CP Daily: Monday May 18, 2020

Published 23:33 on May 18, 2020  /  Last updated at 23:33 on May 18, 2020  /  Newsletter  /  No Comments

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

*** COMING JUNE 18: Carbon Fast Forward – Online ***

A virtual conference bringing in-depth insights to help navigate the vast uncertainty cast over environmental markets by the COVID-19 pandemic.

This one-day event examines the critical issues affecting companies with exposure to the EU ETS and the expanding global carbon market. Building on the success of the annual Carbon Forward conference in London, Carbon Fast Forward’s first online conference brings that insight and expertise to your virtual office, helping attendees manage the risks and opportunities in the EU ETS and international markets over the coming decade.

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TOP STORY

EU Market: EUAs jump 6% on wider market gains, auction supply dip

EUAs broke above €20 for the first time this month on Monday ahead of a lower auction supply and as wider markets rose on optimism that the world was emerging from its pandemic-induced lockdown.

EMEA

UK’s Liberty nets €100 mln from EUA sales from newly-purchased steel facilities -media

UK-based Liberty House Group sold more than €100 million worth of EUAs in January and February, opting to offload the units only months after the expansion of its steelmaking division across Europe.

EU launches tender to pick ETS auction platform for Phase 4

The European Commission on Monday launched a tender to appoint a common auction platform to host carbon allowances sales during the first half of Phase 4 of the EU ETS (2021-30).

AMERICAS

RGGI facilities surrender 1.7 mln allowances for past ETS obligations

Two RGGI power plants surrendered allowances last year for past carbon obligations in the Northeast power sector ETS, programme officials confirmed Monday.

Attorneys general request RFS waivers as EPA submits biofuel quotas

Attorneys general from seven refining-heavy states on Friday asked the US EPA to waive Renewable Fuel Standard (RFS) blending requirements this year due to coronavirus-induced economic impacts, as the federal agency sent its 2021 biofuel quotas for White House review.

Argus cancels Napa carbon market conference, considers digital option

Price reporting agency Argus Media has cancelled its Biofuels and Carbon Markets Summit in California this autumn due to COVID-19, but the company said Monday that it may offer a digital version instead.

ASIA PACIFIC

China’s Hubei ETS coverage swells by almost 20%

China’s Hubei province has added over 60 companies to its pilot CO2 emissions trading scheme, including the aviation sector even though its only airliner ceased operations in November.

ICYM

Surprise EU data release lifts lid on 12 years of ETS emissions transactions

The European Commission this week quietly published over 12 years’ worth of trading records from the EU ETS emissions registry, offering a comprehensive glimpse of how hundreds of billions tonnes of CO2 were shifted across more than a million transactions.

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BITE-SIZED UPDATES FROM AROUND THE WORLD

Spanish ambition – The Spanish government has proposed a net zero 2050 emissions target as part of a draft law to be presented to parliament on Tuesday, aiming to set the direction of economic recovery from the coronavirus pandemic, Climate Home reports. The law includes a goal for 100% renewable power by 2050, a ban on all new fossil fuel extraction projects with immediate effect, and measures to end direct fossil fuel subsidies and make all new vehicles emission-free by 2040. The draft features the same 2030 emission cut target of 23% as outlined in January under the government’s revised National Energy and Climate Plan (NECP).

Floor planA Franco-German proposal for a €500 bln EU coronavirus recovery fund includes several climate elements that the two EU powerhouses began pushing for last year: to increase the EU’s 2030 GHG targets (with the addition of studying carbon border adjustments), to install a floor price in the EU ETS, and to examine expanding the scheme to other sectors. The European Commission’s recovery plan is due next week.

Death knell – The global coal industry will “never recover” from the Covid-19 pandemic, industry observers predict, because the crisis has proved renewable energy is cheaper for consumers and a safer bet for investors. A long-term shift away from dirty fossil fuels has accelerated during the lockdown, bringing forward power plant closures in several countries and providing new evidence that humanity’s coal use may finally have peaked after more than 200 years. That makes the worst-case climate scenarios less likely, because they are based on a continued expansion of coal for the rest of the century. Even before the pandemic, the industry was under pressure due to heightened climate activism, divestment campaigns and cheap alternatives. The lockdown has exposed its frailties even further, wiping billions from the market valuations of the world’s biggest coal miners. As demand for electricity has fallen, many utilities have cut back on coal first, because it is more expensive than gas, wind, and solar. In the EU, imports of coal for thermal power plants plunged by almost two-thirds in recent months to reach lows not seen in 30 years. The consequences have been felt around the world as well. (Guardian)

Green props – Oil majors have all cut capital spending sharply as worldwide stay-at-home orders triggered by the coronavirus outbreak slammed fuel demand and sent oil prices to record lows. But Europe’s top five producers – BP, Shell, Total, Eni, and Equinor – are all focusing their investment cuts mainly on oil and gas activities, and giving their renewables and low carbon businesses a relative boost, according to a Reuters review of company statements and interviews with executives.

Safety net – Europe should consider the EU ETS no longer as the “cornerstone” or driver of decarbonisation, but as a safety net (as it is in California’s WCI-linked market) while sector-targeted policies spur cuts, argue Charlotte Vailles and Nicolas Berghmans at French think-tanks I4CE and IDDRI respectively. They say the current EUA price reductions due to the coronavirus-linked economic downturn highlight how necessary it is to reform the mechanism for managing this surplus or even to implement a carbon floor price. (Energy Post)

Low price spread – Think-tank I4CE has also updated its Global Carbon Accounts project mapping countries with explicit carbon prices, sectors covered, price levels, and government revenues. It finds that as of Mar. 1, more than 75% of emissions regulated are still covered by a price below $10/tonne – well below the $40-80 corridor economists recommended by 2020 for a Paris Agreement-aligned trajectory.

Double denial – New York Governor Andrew Cuomo’s (D) administration once again denied a key water permit for the controversial Williams Northeast Supply Enhancement pipeline sought by National Grid on Friday, citing the state’s sweeping climate law and marking a win for environmentalists. The New York Department of Environmental Conservation (DEC) said the construction of the pipeline in an ecologically sensitive, historically contaminated and recovering area – particularly near New York’s Raritan Bay – would have an unacceptable negative impact on water quality. The DEC also cited the emissions impacts of the pipeline as grounds for denying the project, declaring the pipeline inconsistent with the state’s Climate Leadership and Community Protection Act, which mandates net-zero emissions by 2050. Shortly after the New York decision, the New Jersey Department of Environmental Protection also denied six essential permits for the pipeline. (Politico)

Earning stripes – US online payments company Stripe is spending $1 million on carbon removals, following last year’s pledge that instead of buying cheap carbon offsets the company would pay much more for innovative methods to get CO2 out of the air for as much as $800/tonne. The projects include putting CO2 into concrete, burying bio-oil, and applying special sand to a beach to allow the waves to grind it up and have the ocean absorb more carbon.

And finally… Better dead than red – New bank restrictions on the financing of oil and gas drilling in the Arctic are akin to past practices – known as redlining – of not loaning to communities of colour, US Energy Secretary Dan Brouillette said. “We didn’t want banks redlining certain parts of the country. We don’t want that here. I do not think banks should be redlining our oil and gas investment across the country,” Brouillette told Axios in an interview. Experts quickly said the redlining comparison was both inappropriate and inaccurate, with one noting that a massive corporation losing access to several banks “is absolutely nothing like the systematic exclusion and exploitation of black communities for hundreds of years”. Since December, Goldman Sachs, Wells Fargo, Citi, Morgan Stanley, and JP Morgan have all announced they won’t directly finance new oil and gas development in the Arctic.

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