CP Daily: Thursday April 30, 2020

Published 01:54 on May 1, 2020  /  Last updated at 02:08 on May 1, 2020  /  Newsletter  /  No Comments

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

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TOP STORY

Czech MEP proposes postponing 2050 EU net zero goal, softens ambition in draft opinion

Lawmakers from the European Parliament’s environment committee will on Monday debate its position on the bloc’s Just Transition Fund (JTF), though the draft opinion submitted by the eurosceptic Czech MEP directing the effort has considerably softened the proposal’s tone.

INTERNATIONAL

Global CO2 emissions to see historic drop in 2020 amid virus crisis -IEA

*FREE READ* – Countermeasures to defeat the COVID-19 pandemic including complete lockdowns in a number of countries are causing unprecedented drops in global energy demand and will likely drive a massive fall in worldwide greenhouse gas emissions this year, the International Energy Agency said Thursday.

EMEA

EU Market: EUAs break below €20 as 2019 compliance season ends

EUAs sank below €20 to a two-week low on Thursday, with traders attributing the fall to month-end profit-taking following and the end of the annual compliance cycle.

AMERICAS

NA Markets: California allowances climb on greater buying, RGGI rises on bullish post-2020 outlook

California Carbon Allowance (CCA) prices neared the WCI floor price this week as higher compliance buying offset fewer sellers in the market, while RGGI Allowance (RGA) values rose to a nine-week high on bullish sentiment about post-2020 revisions to the ETS.

WCI participants complete second exchange-traded California carbon offset deal

WCI market participants traded California Carbon Offsets (CCOs) without any invalidation risk on ICE for the second time ever on Thursday.

PODCAST

CARBON PULSE CONVERSATIONS 005: ICIS

In our latest instalment of the Carbon Pulse Conversations podcast, we speak to Marcus Ferdinand, head of European power and carbon analytics at ICIS, about what’s driving EUAs at the moment, how the coronavirus crisis is impacting the EU ETS, and his forecasts for allowance prices.

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BITE-SIZED UPDATES FROM AROUND THE WORLD

Flight of fancy – The aviation industry could take three-to-five years to recover to the levels seen before the coronavirus pandemic, according to Guillaume Faury, boss of planemaker Airbus. According to the Guardian, Faury said the brutal short-term outlook was coupled with longer-term optimism that the aviation industry will rebound and grow. He said airlines view the crisis as “an opportunity” to accelerate the switch to newer planes with lower carbon emissions. Read Carbon Pulse’s analysis on how 2020 may be a write-off for airlines’ purchases for the CORSIA international flight offsetting mechanism.

Polish phaseout – Poland may take 25 years to scrap coal power, according to Wojciech Dabrowski, head of utility PGE. That’s later than the EU’s 2030 coal exit aim.  The Polish government previously said it expects to be relying on 25% coal power by 2040. PGE believes suspending the EU ETS over coronavirus concerns is politically unfeasible, but wants Brussels to boost financing for energy upgrades by increasing the size of scheme’s Modernisation Fund. (Bloomberg)

Major cuts – Oil major Shell is not ringfencing its low-carbon Integrated Gas and New Energies division from spending cuts to weather the coronavirus crisis, but those businesses will only face a quarter of the $5 bln 2020 reduction, according to Chief Executive Ben van Beurden. Shell slashed its dividend by two-thirds on Thursday, the first cut since World War II. (Reuters)

Clean fund – The Western Australian state government has set up an A$9-mln Clean Energy Future Fund to support the development of innovative clean energy projects, it said on Thursday, adding that A$2 mln is available for project milestones to be delivered in 2020-21 and A$3 mln in each of the following two years. Later on, royalties from future unconventional onshore oil and gas projects will be added to the fund, the government said.

Forest fight – Brazil will again invoke Guarantee of Law and Order (GLO) decree that deployed troops to fight Amazon forest fires last year.  Amazon forest destruction has continued to climb this year amid signs that the government is rolling back routine environmental enforcement due to the coronavirus outbreak. From January to March, deforestation in the Brazilian Amazon rose 51% from a year ago, according to preliminary satellite data. (Reuters)

Mary serious – Maryland is “taking a serious look” at whether or not to exit the PJM Interconnection’s wholesale market through a Fixed Resource Requirement (FRR) alternative, Public Service Commission Chair Jason Stanek said Wednesday. The US state is one of several in the wholesale market that has been vocal in its opposition to the US Federal Energy Regulatory Commission’s (FERC) Dec. 19 order, which effectively raises the floor price for new resources that receive state subsidies. Maryland, along with New Jersey, Illinois, and a broad array of stakeholders, asked the DC Circuit Court of Appeals this week to review the commission’s April decision to uphold that ruling. (Utility Dive)

And finally… Capture me if you can – Nearly $900 mln in claimed ’45Q’ carbon capture tax credits from tax years 2010-19 failed to follow US EPA guidelines requiring companies to monitor, report, and verify the stored CO2, according to the Internal Revenue Services’ inspector general. In a letter to US Senator Bob Menendez (D) obtained by Politico, Treasury Inspector General for Tax Administration J. Russell George said the IRS withheld $531 mln in credits that companies tried to claim after reviewing the tax returns. However, Menendez subsequently sent a letter to IRS Commissioner Charles Rettig demanding that the agency follow up on the problems, noting that taxpayers are still on the hook for $362 mln in payouts for projects that haven’t complied. The senator also called for an audit of every company that has claimed $10,000 or more via the credit, a special project by the agency to ensure that monitoring requirements are met, and a suspension of any use of the 45Q credit for enhanced oil recovery.

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