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TOP STORY

FEATURE: Fuelling the fire – Europe’s burning demand for wood heaters to escape carbon pricing

Emissions resulting from the EU’s scramble to burn wood to heat homes last year are set to remain outside the scope of the bloc’s carbon pricing system, with residential biomass burn poised to retain its definition as a green activity despite ongoing discussions around its sustainability.

VOLUNTARY

INTERVIEW: Poor demand, rather than quality, undermines the voluntary carbon market’s shift to standardisation

Poor demand rather than concern about the quality of supply has undermined attempts to introduce standardised products in the voluntary carbon market (VCM), a senior executive at the Intercontinental Exchange (ICE) told Carbon Pulse ahead of the bourse’s first auction of offsets.

AMERICAS

Canada finalises first-in-the-nation refrigerant offset protocol

The Canadian government on Friday published a refrigerant carbon credit protocol that will apply nationwide under the federal offset system, as it unveiled further details of other methodologies currently under development.

Oregon Clean Fuels Program hits record net deficit in Q3 on surging fossil fuel obligations

The Oregon Clean Fuels Program (OCFP) generated the highest quarterly net deficit in its history during the third quarter, pending residential EV charging credits that are issued biannually, as deficit generation from gasoline and diesel soared to record levels, according to state data published Thursday.

US Carbon Markets and LCFS Roundup for week ending February 24, 2023

A summary of legislative, regulatory, and policy action on carbon, clean fuel standard, and clean energy markets at the US federal and subnational levels this week, including planned legislation to eliminate RGGI in Pennsylvania and committee passage of a clean transportation fuel standard bill in New Mexico.

Emitters’ WCI, RGGI net long positions unravel amid January expiry, as publication of backlogged data starts

The US Commodity Futures Trading Commission (CFTC) on Friday began publishing delayed Commitments of Traders reports following a cyber attack on the agency’s third-party data provider several weeks ago, showing that compliance entities in the WCI and RGGI markets saw their net long positions unwind as the January contract went to delivery.

EMEA

South Africa looks to introduce trading component to carbon tax programme

The South African government is taking steps towards introducing a tradeable component to the country’s carbon tax regime.

Rwanda to announce international carbon plans in April -media

Rwanda will in April outline its plans for involvement in international carbon markets including those under Article 6 of the Paris Agreement following consultations and studies that are currently under way, its minister of environment was reported as saying by a domestic media source.

Chemicals giant to cut carbon-intensive EU capacity citing energy costs

One of the world’s largest industrial firms will substantially reduce its ammonia production capacity in Europe, citing in full-year results on Friday the soaring cost of energy and weakening regional “competitiveness”.

Euro Markets: EUAs post modest weekly increase after testing €100 for third time in a week

European carbon posted a modest week-on-week gain on Friday as prices recovered from their sell-off in the wake of Tuesday’s record high, with traders seeing short-term strength as the compliance season nears its peak despite strong selling at the €100 level.

Germany sells 217 mln emissions permits in 2022 under domestic carbon tax, raises €6.4 bln

The German government sold a total 217 mln emissions certificates in 2022 under the country’s domestic carbon tax scheme for transportation and heating sectors (nEHS), it announced on Thursday, raising some €6.4 billion in revenues.

ASIA PACIFIC

CN Markets: CEA, CCER trading volumes shrink amid lingering lack of regulatory certainty

Trading volumes in China’s compliance and voluntary carbon market both dropped over the past week despite an uptick in prices, as sentiment remains negative due to the lack of policy clarity.

BIODIVERSITY (FREE TO READ)

GreenCollar Group expects first NaturePlus credit issuance at the end of next month  

Australian crediting developer GreenCollar Group expects the inaugural issuance of its world-first NaturePlus biodiversity credit at the end of next month, as the Australian government extends the consultation period on its nature repair market.

UK risks biodiversity funding shortfall with ministers facing “difficult choices” -govt

The UK will face significant challenges to fund its biodiversity and net gain plans with ministers expected to face “tough choices”, according to a senior civil servant speaking at an event Friday.

COMMENT

Evolving climate science, carbon accounting, and the need to support urgent action

The ongoing need to evaluate and refine accounting methods, incorporating new data and new understanding, is not a fatal flaw in the AFOLU market, rather it is a natural and essential process so that market-based finance can be delivered more efficiently and urgently to fight climate change and conserve forests around the world, write David Shoch, Scott Settelmyer, and Rebecca Dickson, of TerraCarbon LLC.

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CONFERENCES

Argus Asia Carbon Conference – Mar. 14-16, Sarawak, Malaysia: Organised by Argus Media in collaboration with the Ministry of Energy and Environmental Sustainability Sarawak (MEESty), and with host sponsor Samling Group, the Asia Carbon Conference will take place on Mar. 14-16 in Kuching, Sarawak, Malaysia. Join us for the first industry leadership conference for carbon offsetting and trading in Asia to get ahead of your competitors in a rapidly growing global market. This is your opportunity to interact, learn, and network, for the answers you need on fundamental questions about carbon offsets: how do they work, and how might they impact Asia? Find out more

North American Carbon World (NACW) 2023 – Mar. 21-23, Anaheim: For 20 years, the NACW conference has been the place for carbon professionals working in North American carbon markets and climate policy to learn, collaborate, and network. Taking place Mar. 21-23 in Anaheim, California, NACW 2023 will dive into new policies and developments that will shape and scale carbon markets and climate solutions with integrity, ambition, and equity. Register now to gain actionable insights for bold climate solutions and participate in premier networking opportunities with an active and engaged audience to strengthen your organization’s strategy for navigating the carbon landscape.

European Climate Summit (ECS 2023) – Mar. 28-30, Lisbon: Registration for the 5th edition of the European Climate Summit organised by IETA and partners is open. The ECS brings together leading private sector experts and policymakers from both the carbon and energy world, to analyse and discuss the current developments and pressing challenges. The summit provides a discussion and networking forum for policymakers, business leaders, and innovators involved in building, scaling, and collaborating on markets for net zero. The event will feature high-level plenaries, cross-cutting deep dives, interactive side events, and quality networking opportunities. Registration here

ANNOUNCEMENT

Call for Expression of Interest to join the Climate Action Data Trust User Forum. Climate Action Data Trust has launched a Call for Expression of Interest to join the CAD Trust User Forum. The Initiative is looking for a variety of stakeholders across the carbon market value chain, from both the public and private sector. The purpose of the User Forum is to act as a market sounding board for the Council and the Technical Committee on business, policy, and technical matters. CAD Trust is a decentralised meta data platform that links, aggregates and harmonises all major carbon registry data to enhance transparent accounting in line with Article 6 of the Paris Agreement. Deadline for applications extended to Feb. 28, 2023.

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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

Speakage about leakage – Climate legislation passed between 1996 and 2016 has not had a significant net impact on trade-related emissions, commonly known as carbon leakage, according to a new study published in Environmental and Resource Economics. “We find that the passage of new climate laws has had no significant impact on trade-related carbon emissions and a negative long-term effect on international production emissions,” the study, by Shaikh Eskander and Sam Fankhauser of the Grantham Institute at the London School of Economics, concluded. The paper analyses the difference between countries’ production emissions and consumption emissions to estimate trade-related carbon leakage in 111 countries.

ETA’s arrival – The US Department of State, The Rockefeller Foundation, and the Bezos Earth Fund on Friday held the first meeting of the High-Level Consultative Group (HLCG) providing input on the design of the Energy Transition Accelerator (ETA), a joint initiative to catalyse private capital to accelerate the transition from fossil fuel to clean power in developing countries. The three partners introduced the broad outlines of the ETA in November during the UN COP27 summit in Sharm el-Sheikh. Together, they are undertaking an inclusive process to design this innovative initiative in the lead up to COP28 this December in Dubai. The ETA partners last month announced the formation of the high-level group and a preliminary set of participants in January, along with a set of principles to guide the ETA’s design. Today, the partners announced the full set of HLCG participants, which includes the head of, or high-level officials from, the IEA, UNEP, UNDP, EBRD, IETA, SBTi, NRDC, WRI, Sierra Club, Salesforce, Integrity Council for the Voluntary Carbon Market (ICVCM), Voluntary Carbon Markets Integrity Initiative (VCMI), IRENA, WWF, Bank of America, and the European Climate Foundation. The aim of the ETA is to help keep a 1.5C limit on warming within reach by driving private investment in the implementation of energy transition strategies that deliver deeper, earlier greenhouse gas reductions in developing countries. The ETA will seek to leverage the growing demand for high-quality carbon credits to scale up finance to accelerate the deployment of clean power and the retirement of fossil fuel assets in developing countries. In addition to reducing emissions, finance generated by the ETA will support developing countries in expanding clean energy access and creating jobs and economic growth. The ETA also will generate new finance for adaptation efforts in vulnerable countries.

EMEA

Miserable milestone – On the first anniversary of Russia’s invasion of Ukraine, the Guardian outlines the environmental destruction wrought on the country. It details a new map that aims to hold the aggressor to account for a compensation claim that currently stands at more than $50 bln. Manufacturing of missiles and other weapons causes pollution and emits CO2, as do the explosions and fire they ignite. The war is so far responsible for 33 MtCO2 and postwar reconstruction is estimated to generate another 48.7 Mt. With the largest untapped potential for solar and wind energy in Europe, Ukraine is perfectly positioned to replace a previous dependence on Russian oil and gas imports with renewable electricity sources, writes Iryna Stavchuk of the European Climate Foundation and a former Ukraine climate minister. In an article for EurActiv, Stavchuk writes on what’s required to rebuild her war-torn country and develop a secure, green energy system, the benefits of which could be felt far beyond its borders. Read Carbon Pulse’s report of last year’s Ukraine Recovery Conference in Lugano, which aimed to pave a way towards a green rebuild, as well as this feature article on how the escalation of war in Europe threatens global net zero goals. To mark the anniversary, German Chancellor Olaf Scholz said Russia’s attempt to blackmail Germany and the rest of Europe into giving up its support of Ukraine by cutting energy supplies has failed. He stressed that the German government had succeeded in weaning the country off Russian energy supplies at unprecedented speed, taking away most of the leverage the Russian government had over western Europe due to its energy rich resources.

Cooling Accra – Swiss fuel importer foundation Klik is funding a programme to introduce clean cooling technology across Ghana, another of its Article 6 initiatives to generate carbon credits that Switzerland can put towards its Paris Agreement pledge. The programme, in its early design stages, has the main objective to shift Ghana’s air-conditioning (AC) sector towards low carbon cooling by paving the way for ACs with high energy efficiency and the use of low GHG emitting refrigerants. The split AC sub-sector currently has a large impact on Ghana’s emissions balance, accounting for about 8% of national GHG emissions. Read Carbon Pulse’s analysis on how Ghana is emerging as a global front-runner on Paris Agreement-era carbon sales.

ASIA PACIFIC

Ship it to net zero – South Korea’s maritime ministry (Mof) has announced its strategy to decarbonise the shipping sector by 2050, with a focus on hastening the transition to what it terms as “eco-friendly” vessels, Argus reports. The roadmap is a pre-emptive response to stricter decarbonisation regulations by the International Maritime Organisation (IMO) and the international community, including Europe, Mof said. Mof expects the IMO in July to raise its international maritime carbon emission reduction target from 50% to 100% by 2050, in addition to more economic regulatory measures such as a carbon levy system. The 80th session of the Marine Environment Protection Committee will be held in July, and is expected to adopt the revised IMO Strategy for Reduction of GHG Emissions from Ships, according to the IMO. Mof sees “significant ripple effects” stemming from the tighter regulations on the shipping industry, since charging a certain amount for each tonne of carbon emitted will directly raise transportation costs for shipping firms. This will consequently make it “inevitable” for firms to switch to carbon-neutral fuels in order to stay competitive. The Mof has consequently laid out its four-point strategy to achieve carbon neutrality in the shipping sector by 2050, in what it describes as a first in Asia.

With friends like that – Aggressive policy moves by the US to fast-track its renewable energy industry – namely the $738 bln Inflation Reduction Act (IRA) – could drastically undermine Australia’s future green hydrogen exports unless urgent public and private action is taken, a new report has warned, RenewEconomy reports. The strongly-worded Deloitte report warns that a failure to aggressively pursue major-scale hydrogen development could shrink Australia’s hydrogen exports by 65% by 2050 versus forecasts before the IRA’s introduction. “This could mean that renewable hydrogen never reaches a comparable scale with our current fossil fuel exports, with implications for our balance of trade and clean manufacturing aspirations,” Deloitte says. Australia’s federal Labor government has previously said that by 2050, Australia’s hydrogen industry could generate A$50 bln in additional GDP and create over 16,000 jobs, as well as an additional 13,000 jobs from the construction of renewable energy infrastructure to power the production of green hydrogen. Renewable hydrogen is widely seen by backers as a way to decarbonise hard-to-abate industries, such as heavy transport, metals refining and fertiliser production. Deloitte says Australia’s competitive position in renewable hydrogen could tip the playing field back in its favour as a manufacturing economy by lowering input costs and accelerating agglomeration effects in industrial clusters.

AMERICAS

Accelerated Alta –  Calgary-headquartered power generation company TransAlta is ramping up its plans to become net zero by 2045 from the previous target of 2050, the company announced in a press release on Friday. The company also announced C$7 mln in pre-tax earnings and 200 MW of renewable growth projects. Among the renewable projects are the Horizon Hill wind facility in Oklahoma and the Mount Keith 132kV transmission expansion in Western Australia. TransAlta said it has reduced its annual carbon emissions by 2.3 Mt, or 18% compared to 2021.

VOLUNTARY

Burning desire – CSAA Insurance Group made a $25 mln commitment to the California Wildfire Innovation Fund, a climate-solutions strategy to help reduce the severity and frequency of catastrophic wildfire by supporting forest restoration-related economic development, Carrier Management reported Thursday. The fund was developed by CSAA Insurance Group in partnership with Blue Forest, the non-profit behind the Forest Resilience Bond, which deploys private capital to finance forest restoration projects for wildfire prevention. The California Wildfire Innovation Fund targets emerging investment opportunities in forest restoration, wood utilisation, and wildfire mitigation. Emphasis is placed on industries and projects that add system capacity, create value for forest restoration byproducts, and unlock carbon offset revenue through CCS.

SCIENCE & TECH

Geo-DAC – Fervo Energy has spent the last six years developing new ways to drill deep below the Earth’s surface, with the aim of harnessing geothermal resources that are too costly or difficult to reach using traditional methods. Now the Houston-based startup is turning its attention to the sky. On Thursday, Fervo Energy said it plans to design and engineer a DAC system that removes CO2 from the atmosphere, using geothermal energy to power its operations, Canary Media reported Thursday. The project is supported by a grant from the Chan Zuckerberg Initiative, the philanthropy run by Facebook founder Mark Zuckerberg and his wife Priscilla Chan. The new, unspecified amount of funding from the Chan Zuckerberg Initiative will help Fervo to both use geothermal resources to provide ​“24/7 carbon-free” power and heat to DAC systems, as well as to explore the potential of geothermal reservoirs for storing CO2 once it’s captured from the sky.

The dirt on soil carbon – Forest soil is a larger carbon storage than trees, and forest management affects soil greenhouse gas (GHG) emissions and carbon sinks, phys.org reports, citing a publication by the international HoliSoils project, based in Finland, which emphasised that the European forest sector needs a comprehensive understanding of the carbon sequestration potential of soils. This will help design climate change mitigation measures elsewhere. Global studies on forest carbon sinks often focus on wood biomass, wood product sinks, or various offsetting effects, while analyses of soil carbon sequestration potential have largely focused on afforestation or avoiding deforestation. Furthermore, current tools and scenario analyses used to support decision making focus on the carbon sinks of growing trees. However, “the impact of forest management on soils is less studied and is treated in a highly simplified way in decision-making, even though forest management is crucial for achieving carbon neutrality objectives for terrestrial ecosystems. Soil is the largest carbon storage in the forest, and it can be either a large sink or a source of GHGs, which are affected by forest management decisions,” says research professor Raisa Makipaa from the Natural Resources Institute Finland.

AND FINALLY…

Logging off – The extraction and combustion of fossil fuels pollutes the air we breathe, while the impacts of climate change could actually deprive us of something at least as elemental to life as we know it – the internet. New research published in Earth-Science Reviews warns damage from extreme weather events, and the impacts of melting polar sea ice, could damage transglobal undersea cables. “Our reliance on cables that are no wider than a garden hose is a surprise to many, who regard satellites as the main means of communication,” lead author Mike Clare said in a statement. “But satellites simply don’t have the bandwidth to support modern digital systems. The ‘cloud’ is not in the sky — it is under the sea.” Damage to undersea cables from specific human activities, like fishing operations and anchor strikes, are far more common than major storms. However, hurricanes and typhoons can inflict greater damage, such as by undermining the stability of the continental shelf, across a much wider area, knocking out cable systems across whole regions. (E&E News, Climate Nexus)

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