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TOP STORY
FEATURE: UN climate summit to see “mainstreamed” push on pre-2021 carbon credits
A group of countries are likely to push for formal recognition of pre-2021 efforts to conserve and enhance global forests, hoping to mainstream the topic beyond technical negotiations at this year’s UN climate talks after seeing little success in initial offerings to the voluntary carbon market.
EMEA
EU lawmakers back plans to fund REPowerEU with national carbon auctions in interim vote
The European Parliament’s budgets committee (BUDG) voted on Tuesday largely in line with their MEP colleagues on the bloc’s REPowerEU proposal, seeking to part-finance the package with €20 billion worth of carbon allowance sales sourced from frontloaded member state auctions over three years.
EU ministers tee up further talks on gas price cap after initial debate
EU energy ministers discussed the merits of a bloc-wide gas price cap on Tuesday, agreeing to meet again later next month to decide on a measure aimed at blunting the impact of sky-high prices ahead of winter.
Euro Markets: EUAs advance for a third day, taking rally past 15% as short covering continues
EUA prices extended their three-day rally and rose to the highest in seven weeks on Tuesday morning, as traders boosted covering of short positions and participants eyed falling energy prices and evidence suggesting industrial output could be recovering, boosting the demand for EUAs.
Germany to buy intergovernmental EU carbon units to cover missed non-ETS targets
Germany has struck deals with three other EU nations to buy intergovernmental EU carbon units to cover its shortfall in meeting its non-ETS emissions obligations built up over 2013-20, the government said on Monday.
ASIA PACIFIC
Singapore seeks lower emissions peak before 2030 on pathway to net zero by 2050
Singapore will aim to peak its GHG emissions at a lower level than previously planned and before 2030, the island-state’s Deputy Prime Minister Lawrence Wong announced at a conference on Tuesday.
INTERVIEW: Tech firm in talks with banks, pension funds over green bond-linked carbon credits
A Hong Kong-headquartered tech firm is in talks with a number of banks and pension funds in the Asia-Pacific over Paris-aligned smart contract-based carbon credits attached to green bonds.
Australia should take sensible centre approach to Safeguard baselines, panel says
How baseline settings on Safeguard facilities are configured is largely a moot point, so long as their aggregate emissions levels meet Australia’s climate targets, a panel of experts said Tuesday.
Australia’s NSW launches A$360 mln low carbon investment plan for heavy emitters
The New South Wales (NSW) state government in Australia has launched a A$360 million ($228 mln) investment plan to accelerate emissions reduction in its most carbon intensive industries, NSW Energy Minister Matt Kean announced on Tuesday.
Power market reforms needed to unleash Chinese ETS potential -report
China’s current power market design has hindered the ability of the national ETS to unleash its potential in driving significant CO2 emissions reductions, a policy paper found.
Uzbekistan signs up to Japan’s Joint Crediting Mechanism
Uzbekistan on Tuesday became the 24th nation to sign up to the Joint Crediting Mechanism (JCM), Japan’s bilateral mechanism designed generate carbon credits aligned with the Paris Agreement.
VOLUNTARY
Offset price stratification likely to accelerate in fast-changing market, experts say
A mix of evolving regulatory landscapes and more informed consumer demand will likely spark far more stratified carbon credit prices in the future compared to in the current market, a conference heard on Tuesday.
Climate tech firm to expand into origination to help scale forestry credit supply
A climate tech startup this week announced plans to expand from mainly evaluating forest carbon projects to origination earlier in the value chain, aiming to drive supply that it says is in need of scaling.
Ratings agency finds only 10% of VER projects are of high integrity
A carbon credits ratings agency on Monday said that only less than 10% of voluntary offset projects that it has evaluated to date are of the highest integrity, while VER undertakings that issue large batches each year also warrant more scrutiny.
Nature-based VERs aligning with standardised contracts, creating de facto benchmark
Project-specific, nature-based offset prices appear to have aligned with standardised contracts, a carbon market exchange detailed on Tuesday, as VERs continue to suffer losses this year amid corporate disinterest and uncertainty in the voluntary carbon market (VCM).
AMERICAS
US forest investment company snaps up Michigan lands for VER generation
The joint venture between a US-based carbon credit originator and its investment firm partner has purchased Michigan forestland to develop a voluntary carbon market project, as the company builds out its portfolio across the country.
ADM looking into VER generation from regenerative agriculture programme
US-based food processing and commodities trading corporation ADM is evaluating how to generate voluntary carbon offsets from its regenerative agriculture programme, a company official said Tuesday.
INTERNATIONAL
More than 300 financials and multinationals call on big emitters to align with 1.5C limit
A total of 318 financial institutions and multinational firms collectively worth $37 trillion in assets and spending power have urged 1,000 of the world’s highest emitters to set climate goals in line with the Paris Agreement’s 1.5C warming limit, as part of an annual corporate climate disclosure campaign.
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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
Programme change – The government of Egypt has decided there will be no pavilion events on the first Monday of COP27, according to an email seen by the Guardian. The paper continues: “NGOs have raised concerns because they have carefully targeted their rosters of events to raise key issues they say must be addressed at the two-week-long conference. They fear the cancellations could restrict debate and undermine the role of non-state actors in the event. Media access to pavilions and other areas within the blue zone is also likely to be heavily restricted.” This comes as Reuters reports that concerned activists say “the decision to hold next month’s COP27 climate summit in a highly secured tourist resort in Egypt, along with restrictions on access, is curbing civil society’s participation in the event”. (Carbon Brief)
EMEA
Rise of Rishi – Former UK Chancellor Rishi Sunak was sworn in as the new leader of the Conservative Party and the country’s Prime Minister on Tuesday, replacing Liz Truss, who was in office just 44 days before resigning over her shambolic economic agenda. Sunak wasted no time in naming his cabinet, appointing Grant Schapps as the new secretary of state for the Department of Business, Energy and Industrial Strategy (BEIS), replacing Jacob Rees-Mogg, who resigned earlier in the day. The minister holding this role also effectively acts as the country’s climate minister. Elsewhere, COP26 President Alok Sharma held on to his post under Sunak and will negotiate on behalf of the UK at COP27 next month, but he has been relegated from cabinet. Environment Secretary Ranil Jayawardena also quit on Tuesday, and was replaced by Therese Coffey, who was previously minister of state for Environment and Rural Opportunity under Theresa May between July 2016 and Sep. 2019. While Sunak is by no means an environmental champion, campaigners are cautiously optimistic that he may bring the UK’s climate fight back from the brink, Time reports. This was cemented as Sunak received public backing from the “green” wing of the Tories on Tuesday. Truss’s short time at the helm of the world’s fifth largest economy was a whirlwind for British climate policy. A long-time advocate of smaller government and deregulation who modelled herself on Margaret Thatcher, Truss had expressed skepticism about the ambitious action needed to reach the UK’s 2050 net zero goal, which previous PM Boris Johnson had supported. Once in office, Truss immediately moved to outlaw solar power on most farmland, overturn a widely-supported ban on fracking, and scrap hundreds of laws and subsidy schemes designed to protect nature. Truss also chose Rees-Mogg, who has previously voiced doubt over the science behind manmade climate change, as head of BEIS.
Buildings’ efficiency – The Council of member states today agreed its position on the Energy Performance of Buildings Directive revision and part of the Fit for 55 climate policy package. The nations want to make all new buildings and existing buildings zero-emission by 2030 and 2050 respectively with exceptions will be possible for some buildings, including historical buildings, places of worship and buildings used for defense purposes. The bill now needs to be finalised in trilogue talks between bloc’s Council, the Commission, and Parliament.
Nice problem to have – Europe suddenly has more gas than it can use. Starved of the Russian imports on which its long relied, Europe has rushed to import LNG from around the world to fill up storage. Now, according to Bloomberg, a combination of unusually warm weather and successful bidding for cargoes means facilities are almost full before Europeans have even turned the thermostats up. Gas prices have also fallen back sharply, and are less than a third of their summer peak. But risks still lie ahead: much depends on the weather, and a cold snap would quickly see Europe dipping into its stockpiles. Governments are also on edge about the threat of more sabotage on energy assets that could upend the market. However, at the end of October, the continent is in better shape than policy makers dared hope, relief for the outlook for inflation and economic growth. And even as ships laden with LNG are waiting off the coast of Western Europe to unload at a cost of $450,000 per day, analysts warn the deluge of gas into the continent, nearly-full storage tanks, and warm weather could cause gas prices to plunge further, with energy and gas prices in many nations off by as much as 70% from their summer peaks. Essentially, the continent’s regasification and storage capacities are at or near their limit. At least one LNG tanker appears to have diverted to Asia in search of better prices, something unthinkable earlier this year when firms paid huge penalties to break Asian contracts in order to sell their LNG cargoes to Europe at inflated prices. Meanwhile, American LNG exports — currently reduced following the Freeport LNG explosion in Texas — are driving up domestic methane gas prices, likely squeezing families’ home heating budgets this winter. (Climate Nexus)
Who’s next? – Belgium is considering leaving the Energy Charter Treaty, potentially following Spain, Poland, France, and the Netherlands in exiting the pact on concerns they could get sued by energy companies for climate action, EurActiv reports. Belgium said recent reform proposals were “largely insufficient” but the European Commission defended the reforms on Monday, believing that “the results of the modernisation process respect the energy transition and climate objectives, as well as modern investment protection rules, which is particularly important in the current context where a wave of investment in green energy is expected,” a spokesperson of the EU executive told RTBF. They added that withdrawing from the treaty would mean “continuing to apply the old version of the Treaty to existing investments … for two decades,” which is one of the reasons why modernisation was chosen since the other option was “worse.” Read Carbon Pulse’s latest on the Energy Charter Treaty.
Back to the Matra at hand – As one of Europe’s most dependent countries on Russian fossil fuels, Hungary has seen its payments for imported oil and fossil gas climb from €4 bln in 2019 to an estimated €19 bln this year, Euractiv reports. Hungary’s international reserves are now so low, it has been forced to strike a deal with Gazprom for deferred payments just months after announcing a 15-year deal with the Russian state-owned utility. This stress has been exacerbated by the dire state of the forint, which fell to an all-time low against the euro earlier this month. It’s perhaps of no surprise then that the Orban administration felt compelled to declare an energy emergency earlier this year. Unfortunately, its seven-point plan rejects all opportunities to cut energy costs permanently through investments in renewable energy and energy efficiency, instead choosing to increase domestic fossil gas and lignite production, locking in more fossil-fuel-related problems in the future. Most concerningly, this includes relaunching several units and extending the lifespan of the country’s creaking Matra lignite power plant – one of the EU’s biggest polluters. More than 50 years after it entered operation, it’s still responsible for nearly half of Hungary’s total energy sector CO2 emissions, producing a paltry 11% of the country’s domestic electricity production in return. In Mar. 2021, the Orban administration rightly announced plans to stop burning coal by 2025, essentially setting a closure date for Matra, which made sense in light of Hungary’s climate targets and the facility operating at only half capacity while losing around €113 mln per year in taxpayer money. However, as energy prices surged over the summer, the Hungarian government lost its nerve and is now revisiting its coal phaseout plan. In a series of announcements last month, it said it intends to operate Matra until 2029 and to intensify lignite-based electricity production up to 2030.
Green Serbia – 83 innovative solutions have been selected to receive technical and financial implementation support under the EU for the so-called Green Agenda in Serbia initiative. In response to four public calls, local governments, companies, scientific research institutions and civil society organisations throughout Serbia submitted their environmental plans aiming to accelerate the green transformation, climate action and job creation. The UNDP is implementing the initiative with the financial support of the European Union and in partnership with Serbia’s Ministry of Environmental Protection, EIB Global, the Swedish embassy and the government of Switzerland.
Cleaning up the green – In a bid to clamp down on greenwashing, the UK’s Financial Conduct Authority (FCA) is proposing a package of new measures including investment product sustainability labels and restrictions on how terms like ‘ESG’, ‘green’ or ‘sustainable’ can be used. The measures are among several potential new rules which will protect consumers and improve trust in sustainable investment products. The work forms part of the commitment made in the FCA’s ESG Strategy and Business Plan to build trust and integrity in ESG-labelled instruments, products and the supporting ecosystem. There has been growth in the number of investment products marketed as ‘green’ or making wider sustainability claims. Exaggerated, misleading or unsubstantiated claims about ESG credentials damage confidence in these products. The FCA wants to ensure that consumers and firms can trust that products have the sustainability characteristics they claim to have.
ASIA PACIFIC
Climate budget – The Anthony Albanese Labor government in Australia delivered its first budget on Tuesday, which included A$20 billion in low-cost finance for the upgrade and expansion of Australia’s electricity grid – to unlock new renewables, increase the security of the grid and drive down power prices, according to a press release from the minister for climate and energy, Chris Bowen. This includes more than $6 billion already announced to help build Marinus Link and VNI-West transmission links to unlock green power from Tasmania to the Australian mainland. The budget established the A$1.9 billion Powering the Regions Fund, which will provide support to make sure traditional and new industries in regional Australia can harness the economic opportunities of decarbonisation. In a swipe at the former government, around A$42 mln will be provided to “restore Australia’s reputation and increase international engagement on climate change and energy transformation issues,” according to a summary of budget items from the new Department of Climate Change, Energy, the Environment, and Water.
Unexpected – Indonesian Minister of Investment Bahlil Lahadalia told a conference in Jakarta Monday that it is ‘unfair” and a “double standard” that EUAs trade for $100 each while voluntary offsets generated in Indonesia are only valued at around $10, reports news outlet Liputan6. Possibly unaware of the difference between a regional compliance market and the global voluntary market, Lahadalia called for “an equal distribution of prices” and said the price difference was the reason why there is still disagreements and arguments within the G20 over carbon markets.
CO2 know-how – An investment in petroleum production in Norway by Bangchak Corporation (BCP) gives the energy conglomerate a foothold to grow its upstream business, Bangkok Post reports. The company sees an opportunity to learn the Norwegian way to curb CO2 emissions from various activities such as oil and gas drilling, industrial production, and vehicle exhaust. BCP is a major shareholder in Norwegian oil and gas drilling firm, Okea, having acquired 47.5% share in the company in 2018.
Seaweed deal – A New Zealand First Nations tribe has just signed a Trans-Pacific seaweed research and farming deal with Blu3, a California-based climate tech company, Axios reports. The joint venture represents a way for the Te Whanau-a-Apanui to preserve tribal sovereignty and build economic resilience while innovating solutions to mitigating climate change, and will include several research and commercial projects, focusing on the potential of seaweed to capture and store carbon, as well as ways it can be used in food, bioenergy, construction and biopharmaceuticals.
AMERICAS
Damage control – More than 140 US environmental groups on Monday called on climate envoy John Kerry to support creating a financial entity to compensate countries harmed by the impacts of climate change. The letter is the latest illustration of the expanded role of “loss and damage” at the UN’s upcoming COP27 climate conference next month. Rich countries overwhelmingly responsible for climate change have historically refused to compensate vulnerable countries, but are under increasing pressure to do so. The US rejected a proposal last year at COP26 because it did not specify if some countries could be held legally liable for damages caused by climate change, a US official told Reuters. (Climate Nexus)
Mitigation situation – Mexico will reportedly focus on adaptation, loss and damage, and human rights at COP27, but the Central American nation has encountered a hitch in readying its mitigation plans, with its current plan suspended by a court since 2021. In Mar. 2021, Greenpeace filed a legal complaint against the Mexican state for failing to increase ambition of its NDC, when an update was presented in late 2020. The case saw a court suspend Mexico’s 2020 NDC update for dialling back ambitions on a peak emissions date and emissions reductions by 2050, and for allowing an additional 14 Mt of GHG output. On these issues, the commitments of the 2015 NDC were reinstated until a review was completed, but with only weeks to go until COP27, these have still not been finalised, and the case remains without resolution. (Dialogo Chino)
Reprieve for coal – Nova Scotia’s government introduced legislation last week that would effectively freeze electricity rates – a move observers said could delay retirement plans for the province’s coal-fired power plants, The Globe And Mail Reports. Bill 212, which underwent first reading on Wednesday, would compel the Nova Scotia Utility and Review Board to grant Nova Scotia Power a rate increase no greater than 1.8% between now and 2024 – far less than the utility had requested. The legislation effectively bypasses the utility board, which normally sets the rates that electric utilities charge customers after a lengthy hearing process. Scott Balfour, president of Emera Inc., the utility’s parent company, said an annualised rate increase of 0.6% won’t even keep pace with inflation, let alone allow the utility to make the investments necessary to meet provincial requirements to close and replace coal-fired power plants by 2030.
Making the cut – Maryland achieved a 30% reduction in statewide GHG emissions from 2006 levels in 2020, which exceeded its Greenhouse Gas Emissions Reduction Act (GGRA) target of a 25% reduction by that year, the Maryland Department of the Environment (MDE) announced Tuesday. Maryland is roughly on track for meeting its 2030 GGRA Plan targets — with some room for improvement in ZEV adoption, clean energy generation, and building electrification — but meeting those targets would not achieve Maryland’s new goal of reducing statewide GHG emissions 60% by 2031. MDE is required to produce a new GHG reduction plan for the state by June 2023.
VOLUNTARY
Not far from the tree – Apple on Tuesday unveiled its plans to expand renewable power, conserve forests, and further cut emissions from its mammoth supply chain. The tech giant aims to “facilitate” the construction of enough new European wind and solar projects to “power all Apple devices on the continent with low-carbon electricity”, and called on its global supply chain to fully decarbonise by 2030 and pledged deeper cooperation. Separately, Apple announced initial investments from the $200 mln “Restore Fund” unveiled last year to promote CO2 removals. These first steps are aimed at restoring and protecting 250,000 acres of forests, grasslands, and wetlands in Brazil and Paraguay, and remove 1 Mt annually by 2025. (Axios)
AND FINALLY…
Going private – Publicly-traded companies are selling off their fossil fuel operations to private equity firms and — on paper — lowering their GHG emissions in the process. “Public investors like mutual funds, hedge funds, university endowments, pension funds — they are actively shifting away from fossil fuels,” Pavel Molchanov, managing director of renewable energy and clean technology at financial services firm Raymond James, told Inside Climate News. “As public investors are divesting fossil fuels, someone’s buying it. They’re not disappearing into thin air.” Harold Hamm’s Continental Resources announced last week it plans to take itself private is consistent with the cross-sector trend of companies — including BP, ExxonMobil, Shell, and ConocoPhillips — moving fossil fuel operations into corporate structures shielded from public disclosure requirements. Governments and investors are pressuring publicly-held firms to disclose, if not actually reduce, their emissions and firms are responding by moving the emissions off their books. Beyond accounting pitfalls, however, the moves can actually lead to increased climate pollution because the private firms often operate coal plants or ‘marginal’ oil and gas wells longer than publicly traded firms would have, and are more likely to abandon drilling operations sticking taxpayers with the bill to cap and clean up the abandoned wells, or fail to remediate refineries that literally rain oil onto neighbouring communities. (Climate Nexus)
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