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TOP STORY
June RGGI auction settles within traders’ expectations as compliance buying returns
The Q2 RGGI auction settled at a slight premium to the secondary market, as the clearing price and healthy compliance buying aligned with market participants’ predictions prior to the sale, according to results published Friday.
VOLUNTARY
VER prices must rise 10-fold as credible supply seen limited -report
Voluntary emissions reduction (VER) prices must surge 10-fold this decade to drive meaningful climate action, otherwise buyers risk being accused of greenwashing by purchasing carbon offsets too cheap to deliver genuine GHG cuts, according to research published Friday.
EMEA
Moscow Exchange and VTB to launch Russian carbon marketplace, as Putin makes climate pledges
Moscow Exchange and Russia’s second-largest bank VTB signed an agreement to develop a carbon marketplace, the two companies announced on Thursday, as President Vladimir Putin made a series of pledges towards developing the country’s climate-focussed industries and attracting new foreign investment.
Euro Markets: EUAs drop below €50 for 2.1% weekly loss
EUAs slipped below €50 on Friday as the previous session’s technical breakout continued to encourage selling, though much of the market remains bullish, with many eyeing a rapid recovery.
AMERICAS
WCI speculative holdings hit new all-time high after Q2 auction
Speculators’ California Carbon Allowance (CCA) positions surged for the third consecutive week as the group took out a larger position on the current vintage contract, while compliance entities’ short position grew over the period, according to US Commodity Futures Trading Commission (CFTC) data published Friday.
Retired California livestock offset project latest to propose LCFS pathway
A California public utility has requested approval under the Low Carbon Fuel Standard (LCFS) for a dairy digester formerly registered under the state’s compliance offset programme, according to documents published Thursday.
US Carbon Pricing and LCFS Roundup for week ending June 4, 2021
A summary of legislative and regulatory action on carbon pricing, clean fuel standards, and clean energy at the US subnational and federal level this week, including developments in California and Illinois.
ASIA PACIFIC
NZ Market: NZUs climb to 11-wk high as FPO becomes history
New Zealand allowances on Friday closed above NZ$38 ($27.18) for the first time since before the March auction, rising after ETS participants earlier this week finalised 2020 compliance and the NZ$35 fixed price option became a thing of the past.
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BITE-SIZED UPDATES FROM AROUND THE WORLD
Carbon Pulse has teamed up with CME Group to provide its clients with regular updates on the global carbon markets. Check out these briefs for the latest insights on pressing trends and events impacting markets, published every other week. Registration required.
AMERICAS
Not one for us – The US Federal Reserve does not seek to set climate change policy for the country and the issue, while of long-term economic concern, does not currently influence monetary policy, Fed Chair Jerome Powell said Friday. “Climate change is not something we directly consider in setting monetary policy,” Powell said at a panel discussion on how the financial sector might address climate risks. “Central banks can play an important role in building an analysis … to quantify the risks … But we are not and we don’t seek to be climate policymakers as such,” a role that should be left to elected officials, he added. His remarks stood in contrast to central bankers from Europe and China who joined him on the panel and backed a more activist approach to influencing climate policy. Central banks have begun adding green bonds to their asset holdings, and People’s Bank of China Governor Yi Gang said he also wanted to guide the debate around social and behavioural changes to lessen carbon use. (Reuters)
Better nature – Canada could reach one-third of its GHG reduction targets by making better use of its vast forests, prairies, and wetlands, says a new report by more than three dozen scientists. The researchers from universities, governments and environmental groups say a good portion of those emissions cuts could be made for under C$50 a tonne, less than next year’s carbon tax. In all, the report lists 24 nature-based ways for Canada to cut carbon emissions by 78 Mt a year by 2030 — more than one-third of the federal government’s goal of 219 Mt. (Canadian Press)
Mixed Mex-ages – Carbon Brief profiles Mexico, the world’s 11th emitter. Under past administrations, the nation has played an important role in global climate negotiations and was one of the first nations to introduce climate change legislation. However, progress has ground to a halt as the current government pours money into the state-run fossil fuel sector and dismantles policies to promote renewables while its citizens are already bearing the brunt of droughts, extreme heat, and hurricanes.
EMEA
Green deal or no deal – Using green power and hydrogen from North Africa and the Middle East to help the EU meet its climate goals only makes sense if the exporting countries increase their own renewable power use, said a senior European Commission official. The EC planned to provide targeted help to large-scale renewable and clean hydrogen production in North African countries to enable exports to southern Europe, it said in a new policy for the EU’s Mediterranean neighbours adopted in February. But the focus was on ensuring that these neighbours also switched to cleaner energy, the EC energy department’s Florian Ermacora told a Friends of Sustainable Grids (FOSG) webinar this week, according to Montel. North Africa and the Middle East are potentially cheap sources for wind and solar power and there are multiple power interconnector projects planned. The EC said in February that it would propose partnering with Mediterranean countries on fostering investments in energy efficiency, renewable energy, “and a new focus on clean hydrogen production”, including through financial incentives.
Higher hydrogen – Germany’s industry, transport, and heating sectors will need significantly more hydrogen to help reach future climate targets than the government currently expects, said the head of the national hydrogen council Katherina Reiche, based on a comparative report by Fraunhofer ISI, ISE, and IEG. The institutes examined several reports on hydrogen needs in Germany. The country’s hydrogen production is currently 57 TWh per year, produced almost entirely with fossil fuels, says the report. From 2030, it shows the first relevant demand quantities for green hydrogen and derivatives of up to 80 TWh. This demand grows to 100-300 TWh by 2040. For the year 2050, the demand for hydrogen and hydrogen-based synthesis products is expected to increase to between 400-800 TWh, with industry needing the most. Imports will become the leading source of supply, particularly after 2040. To establish a hydrogen economy, Germany needs to build large domestic capacities of electrolysers, massively expand renewables and the hydrogen transport infrastructure, and set up energy partnerships for imports, said Reiche. (Clean Energy Wire)
Not ready for net zero – Croatia’s Low-Carbon Development Strategy adopted by the Parliament sets an emissions reduction goal of 33-36% below 1990 levels by 2030 and 56-80% by 2050. Getting to net zero by 2050 is “difficult to achieve according to the currently available knowledge and technologies”, the document said. Croatia said it supports the EU’s bloc-wide objective to become climate neutral by 2050, however. The environment ministry said its climate directorate and its partners are drafting a five-year action plan for the implementation of the strategy and that it would include measures to achieve greater emission reductions by 2030 and achieve climate neutrality by 2050. (Balkan Green Energy News)
BECCS friends – Britain’s Drax Group and US engineering company Bechtel have teamed up to identify opportunities to build new bioenergy with carbon capture and storage (BECCS) power plants around the world, they said Friday. BECCS is a negative emissions technology which extracts bioenergy from biomass and then captures and stores the CO2 but is not yet at commercial scale. Drax has a pilot BECCS project at its power station in Yorkshire. (Reuters)
Splitsville – Barclays’ US-listed iPath Series B Carbon Exchange-Traded Notes (ticker: GRN), which tracks EU Allowance prices, completed a 5-for-1 split on Friday. The bank announced the split on May 19, and following the event 5 mln ETNs will be outstanding at a principal amount of $10 each. Thursday’s closing indicative value of the split went from $99.19 as of Thursday’s close to $19.84 by Friday’s open, with shares trading up 9 cents at $19.82 on Friday afternoon. GRN is one of two US-listed publicly traded vehicles (KRBN being the other) that allow investors to gain exposure to compliance-grade carbon allowances. GRN had been calculated based on a more than 99.9% share of EUAs and a less than 0.1% share of CERs, though the CER portion was dropped in late February.
VOLUNTARY
Bonobo bucks – Toronto-based investment vehicle Carbon Streaming Corporation on Thursday announced it has entered into an exclusive term sheet with the Bonobo Conservation Initiative (BCI) to provide initial funding for BCI to develop two carbon credit projects within the Bonobo Peace Forest (BPF) located in the Democratic Republic of Congo. The two projects account for over 67% of the total area within the 5.3-mln ha BPF and offer a combined potential to avoid and remove hundreds of mln tonnes of CO2e over the 30-year span of the agreement. The REDD+ framework developed by the UNFCCC will be used to define the projects, both of which are anticipated to be certified through Verra’s VCS.
AND FINALLY…
August Burns Red(woods) – Scientists have known last year’s Castle Fire was probably the most destructive for California’s famously fire-resilient sequoias in at least 700 years, but a draft National Park Service report obtained by the Visalia Times-Delta puts a quantitative measurement on that fire’s climate-fuelled toll. Between 7,500 and 10,000 monarch sequoias – about 10% to 14% of the world’s mature sequoia population – perished in the Aug. 2020 fire. “I cannot overemphasise how mind-blowing this is for all of us. These trees have lived for thousands of years. They’ve survived dozens of wildfires already,” Christy Brigham, chief of Resources Management and Science at Sequoia and Kings Canyon national parks, told the Times-Delta. Redwood forests are some of the world’s most efficient when it comes to removing carbon from the atmosphere, and also provide critical wildlife habitat and watershed protection for farmers and communities in the San Joaquin Valley. The loss numbers, derived from satellite data, will be confirmed visually when scientists are able to hike the high-elevation groves still covered in snow. “Not much in my life in the natural world has made me cry, but this did,” Nate Stephenson, a research ecologist for the US Geological Survey who works in the park and has been studying sequoias for years, told the San Francisco Chronicle. (Climate Nexus)
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