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TOP STORY
ANALYSIS: Canadian Clean Fuel Regulations plagued by environmental, programme design concerns
The newly-minted Canadian Clean Fuel Regulations (CFR) are in danger of not living up to their GHG abatement potential and continuing to incentivise fossil fuel production, while expectations for credit supply from CCS projects and overall prices remain uncertain, according to low-carbon transportation groups, analysts, and market participants.
EMEA
Grid tests may clear path for German nuclear extension, as demand measures take effect
Germany is set to extend the lives of two nuclear power plants beyond this year based on results of soon-to-be-published security of supply tests, according to domestic media outlets, a move that would further ease pressure on energy supplies as mandatory demand cuts start to bite.
Euro Markets: EUAs sink with gas on expectations of Nord Stream restart that were later dashed
EUAs resumed their decline on Friday as energy prices dropped amid expectation the Nord Stream 1 pipeline would resume deliveries after a short maintenance, a belief dashed by a Gazprom announcement late on.
UK starts to fund next generation nuclear after PM Johnson’s swansong speech
The UK government has awarded £3.3 million in funding to research the next generation of cutting edge nuclear reactors, a day after outgoing Prime Minister Boris Johnson pledged a “Great British nuclear campaign” that will see eight new plants built.
ASIA PACIFIC
Australia’s NSW launches 5-year strategy to kickstart blue carbon investment
The New South Wales (NSW) state government in Australia has launched a five-year blue carbon strategy to unlock investment through carbon credits and other mechanisms to protect and restore the state’s coastal biodiversity and ecosystems and contribute to its emissions reduction targets.
Australia Market: Terra Carbon, EDL earn big ACCU batches
The number of newly minted Australian Carbon Credit Units (ACCUs) rose again this week with Terra Carbon and EDL LFG securing most of the new volume, while spot market prices for Australian offsets barely budged during the period.
CN Markets: CEA price barely moves amid sustained pessimism
Chinese carbon allowance prices barely changed over the past week despite a slight rebound in trading volume, as the ongoing lack of policy direction continues to leave the market drifting.
INTERNATIONAL
‘De-growth’ vs ‘green-growth’ debate highlights expert divergence under climate change
Two leading academic experts showed professional constraint on Friday during a heated debate on opposing economic growth models, including whether continuous growth can be sustained in a landscape of accelerating climate change.
AMERICAS
WCI compliance entities build CCA holdings after Q3 auction results, speculators trim
Emitters hit a nearly 1.5-year high in their California Carbon Allowance (CCA) net length this week, while financial players slightly decreased their position following the publication of the Q3 WCI auction result and the August contract expiry, according to US Commodity Futures Trading Commission (CFTC) data published Friday.
COMMENT
The EU ETS is starting its own battle to survive the winter
The summer holidays are over. Carbon traders had a fun August in which EUA prices went up €22 and then went back down €22, but now the grown-ups are back from the beach and stuff’s getting real, writes Alessandro Vitelli.
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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
Debt swapping – Climate vulnerable nations in Africa are showing growing interest in debt-for-climate swaps to address ballooning debt and spur climate investments. The IMF, the Green Climate Fund, and the African Development Bank increasingly support this as a solution, whereby outstanding loan repayment money can instead be used to invest in climate projects under terms agreed with creditors. Cabo Verde, Eswatini, and Kenya are among nations looking into how to make the swaps work for them, while the Egyptian COP27 presidency is considering launching a debt swap framework at the UN climate summit in November. (Climate Home)
Backshuffle in Bali – Some of the world’s major economies are “backsliding” on their emissions commitments, Britain’s climate envoy Alok Sharma said on Thursday, a day after objections to language on climate targets and the war in Ukraine prevented a joint communique from being issued at the G20 ministerial meeting in Bali, diplomatic sources said. COP26 President Sharma told Reuters the response from the G20 that accounts for 80% of global emissions was “incredibly worrying” and said “a number of countries” were backsliding on their commitments made at last year’s COP26 talks in Glasgow and the 2015 Paris Agreement. “The big emitters absolutely need to look these climate vulnerable countries in the eye and say they are doing absolutely everything they can to deliver on the commitments they have made,” he said.
AMERICAS
Amazon burning – Fires in Brazil’s Amazon rainforest surged in August to the highest for the month since 2010, government data showed on Wednesday, surpassing the blazes in Aug. 2019 that drew global attention soon after President Jair Bolsonaro took office. National space research agency INPE registered 31,513 fire alerts in the Amazon via satellite in the first 30 days of the month, making it the worst August since 2010, when fires totalled 45,018 for the full month. With one day left, fires this month are already up 12.3% from Aug. 2021 and roughly 20% above the average for the month in the INPE data series since 1998. (Reuters)
Climate (guard) change – White House climate advisor Gina McCarthy will depart from her role on Sep. 16, and former Clinton aide John Podesta will join its climate team. The White House on Friday announced deputy climate adviser Ali Zaidi will take over for McCarthy as National Climate Advisor, while Podesta will oversee the implementation of the climate and clean energy provisions of the Inflation Reduction Act, the major climate legislation President Joe Biden recently signed. (The Hill)
Three for one blends – Meanwhile, the Biden administration is expected to announce three-year biofuel blending mandates under the Renewable Fuel Standard (RFS) this fall, two anonymous sources told Reuters. The EPA is already directed by a court to propose a rulemaking for the 2023 mandates by Nov. 16. The multi-year target would provide longer-term certainty to the refining and biofuels industry, as the annual rulemaking process had created a nonstop lobbying battle over the mandates for the powerful oil and corn lobbies.
Aera supply – ExxonMobil and Shell on Thursday confirmed the sale of their California oil joint-venture Aera to German asset manager IKAV for $4 bln, ending a 25-year-long partnership that was one of the state’s largest oil producers. The deal puts a company with conventional and renewable energy investments in charge of a living relic of California’s early oil and gas production. Aera was formed in 1997 and has operations in eight onshore fields in central California, and the company was responsible for 3.3 MtCO2e under the state’s WCI-linked cap-and-trade system in 2020, according to data from regulator ARB. (Reuters)
ASIA PACIFIC
Low carb steel – Japan’s JFE Steel plans to spend 1 trillion yen ($7.2 bln) on low-carbon technology over the next eight years to achieve its 2030 goal to cut CO2 emissions, its president Yoshihisa Kitano said on Thursday, but said government help was needed, Channel News Asia reports. As steelmakers around the world face pressure to cut emissions to tackle climate change, JFE has set itself a goal to reduce its CO2 in 2030 by 30% versus 2013 levels. Kitano said JFE expected to invest in low-carbon technology, including electric arc furnaces (EAF) that can recycle scrap, as well as making what he called “wise use” of CO2 by developing “a carbon-recycle blast furnace” and using carbon capture and storage to prevent the release of CO2 into the atmosphere. Japan’s No.2 steelmaker plans to build a large-scale EAF as early as 2027 to replace the No.2 blast furnace at its Kurashiki plant in western Japan, Kitano said, without giving an investment size.
Green deal – Steelmaker Posco on Thursday signed a memorandum of understanding (MoU) with ZeroC, a subsidiary of renewable energy company Greenko, to make green hydrogen, and to jointly pursue opportunities in renewables, and other derivatives of green hydrogen, Livemint reports. In a joint statement, both the companies said that this MoU will contribute towards the mission of making India a green hydrogen hub. Posco Holdings and Greenko will carry out a feasibility study on green hydrogen production after discovering a proper site by the end of 2022. Greenko, which is majority owned by Singapore’s sovereign wealth fund GIC, runs about 7.5 GW capacity of renewable energy facilities in India.
Put it away – Inpex, Mitsibishi, and Jogmec jointly announced they commenced research on the acquisition of wide-area two-dimensional seismic survey data and wide-area geological evaluation to estimate CO2 storage potential in the Kitakambara area in Niigata Prefecture, Japan. The purpose of the joint research initiative is for the three partners to jointly acquire new seismic survey data in addition to well and existing seismic survey data owned by Inpex and Mitsubishi. At the same time, the parties plan to evaluate subsurface CO2 storage capacity of geological formations such as the Nishiyama and Shiiya Formations that have been used as production formations of oil and gas fields in Niigata Prefecture (Inpex press release).
Ammonia agreement – Itochu and Sasol have concluded an MoU on collaboration in the field of green ammonia. The MoU was recently signed at TICAD8 (Tokyo International Conference on African Development) in Tunisia, and the two companies will jointly consider research and development for the establishment of a green ammonia supply chain in Boegoebaai, Northern Cape Province, South Africa. The companies will consider export-type projects including power generation fuel, marine fuel, and other existing applications (Itochu press release).
Ready to go – The Shanghai municipal government is set to auction off 1 mln CO2 allowances for its emissions trading scheme on September 9, with a price floor of 52.56 yuan ($7.61), according to a notice issued by the local exchange. The floor price for the auction was set based on the weighted average price over the past three months, from June to Aug. Spot SHEAs closed Thursday on the Shanghai bourse at 59.33 yuan, down 0.62% from a day earlier, exchange data showed.
New deal – The government of China’s Hanshou county has signed a cooperation agreement with a state-owned investment company to explore the potential of nature-based offsets, a joint statement showed. The target area for the project – covering 165,000 hectares of forest and rice fields – is expected to create carbon sink of 15 mln tonnes of CO2 equivalent within 30 years once the project is established, bringing in revenue of more than 750 mln yuan ($108.6 mln), according to the statement. The two parties did not specify which standard they will employ for the project.
EMEA
Industry woes – German industry is struggling to source its energy needs against the backdrop of a worsening gas crisis, the head of the country’s association of energy consumers (VEA) told Montel in an interview. Volker Stuke said as many as a third of the companies his organisation represented had not yet secured procurement contracts for 2023 delivery owing to high prices and a dearth of supply. The VEA has advised its customers to refrain from full supply contracts in the current environment if possible and to adjust procurement profiles with wholesale products that were still available. This has resulted in shifting more procurement to shorter term markets – something industrial consumers normally seek to hedge against with longer-dated contracts.
AND FINALLY…
Mele Coal-ikimaka – Hawaii closed its only coal-fired power plant on Thursday, an aggressive step forward in the state’s effort to transition entirely to renewable energy by 2045. The AES power plant has been in use since 1992 on Oahu – the state’s third largest island and home to its capital Honolulu – and is responsible for as much as 20% of the island’s electricity But it also emits 1.5 MtCO2e each year, making it one of Hawaii’s main GHG emitters. The closure of the plant came after Hawaii lawmakers approved legislation in 2020 effectively banning coal for electricity production by the end of this year. (Guardian)
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