CP Daily: Monday July 13, 2020
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*TOP STORY* EU Market: EUAs break above €30 for first time in 14 years to eye record high
EUAs raced above €30 for the first time in 14 years on Monday, busting through last year’s peak to close in on the market’s April 2006 all-time high.
*ASIA PACIFIC* SK Market: KAUs fall to 2.5-year low as support evaporates
South Korean carbon permits on Monday fell by 9.9% for the third consecutive session, hitting their lowest levels since Jan. 2018 as all support for the KAU-19 contract has vanished. Norske Skog earns first batch of Australian carbon credits
Norske Skog’s Boyer paper mill in Australia has earned its first batch of carbon credits, four years after registering a heat recovery project with the Clean Energy Regulator and signing a contract to sell quarter of a million offsets to the government.
*AMERICAS* California power demand returns to historic levels amid heatwave, with natural gas leading
California electricity use is returning to pre-coronavirus levels as travel restrictions ease and temperatures rise, with natural gas and imports making up a larger share of the grid than they did in 2019, according to California Independent System Operator (CAISO) data. In light of COVID-19, stakeholders weigh relief for Brazil’s RenovaBio targets
The Brazilian government’s move to slash the credit targets for the country’s RenovaBio programme has split stakeholders, with sugarcane producers and allied lawmakers pushing back on the cut and large obligated parties calling for further relief, according to public comments.
*ICYM* 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.
*Job listings this week*
– Value Chain Certification Officer, SustainCERT – US Remote – Senior Sourcing Manager, Carbon Projects, South Pole – London/Amsterdam – Senior Consultant, Climate Policy and Carbon Pricing, South Pole – London/Amsterdam/Berlin – Carbon Pricing and Climate Policy Consultant, Climate Focus – Amsterdam/Rotterdam – Principal Analyst, Climate Change Commission, Wellington (preferred) – Forward Markets Trader, Contact Energy, Wellington
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*BITE-SIZED UPDATES FROM AROUND THE WORLD*
*It’s settled* – The largest-ever study of what happens to emissions from fuel combustion when they attract a charge has found that… wait for it… carbon pricing works. Researchers analysed data for 142 countries over more than two decades, 43 of which had a carbon price of some form by the end of the study period. The results showed that countries with carbon prices on average have annual CO2 emissions growth rates that are about two percentage points lower than countries without a carbon price, after taking many other factors into account. By way of context, the average annual emissions growth rate for the 142 countries was about 2% per year. This size of effect adds up to very large differences over time, and is often enough to make the difference between a country having a rising or a declining emissions trajectory. (The Conversation)
*Exchange letters –* Mark Carney, the UN special envoy for climate and finance, has called on stock exchanges to back a drive to improve the environmental data shared by companies. Carney, who until recently was the governor of the Bank of England, has championed a framework from the Task Force on Climate-Related Financial Disclosures (TCFD), which helps companies figure out what environmental information to share. While the TCFD is currently voluntary, Carney has floated the idea of making it compulsory and is keen to see greater adoption to help investors make more informed decisions when assessing climate-related risks. Ahead of the next round of UN climate talks in Scotland next year, Carney and David Schwimmer, CEO of the London Stock Exchange Group (LSE), have written to a number of stock exchanges asking them to support a new initiative with the UN’s Sustainable Stock Exchanges (UN SSE) set to launch in September. (New York Times)
*Two is company –* The top two state coal enterprises in China’s eastern coastal province of Shandong – Yankuang Group and Shandong Energy Group – are mulling a restructuring for a possible merger that will form a producer second only to China Energy. Jining-based Yankuang’s listed unit Yanzhou Coal Mining disclosed this plan in a statement it issued Sunday, adding the scheme has not yet been thoroughly fleshed out and is still subject to regulatory approval. Both Yankuang and Jinan-based Shandong Energy are under the control of the provincial State-Owned Assets Supervision and Administration Commission, and Yankuang holds an about 55% stake in Yanzhou Coal Mining, public information shows. (Yicai Global)
*Coal scuttle –* Japan’s environment minister has hailed a “turning point” in his country’s climate change policy after vowing to slash its much-criticised support for coal power in the developing world. In an interview with the Financial Times , Shinjiro Koizumi said the new strategy on infrastructure exports announced last week marked a clear change in approach, following opprobrium at last year’s COP25 talks in Madrid. The new policy will curtail an important source of official finance for coal plants in Southeast Asia and help spur a regional shift towards cleaner energy, if Japan implements it rigorously.
*Green fund goes red –* Germany’s green energy fund has slipped into the red for the first time since 2013, data compiled by the country’s transmission grid operators shows. The account, which finances the expansion of renewable energy sources and is filled by consumers through a surcharge on their power bill, fell from about €2 billion in available funds to -€1.16 billion in the first six months of 2020. This means the funding mechanism for wind turbines, solar farms, and other renewables has consumed more than €3 billion in six months during a time in which the share of renewables in the country’s power mix reached new record levels. Analysts warned earlier this year that the balance on Germany’s green energy account looked set to fall significantly due to the coronavirus crisis’s dampening effects on power prices, which means that operators require a greater share in support payments in order to achieve their guaranteed remuneration for renewables production. (Clean Energy Wire)
*Belch tax –* A tax on bovine flatulence should be imposed to encourage farms to cut GHGs, according to a report written by a co-author of the UK Conservatives’ manifesto . The tax would give farmers an incentive to add methane-reducing supplements to their cattle feed. About 15% of global emissions comes from livestock, and more than 30% of that is from methane. Most of the gas produced by cattle comes from burps and a small amount from their rear ends. (The Times)
*No woman’s land* – Women have been shut out of Boris Johnson’s new key decision-making bodies, an analysis shows, sparking accusations that his government is “incredibly blokey”. Under a shakeup last month, strategy is set – on handling the pandemic, Brexit, the economy and the climate emergency – by small committees of cabinet ministers, each chaired by the PM. But there is not a single woman sitting four of those committees, while home secretary Priti Patel is the sole female voice on two others. (The Independent)
*Green top 20* – The EU’s landmark plan to become climate-neutral by 2050 promises to overhaul the bloc’s economy, and 20 regional companies are well placed to capitalise on these changes, according to Goldman Sachs . Along with protecting long-term wealth by tackling climate change, Goldman analysts believe the Green Deal – which they “conservatively estimate” will cost in the region of €7 trillion ($7.9 trillion) – will boost short-term GDP and employment thanks to a “major investment wave in power infrastructure, buildings renovation, automotive and industrials.” In the European utilities sector, Goldman issued “buy” recommendations on Italian multinational energy company Enel, Germany electric utility RWE, Spain’s Iberdrola, Portugal’s EDP and Spanish subsidiary EDPR, Danish multinational Orsted and Britain’s SSE, with the ripple effect of the green revolution extending beyond just the bloc itself. The bank also recommended Volkswagen and France’s Renault and Alstom as clean transportation plays,as well as Vestas as a solid renewables pick. (CNBC)
*And finally… A bridge not far enough** – *A Facebook Live conversation last week between former US Secretary of State John Kerry’s bipartisan climate organisation World War Zero and a youth climate activist on “bridging the generational gap on climate change” revealed more rifts than commonalities, Heated reports . The talk, featuring World War Zero co-founder and former Republican Ohio Governor John Kasich and activist group Zero Hour founder Jamie Margolin, started off on the wrong foot when Kasich repeatedly got the name wrong of progressives’ Green New Deal for rapidly decarbonising the US economy and other social justice measures. Kasich also said there are “questions about all that science” related to the rapid scale of carbon abatement necessary to avoid overshooting 1.5C of warming, and also said he knew nothing of fossil fuel-funded climate denial strategies.
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