CP Daily: Friday July 10, 2020

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*TOP STORY* POLL: Analysts raise short-term EUA price views following huge rally, but warn of pullback
Analysts have raised their short-term EU carbon price forecasts following the huge rally staged in Q2, though most are warning of a pullback from current levels, especially should Europe be gripped by a second wave of COVID-19.
*EMEA* EU nations to cover less than a fifth of coal phaseout impact with EUA cancellations -analysts
EU nations are only likely to cancel enough EUAs to account for around 15% of emissions reduced due to coal power phaseouts through 2030, with the vast majority of the lost generation being replaced by renewables rather than gas, analysts said in a report this week. Latest EU budget proposal leaves question mark over use of ETS revenues
The European Council’s latest proposal for a 2021-27 Multiannual Financial Framework (MFF) retains the idea of earmarking some revenues from auctioned EUAs for the bloc’s general budget, but wants to leave it to officials to outline the details only after 2021. EU Market: EUAs make late surge to end week 4% higher
EUAs mounted a late scramble from week-low levels to climb back above €29 on Friday, ensuring a 4% weekly gain and keeping carbon near its year-high in continued jumpy trade.
*ASIA PACIFIC* Australia’s NT outlines offset principles, vague on links to Safeguard Mechanism
The Northern Territory government in Australia has released principles for use of carbon offsets in its efforts to reach net zero emissions by mid-century, but did not clarify which requirements might be imposed on facilities already regulated under the federal Safeguard Mechanism. SK Market: KAU nosedive continues as market swims in units
South Korean CO2 permits shed another 9.9% in Friday trade to sink to their lowest levels since Oct. 2018 as the market remained flooded with surplus allowances and bereft of demand. CN Markets: Pilot market data for week ending July 10, 2020
Closing prices, ranges and volumes for China’s regional pilot carbon markets this week.
*AMERICAS* Speculators, compliance entities keep California carbon holdings steady amid price climb
WCI compliance entities and speculators made minimal changes to their net long California Carbon Allowance (CCA) holdings during the past week despite prices rising on the secondary market, according to US Commodity Futures Trading Commission (CFTC) data released Friday. Maine pushes back approval of post-2020 RGGI regulation
Maine’s Department of Environmental Protection (DEP) is aiming to finalise its post-2020 RGGI regulation next month after failing to meet internal deadlines for an upcoming July committee meeting, an official told Carbon Pulse. LCFS Market: California prices hit 2-month low on continued lack of demand
California Low Carbon Fuel Standard (LCFS) credit prices sank past the $200 level this week as buyers continued to wait for the market to fall further and despite higher gasoline production in the Golden State.
*INTERNATIONAL* Norway pays Indonesia for cutting 11.2 MtCO2e under forestry deal
Norway has paid Indonesia for reducing greenhouse gas emissions by 11.2 MtCO2e, the first payment under a 10-year-old bilateral forestry deal after a smaller transfer flagged last year never materialised. UN launches 2020 tender to buy 224k Gold Standard CERs
The UN has opened a tender to buy just over 224,000 Gold Standard CERs to offset the organisation’s annual emissions.
*ICYM* EXCLUSIVE – EU lawmakers eye price ceiling, speculation curbs to prevent “cornering” of ETS
A growing number of European lawmakers are considering measures to curb speculation or cap prices in the EU ETS, Carbon Pulse has learned, as allowances skyrocket towards all-time highs on what some participants say are attempts by hedge funds and other algo-wielding investors to “corner” the market.
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*BITE-SIZED UPDATES FROM AROUND THE WORLD*
*Firefighting –* Brazil’s government announced on Thursday it plans to ban setting fires in the Amazon for 120 days, meeting with global investors to address their rising concerns over destruction of the rainforest. The decree, set to be issued next week, repeats a similar temporary ban instituted last year when fires surged, which provoked an outcry that Brazil was not doing enough to protect the world’s largest rainforest. Brazil’s government, led by Vice President Hamilton Mourao, had arranged Thursday’s video conference in response to a letter sent by 29 global firms demanding the government stop environmental destruction that has surged since right-wing President Jair Bolsonaro took office at the start of last year. Some firms are putting additional investments in Brazil on hold or threatening to divest if Bolsonaro’s government does not act. (Reuters)
*Not yet ready – *Most EU gas transportation networks are not yet ready to transport green gases such as hydrogen or biomethane, a survey by the EU Energy Regulator ACER has found . Some 65% of the responding national regulators reported that their gas grids do not allow hydrogen to be injected into the system. In most cases, developments are at an early stage, driven mainly by pilot projects. Most national regulators would support an EU-wide approach for setting hydrogen admixing limits, in pursuit of cross-border gas trading and market integration. Pure hydrogen networks could be built in parallel with the blending of hydrogen in the existing networks, depending on the specific market and network situation.
*Network constraints* *– *Ofgem has unveiled proposals that would see the UK invest £25 bln over the next five years to deliver a “greener, fairer energy system” while cutting consumer energy bills. But the plans were immediately panned by network operators, which have warned the new spending regime will struggle to attract the level of investment needed to deliver the UK’s net zero target. In plans published Friday, Ofgem explained the upfront expenditure, generated in part from slashing network companies’ returns and linking spending plans to ambitious climate targets, would support the growth of green energy in the UK while enabling ongoing maintenance and operation of gas and electricity networks. Ofgem has proposed to halve the return network operators are allowed to make from their investments. (BusinessGreen)
*Breakthrough Biden? – *Economic proposals unveiled by presumptive US Democratic presidential candidate Joe Biden on Thursday feature $300 bln over four years in investments in R&D and “breakthrough” technologies, including energy. Part of Biden’s “buy American” proposals says his administration would “commit to purchasing tens of billions of dollars of clean vehicles and products to support the expansion of clean energy generation capacity”. The campaign already had called for spending $400 bln over 10 years on clean energy R&D and innovation, and will announce more measures next week. Separately, Biden told a reporter in Pennsylvania on Thursday that his administration would not eliminate fracking jobs. “Fracking is not going to be on the chopping block,” he said when asked about displaced workers. Environmentalists who have been pressing the candidate to call for a fracking ban aren’t likely to greet that statement the way they did his “unity” task force’s climate proposal earlier this week. Biden has called for no new leases on federal lands, but some Democrats have joined in pressing him to promise to pursue a ban on the practice, while Pro-Trump ads have targeted him from the other side in the state that’s been a key player in the fracking boom. (Axios, Politico)
*Standard procedure – *Colorado Representative Diana DeGette (D) introduced a bill to establish a federal clean energy standard requiring US electricity producers to reach net zero carbon emissions by 2050 at the latest. The Clean Energy Innovation and Deployment Act would create a system awarding energy providers a credit for every MWh of electricity they produce without emitting any carbon. Companies would also receive a credit for each tonne of CO2 they remove via carbon capture, utilisation, and storage. California Democratic Representatives Jared Huffman and Scott Peters are co-sponsors of the measure. (Politico)
*Post-corona credits? – *The City of Charlottesville, Virginia’s municipal gas utility may seek out offsets as it looks to wind down its use of fossil fuels. The utility’s director told Charlottesville Tomorrow that the company was looking at offset programmes earlier this year before the coronavirus pandemic delayed the plan. She said that customers have shown support, as well, with 92% of surveyed customers support carbon offset implementation, while 31% would support it only if it doesn’t impact gas rates.
*And finally… Best in grass – *Meadows of seagrass on the ocean floor are among the planet’s most efficient ecosystems for absorbing and storing carbon, but climate change, industrial, and agricultural run-off, and development along coastlines are threatening them, Axios reports. About 161,150 hectares of seagrass have been lost along Australia’s coasts since the 1950s, releasing CO2 equivalent to that from 5 million cars each year, according to new research. A loss of seagrass by itself didn’t account for the CO2 emitted from the soil, but waves, tides, and currents disrupted the soil and sand in shallow areas without seagrass, releasing the carbon sequestered in it. Researchers also found seagrass meadows in shallow water stored more carbon than those in deep water, making the nearshore an important area to preserve.
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