CP Daily: Wednesday May 13, 2020

Published 02:37 on May 14, 2020  /  Last updated at 02:44 on May 14, 2020  /  Newsletter  /  No Comments

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

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TOP STORY

EU keeps mum on CORSIA baseline as study says change could wipe airline offset obligations

Airlines could avoid buying CORSIA units through the mid-2020s if nations alter the emissions baseline for the international aviation offset system, a study showed, with the EU on Wednesday making no mention of changing that provision in its proposal to implement the ICAO programme’s pilot phase.

INTERNATIONAL 

Next year’s UN climate talks should take place in Africa as planned, says continent’s negotiators

African climate negotiators want next year’s COP27 UN summit to go ahead in Africa as planned, despite this year’s postponement of the UK-hosted talks to 2021.

Global carbon fund hands back majority of early gains after volatility bet sours

A carbon market investment fund in April handed back most of the gains made the previous month after a bet on volatility went sour.

AMERICAS

California sets 20-mth high with 11.2 mln new offsets, as Quebec issues first credits since July

California regulator ARB minted 11.2 million new credits this week in its highest single issuance since autumn of 2018, while Quebec’s environment ministry handed out its first compliance offsets in 10 months, according to data released Wednesday.

TCI carbon market framework progresses, but doubts persist about timeline

The Transportation and Climate Initiative (TCI) is working through disagreements on its final Memorandum of Understanding (MOU) that could extend the current timeline for publication, but some believe the framework to regulate fuel sector emissions across two US regions is nearing completion.

Canadian gold miner inks forestry offset deal with developer and First Nation community

A Canadian mineral exploration company has agreed to develop an Ontario-based forestry project with a North American offset developer and a First Nations group, with most of the credit revenue earmarked for the indigenous community.

EMEA

Merkel seeks to renegotiate EU burden-sharing under higher 2030 GHG goal

German Chancellor Angela Merkel will seek to review the EU’s non-ETS Effort Sharing Regulation (ESR) should the 27-nation bloc agree to increase its 2030 emission target, she said Wednesday following pressure from her own political party.

EU Market: EUAs rebound towards €19 after extending five-week low

EUAs extended a five-week low on Wednesday but then ticked higher despite struggling to absorb the UK’s bumper auction and facing several bearish technical and fundamental signals.

EU carbon pricing needs to top €200/t to reach net zero, says oil major Shell

Carbon prices must exceed €200 per tonne if the EU is to meet its net zero 2050 emission goal, oil major Shell said Wednesday.

ASIA PACIFIC

SK Market: Korean CO2 auction fails to sell out as KAU prices tank

South Korea’s monthly CO2 auction failed to sell out on Wednesday as secondary market allowances suffered a second consecutive day of heavy losses, closing nearly 10% below the previous session.

Safeguard crediting could create ‘two-speed’ carbon pricing in Australia, analysts say

A crediting mechanism for big Australian emitters beating their CO2 targets would put downward pressure on offset prices without adding fresh demand, and could force the need for a new type of carbon credit to distinguish higher-value land-based units, analysts said Wednesday.

PODCAST

CARBON PULSE CONVERSATIONS 009: The Gold Standard

In this latest episode of our Carbon Pulse Conversations podcast, we chat with Owen Hewlett, chief technical officer at The Gold Standard, which is one of the main certifiers of voluntary carbon market projects and an approved standard under the international CORSIA aviation offset scheme.

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BITE-SIZED UPDATES FROM AROUND THE WORLD

Share shake – Norway’s $1 trillion oil fund has sold out of some of the biggest names in commodities and utilities, including miners Glencore, Anglo American, and its 0.6% share in EU ETS-exposed utility RWE, after the world’s largest sovereign wealth vehicle decided they breached its guidelines on using coal. It also put fellow ETS-covered utilities Enel and Uniper on an observation list for possible sale later. Additionally, the fund announced it would stop investing in Calgary-based Canadian Natural Resources, Cenovus Energy, Suncor Energy, and Imperial Oil, after concluding they produce unacceptable levels of GHG emissions. Canadian Prime Minister Justin Trudeau said the move was an example of why it is important for the country to move forward in reducing emissions in all sectors. Norway is also seeking to withdraw a record $37 billion from the fund to help pay for coronavirus aid programmes in the country.  (Financial Times, CBC)

Big bucks – The value of the global market for carbon emissions offsets could increase to $200 billion by 2050, German bank Berenberg said in a note Wednesday. Although now relatively small, the carbon offsets market has grown quickly in recent years and could be set for further rapid growth as countries hit the limits of decarbonisation, meaning they will have to rely on offsetting projects to achieve national and corporate climate targets. “The global carbon offset market is tiny at $0.6 billion (2019) versus the much larger global carbon permit market at $44 billion (2018),” Berenberg said in the note. “However, the offset market has more than tripled over the past three years and we estimate that the very long-term (2050) addressable market size is huge at ~$200 billion,” it added, predicting the market will continue to grow at its rapid current rate over the next five years. The bank also said previous weaknesses around some project types will likely be addressed as the market attracts larger actors. “We expect the quality of offsets will improve as large, well-regulated, publicly listed companies are set to invest hundreds of millions of US dollars in offset project development,” it said. Berenberg said due to the coronavirus, it no longer sees aviation as a driving buyer of offsets, but rather that role will be taken up by sectors such as food and beverage, technology, and oil and gas. (S&P Global Platts)

Renew kid in town – Renewables are set to outpace coal generation in 2020, according to the latest short-term energy outlook from the US Energy Information Administration (EIA), amid shrinking electricity demand caused by COVID-19 response measures as well as low natural gas prices. EIA estimates coal generation will total 724.2 bln kWh in 2020, compared to 761 bln kWh of renewables – a considerable difference from 2019 when the coal/renewables breakdown was 959.5 bln kWh​ to 688 bln kWh. The agency forecast that renewable generation will also continue to outpace coal in 2021 by some 833.8 bln kWh to 810.3 bln kWh. (Utility Dive)

Up to the task – Progressive US Representative Alexandria Ocasio-Cortez (D) will co-chair a panel advising Joe Biden on climate policy, as the apparent Democratic nominee takes steps to unify the party with supporters of former presidential candidate Senator Bernie Sanders. In a joint statement announcing participants of the six “Unity Task Forces” released by Biden and Sanders on Wednesday, Ocasio-Cortez is listed as a co-chair of the climate change task force along with former Secretary of State John Kerry, who worked on the Paris Agreement under President Barack Obama. Ocasio-Cortez, who had endorsed Bernie Sanders before he dropped out of the race in April, will be serving as Sanders’ representative on the committee convened by Biden to deal with climate policy, her spokeswoman said. (NBC News)

Tire stickers – The European Parliament has formally approved a new EU-wide tire labelling scheme that it hopes will lead to lower emissions, Argus reports. The EU Commission calculates that tires, mainly owing to rolling resistance, account for 5-10% of a vehicle’s fuel consumption. The new tire labels will operate an A-E scale for fuel efficiency, resembling similar EU labelling schemes for household goods. The Commission estimates that the policy could deliver a transport sector emissions cut of up to 10 million tonnes per year of CO2e by 2030 in encouraging consumers to use the most fuel efficient tyres. The new tire labelling rules will apply from May 1, 2021 following MEPs’ approval and the expected formal backing by the EU’s council of ministers. Road transport currently accounts for some 22% of the EU’s emissions.

Deal reveal – After years of negotiations, Alberta announced Tuesday that it had reached a preliminary agreement with the Canadian federal government on reducing methane emissions. The Alberta government said the deal would achieve methane cuts of 45% below 2014 levels by 2025 – the same as the federal guidelines – after the Canadian Association of Petroleum Producers said the provincial strategy would allow for a more flexible approach. Before it can officially take effect, the deal will undergo a review process and is subject to approval by the federal cabinet, with the Canadian environment ministry set to put it to a 60-day public comment period. (Global News)

Fair trade – No evidence of anti-competitive conduct was found in the Northeast US RGGI programme in 2019, according to the annual market monitoring report prepared by Potomac Economics. In reviewing the four quarterly auctions, the market monitor found no material concerns regarding the process, barriers to participation, or the competitiveness of the results. In the secondary market, the market monitor also found no evidence of anti-competitive conduct, as firms have generally purchased quantities of allowances that are consistent with their expected needs.

And finally… Bailout bonanza – Fossil fuel companies and coal-powered utilities in the US are set for a potential bonanza under federal plans for a bond bailout that would come as part of the rescue package for the coronavirus crisis, according to new analysis. At least 90 fossil fuel companies, many of them established giants such as ExxonMobil, Chevron, and Koch Industries, plus some 150 utilities, stand to gain from the US Federal Reserve’s bond buyback programme, which will be worth at least $750 bln, the Rainforest Action Network said. Ten out of the top 40 fracking companies would also be eligible to apply, according to the analysis, which examined all US fossil fuel and energy companies to check whether they would qualify under the published scheme rules. (The Guardian)

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