CP Daily: Friday May 22, 2020

Published 01:20 on May 23, 2020  /  Last updated at 18:25 on July 30, 2020  /  Newsletter  /  No Comments

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

**Due to public holidays in the UK and US, no CP Daily will be published on Monday, May 25**

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TOP STORY

Bid to add shipping to EU ETS hits rough waters as rival lawmaker evades issue

A European Parliament effort to fast-track shipping into the EU ETS may sail into rough waters next week as an influential lawmaker appeared to snub the idea.

EMEA

More EUA price downside seen, but virus-triggered bottom probably in -analysts

European carbon prices have probably hit their coronavirus-triggered bottom as panic selling by emitters has failed to materialise, analysts said, though the market risks more downside from another wave of lockdowns.

EU Market: EUAs rise to secure 12% weekly gain on auction gap, economic recovery

EUAs rebounded from early losses on Friday even as weak gas and wider macroeconomic concerns weighed, notching a gain of more than €2 for the week.

ASIA PACIFIC

Cautious climate optimism as China ditches GDP target for 2020

China looks unlikely to launch a carbon-intensive spending spree to recover from COVID-19 after the government on Friday said it has decided to not set a GDP growth target for this year, though continued support for “clean” coal and infrastructure projects means the country’s carbon emissions will likely rebound, according to observers.

Lawmaker and solar tycoon calls for China to ditch ETS for carbon tax

China should drop its emissions trading scheme and instead introduce a carbon tax to raise revenue and boost renewable energy, a deputy delegate to China’s National People’s Congress who is also the CEO of a solar power firm said on Friday.

Australia does accounting U-turn to allow offset projects to maximise generation

Australia will allow all existing offset projects to choose whether to switch to a new carbon accounting method being introduced later this year, the Clean Energy Regulator said Friday, meaning those that had been expected to see lower credit generation under the new system can stay with the old one instead.

CN Markets: Pilot market data for week ending May 22, 2020

Closing prices, ranges and volumes for China’s regional pilot carbon markets this week.

AMERICAS

Compliance entities added to WCI holdings prior to Q2 auction

WCI regulated parties added to their California Carbon Allowance (CCA) positions ahead of the Q2 auction, while speculators slightly trimmed their futures and options holdings, according to US Commodity Futures Trading Commission (CFTC) data.

Two speculators open RGGI CO2 accounts ahead of post-2020 changes

Two companies including a major US investment bank registered CO2 Allowance Tracking System (COATS) accounts in the Northeast RGGI ETS this month, marking four additions so far this year.

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BITE-SIZED UPDATES FROM AROUND THE WORLD

Tense – China-Australia relations have been tense recently after the latter initiated a thorough investigation into the origin of the coronavirus. China has made several moves targeting the significant natural resources between the two, and Beijing has now directed state-owned power plants to buy domestic coal over imported coal from Australia, according to the Sydney Morning Herald. While the outcome is not yet clear, the uneasy situation puts increasing pressure on the Australian government to diversify its economy in a bid to rely less on highly polluting fossil fuel exports.

Let us stay – An alliance of hard coal plant operators plans to achieve an expansion in the runtime of Germany’s seven most modern facilities by proposing to shift them into an “energy transition reserve” to back up intermittent renewable power production, Frankfurter Allgemeine Zeitung reports. The alliance wants the plants to be kept on stand-by from 2030 to 2038 – the definitive end year of coal-fired generation in the country – and financed through a surcharge on grid fees. The government plans to supplement renewables production with some 17GW in newly constructed gas plants, which emit much less than coal. But the coal operators argue that construction of new gas plants could be partly avoided if their plants are allowed to stay operational for longer, and that their expected “few hundred hours” of annual runtime would add the “manageable” amount of an additional maximum of 1 Mt of CO2 per year compared to gas-fired generation. The proposal could also help solve a dispute over compensation for plants constructed after 2008 which, according to the alliance, would not be able to amortise if they are taken off the grid before 2030. Germany’s coal exit law detailing plant shutdowns and compensation for coal companies was adopted in January. Hard coal plant operators have criticised the plans, as the relatively late shutdown dates for lignite likely mean earlier closures for hard coal. In February, hard coal operators and the economy ministry failed to reach an agreement on the matter. Experts will weigh in on the law in a public hearing in parliament on May 25. (Clean Energy Wire)

Challenge lost – Environmental charity ClientEarth has lost a UK High Court challenge against a government decision to approve Drax’s new gas-fired power plant. The court heard how ClientEarth opposed the construction of two new gas generation units and two battery storage units on environmental grounds. ClientEarth had argued the decision did not take enough account of environmental targets at the power station near Selby, North Yorkshire. But the judge said the targets were outweighed by other “public interest issues” involved. The charity is now considering an appeal against the decision. (BBC)

Brazil bucks – Brazil could produce 10-20% more GHGs in 2020 due to deforestation and farming as compared to the most recent data from 2018, while emissions globally have dropped this year as the coronavirus pandemic paralyses society, according to a report by Brazil environmental advocacy group Climate Observatory. (Reuters)

Shifting grid – Consultancy The Brattle Group intends to finalise this summer a New York ISO (NYISO) study examining potential paths to the Empire State’s 2040 carbon-free power grid goal, according to a presentation. The firm’s initial analysis determined increased renewable generation and battery storage would be necessary, while new carbon-free alternatives such as renewable natural gas (RNG) would also need to come online to meet the state’s ambitious target. NYISO has also been debating a carbon adder for its wholesale electricity grid, but those plans have been shelved in the interim.

High tension – Maryland and New Jersey public utilities commissioners expressed frustration at a Thursday webinar with the Federal Energy Regulatory Commission’s Minimum Offer Price Rule (MOPR) released in Dec. 2019, saying tensions between the groups are “at an all-time high.” The FERC MOPR ruling requires grid operator PJM to set a minimum offer price at capacity auctions, making carbon-emitting sources more competitive with state-subsidised renewable sources. New Jersey Commissioner Bob Gordon said at a webinar hosted by Advanced Energy Economy that the ruling has the potential “to raise the cost of clean energy resources and really threaten the economic viability of them.” New Jersey and Maryland are looking into exiting the PJM capacity auctions over the issue. (Utility Dive)

Closing time – Fund manager WisdomTree is set to close its exchange-traded product (ETP) for EU carbon allowances after its swap counterparty Shell Trading Switzerland terminated its purchase agreement after reassessing potential risks. Effective June 22, WisdomTree will terminate the carbon offering, as well as eight other oil-related ETPs, which combined have around $550m in assets under management. The impact of an oil price war and COVID-19 led to extreme volatility in carbon and oil prices, with front-month WTI futures falling deep into negative territory for the first time ever last month.

Let’s do it live – Emissions trading association IETA has announced a series of virtual carbon market events, launching on June 3 and running over the coming months. The IETA Live virtual series are free of charge and represent “an excellent opportunity to catch up on developments in carbon markets worldwide, to share your thoughts and interact with experts and peers.” IETA adds: “This is your platform to show that your organisation is demonstrating effective leadership in these unprecedented times, and an important opportunity for industry engagement and commitment. We are grateful to have a few initial partner sponsors lined up already.”

And finally… What a turn off – Hundreds of renewable energy projects may be asked to turn off this weekend to avoid overloading the grid as the UK’s electricity demand plummets to record lows, the Guardian reports. Britain’s demand for electricity is forecast to tumble to a fifth below normal levels due to the spring bank holiday and the shutdown of shops, bars, and restaurants mandated by the coronavirus lockdown. National Grid is braced for electricity demand to fall to 15.6 GW on Saturday afternoon – a level usually associated with the middle of the night – and continue to drop even lower in the early hours of Sunday morning. Meanwhile, the sunny weather is expected to generate more renewable electricity than the UK needs.

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