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TOP STORY
ANALYSIS: WCI regulated entities building length as California allowance prices dip
Regulated entities in the WCI-linked ETS are increasingly taking long positions in the programme as California Carbon Allowance (CCA) prices retreat from record highs, while also selling call options further out on the curve, according to US Commodity Futures Trading Commission (CFTC) data.
EMEA
EU Market: EUAs surge 6.5% as negotiators move closer to Brexit deal
EUAs surged to a three-week high near €26 on Tuesday as Brexit negotiators reportedly closed in on an agreement after the UK made a key concession.
Enhanced MSR crucial among EU cap-and-trade reform measures -report
A beefed-up MSR will be the most essential component of a multi-pronged approach to EU ETS reforms aimed at ensuring the carbon market delivers its share of the bloc’s net zero emission efforts, a report has found.
AMERICAS
US EPA to consider half of waived volumes in forecasting 2020 RFS exemptions
The US EPA will only factor in a portion of past compliance obligations exempted under the Renewable Fuel Standard (RFS) to project waived volumes under the federal biofuels programme next year, the agency announced on Tuesday.
ASIA PACIFIC
Guangdong issues 200,000 carbon credits as offset market is revived
The Guangdong provincial government has issued some 200,000 carbon credits, in a sign that its offset market is gradually returning to life after a 10-month hiatus due to restructuring of market regulations.
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BITE-SIZED UPDATES FROM AROUND THE WORLD
They have no choice – Royal Dutch Shell still sees abundant opportunity to make money from oil and gas in coming decades even as investors and governments increase pressure on energy companies over climate change, its chief executive said. But in an interview with Reuters, Ben van Beurden expressed concern that some shareholders could abandon the world’s second-largest listed energy company due partly to what he called the “demonisation” of oil and gas and “unjustified” worries that its business model was unsustainable. A defiant van Beurden rejected a rising chorus from climate activists and parts of the investor community to transform radically the 112-year-old Anglo-Dutch company’s traditional business model. “Despite what a lot of activists say, it is entirely legitimate to invest in oil and gas because the world demands it,” van Beurden said. “We have no choice” but to invest in long-life projects, he added.
Bank lag – More than a third of the world’s top 75 banks by assets have still not declared their support for the TCFD’s climate risk disclosure initiative, according to a report from BCS Consulting. Chinese banks dominate the refusals, but there are also some large lenders in the US and Europe that have not signed up, including Italy’s UniCredit, Germany’s Commerzbank, and San Francisco-based lender Wells Fargo, the report said, adding that the rate at which banks are signing up has “slowed significantly”. (Financial Times $)
EIB pause – The EU member state-owned European Investment Bank has postponed until November a decision on whether to stop financing fossil fuel projects, aiming to work out final details of the move away from coal. Germany, Italy, Poland, Latvia, and Spain had wanted the bank to keep funding certain gas projects. (Reuters)
Taxing times, part 1 – France wants the EU to work on creating a tax on airplane and ship fuels as part of a push to rein in carbon emissions, French Finance Minister Bruno Le Maire said on Tuesday. According to Reuters, Le Maire said the tax would complement plans supported by France and Germany for a carbon border tax that would shield European companies from competition from countries with lower emissions standards. France has previously voiced support for a tax on kerosene, along with other member states including the Netherlands.
Taxing times, part 2 – Germany’s carbon levy on domestic and intra-European flights is to rise to a larger-than-expected €13.03 from €7.50 from Apr. 2020, while charges on medium-haul flights could rise to €33.01 euros from €23.43, and for long-haul flights to €59.43 from €42.18, an official at the country’s finance ministry said. Germany could expect an additional tax take of around €740 million, with the proceeds to mainly be used to finance tax relief on train tickets.
Taxing times, part 3 – Austria will have to adopt a carbon pricing system along the lines of what Germany has proposed, the chief executive of state-controlled utility Verbund told Reuters. “If you take the issue of climate change and its consequences seriously, we will not be able to get around CO2 pricing,” Wolfgang Anzengruber said in an interview, hailing Germany’s plan as an important step. He dismissed calls for a carbon tax, however. “Taxes are never tied to a goal, and once a tax is there, you never get rid of it,” said Anzengruber, who favoured the approach of setting a minimum CO2 price that would apply until market mechanisms worked properly. “Germany has made an important step here, and other countries will not be able to avoid it,” Anzengruber said.
Christmas came early – Residents of Budapest elected pro-European, centre-left candidate Gergely Karacsony (whose surname means “Christmas”) as the Hungarian capital’s mayor on Sunday. Karacsony, who unseated the incumbent nationalist Istvan Tarlos after a decade in office, is a member of the green Dialogue for Hungary party and made climate action one of the three pillars of his campaign. Karacsony promised to declare a climate emergency, prioritise clean energy requirements for municipal buildings, and overhaul the city’s public transit and bike infrastructure. Hungary, ruled by the right-wing Fidesz government, is one of three Central and Eastern European countries that have not agreed to the EU’s pledge to reach net zero emissions by 2050. (Climate Home)
You down with OEP? – The UK government has formally introduced its long-awaited environment bill in Parliament, promising that the “landmark” legislation will reshape environmental regulation and enforcement in the UK after Brexit, reports BusinessGreen. Currently most of the UK’s environmental rules are enforced by Brussels, but today’s legislation would see the creation of a new Office for Environmental Protection (OEP) established to ensure the UK complies with environmental standards. The government confirmed today the OEP will be based in Bristol with a staff headcount of up to 120. The bill also aims to improve air and water quality, tackle plastic pollution, and restore wildlife.
Journal journey – The latest issue of the quarterly Carbon Mechanisms Review examines how the Paris Agreement’s Article 6 promotes climate ambition, how to attribute mitigation outcomes from blended climate finance and carbon financing, and avoiding double counting for CORSIA.
And finally… Frequent delinquents – Air miles programmes should be banned and a levy on frequent fliers implemented in order to reduce aviation CO2 emissions, according to new research. The measure is one of a number of recommendations from Richard Carmichael at Imperial College London, who published a report on how the UK can meet its target of net-zero emissions by 2050. Air miles encourage people to take extra flights to keep up their “privileged traveler status” and should be banned, according to the report carried out for the independent UK government advisor Committee on Climate Change, while an air miles levy would be based on the number of miles flown by each passenger, penalising those who fly the most while leaving the majority of people unaffected. (CNN)
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