CP Daily: Wednesday July 29, 2020

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*TOP STORY* RGGI Q2 emissions likely bolstered by waning coronavirus restrictions, warmer weather
RGGI’s Q2 emissions appear on track for smaller year-on-year differences than Q1 as power consumption rebounded due to the COVID-19 pandemic easing, while shifts in consumer behaviour may have contributed to varied results among individual states in the regional carbon market.
*PODCAST* CARBON PULSE CONVERSATIONS 015: Sheppard Mullin
In the latest episode of our Carbon Pulse Conservations podcast, we speak with Sheppard Mullin Partner Nico Van Aelstyn about the recent federal court rulings in the US Department of Justice’s (DOJ) legal challenges to the California-Quebec carbon market linkage.
*EMEA* EU Market: Strong Polish auction vaults EUAs back above €26, as investment funds pull back
EUAs climbed above €26 on Wednesday as a strong Polish auction helped extend this week’s rebound from a one-month low, while weekly data showed a large downsize in investment fund holdings despite more of these firms entering the market. EU seeks to ‘green’ little-known fund for coal and steel research
The European Commission seeks to rebrand a fund for research on coal and steel production to help decarbonise these ETS-covered sectors, while propelling the initiative’s total funding to over €100 million a year. Chemicals firm BASF to publish CO2 footprint of all its products
Germany-based chemicals giant BASF plans by the end of 2021 to publish the carbon footprint of all the nearly 45,000 products it sells, in an effort to drive emissions cuts across its supply chain, it said on Wednesday. UK utility Drax sees jump in H1 coal power output as it clears stockpiles
Coal power generation at UK utility Drax more than doubled in H1 as the company sought to use up its remaining stockpiles ahead of an anticipated coal phaseout in Mar. 2021, it said in first-half results on Wednesday. Virus surges risk EU airline Wizz Air’s rapid recovery
Hungary-based airline Wizz Air has recovered to around 70% of its pre-pandemic flight capacity, though renewed travel restrictions could dent prospects for a full recovery by year-end, it said in financial results on Wednesday.
*AMERICAS* California fuel sales crater in April during heights of COVID-19 pandemic
California’s WCI-capped fuel consumption collapsed in April as a statewide ‘shelter-in-place’ order scuttled vehicle miles travelled (VMT) across the Golden State, leading to historic lows for gasoline demand, according to state data released Wednesday. Massachusetts House removes CO2 pricing from climate bill as legislative session faces possible extension
The Massachusetts House of Representatives omitted carbon pricing language from a Senate climate bill on Wednesday, but advocates are hopeful that lawmakers can reinsert the provision after the lower chamber agreed to extend the legislative session past this month. Brazil formalises voluntary REDD+ market from UN-backed programme
The Brazilian government has approved the creation of a voluntary forest offset market, an outgrowth of the UN Green Climate Fund’s inaugural foray into schemes designed to cut emissions by halting deforestation.
*ASIA PACIFIC* South Korea MPs move to ban public investments in overseas coal
Lawmakers from South Korea’s ruling Democratic party have proposed legislation that would ban further public investment in coal-fired power plants abroad amid criticism towards state-owned KEPCO’s involvement in such facilities in Indonesia and Vietnam.
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*BITE-SIZED UPDATES FROM AROUND THE WORLD*
*Coal stay -* Poland’s government has scrapped a plan to close two mines owned by the country’s biggest coal producer PGG following opposition from trade unions. PGG management had been expected to present the unions with a closure plan to help the company survive the coronavirus crisis, but will now work with unions and the government to come up with a new scheme by the end of September. (Reuters)
*No tree-huggers *- The European Commission’s climate chief Frans Timmermans is confident that Warsaw will soon subscribe to the EU-wide net zero target by 2050 as the country gears towards renewables, he told the Columbia-SIPA Center on Global Energy Policy . However, Timmermans said the discourse in Warsaw is often “more driven by ideology” than by facts. “That’s the irony of our times, they say we are ideological, we’re tree-huggers, but the only thing we’re doing is to let science speak for themselves,” he added. The Commission’s Executive VP for the European Green Deal also touched upon the bloc’s carbon border adjustment mechanism being developed, and suggested that he’s seen some “openings” in the EU’s climate relations with China’s decarbonisation plans.
*Nest best -* The UK’s largest pension fund, the government-backed 9-mln member National Employment Savings Trust (NEST), is to begin divesting from fossil fuels and aims to fully decarbonise its portfolio by 2050. NEST will ban investments in any companies involved in coal mining, oil from tar sands, and arctic drilling. The move puts NEST “potentially at odds” with pensions minister Guy Opperman, who earlier this month condemned divestment as counter-productive. (The Guardian)
*In the mood – *Moody’s Corporation, the US holding company for credit rating agency Moody’s Investors Service, on Tuesday announced plans to source 100% of the power for its global operations from renewables as it seeks out net zero emissions by 2050. After achieving carbon neutrality for the first time in 2019, Moody’s plans to retroactively compensate for its GHGs for the period between Sep. 2000 and Dec. 2018, and aims to achieve this by 2040 through buying verified carbon offsets. According to goals validated in July by the Science Based Targets initiative, Moody’s plans to lower absolute Scope 1 and Scope 2 GHG emissions by 50% by 2030 from 2019 levels, while absolute Scope 3 GHG emissions fuel and energy related activities, business travel, and employee commuting will be reduced by 15% by 2025 below that baseline. (Renewables Now)
*Drilling below zero -* Maersk Drilling is investing $1 mln in a California biomass company to help offset its emissions. The firm has tied up with Clean Energy Systems to help develop a new technology called Carbon-Negative Energy. The concept builds on technology originally developed for the aerospace industry, which is now being deployed in a process that is expected to result in net-negative carbon emissions. A full-scale deployment of the Carbon-Negative Energy concept will produce renewable fuel and power, and simultaneously remove GHGs from the atmosphere. The net-negative emissions can also be converted into carbon credits. The agreement gives Maersk Drilling an option to offset the emissions resulting from drilling for its customers or for the company itself. (Splash 247)
*Frontier retreat* – BP’s exploration and development ventures have been pushed back in Africa by about 6-12 months amid the coronavirus outbreak, according to the company’s Africa new ventures vice president Jonathan Evans. “Some portfolio choices are coming sooner than we would have thought … We have to make choices about what to continue with and what to stop or get out of,” Evans said in an Africa Oil Week (AOW) webinar. The oil major has declared it will reach net zero carbon emissions by 2050. As part of this, it has begun factoring in a carbon price equivalent to $100 per tonne as of 2030. “That probably means not so many oil projects and certainly not so many heavy oil projects,” he continued. Those projects that do go ahead will probably have to involve high production rates and be close to market. The practical impact will also see BP move away from long-dated frontier exploration. Instead, the company will move into other parts of the value chain, such as the power sector. (Energy Voice)
*A lower TIER – *The Alberta government issued amendments to the province’s Technology Innovation and Emission Reduction (TIER) regime on Wednesday that adjusts the definition of emissions-intensive, trade-exposed (EITE) sectors for the province’s large emitter programme. The change will allow additional sectors to voluntary opt into TIER and avoid paying the federal CO2 levy, with a government press release estimating that 100 small facilities and 20 medium-sized industries in eight sectors will become eligible for that relief with the new change. Additionally, the amendments extend the deadline for facilities to apply to voluntarily opt into the TIER regulation for the 2020 compliance year to Nov. 1 from Sep. 1.
*RGGI results –* Health benefits from the Northeast US RGGI cap-and-trade programme are even greater than previously thought , according to a new study. Environmental scientist Frederica Perera, who runs Columbia University’s Center for Children’s Environmental Health, looked to 2017 analysis by Abt Associates that found the health benefits of RGGI from 2009-14 were somewhere between $3-8.3 bln, with the benefits to children coming in at $8.1 mln. Perera took the analysis a step further, updating the 2017 study by looking at additional health effects on developing fetuses and young children, who are especially sensitive to air pollution. She estimated that the cost savings from avoided childhood illnesses due to the programme were between $191-350 mln. Separately, RGGI released its 2018 investment report on Wednesday, showing the outcome of $248 mln in allowance proceeds from that year. Some 38% of revenues was directed to energy efficiency, while GHG abatement programmes received 20% and clean and renewable energy programmes took in 19%. (WBUR)
*Petra no go –* A Texas CCS project hailed as a key solution to climate change has been mothballed over low oil prices, E&E News reports . The Petra Nova project captured a small share of the CO2 emissions from an adjoining coal plant, which were then used to extract oil out of the ground. A spokesperson for NRG Energy, the company behind the project, said it will come back online when the “economics improve”. (Axios)
*And finally… A little H with your CH4? – *The Russian government is urging the country’s leading energy companies to quickly expand their hydrogen production capacities and is considering using the controversial offshore gas pipeline Nord Stream 2 to transport the synthetic gas to Germany, Handelsblatt reports. The state-owned energy companies Gazprom and Rosatom have been instructed by Russia’s energy ministry to establish large-scale hydrogen production capacities by 2024. The country seeks to transform its hydrogen production from “grey” to “turquoise” meaning that instead of CO2 emissions stemming from the use fossil fuels, the production with methane separation will have solid carbon as a by-product that could be used as fertiliser. “In case of a mass transformation towards hydrogen in Europe, Russia otherwise could face a shutdown of the pipelines” and turn Nord Stream 2 into an “investment ruin”, Handelsblatt reports. In a first step, Gazprom is reportedly pondering adding up to 20% hydrogen to the natural gas flowing through older pipelines in its network and might increase the share to up to 70% in newer ones like the offshore link connecting Russia with Germany through the Baltic Sea. (Clean Energy Wire)
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