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Experts have slashed their EU carbon prices forecasts for 2020 by a quarter, according to a poll of 12 analysts, as the coronavirus crisis grips the bloc’s ETS and wider economy.
In the latest Carbon Pulse Conversations podcast, we speak to Megan Boutwell, vice president of operations at US-based consultancy Stillwater Associates, about the coronavirus-related impacts on the California Low Carbon Fuel Standard (LCFS) and neighbouring transportation sector clean fuels markets.
Europe’s top emitter RWE on Friday reported a 29% drop in ETS-covered thermal power output over Q1, continuing its rapid decline in carbon-intensive generation from last year.
The Netherlands government has pledged to achieve an additional 8 million tonnes of emissions cuts by year-end, with most coming from EU ETS-covered coal power and industrial facilities.
EUAs dipped below €21 on Friday and were poised to end a tumultuous week at a loss, with oil prices continuing to strongly influence price direction.
The Canadian environment ministry pushed back the release of a draft regulation for the national Clean Fuel Standard (CFS) on Friday, though it kept the 2022 start date intact for the implementation of the programme’s liquid fuel stream.
Speculators’ total California Carbon Allowance (CCA) holdings remained mostly flat week-on-week as prices climbed on the secondary market, while compliance entities further trimmed their position, according to US Commodity Futures Trading Commission (CFTC) data released Friday.
Pennsylvania Republican lawmakers have urged Governor Tom Wolf (D) to withdraw his executive order that requires the Department of Environmental Protection (DEP) to draft a RGGI-modelled cap-and-trade programme by this summer.
The US Supreme Court will decide at a May conference whether to take up a case that challenges the point of obligation under the Renewable Fuel Standard (RFS), with refiners arguing the EPA should reconsider that facet of the biofuels programme on an annual basis.
China is making steady progress on reforming its power market, which along with the national ETS is expected to speed up decarbonisation, but the process is vulnerable to government strategy to rebuild the economy after the COVID-19 outbreak, according to analysis released this week.
Closing prices, ranges and volumes for China’s regional pilot carbon markets this week.
BITE-SIZED UPDATES FROM AROUND THE WORLD
Fresh ‘green’ money – EU leaders tasked the European Commission on Thursday with drafting a trillion-euro recovery plan to revamp the bloc’s economy from the coronavirus crisis, but questions remain over how ‘green’ the fund will be. Commission President Ursula von der Leyen announced a temporary increase in the EU’s own resources – taxes and levies going directly to the EU budget – “of around 2%” of the EU’s gross national income, up from 1.2% currently. That could include revenues from auctioning EU Allowances, as European Parliament president David Sassoli suggested during yesterday’s EU summit. (Euractiv)
Help us – Trade unions at Poland’s biggest coal group, state-owned PGG, warned on Friday that the industry would collapse because of falling demand if the government did not help. Poland, which is heavily reliant on coal-fuelled power stations for its energy, is the only EU member state not to have pledged to achieve zero carbon emissions by 2050. But in the face of growing EU pressure to reduce emissions, the ruling Law and Justice (PiS) party has encouraged investment in solar energy and offshore windfarms. The increasing share of clean energy in power generation, falling demand for electricity since the start of the coronavirus lockdown and coal imports have heightened problems for the coal industry. PGG asked unions this month to accept a cut in hours and pay of up to 20% for three months, which would make the company eligible for government help. The unions initially rejected the proposal but later said they would accept it if management presented a restructuring plan for PGG that would guarantee jobs. PGG said it would need to have reliable demand forecasts for such a plan, which is all but impossible in the current circumstances. (Reuters)
Chilling on drilling – US-based investment bank Morgan Stanley will no longer finance drilling in the Arctic, new coal plants, or new thermal coal mines, according to a policy update issued by the company Thursday. The bank will also phase out financing for existing coal mining companies, joining fellow banking giants Goldman Sachs, JPMorgan Chase, Wells Fargo, and Citigroup in refusing to fund Arctic drilling. Green group Sierra Club said the move leaves Bank of America as the only remaining lender willing to support such an endeavour. (Politico)
Stalled solicitation – The New York State Energy Research and Development Authority (NYSERDA) is putting the brakes on a potential offshore wind solicitation this summer due to COVID-19. That news comes after the state’s Public Service Commission (PSC) on Thursday approved an order authorising a state solicitation of up to 2.5 GW of offshore wind on a 4-1 commission vote. It was the second solicitation authorised by regulators, after NYSERDA last year selected two projects of 880 MW and 816 MW expected to come online by 2024. (Utility Dive)
Special price for you – China’s Hubei carbon exchange, which hosts trading in the provincial ETS, on Friday announced it has cut transaction fees for CO2 permit trades to zero until Sep. 30 in a bid to help the region’s economy get back on its feet after GDP dropped 39% year-on-year in Q1. The exchange reopened the carbon market on Mar. 23 after it was closed for two months due to the COVID-19 crisis. Volumes on the bourse have been modest since, with 127,687 allowances changing hands by Thursday’s close, though 100,000 of those stemmed from a single deal going through on Apr. 20. On Friday, some 17,178 allowances traded on the exchange, where CO2 units are worth around $3.50-4.00 apiece.
And finally… No ice normal – Summers with no ice may be normal in the Arctic within the next 30 years, with potentially “devastating consequences for the Arctic ecosystem,” new research warns. A study published this week in the journal Geophysical Research Letters finds that ice-free summers are still very likely by 2050 even if the world takes aggressive action to curb emissions. Since satellite records began in 1978, summer and autumn sea ice extent has decreased approximately 50%, an amount roughly equal to half the area of the continental US, and ice in the Arctic hit its second-lowest extent on record last summer. (Climate Nexus)
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