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COP25: With the rules still in flux, governments and businesses scramble to pioneer Paris carbon markets
Businesses and governments on the sidelines of the Madrid climate talks are busy building the foundations for a Paris era international carbon market and carving out a role for themselves, even as delegates remain gridlocked in negotiations over the rules.
Voluntary carbon trade worldwide doubled in 2018 to approach record levels at near 100 MtCO2e, as forest projects took a lead amid heightened demand but offset prices remained flat, researchers found in a report published on Thursday.
The Canadian federal government is to announce an agreement with Alberta on the province’s carbon pricing mechanism for stationary installations, national media reported Thursday.
More clean fuel standard programmes could develop across the United States as states look to reduce carbon emissions from the transportation sector and incentivise additional supply of less-carbon emitting fuel sources, experts told the OPIS Carbon & LCFS conference.
The credit balance under California’s Low Carbon Fuel Standard (LCFS) is likely to tighten early in the next decade, but the accelerated adoption of electric vehicles will ensure the programme reaches its 2030 goal, an analyst said Thursday.
California Carbon Allowance (CCAs) prices fell this week to counter an initially bullish reaction to last week’s Q4 WCI auction, while RGGI Allowances (RGAs) slid heading into the Northeast US carbon market’s final sale of 2019.
China may issue as many as 4.4 billion CO2 allowances in the first year of its national emissions trading scheme, some 30% more than previously thought as the number of participants has swelled, analysts said Thursday.
Western Australia has decided to allow offset projects on pastoral lands as long as they don’t interfere with the local mining industry, finally clearing the way for stalled initiatives that will generate some 5 million credits to the federal government.
Australia’s Clean Energy Regulator has now cancelled all seven ERF contracts with developer Our Energy Group, a data update showed Thursday, while new offset issuance this week swelled to three-quarters of a million.
The South African government has formalised regulations for the use of offsets under its national carbon tax regime, after making a few last-minute changes based on stakeholder feedback.
EUAs recovered from a midday dive towards €24 on Thursday, with buyers stepping in at levels that have consistently found support over the past two weeks.
BITE-SIZED UPDATES FROM AROUND THE WORLD
COP25: Ready to blow – The oil and gas industry’s expansion plans over the next five years would blow past the Paris Agreement’s 1.5C global warming limit by locking in 148 billion tonnes of cumulative CO2 emissions, according to a report released at the UN climate summit Thursday. The study from 17 environmental groups found that 25 companies were responsible for nearly half of the planned extraction, including Shell, BP, and Equinor, while 85% of the production is slated to come from the US and Canada over that period.
Flight update – EU finance ministers have agreed to call on the European Commission to “update provisions” for an EU energy tax system, and singled out aviation as one of the sectors that could see reform. Opposition to changing the existing rules from member states is likely to remain strong, as EU tax overhauls require unanimous support from all member states. Green group T&E called on willing member states to now agree bilaterally to tax aviation. (Reuters)
COP25: Forest fever – Pro-carbon market business group IETA has launched a Markets for Natural Climate Solutions (NCS) Initiative to serve as a focus for its lobbying efforts to promote the use of land-based carbon credits. The group has seen increasing interest in the sector from its big-emitting energy major members BHP, BP, Chevron, Shell, and Woodside Energy, which will be founder members alongside non-profit Arbor Day Foundation. The initiative will initially have two full-time staff and be headed by IETA’s Simon Henry out of Geneva. Read Carbon Pulse’s latest on energy company commitments for land-based carbon credits here and here.
Good company – Some 285 businesses that have committed to aligning their emissions reduction strategies with the the Paris Agreement will spur more than $18 billion in climate mitigation investment and up to 90 TWh of annual renewable electricity generation, according to a report by the NGO-backed Science Based Targets initiative (SBTi). The firms have committed to cut emissions by 265 Mt of CO2e. More than 90% of the companies have set value chain targets, which make up 3.9 billion Mt of CO2e per year – roughly equivalent to 90% of the EU’s annual emissions. (edie)
Aim of throne – The Canadian Liberal government will attempt to move forward on the party’s campaign promises of setting a target of net zero emissions by 2050, planting 2 billion trees, and protecting a quarter of the country’s oceans and land. Governor General Julie Payette revealed these and other details in her Speech from the Throne in Ottawa on Thursday. She did not get into specifics about how exactly the government plans to zero out the 592 Mt of GHGs that Canada is projected to emit by 2030. The government made it clear that it plans to continue with its carbon pricing system, in the hopes of making it more costly to pollute and so depressing emissions over time. There was also a nod to continued government support for the expansion of the fossil fuel industry, which produces the largest proportion of Canada’s carbon pollution, with Payette stating that the government will work “just as hard to get Canadian resources to new markets” as it does on fighting the climate crisis.
Anchor up – European carbon prices have room to rise above €30 next year mostly based on psychology more than fundamental reasons, UBS analyst Sam Arie said in a note published on Thursday. “Overall, we believe the carbon scheme is still not structurally tight but instead trades heavily on perceived, psychological anchor points,” Arie said, adding the most important “anchor” might be the price the market believed politicians would tolerate in the future. While recently political acceptance seemed to have agreed on a price of around EUR 30/t, rising concerns about climate change could see this rise to “€30-40, which means there could be upside to the CO2 price in 2020”. (Montel)
Green deal – The $200 billion green bond market is set for a shake-up after the European Parliament and member states on Thursday reached a deal on a new set of EU rules governing which financial products can be called “green” and “sustainable”. Under the agreement, all financial products that claim to be green or sustainable will have to disclose exactly what proportion of their investments are environmentally friendly and declare which of three levels of greenness apply. (Reuters)
Deep trouble – Unabated climate change could cause coral reef tourism revenue losses of over 90%, while some West African countries are forecast to see fish stocks decline by 85%, according to an analysis into country-by-country climate impacts on key ocean sectors, published Friday as world leaders gather at COP25 in Madrid. Commissioned by the High Level Panel for a Sustainable Ocean Economy, a group of 14 heads of government, ‘The expected impacts of climate change on the ocean economy’ assesses global to local climate impacts on three of the largest sources of ocean-based revenue and jobs – coral reef tourism, wild capture fisheries, and marine aquaculture. The analysis details the wide ranging and severe impacts that climate change will have on the ocean and ocean-based economy and calls for a forward looking, cooperative and equitable global response.
In the cloud – Oil major BP will start providing online retailer Amazon with renewable electricity to fuel European data centres that power the tech giant’s cloud platform, per a Wednesday announcement. Starting in 2021, BP said it will provide Amazon with 122 MW of capacity from an onshore wind farm under development in Sweden, and 50 MW from a new solar project in Spain. They eventually plan on deals encompassing over 400 MW of renewable capacity. (Axios)
And finally… Model models – Climate models dating back decades were “quite accurate” in predicting warming through present day, new research shows. A study published Wednesday in the journal Geophysical Research Letters does a comprehensive review of 17 climate models created between 1970 and 2007, comparing how the models predicted global mean surface temperature for 2017. “The big takeaway is that climate models have been around a long time, and in terms of getting the basic temperature of the Earth right, they’ve been doing that for a long time,” lead author Zeke Hausfather told the Washington Post. (Climate Nexus)
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