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TOP STORY
EXCLUSIVE: Rising EU ETS emissions point to urgent need for a dynamic pricing paradigm -Andurand
With high energy prices dominating the political agenda and politicians in certain EU member states training their sights on the bloc’s carbon market, there is one salient fact being missed in all the hubbub: ETS emissions likely increased by 6% in 2021, and are set to rise again this year. Self-evidently, this means that the price of EUAs is not yet high enough to drive structural decarbonisation, write Pierre Andurand and Mark Lewis in an exclusive piece for Carbon Pulse.
EMEA
EU lawmakers propose raft of amendments seeking to weaken MSR, curb carbon prices
EU parliamentarians have proposed multiple amendments designed to weaken EU ETS reforms and to intervene in the market amid record carbon permit prices, documents released Friday showed, in an early sign lawmakers will face a battle to agree measures to tighten the bloc’s flagship climate policy.
South Africa releases draft framework to develop new domestic carbon offset standards
The South African government this week published a draft framework to help develop domestic carbon offset standards for use under the country’s carbon tax regime.
Euro Markets: EUAs settle back on profit taking amid uncertain geopolitical outlook
A late sell-off ahead of the weekend trimmed EUAs’ weekly gain to 5.6% after prices had earlier flirted with the record high, as natural gas prices retreated amid reports that the US and EU are working to diversify Europe’s gas supplies if tensions between Russian and Ukraine escalate into conflict.
AMERICAS
Cap trajectory, industry allocation proving contentious in Washington carbon market rulemaking
The fossil fuel industry and green groups are at odds with whether the steep linear reduction factor of Washington state’s forthcoming cap-and-trade regulation is appropriate, while free allowance distribution methods to industry and offset eligibility have generated pushback, according to public comments.
Financial players’ CCA position collapses by most since start of pandemic, compliance holdings boom
California Carbon Allowance (CCA) holdings for speculators burrowed a nearly eight-month low this week as prices dove, while emitters’ net short position dwindled to the thinnest level since May, according to US Commodity Futures Trading Commission (CFTC) data published Friday.
US Carbon Pricing and LCFS Roundup for week ending January 28, 2022
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 budget language to end the RGGI linkage in Virginia.
ASIA PACIFIC
China power market reform plan brightens ETS outlook
China on Friday outlined plans to launch and build out a national unified power market this decade, a move considered crucial to make carbon pricing more effective while helping to increase the share of clean power in electricity generation.
CN Markets: China’s ETS slips into post-compliance funk with no future guidance
Weekly trading volume in China’s national emissions market fell below 500 units over Jan. 21-27, as traders wound down ahead of next week’s Lunar New Year celebrations with no news on the 2021 allocation plan.
Shell kickstarts green hydrogen play in China with start-up of 20 MW electrolyser
Oil major Shell has started operations in China of a 20 MW renewable power-to-hydrogen electrolyser, constructed as part of a joint venture with a local firm, the company announced on Friday.
VOLUNTARY
US agri-credit initiative targets 30 mln credits by 2030 amid global rollout
A US-based alliance that focuses on decarbonising agriculture expects to generate upwards of 30 million credits a year by 2030 and plans to expand its regional presence by striking partnerships in India, Brazil and one European country this year.
Exchange CBL adjusts vintage rules for nature-based VER contract
ESG commodities marketplace Xpansiv’s CBL has announced changes to vintage eligibility for its standardised Nature-Based Global Emissions Offsets (N-GEO) contract, aiming to better align to market demand for greater clarity and adherence to integrity-based principles.
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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
INTERNATIONAL
Major meet – US climate envoy John Kerry has warned nations that the world is “not on a good track” to meet its goal of pivoting away from fossil fuels in order to avoid the most dangerous consequences of climate change. He hosted the closed-door Major Economies Forum on energy and climate virtual meeting and was joined by ministers from the US, China, EU, Russia, UK, and almost 20 other countries. According to senior US officials, discussions included blueprints for how to cut methane emissions, and the technical or financial support that countries might need, as well as the possible creation of a goal for the proportion of newly installed power that should come from zero-carbon sources this decade. (AP)
Investment surge – BloombergNEF’s Energy Transition Investment Trends 2022 found investment rose in almost every sector covered in the report, including renewable energy, energy storage, electrified transport, electrified heat, nuclear, hydrogen and sustainable materials, Renews.biz reports. Renewable energy, which includes wind, solar and other renewables, remains the largest sector in investment terms, achieving a new record of $366 billion committed in 2021, up 6.5% from the year prior. Electrified transport, which includes spending on electric vehicles and associated infrastructure, was the second-largest sector with $273 bln invested. With electric vehicle sales surging, this sector grew at a “breakneck” rate of 77% in 2021, and could overtake renewable energy in dollar terms in 2022. Only CCS recorded a dip in investment, though there were many new projects announced in the year.
EMEA
Non merci – French energy regulator, CRE, has rejected a request to build the Gridlink interconnector between Britain and France because of increased uncertainty since Brexit. The 1.4 GW project was being developed by a private company and was supposed to be operational from 2025. The link was awaiting regulatory approval from CRE and British regulator Ofgem. Studies showed that Brexit could have a significant impact on the benefits of interconnection projects, CRE said. The measures in the Brexit agreement to try to link the UK with other markets have many uncertainties, it added. Last week, Britain rejected a politically controversial 2 GW power cable to France. The UK refused to grant a development consent order, the final stage in the planning process, despite a recommendation from the examining authority that the project be approved. (Bloomberg)
ASIA PACIFIC
MoU on CCS – Petronas has signed a memorandum of understanding (MoU) with Japex to collaborate on CCS opportunities, including suitable CO2 storage solutions in Malaysia, The Edge Markets reports. Under the MoU, Petronas and Japex will perform technical maturation activities to unlock potential CCS solutions, which include evaluating optimal capture, storage and transportation methods, as well as estimation of emissions, capture volumes, and monitoring methods of CO2 stored underground, Petronas said in a statement on Friday. At the same time, Japanese power company Chiyoda Corp. and Indonesia’s Pertamina announced they will cooperate on developing CCUS and hydrogen as well, as part of their efforts to achieve net zero.
Green taxonomy – The Financial Service Authority of Indonesia recently unveiled the first version of its green taxonomy, a classification system for green economic activities, according to a research note from HSBC. Based on the “traffic light” system of the ASEAN Taxonomy for Sustainable Finance, the Indonesian taxonomy categorised business activities as green, yellow (transition activities) and red (harmful activities). In HSBC’s view, the taxonomy provides clearer grounds for investors and issuers to identify green projects in Indonesia where there is strong demand for green capital. HSBC stated that the taxonomy could enhance the credibility of green finance products, and thus boost the issuance volume, as well as serve as a foundation for Indonesia’s reporting system for green instruments. (HSBC bank).
Green hydrogen boost – A green hydrogen policy for India will be unveiled in the next ten days, the Times of India reports, and is likely to feature incentives such as free transmission for 25 years to boost production. The policy will also feature dollar-denominated bids, offers of land in renewable energy parks, and land allocation near ports for creating bunkers for green hydrogen and ammonia.
In the zone – The Australian state of NSW has formally declared the second of at least five planned renewable energy zones, as it continues to roll out its decade-long strategy of replacing most, if not all, of its legacy coal fired power stations, Renew Economy reports. The state government’s infrastructure roadmap has identified at least five REZs across the state and taken soundings of project interest in most, and has been overwhelmed by the response from developers of wind, solar and storage projects. On Friday it “declared” the New England REZ, based around Armidale in the state’s north, just two months after doing the same with the Central-West Orana REZ.
AMERICAS
Climate cancellation – The sale of offshore oil and gas leases on more than 323 mln ha in the Gulf of Mexico was cancelled by a US judge who ordered regulators to take a harder look at the impact on climate change. US District Judge Rudolph Contreras in Washington vacated the lease sale in a 67-page decision, issued Thursday. The judge found that the Interior Department underestimated the climate impacts of the leases and doing a further analysis wouldn’t overly harm the companies seeking the leases. The court’s decision throws into doubt the November sale of some 308 tracts spanning 688,000 ha of the Gulf of Mexico. Thirty-three oil companies spent about $192 mln buying the drilling rights in the auction, the second-to-last scheduled under a five-year programme drawn up by the Obama administration. (Bloomberg)
Deadline delays – The US EPA on Friday published its final rulemaking for extending compliance deadlines under the Renewable Fuel Standard (RFS). Consistent with the agency’s November proposal, the EPA will not set a 2019 compliance deadline for small refiners under the RFS until the quarter after the 2021 Renewable Volume Obligation (RVO) for the biofuels programme is set. The 2020 RFS compliance deadline for all refiners will then not follow until the quarter after that, and the 2021 deadline would not occur until the quarter after that. The EPA also finalised a different method for setting the RFS compliance deadlines for 2022 and onward that could depend on several different scenario.
VOLUNTARY
CarbonRight on – Dominion Energy customers in Utah and Idaho will soon have an option to reach net zero emissions on natural gas usage by supporting projects that reduce carbon emissions, the company announced Thursday. Residential, business, and government entity customers in the two neighbouring states will have the option to enroll in the new programme, CarbonRight, beginning in March. Those who enroll can purchase carbon offsets in $5 blocks that are added onto their monthly bill. Two of the projects help reduce landfill carbon emission reduction in Utah and Missouri, while the other is a forestry project in Minnesota. (KSL.com)
AND FINALLY…
Jail time – China will jail 47 steel company officials for faking air pollution data, in a sign that Beijing’s crackdown on firms that are flouting environmental rules is intensifying. The officials who worked at four mills in Tangshan city near Beijing, China’s top steelmaking hub, were give prison sentences from 6-18 months, the municipal government said in a statement on its WeChat channel that cited court documents.
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