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In the latest Carbon Pulse Conversations podcast, we speak to Oslo-based carbon and power analyst Yan Qin from Refinitiv about the latest developments in preparing for China’s national emissions trading scheme and the outlook for getting that market up and running this year.
EU carbon prices surged to a new one-month high above €22 on Friday, notching a 2.9% weekly gain as traders attributed the rise and accompanying volatility to more speculative short-covering and increased algo activity.
Members of the European Parliament voted on Friday in favour of aligning the bloc’s coronavirus recovery measures with the Green Deal, dismissing efforts by right-wing lawmakers to ease the impact of the EU ETS.
EU countries have signed off on a sustainable finance regulation to establish criteria setting out what qualifies as a green investment, but several flagged concerns that may create problems in future.
The EU’s coronavirus response has helped accelerate the bloc’s transition to clean power by a decade as more renewables than previously thought possible are able to balance the grid, a leading renewables technology firm said on Friday.
Speculators grew their California Carbon Allowance (CCA) holdings and reversed four consecutive weeks of declines, while compliance entities appeared to trim their positions this past week, US Commodity Futures Trading Commission (CFTC) data showed Friday.
Marathon Petroleum announced Friday that it will idle its Martinez refinery this month because of lower demand due to the COVID-19 pandemic, potentially lessening the company’s compliance obligations under the California Low Carbon Fuel Standard (LCFS) and WCI cap-and-trade programme.
The Virginia Department of Environmental Quality (DEQ) will revise its existing RGGI-modelled cap-and-trade regulation to implement state-run auctions as the state eyes entering the Northeast US power sector carbon market next year.
Pennsylvania’s House environment committee chair has called for Governor Tom Wolf’s (D) administration to scrap plans for crafting a draft RGGI-aligned ETS regulation, arguing the programme would be a detriment to residents and businesses in light of the coronavirus outbreak.
Australia’s Clean Energy Regulator has released draft regulations that would open for allowing companies with state-level carbon obligations to generate domestic offsets.
Thermal power output in China fell 7.5% YoY in March, failing to pick up as the country began emerging from its virus lockdown while the economy contracted in Q1 for the first time in nearly 30 years.
Closing prices, ranges and volumes for China’s regional pilot carbon markets this week.
The bottom fell out of the CORSIA international aviation offset market almost as soon as it began with the coronavirus fallout grounding airlines worldwide, yielding slim prospects for even limited test buying this year.
BITE-SIZED UPDATES FROM AROUND THE WORLD
CAPP and delayed – Canada’s oil and gas producers have asked the federal government to freeze the carbon tax and delay new climate change regulations while the industry weathers the storm of COVID-19. In a letter to Natural Resources Minister Seamus O’Regan sent Mar. 27, the Canadian Association of Petroleum Producers (CAPP) called on Ottawa to freeze its ‘backstop’ CO2 price of C$30/tonne for the foreseeable future, rather than raise it by the scheduled C$10 rate annually through 2022. Additionally, CAPP wants the Liberal government to push back the deployment of the national Clean Fuel Standard by three years to 2025, as well as suspend planned legislation to set five-year, legally-binding CO2 budgets to help reach Canada’s 2050 carbon neutrality goal. Environment critics viewed the list of demands as the industry’s attempt to use the COVID-19 crisis as cover to curb health and safety policies and put off regulations that will help the environment, with some noting that CAPP has long opposed the measures they are seeking to delay or weaken. (The Canadian Press)
Methane millions – Meanwhile, Canadian Prime Minister Justin Trudeau on Friday announced the government will establish a C$750-mln emission reduction fund to cut methane and create jobs. The fund includes C$75 mln to help the offshore oil industry cut emissions in Newfoundland and Labrador. Additionally, the government will commit C$1.7 bln to clean up orphan wells in Alberta, British Columbia, and Saskatchewan, with the move expected to help maintain 5,200 jobs in Alberta alone. (CBC)
No guarantee – Ontario Premier Doug Ford’s administration is hoping to dismiss a lawsuit filed by a group of young people alleging that the Canadian province’s lack of action on climate change has violated their charter rights. In a document filed on April 15, Ontario’s Ministry of the Attorney General says the allegations in the lawsuit are incapable of being proven, and that Canada’s charter does not guarantee a right to particular greenhouse gas targets. The lawsuit centres on the Progressive Conservatives’ move to scale back emission targets set by the previous Liberal government, and comes as federal data this week showed that Ontario’s emissions increased by 6.5% in 2018, the same year that Ford was elected and abruptly repealed the province’s WCI-linked cap-and-trade regulation. (CBC)
MOPR opera – The Republican-controlled US Federal Energy Regulatory Commission (FERC) voted 3-1 on Thursday to decline to review its December decision limiting the participation of subsidised clean energy in the 13-state PJM capacity market. PJM, some of its state members, and renewable energy and nuclear interests had asked FERC to rehear its Minimum Offer Price Rule (MOPR), but Chairman Neil Chatterjee and his Republican colleagues largely refused, reiterating their argument that state subsidies for clean energy unfairly lowered market rates for fossil fuel plants that do not receive the same support. However, Chatterjee later clarified that participation in RGGI, which includes three PJM states, will not trigger the MOPR. In response, FERC’s lone Democratic Commissioner Richard Glick called the decision “plain garbage”. (Politico, Utility Dive)
Auf wiedersehen, coal – Austria has shut its last coal-fired power plant in Mallech, in the southeastern region of Styria. The 246MW plant, commissioned in 1986, provided Austria’s second-largest city Graz with heat. According to CAN Europe, Austria is now the EU’s eighth coal-free member state, but reminds that there are still seven countries lacking plans to end coal-fired generation by 2030. “It’s now make-or-break time not just for preventing the climate crisis but also for helping coal workers and regions dependent on coal to make the transition that is both effective and just so that no one is left behind,” says CAN Europe’s Joanna Flisowska.
Mega – Global warming has helped accelerate a “moderate” drought in the American West into a “megadrought,” new research shows, creating a dry period that could be one of the most intense droughts in more than a millennium. A study published in the journal Science used tree rings in a nine-state range to find that the period from 2000 to 2019 was the second-driest on record for the region in 1,200 years. (Climate Nexus)
Beyond borders – Brussels-based think-thank ERCST is to collaborate with South Korean NGO Climate Change Center on examining the role of Border Carbon Adjustments (BCAs) in global climate policy, with a focus on the EU’s plans to propose a BCA next year. The two institutions will hold a virtual Korea-EU town hall meeting on July 1.
And finally… Light flights – Widespread travel restrictions around the world have slashed demand for air travel, with more than eight in 10 flights cancelled, but there is a notable disparity in the US. While the Transportation Security Administration has reported a 96% slump in passenger volume, only slightly more than half the flights within the US have been cancelled, meaning less than one in 10 seats on domestic flights were filled by passengers last week, according to estimates. Experts called the situation a “huge environmental waste”, with the US airline industry’s $25-bln bailout requiring them to maintain a certain level of service. The economics of running an airline can also be counter-intuitive in that it can sometimes be cheaper to fly a commercial airliner to a planned destination than pay for an airport spot to simply park it. (The Guardian)
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