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- Analysts trim EUA price forecasts in wake of surprise Polish sale notice
- EU Market: EUAs rally €2 to end higher after selling off on Polish sale news
- EU ETS does not hurt firms’ profitability -OECD
- NA Markets: WCI, RGA prices dip despite increased activity on secondary market
- LCFS Market: California prices set new record as participants eye $200
- US EPA reduces emissions standards for power plants
- Australian carbon market for industry likely to be short from day one, analysts find
- Unwanted exercise and ‘pin risk’: A primer for EUA options expiry’s other risks
- In Katowice, indigenous leaders call for wider uptake of REDD+
Analysts are trimming their EU carbon price forecasts in the wake of Poland’s announcement that it would offload an additional 56 million permits in 2019, with some experts predicting that another large batch will come the following year.
EU carbon prices rallied by €2 on Thursday, clawing back from a one-month low below €18 that was plumbed on news that Poland will double the number of allowances to be auctioned next year.
EU ETS prices did not hurt revenue, profits, or employment at firms covered by the programme over 2005-2014 period, but despite modest price levels, they had a limited impact in cutting emissions, the OECD said in a report Thursday.
RGGI allowance (RGA) prices declined by double-digits ahead of the final 2018 auction and amid increased activity, while California Carbon Allowance (CCA) prices dipped as entities looked to shift positions across the curve.
California Low Carbon Fuel Standard (LCFS) credits traded at a new all-time high on Wednesday, drawing closer to the $200 mark as traders debated whether or not that level would be breached.
The US Environmental Protection Agency (EPA) released proposed rules Thursday that would relax the standard for new and modified power plants, while also removing a requirement that coal-fired facilities use carbon capture technology.
A baseline-and-crediting scheme for industrial emitters under a ramped-up Safeguard Mechanism featuring targets in line with the Labor party’s climate target would be short from the outset, with demand rapidly increasing over the next decade, a report found Thursday.
*FREE READ* – There are hundreds of millions of tonnes in open interest across the Dec-18 EUA options. Beyond spawning more volatility, options trading veteran Tobias Munk says this massive build-up may yield additional risks in the form of unwanted exercises and ‘pin risk’ ahead of next week’s expiry.
*FREE READ* – “RIA lives!” said Peruvian indigenous leader Fermín Chimatani Tayori, referring to a private-public partnership called “Amazon Indigenous REDD+”, an eight-year effort to develop protocols and projects that use carbon finance to support indigenous development plans called “Life Plans” (Planes de Vida).
BITE-SIZED UPDATES FROM AROUND THE WORLD
Change of heart – New Brunswick Premier Blaine Higgs said his province will launch its own legal challenge against the Canadian federal government’s backstop carbon pricing plan. Last week, Higgs’ new Tory government announced it would intervene in lawsuits launched by Saskatchewan and Ontario, but Higgs now says New Brunswick will file its own suit. He added his government will endorse the recommendations of the New Brunswick Climate Change Action Plan released two years ago, and will develop new regulations to address large industrial emitters. (The Canadian Press)
Dropped – France’s government has now dropped the carbon tax rises due in 2019 that sparked weeks of violent protests in France, BBC reports. Prime Minister Edouard Philippe, who had previously only promised to postpone the rise for six months, says the increase has now been dropped from next year’s budget. Further protests from the ‘yellow vests’ are planned for this weekend, regardless of the government’s move.
All-night capacity – EU legislators failed to reach agreement on the bloc’s electricity market reform bill after an all-night trilogue negotiation between the three lawmaking bodies. Talks collapsed over Poland’s insistence to keep providing state aid to coal via capacity mechanisms to remunerate power plants that remain on stand-by. They will try again on Dec. 18. (EurActiv)
Down on the farm – A government-industry expert group in New Zealand on Thursday published a report showing that with a comprehensive policy package the country could reduce biological GHG emissions from New Zealand’s pastoral sector about 12-24% below 2005 levels by 2030, and 9-40% below 1990 levels by 2050, translating into some 10 MtCO2e per year by the end of the next decade and 15 Mt by mid-century. If implemented, that would likely take a bite out of the nation’s needs to buy international carbon units to meet its Paris obligations.
DiNO Joe – West Virginia Senator Joe Manchin joined fellow Democrats in voting no on controversial Federal Energy Regulatory Commission (FERC) chair nominee Robert McNamee during a cloture session on Wednesday. Manchin, who is a major coal backer, cited climate change and comments McNamee made earlier this year criticising renewables as the reason for his about-face. The senator’s action comes as environmental activists are seizing upon his potential elevation to top Democrat on the Energy committee next year. Regardless, McNamee is expected to move ahead Thursday on a 50-49 party line vote. (Politico)
Market please – Ahead of Dec. 11’s crunch UK parliament vote on the Brexit deal, carbon market business association IETA issued a statement Thursday urging the UK to either continue to participate in the EU ETS or create its own, linkable domestic UK carbon market. If UK lawmakers vote to adopt the Brexit deal, Britain stands to stay in the EU ETS until end-2020, while a vote against would raise the prospect of a sudden ETS exit if no further deal emerges by the Mar. 29 exit day. IETA echoed the government’s view that UK 2019 EU Allowances auctions and free allocation should be postponed if there is still uncertainty at the start of 2019 over the UK’s EU ETS participation to avoid marking UK-issued units, which it said would create a price distortion and high risk of UK auctions failing.
And finally… Solidarity in scepticism – A Polish trade union issued a joint statement with a US climate science denial group on Thursday rejecting the scientific consensus on climate change, coming during the Poland-hosted UN climate talks in Katowice. The statement, signed by the Arlington Heights, Illinois-based Heartland Institute and trade union Solidarity, doubted assertions from the UN science panel IPCC that “the world stands at the edge of climate catastrophe.” Though the groups said that neither organisation opposes the goal of clean air, they also didn’t support the elimination of coal from the world’s energy portfolio. The alliance between Solidarity and the Heartland Institute will come as a blow to the Polish government, which has so far balanced urging progress on finalising the Paris rulebook with reluctance to significantly reduce the share of coal in its energy mix. (DeSmog UK).
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