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TOP STORY
EU nations find compromise on carbon border levy, but thorny issues remain
EU finance ministers on Tuesday forged a unified position on a proposed Carbon Border Adjustment Mechanism (CBAM), defusing fears that bloc’s Fit for 55 climate package might be delayed or watered down due to the European energy crisis or Russia’s invasion of Ukraine.
EMEA
Key EU lawmakers support carbon market MSR review proposal, teeing up April plenary vote
EU lawmakers on a key parliamentary committee on Tuesday voted overwhelmingly to support a European Commission proposal to strengthen the supply-curbing MSR.
EUA price at €100 could incentivise sustained fossil-to-renewable hydrogen switch
A carbon price at €100/tonne would incentivise a switch from fossil-based to renewable hydrogen in the EU, although priority must be on rolling out the technology to decarbonise industries that need green molecules the most, such as aviation, shipping, heavy industry, a conference heard on Tuesday.
Euro Markets: EUAs snap 5-day winning streak amid thinning demand as energy weakens on gas measures
EU carbon snapped a series of five daily gains on Tuesday as screen-based demand shrank and the daily auction cleared at a sharp discount, while energy markets gave up early gains after EU leaders were predicted to agree rapid measures to reduce the bloc’s reliance on Russian gas.
Utility RWE warns of high risks from Ukraine conflict escalation
Germany-based RWE, the EU’s top corporate emitter, faces large risks in the event of an escalation of the war in Ukraine and believes that German industry would be hit very hard by cuts in Russian energy imports, the firm said in its full-year results on Tuesday.
AMERICAS
Canada launches Clean Electricity Standard consultations in bid for net zero grid
Canada’s Minister of Environment and Climate Change Steven Guilbeault launched consultations to develop a Clean Electricity Standard (CES) on Tuesday, reiterating the goal to achieve a net zero electricity grid by 2035 and noting the potential to use carbon offsets within policy design.
California regulator puts WCI allowance surplus at lower level than market watchdog
California regulator ARB this week calculated a lower level for the WCI carbon market allowance glut than an advisory committee, as the agency reiterated it will await the results of the 2022 Scoping Plan update to explore changes to the programme.
ARB hones decarbonisation pathway, points to massive DAC build-out and other technologies
A tremendous build-out of clean energy and massive shift to low-carbon technologies underpin California’s climate pathways, including over 100 million tonnes of Direct Air Capture (DAC), according to initial modelling results released Tuesday as part of the 2022 Scoping Plan that provides a roadmap for future policy development.
New York Senate includes LCFS in budget resolution
The New York State Senate on Monday approved a budget resolution that includes language to implement a low-carbon fuel standard (LCFS), though some environmental groups are still sternly opposed to the market-based programme.
ASIA PACIFIC
New Zealand auction clears at NZ$70, releases most of CCR
New Zealand’s first carbon allowance auction of the year cleared at NZ$70 ($47.37), with almost 80% of the 2022 cost containment reserve (CCR) released at the first sale.
Concerns grow that China might not restart offset programme this year
With no news still of when China’s national offset programme might restart, it is becoming increasingly likely that this might not happen until 2023 due to the number of issues that need to be resolved, one analyst has claimed.
China sees 4.3% rise in thermal power generation as economy outperforms expectations in Jan-Feb
Thermal power generation in China rose 4.3% year-on-year in the first two months of 2022 as the economy performed better than expected over the period, official data showed Tuesday.
Australia Market Roundup: AgriProve registers 31 projects as ERF delivery numbers already begin to drift
Soil carbon developer AgriProve Solutions has had more than 30 new projects registered by the Clean Energy Regulator, while fresh regulator data indicated a downturn in ACCU delivery numbers to the Emissions Reductions Fund had already began in late February.
PREVIEW: Market expects NZ auction to trigger cost containment reserve
Despite the recent price correction in New Zealand’s emissions trading scheme, market participants expect Wednesday’s auction to trigger the release of the full 7 million allowances in the cost containment reserve (CCR).
VOLUNTARY
Global securities watchdog announces voluntary carbon markets probe
A global securities watchdog group has announced a probe into voluntary carbon markets.
WEBINAR
Zeroing In – The Outlook for Net Zero Energy
Following the release of the Transition Trends Report 2022, Reuters Events will host an exclusive dialogue of industry leaders, to analyse and digest the key findings from 3,000+. The panel will feature senior executives from Deloitte, Octopus Energy and EDP. Please RSVP for attendance.
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CONFERENCES
North American Carbon World (NACW) 2022 – Apr. 6-8 in Anaheim, California – presented by the Climate Action Reserve: Learn, collaborate, and network on carbon markets and climate policy at NACW, North America’s largest carbon event. NACW features comprehensive and up-to-date information, key thought leaders advancing innovative climate solutions, and the best networking opportunities with colleagues in the business, government, nonprofit, and academic sectors. NACW will dive into the status and future of North American carbon markets, climate policies, innovative solutions, natural climate solutions, net zero pledges and beyond, transportation and LCFS markets. www.nacwconference.com
City Week 2022: Resetting Priorities for a Better Future – Apr. 25-27 at London Guildhall: Now in its 12th year, City Week is the premier gathering of the international financial services community. Organised in partnership with the UK Government and leading City institutions, City Week brings together industry leaders and policy makers from around the globe to consider the future of global financial markets. Each day will address a specific theme, with Day 1 focussing on “Meeting the climate change challenge – the role of financial services in achieving net zero”. www.cityweekuk.com
Reuters Events: Global Energy Transition 2022 – June 14-15 in New York City: The conference unites CEOs and changemakers from the energy, industrial, and government ecosystems to shed light on the defining issue of our time, and help companies meet a uniquely difficult challenge. Over two days and five critical themes, we will define the future of energy, inspire a decade of action, and prepare the sector for challenges still to come, with diverse voices from around the world bringing passion and expertise to deliver a new path forward. Find out more by visiting the website today: https://bit.ly/35H7cgb
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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
EMEA
45 or die – In reaction to the Russian invasion of Ukraine, there is growing support across the European Parliament to increase the EU’s 2030 renewable energy target and break away from Russian fossil fuels, lawmakers from across the political spectrum told Euractiv. Currently, just over 22% of Europe’s energy comes from renewables. Last year, the European Commission proposed amending the EU’s renewable energy directive to increase this share to 40% by 2030. Now, in response to Russia’s invasion, the European Parliament is set to push for this target to be increased to 45%.
Shell under fire – The directors of Shell are being sued for failing to properly prepare the company for net zero. ClientEarth, an environmental law organisation, is taking the action against the multinational oil and gas major and has called for others to support its claim. In what is thought to be a legal first, the lawsuit brought by activist shareholders claims that Shell’s directors are personally liable for failing to devise a strategy in line with the Paris Agreement, which aims to limit global warming to below 2C. The lawsuit claims the failure puts the directors in breach of their duties under UK corporate law. If the lawsuit is successful, Shell’s board could be forced by the courts to change its strategy, taking specific concrete steps to align its plan a 2C warming scenario. At Shell’s 2021 annual general meeting more than 30% of shareholders voted against the board in support of a resolution calling for Paris-aligned emissions targets. (Guardian)
Wind against Putin – UK prime minister Boris Johnson has come out against criticism of the UK’s net zero agenda in an opinion piece in the Daily Telegraph that argues that renewables are the quickest and cheapest route to greater energy independence. Johnson stressed the importance of scaling up domestic renewable power capacity and accelerating the net zero transition in an opinion piece for the British newspaper on Tuesday, arguing that Europe’s heavy dependence on Russia for oil and gas has helped enabled the brutal invasion of Ukraine. “From the destruction of Aleppo, to the deadly use of Novichok on the streets of Salisbury, to the barbarism we are currently witnessing in Ukraine, Putin has been able to get away with too much for too long because he has encouraged and exploited a Western addiction to his oil and gas,” the opinion piece read. “That addiction must now end – and the winners will be British consumers, the natural environment and the cause of freedom itself.” The UK should therefore rapidly ramp up renewable energy generation of all forms. “He may have his hand on the taps for oil and gas. But there is nothing he can do to stop the North Sea wind.” (Daily Telegraph)
Burt-on or Burt-off? – The UK government says it still plans to stop using coal by 2024, despite claims one of the last UK plants could be kept open to help tackle the energy crisis. Nottinghamshire’s West Burton A plant is set to be closed this year as part of the UK’s net zero plans. According to a report in The Times, EDF – the French energy giant that runs the site – has been approached to see if it could keep the site running. A government spokesman said it had “made no formal request to EDF”. He said how UK coal plants were run “is ultimately a commercial matter,” adding the government will be “setting out plans to boost our long-term energy resilience and domestic supply shortly”. Plans to start closing West Burton A in September were formed to help the UK reach its target of not burning any coal for electricity by next October, with the deadline part of the UK’s plans to reach net zero by the middle of the century. A rise in gas prices and the impact of the invasion of Ukraine has left the government looking for alternatives to help reduce reliance on Russian imports. EDF said two of four units at West Burton A have already been shut down, with staff numbers cut ahead of the planned closure this year. (BBC)
In case of emergency – The Netherlands on Monday said output from the Groningen gas field would be only a last option to secure its energy needs in the wake of Russia’s invasion of Ukraine, as it cut its production forecast for the facility this year. Extraction in the year to the end of September is now expected to be 4.6 bcm, the government said in a letter to parliament, versus an outlook for 7.6 bcm released in January. A main source of Europe’s gas for decades, the Groningen field operated by a joint venture between Shell and Exxon Mobil hit peak output of 88 bcm in 1976 and was still close to 30 bcm only five years ago. The Dutch state announced in 2019 that Groningen output would end by Oct. 2022 to limit seismic risks in the region, with gas only to be extracted thereafter in the event of extreme weather or unforeseen circumstances. “The events are unsure, also because of the Russian invasion in Ukraine,” the government said. “We continue to stress that the Groningen field will only be an option of last resort, to guarantee supply of energy to households.” The government said it would stick to its plan to shut down the field completely in 2023 or 2024, depending on how fast gas reserves can be filled with the low-calorific gas typical of Groningen. In order to limit dependence on Russian fuels, the Netherlands will look to increase its capacity to import liquefied natural gas (LNG), potentially expanding an existing LNG terminal in Rotterdam by 5-8 bcm, or building a new floating facility with a 4 bcm capacity in the Groningen province. Some are urging the Netherlands to restart production at Groningen given the extraordinary circumstances in Ukraine and a potential interruption of gas supplies coming from Russia. (Euractiv)
LEAG loan – Eastern German lignite company LEAG has accepted a loan of €5.5 bln from state-owned bank KfW to cushion the impact of Russia’s war on Ukraine on energy markets, business newspaper Handelsblatt reports. “An emergency like this has never existed before on the German energy market,” the authors write, adding that the loan is the largest individual company credit ever granted by KfW. It was made available more than a week ago to alleviate a “critical” situation, which is now under control, the newspaper said, citing government sources. Apart from lignite power producer LEAG, energy company Uniper has also secured a loan over €2 bln, while gas retailer VNG has requested a similar support credit, they added. The companies’ financial difficulties arise from suddenly skyrocketing security deposits they have to make at a clearing house to cushion price fluctuations on energy markets. As many energy companies have entered into long-term supply contracts with customers at fixed rates, these deposits are needed to buy energy reserves on the market if the companies can no longer deliver electricity or gas themselves. In the medium run, however, energy companies like LEAG could end up benefitting from the current price explosion on energy markets. Owned by Czech investment company EPH, LEAG is Germany’s second largest lignite producer after RWE and employs about 7,000 people in eastern Germany. Coal power plant operators in Germany have started making provisions for a runtime extension of decommissioned stations in preparation for possible energy supply disruptions as a result of the war in Ukraine, while the economy and climate ministry said all plants going offline in the future would first move into a capacity reserve before being shuttered completely. (Clean Energy Wire)
CO2 on the rise – Germany’s GHG emissions have increased by nearly 5% in 2021, in an expected rebound during the economic revival after the pandemic. The German government said it wants to tackle the lack of structural changes in the buildings and transport sectors, both of which failed on their specific emission reduction targets. The economy and climate ministry said it plans to reap the double benefits of energy independence and climate action, with an emergency programme that is to triple renewable capacity expansion. The German climate state secretary also announced he expects a heat pump boom in 2022 as households strive to become independent from Russian fossil fuels. (Clean Energy Wire)
ASIA PACIFIC
G20 energy meet – Indonesia’s Ministry of Energy and Mineral Resources (ESDM) will hold an inaugural session of the Energy Transition Working Group (ETWG) at the G20 Indonesia Presidency forum in Yogyakarta on March 24-25, 2022, Antara news agency reports. The main topics of discussion at the meeting will pertain to three priority issues: access, technology, and funding. Regarding energy access, the working group will discuss the need to create affordable, reliable, sustainable, and modern energy for all countries, especially regarding electrification. Moreover, the working group will discuss efforts to improve and utilise technology for clean industrial development, integration of renewable energy, and energy efficiency. Meanwhile, in terms of funding, Indonesia will encourage developed countries to invest and finance various innovations for developing renewable energy, including collecting promises from developed countries to shore up $100 bln to deal with climate change since such a promise has yet to be realised.
AMERICAS
Another push – More than 80 House Democrats this week called on US President Joe Biden to restart negotiations over his stalled Build Back Better (BBB) social spending bill and push forward funding for promoting clean energy and fighting climate change. The BBB legislation has stalled in the Senate and talks between the White House and some key senators have essentially stopped. “Given the widespread agreement in the US Senate for House passed climate provisions, we have an opportunity to recommence negotiations with climate serving as a key starting point,” they wrote. The climate portion of the legislation would be the largest-ever federal investment in clean energy, with some $555 bln devoted to clean technologies and clean energy tax incentives. The letter did not mention Senator Joe Manchin (D) who helped sink the BBB act by opposing it in December. (CNBC)
Lee’s gone – Climate hawk Allison Herren Lee will step down as a commissioner at the Securities and Exchange Commission (SEC). Lee announced that she does not intend to seek a second term, with her first term ending on June 5. Commissioners may remain in their roles for up to 18 months after their terms end, with Lee stating that she would step down once a replacement has been named. The announcement on Tuesday comes exactly one year after Lee — as acting chair — declared that climate change disclosures would be a priority for the agency, the New York Times reports. In doing so, Lee, who was appointed to fill a Democratic seat on the commission by President Trump in 2019, paved the way for her successor, Gary Gensler, who took over last April. The commission will hold a vote on proposed environmental disclosure rules next week, after which it intends to take public comment. “Today’s announcement does not state the reason for her departure but, to the extent that it reflects internal disagreements over a pending climate disclosure proposal, it could telegraph a lower degree of stringency,” said analysts at ClearView Energy Partners.
SCIENCE & TECH
Mineralise this – A new study has revealed that – through techno-economic modelling – the notoriously hard-to-abate cement industry could see a reduction in CO2e emissions and additional profit by incorporating CO2 mineralisation, Gas World reports. According to global estimates, the cement industry was responsible for approximately 7% of anthropogenic CO2e emissions in 2015. The challenge of reducing these emissions in the cement industry stems from the majority (60%) of its emissions being process-inherent, meaning that to lower emissions either the entire process must be replaced by more sustainable alternatives or the emissions generated through the process must be captured and stored. A little-studied area of CCS lies in CO2 mineralisation – a technique that involves captured CO2 reacting with activated minerals within rocks or industrial wastes to form stable carbonate minerals.
AND FINALLY…
Couldn’t care less – A group of Australian school students behind a landmark climate change lawsuit has vowed to keep fighting for protection from global warming after a “devastating” court ruling, news.com.au reports. The Federal Court on Tuesday found Australia’s environment minister did not have a duty of care to protect children from the harm caused by climate change. The minister, Sussan Ley, secured the victory after being taken to court by eight students. The teenagers launched their class action in 2020, attempting to stop planning approval for an expansion of Whitehaven Coal’s Vickery mine. They secured a partial victory in May last year. Justice Mordecai Bromberg, however, dismissed their application to prevent Ley from approving the mine expansion, but found she owed a duty of care to young Australians when assessing fossil fuel projects. Meanwhile, PM Scott Morrison, who last year announced a net zero emissions by 2050 goal, although he refused to commit his government to legislate for it, said on Tuesday that he wants Australia’s coal plants to “run as long as they possibly can,” according to The Guardian, for “when the wind doesn’t blow and the sun doesn’t shine.”
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