 times more liquid iron. The new plant is expected to be operational in seven years. (edie.net)

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