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- DOJ argues WCI linkage is binding, hinders Trump’s climate negotiations
- Australia expects offset market to grow this year, but Safeguard demand to dwindle even further
- WCI regulated parties increase CCA short positions as speculators add length
- LCFS Market: California prompt prices keep sliding as forward values narrow
- EPH’s big-emitting lignite facilities get boost as mine resumes operations
- EU Market: EUAs slip towards €24 as virus worries grip tighter
California’s cap-and-trade linkage with Quebec created a binding agreement between the jurisdictions, while also obstructing or running afoul of the federal government’s position on international climate policy, according to US Department of Justice (DOJ) brief filed Monday evening.
Australia’s Clean Energy Regulator expects carbon credit issuances to grow nearly 11% this year and offset delivery to the Emissions Reduction Fund to increase by a fifth, while demand from Safeguard Mechanism entities is likely to drop further.
WCI compliance entities grew their short positions on the secondary market ahead of the February auction, but traders are questioning whether that US Commodity Futures Trading Commission (CFTC) data paints a complete picture of California carbon holdings.
California Low Carbon Fuel Standard (LCFS) prices for near-term delivery continued to retreat from record highs set earlier this month, while steady forward contract demand is supporting values at the back end, flattening the price curve.
EPH’s big-emitting German lignite power operations were given a lift on Tuesday as one of its mines resumed operations after six months of closure due to an environmental lawsuit.
EUA prices continued to slide on Tuesday as financial markets remained on high alert about concerns that the Covid-19 coronavirus would spread worldwide.
BITE-SIZED UPDATES FROM AROUND THE WORLD
Upholding standards – Britain must uphold EU climate targets after the post-Brexit transition period, according to a negotiating mandate adopted for the executive EU Commission by member states on Tuesday. The EU and Britain are slated to begin talks next week to try to agree to a partnership deal for when the Brexit transition period ends on Dec. 31. The EU mandate says Britain must maintain a carbon pricing system of “at least the same effectiveness and scope” as the EU ETS. The UK is due to publish its negotiating stance on Thursday. (Reuters)
Spending shortfall – Europe’s top companies need to more than double their current level of spending on low-carbon projects to meet the European Commission’s flagship goal of ‘climate neutrality’ by 2050, according to a study of 882 publicly-traded companies across multiple sectors by investor-backed non-profit CDP and consultancy Oliver Wyman. It showed they spent €124 billion on capital investment and research and development in 2019, around 12% of total investment and shy of the 25% required for net zero. (Reuters)
Chasing perfection – Investment bank JP Morgan Chase announced several new climate commitments during its annual investor day in New York on Tuesday, including expanding restrictions on financing for coal mining and coal-fired power, as well as ending financing for new oil and gas drilling in the Arctic. As part of the new initiatives, the bank will facilitate $200 bln in projects that support the UN’s sustainable development goals, $50 bln of which will go toward financing for green initiatives as part of a 2017 clean financing target. However, green group Sierra Club said the updated policy does not place restrictions on other oil and gas operations, such as fracking, while Rainforest Action Network pointed out the new policy would still allow the firm to finance coal-mining conglomerates that get less than 50% of their revenue from the fossil fuel. (Politico)
Dropping out – Norway’s Equinor has dropped plans to drill for oil in the Great Australian Bight, the Guardian reports. Amid protests from environmentalists, the company said the A$200-mln project was not competitive compared to some of its other prospects. BP and Shell have previously pulled out of projects in the Bight, a large bay on the south coast of Western Australia and South Australia.
Talking it over – In Japan, Environment Minister Shinjiro Koizumu said Tuesday he had agreed with other ministries to review the nation’s policy of backing the construction of new coal-fired power plants abroad, according to Reuters. The Abe administration has come under fire for moving slow to phase out fossil fuels. Earlier this month more than 120 Japanese companies and 20 municipal governments urged the administration to step up climate efforts over fears that Japanese firms might be left out of international supply chains.
Crisis management – Over one-third of registered US voters consider climate change a crisis and 59% say the US is doing too little to address it, newly released polling shows. The Brunswick Group survey published Tuesday showed that 61% of those surveyed backed progressive Democrats’ Green New Deal, which the survey defined as a 10-year national mobilisation to cut emissions to the maximum extent possible. Some 51% agreed that a CO2 tax was a “good idea”, and 66% agree California and other states should have power to regulate vehicle carbon emissions at a time when the Trump administration is seeking to prevent it. However, the survey also found Trump voters’ support for thwarting California went up when told it was a “Trump administration” policy as opposed to a “US government” move. (Axios)
And finally… Cash back rewards – The oil and gas industry substantially rewards US legislators with campaign donations when they oppose environmental protections, according to new analysis of congressional votes and political contributions. The peer-reviewed study, posted in the journal Proceedings of the National Academy of Sciences, documented how lawmakers’ scores from the green group League of Conservation Voters (LCV) dipped and then were followed by campaign funding from the industry. On average, a 10% decrease in the LCV score in an election cycle was associated with an additional $1,700 in campaign money from the corporations the following cycle. The authors also sought to determine whether campaign donations from industry might prompt legislators to vote against environment rules that oil and gas companies saw as a burden. However, they concluded there was little or no relationship between campaign contributions in one election cycle and LCV scores in the following period. (The Guardian)
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