MARC(U) MY WORD: Addressing âcrunch issuesâ in the EU CBAM
Mohammed Chahim MEPâs draft report on the EUâs proposed carbon border adjustment mechanism (CBAM) takes a more aggressive stance and places greater focus on achieving the EU target on climate change, but seems less concerned about impacts on competitiveness of EU industry and the resulting risk of emissions leakage to third countries, argue Andrei Marcu, Michael Mehling, and Aaron Cosbey of think-tank ERCST.
Read MoreMARC(U) MY WORD: Key issues in EU ETS review
Observers and stakeholders generally agree that the revision to the EU ETS needs to ensure that the transition results in a prosperous and decarbonised, but not deindustrialised Europe.
Read MoreCOMMENT: What a long, strange trip 2021 has been for EUAs
Itâs been a year of tumbling records and high anxiety as EU carbon prices have explored uncharted territory while natural gas and electricity markets have also reached new peaks. Normally a doubling of prices would be considered unusual, abnormal even, but carbon has been cast firmly into the shade by the enormous increases in energy prices. It’s tempting to call events in the gas market a once-in-a-lifetime aberration but if markets teach one thing, it’s not to dismiss anything as being out of the ordinary.
Read MoreCOMMENT: When is a market not a market? When it’s the EU ETS that Poland & Co. want
Everyoneâs aware how natural gas prices are up by more than 400% this year due to reduced Russian supplies, tight LNG markets, low EU storages, and the onset of winter demand. And of course since gas is a primary fuel for power generation, thereâs been a knock-on effect there too. So you might be forgiven if you find it confusing that a number of EU member states think that suspending the EU ETS and reforming the market is a sure-fire way to deal with these gas and power prices.
Read MoreMARC(U) MY WORD: EU’s ‘Fit for 55’ should bring clarity for 29a
The potential to trigger Article 29a of the EU ETS, which provides for a cost containment mechanism, has now become real, with some analysts claiming that the conditions have already been fulfilled or are very close to being fulfilled. As such, it’s becoming imperative for the good functioning of the ETS, given the current trend in prices but also as a matter of principle, that current vagueness in 29a’s wording should be spelled out as part of the bloc’s âFit for 55â package.
Read MoreCOMMENT: Trigger-happy on European carbon market intervention
A few people have been talking about whether EUA prices are coming close to triggering an intervention to calm prices, so I though Iâd quickly go through what I understand to be the rule and the different possible interpretations.
Read MoreCOMMENT: A Brave New (Article 6) World
Last weekâs UN agreement on Article 6 is bullish for the role of market-based mechanisms in supporting global climate action. But the new dawn comes with added complexities, write Sebastien Cross and Tommy Ricketts of BeZero Carbon.
Read MoreCOMMENT: Switzerlandâs bilateral agreements set a poor precedent for ambition ahead of COP26
Switzerland’s recent bilateral crediting deals send no signal for decarbonisation at home, while for the countries hosting the emission reductions the agreements close some of their best available options to implement their NDCs and raise ambition in the future, according to researchers at NewClimate Institute.
Read MoreECOSYSTEM MARKETPLACE – Shades of REDD+: Managing expectations for Glasgow
Glasgow is likely to produce a decision on the implementation modalities for market mechanisms under the Paris Agreement. However, those expecting that such a decision would lead to a flurry of investments into Article 6 transactions may see their hopes frustrated by governmentsâ and corporatesâ lack of appetite for such transactions. But closing the Paris Rulebook will still be important, if only to put voluntary carbon markets on stable ground.
Read MoreECOSYSTEM MARKETPLACE – Shades of REDD+: Filling an Urgent Need – New Guidance for âNested REDD+â Published
Over the last months, several companies have announced an aggregate of more than two billion dollars of investments – in particular trading houses or major emitters – in voluntary carbon market projects that champion nature-based solutions. At the same time, the LEAF coalition is encouraging the development of jurisdictional REDD+. For such initiatives to peacefully coexist, there is an urgent need for countries to build ânestedâ REDD+ systems.
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