**Due to public holidays, CP Daily will not be published on Monday, Aug. 31**
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TOP STORY
California offset discounts fall to three-year lows on illiquidity, post-2020 ETS changes
California Carbon Offset (CCO) prices are declining on the secondary market as fewer compliance buyers participate and sellers look to unload volume before post-2020 alterations to the state’s cap-and-trade programme take effect, sources told Carbon Pulse.
EMEA
The FT effect: How big EU carbon price moves follow the financial paper’s market coverage
Want to make a quick buck – or should we say a quick euro? When the Financial Times runs its next piece on EU carbon allowances, trade them immediately.
EU Market: EUAs leap to nearly €30 on French nuclear outages
EUAs climbed as much as 5.5% on Friday, hitting a fresh six-week high within a few cents of €30 as French nuclear outages lifted the European energy complex.
EU must succeed in introducing ETS for additional sectors, says Merkel
As the EU seeks to adopt a tougher 2030 GHG target by year-end, a carbon market for sectors not yet covered by the EU ETS would give a much-needed price signal to reduce emissions, German Chancellor Angela Merkel said on Friday.
Most EU ETS registry functionality restored after outage, though Kyoto trade problems persist
Most functionality in the EU ETS registry system has been restored after last week’s outage, the European Commission announced late Friday, though transactions in Kyoto Protocol credits remains impacted.
ASIA PACIFIC
Shanghai, Tianjin auctions clear at floor price, but demand surprises
Allowance auctions in Shanghai and Tianjin on Friday both cleared at their price floors near secondary market prices, with the Shanghai sale reversing failures in previous years to go over-subscribed.
NZ Market: NZUs edge up to hit 4-wk high in quiet market
New Zealand allowances crept up 5 cents on Friday to end the week at their highest since late July and just shy of the market’s all-time record, but activity is stymied with both supply and demand dented.
CN Markets: Pilot market data for week ending Aug. 28, 2020
Prices, ranges and volumes for China’s regional pilot carbon markets this week.
AMERICAS
Speculators build CCA position by largest amount since February after Q3 auction
Speculators’ California Carbon Allowance (CCA) positions rose by the largest amount since the COVID-19 pandemic began, as compliance entities held positions firm following the Q3 auction results, according to US Commodity Futures Trading Commission (CFTC) data published Friday.
LCFS Market: California credit prices stagnate following refinery conversion announcements
California Low Carbon Fuel Standard (LCFS) prices are holding steady over the second half of August, with credit values failing to decrease much further after several oil majors revealed plans to explore converting their facilities to biofuels production.
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BITE-SIZED UPDATES FROM AROUND THE WORLD
Switching tactics – PetroChina has pledged to cut emissions to near zero by 2050, as it reported a plunge to a first-half net loss of $4.36 bln on lower oil prices and a hit to demand from the COVID-19 crisis. In the company’s first mention of a GHG target, Asia’s largest oil and gas producer said it plans to spend $440-730 mln annually on sectors including solar, hydrogen, and natural gas power generation in the first few years of the 2021-25 period, rising to $1.46 bln a year. (Reuters)
Smoke signals – India must swiftly and permanently turn away from coal despite its need for cheap energy, the UN secretary general has urged. Antonio Guterres told a virtual audience on Friday morning that coal use must be phased out in the country, with no new coal-fired power stations after this year, and that fossil fuel subsidies must be ended. “[Coal] spells stranded assets and makes no commercial sense – the coal business is going up in smoke,” he said. India has continued to promote new coal-fired power generation even as the price of renewable energy has tumbled. (Guardian)
Dumped – All five of the Adani’s Abbot Point coal port’s existing Korean creditors have now ruled out providing any further funds to the Australian port linked to the Carmichael mine and rail project, as the initiative tries and fails to refinance its substantial debt. Adding to the project’s problems, the India-based Adani lost a case in Queensland’s Supreme Court brought by four of its coal port customers, with a judge ordering the company to pay A$106 mln ($78 mln). (Market Forces)
Digging and defilement – A New South Wales mining industry push for 21 new coal projects to boost an economic recovery from the coronavirus pandemic would add seven years’ worth of Australia’s GHG emissions to the atmosphere if they were all developed, emitting around 3.7 bln tonnes of CO2e over their lifetimes, according to analysis from the University of NSW Climate Justice Project. The NSW Minerals Council identified the unapproved coal mines, at various stages of environmental assessment and development, saying they would create about 10,000 jobs and generate billions in royalties. (The Guardian)
Going green – Thyssenkrupp unveiled plans on Friday to build a factory that will be able to produce carbon neutral steel by using hydrogen generated via renewables instead of coal. Germany’s largest steelmaker said it plans to complete most of the plant by 2025, enabling it to produce 400,000 tonnes of so-called green steel a year. By 2030, annual production is expected to rise to 3 Mt. European industry already uses millions of tonnes of hydrogen each year but it is mostly produced from coal or natural gas, which is much cheaper than “green” hydrogen extracted from water using renewable energy. Germany aims to become a pioneer in hydrogen technology and plans up to 5 GW of hydrogen capacity by 2030, with another 5 GW to be installed by 2040 at the latest. It has earmarked €9 billion in investment to help achieve its goals. (Reuters)
Reactors retracted – France’s EDF will begin decommissioning its Hunterston B nuclear power plant in Scotland by Jan. 2022 at the latest, the company said Thursday. The plant, which began operation in 1976, has two reactors capable together of generating enough electricity to power around 1.7 mln homes. It had regulatory approval to operate until Mar. 2023, but both reactors were taken offline in 2018 after cracks were found in the graphite bricks that form the reactor core. (Reuters)
Bicker Sky Country – Montana Senator Steve Daines (R) on Wednesday called on Governor Steve Bullock (D) to reject a carbon pricing provision that is before the state’s Climate Solutions Council for potential inclusion in the state’s climate plan. In a letter to Bullock, Daines said a CO2 price would be a “gut punch” to Big Sky Country’s tens of thousands of fossil fuel industry and manufacturing jobs, and pointed to California’s recent heatwave-fuelled blackouts as an example of why Montana needs an “all-of-the-above energy approach”. But Bullock, who is challenging Daines for the Senate this November, shot back that the letter was “inappropriate”, particularly given that the recommendations Daines points to are in unreleased draft form and do not recommend a specific policy action. The Council, which released draft recommendations in February that did not include explicitly carbon pricing, is expected to publish the final version in the coming weeks. (Politico)
Nuclear option – Utility Exelon on Thursday announced it would close two of its nuclear plants in Illinois totalling over 4.1 GW of generation by fall 2021, blaming in part a 2019 rule implemented by the US Federal Energy Regulatory Commission (FERC) that raises the bidding price for state-subsidised resources in the PJM Interconnection wholesale grid. The company said its Dresden and Byron plants face hundreds of millions of dollars in revenue shortfalls, but representatives from Illinois Governor JB Pritzker’s (D) office said the utility’s “threats” are a thinly veiled attempt to secure more money from the state. Pritzker’s clean energy plan published last week seemed to reject a Fixed Resource Requirement that would further subsidise Exelon’s nuclear plants, instead supporting a market-based CO2 pricing mechanism for the power sector to lower emissions. (Utility Dive)
Speaking of FERC… – The Commission on Friday published the agenda and speaker list for its Sep. 30 conference that will discuss the adoption of carbon pricing mechanisms in US wholesale energy markets. A coalition of fossil-based and renewable electricity generators and trade groups petitioned FERC earlier this year to host the conference as more regional grid operators debate the inclusion of a CO2 adder in power markets such as NYISO and PJM.
Blowing budgets – Analysis of more than 275,000 household surveys from 26 countries has found that only about 5% of EU households live within the limits for 1.5C of warming, which equates to a budget of 2.5 tonnes of CO2 per person. Households in the top 1% of polluters in the EU have carbon footprints that are 22 times larger than that limit, the study found. (The Conversation)
And finally… Pea shooter – An experimental distillery has created a sustainable vodka that it claims saves more than 1.5 kg of CO2 emissions per bottle by drawing on the humble garden pea. Arbikie Distillery in Angus bills its pea-based Nadar vodka as a “climate-positive spirit” that avoids more emissions than it creates. (inews)
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