News and intelligence on carbon markets, greenhouse gas pricing, and climate policy
Published 23:12 on November 3, 2023 / Last updated at 23:54 on November 3, 2023 / Newsletters
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Standards body and registry Verra on Friday halted issuances for both Kasigau Corridor REDD projects in Kenya, initiating an investigation into the activities after it was made aware of what it said were serious allegations of physical and sexual abuse.
The body guiding the Paris Agreement’s carbon crediting mechanism has hastily scheduled an extra meeting for later this month after this week’s talks broke without progress in key areas despite deciding on several elements that will help speed development over the next year.
US tech giant Microsoft has stressed the need for other buyers to join its effort to scale up emerging technologies such as direct air capture and enhanced rock weathering through the purchase of carbon removal credits, with the company’s removals portfolio executive stating that a group effort is required to scale up the industry and bring down costs.
The Council of EU member states is firming up its largely favourable position on whether to obligate oil and gas firms to fund the bloc’s CCS infrastructure as part of the bloc’s Net Zero Industry Act, with Denmark and the Netherlands wanting to include provisions that would also safeguard non-oil and gas ‘front-runner’ companies.
European carbon prices underwent a gradually steeper decline over Friday to give up almost all of the previous session’s €3 rally, as bears gained in confidence despite technical signals that raised the prospect of a potential bullish reversal, while the main energy markets were mixed after news from the Middle East suggested the current conflict in Gaza might not widen in the region.
The UK government has earmarked £65 million to invest in five pioneering projects aimed at heating homes by harnessing waste heat from data centres.
A marketplace for trading environmental assets has opened in South Africa to tap into the expected boom in carbon credit demand in the country where the units can put towards the national carbon tax.
The Brazilian federal government submitted stronger Nationally Determined Contribution (NDC) targets to the United Nations Framework Convention on Climate Change (UNFCCC), officially increasing the country’s ambition to reduce emissions – the first official change to its national emissions plan since President Inacio Lula da Silva was elected in October 2022.
A major US veterinary pharmaceutical company and an Indianapolis-headquartered startup announced on Thursday the verification of credits for sale through the latter’s cloud-based platform.
Compliance players shed California Carbon Allowance (CCA) holdings as speculators did the opposite, while both entities reduced their RGGI Allowance (RGA) and Washington Carbon Allowance (WCA) net length, US Commodity Futures Trading Commission (CFTC) data showed Friday.
A monthly report by a carbon market analysis firm revealed lower expectations for California Carbon Allowance (CCA) prices, with Washington Carbon Allowance (WCA) values also expected to slide, while the outlook for RGGI Allowances (RGAs) remained the same.
India’s Ministry of Power has launched a National Efficient Cooking Programme (NECP) to distribute 2 million induction cookstoves in order to revolutionise cooking practises in the country while slashing carbon emissions.
New Zealand’s Electoral Commission has released the results of the special votes from last month’s election, showing that the National party and Act will not get a majority together, meaning they will need NZ First to form government.
CO2 allowance prices in China’s carbon market fell below the 80 yuan ($10.93) benchmark over the past week after hitting a fresh all-time high, with trading volume remaining stable amid continued compliance demand.
China is deepening power sector reform by accelerating the construction of the spot electricity markets, a move considered crucial to make the transition towards market-based electricity pricing and improve the effectiveness of the national carbon market.
Australia’s domestic gas pipelines could take up to 10% hydrogen blended into the natural gas stream, according to a report released Friday, which could eventually be increased to 100% to speed decarbonisation, add new jobs in the state, and ultimately ensure gas pipelines remain viable through the energy transition.
BIODIVERSITY (FREE TO READ)
The EU will provide funding for an Italian firm to adapt its existing approach for biodiversity credits, with the company now seeking to take advantage of opportunities emerging from European-wide corporate disclosure rules.
Japan has started the first phase in a pilot for companies seeking to generate certificates by supporting government-certified biodiversity projects that they can use in reports under the Taskforce on Nature-related Financial Disclosures (TNFD).
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BITE-SIZED UPDATES FROM AROUND THE WORLD
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“Avoid our mistake” – The US and EU are advocating for the establishment of a new loss and damage fund under the auspices of the World Bank at a meeting in Abu Dhabi. However, David Archer, Action Aid’s head of programmes and a civil society representative on the board of the Global Partnership for Education (GPE), warns against this decision in a piece for Climate Home News. Archer argues that hosting the fund at the World Bank is costly and undermines the fund’s independence and identity, highlighting how the GPE — which has been hosted by the World Bank for approximately 20 years — is reconsidering its relationship due to increasing costs. These costs include a substantial administrative fee, which at one point was suggested to increase to 24% of GPE’s income, although it was negotiated down to 20.5%. If the World Bank were to host the new loss and damage fund and charge similar fees, a significant portion of the funds intended for addressing loss and damage could be absorbed by the bank instead, he wrote. He also notes that the GPE’s decision-making is compromised by the World Bank’s influence, which can limit the GPE’s ability to set its own strategy and operate democratically. The loss of a distinct identity is another major concern, Archer warned. Within country operations, the GPE is often perceived as merely another World Bank initiative. This confusion could lead to the displacement of other funds intended for specific purposes, a scenario that could be repeated with the loss and damage fund. Archer criticises the US and EU preference for World Bank hosting, suggesting it fits their business model and desire for control, but warns it would be detrimental for the effective action on loss and damage, urging that the mistakes with the GPE should not be repeated.
REDD results – The UN on Friday posted that it had completed technical checks on Mozambique’s REDD forest protection activity for 2014-16, which amounts to 78.8 MtCO2e measured against the nation’s FREL forest reference level. The UN noted that the information provided was in accordance with guidelines, “mostly” transparent, and fully consistent with the FREL. The activity could pave the way for the African nation to raise result-based payment finance, while efforts by other nations to sell the results as carbon credits on the voluntary carbon market have so far had little success. Read Carbon Pulse’s analysis on more recent efforts by nations to offer post-2020 REDD results as sovereign carbon credits under Article 6 of the Paris Agreement.
Coalition comeback – German Economy Minister Robert Habeck has pushed back against doubts that Europe’s largest economy can phase out coal by 2030 – eight years earlier than the legislated date – after ramping up its use in the aftermath of the energy crisis. It is “absolutely” the plan to switch off all coal plants by 2030, he said in an interview with Bloomberg TV. Earlier this week, his coalition partner Finance Minister Christian Lindner said that until it’s clear that energy is available and affordable, “we should end dreams of phasing out coal-fired power in 2030”.
Partners – The UK and Germany have formed a new energy partnership to secure sustainable, affordable energy, and strengthen energy security for both countries. The agreement, signed in London by the UK’s Energy Security Secretary Claire Coutinho and Germany’s Vice Chancellor, Robert Habeck, emphasises a mutual dedication to achieving net zero and advancing the energy transition. Key areas of cooperation include the advancement of renewables, particularly offshore wind and the enhancement of interconnectors. The partnership aims to overcome regulatory hurdles and promote offshore hybrid projects, share expertise on CCS technologies, and collaborate on the transport of CO2 across borders. It also includes sharing best practices for decarbonisation in various sectors, improving energy efficiency, and aligning net zero strategies. It builds on the previously established UK-Germany hydrogen partnership, focusing on the role of the low-carbon gas in the energy mix and fostering the global hydrogen economy. Both countries said they are heavily invested in developing the renewable energy potential of the North Sea, with a substantial portion of installed offshore wind capacity located in their waters. The partnership has already seen progress with the NeuConnect project, a £2.4-bln initiative that marks the first subsea electricity link between the UK and Germany, capable of powering up to 1.5 mln homes upon completion in 2028. Additionally, another interconnector project is in the pipeline, pending approval from the UK’s energy regulator Ofgem.
Rooftop reliance – Just over half of Europe’s single family homes could technically be fully energy self-sufficient with a combination of solar energy and energy storage, according to a report by the Karlsruhe Institute of Technology (KIT). Today, some 53% of about 41 million buildings included in the analysis could theoretically go off-grid and have a fully self-sufficient supply of electricity and heat using only rooftop solar irradiation, the authors concluded, based on looking at data about Europe’s building stock together with climatic and economic conditions. The potential for self sufficiency is highest in Spain, thanks to its strong solar resources, and in Germany, where power prices are relatively high. Boosting the self sufficiency of building stock could become increasingly relevant as buildings become part of the EU ETS with the launch of EU ETS 2 from 2027.
You’re invited – Australia’s Clean Energy Regulator is inviting companies to opt-in to the Corporate Emissions Reduction Transparency (CERT) report for next year, where they can join other entities in publicly disclosing their progress on achieving their respective climate goals. Regulator Chair David Parker noted that consumers, shareholders, and supply chains increasingly want to know what companies are doing to combat climate change. Last year’s CERT saw 25 of Australia’s largest companies share their climate progress, or lack their of. The companies represented 21% of all Scope 1 emissions reported to the regulator between 2021 and 2022, covering a broad range of sectors. Companies can opt-in from now until Jan. 31 next year.
First of its kind – The world’s first maritime renewable energy project combining deep-sea floating wind energy and aquaculture has been completed in China, Shanghai Electric announced this week. The project was developed by Longyuan Power Group and a subsidiary of Shanghai Electric, which provides power generation equipment and towers of offshore turbines. Once operational, the offshore wind project can generate 96,000 kWh of electricity daily at full capacity, equivalent to the daily energy consumption of 42,500 people, the company said.
Shellfish deal – China’s Zhejiang province saw its shellfish-based blue carbon deal completed this week, which cleared at 45.2 yuan ($6.18) per tonne, state-owned Zhejiang Daily reports. The carbon sinks sold at the auction, totalling 2,220 tonnes, were generated from mussel farming activities in the Dachen Islands from 2016 to 2023. Mussel farming is considered to have a strong carbon sequestration potential in China, as 1kg of mussels can help sequester around 0.3kg of CO2, the report said.
New research on CO2 capture – India has developed a new energy-efficient CO2 capture technology with the potential for application in the steel sector. The technology was created in efforts to support its goal of reaching net zero emissions by 2070, and it captures CO2 from various emission sources, and converts the emissions into usable chemicals or permanent storage. A team of researchers at IIT-Bombay has been granted a patent for the technology and the innovation accepted for publication in Nature Communications journal. Carbon monoxide (CO) is an essential ingredient in the steel industry and is currently generated by partial oxidation of coke/coal, which leads to a significant production of CO2 as an end product of this process. According to researchers, if the emitted CO2 can be captured and converted into CO, it can lead to a circular economy in this process while reducing the carbon footprint and associated costs.
Stay on topic – Nova Scotia’s Finance Minister Allan MacMaster, along with several other provincial counterparts, expressed opposition to the national carbon pricing scheme during a virtual call Friday with Federal Finance Minister Chrystia Freeland. Despite no formal discussion on the issue during the call, MacMaster criticised the policy for not providing alternatives to fossil fuels and only adding to the cost of living amidst high inflation and interest rates. Following the meeting, Nova Scotia, New Brunswick, Ontario, Saskatchewan, and Alberta jointly called for the termination of the carbon tax. New Brunswick’s Premier Blaine Higgs wants the issue on the agenda at an upcoming premiers’ meeting in Halifax, citing the carbon price’s failure to meet emissions targets and its impact on affordability. Nova Scotia Premier Tim Houston also advocated for the removal of the tax, even though it was not scheduled for discussion at the Halifax meeting. The levy, which aims to make fossil fuels less attractive by raising their cost and includes a rebate for Canadians to compensate, was defended by Freeland. She indicated that the call’s focus was on Ontario’s request to discuss Alberta’s potential exit from the Canada Pension Plan, but she acknowledged the provinces’ concerns about the carbon tax and suggested that these could be addressed at the upcoming annual federal-provincial finance ministers meeting. (Canadian Press)
Power struggle – In a marathon session from Thursday morning to the early hours of Friday, Democrats in the Michigan House of Representatives approved a slate of bills on their clean energy priorities, reports Michigan Forward. The passed bills included policies to set updated clean energy and energy waste reduction standards, provide energy regulators with additional priorities for regulation, allow farmers to rent their land to solar energy companies, provide state regulators with authority over large-scale clean energy permitting, and create an office to facilitate transitions from fossil fuel to clean energy jobs. The bills solicited fierce Republican opposition, who expressed concerns over the impact on energy reliability and affordability, but Democrats countered that they had already implemented measures aimed at these concerns. The bills originated from the Senate will now move back to that body for further consideration, while those stemming from the House will move to the Senate committee process.
Prudent pension plan – The California Public Employees’ Retirement System (Calpers), the largest pension fund in the US, is considering an increase of $53 bln in climate-related investments by 2030, which would double its exposure to sectors such as wind, solar, and carbon capture to a total of $100 bln, according to a policy proposal published Friday by the California Public Employees’ Retirement System. The $444 bln fund is also looking at new guidelines to divest its holdings in polluters that pose a fiduciary risk because they “fail to present a credible net zero plan” for emissions. (Bloomberg)
Disclosing health care emissions – Mandating disclosures from publicly traded health care organisations (HCO) could create systemic pressure and new opportunities for disclosure and standardisation throughout the health care industry, according to a study published in peer-reviewed journal NEJM Catalyst. The proposed SEC-required reporting will increase the availability of third-party verified GHG emission data throughout the health care sector. The study also emphasised that disclosures would provide critical insight into “hot spots” – large sources of emissions – and opportunities for reductions that could benefit all HCOs, including identifying suitable alternative technologies with lower embodied emissions or targeted efficiency improvements.
On track – Global investment management firm Axa Investment Managers (Axa IM) revealed promising advancement towards its net zero ambitions. The firm has achieved or is nearing achievement on six out of eight benchmarks pertaining to its environmental sustainability objectives, such as mandatory ESG and sustainability training completed by all staff by the end of 2022 and a 58% reduction in the company’s carbon emissions since 2019. However, Axa IM acknowledged slower advancement on two goals with extended timelines. Its commitment to invest $500 mln in natural capital solutions by 2028 is 30% complete, with $150 mln already allocated. As for phasing out coal investments in OECD countries by 2030, it has reached 11.5% of its target as of the last year. The firm plans to annually review these goals. (Citywire)
Climate catch-22 – Efforts to clean up air pollution have inadvertently led to a rise in temperatures, due to the removal of aerosols that previously reflected solar radiation, according to Euractiv and Reuters. China’s successful reduction of sulphur dioxide emissions from coal plants by 90% has significantly improved air quality and public health but has also unmasked the warming effect of GHGs, leading to a 0.7C increase in average temperatures in the country since 2014, according to a Reuters review of meteorological data and the scientists interviewed. Experts are concerned that further air quality improvements globally – a term they have dubbed “unmasking” – could rapidly intensify global warming, particularly in regions such as India and the Middle East. Although sulphur dioxide has a cooling effect on the climate, they say reducing its levels has revealed the full impact of global warming. This phenomenon has been linked to shifts in weather patterns and more intense heatwaves. The IPCC has highlighted that without the cooling effect of sulphur pollution, we would have already exceeded the target limit for global temperature rise. However, climate experts are not suggesting that the world should let-up on fighting air pollution, a clear and present danger that the WHO says causes about 7 mln premature deaths a year, mostly in poorer countries. To counteract the warming effects of pollution reduction, scientists suggest aggressive actions to cut methane emissions, which could quickly reduce global temperatures due to its short atmospheric lifespan compared to CO2. While cleaning up pollution remains crucial for health reasons, experts say balancing its unintended climatic consequences is a complex challenge that requires immediate and targeted climate action, particularly in the reduction of methane.
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