Newsletters > CP Daily: Friday March 18, 2022

CP Daily: Friday March 18, 2022

Published 00:38 on March 19, 2022  /  Last updated at 00:53 on March 19, 2022  / Carbon Pulse /  Newsletters

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

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TOP STORY

Major utility signs up to Japan’s voluntary carbon market

The biggest of Japan’s regulated utilities said on Friday it will participate in the government’s voluntary emissions market that launches later this year, as the number of companies backing the scheme continues to tick up ahead of the Mar. 31 deadline.

VOLUNTARY

Tradable units offer route to ramp up CCS worldwide -report

International emissions trade could be used to incentivise the capture and removal of billions of tonnes of CO2, according to research commissioned by oil firms this week that set out how heavy industries could cooperate in light of net zero commitments.

Carbon removal startup acquires funds for ocean-based pilot projects, offers carbon credits

A Nova Scotia-based carbon removal startup has raised nearly $8 million to build pilot facilities to deploy its proprietary carbon transition technology, which aims to speed up the earth’s natural process of removing carbon from the air and safely storing it in the ocean, the company announced on Friday.

ASIA PACIFIC

CN Markets: Volumes rise on large OTC deal, but frustrations linger for Chinese carbon traders

A sizable OTC block trade helped trading volume in China’s national ETS after the recent lull, though the market remains frustrated amid the continuing lack of regulatory progress.

Industry body adds pressure on Australian government to press pause on ERF exit rule

The main body representing Australia’s carbon industry on Friday added its voice to those urging the government to delay the implementation of the rule allowing developers with a fixed government contract to abandon those and sell credits on the secondary market instead.

Australia’s NSW to finance emissions abatement for rural economy

Australia’s most populous state, New South Wales, will invest A$125 million ($92 mln) until 2030 to support farmers and land managers to reduce emissions, improve their access to environmental markets, and accelerate finance for natural capital and low carbon farming, the state government announced Friday.

AMERICAS

LCFS Market: California credits nosedive below $120 as bear market persists

California Low Carbon Fuel Standard (LCFS) credit prices spiralled to fresh four-year lows on Friday as traders saw little in the way of support coming into the transportation sector programme.

WCI auction volume inches down for Q2 sale

California and Quebec will slightly decrease the number of current vintage allowances offered in the jurisdictions’ May cap-and-trade sale, with a reduction in unsold volume offsetting a rise in V22 units, according to a notice published Friday.

Compliance entities boost, financials shed CCA holdings during price rebound

Emitters saw their California Carbon Allowance (CCA) net short position nearly flatten this week as prices lurched back from six-month lows, while speculators’ net long holdings sank to a new 10-month nadir, according to US Commodity Futures Trading Commission (CFTC) data published Friday.

EMEA

Euro Markets: EUA trading range narrows as looming options expiry exerts pull

EUAs traded in their narrowest weekly range since end-2021 as high options open interest at a strike price of €80 acted as a magnet, while energy markets were mixed as Russia and the US traded words and analysts cautioned that economic risks from a drawn-out Ukraine conflict are underestimated.

Enel reports surge in ETS-covered generation, raises forward hedges

Italian utility Enel saw a 22% surge in ETS-covered power generation in 2021, according to annual results published late Thursday that showed an advance it its near-term hedging.

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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

INTERNATIONAL

Out of site, out of mind – The Science-Based Targets initiative (SBTi) has kicked five oil and gas companies off its website while it works on criteria for how fossil fuel producers can set climate targets compatible with 1.5C or 2C of global warming. The SBTi, which was formed by a coalition of green NGOs, was planning to unveil those criteria in 2021. Instead, it announced this month it will no longer accept commitments from fossil fuel producers. The five firms it has removed include Russian oil company Tatneft, which is part-owned by the government of Tatarstan province. (Climate Home)

Report time – 2021 has been a crucial year for emissions trading systems around the world as countries are taking steps to meet their net zero commitments. As of 2022, 25 emissions trading systems are in force worldwide, with another 15 scheduled for implementation or being considered. Domestic carbon markets now cover about 16% of global emissions and have generated more than $150 bln in auction revenues.  The 2022 edition of the ICAP Status Report – a cornerstone publication for the carbon market community, to be released Mar. 29 – provides a comprehensive snapshot of the latest developments of ETS in operation, scheduled and under consideration around the world. The Report features up-to-date factsheets alongside infographics that visualize the characteristics of the different systems. In-depth articles from policymakers and carbon market experts also provide insights into the latest ETS trends across the globe. To accompany the release of the Report, ICAP will be hosting two public webinars timed to accommodate the global reach of the ETS community. Representatives of ETS jurisdictions (including California, China, Germany, New Zealand, and the EU) will share the latest developments and future prospects from their systems, and the ICAP Secretariat will offer a closer look at the key messages of the 2022 Report.

EMEA

Double Dutch – The Netherlands will significantly ramp up the building of offshore wind farms in coming years, doubling the planned capacity by 2030, in a bid to meet climate goals and reduce the country’s dependence on Russian gas. The government announced plans for additional wind farms with a total capacity of 10.7 GW to be realised by the end of the decade in the Dutch part of the North Sea taking the planned total to above 20 GW. Current plans aim at a total capacity of about 10 GW in offshore wind energy in 2030, with about 3 GW already operational or under construction following a series of tenders in recent years. The government in January announced it would significantly increase spending on the energy transition and set up a fund of €35 bln to finance projects that would help keep the transformation to a carbon neutral economy on track. (Reuters)

Targeting hydrogen – The lawmaker tasked with drafting the European Parliament’s position on the EU’s recast renewable energy directive wants to include a 10% target for “low-carbon hydrogen” as part of efforts to kick-start the EU market, Euractiv reports. The European Commission seeks to ramp up clean hydrogen production in the EU, with at least 40 GW of new electrolysers expected to produce up to 10 mln tonnes of renewable hydrogen by 2030 – mainly coming from wind and solar. Ramping up volumes of green hydrogen will take years, said Markus Pieper, a German lawmaker for the conservative EPP group. He said a 10% target could act as a bridge to meet CO2 obligations. A rising number of stakeholders now believe that the European market should switch now to green hydrogen, bypassing the previously-expected transition phase of fossil-based hydrogen, now less economically viable given the current gas price crisis.

Money in ammonia – Energy company RWE plans to build an ammonia terminal at the site of the planned import harbour for LNG in the northern German city of Brunsbuttel to facilitate the conversion of the entire site “ready to import green molecules” at a later stage. Ammonia is a derivative of hydrogen but can be transported and stored much more easily. The German government had agreed to provide half of the funds necessary to build the LNG terminal in cooperation with Dutch state-owned energy company Gasunie and RWE, but said the facility would have to be “hydrogen-ready”. Instead of the direct import of hydrogen, this could be realised through ammonia, from which hydrogen could be won through a process called “cracking”, the government had said. Ammonia is used to produce fertilisers, pharmaceutical, or cleaning products. It is a gas composed of nitrogen and hydrogen, which can easily be liquefied to have large energy density at small volume. It can therefore be easily transported and stored and industry has decades of experience handling it. However, its production is very energy-intensive and today the hydrogen needed often comes from fossil gas, coal, or oil through processes that release CO2. Economy and climate minister Robert Habeck said RWE’s ammonia project would provide insights into how an LNG terminal could be converted to green hydrogen or hydrogen derivatives. RWE said 300,000 tonnes of green ammonia per year would arrive at the terminal from 2026 onward. (Clean Energy Wire)

Not Finnished – Finnish utility Fortum has sought government approval to extend the lifetime of its 1GW Loviisa nuclear power plant to 2050, saying the low-emissions electricity is needed for supply security. “Loviisa power plant’s lifetime extension [to 2050] is significant for all of Finland because it contributes to securing the supply of clean domestic electricity also in the future,” said Simon-Erik Ollus, executive vice president of Fortum’s generation division. The two-unit power plant would generate up to 170 TWh of electricity under an extension, Fortum previously said. Current licences are due to expire in 2027 and 2030. (Montel)

Concerned Brits – A new study from market research firm Ipsos shows more than 8 in 10 British people are concerned about how dependent the UK is on energy imports from other countries. A similar proportion are concerned about the chance that energy supplies to the country could be interrupted and this would affect people’s home energy. Three quarters of the population think the chances of interruptions to the UK’s energy supplies will get worse over the next 6 months, and that this will affect energy supplies to homes. These findings come against a backdrop of already high levels of concern about energy prices in the country.  Nine in ten respondents said they are concerned about the price that households in the UK have to pay for their home energy at the moment, with levels of concern highest amongst older participants.  There is also a strong perception that the price that UK households pay for their home energy will increase in the next six months – 70% think prices will increase a lot.

Forks down – EU Agriculture Commissioner Janusz Wojciechowski wants to hold off implementing the bloc’s flagship sustainable food policy, the Farm to Fork strategy, despite Commission Vice-President Frans Timmermans’ call to preserve the EU’s green ambition even in challenging times. In a hearing at the European Parliament’s agriculture committee (COMAGRI) on Thursday, the Polish Commissioner informed MEPs on the next steps the EU executive plans to cope with the knock-on impact of the Ukraine war on the EU, as well as international food supply chains. “Now we need to stop the procedure, to suspend the procedure,” the Polish commissioner said replying to a question from centre-right MEP Herbert Dorfmann who asked what the Commission intends to do with “certain pieces of legislation which could question food security, for example, the pesticides directive, nature restoration law.” According to Wojciechowski, the agrifood policy for the next months should be based on the Common Agricultural Policy (CAP) strategic plans without adding anything more. National strategic plans (NSPs) are one of the main novelties of the reformed CAP, the EU’s massive farming subsidies programme, which will run from 2023 to 2027. Through these plans, EU countries detail how they will meet the nine EU-wide objectives of the reformed CAP while responding to the needs of farmers and rural communities. (Euractiv)

AMERICAS

Letting the free market work – Texas has reached out to 19 financial companies this week to inquire if they “boycott” fossil fuels, a move that comes as Republicans seek to penalise firms seen as discriminatory toward the industry. The queries, sent Wednesday by state Comptroller Glenn Hegar, come six months after Texas passed legislation that bars it from doing business with banks and financial firms that have divested from energy companies or have otherwise distanced themselves from fossil fuels to prioritise clean energy. Hegar also requested the companies provide his office with a list of any mutual funds or exchange-traded funds that “prohibit or limit” investment in fossil fuels. Any company that fails to respond or to provide clarification within 60 days “will be presumed to be boycotting energy companies,” his office said in a statement. (Washington Examiner)

Tremendous transmission – The California Independent System Operator (CAISO) approved a transmission plan Thursday that includes 23 projects, estimated to cost nearly $3 bln, to cope with the dramatic increase in renewable generation and forecasted load growth in its footprint. The plan represents a massive increase in spending, compared to an average of $217 mln earmarked for transmission in the last five years. The current package of transmission projects will be an important addition of infrastructure to kick off the next phase of build-out to meet California’s clean energy goals, CAISO President and CEO Elliot Mainzer said at a Thursday meeting. (Utility Dive)

Bolster bill – The US Federal Energy Regulatory Commission (FERC) would have to bolster interregional transmission planning and require GHG emissions reporting by utilities under a bill introduced Thursday by Sen. Ed Markey and three other Democratic senators. The bill, which also addresses transmission cost allocation, grid interconnection, and competitive generation procurement, comes as FERC is preparing to propose changes to a set of its transmission-related rules. (Utility Dive)

VOLUNTARY

DAC stack – DAC startup Heirloom has raised $53 mln in a Series A funding round of investment from names including the Bill Gates-led Breakthrough Energy Ventures, and Microsoft’s climate venture capital arm. Heirloom, which formed in 2020, is working on DAC technology that leverages an accelerated carbon mineralisation to absorb CO2 from ambient air in days and extracts it to store permanently underground.  Online payment processing company Stripe has previously agreed to pay more than $2,000 a tonne for its removals units. (Axios)

Sabah shoutout – Civil society organisations have complained to the UN’s special rapporteur on the rights of Indigenous peoples about a lack of meaningful involvement of local communities in the drafting of a 100-year forest carbon agreement in the Malaysian state of Sabah, Mongabay reports. The deal involves representatives from the state government and Singaporean firm Hoch Standard Pte. Ltd. Read Carbon Pulse’s latest on the controversial deal.

Building a floor – Global building products and insulation firm Kingspan Group will attempt to accelerate decarbonisation efforts by putting a €70/t internal price on carbon from Jan. 2023 in a move to deliver its 2030 net zero emissions manufacturing goal. The company reported a cut of its direct Scope 1 and 2 emissions by 4.3% in 2021, and a reduction in carbon intensity by 29%, having set an SBTi -backed target to cut its Scope 1 and 2 emissions by 90% between 2020 and 2030. Kingspan said the €70 level could be adjusted in future if needed to help the firm meet its goals. (Business Green)

SCIENCE & TECH

Flabbergasted at the South Pole – The coldest location on the planet has experienced an episode of warm weather this week unlike any ever observed, with temperatures over the eastern Antarctic ice sheet soaring 50 to 90 degrees F above normal. The warmth has smashed records and shocked scientists. “This event is completely unprecedented and upended our expectations about the Antarctic climate system,” said Jonathan Wille, a researcher studying polar meteorology at Université Grenoble Alpes in France, in an email to the Washington Post. “Antarctic climatology has been rewritten,” tweeted Stefano Di Battista, a researcher who has published studies on Antarctic temperatures. He added that such temperature anomalies would have been considered “impossible” and “unthinkable” before they actually occurred. Parts of eastern Antarctica have seen temperatures hover 70 F (40 C) above normal for three days and counting, Wille said. He likened the event to the June heatwave in the Pacific Northwest, which scientists concluded would have been “virtually impossible” without human-caused climate change. What is considered “warm” over the frozen, barren confines of eastern Antarctica is, of course, relative. Instead of temperatures being -50 or -60 degrees F (-45 or -51 C), they’ve been closer to 0 or 10 F (-18 or -12 C) — but that’s a massive heatwave by Antarctic standards.

AND FINALLY…

Defence mechanism – The former chief of Australia’s defence force, Chris Barrie, says defence personnel are not allowed to speak out on the national strategic threats posed by climate change without prior approval from the office of Australia’s defence minister, Peter Dutton, The Guardian reports. The suggestion was immediately rejected by the defence minister’s office. Barrie is the Australian chair of the Global Military Advisory Council on Climate Change and authored the 2015 report Climate Change, Security and the ADF. He made the remarks while addressing the 2022 Fenner conference on sustainable agriculture in Canberra, where he outlined the security threats Australia faced as a result of global warming. Barrie said when he lectured on the threats caused by climate change in the defence headquarters in Canberra, they were filled with attendees interested in the subject. “Most of them would like to be out there speaking but they’re not allowed to unless they go through Peter Dutton’s office,” Barrie said. Neil James, the executive director of a defence and national security policy watchdog, the Australia Defence Association, said there were very few military, academic, or civilian strategic security analysts who did not consider climate change a serious problem.

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