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California Carbon Allowances (CCAs) will stay tethered to the WCI floor price through the end of the year as a result of the coronavirus pandemic curtailing economic activity and emission output in the linked ETS, analysts said Wednesday.
EUAs jumped 6.5% to top €21 on Wednesday as prices leapt on bullish sentiment, including from the absorption of Poland’s large auction – the last sale for several days in a supply-starved holiday period.
The European Commission will propose next year a new initiative to compensate farmers and foresters for CO2 emissions sequestration, opening the door to including market-based measures.
Compliance-oriented entities increased their RGGI allowance (RGA) holdings after the Northeast US ETS’ first quarterly sale of 2020 and as the coronavirus pandemic caused prices to briefly crash on the secondary market, according to a report published Wednesday.
Massachusetts electricity generators reduced emissions under the Global Warming Solution Act (GWSA) programme in 2019 as a result of milder weather and increased imports, but allowance prices still remained high due to illiquid conditions, a new report showed.
China’s National Energy Administration (NEA) has released a draft mechanism for clean energy consumption that would expand its power market reform, an announcement coming days before the annual National People’s Congress meets to address COVID-19 recovery and the next 5-year plan.
BITE-SIZED UPDATES FROM AROUND THE WORLD
Das done deal – The German cabinet on Wednesday approved an increase in prices in the country’s market-based ETS for the transport and heating sectors, after lawmakers from several parties reached a deal to up them late last year. Germany’s ‘National ETS’ (NETS) will begin as planned in 2021 with a fixed price of €25/tonne – more than double the €10 starting rate originally agreed by lawmakers last year. Under the deal, the scheme – which effectively starts out a tax – will then charge €30 in 2022, €35 in 2023, €45 in 2024, and €55 in 2025. The previous trajectory had been set to rise to €35 in 2025. Then from 2026, the mechanism will transition to a more trading-based system with an annual emissions cap and a price corridor of €55-65 – narrower than the €35-60 range initially proposed by the government last September. The cabinet also today approved another regulation to use the proceeds from the programme to offset a reduction in the renewables-supporting EEG surcharge that appears on power bills, in order to ease the burden of costlier carbon for consumers and businesses. Germany’s NETS will cover heating oil, LPG, natural gas, coal, petrol, and diesel, regulating fuels used in heating and road transportation, but not aviation, which is already subject to the EU ETS.
Hampered growth – The growth of renewable energy will slow for the first time in 20 years due to the coronavirus pandemic as developers build fewer wind farms and solar projects, according to the IEA’s renewable energy market update report, which also notes that a rebound is possible, particularly if governments support a green economic recovery. The IEA expects the world’s renewable capacity will grow by just 6% or 167 GW this year, a level 13% less than in 2019. (The Guardian)
Brexit recap – The UK has published 13 documents setting out its approach to a post-Brexit relationship with the EU, including an energy document mentioning carbon pricing. The paper refers back to a February paper covered in Carbon Pulse stressing that Britain was open to considering a link between a future national ETS and the EU carbon market. Since then, the UK has continued to insist it is on track to launch its own ETS next January when the Brexit transition period expires, even as it also makes contingency plans for an interim carbon tax.
Out of Africa – Rwanda became the first African nation to submit its updated Nationally Determined Contribution to the UN this year as it pledged a 16% emissions cut by 2030 from a business-as-usual scenario. The country added a conditional target of 22% from BAU based on international support and funding, including emissions trading approaches under the Paris Agreement’s yet-to-be-agreed Article 6. Under its BAU projection, Rwanda anticipates total emissions to double over the 2015-2030 period to 12.1 million tonnes of CO2e in 2030, while its unconditional NDC would see emissions drop by 1.9 Mt to just over 10 Mt. Additionally, the European microstate of Andorra submitted its updated NDC on Wednesday as the small country reiterated its pledge of cutting GHGs 37% below BAU, as well as achieving net zero emissions by 2050.
Brazil ban – British supermarkets including Tesco, Lidl, and Sainsbury’s were among more than 40 companies to sign an open letter urging Brazil’s national legislature to reject a proposed land regularisation bill, backed by President Jair Bolsonaro, that could enable faster destruction of the Amazon rainforest, Reuters reports. They warned they might have to boycott Brazil’s products as the law would encourage further land grabbing and widespread deforestation. The bill aims to make it easier for those that settled on public land historically to obtain deeds for their properties. Separately, fines for illegal logging in the Amazon have been effectively suspended since Oct. 2019 under a Bolsonaro administration decree, Human Rights Watch said today. Federal enforcement agents have issued thousands of fines for illegal deforestation and other environmental infringements in the Amazon and elsewhere in Brazil since October, yet due to new procedures put in place by the Environment Ministry that month, based on a decree issued by Bolsonaro last April, lawbreakers have been required to pay in no more than five of these cases, according to official information obtained by the campaign group. Real-time alerts from Brazil’s Space Agency (INPE) show that deforestation in the Amazon region may have increased 53% between Oct. 2019 and Apr. 2020 compared with the same period a year before.
What more can we do? – US Energy Secretary Dan Brouillette weighed in on the decline in emissions seen across the globe amid the pandemic, telling Axios they suggest the targets laid out under the Paris climate agreement are unrealistic. “We’ve practically shut down the world economy and we still haven’t met the goals that were set in the Paris Agreement,” he said. “What more can we do? If we’re going to be serious about this, we have to get more serious about things like nuclear energy.” (Politico)
No time off – US Representative Paul Tonko (D), chairman of the House Energy and Commerce Committee’s Environment and Climate Change Subcommittee, acknowledged the ongoing coronavirus pandemic has “upended” plans for consideration of major climate change legislation this year but said he continues to gather feedback on the CLEAN Future Act, which committee leaders unveiled earlier this year. “We continue to meet with stakeholders and various think tanks about the future of federal climate legislation,” Tonko told Politico. “We can now take this time to make it as accurate and as effective as those who have advised us need it to be. We’re not taking any time off.”
Advisory against – The Pennsylvania Department of Environmental Protection’s (DEP) Citizens Advisory Council on Tuesday voted against a motion to move the agency’s proposed RGGI-modelled ETS regulation to the Environmental Quality Board (EQB) for consideration. The 9-4 vote, with one abstention, comes shortly after the DEP’s Air Quality Technical Advisory Committee (AQTAC) deadlocked on that recommendation. However, a DEP spokesperson previously told Carbon Pulse the votes would not affect the agency’s plans to move the regulation for a EQB vote on July 21, consistent with Governor Tom Wolf’s (D) executive order. (PA Environment Digest Blog)
Blend bump – The US EPA has proposed lifting the amount of biofuels that refiners must blend into their fuel next year under the Renewable Fuel Standard (RFS) to 20.17 billion gallons, from 20.09 billion this year, two anonymous sources tell Reuters. The total figure roughly aligns with analysts’ previous estimates, with the cellulosic biofuel quota rising to 670 mln gal in 2021 from 590 mln this year. The White House is currently reviewing the draft proposal.
And finally… Hard of hearing – Trump administration officials at the EPA and Department of Transportation ignored repeated warnings from agency staff and White House economists of significant deficiencies in the factual and legal justifications for the administration’s rollback of existing mileage standards, according to two new reports. Legal experts widely agree the agencies’ failures to address the concerns, as well as the failure to publish inter-agency correspondence, could undermine the administration’s ability to defend the rule against legal challenges, the Washington Post and E&E News reported. The Trump administration’s Safer Affordable Fuel-Efficient (SAFE) Vehicles rule would reduce annual fuel efficiency improvements from the 5% required under the Obama-era standards to just 1.5% per year. (Climate Nexus)
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