CP Daily: Friday March 6, 2020

Published 00:16 on March 7, 2020  /  Last updated at 00:16 on March 7, 2020  /  Newsletter  /  No Comments

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

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TOP STORY

WCI lawsuit ruling could also threaten RGGI, other state initiatives, experts say

A ruling in favour of the Trump administration’s challenge of the California-Quebec ETS linkage could endanger the status of countless US state compacts, including the RGGI power sector carbon market, if the case arrives at the Supreme Court, legal experts said.

AMERICAS

Alberta to raise large emitter CO2 price in lockstep with federal mandate -report

The Alberta United Conservative Party (UCP) government will increase the carbon charge under the Technology Innovation and Emission Reduction (TIER) regime to C$50/tonne by 2022 in line with Ottawa’s backstop CO2 pricing requirement, a shift from the Canadian province’s previous approach.

Virginia Democrats reconcile legislation to implement state-run RGGI auctions

Virginia Democrats agreed final revisions to legislation to allow the state to implement its RGGI-modelled carbon market regulation with state-run allowance auctions, putting it on the path to final approval.

US Carbon Pricing Roundup for week ending Mar. 6, 2020

A summary of legislative and regulatory action on carbon pricing and clean energy at the US subnational and federal level this week, including developments in Washington, New York, and Hawaii.

EMEA

EU states have already completed over 70% of their 2020 free EUA allocations -data

EU member states and the UK have distributed more than 70% of the allowances earmarked for free allocation to industrial emitters this year, according to data released late Friday by the European Commission, with three governments having not yet started the annual process.

EU Market: EUAs dip for a near-1% weekly loss as oil crashes on OPEC+ split

EUAs slipped further below €24 on Friday but were poised to stay relatively flat this week, even as the spreading COVID-19 coronavirus roils wider markets amid fears it could cause a lengthy economic slowdown.

Emitter demand for German auctioned EUAs hits 10-mth low in January -report

Demand from emitters in Germany’s weekly auctions dropped to a 10-month low in January, a government report shows.

ASIA PACIFIC

NZ Market: NZUs cling on to NZ$26, but downside looms

NZUs closed at NZ$26 for the third straight day on Friday, but with a NZ$25 floor price still in play and the economy braced for coronavirus impact, market participants see potential downside ahead.

Numbers swell for Australia’s ERF as major players make big offset deliveries

Carbon credit deliveries to the Australian government’s Emissions Reduction Fund (ERF) ballooned to more than 1.35 million over the past fortnight as developers Terra Carbon and LMS Energy made major deliveries, while the Clean Energy Regulator this week issued over 430,000 new offsets.

CN Markets: Pilot market data for week ending Mar. 6, 2020

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

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BITE-SIZED UPDATES FROM AROUND THE WORLD

Power adjusted – Electricity imports to the EU are “for sure to be included” in carbon border adjustment proposals due next year, EU economy commissioner Paolo Gentiloni has said, adding that the Commission wants to define key principles and included sectors before summer, Platts reported. Read Carbon Pulse’s take on how EU nations on the bloc’s periphery have been calling for power to be among the included sectors because inter-connections leave the countries’ electricity producers unusually exposed to carbon leakage.

Taking a pass on gas – Germany will include only the greenest sources of hydrogen in a package of incentives designed to build up the fuel as a low-carbon source of energy, according to a draft government strategy document. The move, if endorsed by Chancellor Merkel’s cabinet, would be a blow to natural gas producers that increasingly see hydrogen as part of the way they can adapt to tightening rules on GHGs. Hydrogen burns without producing CO2 and has the energy to provide temperatures of 1,000 degrees C or more needed by steelmakers and oil refiners. Yet much of the fuel currently is derived from natural gas, throwing off CO2 emissions in the process. Germany wants to focus its support on green hydrogen, where the gas is made with electricity from renewables. “From the federal government’s point of view, only hydrogen that is produced on the basis of renewable energies is sustainable in the long term,” according to the draft government document seen by Bloomberg. “It is therefore the goal of the federal government to use green hydrogen and to support a rapid market ramp-up and to establish corresponding value chains.”

Utility says no – The European Commission’s plans to raise the EU’s 2030 emissions reduction target from 40% to at least 50% are “simply not doable”, according to Poland’s largest utility PGE, adding the more ambitious goal was unworkable for a lower-income EU member state dependent on coal-fired generation. “The available analysis shows that particularly the increased 2030 targets would necessitate a rapid transition away from coal and massive replacement of power generation capacity in the Polish power system in a very short time period due to the drastic increase in CO2 prices,” PGE Chief Executive Wojciech Dabrowski said. “This is simply not doable for us from a technical, economic and social point of view. Taking into account the duration of the investment process in our sector, 2030 is tomorrow,” he said. In 2019, PGE generated 88% of its electricity from lignite and hard coal. It has announced a strategy to invest in renewables but is still building new conventional coal plants. (Platts)

Virtual reality – A revolutionary trial to use household batteries to help support the electricity grid in London is being rolled out further to help deal with peaks in winter demand and reduce carbon emissions in the capital, the British government announced Friday. An initial trial by UK Power Networks (UKPN) paid 45 households to store energy in batteries in their homes, which the network operator drew on in times of need. It was so successful that it reduced household evening peak electricity demand by 60% and helped cut carbon emissions from electricity by 20% for average households. The home batteries allow consumers to buy electricity when it’s cheapest and store it for use when grid prices are more expensive, helping lower household electricity bills.

Half grounded – Lufthansa, Germany’s biggest airline, has announced that it will halve flight capacity in the coming weeks to cope with a slump in demand caused by the COVID-19 coronavirus. Its managers said cutting the flights would help “even out” the financial downturn due to a low rate of bookings and mounting cancellations. Fewer flights will translate into reduced emissions from EU airlines, which in turn will translate into less demand for EU carbon units. (Guardian)

Spending the unspent – EU support of some €34 mln will help boost three innovative projects for clean transport in Italy and Germany for a total investment of €370 mln, the European Commission announced Friday. The funding comes from unspent funds from the NER300 programme, reinvested to support innovative low-carbon projects under the Connecting Europe Facility Debt Instrument, an EU financial instrument managed by the EIB. “Reinvesting the unspent funds from the first NER300 call enables timely support to promising projects before the launch of the first call for proposals under the Innovation Fund in 2020,” the Commission said. The first three projects selected under the Connecting Europe Facility Debt Instrument to benefit from the NER300 support focus on electrifying urban public transport fleet and investing in the related charging infrastructure (VHH Hamburg and Hamburger Hochbahn E-Mobility programmes), as well as developing electric vehicle charging infrastructure (EV Charging Italy).

Disclosure drive – The UK’s Financial Conduct Authority (FCA) today published proposals outlining new climate-related disclosure requirements for premium listed issuers. The new rule will require all commercial companies with a premium listing to either make climate-related disclosures consistent with the approach set out by the Taskforce on Climate-related Financial Disclosures (TCFD) or explain why not. The FCA will consider consulting on extending this rule to a wider scope of issuers. It is also seeking feedback on clarifications to how existing requirements applicable to all listed companies already require climate- and other sustainability-related disclosure. The FCA is also currently considering how best to enhance climate-related disclosures by regulated firms, including asset managers and life insurers, to ensure a coordinated approach. The consultation period closes on Jun. 5.

Scope 3 – An upper house committee in the New South Wales parliament has recommended the state legislature dismiss or at least amend legislation that would prevent regulators taking Scope 3 emissions into account when assessing whether or not to approve new coal mines, reports RenewEconomy. The state’s independent planning committee last year blocked or imposed conditions on new coal mines based on downstream emissions, a move that has riled the local coal industry and the conservative state government. The government claims that taking into account GHG emissions from the coal once its exported to other countries is against accounting principles under international climate agreement, though the upper house committee argued that reducing coal exports would in fact help those international agreements. Emissions from Australia’s exported fossil fuels are about twice as high as the nation’s domestic carbon output.

No money for you – Australia has decided to pull out of its five-year energy transition hub project, which it has been co-funding with Germany. The project, carried out at three institutions in Germany as well as at the Australian National University and the University of Melbourne, was meant to run until 2022, mapping how economies could shift to a zero-emission future. But the Morrison government on Friday let the universities know that there will be no more money forthcoming, the Guardian reports.

Farm friends – Agricultural technology company Indigo Ag on Thursday announced its integration with US farming equipment manufacturer John Deere’s Operations Center to link on-farm agronomic data between technology ecosystems. The connection will allow Indigo to enhance it ability to deliver agronomic advice, carbon credits, and crop premiums to growers across the US, the company said. Since launching in June, the Massachusetts-based company added that farmers have already submitted more than 18 million acres for consideration to Indigo Carbon, a marketplace paying farmers for increases in soil carbon content and GHG reductions. (Feedstuffs)

Ted talk – The Trump administration will appeal a recent court ruling that cast doubt on the Renewable Fuel Standard’s (RFS) compliance waiver programme, two anonymous sources told Reuters. Although other news outlets had previously reported that the US EPA would limit the number of small refinery exemptions (SREs) given out in response to the January decision from the US Court of Appeals for the 10th Circuit, sources said that a conversation between President Donald Trump and Senator Ted Cruz (R) of Texas helped push the administration to shift course. Biofuel credit prices endured a volatile session after the news broke Friday, though largely ended up near Wednesday’s level, market sources told Carbon Pulse. No official confirmation of the appeal by the Trump administration was given as of Friday afternoon.

You hate to UNFCCC it – Africa Climate Week in Kampala (Apr. 20-24) has been postponed to “ensure the health and safety of all participants in light of the COVID-19 coronavirus”, the UNFCCC announced Friday, adding that the event would take place at a later time that has yet to be determined. Uganda will remain the host country, and preparations will continue for the meeting to share ways for governments to implement the Paris Agreement in Africa. ACW serves as a platform for national governments and non-party stakeholders to engage, build partnerships, and explore solutions that can deliver climate action and support at scale. Shortly after, the UNFCCC also announced it will not hold any meetings at its Bonn headquarters or elsewhere through April due to evolving outbreak. In addition to health and safety concerns and travel restrictions, the body noted some forthcoming meetings require quorum that can be affected by last-minute cancellations, which has already occurred in recent days.

And finally… Crowning Miss Climate – Don’t count on America’s oil giants to join their rivals across the pond in ambitious efforts to cut CO2 emissions, according to Bloomberg. On Thursday, ExxonMobil CEO Darren Woods dismissed the long-term pledges from Europe’s top crude producers as nothing more than a “beauty competition” that would do little to halt climate change. His comments echo those of Chevron CEO Mike Wirth earlier this week. Energy companies need to focus on global, systemic efforts to reduce GHGs, rather than just replacing their own emissions-heavy assets with cleaner ones to make themselves look good, Woods told investors in New York. He said that for the industry to truly address climate change, major technological breakthroughs are needed in the fields of carbon capture, alternative fuels in transport and re-thinking industrial processes, all of which Exxon was investing in. Edward Mason, head of responsible investment of the Church Commissioners for England, blasted Woods’ comments about Exxon’s climate posture, saying the company is “pursuing an ugly strategy — ugly ethically & ugly financially — so it has no place at a beauty parade.” Mason also noted that Exxon’s stock is at a 15-year low. Meanwhile, the Guardian reports on how Exxon met key European commission officials ahead of the launch of the EU Green Deal in November to urge Brussels to extend the EU ETS to include road transport, according to climate lobbying watchdog InfluenceMap. The paper said the move appears to be an attempt to stall the rollout of electric vehicles by keeping a lid on the cost of driving a traditional combustion engine vehicle. The Commission intends to consult on the idea with a view to adding more ETS sectors later this decade.

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