CP Daily: Tuesday June 30, 2020

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*TOP STORY* ICAO Council drops 2020 from emissions baseline for CORSIA’s pilot phase
ICAO’s Council on Tuesday agreed to omit 2020 from the carbon neutral growth baseline during the international aviation offset programme CORSIA’s first three years, while leaving the door open for the UN body’s Assembly to make that change for the entire 15-year duration of the scheme.
*AMERICAS* US House Democrats back CO2 pricing, national LCFS for 2050 net zero goal
Democrats on a US House of Representatives climate committee unveiled a sweeping roadmap Tuesday to decarbonise the economy by mid-century, including through carbon pricing and transitioning the Renewable Fuel Standard (RFS) into a nationwide Low Carbon Fuel Standard (LCFS). Researchers flag concerns on additionality, perverse incentives in California’s offset programme
California’s compliance offset approach does not eliminate the risk of over crediting emissions reductions from approved protocols, but further analysis and changes could minimise that outcome, according to an updated research report. Strict DEBs definition could yield undersupplied offset market by 2027 -analysts
Offset credits with direct environmental benefits to the state (DEBs) may be undersupplied in the post-2020 period and lead to tighter discounts to allowance prices depending on regulator ARB’s final classification, according to a new analysis published Tuesday. Eleven new California CITSS accounts opened in Q2 as allowances sunk beneath WCI floor
Eleven entities opened California-based Compliance Instrument Tracking System Service (CITSS) accounts to participate in the WCI carbon market during the second quarter of 2020 as five others closed theirs, data from state regulator ARB showed Tuesday. LCFS Market: California prices dip towards $200 ahead of PG&E sale
California Low Carbon Fuel Standard (LCFS) credit values continued their downward trend on Tuesday ahead of utility Pacific Gas & Electric’s (PG&E) latest auction.
*EMEA* EU Market: EUAs spike to nine-month high above €27 on more speculative buying, short-covering
EUAs raced to a nine-month high above €27 on Tuesday, surging on more speculative buying and short-covering to reverse early losses in volatile quarter-end trade. Raising EU GHG target to 55% possible if all sectors contribute, says energy chief
EU Commissioner for Energy Kadri Simson is optimistic about the bloc’s ability to raise its 2030 emissions target to 55%, she said at an online event on Tuesday, stressing the need to cut GHG output from heavy industry and to spur energy efficiency in buildings.
*ASIA PACIFIC* Australia’s biggest emitter launches carbon neutral product
Australia’s biggest emitter on Tuesday announced the launch of a carbon neutral electricity product that will offer offset-backed power to customers, and it plans to roll out similar options across its entire product portfolio. Australian savanna burning projects earn 420,000 carbon credits
Project developers ALFA have received around 420,000 carbon offsets in the Clean Energy Regulator’s latest credit issuance for two programmes in Australia’s Northern Territory aimed at reducing the risk of late dry season wildfires. NZ Market: NZUs rise to new record high as sellers remain reluctant
New Zealand carbon allowances rose to record highs on Tuesday as available supply remains modest and traders fix their eyes on 2021 market dynamics.
*VOLUNTARY* GHG removal platform Puro.earth focuses on web sales in search for scale
Greenhouse gas removal platform Puro.earth has paused its bi-monthly auctions, favouring web sales to bolster trade in its premium-priced credits for the voluntary carbon market.
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*BITE-SIZED UPDATES FROM AROUND THE WORLD*
*Grab your shovel* – The US is to join with other major powers including China, India, and the EU in formulating plans for a global green recovery from the coronavirus crisis, in the only major international summit on the climate emergency this year, the Guardian reports . Next week, the International Energy Agency (IEA) will host an online summit for the world’s biggest economies as well as developing countries, covering 80% of global emissions. It aims to set out plans for boosting renewable energy, energy efficiency, and other emissions-cutting projects that would generate tens of millions of “shovel-ready” green jobs around the world to replace those lost in the pandemic. Dan Brouillette, the US secretary of state for energy, will attend, along with China’s energy minister, Zhang Jianhua, the EU commission’s vice-president, Frans Timmermans, and the UK’s business secretary, Alok Sharma, who is president of the UN Cop26 climate talks, now postponed to next year. (The Guardian)
*Border backing -* Germany and France have thrown renewed weight behind calls for an EU-wide carbon border tax , Clean Energy Wire reported. Speaking at a joint press conference with French President Emmanuel Macron on Monday, German Chancellor Angela Merkel said there was “a common position” that the bloc needs such a mechanism. “If we have very ambitious climate protection targets, then we must also protect ourselves, as it were, against those who import products to us that are more harmful to the climate or emit far more CO2,” she said. Read Carbon Pulse’s latest on how Germany is among several states seeking to keep the EU’s options open on border measures.
*Capturing value -* Bloomberg profiles Norway’s $2.6 bln offshore carbon capture plans at a cement facility and waste-to-energy power plant that eventually could take imported CO2 from all over the world. The state is set to bear 80% of the cost, with the rest covered by oil companies Equinor, Total, and Shell. Green groups put the project’s cost at around $140/tCO2, or about five times the current EU ETS price but below Norwegian EV subsidies of about $1,350/tonne.
*Forgotten crisis -* UK Prime Minister Boris Johnson’s plans to ‘build back greener’ were greeted with dismay by environmental experts, who were concerned that the climate crisis has received scant attention in what the COP26 host government is revealing so far of its post-COVID recovery plans. Johnson reaffirmed tree-planting ambitions but observers didn’t hear much-trailed plans to boost home insulation, the Guardian reported . His speech did reveal an intention to attract battery-producing “gigafactories” and to provide up to £100 mln to develop direct air capture (DAC), for which the government “is exploring options around carbon pricing and incentives, where the government may pay a price per tonne of CO2 captured”.
*Pet sale -* Oil major BP has agreed to sell its petrochemicals business to Ineos for $5 bln, marking BP’s departure from the key oil demand source just as rivals see it as a lower-carbon alternative to sustain their companies through the energy transition, the Financial Times reports. BP is in the process of mapping out a route to net zero emissions, with the company noting that making plastics would not play a key part in its new green energy strategy. Additionally, rival Shell plans to slash the value of its oil and gas assets by up to $22 bln after the coronavirus crisis hit demand for fuel and weakened the outlook for energy prices, Reuters reports . The writedown follows similar steps by other major energy companies including BP and relates to large LNG operations in Australia as well as oil and gas production assets in Brazil and US shale basins.
*Contingency plan – *California lawmakers have advanced legislation (SB-350) to create a non-profit public benefit corporation that could take over Pacific Gas & Electric (PG&E) if the utility is unable to emerge from bankruptcy or fails to meet safety obligations down the road. State senators voted to concur amendments to the bill made in the state assembly, and the measures is now set to head to California Governor Gavin Newsom’s (D) desk, who is expected to sign it. State Senator Jerry Hill (D), who introduced the bill in February, said at a hearing Monday that he hopes the bill will never be needed, since that would mean PG&E has failed the state again after its equipment was responsible for deadly wildfires in recent years. A federal judge approved PG&E’s bankruptcy plan earlier this month. (Utility Dive)
*Bring it back – *A comprehensive energy package introduced earlier this year could come back to the US Senate floor as early as July, Lucy Murfitt, chief counsel for the Senate Energy and Natural Resources Committee, said on Monday. The legislative package comprises over 50 bills reported to the Senate in 2019 and was introduced by Chair of the Energy and Natural Resources Committee Lisa Murkowski (R) and Ranking Member Joe Manchin (D). It made it to the Senate floor but was ultimately stalled by disagreements after a bill was added that would have reduced hydrofluorocarbon use . (Utility Dive)
*Wonk corner* – The discussion on carbon pricing primarily revolves around whether it would be better to achieve this through a tax or emissions trading. A new study based on a scientifically-controlled experiment now sheds light on another aspect of this debate: the incentive effect of both options on actors who want to act morally beyond their economic interests. Around 1,000 students in Cologne participated in the experiment for the study, which was published in the journal Nature Sustainability. “We show that direct carbon pricing through a tax is associated with greater moral behaviour than the indirect form of emissions trading,” explains economist Ottmar Edenhofer of MCC-Berlin , who helped design the study. “The effect is considerable; it could certainly carry weight in the political struggle for the most efficient climate policy possible”.
*And finally… **Going south fast – *The South Pole warmed three times faster than the global average over the past 30 years, according to a new study. The Amundsen-Scott station, the world’s southernmost weather station, recorded warming of that higher magnitude from 1989 to 2018, the study published in Nature Climate Change showed. The record heat was driven largely by natural swings in Antarctica’s climate, the study lead author told Carbon Brief , but it “appears very likely that it worked in tandem with human-caused warming”.
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