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CARBON FORWARD 2023

EUA price outlook sees short-term supply increase meeting “sticky” industrial emissions

EUA prices are set to remain broadly within their current range in the coming two years before resuming their upward trajectory from 2026, as the market works through the additional supply mandated by the EU’s REPowerEU initiative, according to analysts speaking at the Carbon Forward event on Thursday.

Shipping companies may seek to avoid EU ETS via sea transfer -industry

Shipping companies may try to avoid paying carbon costs for their routes by engaging in ship-to-ship transfer of their liquid cargo at sea, a maritime industry expert told an audience at the Carbon Forward conference on Thursday.

Implement CBAM first before expanding its scope, urges industry representative

The EU should first test whether its carbon border adjustment mechanism (CBAM) delivers on its objectives of reducing emissions in third party countries and providing carbon leakage protection for European industry, before expanding its scope within existing, or to additional, sectors, an industry representative said on Thursday.

ASIA PACIFIC

PREVIEW: NZ election likely to bring change in govt, providing ETS stability but seen as backward step for climate action

New Zealand’s centre-right National party is all but certain to win this weekend’s election, which will likely provide short-term stability to the country’s emissions trading scheme, but higher emissions in the long term as it looks to wind back key climate policies.

NZ Market: NZX updates ETS calendar, as market looks to December auction and beyond

The NZX has updated the ETS auction calendar for the next four auctions in line with the new price controls and settings recommended by the Climate Change Commission, as market observers look to what the future holds following Saturday’s election.

ASX to launch ACCU futures contract by 2025 -sources

The Australian Securities Exchange (ASX) is looking to launch a futures contract for Australian Carbon Credits Units (ACCUs) by 2025, in time for the first surrender period for facilities covered under the Safeguard Mechanism, multiple sources have told Carbon Pulse.

AMERICAS

Washington sees WCI linkage benefitting carbon market, warns standalone programme could spell doom

The Washington Department of Ecology (ECY) on Thursday said linking its cap-and-trade regulation with the California-Quebec market could yield several benefits, and that maintaining an independent scheme could prove an existential threat to the programme.

WCI Markets: CCAs decline amid heavy spread trading, WCAs hit 7-mth low beneath reserve sale trigger

California Carbon Allowance (CCA) prices sagged to a six-week low in recent days as bearish macroeconomic factors intertwined with “roll season”, while Washington Carbon Allowance (WCA) values sank as traders questioned the upcoming November Allowance Price Containment Reserve sale and state’s WCI linkage potential.

INTERVIEW: First Brazil-based carbon credit certifier seeks to fill market gap by adapting to national context

Officials from Brazil’s first homegrown carbon offset standards body will bring in smaller landowners and promote conservation across the country by reducing the significant time and costs involved in applying for credit certification.

Brazilian bank to establish trading desk to facilitate carbon credit transactions

A large Brazilian financial services firm is working to set up a trading desk following its inaugural sale of carbon credits to a major multinational bank, the company announced Wednesday.

INTERNATIONAL

Development banks’ climate finance reached record almost $100 billion in 2022 -report

Multilateral development banks provided worldwide climate finance of almost $100 billion in 2022, up from $82 bln in 2021, with a record more than $60 bln going to low and middle-income countries, according to a report released Thursday.

ICE sees first trades in CORSIA first phase carbon credit futures

London-based exchange ICE has seen its first trades in its newly-launched CORSIA-eligible carbon credits, transactions that give an early indication of how correspondingly-adjusted units will be valued.

Hydrogen pricing structures immature but carbon taxes could help, analysts find

The cost of producing green hydrogen has been a focus since the clean energy source began gaining popularity at the end of the last decade, but actual pricing for sale is less clear.

Australian graphite firm posts 15% CO2 cut in pilot, strikes deal with UK cement maker

Concrete is one of the world’s most emissions intensive industries with few ways to quickly and easily decarbonise, but an Australian junior has partnered with the UK’s largest cement maker with a new technology that could cut them by 15%.

VOLUNTARY

Disparity between carbon credit rating agency grades and price revealed in new partnership

A wide disparity between some carbon credit prices and measures of their quality has been revealed after a rating agency teamed up with a marketplace platform.

Carbon credit insurance company to pay claims with replacement offsets

A UK-based carbon credit insurer on Thursday announced its clients can now get paid out in replacement offsets, after the company amassed four partners to build a pool of units with which to settle claims.

Biochar may help remove up to 3 bln tonnes of CO2 annually -report

Biochar has the potential to remove up to 3 billion tonnes of CO2e per year, about 6% of global greenhouse gas emissions, and can accelerate global decarbonisation, according to a report published this week.

New funding round for clean cooking companies to open in November

The second funding round organised by the Modern Cooking Facility for Africa (MCFA) initiative will open at the end of November with €16 million up for grabs, designed to provide finance to scale clean cooking solutions across seven African countries.

EMEA

Euro Markets: EUAs extend gains, near 100-day moving average as gas jumps 15%

European carbon prices were modestly higher in thin trading on Thursday as energy prices resumed their upward march with natural gas rising to a seven-month high and triggering short covering that briefly took EUAs above a key level.

Almost two-thirds of EU firms face losses due to climate change, says report

More than 60% of EU companies say they have experienced losses due to climate change, an increase on last year, but only around half of those firms are taking action to build climate resilience amid increasingly stringent financial conditions across the region, according to a report released Thursday.

Scarce clean hydrogen put public funds at risk in Spain ahead of upcoming EU auction

A scarcity of green hydrogen may force a Spanish steelworks to rely on fossil fuels for longer, diverting public money just weeks ahead of the first auction of the EU’s new Hydrogen Bank facility.

South African exchange teams up with Xpansiv under new environmental markets venture

The Johannesburg Stock Exchange (JSE) announced Thursday it has teamed up with infrastructure provider Xpansiv to allow local participants to buy or sell carbon credits and renewable energy certificates held in either local or global registries.

BIODIVERSITY (FREE TO READ)

Australian govt to begin consulting on EPBC reforms

The Australian government has brought forward consultation on its overhaul of the country’s environmental laws, which observers hope will create vast improvements on the way climate and biodiversity issues are handled.

Biodiversity net gain needed for Europe, says energy investment boss

A renewable energy investment outfit is already achieving biodiversity net gain as a result of the UK’s compliance scheme, but they want a similar process across the European continent, according to the company’s chief investment officer.

Nature funders join forces on biodiversity, climate change

The Prince Albert II of Monaco Foundation (FPA2) and impact fund Una Terra Venture Capital Fund have formed a comprehensive partnership that will focus on climate change mitigation, biodiversity restoration, and ocean conservation, they announced.

World Economic Forum to launch buyers club for biodiversity credits

The World Economic Forum (WEF) is putting together a buyers club for biodiversity credits to be launched early next year, with several major companies already signed up ahead of what is planned to be a pilot auction to be held at an undecided date in 2024.

Biodiversity Pulse: Thursday October 12, 2023

A twice-weekly summary of our biodiversity news plus bite-sized updates from around the world. All articles in this edition are free to read (no subscription required).

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CONFERENCES

Carbon Forward 2023 – Oct. 11-13, London: Join us for Europe’s pre-eminent carbon markets conference, covering the EU and UK ETS as well as international voluntary markets and compliance schemes elsewhere in the world. The event brings together attendees from all related sectors, including traders and intermediaries, big emitters, financiers, project developers, analysts, consultants, NGOs, and government representatives. Topics to be covered include carbon pricing regimes globally, investment opportunities, Article 6 cooperation, CBAM, net zero strategies, and de-risking the voluntary carbon markets. Passes are going fast so secure yours today!

Private Land Conservation Conference | Unite for Nature – Oct. 16-18, Canberra: Nature has been elevated to the world stage and the Australian Land Conservation Alliance’s Private Land Conservation plays a crucial role in exploring the challenges and solutions as we navigate the transition to a nature positive future. Featuring Australian and international conservation practitioners, policy experts, business, finance and industry leaders, landholders, and First Nations groups on the frontlines of conservation, the conference explores pathways to reversing nature loss. To register: www.alcaconference.org.au/registration

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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

New partnership – Japanese trading house Marubeni has signed a Memorandum of Understanding (MoU) with the UK government for cooperation on clean energy projects, including offshore wind and green hydrogen, it announced Thursday. The MoU affirms the partnership between the two sides, indicating the government’s commitment to supporting Marubeni’s plans to invest around £10 bln in clean energy projects over the next 10 years, according to a company statement. The Japanese company in 2021 already signed a similar agreement with Scottish Enterprise to promote the decarbonisation of Scotland.

Loss and Damage – Since a Loss and Damage Fund was announced last year at COP27, a dedicated Transitional Committee has met thrice to work out details on the Fund’s governance, location, sources of funding and ways of working, but with too slow of a pace, green groups including Climate Action Network International are claiming. Just as the fourth and final meeting is due next week, NGOs are calling on the Committee’s members to “make substantial progress to resolve both technical and political gridlocks to bring the Fund to life and initiate its work by COP28”. (Read the letter)

Atlantic mission: The cross-stakeholder Mission Possible Partnership is steering a new initiative of non-profit and private sector leaders to enable the first shipment of clean hydrogen from the US to Europe by 2026: the Transatlantic Clean Hydrogen Trade Coalition (H2TC), it said in a statement. The H2TC aims to support first movers in the US Gulf Coast and Northwestern Europe, with the goal of facilitating trade of more than 3Mt a year of hydrogen-derived ammonia and methanol through this corridor by 2030. It so far has more than 20 members including Shell, STX, and Trafigura.

EMEA

Big talk – The CEO of the Saudi Regional Voluntary Carbon Market Company (RVCMC), Riham ElGizy, expects the MENA region’s voluntary carbon market to reach 100-150 Mt by 2030, in an interview with Arab News. She added that Saudi Arabia is on track to establish a carbon credit exchange platform by the second half of 2024, which will incorporate a spot market to help with price discovery, as well as offering OTC trading, and a marketplace for suppliers to sell their own products. In an interview with Carbon Pulse in June, she suggested that the regional voluntary market’s volumes would be in the hundreds of millions by the end of the decade, and that the platform would be in place in 2024.

Fossil for climate – Uganda has announced that it will release plans to achieve carbon neutrality by 2050 at the UN COP28 climate summit in the UAE next month, adding that the country will mobilise oil and gas revenues to achieve its energy transition goals, Argus reports. The strategy will be built on three pillars — expansion of renewable energy, especially hydropower, financing reforestation programmes to meet commitments made at COP26 and COP27, and ensuring universal access to electricity in the country by 2040. The country estimates oil and gas developments plans will provide a boost of more than $40 bln to the economy over the next 25 years.

Energy costs – The amount of money British households owe their energy suppliers jumped to a record £2.6 bln this summer due to surging wholesale prices and the rising cost of living, Bloomberg reports. With the increase in bad debt levels expected to continue, regulator Ofgem said it is considering adding a one-time adjustment to the April energy price cap to reduce the risk of suppliers going bust or leaving the market as a result of unrecoverable debt. Proposals under consideration would add an average of £17 to all bills.

Blow me down – Germany has added 50% more new wind power capacity in the first nine months of 2023 than in the same time period last year, reports news agency dpa. Preliminary figures show that 518 new turbines were constructed between January and September, corresponding to an additional 2.4 GW of capacity. (Clean Energy Wire)

On a mission – 10 European cities were awarded the label of the EU mission for climate-neutral and smart cities, which recognises their plans to achieve climate neutrality already by 2030 and aims to facilitate access to public and private funding towards that objective: Sonderborg (Denmark), Mannheim (Germany), Madrid, Valencia, Valladolid, Vitoria-Gasteiz and Zaragoza (Spain), Klagenfurt (Austria), Cluj-Napoca (Romania), and Stockholm (Sweden). In total, 100 EU cities participated, with 12 additional cities from countries associated with Horizon Europe. 

Dutch aid – The European Investment Bank (EIB) signed on Thursday a €40 mln financing deal with Dutch climate tech scale-up Battolyser Systems to scale its production facility in Rotterdam. The technology, able to safely switch on and off instantly and therefore to match the intermittency of renewable energy sources like wind and solar, is already operational and its commercial deployment is scheduled for 2024. Battolyser would then help large industrial players as well as small and medium businesses to decarbonise their operations.

Euro 7 – MEPs backed on Thursday their position on revamping EU rules for type-approval and market surveillance of motor vehicles (so-called ‘Euro 7’) with 52 votes in favour, 32 against, and one abstention. They agreed with the levels proposed by the Commission for pollutant emissions (such as nitrogen oxides, particulate matter, carbon monoxide, and ammonia) for passenger cars and propose an additional breakdown of emissions into three categories for light commercial vehicles based on their weight. The adopted text also proposes stricter limits for exhaust emissions by buses and heavy-duty vehicles, including levels set for real driving emissions. The emission standards currently in force would apply until July 1, 2030 for cars and vans, and July 1, 2031 for buses and trucks (compared to 2025 and 2027 respectively). The report is now scheduled for adoption during the next plenary sitting in November, and will constitute Parliament’s negotiating position with EU governments on the final shape of the legislation.

ASIA PACIFIC

Raising cash – New Zealand forest carbon tech firm CarbonCrop has successfully closed a new funding round, it announced Thursday, without revealing how much money it had raised. The new investors included NZVC, Agnition (Ravensdown), and the Aspire NZ Seed Fund, which is operated by New Zealand Growth Capital Partners. Existing investor K1W1 also participated. CarbonCrop said it will use the fresh investments to fund an expansion of its domestic activities as well as its entry into international markets. The company launched a voluntary carbon trading platform last year, and a service issuing credits for landholders. The latter was halted after just a day amid criticism of its lax additionality rules, though eventually CarbonCrop decided to dismiss the critics and carry on.

Dirty money – The Adani Group, the politically connected conglomerate that dominates large parts of India’s economy, appears to have imported billions of dollars of coal at prices well above market value, according to customs records reviewed by the FT. The data supports longstanding allegations that Adani, the country’s largest private coal importer, has been inflating fuel costs and led to millions of Indian consumers and businesses overpaying for electricity.

E-methane introduction – Japan’s Osaka Gas has entered into an agreement with CPC, Taiwan’s state-owned oil and gas company, to conduct joint studies on carbon-neutral solutions, including the introduction of e-methane, it announced Thursday. The two companies, which have been working together in LNG procurement, said they will also explore other new energy options, such as hydrogen, ammonia, and biogas.

Stepping stone – HD Korea Shipbuilding & Offshore Engineering (KSOE), an affiliate of HD Hyundai, has decided to invest 64 bln won ($47.77 mln) to build an eco-friendly energy ecosystem through a partnership with Estonia-based Elcogen AS, according to the Korea Times. The collaboration will help the Korean company advance its solid oxide fuel cell (SOFC) system technology, which will serve as a stepping stone for the production of green hydrogen, the report said. To expand its green energy capacity, HD KSOE already invested $30 mln in TerraPower, a US-based firm that designs small modular reactors.

Green aviation – China has released a policy document for development of the country’s “green aviation manufacturing system,” which aims to increase the viability of homemade aircraft using sustainable aviation fuel (SAF) and allows the commercial operation of electric aircraft for general aviation by 2025, China Daily reports. By 2035, the country aims to achieve an advanced manufacturing system for the aviation sector, supported by new energy-powered aircraft, according to a release by China’s Civil Aviation Administration and three other government agencies.

Green transition – An Indian optical and digital solutions company, STL, has collaborated with Hygenco, a green hydrogen solutions provider, for the supply of green hydrogen to its manufacturing plants. Under the agreement, Hygenco will build-own-operate the green hydrogen facility for STL for 20 years. This facility will be based on renewable energy and commissioned in the next 15-18 months. H2 and O2 are used as fuel in blast furnaces for making glass from silica particles and are considered hard to decarbonise. The companies, through this collaboration, aim at carbon abatement to the tune of about 30% year on year. (Press release)

AMERICAS

Proceed with caution – A comprehensive study led by Berlin-based MCC explores the potential social and economic impacts of carbon pricing as a climate policy tool in 16 Latin American countries. Using household expenditure surveys and carbon intensity data, the research identified how an increase in fossil fuel prices would affect households across income brackets. The study found that carbon pricing would have a regressive effect in 11 countries, disproportionately impacting the poor, while having a progressive effect in the other five. The research also found that targeted redistribution of carbon pricing revenues could mitigate these negative impacts but noted that in countries like Paraguay, only 6% of the most vulnerable households are connected to direct state payment systems. MCC stressed the need for a comprehensive policy mix that includes direct payments, infrastructure investments, and potentially, exemptions for certain goods to ensure social balance in climate policies.

Closed loop – Nova Scotia is dropping the Atlantic Loop from its strategy to reach its 2030 renewable energy targets, Natural Resources and Renewables Minister Tory Rushton said Wednesday. The Atlantic Loop would have imported hydroelectricity from Quebec into New Brunswick and Nova Scotia via upgraded transmission links, but the government cited prohibitive costs that have reached C$9 bln from nearly C$3 bln three years ago without a guarantee of a secure supply of power from Quebec as the reason to forego the plan. Instead, the province has called for additional 30% wind power and 5% solar energy in its power grid to meet its targets, and will rely on continued imports of hydroelectricity from the Muskrat Falls project in Labrador via the Emera-owned Maritime Link. (Canadian Press)

Canadian complaint – Greenpeace Canada announced Thursday that the Alberta Securities Commission has agreed to review a complaint placed by the environmental group that alleges incomplete disclosure of climate-related risk by Calgary-based Suncor Energy. The complaint accuses Suncor of removing warnings on potential stranded oil sands assets in its low-carbon scenario that had appeared in climate risk reporting from the previous year, even as Suncor increased its exposure by selling renewable energy assets in favour of more investment in oil sands. Under Alberta law, failing to fully disclose risks to shareholders can result in fraud chargers or class action lawsuits, according to Greenpeace.

New York no – New York Governor Kathy Hochul’s administration on Thursday rejected a request from companies for greater subsidies to complete offshore wind and large–scale solar and wind projects, Politico reports. The rejection puts the projects’ development in doubt and threatens state’s ability to meet its climate goals. It also pushes project developers to consider whether to cancel their contracts with the New York State Energy Research and Development Authority (NYSERDA), which would cost millions in security payments. The requesting projects account for 25% of the forecasted electricity demand in 2030. The rejected increases would have totalled 12 bln and doubled the costs to ratepayers on existing contracts. Hochul said the decision was necessary to maintain affordability and preserve competition.

VOLUNTARY

Digitalise this – Carbon credit standards body Verra announced Thursday that it is introducing a digital version of its recently updated Non-Permanence Risk Tool (NPRT) for Agriculture, Forestry, and Other Land Use (AFOLU) projects. The digital AFOLU NPRT, also known as the AFOLU Non-Permanence Risk Assessment Calculator, will allow project proponents to conduct non-permanence risk assessment for their AFOLU projects and estimate the required buffer pool contributions of those projects. The calculator will be available on the Verra Project Hub within the next couple of weeks and its release is part of a multiyear digitalisation effort on the part of Verra. The tool has several features to increase its ease of use, including automated risk calculation, electronic production of a consistently formatted final report, and the ability to upload all relevant documents. 

AND FINALLY…

StHop it already – Extreme heat is going to make beer more expensive and make it taste worse, a new study has found. Research published in the journal Nature Communications looked at how climate change is going to impact the growing of hops in Europe, finding that heat is going to decrease the yield by as much as 18% over the next few decades, while the alpha acids in the hops themselves – a key component of their flavour and aroma – could decline between 20% to 31%. “Beer drinkers will definitely see the climate change, either in the price tag or the quality,” co-author Miroslav Trnka, a scientist at the Global Change Research Institute of the Czech Academy of Sciences, told the Guardian. “That seems to be inevitable from our data.” (Climate Nexus)

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