CP Daily: Friday July 31, 2020

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*TOP STORY* SK Market: KAUs slink to 3.5-year lows on 2019 compliance deadline day
Friday marked the deadline for South Korean companies to comply with their 2019 targets under the nation’s emissions trading scheme, but minimal demand in the over-supplied market led to prices falling to levels not seen since Dec. 2016.
*EMEA* EU carbon prices face ‘short-term bearish, medium-term bullish’ conundrum -analysts
EU carbon prices are forecast to soar into a new upper echelon above €30 next year amid tightening supply and recovering demand, but they first must endure the second half of 2020, which is rife with bearish risk, analysts said. EU Market: EUAs climb ahead of auction cuts, heatwave
EU carbon prices rose on Friday ahead of a month-long reduction in auction supply and as a heatwave started to grip much of Western Europe. Ireland forced to strengthen climate plan in second landmark court ruling
The Irish government must take more a more ambitious approach to achieve its climate targets, the country’s supreme court said on Friday, the world’s second citizen-led ruling to succeed in forcing more aggressive national emission cuts. Major EU airlines’ passenger capacity plunges in Q2 2020 despite slow summer rebound
Major EU airlines have seen their passenger capacity and traffic shrink to minimum levels in Q2 as a result of the COVID pandemic, despite signs of timid recovery amid easing restrictions and the start of the summer period. Utility Engie reports lagged hedging position, as H1 power output dips
French utility Engie advanced its power hedging over Q2 but still lagged its position of a year earlier while overall generation slipped over the first half, it said in financial results on Friday, unveiling an asset review programme intended to allow the company to focus more strongly on renewables.
*AMERICAS* RGGI Q2 emissions stay flat year-on-year despite COVID-19 pandemic
The Northeast US RGGI ETS saw minimal emission changes in the second quarter of 2020 compared to last year, despite much of the region issuing statewide ‘shelter-in-place’ orders that shuttered industrial sites, schools, and office buildings, according to data published Friday. California LCFS notches record 459k credit deficit in Q1 2020
California transportation sector entities posted a Low Carbon Fuel Standard (LCFS) credit deficit of nearly 459,000 tonnes during the first quarter of 2020, with a more stringent GHG reduction target and lower biofuel credit generation unable to overcome a drop in gasoline and diesel usage during the COVID-19 pandemic, state data showed Friday. British Columbia and First Nations group ink new forest offset agreement
The British Columbia government and Coastal First Nations (CFN) signed a new memorandum of understanding on Friday that includes a five-year offset purchase agreement, with the document noting the struggles the Indigenous communities have faced in trying to sell their forest carbon credits to private buyers. US airline Delta halves 2019 offset purchases due to COVID-19
Delta Airlines significantly curtailed buying carbon credits against its 2019 emissions due to the financial impact brought on by the coronavirus outbreak, the carrier said in a report published Friday. WCI compliance entities, speculators hold California carbon positions firm ahead of August auction
Compliance entities and speculators kept their California Carbon Allowance (CCA) positions largely unchanged on the secondary market as prices began to retrace ahead of the August WCI auction, according to US Commodity Futures Trading Commission (CFTC) data published Friday.
*ASIA PACIFIC* Esso, BHP Billiton the main beneficiaries as Australia inflates CO2 caps
Australia’s Clean Energy Regulator has issued a new batch of emission baselines under the Safeguard Mechanism, increasing the amount of CO2 discharges allowed from several large industrial facilities. CN Markets: Pilot market data for week ending July 31, 2020
Closing prices, ranges and volumes for China’s regional pilot carbon markets this week.
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*BITE-SIZED UPDATES FROM AROUND THE WORLD*
*Trade support –* Shell and Total escaped underlying losses in the second quarter after stronger oil trading results helped offset plunging energy demand triggered by the coronavirus pandemic. Anglo-Dutch oil major Shell revealed an 82% drop in adjusted earnings to $638 mln, while France’s Total said its adjusted profits had fallen 96% to $126 mln. Analysts had expected the groups to report losses of $674 mln and $400 mln respectively. The underlying figures, which are those most closely watched by analysts as a measure of core performance, exclude combined write-downs of almost $25 bln as the companies overhauled their price outlooks after the crisis hit. Brent crude fell from almost $70 a barrel in early January to below $20 in April as consumption declined as much as a third at the peak of lockdowns, and has only recovered to just above $40. (Financial Times)
*Locked-in savings –* The UK government has closed its consultation on the extension of its ‘Climate Change Agreements’ scheme, which subsidises UK industry in return for commitments on energy and emissions reductions. The current targets generate savings worth nearly £300 mln annually for participating organisations. Almost 9,000 facilities across the UK currently participate, and in most sectors, participation was between 80-100% of eligible businesses. The government has decided to extend the scheme by about two years, and following the consultation will update the baseline year to set targets to 2018. Eligibility criteria remain largely unchanged till 2025, after which a new regime is expected.
*Green Germany *- A record 50.2% of Germany’s power consumption in January to June was met from renewable sources, utility industry association BDEW said Thursday. This was up from 44.1% over the same period last year and reflects Germany’s ambitions to raise the share of renewables in its power mix to 65% by 2030, Reuters reports . However, BDEW reported that part of this increase was due to a plunge in industrial demand from the coronavirus crisis. The association reported a 5.7% decline in power demand.
*Paying dividends – *Taxing emissions and returning the revenues to households as a dividend would curb US CO2 output 57% below 2005 levels by 2035, drive $1.4 trillion of investment into new technologies, and create 1.6 mln jobs, according to an analysis commissioned by the conservative group Climate Leadership Council. The CLC plan analysed pricing CO2 emissions at $40/tonne beginning in 2021 and rising after that. The effort is backed by GOP luminaries such as former secretaries of State George Shultz and James Baker, as well as a handful of major banks, and oil, gas, and power companies. (Politico)
*Solution squeeze – *Some of California’s key environmental programmes for battling smog and climate change have lost nearly $105 mln as the state grapples with the economic fallout of the coronavirus pandemic. In a letter shared with CalMatters , the state’s Department of Finance notified lawmakers of reductions to funds from California’s landmark cap-and-trade system, with each listed programme losing about 14% of ETS revenues appropriated in the 2019-20 budget. These cuts are on top of $168 mln squeezed from the original budgets of programmes that are automatically allocated as a proportion of the proceeds from cap-and-trade, such as high-speed rail, affordable housing, and transit. The May WCI auction only saw $25 mln worth of California-owned allowances purchased by compliance entities under the joint ETS, leaving the state about $300 mln short of its 2019-20 budget expectations.
*Acid and you shall receive –* Offset registry Climate Action Reserve (CAR) on Friday released its draft Adipic Acid Production Protocol for public review and comment. The methodology provides guidance for monitoring, reporting, and verifying N2O emission reductions at adipic acid production facilities in the US. Adipic acid is largely used in the manufacture of nylon and ranks among the top 50 synthetic chemicals produced in the country each year. The project type is approved under the CDM, though these offsets have been shunned by several EU governments and the bloc’s ETS. CAR will hold a public webinar on the protocol on Aug. 12, and comments are due by 1800 Pacific time on Aug. 31 (0100 GMT, Sep. 1)
*And finally… **You see what happens, Larry? –* The Ohio House of Representatives on Thursday voted unanimously to remove Larry Householder (R) as House Speaker, just minutes after a federal grand jury indicted Householder and four others in a $60 mln racketeering conspiracy connected to last year’s nuclear bailout bill, HB-6. Householder is the first Ohio House Speaker ever to be removed by the chamber, although the lower chamber did not vote on whether to expel Householder from the legislature, or to choose his replacement. FBI agents arrested Householder and four others last week for criminal activity in helping pass the 2019 bill that gutted Ohio’s Renewable Portfolio Standard (RPS) and energy efficiency programme, in exchange for using taxpayer money to subside two nuclear plants from utility FirstEnergy and two coal plants. (WOSU Public Media)
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