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TOP STORY

ANALYSIS: UK carbon price discount to EUAs widens amid falling demand and “policy gap”

The discount in UK Allowance (UKA) prices to their EU counterpart has widened to the most since the British market was launched, as traders price in a variety of bearish factors that point to a UK market lengthening at the same time as Europe tightens its targets.

EMEA

Verified EU ETS emissions rose slightly in 2022, European Commission confirms

Verified emissions covered under the EU ETS rose marginally last year, the European Commission said late Monday, confirming findings based on preliminary data released earlier this month.

Bank of France chief urges global carbon pricing as leading decarbonisation tool

The governor of the French central bank has urged the rapid rollout of global carbon pricing as one of the main tools for meeting climate goals, speaking at an event in London, with one senior investor also calling for a price of $150/tonne “over the next few years”.

North Sea nations sign pledge to develop “renewable energy powerhouse”

Leaders from seven countries vowed to ramp up offshore wind power capacity to 120 GW by 2030 and 300 GW by 2050 at the second North Sea Summit in the Belgian town of Ostend on Monday, an event also attended by European Commission President Ursula Von der Leyen.

Euro Markets: Prices extend decline amid further bearish shift in sentiment on end of compliance

EU carbon prices dropped below key technical levels on Monday as the approaching end of the annual compliance cycle has begun to depress industrial demand, though some analysts saw potential for a last-minute rush of buying in the next two days, while UKAs snapped an eight-day losing streak.

Green groups call for inclusion of incineration in UK carbon market

Green groups are urging the UK government to include waste incineration in the UK ETS place a ban on new energy-from-waste units in the country.

ASIA PACIFIC

South Korea looking to fund international emissions reduction projects

South Korea is calling for proposals for international demonstration projects in order to kickstart its participation in the Paris Agreement carbon market.

Australia Market Roundup: AGL begins final shutdown of Liddell coal power station, ACCU price slides

AGL Energy on Monday began its phased shut down of the 52-year-old Liddell coal fired power station, as the price of Australian Carbon Credit Units (ACCU) slipped amid limited trading.

Big Chinese power producers to see better days ahead, more focus on renewables

China’s top independent power producers (IPPs) stand to benefit from moderating coal prices over the next twelve months, lifting their credit profiles and enabling them to be better placed to execute China’s energy transition goals, research from a ratings service has found.

Australian carbon news provider shuts down

An Australian news website specialising in domestic climate and carbon policies this month ceased publication and has begun contacting subscribers for refund arrangements.

AMERICAS

California cap-and-trade review bill set to pass first legislative committee

A California Assembly committee on Monday was primed to send along legislation that would direct the state government to evaluate certain areas of the state’s WCI-linked cap-and-trade regulation and mandate that any resulting reforms take effect by 2025.

RGGI Market: Lower demand, upcoming power sector emission rules drive near-term weakness

RGGI Allowance (RGA) values slid over the week as demand fizzled out amid expectations for lower CO2 output and excess gas and coal stocks, and as traders anticipated upcoming federal electricity sector emissions rules to replace the scuttled Clean Power Plan.

California transportation fuel consumption inches up in January

California gasoline sales increased year-on-year in January amid lower retail prices, while diesel consumption slid, according to state data published Monday.

US could require 2 bln tonnes of annual carbon capture to hit 2050 climate goal

The US may need to capture and store nearly 2 billion tonnes of CO2 per year in order to hit the country’s mid-century net zero emissions target, according to a government report published Monday.

VOLUNTARY

Business alliance to launch voluntary carbon credit buyers’ hub as market difficulties persist

A global business organisation will launch a carbon credit buyers’ hub to help build confidence among companies that they are buying quality units, a conference heard on Monday, with other speakers noting the complementarity to the ongoing work under the Integrity Council for the Voluntary Carbon Market (ICVCM).

VCM Report: Huge REDD issuance weighs on market to keep prices heading lower

Offset prices fell over the past week as the market was weighed down by another surge in available offsets, particularly in the REDD avoided deforestation market.

Veteran carbon analyst accepts director role at Xpansiv

A veteran emissions market analyst has joined voluntary carbon marketplace operator Xpansiv.

INTERNATIONAL

UK govt supporting call for proposals to build sea level rise resilience through new financial, insurance products

The UK government is supporting a call for proposals for projects to build resilience to sea level rise through innovative and scalable finance and insurance products.

Shipping, mining firms incorporate carbon pricing mechanism into freight contract

A shipping firm and a mining and metals company have incorporated a carbon pricing mechanism into their existing contract of affreightment (COA).

BIODIVERSITY (FREE TO READ)

Nature markets “on the cusp” of a financial revolution, says expert

The way nature and biodiversity appear in global financial markets is on the edge of a revolution but they will be treated in a fundamentally different way to carbon, according to a senior member of the Taskforce on Nature-related Financial Disclosures (TNFD), speaking at an event in the UK on Monday.

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CONFERENCES

City Week 2023 – April 24-26, London: City Week event brings together more than 1,000 top-level senior decision-makers from UK and overseas financial institutions for a comprehensive programme of cutting-edge presentations, panel discussions, and networking. This year’s forum will feature many well-known names from the global financial services industry, the world of politics and the international regulatory community. Day 1 has been set at the Climate Change, Green Finance and Sustainability Summit. The 13th annual edition of City Week will be held in-person at Guildhall, London, and also streamed live on our media channels. As in previous years, CW2023 is being organised in partnership with the UK Government, the City of London Corporation, TheCityUK, UK Finance and leading City institutions. Carbon Pulse readers can enjoy a 20% discount on tickets. Register here and use code CITY14CP.

Carbon Forward Asia – May 2-3, Singapore/Online: Carbon Forward is coming to Asia! Join us in Singapore or watch the conference online, and gain valuable insights into the trends and developments in carbon pricing throughout the Asia Pacific region. We will discuss investment opportunities across compliance and voluntary carbon markets, as well as transport initiatives such as CORSIA and SAF for aviation and shipping sector programmes, the impact of the EU’s carbon border adjustment mechanism (CBAM), CCS crediting, developments under Article 6 of the Paris Agreement, corporate climate goals, and other exciting topics. The confirmed attendee list is approaching 200 people. Purchase your tickets now, before they sell out!

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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

Those opposed – Norway’s $1.4 trillion sovereign wealth fund, one of the world’s largest investors, said on Saturday it will vote against a resolution calling on British oil major BP to adopt tougher GHG targets. While BP already aims to reduce emissions, the motion filed by activist group Follow This ahead of an Apr. 27 shareholder vote calls on the company to align with the Paris Agreement’s goal to limit global warming. Norges Bank Investment Management (NBIM), which operates the Norwegian fund, said last year that it plans to take a tougher line on companies that do not adopt credible climate plans. It did not give a reason for rejecting the motion, but the fund has said in the past that while it sometimes backs ESG proposals put forward by activist groups, it carefully judges each case on its merits. The Norwegian fund, itself built on oil and gas revenue, owned 2.73% of BP’s shares worth some $2.8 bln at the end of 2022. (Reuters)

Nuclear lifetimes – Hungary aims to extend the lifetime of its sole nuclear power plant by 20 years to bridge major delays to its Russian-managed expansion, according to a senior official as Bloomberg reports. Extending the operation of the Paks plant in southern Hungary will maintain the source of about 40% of the country’s electricity consumption. The government is currently assessing safety issues after previous 20-year extensions to the four existing reactors in the last decade. Germany recently closed its last remaining plants.

Big raise – A Swedish start-up backed by the Agnelli, Wallenberg, and Maersk families is seeking to raise more than €1.5 bln of equity funding to further its ambitions of building steel plants with virtually no carbon emissions, the FT reports. H2 Green Steel, which is also backed by Mercedes, Scania, and Spotify’s chief executive, is in the earlier stages of seeking the new funding and is working with advisers from Morgan Stanley. H2GS confirmed that it had begun the final part of its financing strategy to raise more than €5 bln, including €3.5 bln in debt.

Saving on bills – A €450 mln scheme will help support gas-intensive manufacturing companies in Spain, the EU executive announced on Monday. The aid will take the form of direct grants, to mitigate the increases in the price of gas incurred by companies and that cannot be passed on to final consumers. It will not exceed 50% of the eligible costs for the maximum aid ceiling of €4 mln or 40% of the eligible costs for the maximum aid ceiling of €25 mln, and it will be granted before 31 December 2023.

AMERICAS

Powering EPA rules – The US EPA is expected to require new and existing fossil fuel power generation plants to install carbon capture and storage (CCS) technology or source zero-emission renewable energy, in upcoming standards and rules to be released as early as this week, Reuters reported Sunday. The new rules that are a year in the making would align with US President Biden’s pledge to decarbonise the power sector by 2035. Last year, the US Supreme Court prevented the agency from enacting rules that forced a system-wide shift in electricity generation, ruling against the EPA’s claims that it had the regulatory authority to curtail emissions based on a generation shifting approach. Former President Obama (D) had attempted to engage in a generation shifting approach under the Clean Power Plan (CPP), which the Supreme Court halted with a stay in Feb. 2016. Lissa Lynch, director of the environment advocacy Natural Resources Defense Council (NRDC) noted that the agency could set less stringent standards for “peaker” plants that run during high power demand. According to US Energy Information Agency data, 60% of US electricity generation in 2022 was from fossil fuels, of which gas plants supplied 60% of power and 40% was from coal.

State’s right – The US Supreme Court on Monday allowed lawsuits brought by municipalities seeking to hold energy companies accountable for climate change to move forward in a loss for business interests. The court turned away oil company appeals in five cases involving claims brought by cities and municipalities in Colorado, Maryland, California, Hawaii, and Rhode Island as part of efforts to hold businesses accountable for the effects of climate change. The relatively narrow legal issue is whether the lawsuits should be heard in state court instead of federal court. Litigants care because of the widely held view that plaintiffs have a better chance of winning damage awards in state court. (NBC News)

Texas turn – Several bills to incentivise natural gas-powered electricity have passed the Texas Senate, threatening the renewable electricity boom in the state synonymous with fossil fuels, E&E News reports. The Lone Star state leads the nation in wind power generation and is second in solar generation only to California. One bill would see the state develop their own gas power plants, while others would add fees for grid connection to renewable energy projects, or require them to pay for backup power. The bills are now being considered in the similarly Republican-controlled House of Representatives.

SRE stay switch – The US Court of Appeals for the District of Columbia Circuit on Monday denied a request from two Sinclair Oil Corporation facilities to reinstate their small refinery exemptions (SREs) under the Renewable Fuel Standard (RFS) while argument on the merits of the lawsuit play out. The EPA had denied the SREs to Sinclair last year after President Joe Biden’s (D) administration changed the methodology for how the adminsitration determined disproportionate economic hardship caused by the RFS for small refiners. It also reversed the court’s previous decision last month to suspend the EPA’s denial of compliance relief to Sinclair. The court decision on Monday laid out a briefing schedule for arguments on the case through mid-December.

ASIA PACIFIC

Green collaboration – The Monetary Authority of Singapore (MAS) and its Chinese counterpart, the People’s Bank of China, will deepen cooperation in green and transition financing between the two countries, The Straits Times reports. This will be spearheaded by a newly formed Green Finance Taskforce (GFTF), which will also encourage greater collaboration between the public and private sectors as Asia transitions to a low carbon future. At its inaugural meeting in Chongqing on Friday, the task force discussed initiatives that will boost green and transition financing flows among Singapore, China, and the broader region. For now, priority will be in three areas – establishing definitions and taxonomies, strengthening bond-market connectivity between Singapore and China, and exploiting technology that will pave the way for the adoption of sustainable financing.

Not gonna happen – The message to green hydrogen producers in India who might be thinking of the steel industry as a market is: perish the thought. Green steel production in India is unlikely to happen anytime soon, perhaps never, The Hindu Businessline reports. Green steel, or the steel produced through processes that do not emit carbon dioxide, essentially means using hydrogen as the reducing agent (remover of oxygen) in steel production. In other words, iron ore is basically iron oxide and hydrogen is used to pull oxygen away from iron oxide, leaving pure iron behind—to which a little carbon is added to make steel. Right now, carbon, in the form of coke, has been used for pulling away oxygen; when carbon joins hands with oxygen it becomes carbon dioxide (CO2), which is today mankind’s greatest enemy. Hydrogen can do the job of coke just as well. It now emerges that much of Indian iron ore is unsuitable for making green steel. According to Australia’s Commonwealth Industrial and Scientific Research Organisation (CSIRO), which is the country’s publicly funded research organisation and an expert in mines and minerals, 66% of India’s (and Australia’s) iron ore is not suitable for being made into green steel. That said, Indian steel maker Tata Steel on Monday said it had initiated a trial for injecting hydrogen gas at its blast furnace in the company’s flagship plant, in a move to reduce metallurgical coke usage and cut emissions, Reuters reported. The company commenced the trial injection at the plant in the eastern city of Jamshedpur, using 40% of the injection systems on Sunday, Tata Steel said in a statement.

Electrolyser from down under — Australian hydrogen company Fortescue Future Industries aims to begin production of hydrogen electrolysers later this year at its new Queensland factory after delivering its first in-house prototype, RenewEconomy reports. FFI chief executive Mark Hutchinson says the facility was built on time and under budget, and is now looking at using its own Australian-made PEM (polymer electrolyte membrane) technology following the collapse of a deal with US-based Plug Power last year. Hutchinson re-iterated that FFI has at least five major hydrogen projects across the world that could reach financial investment decisions (FID) by the end of 2023. These include two in the US – in Arkansas and Texas – that will look to supply green hydrogen for heavy transport, one in Kenya looking at green ammonia for local fertiliser use, one in Brazil looking at green ammonia for export, and another in Norway looking to export green ammonia to Europe. There is also a proposal to convert an existing gas-fed ammonia facility at Gibson Island near Brisbane into a renewables-fed green ammonia facility, also likely for export to Asia. Hutchinson urges the Australian government to step up and seek to match at least some of the incentives offered by the US government’s Inflation Reduction Act.

Bettering standards – China has issued guidelines for the construction of a “standard system for carbon peaking and neutrality’ as part of its effort to realise climate goals, according to documents jointly published by the country’s Standardization Administration and ten other government bodies. The government aims to build a standard system that covers the criterion for emissions reduction, carbon removal and the development of carbon markets, with no less than 1,000 national and industry standards to be launched or revised by 2025, the document said. The policy development is in line with an implementation plan released last year to establish a wide range of emissions-related standards over the coming few years.

VOLUNTARY

DuPont ups its dues – DuPont, the chemical producing giant, raised its Scope 1 and 2 GHG emissions targets on Monday to 50% by 2030 after surpassing its initial goal of 30% by the end of 2022, Reuters reported. The company also set a new Scope 3 GHG emissions reduction target of 25% below 2020 levels by the end of this decade. DuPont will additionally require suppliers to disclose their emissions as part of their Scope 3 initiative.

Buhler, Buhler – Vancouver-based ESG investor DevvStream is entering into an exclusive carbon credit management project with gas infusion technology firm, Prosper Technologies, the company said in a press release on Monday. Prosper Technologies’ patented process reduces energy consumption in industrial plants by 85%. DevvStream will acquire the rights to the carbon credits created by Prosper for an undisclosed amount. DevvStream also announced its appointment of German business professor Michael Max Buhler to its board of directors.

Carbon shore – Formosa Plastics has awarded a grant to Houston-based regeneration organisation BCarbon for a blue carbon credit project restoring a shoreline near Port Comfort, Texas, according to a press release from BCarbon on Monday. The project area is near the Formosa Plastics production facility. The BCarbon Living Shoreline Blue Carbon protocol will be used for the project’s carbon credit production. Creating a living shoreline will include building an oyster reef-breakwater, the announcement read.

AND FINALLY…

Pension plan – Craig Cohon has had an unusual career. The 59-year-old Canadian helped bring Coca-Cola to Russia in the early 1990s and co-owned Cirque du Soleil in the country. He once managed an opera singer and has worked for the World Economic Forum. Those decades of globetrotting took their toll on the planet. When Cohon decided to calculate his lifetime carbon footprint, factoring in everything from his adult travels to his childhood diet, he pegged it at 8,147 tCO2e – 28 times the global average. “I feel like I am 100% accountable and 100% guilty of my personal damage to the world, and I’m 100% not to blame, because I was unaware at a deep level of the unintended consequences,” Cohon said. “But now that I understand it. I am doing something about it, personally.” In Apr. 2022, Cohon reached out to Patch, a carbon credit company, to suss out how he might support enough carbon removal projects to offset the entirety of his own footprint. The price tag was about $1 mln, and Cohon drained his pension fund to cover it. He then decided to hit the road, walking from London to Istanbul to raise awareness of climate change. The 4,200-km pilgrimage requires Cohon to cover 29 km each day for 153 days, meeting politicians and ordinary people along the way and inviting business leaders and climate activists to join him. He is expecting to enter Istanbul on June 5, his 60th birthday. (Bloomberg)

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