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*TOP STORY* China ETS could face 600 Mt/year surplus, IEA warns
China’s national emissions trading scheme could generate more than 600 million surplus allowances each year due to the generous benchmarks proposed for facilities that don’t monitor their CO2 fuel factor, the International Energy Agency (IEA) said Monday.
*EMEA* EU Market: EUAs surge to 2020 high near €27 on speculative buying, short-covering
EUAs surged to near €27 on Monday to hit their highest so far this year, rebounding by almost 10% from early weakness as speculator buying drove a strong auction result and widespread short-covering. BRIEFING: Incoming German EU presidency outlines plans to “strengthen” ETS, steer climate law
The incoming German presidency of the Council of EU member states will keep climate policy and the bloc’s carbon market high on the agenda, as Berlin will be responsible for fostering agreements among EU nations over an upgraded level of ambition for 2030. France’s Macron to present new environmental agenda after election setback
French President Emmanuel Macron will put forward in September new climate legislation based on citizen proposals and push for more climate ambition at EU level, he said on Monday following a major setback in local elections.
*AMERICAS* California to begin tagging DEBs-eligible offsets, accept out-of-state project applications
California regulator ARB will begin tagging in-state offset credits that meet the requirements of yielding direct environmental benefits to the state (DEBs) in the coming weeks, with an application process also expected to potentially qualify out-of-state projects with that distinction. California fuel sales collapse in March amid COVID-19 outbreak, larger cuts expected in April
California’s WCI-capped fuel consumption plummeted during March as a statewide ‘shelter-in-place’ order went into effect and stunted vehicle miles travelled across the Golden State, with federal data forecasting steeper drops in April. LCFS Market: California credits dither as price cap set to kick in
California Low Carbon Fuel Standard (LCFS) values have sagged recently on a lack of demand, even as fuel production and vehicle miles travelled picks up and the transportation sector programme’s price ceiling takes effect later this week.
*COMMENT* MARCU MY WORDS: Carbon leakage and competitiveness – different objectives, different tools
The EU needs to broaden its debate beyond a proposed carbon border adjustment mechanism in order to deal with carbon leakage and competitiveness issues thrown up by its climate ambition running ahead of that pursued by its main trade partners, argue Andrei Marcu, Michael Mehling, Aaron Cosbey of think-tank ERCST.
*ICYM* US threatens CORSIA exit if GHG baseline decision not made next week
The US will opt out of the first three years of the CORSIA offset mechanism for global air travel if other countries do not agree to alter the programme’s emissions baseline next week, with other nations potentially following suit, a Dutch minister said Friday.
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*BITE-SIZED UPDATES FROM AROUND THE WORLD*
*Hasta la vista *- Spain will on Tuesday shut down half of its remaining coal-fired power stations, national newspaper El Pais reports
*Hard compensation* – Chancellor Angela Merkel’s coalition government on Monday agreed on a compensation package for utilities operating hard coal power stations as part of Germany’s plans to phase out coal by 2038 to meet climate goals. The agreement between Merkel’s conservatives and their Social Democrat (SPD) coalition partners opens the door for parliament to vote in early July on a bundle of laws governing the coal phase-out, Reuters reports. Conservative and SPD parliamentary representatives said that under the agreement, utilities that switch hard coal-powered plants to gas will get a conversion bonus of €390/kW instead of a previously agreed €180. The bonus applies to power plants no older than 25 years and is available until the end of 2022. If utilities decided to switch their plants to gas after 2022, the bonus will fall by €25/kW each year. Power stations that are 25-35 years old are entitled for a lower conversion bonus of €225/kW if they switch to gas. The government also wants to entice utilities that do not switch to gas to shut down their hard coal plants with tenders that run until 2026. The goal is to make German power generation free of hard coal by 2033. Last week, the government approved a €4.3 billion compensation package for utilities operating lignite power stations.
*Investor pressure -* German utility RWE sought at its AGM on Friday to convince shareholders
*Cleaning up* – Renewables covered more than half of Germany’s power consumption in the first six months of 2020, according to a first estimate by think-tank Agora Energiewende. Coal use dropped while demand was low due to the coronavirus crisis, leading to the sector’s emissions to fall significantly. The largest emitter in the EU, Germany will most likely reach its original target of reducing GHGs by 40% this year compared to 1990 levels, the organisation said, calling for a massive renewables expansion to ensure emissions continue to fall even after the impacts of the pandemic come to an end.
*Rig reductions -* Norway could cut its emissions
*More money* – The UK government has announced
*Under-reported* – Chemical maker Ineos has been under-estimating emissions from its chemical plants at Grangemouth since 2016, according to the Scottish Environment Protection Agency (Sepa). The agency has withdrawn previously published data on emissions from Ineos Chemicals and asked the company to review a “discrepancy” in its figures, The Ferret reports
*Carbon pricing call – *US House Democrats’ plan to combat climate change set for publication Tuesday will call for net zero emissions by 2050 and some form of carbon pricing, Bloomberg reports
*Schering is caring – *Plant Scherer in Georgia, for years the highest capacity coal-fired plant in the US, will lose one of its four units to retirement
*Chesa-bleak –* Oklahoma City-based shale gas pioneer Chesapeake Energy announced Sunday that it has filed for Chapter 11 bankruptcy protection, the highest-profile fracking company to do so during the COVID-19 pandemic. However, analysts said the filing also signals pre-pandemic financial woes that had badly afflicted Chesapeake for years, and to some extent the shale sector overall, which has long struggled with debt and cashflow problems. (Axios)
*Cheap *- Brazil’s B3 commodities exchange registered its second sale of CBIO carbon credits at prices below initial market expectations, as the biofuels industry awaits a revised 2020 official target for sales of the credits to better match lower demand in the Covid-19 scenario, Argus reports
*And finally… **Bail bonds – *The US Federal Reserve has bought $17.5 mln worth of energy company bonds and $19.5 mln of utility bonds on the open market as of June 18 through a taxpayer-backed programme to help companies weather the coronavirus-induced economic slump. The data published Sunday showed utilities and energy companies comprised one-fifth of the central bank’s individual bond purchases, while the reserve likely also boosted energy companies through purchase of exchange-traded funds (ETFs). The information showed the Fed has bought bonds on the secondary market issued by Exxon Mobil, Duke Energy, Williams Co., Phillips 66, Sabine Pass Liquefaction, FirstEnergy Corp., DTE Electric, Florida Power & Light, and Marathon Petroleum. Environmental activists and some congressional Democrats have questioned the programme’s support of oil and gas companies whose finances were ailing before coronavirus-influenced shutdowns. (Politico)
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