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South Korea’s monthly auction of CO2 allowances sold out on Wednesday, fetching the highest price since the regular sales started last year.
An EU push to ratchet up the ETS’ supply control mechanism and tighten 2030 emissions targets will face a big test in the following months as the 27-nation bloc copes with the coronavirus, a report released on Wednesday found.
EUAs rose back above €21 on Wednesday after absorbing bumper supply from two auctions, withstanding pressure to give back recent gains as the carbon market appeared to once again track US equities for much of the day.
Estonia’s finance minister has formally called for his country leave the EU carbon market in order to reduce power prices amid the coronavirus outbreak, though any efforts are likely to be in vain.
*Updates with power demand figures* – EU carbon prices will resume their downtrend to average €11 this quarter amid an ongoing reduction in power demand and a big fall in the bloc’s 2020 GDP due to the coronavirus, analysts said Tuesday, warning that EUAs could eventually crash to as little as €5 if the crisis persists.
The Canadian environment ministry proposed Wednesday to delay the 2019 reporting and compliance deadlines for the federal ‘backstop’ output-based pricing system (OBPS), potentially giving large stationary emitters more time to procure offsets or surplus credits.
California issued no new offsets or reduced any invalidation periods this week for the first time in nearly two years, according to data published by regulator ARB on Wednesday.
California regulator ARB does not intend to alter its current cap-and-trade auction schedule or compliance deadlines as a result of the COVID-19 pandemic sweeping across the US, an agency spokesperson told Carbon Pulse Wednesday.
New Mexico and Nevada are maintaining schedules to outline potential climate change and carbon pricing strategies by later this year, even as the COVID-19 pandemic presents logistical challenges for the Southwest US states.
Guangdong province has become the first Chinese region to officially deviate from the central government’s national ETS preparation timetable, though others are expected to follow, sparking fresh concerns over whether the world’s biggest carbon market will be able to launch this year as planned.
Nearly half of the world’s coal power plants will run at a loss this year even as carbon prices have a negligible effect in many countries outside the EU, a report published Wednesday found.
Being confined to our homes with the wider world firmly under lockdown due to the coronavirus, we have started a podcast: Carbon Pulse Conversations. Check out our first episode!
BITE-SIZED UPDATES FROM AROUND THE WORLD
Silver lining: US edition – The US Energy Information Administration forecasts that COVID-19 will slash the country’s energy-related CO2 emissions by 7.5% this year, nearly three times the 2.7% drop in 2019, but then rise by 3.6% in 2021 as the economy rebounds. The agency also predicts a 9% decrease in gasoline consumption and a 10% decrease in jet fuel use this year, while coal-fired power output will plummet by 20%. Total annual electric power generation is projected to decline by 3%, retail electricity sales to the commercial sector will fall by 4.7% year-over-year due to business closures, while factory cutbacks mean sales to the industrial sector slide by 4.2%. (MPR, Axios)
Silver lining: EU edition – In Europe, CO2 emissions have fallen almost 60% since coronavirus lockdowns put the world economy into reverse. Measures by the 27 EU member states to confine their populations have disrupted economies and prompted a 58% decline in daily CO2 output, according to calculations by Sia Partners, a French consultancy specialising in energy. Emissions from cars and motorcycles were down 88%, for example, while those from the energy sector fell almost 40% from before the crisis. The one sector where emissions have risen since the pandemic began is households, where they are almost a third higher because of the huge numbers of locked-down Europeans. “Once the confinement is finished, some sectors will restart right away and others will not,” said Charlotte de Lorgeril, an energy, utilities, and environment partner at Sia. The company said among all EU countries, the smallest decreases in emissions were in Malta and Sweden – outliers because their governments have sought to maintain economic activity where possible. The biggest declines were in those EU countries worst affected by the pandemic: France, Spain, and Italy. (FT)
Cleaner capital – As part of sustainable finance laws, Brussels published a consultation to July 15 on whether this should include new listed company reporting requirements linking emission cuts to executive pay. Financiers could also be required to disclose the global warming scenarios of their portfolios and those with high climate risk exposure forced to set aside more capital. Read Carbon Pulse’s report on the EU’s sustainable finance drive.
Let’s Split – The Croatian EU presidency has postponed all informal EU Council meetings until May 15 due to coronavirus restrictions. That includes the next meeting of EU environment ministers that was due Apr. 25. The next formal EU Environment Council is scheduled for 22 June. Read Carbon Pulse’s take on how the EU’s climate action has been disrupted as Brussels scrambles to tackle the virus.
Mind the gap – Some carbon offset prices have surged since ICAO published the initial list of eligible CORSIA programmes last month, according to Viridios Capital. The price of a 2016-20 vintage voluntary credit has jumped to $1.10 a tonne from $0.70 in early March, Eddie Listorti, chief executive of the Sydney-based trading company and emissions-cutting project developer, told Bloomberg. “Prices gapped higher,” he said. “And this is while airlines are grounded,” due to the coronavirus. If demand isn’t wiped out, some credits could triple in value, or even jump more than 10 times, based on EU carbon market values above €21, Listorti said. Other industries such as technology, palm oil, utilities and oil companies are also boosting demand for offsets, even if airlines don’t want many of them, he said. “The long-term trend is higher because the private sector is behind this,” Listorti said.
Refiner rejection – The US Court of Appeals for the 10th Circuit on Tuesday rejected a challenge from two oil refining companies to its January ruling that the EPA had been handing out biofuel waivers inappropriately under the Renewable Fuels Standard (RFS). Refiners HollyFrontier and Wynnewood Refining Company lost their appeal for an en banc review of three judges’ unanimous ruling that the EPA exceeded its statutory authority in granting the small refiner exemptions (SREs). Observers did not expect the court to grant the en banc request, and the refiners now have until June to appeal to the US Supreme Court. (Reuters)
And finally… If only we knew air pollution was bad – Coronavirus patients in areas that had high levels of air pollution before the pandemic are more likely to die from the infection than patients in cleaner parts of the country, according to a new US nationwide study that offers the first clear link between long-term exposure to pollution and COVID-19 death rates. According to the New York Times, in an analysis of 3,080 counties in the country, researchers at the Harvard University T.H. Chan School of Public Health found that higher levels of the tiny, dangerous particles in air known as PM 2.5 were associated with higher death rates from the disease. The analysis is the first nationwide study to show a statistical link, revealing a “large overlap” between virus deaths and other diseases associated with long-term exposure to fine particulate matter. It found that if Manhattan had lowered its average particulate matter level by just a single unit, or one microgram per cubic meter, over the past 20 years, the borough would most likely have seen 248 fewer COVID-19 deaths by this point in the outbreak. The paper has been submitted for peer review and publication in the New England Journal of Medicine.
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