$2 Billion Global Voluntary Market Leaves Europe in its Wake

September 23, 2022

The global voluntary carbon market (VCM) is soaring after hitting a transaction value of nearly $2 billion in 2021, while Europe remains a relative backwater, providing just a small fraction of the world's carbon offset credits.

Just 1 million metric tons of carbon dioxide equivalent (CO2) were reduced by European VCM projects in that year, compared to 90 million tons of CO2 removals in Asia, according to environmental data provider Ecosystem Marketplace (EM) data. By contrast, the rapidly expanding global VCM is expected to be worth a whopping $30 billion by 2030, according to EM forecasts.

Furthermore, there is skepticism in Europe at the highest levels of government about the potential benefits of carbon credits, with political energy more focused on cutting emissions by industrial installations through the European Union's Emissions Trading System (ETS).

During this decade, the EU ETS aims to almost halve the carbon emitted by those 10,000 stationary installations that currently produce more than 1.5 billion mt/year of carbon dioxide, making the potential carbon dioxide reductions from VCM projects pale by comparison.

In a series of blog posts over the next few months, OPIS will examine the prospects for the voluntary carbon market in Europe and ask whether carbon credit projects across the continent will ever make a meaningful contribution to the market.

The state of the Global VCM

The voluntary carbon market started as an initiative for private individuals, corporations and other actors, to buy and sell carbon credits beyond the scope of regulated carbon compliance pricing instruments.

A carbon credit is a tradable unit and equals one ton of greenhouse gas (GHG) emissions reduction or removal. Within the VCM system, credits can be generated via nature-based or technology-based projects; their prices depend on eight different VCM categories.

According to Ecosystem Marketplace, more than 170 project-specific types were traded globally over 2020-2021, with forestry and land use accounting for 46% of traded volumes in 2021, up from 28% in 2020.

Companies globally are seeing increased demand from business partners and clients to decarbonize; reducing value chain emissions and using VCM carbon credits, seems a good and cheap way to achieve their net-zero goals.

"Carbon is no longer a public relations tool; it has instead become an element in competitiveness and procurement processes," Malwina Burzec, senior associate and attorney-at-law specializing in sustainability at consultancy EY, told OPIS.

Globally, heavy industries and hard-to-abate sectors are keen to buy offset credits, which help to reduce their net emissions at a price somewhere between $5-15/metric ton of CO2 (mtCO2). By contrast, payments for emissions allowances subject to European compliance markets currently cost around $80/mtCO2.

Critics of the system however say that this could be a snag: "cheap offsets" can be used to avoid the hard work of cutting emissions, while the quality and transparency of carbon offset projects in which companies invest can be ill-defined and poorly regulated.

In April 2021, researchers at the nonprofit group CarbonPlan discovered that some $410 million worth of offsets had been sold under the California forest carbon offsets program without absorbing a single ton of carbon dioxide.

Similarly, Finnish nonprofit and impact startup Compensate calculated that 90% of evaluated projects include serious permanence risks and unreliable baselines, while the assumed scale of deforestation that would take place in the absence of those offset projects was largely inflated. More worryingly still is that many offset projects cause serious human rights violations, Compensate said in its Reforming the Voluntary Carbon Market 2021 report.

While financial markets are overseen by government regulators like the U.S. Securities and Exchange Commission, businesses, brokers and traders dealing in VCM projects are yet to be regulated. At best, they are largely shaped by broader national environmental and decarbonization policies.

For Mark Lewis, head of climate research at Andurand Capital Management, the VCM market has always been less transparent and complicated, and it is the role of regulators to provide the methodologies needed.

"Today the range of [methodologies] is so broad, that the impact of price discovery and information is crucial. Finance service providers could be mediators, linking and matching buyers' and sellers' criteria and helping buyers to achieve their goals," he said at a recent event organized by the International Emissions Trading Association.

European VCM faces obstacles

"Europe is a well-developed region, and there is less potential for nature-based offset projects than you would have in developing countries," said EY's Burzec.

Government subsidy systems also limit the need for VCM projects, Burzec suggested: "Additionally, Europe offers a broad scope of public aid and regulatory requirements to stimulate renewable and energy efficiency projects."

"At VCM, project developers must prove that the project is additional, that financing from carbon credits is inevitable for project deployment, and that there are significant barriers to implement the project," she added.

A lack of clarity about the rules governing carbon offset credits has also stymied projects in countries with ample land resources.

"In Finland there is a very lively discussion going on, as companies would like to invest in local projects, lots of them in forestry and some also in technical removals, while trying to avoid double claiming with the Finnish targets," Hanna-Mari Ahonen, an analyst at Germany-based climate consultancy Perspectives, told OPIS.

"Credible voluntary offsetting should be based on emission reductions or removals that are not also claimed by the host country," she said. "The current EU legislation is not up to date yet and does not seem to enable individual EU countries to give up their claims to certain emission reductions or removals."

The Finnish government has commissioned studies on regulating voluntary carbon markets and avoiding double claiming. Best practice guidance has also been developed at the Nordic level.

In the meantime, financial markets are paying increased attention to the VCM market, trying to find out their role and what kind of services they can provide.

Market participants have called on European lawmakers to merge the EU compliance and voluntary carbon market systems, as they seek to achieve harmonization of national accounting practices with increased VCM transparency.

--Reporting by Benita Dreesen, bdreesen@opisnet.com; Editing by Anthony Lane, alane@opisnet.com, Rob Sheridan, rsheridan@opisnet.com

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Australia's Fortescue to Spend $6.2Bn to Fully Decarbonize by 2030

September 20, 2022

Australia's Fortescue Metals Group, one of the world's top iron ore miners and parent of green hydrogen developer Fortescue Future Industries (FFI), said it plans to spend $6.2 billion over eight years to fully decarbonize its mining operations by 2030.

Fortescue made the announcement at United Nations Global Compact CEO roundtable in New York on Monday local time and in a filing to the Australian Securities Exchange on Tuesday.

When fully implemented, Fortescue said its decarbonization strategy will avoid around 3 million metric tonnes (mt) of carbon dioxide-equivalent a year from 2030, or more than 1% of Australia's legislated 43% by 2030 reduction target.

The company said it expects its decarbonization investment to generate "attractive returns" as the progressive elimination of diesel, natural gas and carbon offset purchases from its supply chain leads to operating cost savings.

Fortescue said its scope 1 and 2 emissions reductions will be verified and audited by the Science Based Targets Initiative (SBTi), a partnership between the United Nations Global Compact, World Wide Fund for Nature, CDP (formerly known as the Carbon Disclosure Project) and the World Resources Institute.

Its plan towards producing carbon-free iron ore includes investing in additional 2 to 3 gigawatts of renewable electricity and battery storage, replacing its fleet of diesel-powered mining haul trucks with zero-emission hydrogen-fueled trucks from 2025, switching to ammonia-fueled trains from 2026 and introducing electric or hydrogen drill rigs and excavators from 2029.

Fortescue said it expects to save $818 million per year from 2030 as it reduces spending on diesel, natural gas and Australian Carbon Credit Units (ACCUs), based on its assumed price of $1/liter for diesel, $4.50/gigajoule (GJ) for gas and $20/unit for ACCUs.

By the end of this decade, it expects to have displaced around 700 million liters of diesel and 15 million GJ of gas which will also shield the company from fossil fuel price volatility and regulatory risks such as a future carbon tax.

Eliminating carbon offset purchases "whenever possible" will also reduce the company's exposure to price risks associated with carbon offsets.

In the 12 months to June 2022, Fortescue said its scope 1 and 2 emissions from mining operations were 2.24 million mt. For the same period, it surrendered
260,000 mt of offsets, including ACCUs and Verified Carbon Units, according to its own Climate Change Report.

Fortescue's green hydrogen subsidiary FFI and Williams Advanced Engineering are developing the world's first regenerating battery electric iron ore train.

FFI's recently announced initiatives include the establishment of a renewable energy technology hub in the US state of Colorado and the potential development of a green hydrogen production project in Egypt with a 9.2-gigawatt installed capacity.

--Reporting by Trisha Huang, thuang@opisnet.com; Editing by Hanwei Wu, hwu@opisnet.com

© 2022 Oil Price Information Service, LLC. All rights reserved.

Decarbonizing Global Energy System by 2050 Could Save Trillions: Study

September 13, 2022

A transition to clean energy by 2050 could save the world at least $12 trillion, compared to continuing the current levels of fossil fuel use, according to a new Oxford University study published on September 13. 

The researchers analyzed thousands of transition cost scenarios produced by major energy models and used data on 45 years of solar energy costs, 37 years of wind energy costs and 25 years for battery storage, the university said in a news release.

"They found the real cost of solar energy dropped twice as fast as the most ambitious projections in these models, revealing that over the last 20 years previous models badly overestimated the future costs of key clean energy technologies versus reality," the school said.

The study's "fast transition" scenario showed a realistic possible future for a fossil-free energy system by around 2050, providing 55% more energy services globally than today, it said.

Lead author Rupert Way, a postdoctoral researcher at the Smith School of Enterprise and the Environment, said past models predicting high costs for transitioning to clean energy had deterred companies from investing and made governments nervous about setting climate-friendly policies.

"But clean energy costs have fallen sharply over the last decade, much faster than those models expected," Way said in the release. "Our latest research shows scaling up key green technologies will continue to drive their costs down, and the faster we go, the more we will save."

Professor Doyne Farmer, who led the team that conducted the study at the Institute for New Economic Thinking at the Oxford Martin School, said that the idea that going green will be expensive is "just wrong."

He said clean energy costs had been trending down for decades, and the study showed that renewables would become cheaper than fossil fuels across almost all applications in the years to come.

The research was conducted before Russia invaded Ukraine in late February, sparking a sharp rise in fossil fuel prices worldwide.

"The current energy crisis underscores the study's findings and demonstrates the risks of continuing to rely on expensive, insecure, fossil fuels," the university said.

The paper was published in the journal Joule.

--Reporting by Abdul Latheef, alatheef@opisnet.com; Editing by Michael Kelly, mkelly@opisnet.com

© 2022 Oil Price Information Service, LLC. All rights reserved.

 

Shippers Launch Initiative to Tackle Industry's 'Methane Slip' Problem

September 6, 2022

A coalition of shipping leaders on Tuesday launched an initiative to find technology solutions to measure and manage maritime methane emissions.

The Methane Abatement in Maritime Innovation Initiative (MAMII) aims to minimize the environmental impact of liquefied natural gas (LNG) in shipping, according to a statement posted on the group's website.

"In its first year, members will seek to identify and pilot new technologies to monitor and reduce 'methane slip' from vessels fueled by LNG. Once these solutions have been validated, the initiative will seek to endorse them to industry from 2023," MAMII said.

The program is supported by Maran Gas Maritime, Mediterranean Shipping Co., Carnival Corp., Seaspan, Shell, Lloyd's Register and the Knutsen Group. It will be managed by Safetytech Accelerator, a nonprofit established by Lloyd's Register.

The initiative will also draw on the expertise of academics, civil society and other stakeholders such as the U.K.'s National Physical Laboratory, the statement said.

It said the shipping industry is using LNG as "a bridging fuel" to support its decarbonization efforts, with campaign groups forecasting that over two-thirds of new ships will be powered by LNG by 2025.

While greenhouse gas (GHG) emissions from LNG are lower compared to traditional marine fuels, the environmental benefits of using it could be negated due to the propensity of LNG-powered vessels to leak unburned methane through the combustion process, MAMII said.

A component of natural gas, methane is much more potent than carbon dioxide.
The International Energy Agency estimates that methane is responsible for around 30% of the rise in global temperatures since the Industrial Revolution.

"Defining what constitutes negligible methane emissions, and then ensuring the sector meets that target is, therefore, a vital imperative for an industry grappling with its climate footprint and increasingly using LNG as a transition fuel," MAMII said.

No globally recognized methods for measuring methane slip are currently available, it said.

Overall, the shipping industry accounted for 2.89% of global GHG emissions in 2018, the last year for which data are available, according to the International Maritime Organization.

--Reporting by Abdul Latheef, alatheef@opisnet.com
--Editing by Jeff Barber, jbarber@opisnet.com

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IOSCO Calls for Investor Education to Shield Against Fraud and Greenwashing

August 31, 2022

The International Organization of Securities Commissions (IOSCO) on Wednesday published a report on how education on sustainable finance can help protect investors against fraud and greenwashing.

The report, prepared by IOSCO's Committee on Retail Investors, indicates that securities regulators have increasingly focused on whether sustainable finance claims are accurate and if investors have the information they need to evaluate products.

It also identifies some of the main challenges and sound practices for developing educational content.

"Investors of all sizes are increasingly seeking out sustainable investments for a variety of reasons. However, investors currently lack a consistent and comparable framework to enable their understanding of sustainable finance products," the report said.

Citing industry data, it said assets under management by sustainable funds rose globally by 53% in 2021 to $2.7 trillion, and sustainability linked bonds and loans worth more than $1.6 trillion were issued last year. Global environmental, social and governance (ESG) assets are projected to exceed $50 trillion by 2025, it said.

Despite such rapid growth, globally consistent terminology and common definitions in the area of sustainable finance are still in the process of development by industry and other groups, the report said.

It describes several educational activities that regulators should consider.

One example is explaining to retail investors how to obtain sustainability related information. Another is helping them understand ESG certifications, labels and scores to protect them against unsubstantiated or misleading sustainability claims, the report said.

--Reporting by Abdul Latheef, alatheef@opisnet.com; Editing by Michael Kelly, mkelly@opisnet.com

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American Carbon Registry Hits Back After TV Show Probes Benefits of Offsets

August 24, 2022

A major carbon registry has pushed back after a segment examining the benefits of carbon offsets aired Sunday on the TV show "Last Week Tonight with John Oliver.""It seems at best the benefits of carbon offsets are wildly overstated, while the harm that they can do is very real," host John Oliver said. "And while there are ongoing efforts to at least improve the standards of registries, the truth is, the offsets aren't the answer here. Fundamentally, we cannot offset our way out of climate change."Oliver's comments drew sharp reaction from the American Carbon Registry (ACR), whose forestry projects were highlighted in the segment.The registry said the show missed the opportunity to use its platform to explore the legitimate and critical role carbon offsets have in accelerating the transition to a global net-zero economy by midcentury."Unfortunately, the debate about the role that carbon markets and high-quality offsets have to play to address climate change is complex and not one that we can effectively engage in this type of media format," ACR said Monday in a statement posted on its website.Oliver said there are few checks and balances to prevent abuse in the carbon offset industry and cited the Hawk Mountain Sanctuary project in Pennsylvania as an example. The site was already a sanctuary, and the project provided no additional climate benefits, he said. Oliver said JPMorgan Chase bought $1 million worth of carbon credits from the project to offset its emissions."The forest didn't need saving. It wasn't under threat," a clip played on the show said.In a response to questions asked from the program's producers ahead of the taping, ACR said that prior to the development of that carbon project, "the Hawk Mountain project area had no restrictions on timber harvesting, and the forest was aging. It is ACR's understanding that in the absence of carbon revenue, the management activities required for improved forest health would not have been feasible without additional funding such as through timber harvesting. ... The income derived from carbon market finance has been a critical driver in the ongoing protection and management of the forests including addressing invasive species threats and ensuring oak regeneration, while also bringing greater ecosystem awareness and delivering clear climate results."Oliver also cited two other ACR-registered projects that he said did not provide additionality -- one in rural Pennsylvania and the other in New Jersey.The Walt Disney Co. bought credits from the former project, while The Good Traveler has been offering credits to air passengers from the New Jersey project, Oliver said.ACR said producers from the program asked questions about the additionality of the emissions reductions from the three projects. The projects were the subject of prior, "deeply-flawed" reporting, it said."Unfortunately, the rules underpinning quality in the carbon market are nuanced and have not been well conveyed by the media to date," it said. Verra, the largest carbon registry, said it was preparing a statement in response to Oliver's criticism.The show did not have any immediate adverse effect on the price of carbon credits Tuesday, said Jennifer McIsaac, director of market analysis at ClearBlue Markets."ClearBlue is observing a strengthening of the CME N-GEO. So, no price reaction that we can see,"  McIsaac said in an email to OPIS. "Also, as we go into the latter part of the year, pricing for voluntary offsets tends to be supported by end-of-year buying; December has the highest monthly retirements each year."On Tuesday, the CME N-GEO December 2022 futures contract rose as much as 50cts/mt compared with Monday, and trades for forestry carbon credits with co-benefits were done in a range of $9.39/mt.Tommy Ricketts, CEO and co-founder of the carbon ratings agency BeZero Carbon, also weighed in the debate, arguing that project quality ratings like the ones BeZero provides are precisely the type of innovation Oliver said the voluntary carbon market needs."But project types are extremely heterogeneous," Ricketts said in an email."It's just not the case that every type of methodology can guarantee the exact outcome of every project. We need a pass or fail approach for issuance, but quality is ultimately a scale."Ricketts said the credibility issues facing the market stem from a basic point.He believes purchasers, developers and marketplaces lack the tools to accurately assess, manage or price the risks associated with the projects."Information disclosure, transparency and systems of analysis are the lifeblood of scalable, financialized markets. That is why we publish our headline ratings for free coupled with a paywall platform for those seeking to go deeper," he said.It is not the first time carbon offsets have come under media scrutiny, and the additionality problem with the three ACR projects were raised in a report published in December 2020 by Bloomberg Green.Reports questioning the credibility of other carbon projects have also been published by media outlets worldwide, followed by equally robust rebuttals from the registries.Oliver's comments come at a time when the demand for carbon credits remains strong amid a surge in corporate net-zero announcements. In 2021, the value of VCM transactions jumped to nearly $2 billion, U.S. environmental data provider Ecosystem Marketplace said earlier this month. At least one-fifth of the world's largest 2,000 public companies have now committed to meeting net-zero targets by midcentury or sooner through various initiatives, according to the Alliance of CEO Climate Leaders."Study after study have indicated that most offsets available on the market don't reliably reduce emissions, and yet, offsets are now the backbone of the environmental policies of many of the biggest polluters on the planet," Oliver said, referring to the corporate pledges.He said an analysis of the net-zero promises of companies in heavily polluting industries had found that two-thirds of them were relying on offsets instead of emissions reductions to reach their climate goals."The bottom line is, we have an offset system that places profits over science, and the rules regulating it are just far too lax," Oliver said.--Reporting by Abdul Latheef, alatheef@opisnet.com

--Editing by Bridget Hunsucker, bhunsucker@opisnet.com, and Barbara Chuck, bchuck@opisnet.com© 2022 Oil Price Information Service, LLC. All rights reserved.

ICE Launches NBS Carbon Credit Futures For Vintages 2017 to 2030

August 18, 2022

The Intercontinental Exchange (ICE) launched 10 more Nature-Based Solutions carbon credit futures contracts this week, providing the growing voluntary carbon market with trading and hedging opportunities for individual vintages spanning 2016 to 2030.

Like the previously established ICE NBS futures contract for vintages spanning 2016 to 2020, the new contracts each deliver a fixed, five-year vintage bucket with progressively newer years, such as 2017 to 2021 and 2018 to 2022.

On Monday, the first day of trading, 45 lots transacted by companies such as Chevron Products Company, a division of Chevron USA, Hartree Partners, Mercuria, Trafigura and Vitol, ICE said in a press release. Evolution Markets brokered some of the deals, it said.

The vintage ranges for the 45 lots were 2017-2021 and 2018-2022.

The "new carbon credit futures satisfy the key demands of the market. They allow single-vintages to be traded with the added liquidity benefits from having each futures contract deliver a fixed five-year vintage bucket, they provide a forward curve out to 2030, and customers can extend carry trades for multiple years while trading vintage spreads without the basis risk from the cost of carry," ICE Managing Director of Utility Markets Gordon Bennett said in the release. "The structure for the new carbon credit vintages was developed through extensive discussions with a wide community covering corporate buyers, developers, trading houses, and financials."

Activity on the ICE NBS contracts was relatively quiet on Wednesday, with V17-V21 December 2022 bid at $8.28/mt against offers at $8.50/mt and V18-V22 December 2023 bid at $10.70/mt. Nothing had traded as of 1 pm CT.

There was one trade on the ICE NBS V17-V21 December 2022 futures contract on Tuesday, done at $8.14/mt.

That price fell within the low and high range of OPIS Voluntary REDD+ Credits V16-V17 for volume Tier 3 (trades with volumes between 2,000 and 49,999 credits) on Tuesday, which had a mean assessment of $12.205/mt.

OPIS voluntary carbon forestry assessments are also vintage-specific and take into account both the electronic market and the premium-priced bilateral market.

A market participant said on Monday that forestry credit traders and brokers were eyeing ICE's newly launched vintage-specific futures contracts. More specifically, some were removing liquidity from the CME N-GEO future contracts, the participant said.

ICE's Nature-Based Solutions carbon credit futures contract physically delivers Verified Carbon Unit (VCU) credits, with each contract equal to 1,000 carbon credits where each credit is equal to the removal or reduction of 1 metric ton of greenhouse gas (GHG) emissions achieved by projects that preserve and maintain natural ecosystems, the exchange said.

--Reporting by Jeremy Rakes, jrakes@opisnet.com
--Editing by Bridget Hunsucker, bhunsucker@opisnet.com

© 2022 Oil Price Information Service, LLC. All rights reserved.

ACX to Launch Surveillance Program for the Voluntary Carbon Market

August 15, 2022

AirCarbon Exchange (ACX) said Tuesday that it has chosen market risk solutions provider Eventus as partner to introduce the first comprehensive surveillance program for the voluntary carbon market (VCM) later this year.

ACX will use the Eventus Validus platform for trade surveillance and monitoring of money laundering activities in its spot and forthcoming derivatives markets globally, the company said.

The exchange said, due to the emerging nature of carbon credits as an asset class, markets currently operate without the controls of more conventional financial instruments.

"A key principle of ACX's vision is our decision to partner with Eventus to develop, for the first time in the history of the VCM, a comprehensive market surveillance platform to monitor prohibited activities such as market manipulation or money laundering," Thomas McMahon, CEO and co-founder of ACX, said in a statement.

He said the surveillance program would enhance the integrity of the VCM and open up the market to more players.

The exchange said it undertook a "rigorous assessment process" for potential surveillance partners before choosing Eventus.

ACX, which uses blockchain technology to accelerate the efficiency of carbon trading, is based in Singapore, and Eventus in Austin, Texas.

--Reporting by Abdul Latheef, alatheef@opisnet.com
--Editing by Michael Kelly, mkelly@opisnet.com

© 2022 Oil Price Information Service, LLC. All rights reserved.

CCA Q3 Auction Settlement May Reach $33/mt Depending on Demand: Analysts

August 11, 2022

The upcoming third-quarter joint California-Quebec cap-and-trade auction could reach a settlement price between $28.15/mt and $33.05/mt depending on market demand and supply, analyst firm CaliforniaCarbon.Info said Wednesday.The previous auction settled at $30.85/mt, $11.15/mt above the 2022 auction reserve price (ARP) of $19.70/mt.Auction 32 on Aug. 17 will have 57 million vintage 2022 California Carbon Allowances (CCA) in the "current" portion of the event and 7.9 million 2025 CCAs during the "advance" portion.Financial investors without compliance obligations made up 12.3% of all participants in the previous auction and have been participating at a steady rate, at 13.5% in the first quarterly auction.CaliforniaCarbon estimates if financial entities' participation is above 15% in the upcoming auction, the event's settlement price could be between $30/mt to $32/mt, but if it is below 10%, it may reach $27/mt to $29/mt.Speculators without compliance obligations have overall reduced long-term positions throughout 2022, CaliforniaCarbon Analyst Craig Rocha said during a webinar."Investors are less optimistic than they were in December of last year," he said.In 2021, noncompliance entities increased their participation in the auctions, reaching a high of 32.5% during the third quarter event and each quarterly auction sold out. The 2021 quarterly auction settlement prices strengthened consecutively between events and the Q4 auction settled at $28.26/mt or $10.55/mt above the 2021 ARP of $17.71/mt.CaliforniaCarbon pointed to major events like high gas prices, inflation and the ongoing scheduled review of revision of the AB 32 climate scoping plan by the California Air Resource Board (CARB), which may enact changes to the state's cap-and-trade program, as contributing to their price forecast."The past couple of months have been pretty hectic on the policy side," CaliforniaCarbon Analyst Pawan Mehra said during the webinar.On Wednesday, the Intercontinental Exchange CCA V22 December 2022 futures contract traded between $31.90/mt and $32.55/mt by 3 p.m. CT, above the OPIS V22 December 2022 assessment of $31.95/mt on Tuesday.--Reporting by Mayra Cruz, mcruz@opisnet.com

-- Editing by Kylee West, kwest@opisnet.com, Michael Kelly, mkelly@opisnet.com

© 2022 Oil Price Information Service, LLC. All rights reserved.

ICE to Auction 500,000 Carbon Credits From US Reforestation Projects

August 8, 2022

The Intercontinental Exchange (ICE) will host its first voluntary carbon market auctions in the fourth quarter of 2022 by offering half a million credits from U.S. reforestation projects operated by GreenTrees, the company announced Monday.

The exchange plans to host two auctions, each offering 250,000 emission reduction tons (ERTs), issued by the American Carbon Registry, ICE said.

No financial details were disclosed.

A major reforestation program operator, GreenTrees is wholly owned by ACRE Investment Management. Its programs are open to landowners with as low as seven acres to those with up to 3,500 acres, the exchange said.

"By working with ICE, we can now connect one of the largest global networks of companies to everyday landowners, who are our first responders to climate change," Chandler Van Voorhis, manager and co-founder of GreenTrees, said in a statement.

ICE has operated environmental markets for almost two decades.

It has been conducting compliance market auctions for the past 10 years, starting with carbon allowance auctions on behalf of the U.K. government in 2012, the exchange said.

--Reporting by Abdul Latheef, alatheef@opisnet.com

--Editing by Michael Kelly, mkelly@opisnet.com

© 2022 Oil Price Information Service, LLC. All rights reserved.

Australian Capital Territory to Phase Out Internal Combustion Engine Cars

July 26, 2022

The government of Australian Capital Territory (ACT) said last week it will start to phase out internal combustion engine vehicles from 2035, becoming the first Australian jurisdiction to do so.

Home to Australia's capital Canberra, ACT covers a land area of around 2,300 square kilometers in the state of New South Wales.

The ACT has a target to increase the share of zero-emission vehicles (ZEVs) to 80%-90% of new light vehicle sales by 2030 and to start phasing out the sale of new gasoline- and diesel-powered light vehicles from 2035, ACT's Chief Minister Andrew Barr and Minister for Water, Energy and Emissions Reduction Shane Rattenbury said in a July 20 joint press release.

With transport accounting for more than 60% of ACT's emissions, the transition to ZEVs will reduce pollution and support the territory's commitment to reach net zero by 2045, they said.

To encourage uptake and reduce cost barriers for ZEVs, the ACT government will extend financial incentives, including stamp duty waivers for buyers of used electric and hydrogen vehicles, free vehicle registration and offer interest-free loans.

The ACT government will also expand the public charging network and ensure that 100% of all newly leased government vehicles are ZEVs, the ministers said in the press release.

--Reporting by Trisha Huang, thuang@opisnet.com

--Editing by Carrie Ho, cho@opisnet.com

© 2022 Oil Price Information Service, LLC. All rights reserved.

EU Eyes $14.2 Billion in Regional Hydrogen Development Project Hy2Tech

July 18, 2022

The European Commission (EC) has given the green light to a 5.4 billion euro ($5.4 billion)-hydrogen development project, known as Hy2Tech, it said in a press release Monday.

Hy2Tech is the first Important Project of Common European Interest (IPCEI) in support of hydrogen technology and approved under European Union legislation, the statement said. The 5.4 billion euros worth of funding from EU member states will be invested in 35 companies for 41 research, development, and deployment projects.

These 41 projects will cover the entire hydrogen technology value chain, including the transportation and distribution of hydrogen, as well as end-user applications, particularly in the mobility sector. Another 8.8 billion euros in funding is expected to come from private investors to support research and deployment of hydrogen technologies, including electrolyzers, fuels cells, and storage, according to the statement.

"With this project, we will see EU hydrogen production moving 'from lab to fab'; and our industry turning technological mastery into commercial leadership," said commissioner for the internal market Thierry Breton. "We are not only supporting hydrogen through funding but are also developing EU-wide rules for enabling the hydrogen market and creating dedicated infrastructure."

For the European hydrogen federation, the approval of the IPCEI comes after an intense two-year process.

"These projects come at the right moment to help reduce dependency from fossil fuels- in the context of the current energy crisis," Hydrogen Europe CEO Jorgo Chatzimarkakis said in the statement. "Given the vast range of applications that depend on renewable hydrogen for decarbonizing, we very much welcome the 5.4 billion euros allocated by the European Commission to support these projects."

Funding for the 35 companies involved is set to create around 20,000 direct jobs, according to the statement.

In July 2020, the European Commission published its hydrogen strategy for a climate-neutral Europe, with a three-pillar roadmap to scale up the production of renewable-based hydrogen. The EC's ambition is to increase production to 10 million metric tons/year of carbon neutral hydrogen by 2030.

--Reporting by Benita Dreesen, bdreesen@opisnet.com

--Editing by Rob Sheridan, rsheridan@opisnet.com

© 2022 Oil Price Information Service, LLC. All rights reserved.

Australia, US Sign Net Zero Technology Acceleration Partnership

July 12, 2022

Australia said Tuesday it has signed a Net Zero Technology Acceleration Partnership agreement with the US to collaborate on meeting climate goals and address energy security.

The Australia-US partnership, signed between Australia's Minister for Climate Change and Energy Chris Bowen and US Secretary of Energy Jennifer M. Granholm at the Sydney Energy Forum, will accelerate the development and deployment of zero emissions technology and facilitate cooperation on critical minerals supply chains to reduce greenhouse gas emissions, the Australian minister said in a statement Tuesday.

The current threats to global energy markets and energy security make international cooperation all the more important, he said.

The partnership formalizes climate change as a centerpiece of Australia's alliance with the US and reinforces the two nations' shared commitment to reach net zero by 2050, Minister Bowen said.

Initial areas of cooperation across industry, research and private sectors will include the development of long duration energy storage technology, digital electricity grids and technology to support the integration of variable renewable energy, hydrogen and carbon dioxide removal including direct air capture, Minister Bowen said.

"This partnership is a huge milestone in ramping up the US and Australia's shared commitment to ambitious climate action and energy security," Minister Bowen said.

The partnership "reflects our nations' joint commitment to grow our energy capacity and obtain the full advantages of affordable, diverse and secure clean energy," Secretary Granholm said.

"Our two countries will work together to unlock critical advances in long-duration storage, grid integration, clean hydrogen, direct air capture and critical minerals and materials - providing an essential opportunity to export the innovations that will accelerate the global clean energy transition," she said.

The two-day clean energy forum, co-hosted by the Australian government and the International Energy Agency, is attended by ministers from the US, Japan, India, Indonesia and the Pacific Island national of Samoa.

--Reporting by Trisha Huang, thuang@opisnet.com

Editing by Hanwei Wu, hwu@opisnet.com

© 2022 Oil Price Information Service, LLC. All rights reserved.

UK to Spend $65 Million on 15 Carbon Removal Technology Projects

July 8, 2022

The United Kingdom will spend 54 million pounds ($65 million) on 15 carbon removal technology projects as part of a plan to develop a new greenhouse gas removal (GGR) industry in the country, the government announced Friday.

Among the projects receiving funding are a plant that can convert gas from household waste into low-carbon hydrogen; a machine that can pull carbon dioxide out of the air; technology that will capture methane produced by cattle; and a system to remove carbon dioxide from seawater.

The projects were chosen through the Direct Air Capture and Greenhouse Gas Removal technologies competition.

"This investment will help establish a greenhouse gas removal industry in the U.K., which could be worth billions to our economy, bringing in private investment and supporting the creation of new green jobs," Energy and Climate Change Minister Greg Hands said in a statement.

While the government is working to accelerate the move away from fossil fuels, it believes GGR technologies will be essential to meeting the U.K.'s goal of net zero emissions by 2050.

The funding announcement came just days after the government launched a consultation on GGR business models, seeking views from stakeholders on how it can help put the U.K. at the forefront of the sector.

--Reporting by Abdul Latheef, alatheef@opisnet.com

--Editing by Michael Kelly, mkelly@opisnet.com

© 2022 Oil Price Information Service, LLC. All rights reserved.

13th Biofuels ICC: Aviation, Maritime Face Different Net Zero Challenges

July 6, 2022

Brussels - Aviation and shipping will experience different challenges in the transition to net-zero, with airlines considering sustainable aviation fuels (SAF), while the maritime industry is discussing a range of options for the preferred fuel of the future, according to speakers at the 13th Biofuels International Conference & Expo on Wednesday.

In the aviation and maritime sectors, demand for low carbon fuels is expected to increase around 1 billion metric tons by 2050, based on current policy and levels, according to Ausilio Bauen, a partner at E4tech, with long-term changes planned in infrastructure and shipping fleets.

"Even with efficiency gains in vessels, aircrafts, and air traffic management, expected to reduce demand by 30%, we would still need to go from 100 million mt of low carbon fuels today, to 500 million MT over the next 5 years to decarbonize the two sectors. These are unprecedented growth rates," Bauen said.

The need to decarbonize is the strongest in aviation sector according to Bauen, with increasing pressure from airlines and passengers, and amid European regulations and obligations for suppliers to supply SAF from 2025 onwards in all European Union airports, reaching more than 1 million passengers annually by 2030.

"This will be difficult to achieve and there are 'controversial' discussions to expand the feedstock base, to include some sort of a flexibility mechanism and to create a Sustainable Aviation Fund, based on the revenues of the EU emissions trading mechanism." Bauen said.

Trillion-dollar investments will be required to roll-out SAF production infrastructure, to develop several thousand SAF production plants, and new aircraft, according to e4Tech.

The maritime sector deals with a different set of evolving policy proposals, such as the FuelEU Maritime initiative, targeting a 2% decrease in greenhouse gas emissions by 2025 and a 75% cut by 2050, compared to 2020 levels, for vessels of more than 5,000 deadweight tons that call at EU ports.

These proposals are likely to be influenced by supply issues and the shipping sector is currently looking at several options including methanol, hydrogen, biofuels, and ammonia. Aspects such as energy density, storage onboard and onshore, bunkering, safety aspects and handling will be important criteria, but the availability of feedstock will remain key, Bauen added.

The 13th Biofuels International Conference & Expo, organized by Bioenergy Insight, runs July 5-6 in Brussels, Belgium.

--Reporting by Benita Dreesen, bdreesen@opisnet.com

--Editing by Rob Sheridan, rsheridan@opisnet.com

© 2022 Oil Price Information Service, LLC. All rights reserved.

 

SCOTUS Ruling Does Not Impact Existing U.S. Cap-and-Trade Programs: Analysts

June 30, 2022

The U.S. Supreme Court's decision Thursday to limit the Environmental Protection Agency's (EPA) authority in regulating greenhouse gas (GHG) emissions generated by fossil fuel power plants will not "immediately impact" existing jurisdictional cap-and-trade markets in the U.S., according to analysts.

The lawsuit led by West Virginia and other conservative states and coal producers, took aim at clarifying the EPA's authority to regulate Greenhouse Gases under the Clean Air Act (CCA).

The EPA developed the Clean Power Plan in 2015 during the Obama administration, designed to shift power plants away from fossil fuels to cleaner sources like wind, solar and natural gas, as well as to create a national cap-and-trade system. Thursday's decision determined that the CPP was an overreach of the EPA's authority.

The court's decision will guide any new EPA rules under the Biden administration analyst firm ClearBlue Markets said in a Thursday note.

"Any future attempts to enact national cap-and-trade type of systems would require explicit congressional authorization," ClearBlue said.

Existing jurisdictional programs, including the 11-state Regional Greenhouse Gas Initiative (RGGI) and California's cap and trade program are not immediately impacted by the ruling, although RGGI would "interact with national power sector regulations." Stricter limits on GHG emissions in nearby states could increase RGGI allowances costs, ClearBlue noted.

RGGI member states require fossil fuel plants with more than 25 megawatts of generation capacity to offset emission with RGGI allowances or approved offset credits.

RGGI is currently made up of 11 member states: Connecticut, Delaware, Maine, Maryland, Massachusetts, New Hampshire, New Jersey, New York, Rhode Island, Vermont and Virginia.

This year, Virginia is attempting to withdraw from RGGI while Pennsylvania is facing legal challenges in joining the consortium.

The RGGI V22 forward delivery contract traded on the Intercontinental Exchange (ICE) at $14.05/st by 1:30 p.m. CT, down from the OPIS assessment of $14.08/st on Wednesday.

On the U.S. West Coast, California's joint cap-and-trade program with Quebec places limits on entities generating a minimum of 25,000 metric tons of carbon dioxide equivalent (CO2e) per year.

The CCA V22 forward delivery contract traded on ICE between $29.80/mt and $30.10/mt, up from the Wednesday, OPIS assessment of $29.665/mt.

--Reporting by Mayra Cruz, mcruz@opisnet.com

-- Editing by Jeremy Rakes, jrakes@opisnet.com

© 2022 Oil Price Information Service, LLC. All rights reserved.

 

Indonesia Further Delays Carbon Tax to Focus on Economic Recovery

June 27, 2022

The Indonesian government has postponed for the second time a carbon tax due to take effect on July 1 in order to focus on the country's economic recovery, the country's Fiscal Policy Agency (BKF) said in a press release on Friday.

The carbon tax, which was originally planned for April, will put a tariff of a minimum IDR 30 per kg, or IDR 30,000/mt ($2.03/mt), on coal-fired power plants' emissions that exceed a determined emission limit, as OPIS reported earlier.

The government did not specify a new launch date for the carbon tax but said it would remain as one of the 2022 strategic deliverables, along with other energy transition plans including phasing down coal-fired power plants and accelerating renewable energy developments. The government is also still finalizing regulations over the implementation and development of carbon markets, the achievement of Nationally Determined Contributions (NDC) targets, sector readiness and economic conditions, according to the BKF.

"The process of maturation of the carbon market scheme including its technical regulations, the system of which will be supported by the carbon tax, still takes time," the BKF said.

The government is currently focusing on protecting the national economy from the spread of global risks including prioritizing the use of state budget to absorb the impact of rising global food and energy prices, the BKF said.

($1 = IDR 14,797.52)

--Reporting by Lujia Wang, lwang@opisnet.com

--Editing by Hanwei Wu, hwu@opisnet.com

© 2022 Oil Price Information Service, LLC. All rights reserved.

Tokyo Exchange Starts Registration for ETS Trial Ahead of September Launch

June 24, 2022

The Tokyo Stock Exchange (TSE) has opened registration till July 22 for companies to participate in the government-backed carbon credit market demonstration project that is set to start in September this year, said the TSE operator Japan Exchange Group (JPX) in a press release on Thursday.

The TSE was earlier appointed by the Ministry of Economy, Trade and Industry (METI) to carry out the trial for Japan's first voluntary emission trading scheme (ETS), which would trade government-certified voluntary credits.

The trial to be carried out during September 2022 to January 2023 will first start trading J-credits. J-credit is Japan's domestic voluntary program through which the government certifies greenhouse gas (GHG) emissions removed or reduced through the use of energy-saving devices or forestry management.

The timeline for the inclusion of other types of credits including excess reduction quota derived from GX League members is not yet decided, the exchange said.

The METI first launched the GX League concept on Feb. 1, which aims to provide a forum for policy formation and rule-setting including for a voluntary ETS to help the country achieve its 2050 carbon neutral target.

A total of 440 companies, also known as the GX League members, who expressed their support for the ETS will be required to set their own emissions targets upon full implementation of the ETS from April 2023 onwards, as reported.

The TSE, however, has not restricted registration to the GX League members but said only corporations, national and local governments, and voluntary organizations are eligible to register as demonstration participants.

According to the JPX, orders placed must specify the scheme such as J-credit or GX League excess quota along with project type or methodology.

The minimum trading volume will be 1 mt of carbon dioxide equivalent and the minimum trading price movement set at JPY 1, according to the Thursday release.

--Reporting by Lujia Wang, lwang@opisnet.com
--Editing by Yuanlin Koh, lkoh@opisnet.com

© 2022 Oil Price Information Service, LLC. All rights reserved.


bp to Take 40.5% Stake in Asian Renewable Energy Hub in Western Australia

June 15, 2022

bp said Wednesday it has acquired a 40.5% equity stake in and will be the operator of the previously announced Asian Renewable Energy Hub (AREH) in the Pilbara in Western Australia (WA).

The AREH will develop up to 26 gigawatts (GW) of combined solar and onshore wind power generation capacity and supply renewable energy to local customers to help decarbonize the largest mining region in the world, bp said in a press release Wednesday.

The renewable energy will also be used for producing green hydrogen and green ammonia for the domestic and international markets and contribute to bp's aim to capture 10% of the global hydrogen markets, it said.

To be developed in phases over 20 years, the 26GW of targeted renewable power generation capacity will produce the equivalent of more than 90 terawatt hours per year or around a third of all electricity generated in Australia in 2020, bp said.

At full capacity, the AREH is expected to produce around 1.6 million mt/yr of green hydrogen or 9 million mt/yr of green ammonia and abate around 17 million mt/yr of carbon dioxide in domestic and export markets, bp said. Over a 50-year lifetime of the project, the AREH is expected to save around 0.5 gigatonnes of carbon, it said.

The AREH will help bp's customers and partners in meeting their net zero and energy commitments and will also contribute to the long-term clean energy security in the Asia Pacific and help countries such as South Korea and Japan to decarbonize, bp's executive vice president of gas and low carbon energy Anja-Isabel Dotzenrath said in the press release.

bp did not disclose the total or estimated project cost in the press release. A company spokesperson said in an emailed reply to questions it is too early to talk about the overall cost of the project before the completion of the front-end engineering design (FEED) phase but capital investment is likely to be in the "tens of billions of dollars".

It is targeting to deliver first low-carbon power to the Pilbara by 2029, the company spokesperson said.

The other AREH project partners are InterContinental Energy (26.4%), CWP Global
(17.8%) and Macquarie Capital and Macquarie's Green Investment Group (15.3%).

The state government of WA granted the AREH project Lead Agency Status in 2018 and said in a statement Wednesday the project will play a key role in the state's energy transition and spur new manufacturing and mineral processing opportunities.

The WA government on Tuesday also announced it will retire state-owned Muja and Collie coal-fired power stations by 2030 and replace them with A$3.8 billion
($2.62 billion) of new investment in renewable energy infrastructure including wind generation and storage.

The 340-megawatt Collie power station will close in late-2027 while units at the 1,094-MW Muja power station will be progressively shuttered before closing in late-2029, WA Premier Mark McGowan said in a statement Tuesday.

--Reporting by Trisha Huang, thuang@opisnet.com
--Editing by Hanwei Wu, hwu@opisnet.com

© 2022 Oil Price Information Service, LLC. All rights reserved.


New Zealand Considers Farm-Level Levy to Reduce Agricultural Emissions

June 14, 2022

The New Zealand government will consider introducing a farm-level levy system from 2025 with separate prices for short- and long-lived gas emissions to reduce its agricultural emissions with a final decision expected in December this year, according to a government press release dated June 8.

A recommendation report issued in May has been put forward to the relevant ministers by the Primary Sector Climate Action Partnership (Partners), also known as He Waka Eke Noa, which is a partnership between the farming industry, the Māori and the government.

The agriculture sector contributes to 50% of New Zealand's gross emissions but is not yet obligated to offset its emissions under the national compliance emission trading scheme (NZ ETS).

The Partners consider the recommended system to be a practical, credible, and more effective alternative to pricing agricultural emissions via the NZ ETS.

The system will allow farmers to calculate their short- and long-lived gas emissions through a single centralized calculator by inputting their farm area, annualized stock reconciliation, production, and synthetic N-fertilizer type and amount rather than using national averages.

Different levy rates will then be applied to short-lived gas, i.e., methane, and long-lived gases, i.e., nitrous oxide and carbon dioxide, respectively, the report said.

The price of methane should be unique and independent from the price for long-lived gases, sequestration, or the NZ ETS carbon prices and capped at NZ$0.11/kilogram ($69/mt) during 2025-2028, the report said.

Even though the NZ ETS covers a range of greenhouse gases including methane, the country's methane emissions are mainly produced by livestock which contributed 88.4% of the country's gross methane emissions in 2019, government data showed.

"The price of methane should be as low as possible to support practice change and emission reductions towards New Zealand's emissions targets and budgets while also supporting global emissions reductions," it added.

The levy for long-lived gas can be initially set at the level required to fund sequestration, incentive discounts for approved actions and research and development for nitrous oxide reduction as well as a share of administration costs, the report said.

The scheme will also recognize emissions reductions from on-farm efficiencies, provide incentives for uptake of actions and allow offset from on-farm sequestration.

The price for sequestration, if it is to link to the NZ ETS carbon price, should be set at an around 75-90% discount of the NZ ETS carbon price to balance the recognition of genuine sequestration while maintaining the financial viability of the system, the report said.

Levy revenue will be invested in research, development and extension such as providing technical advice and information including a dedicated fund for Māori landowners.

Based on the Partners' estimates, the proposed farm-level levy will bring 4-5.5% reduction in gross methane emissions and a 2.9-3.2% reduction in gross nitrous oxide emissions from their respective 2017 levels by 2030.

In combination with existing government policies, the country could achieve its legislated targets of reducing methane emissions by 10% below 2017 levels by
2030 and reducing nitrous oxide and carbon dioxide to net zero by 2050, according to the Partners.

Once the government agree with the recommendations, the relevant legislation will need to be drafted in 2023 for implementation by Jan. 1, 2025, the Partners said.

The Climate Change Commission will provide the government by June 30 a report on farmers' readiness for agricultural emissions pricing that include an assessment of the Partners' recommendations, the commission said in a press release last Wednesday.

--Reporting by Lujia Wang, lwang@opisnet.com
--Editing by Yuanlin Koh, lkoh@opisnet.com 

© 2022 Oil Price Information Service, LLC. All rights reserved.



Nodal Exchange, IncubEx Launch New Environmental Futures and Options

June 7, 2022

Nodal Exchange and IncubEx announced Tuesday that they plan to launch new environmental products, including futures contracts for renewable energy certificates (RECs), renewable natural gas certificates and voluntary carbon offsets.

The new set of physically delivered environmental products will be listed on Nodal starting on June 17, pending regulatory review, the two companies said in the news release.

The products include the Western Regional Energy Generation Information System (WREGIS) Registered RECs from Center for Resource Solutions (CRS) listed wind energy facilities front-half and back-half futures; NEPOOL Quad Qualified REC Class I futures; and renewable natural gas (RNG) certificate futures.

Also included are verified emission reductions (VERs) Carbon Offsetting and Reduction Scheme for International Aviation (CORSIA) eligible and nature-based futures and options; certified emission reductions (CERS), which are for commitment period 2, 2013-plus and 2016-plus futures; carbon removal futures; and global emission reduction (GER) futures, which were developed by Net Zero Markets.

"The growth story and expanding range of environmental markets are reflected in this upcoming product launch on Nodal," Dan Scarbrough, president and COO of IncubEx, said in the release. "With the new listings, we will launch the broadest set of voluntary carbon offset products on any exchange, which is reflective of the numerous methodologies and project types in the underlying carbon offset market.

"We are also extremely excited that Nodal will list the first-ever futures contract in the renewable natural gas space. This RNG focused product is a signal of the burgeoning underlying market as well as the continued focus on innovation by our team and partners at Nodal Exchange."

The new VER CORSIA-eligible futures and VER nature-based futures and options will enable organizations to offset their own carbon emissions or that of the products they sell, which cannot be future directly reduced, thus financing associated greenhouse gas (GHG) reduction projects, the companies said.

The GER future is a concept covering the voluntary carbon market in a basket of contracts and underlying projects, and carbon removal credits put a price on technical or nature-based projects which directly remove carbon dioxide (CO2) from the atmosphere, Nodal and IncubEx said. As for the CER contracts, they "are not currently listed on any other exchange and are novel in their updated vintage definitions, modified from prior CER listed contracts to help align with CORSIA eligible emission units and the Paris Agreement's Article 6, which establishes a United Nations mechanism to trade credits from emissions reductions from specific projects," the companies said in the release.

The WREGIS REC contracts will represent renewable wind energy produced from Western Electricity Coordinating Council (WECC) registered facilities listed with the CRS in connection with the administration of its Green-e certification programs, with WREGIS being an independent REC tracking system covering the Western Interconnection territory, Nodal and Incubex said.

The NEPOOL Quad Qualified REC futures will deliver RECs qualified across Massachusetts Class I, Connecticut, Class I, New Hampshire Class I and Rhode Island New energy resources.

The RNG futures deliver Renewable Thermal Certificates (RTCs) issued by the M-RETS for qualifying RNG or biomethane injection into a distribution or interstate natural gas pipeline in the U.S.

--Reporting by Jeremy Rakes, jrakes@opisnet.com
--Editing by Kylee West, kwest@opisnet.com; Michael Kelly, mkelly@opisnet.com

© 2022 Oil Price Information Service, LLC. All rights reserved.


UN's Espinosa Cites Financial Support as Key to Collective Climate Action

June 6, 2022

A lack of financial investment is the main obstacle to climate action, but there is still hope that the annual $100-billion pledge of 2009 will be met, said United Nations Climate Change (UNFCCC) executive secretary Patricia Espinosa at the opening of the Bonn Climate Change Conference Monday.

"Beyond the calls for a substantial increase in climate finance and in particular adaptation finance, time and time again, the lack of finance comes up as the main crucial issue for capacity building, technology transfer or the consolidation of the enhanced transparency framework," said Espinosa.

In 2009, at the fifteenth conference of the parties (COP15) of the UN Climate Change Conference in Copenhagen, delegates agreed on climate finance funding of $100 billion/year by 2020. The purpose of the pledge was to fund climate change mitigation, with the finance coming from developed countries with high levels of greenhouse gases for donation to developing regions to help these manage their emissions. The pledge was reiterated at COP21 in Paris in 2015, where delegates agreed to extend the commitment to provide $100 billion/year to 2025.

The Bonn conference, designed to set the stage for COP27 in November, will enable participants to discuss a range of climate topics, including greenhouse gas emission reductions, climate financing and financial support for developing countries to cut emissions.

Delegates will likely press those nations who have not declared their net zero pledges to do so. Those who have will be encouraged to revisit their pledges with greater ambition and earlier target dates. Nations are expected to include details of policy or long-term strategy, including short-and-mid-term targets.

The sessions will take place against a backdrop of increasing climate-related disasters and a heavily altered geopolitical landscape, with political pressure on countries to maintain energy supplies, but Espinosa urged governments not to be deterred.

"Climate change is not an agenda we can afford to push back on our global schedule," she said. "COP27 in Egypt needs to focus on implementation. There, nations must show how they will adapt legislation, policies and programs throughout all jurisdictions and sectors, to put the Paris Agreement into practice in their home countries," said the UN's top climate change official.

The Bonn Climate Change Conference, organized by the United Nations Climate Change, runs June 6-16 in Bonn, Germany.

--Reporting by Benita Dreesen, bdreesen@opisnet.com
--Editing by Rob Sheridan, rsheridan@opisnet.com

© 2022 Oil Price Information Service, LLC. All rights reserved.


Truck Manufacturers Seek to Block New California Emissions Standards

June 2, 2022

A group representing truck manufacturers has filed suit against the California Air Resources Board (CARB), claiming the state agency isn't giving them enough time to meet stricter emission standards adopted in December.

The suit by the Truck and Engine Manufacturers Association (EMA) contends that CARB's new standards, which go into effect Jan. 1, 2024, give them only two years to comply instead of the four years required by the federal Clean Air Act.

The suit, filed in U.S. District Court in California, seeks to have the rules declared invalid and California blocked from enforcing them.

While a U.S. Environmental Protection Agency waiver allows California to set its own emission standards, legislation allowing for the waiver also requires the state to give manufacturers the same lead time for changes as dictated in the Clean Air Act, the lawsuit says.

"Congress established the minimum four-year lead-time requirement for the emission standards that apply to new heavy-duty vehicles and engines to account for the unique nature of the heavy-duty industry, where production and sales volumes are much lower than for passenger cars and light-duty trucks, and where the heavy-duty engine manufacturing industry is not fully integrated with the heavy-duty vehicle manufacturing industry," the suit says.

The four-year delay in implementing rules allows manufacturers time to develop new emission-control technology while also ensuring enough time between rule changes to allow manufacturers to recover their investments in developing the technology, the suit says.

The new regulations, adopted by CARB in December, require nitrogen oxide emissions by heavy-duty truck engines be cut by 75% by 2024 and particulate emissions be reduced by 50%, according to the suit. The rules also extend the compliance period for heavy duty engines from 11 years or 120,000 miles to 15 years or 150,000 miles, the suit says. The new rules and tight timeline for complying would force manufacturers to rapidly redesign, test and certify their heavy-duty engines, a process that will involve significant "efforts, costs and burdens," the suit says.

"Truck and engine manufacturers are proud that today's modern engines reduce harmful emissions to near zero levels, and we are committed to building still cleaner products - but CARB must provide manufacturers the minimum four years of lead time mandated by Congress," EMA President Jed R. Mandel said in a statement about the suit.

"This lawsuit is simply to ensure that CARB follows all of the prescribed rules - one of which is intended to maximize the likelihood of the smooth and successful implementation of new emission standards," Mandel said.

A CARB spokesperson did not respond to a request for comment on the suit by publication. California has the ability to set its own vehicle emissions and mileage standards thanks to a waiver issued by the federal government under the Clean Air Act.

While former President Donald Trump revoked that waiver in 2019, it was later reinstated by the EPA under President Joe Biden. That move is being challenged by a group of Republican-led states and several retail and fuel industry groups, which say permitting California to set its own standards has the effect of allowing the state to set national vehicle standards -- as automakers will not build different cars for different regions.

--Reporting by Steve Cronin, scronin@opisnet.com
--Editing by Frank Tang, ftang@opisnet.com

© 2022 Oil Price Information Service, LLC. All rights reserved.


Green Groups Launch Free Interactive Tool to Assess Carbon Credit Quality

June 1, 2022

There is a new online tool in the market to assess the quality of carbon credits -- the free, interactive Scoring Tool was launched Tuesday by three environmental groups under their Carbon Credit Quality Initiative (CCQI).

Founded by the Environmental Defense Fund (EDF), World Wildlife Fund-US and the Oeko-Institut, the CCQI provided transparent information on quality of carbon credits.

The new tool aims to enhance the integrity of carbon credits by enabling buyers to identify high-quality offsets and by encouraging project developers and other market participants to pursue the highest standards, the organizations said.

The credits are assessed using CCQI's methodology, which scores a given carbon credit on a scale of one through five against seven quality objectives.

The first set of scores assesses the quality of three project types: landfill gas utilization, establishment of natural forests and efficient cookstoves under four carbon credit programs: the Clean Development Mechanism, Climate Action Reserve, Gold Standard and the Verified Carbon Standard operated by Verra.

"We don't have a threshold standard where we say this carbon credit is good and this carbon credit is bad," Lambert Schneider, research coordinator for international climate policy at the Oeko-Institut told a launch webinar Tuesday. "Rather, what we want to do is to provide users a nuanced picture of different quality features, outcome credits and perform against a different quality objectives."

The first round of scorings showed that carbon credits often perform well in some areas but poorly in others, the groups said.

Efficient cookstove projects, for example, face serious shortcomings in quantifying emission reductions and addressing non-permanence but often generate high environmental and social benefits, they said.

"CCQI's first round of scoring confirmed that there is both wheat and chaff in the carbon credit market. The important thing, however, is that the consumer can tell the difference," Pedro Martins Barata, senior director of climate at the EDF, said in a statement. "Free, transparent resources like our Scoring Tool can move the market toward quality by helping users understand what quality means for carbon credits."

The groups are planning to add several more project types to the Scoring Tool later this year. Project types under consideration include large-scale grid-connected solar and wind power and avoidance of methane emissions from oil and gas flaring.

At the webinar, Barata stressed that the CCQI is not competing with any rating agencies.

"Just to make sure, we don't see ourselves necessarily in that competition," he said.

--Reporting by Abdul Latheef, alatheef@opisnet.com
--Editing by Michael Kelly, mkelly@opisnet.com

© 2022 Oil Price Information Service, LLC. All rights reserved.


ECS 2022: Convergence Calls for Compliance and Voluntary Carbon Markets

May 25, 2022

Coverage of the European Climate Summit, taking place in Barcelona, May 24-25.

BARCELONA - Compliance and voluntary carbon markets need to converge to help create a higher level of consistency, speakers said at the European Climate Summit on Wednesday.

Converging the two markets could enable the harmonization of national accounting practices, create transparency that would avoid the double counting of emissions and should assist in aligning with local regulations, according to speakers at the Summit.

The compliance market is used by companies and governments that by law must account for their greenhouse gas emissions. It is regulated by mandatory national, regional or international carbon reduction regimes. By contrast, in the decentralized voluntary market, the trade of carbon credits is done voluntarily by private individuals.

"These two markets are designed based on the same infrastructure, on the same goals, and in some cases, there is a direct overlap with a guaranteed price," said David Antonioli, CEO Verra. "However, it is important to understand that the drivers of these markets are very different."

For Antonioli, the idea of convergence is interesting but it poses a question on how to design voluntary rules that support governmental legislation.

"We need to be sure that private sector activity does not replace governmental actions. Figuring out how to make the voluntary market more aligned with regulatory will be key," he said.

Mark Woodall, chief investment officer at C-Quest Capital, noted that price calculations for the two markets are totally different.

"The voluntary market is not priced as a cost-to-production [market] but priced as a cost-to-value; this is the difference between the compliance and non-compliance markets," said Woodall. "Convergence could be achieved if we calculate for the voluntary market, the cost per abated metric ton of carbon
dioxide while adding the social and technological benefits. It needs a different mindset to calculate the cost of abatement and the cost of production," he said.

Meanwhile, other regions, such as Singapore and Japan, are taking steps to bring non-compliance systems into their compliance systems, said Woodall. Singapore is considering using 10% of its  ompliance market for approved quality voluntary projects, he said.

The European Climate Summit, organized by the International Emissions Trading Association, runs May 23-25 in Barcelona, Spain.

--Reporting by Benita Dreesen, bdreesen@opisnet.com
--Editing by Rob Sheridan, rsheridan@opisnet.com

© 2022 Oil Price Information Service, LLC. All rights reserved.


ECS 2022: Extra 250 Million Carbon Allowances Release Could Undermine Market

May 24, 2022

Coverage of the European Climate Summit, taking place in Barcelona, May 24-25.

BARCELONA - A proposal to release up to 250 million carbon allowances from the Market Stability Reserve (MSR) of the European Union Emissions Trading System (ETS) could set a dangerous precedent, cautioned speakers at the European Climate Summit in Barcelona on Tuesday.

The European Allowances, credits that allow the emission of one metric ton of carbon dioxide equivalent during a specified period, could be worth some 20 billion euros ($21.5 billion) in carbon auctions. The proposal to release a large number could fundamentally undermine the credibility of the carbon market, they warned.

"The key of the whole MSR system is raising trust and credibility in the system; without MSR we would have notional floor prices," said Ingo Ramming, head of carbon markets at Spanish financial services company BBVA.

"The issue now is that people believe that the auction revenues are used for other things than for what it was supposed to do, and the market is triggered by this," said Haege Fjellhiem, director of carbon research at financial data provider Refinitiv.

The European Commission launched its REPowerEU plan earlier this year to produce clean energy and diversify supplies. Additional investments of 210 billion euros are needed between now and 2027 to phase out Russian fossil fuel imports, which currently cost European taxpayers nearly 100 billion euros/year, according to a statement on the European Commission's website.

European Union member states can use the new, so-called Recovery and Resilience Facility grants that are funded by the auctioning of ETS allowances, currently held in the MSR, and worth the 20 billion euros, the statement said.

 "If we want to accelerate emission reductions, we need to finance REPowerEU, as this is our response to an exceptional geopolitical situation," replied Mette Quin, the European Commission's deputy director of carbon markets.

"We have done the assessment and we know that we need 250 million allowances to be auctioned to meet the REPowerEU goals. The price impact will be muted, taken into consideration the current situation. The raise of energy prices has a much bigger impact, and the carbon price is only a small fraction of it," Quin added.

However, some participants at the Summit remained uncertain.

"MSR is a rule-based mechanism; is this just a one time off and how to ensure it will not be coming back in the near future?" asked Ramming.

"The recent announcements of the European Commission are confusing for many of our clients," said Aymeric de Conde, commercial director of carbon and renewables trading at Vertis Environmental Finance.

"You have ETS and MSR and they are both based on volumes and balances. Now the Commission adds additional functions and is reversing the flow of the allowances in the market," Conde said. "Many companies are confused and are taking a step back and just waiting for the final version of the ETS and
REPowerEU legislation."

The European Climate Summit, organized by the International Emissions Trading Association, runs May 23-25 in Barcelona, Spain.

--Reporting by Benita Dreesen, bdreesen@opisnet.com
--Editing by Rob Sheridan, rsheridan@opisnet.com

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ECS 2022: Carbon Pricing is Key to Meeting Paris Agreement Goals

May 24, 2022

Coverage of the European Climate Summit, taking place in Barcelona, May 24-25.

BARCELONA - Carbon pricing is a key instrument to combating climate change, with help from the voluntary carbon market in purchasing carbon credits and driving emission reduction, according to speakers at the opening session of the European Climate Summit in Barcelona Tuesday.

"Carbon pricing plays a vital role in the broad range of instruments to decarbonize sectors, and an increasing number of countries are implementing carbon systems," Mary Burce Warlick, deputy executive director of the International Energy Agency told delegates at the Summit. "We believe that the
world is facing its first real global energy crisis [but] we could reach a historical turning point and develop cleaner energy systems. Carbon pricing will be the key instrument to do this," she added.

The global carbon market value surged to a record value of $851 billion in 2021, according to analyst data. Some 40 countries currently use carbon pricing mechanisms, with more planning to implement them in the future.

"Time is running out, but the good news is that we have new technologies and solutions and new investments in infrastructures, beneficial not only for industries but also for our citizens," said general director of the Spanish Office of Climate Change Valvanera Ulargui.

The European Climate Summit, organized by the International Emissions Trading Association, runs May 23-25 in Barcelona, Spain.

--Reporting by Benita Dreesen, bdreesen@opisnet.com
--Editing by Rob Sheridan, rsheridan@opisnet.com

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EEX Group to Enter Voluntary Carbon Market With Suite of Exchange Contracts

May 24, 2022

Germany's EEX Group said Tuesday that it will enter the voluntary carbon market (VCM) by listing a suite of four products on the Nodal Exchange next month.

The launch is scheduled for June 17, followed by a listing on the European Energy Exchange (EEX) in the second half of 2022, the company said.

"Through this global listing approach, the VCM products will be made accessible across multiple time zones, reflecting the global nature of the products," the EEX Group said in a news release.

It said the product suite will cover four contracts, aimed at striking a balance between standardization, on the one hand, and catering for different customer preferences, on the other.

They are: Verified emission reduction (VER) units, aligned with the eligibility rules of the Carbon Offsetting and Reduction Scheme for International Aviation (CORSIA); carbon credits from nature-based solutions; carbon removal credits, the first-of-its-kind exchange-listed contract designed to focus on removal and sequestration activities; and global emission reduction (GER) credits representing the entire VCM in one product, with a basket approach and gradual pathway to net-zero.

The product suite addresses the increasing demand for carbon credits from corporates, the company said.

EEX CEO Peter Reitz said a robust, trustworthy and secure VCM is instrumental to generate financial investments critically needed for a net-zero future.

"The VCM launch is the next logical step for us in our sustainability roadmap as we have a responsibility to our customers and a duty of care as an exchange market operator to contribute to the transition to a cleaner, greener future," Reitz said in the release.

The company said it is collaborating with industry partners to build a convincing and reliable VCM offering.

This includes expanding its cooperation with IncubEx, a long-standing partner of the group, for developing exchange-traded products, services and client relationships in global environmental markets.

The EEX Group has over 15 years of experience in operating environmental markets and offers the largest portfolio of environmental contracts worldwide.

Nodal and EEX are its subsidiaries.

--Reporting by Abdul Latheef, alatheef@opisnet.com
--Editing by Bridget Hunsucker, bhunsucker@opisnet.com, and Barbara Chuck, bchuck@opisnet.com

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EU Unveils $221 Billion Plan to Secure Energy Independence From Russia

May 18, 2022

The European Commission on Wednesday unveiled a 210 billion euro ($221 billion) plan to secure energy independence from Russia by 2027, calling it a "down payment" on security.

The REPowerEU plan calls for energy savings, diversification of supplies and accelerated roll-out of renewables to replace fossil fuels in homes, industry and power generation, the executive branch of the European Union (EU) said.

"Delivering the REPowerEU objectives requires an additional investment of 210 billion euros between now and 2027. This is a down payment on our independence and security," the Commission said in a statement.

It said cutting Russian energy imports can also save the EU almost 100 billion euros ($105 billion) per year.

EU Commission President Ursula von der Leyen told a news conference in Brussels that Russia's invasion of Ukraine had disrupted the global energy markets and showed how dependent the 27-member bloc is on imported energy and how vulnerable it is to rely on Russian supplies.

"And, therefore, we must now reduce as soon as possible our dependency on Russian fossil fuels. I am deeply convinced that we can. And thus, today, we presented our plan to realize these objectives," von der Leyen said.

She said the EU had already managed to reduce gas imports from Russia from 40% last year to 26% in April 2022.

"But today, we are taking our ambition yet to another level to make sure that we become independent from Russian fossil fuels as quickly as possible. REPowerEU will help us to save more energy, to accelerate the phasing out of fossil fuels, and most importantly, to kick-start investments on a new scale," von der Leyen said.

The Commission is promoting energy savings as the quickest and cheapest way to address the current crisis. It aims to increase the EU energy efficiency target for 2030 from 9% to 13%.

Saving energy now will help the EU to prepare for the potential challenges of next winter, it said, adding that short-term behavioral changes alone could cut gas and oil demand by 5%.

The EU has also been working with its international partners to diversify supplies for several months, and has secured record levels of liquefied natural gas deliveries, the Commission said.

It also wants to raise its 2030 target for renewables from 40% to 45%.

"A massive scaling-up and speeding-up of renewable energy in power generation, industry, buildings and transport will accelerate energy independence, give a boost to the green transition, and reduce prices over time," the Commissions said.

It has set up a new platform to enable countries to jointly purchase energy by pooling demand, optimizing infrastructure use and coordinating outreach to suppliers.

Another focus of REPowerEU will be reducing fossil fuel consumption in industry and transport.

To enhance energy savings and efficiencies in the sector and accelerate the transition toward zero-emission vehicles, the Commission will soon present a Greening of Freight Package, aiming to significantly increase energy efficiency in the sector.

--Reporting by Abdul Latheef, alatheef@opisnet.com
--Editing by Michael Kelly, mkelly@opisnet.com

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Nodal Posts New Records in Power, Environmental Futures in April

May 4, 2022

Nodal Exchange achieved new records in power and environmental futures during the month of April, including traded power futures and open interest in environmental products on the exchange, the company announced in a news release.

Nodal set a calendar month record for April with traded power futures volume of 244 million megawatt hours (MWh), an increase of 13.5% from April 2021, the exchange said in the release, adding that in the North American power futures, it had open interest at the end of April at a record 1.213 billion MWh representing a $174 billion of notional value based on both sides.

Open interest in environmental products on Nodal grew to a record high of over 194,000 lots in April, and the exchange had open interest across the product suite at nearly 193,000 contracts at the end of the month, an increase of 42% from the prior year.

"These are extraordinary times, and we are seeing increased price volatility in energy markets which makes price risk hedging even more important. Nodal Exchange is proud to serve the power, natural gas and environmental markets in managing risk and appreciates the ongoing support of its community," Chairman and CEO of Nodal Exchange Paul Cusenza said in the release.

Much of the growth was represented by two renewable energy certificate (REC) groups -- PJM-based REC contracts and Texas CRS and solar.

Open interest in the PJM-based REC contracts totaled 109,709 at the end of the month, an increase of 24% from April 2021, after it rose as high as a record of 110,760 contracts during the month.

OPIS assessed V22 PJM Tri-Qualified at $24.06/MWh at the end of April after it started the month at $23.30/MWh, while OPIS assessed the V23 PJM Tri-Qualified at $24.41/MWh at the end of April, a gain of 64cts from the beginning of April.

Assessments throughout the Mid-Atlantic region rose throughout April on increased demand.

Texas CRS wind and solar open interest ended the month at 31,705 contracts, up 88% from 16,387 the year prior, with the contracts setting a new record in the month, hitting 31,812 contracts.

Nodal, in collaboration with IncubEx, offers more than 90 futures and options products on the exchange. Nodal also set monthly power and environmental futures records in March and a quarterly record in the first quarter of this year.

--Reporting by Jeremy Rakes, jrakes@opisnet.com
--Editing by Kylee West, kwest@opisnet.com; Michael Kelly, mkelly@opisnet.com

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REDD+ Prices Recover, Stabilize Ahead of Expected Earth Day Demand

April 22, 2022

Following a two-month period of heightened volatility, voluntary REDD+ credits prices were recovering from a $6/mt slide to finally stabilize in recent weeks – with the OPIS V21 average price hovering right above the $14/mt-mark since the end of March.

Apr2022-REDD-prices-recover-earth-day

Customer requests for REDD+ credits are increasing after a lull in over-the-counter activity, but many project developers are still out of supply, as a third-party verification bottleneck continues to slow issuances on registries.

A project developer said this week: “Supply and uncertainty over future market prices are challenges in doing deals at the moment, but I anticipate Earth Day … could cause an increase in interest in activity.”

Price uncertainty has permeated the market since the start of February, when opportunistic, financial players liquidated voluntary carbon positions on electronic platforms to focus on oil and gas market volatility – a byproduct of Russia’s invasion on Ukraine.

Many of the speculators have returned, but the initial retreat further escalated a downward price trend already in motion due to typical first-quarter demand weakness.

--Reporting by Bridget Hunsucker, bhunsucker@opisnet.com 

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Pennsylvania Court Clears the Way for State to Join RGGI by Q3 2022

April 19, 2022

The Pennsylvania Legislative Reference Bureau (LRB) will publish regulations this weekend paving the way for the state the join the Regional Greenhouse Gas Initiative (RGGI), ending months of political maneuvering that kept the state from joining in Q1, as originally planned.

On Monday, a state court dissolved a stay preventing the LRB from publishing the regulations, cementing the state's participation in the program. The Pennsylvania Department of Environmental Protection (DEP) had sued the LRB in early February for not publishing the regulation.

"Yes; the regulation will be published on Saturday, April 23," DEP spokesperson Neil Shader said Tuesday.

He added the state would officially participate in the RGGI auctions starting in the third quarter of 2022.

The LRB had argued it could not publish the regulations as a Senate Concurrent Regulator Review Resolution 1 (SCRRR1) had been pending, which would have prevented Pennsylvania from joining RGGI. The SCRRR1 to failed to gain a Senate majority vote on April 5 to overturn a veto by Gov. Tom Wolf (D).

The following day, the Pennsylvania Commonwealth Court had ruled to prevent the LRB from publishing on April 6.

The DEP drafted the RGGI regulation following a 2019 executive order signed Wolf. Pennsylvania has a larger overall climate goal to reduce CO2 emissions by 25% by 2025 and 80% by 2050, compared to 2005 levels.

Pennsylvania's RGGI participation would reduce 188 million tons of carbon dioxide (CO2) over the period of a decade, according to the DEP.

RGGI is made up of 11 member states: Connecticut, Delaware, Maine, Maryland, Massachusetts, New Hampshire, New Jersey, New York, Rhode Island, Vermont and Virginia.

Under the program, fossil-fuel power plants with more than 25 megawatts of generation capacity must offset emissions with either RGGI allowances or approved offset credits.

On Tuesday, RGGI forward delivery prices traded on the Intercontinental Exchange (ICE) between $14.25/st and $14.35/st. On Monday, OPIS assessed the RGGI V22 December 2022 price at $14.25/st.

--Reporting by Mayra Cruz, mcruz@opisnet.com
--Editing by Kylee West, kwest@opisnet.com; Michael Kelly, mkelly@opisnet.com

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World Added 257 GW of Renewables Capacity in 2021: Report

April 11, 2022

Renewable energy accounted for 38% of global installed capacity at the end of 2021 as the world added 257 gigawatts (GW), the International Renewable Energy Agency (Irena) said Monday.

In December 2021, global renewable generation capacity stood at 3,064 GW, increasing the stock of renewable power by 9.1%, and contributing to a record 81% of global power additions, the intergovernmental agency said in its Renewables Capacity Statistics 2022.

Although hydropower accounted for the largest share of the total renewable generation capacity with 1,230 gigawatts (GW), solar and wind continued to dominate the growth, Irena said.

Solar power alone accounted for over half of the additions, with a record 133 GW last year, followed by 93 GW of wind energy overall, with offshore wind capacity hitting a record 21 GW, the report said.

The other contributors to renewables capacity last year were bioenergy, geothermal energy and off-grid electricity.

"This continued progress is another testament of renewable energy's resilience. Its strong performance last year represents more opportunities for countries to reap renewables' multiple socio-economic benefits," IRENA Director General Francesco La Camera said in a statement.

Despite the encouraging global trend, he said Irena's outlook shows that the energy transition is far from being fast or widespread enough to avert the dire consequences of climate change.

The report said Asia contributed 60% of the new renewable capacity in 2021, with China alone adding 121 GW.

Europe and North America, led by the U.S., took second and third places respectively, with the former adding 39 GW, and the latter 38 GW.

Renewable energy capacity grew by 3.9% in Africa and 3.3% in Central America and the Caribbean, Irena said.

--Reporting by Abdul Latheef, alatheef@opisnet.com

--Editing by Michael Kelly, mkelly@opisnet.com

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Financial Participants to Remain in CCAs Until Second Half of Decade: Analyst

April 7, 2022

Anaheim, California - Speculative participation in the California Carbon Allowances (CCA) markets will remain robust until the second half of the decade, a CaliforniaCarbon.info analyst said.

Senior Analyst Anant Jain told delegates at the North American Carbon World Conference on Wednesday that many of the financial players will exit the California Cap-and-Trade carbon market when prices near the regulated ceiling price.

Under the program, allowances are set aside into an Allowance Price Containment Reserve. Credits from the reserve are triggered into the market when the auction price of CCAs reaches a previously established threshold. That ceiling price gains 5% plus inflation each year. For example, in 2022, the reserve will trigger at two price levels - at $46.05/mt and $59.17/mt.

"As prices continue to rise and the ceiling is almost hit, investors will exit as the decade goes on," Jain said during the session "Analyst Take - WCI: The Investor Effect - How much and how long?"

In 2019, non-compliance entities increased positions on the Intercontinental Exchange (ICE) CCA futures contracts to become a large subset of CCA market participation. In response to new demand, the CCA current year vintage prompt price steadily gained that year, starting at $15.66/mt and ending at $17.66/mt, according to OPIS data.

The price was assessed by OPIS at $31.25/mt on Thursday.

Jain noted that the non-compliance entities include equity investors, asset owners and developers, institutional carbon and ESG funds, retail investors and banking investors. CaliforniaCarbon.info estimated that the players are seeking a return of 12-15% currently, down from an earlier 25%.

The participants are currently focused on seven market variables: the COVID-19 pandemic becoming an endemic; the penetration of zero-emissions vehicles (ZEVs) in California; inflation in the U.S.; interest rates and engagements of investors; projects planned by compliance entities; the Russia's invasion of Ukraine; and the California emissions scoping plan outlook, he said.

Financial players have also increased participation in the California and Quebec joint cap-and-trade program quarterly auctions, rising from less than 3% per auction prior to 2020 to 9-10% in the most recent event in February, Jain said.

The first quarter auction sold out of the 58.53 million current vintage CCAs up for grabs and settled at a record-high of $29.15/mt, according to data released in February by the California Air Resources Board (CARB).

--Reporting by Jeremy Rakes, jrakes@opisnet.com
--Editing by Bridget Hunsucker, bhunsucker@opisnet.com

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JB Hunt Offers Carbon Credits to Offset Supply Chain Emissions

April 5, 2022

Trucking giant J.B. Hunt Transport Services on Monday launched a new program to neutralize the carbon footprint of its customers.

CLEAN Transport will help participants offset emissions based on lane-specific activity each quarter, the U.S. company said.

Working with third parties, J.B. Hunt will provide them with data showing the amount of carbon offsets needed to achieve a carbon-neutral shipment and obtain credits supporting the project selected by the customer, it said.

Offset projects include reforestation, forest management, regenerative agriculture and clean power generation.

CLEAN Transport is currently available for J.B. Hunt intermodal customers and will expand to additional service areas as part of the program's growth, the company said.

The projects are verified and registered with recognized organizations such as the American Carbon Registry, Verra, Gold Standard and Climate Action Reserve.

"J.B. Hunt is committed to leading the industry toward a low-carbon future," Craig Harper, chief sustainability officer at J.B. Hunt, said in a statement. "Many of our customers are working toward short- and long-term sustainability goals, and CLEAN Transport will serve as a great extension of the efforts they are already taking to reduce the carbon footprint of their supply chain."

In 2020, the company avoided an estimated 4.3 million empty miles by using its technology platform J.B. Hunt 360° to secure backhaul freight -- hauling cargo back from the destination to the point of origin.

The U.S. trucking industry moves more than 70% of all the freight in the country, leaving a big carbon footprint.

In 2019, the transportation sector accounted for the largest portion, 29%, of total U.S. greenhouse gas emissions, according to the U.S. Environmental Protection Agency. Within the sector, medium- and heavy-duty trucks were responsible for 24% of emissions.

--Reporting by Abdul Latheef, alatheef@opisnet.com

--Editing by Michael Kelly, mkelly@opisnet.com

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ICAO Broadens Eligibility of ART Credits for CORSIA

March 29, 2022

The Architecture for REDD+ Transactions (ART) program said Tuesday that the International Civil Aviation Organization (ICAO) has expanded the eligibility of ART-issued TREES Credits for use under the Carbon Offsetting and Reduction Scheme for International Aviation (CORSIA).

TREES Credits issued for the enhancement of carbon removals through reforestation and forest restoration as well as for the protection of forests in jurisdictions with high forest cover and low rates of deforestation (HFLD) are now eligible for CORSIA, the organization said.

TREES stands for The REDD+ Environmental Excellence Standard, while REDD+ refers to Reducing Emissions from Deforestation and forest Degradation, a United Nations (UN) initiative launched in 2008.

ART was initially approved by the UN's aviation agency in 2020 to supply vintage 2016 to 2020 TREES Credits. The approval was expanded in December 2021 to include ART-issued credits generated between 2021 and 2023.

"The latest decision to extend eligibility to TREES credits generated using the removals and HFLD crediting approaches marks the first ICAO approval of a jurisdictional REDD+ program to supply distinct credits from the protection and restoration of forests for airlines to meet their CORSIA targets," the organization said in a news release.

Mary Grady, the nonprofit's executive director, said the approval, for the first time, offers forest countries access to an important global compliance carbon market.

This includes credits from reduced deforestation as well as from the continued protection and restoration of forests at a jurisdictional scale, she said.

CORSIA was adopted by the ICAO in 2016. Under the scheme, airlines can offset the growth in emissions by purchasing carbon credits and moving toward the use of sustainable aviation fuel.

The program is in its pilot phase until 2023. Participation will become mandatory in 2027 for all 193 UN member states, except for the least developed countries.

--Reporting by Abdul Latheef, alatheef@opisnet.com

--Editing by Michael Kelly, mkelly@opisnet.com

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Report Calls for Strengthening of Global Emissions Trading Systems

March 29, 2022

Existing global emissions trading systems (ETS) must be strengthened to reach carbon neutrality by 2050, the International Carbon Action Partnership (ICAP) said in a report released Tuesday.

ICAP's Emissions Trading Worldwide: Status Report 2022 said that net-zero commitments by governments now cover roughly 90% of global greenhouse gas (GHG) emissions, but many are not yet supported by policies.

"To reach these long-term goals, countries must rapidly implement adequate policy frameworks and those already in place must be bolstered," the report said. "In this context, emissions trading will be critical, and will increasingly play a key role as the policy tool of choice to drive decarbonization."

At the end of 2021, ETS covered 37% of emissions in jurisdictions that have enshrined their net-zero targets in law and 17% of emissions in regions where targets are under development, ICAP said.

There are 25 ETS in force worldwide, with another 22 scheduled for implementation or under consideration, mainly in South America and Southeast Asia.

By the end of 2021, global ETS had raised a record $161 billion in auctioning revenues, growing by over 50% since the end of 2020, the report said.

It said existing systems are maturing, becoming increasingly resilient to external shocks and several governments are undertaking reforms to align their ETS with net-zero targets.

ICAP said the increase in global climate ambition had resulted in an increase in carbon prices across almost all systems, reflecting the expectations of more ambitious emissions caps in the future.

The group, however, warned that public acceptance of carbon pricing is essential to its political feasibility, effectiveness and longevity.

"In the years ahead, we must continue to learn from each other's experiences on how best to design programs to support a just transition, communicate the benefits of carbon pricing and how to mitigate its impacts where needed, to gain and maintain public support," it said.

ICAP is an intergovernmental organization based in Berlin, Germany. Founded in 2007, it has 33 members and seven observers.

--Reporting by Abdul Latheef, alatheef@opisnet.com;

--Editing by Michael Kelly, mkelly@opisnet.com

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China's Hainan Province to Build Emission Trading Center in H2 2022

March 22, 2022

China's southern province of Hainan is set to establish an international carbon emission trading center in its southernmost city of Sanya in the second half of this year with a focus on blue carbon trading, according to a report by provincial media Hainan Daily last Friday.

The proposed center, which is part of Hainan's development plan for its free trade port, was approved by provincial authorities in early-February this year, the report said.

The Hainan center will facilitate the trading of blue carbon credits through which the center aims to gain international recognition for its blue carbon methodology, said Hainan Daily. Further details were not disclosed.

Blue carbon refers to carbon captured in coastal and marine ecosystems.

Blue carbon methodologies are not yet part of China's national voluntary emission reduction program, but the country has seen its first blue carbon deal done last year.

China's Xiamen Carbon and Pollution Exchange, which was first established in 2011, facilitated the country's first ocean carbon sink deal last September using a mangrove ocean carbon sink methodology wholly developed by the University of Xiamen, as OPIS reported earlier.

OPIS first reported in last September on Hainan's plan to build an international emission trading platform that includes providing linkage between China's compliance emission trading scheme (ETS) and other overseas compliance markets.

The province currently does not operate any regional compliance ETS.

--Reporting by Lujia Wang, lwang@opisnet.com

Editing by Carrie Ho, cho@opisnet.com

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More Biofuels Could Help Canada Meet Climate Targets: Report

March 22, 2022

With the right policies, Canada could reduce five times more greenhouse gas emissions through biogas and renewable natural gas (RNG), helping the country meet its climate goals, a new report said Tuesday.

Biogas and RNG projects currently reduce 8 megatonnes (mt) of emissions by making clean energy out of methane collected from landfills, agriculture and other organic waste, the Canadian Biogas Association (CBA) said in its report, Hitting Canada's Climate Targets with Biogas & RNG.

That number will grow only by 2.5 mt by 2030 with existing policies, the group said.

The report said a combination of new policies could deliver 26.7 mt of emissions reductions by 2030, meaning biogas and RNG could be instrumental for hitting Canada's 2030 climate targets.

"The 26.7 Mt of reductions would achieve more than one-half of Canada's 2030 methane pledge, while also helping close the 66-Mt gap to Canada's overall 2030 target that was calculated by the environment commissioner last year," the CBA said in a news release.

At November's COP26 climate summit in Glasgow, U.K., Canada and more than 100 other countries issued the Global Methane Pledge, agreeing to cut methane emissions by 30% by the end of the decade.

Canada has also pledged to cut oil and gas methane emissions by at least 75% below 2012 levels by 2030.

The government has said that reducing methane emissions will help Canada achieve its goal of cutting emissions by 40% to 45% by 2030, before reaching carbon neutrality by 2050.

The CBA study also projected a potential 40-megaton emissions reduction through biogas and RNG by 2050, five times current reductions.

To achieve these bigger reductions, the study said the government must scale up two policies proving successful at the provincial level.

The first is a countrywide RNG mandate, like what Quebec and British Columbia have in place, which would require all suppliers of conventional natural gas to add renewably sourced gases to their mix.

The second policy is a carbon offsets system that rewards landfills and farms for voluntarily collecting and utilizing methane. Alberta and Quebec have similar policies in place that the federal government could look to.

Currently there are 279 biogas and RNG projects in Canada, but the report said that previous analysis had established that the country was harnessing just 14% of its potential.

--Reporting by Abdul Latheef, alatheef@opisnet.com

--Editing by Michael Kelly, mkelly@opisnet.com

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Mumbai Aims Carbon Neutrality by 2050 in Unveiling of Climate Action Plan

March 14, 2022

Mumbai aims to achieve carbon neutrality by 2050, according to its climate action plan unveiled on Sunday, in a major move towards the country's commitment of carbon neutrality by 2070.

Over a 30-year period beginning 2020, the Mumbai climate action plan (MCAP) seeks to tackle the challenges of climate change in the financial hub by adopting "inclusive and robust mitigation and adaptation strategies" for sectors such as the automotive, transport and energy industries that have the potential to significantly reduce emissions.

Current and long-term objectives include a 30% decrease in emissions by 2030, a 44% reduction by 2040 and net-zero by 2050 compared to base-year emissions of 2019 when Mumbai's total carbon dioxide emissions equivalent (CO2e) stood at 23.42 million mt or 1.8 mt of per capita.

In 2019, the stationary energy sector was responsible for 72% of Mumbai's total greenhouse (GHG) emissions, the transport sector, 20% and the waste sector, 8%.

MCAP will focus on six sectors:

- Decarbonizing Mumbai's energy grid and building energy-efficient and climate-resilient infrastructure.

- Promoting low-carbon mobility solutions such as an increase in public transport ridership, promoting electric vehicles (EVs) in new registration and increased EV infrastructures city-wide. Mumbai will aim to transition to all zero-emission vehicles and vehicles with more efficient engines by 2050 by electrifying all buses by 2027, all two-wheelers, taxis and autorickshaws by 2050 and 96% of all private four-wheelers by 2050.

- Decentralizing municipal waste management by focusing on the reduce, reuse, recover, recycle approach and implementing a zero-landfill waste management plan.

- Increasing conservation projects and extending biodiversity by increasing the vegetation cover and permeable surface of the city surface area by 30-40% by 2030 and increasing the per capita open space to 6m2 by 2040.

- Increasing resilience by reducing water-sanitation inequity and adopting nature-based solutions for water conservation and flood risk management.

- Reducing air pollution levels by 20-30% by 2030 through improved monitoring, implement forecasting and awareness programs and building community health resilience through decentralized planning, capacity building and training initiatives.

However, even as it the city focuses on the six segments, there is still a 30% gap of residual emissions in meeting the 2050 target of net-zero emissions, according to the MCAP.

Two-thirds of the residual emissions in 2050 is expected to come from the use of liquefied petroleum gas (LPG) as cooking fuel which is much dependent on a policy shift to electricity. The rest of the residual emissions is expected to be mostly from wastewater treatment that remains predominantly facultative treatment without biogas capture systems.

The MCAP, which aims to guide the city towards a net-zero future through inclusive, low carbon urban development, is aligned with the goals of the Paris Agreement limiting global warming to 1.5°C.

--Reporting by Yuanlin Koh, lkoh@opisnet.com

--Editing by Carrie Ho, cho@opisnet.com

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Energy Firms Seek to Build New Carbon Capture Hub in Alberta

March 14, 2022

Two Canadian energy companies have submitted a joint proposal to build a new carbon capture and storage (CCS) hub in Alberta that, if developed, would be able to sequester 6 million tons of carbon dioxide (CO2) annually.

Inter Pipeline and Rockpoint Gas Storage said Monday that the project had already received strong support from community stakeholders as well as major third-party emitters in Alberta's Industrial Heartland, one of the country's largest petrochemical processing regions.

Inter Pipeline is a major petroleum transportation and natural gas liquids processing business while Rockpoint is the largest independent owner and operator of natural gas storage in North America.

The Calgary-based companies said the project would help reduce emissions across both businesses and their customers, and that they would leverage existing infrastructure to build it, significantly reducing the need for new construction.

"The opportunity to develop a carbon capture sequestration hub of this scale will further position Alberta as a leader in energy transition and meet its decarbonization targets," Inter Pipeline Interim CEO Brian Baker said in a statement. "IPL and Rockpoint have the resources and experience to execute on all of the components of a large-scale carbon capture and storage project."

Alberta has committed C$1.24 billion ($970 million) through 2025 to two commercial-scale CCS projects, aimed at cutting emissions from the oilsands and fertilizer sectors by 2.76 million tons each year.

In 2020, the province commissioned the Alberta Carbon Trunk Line, a 150-mile pipeline that carries CO2 captured from the Sturgeon Refinery and the Nutrien Redwater fertilizer plant to enhanced oil recovery projects in central Alberta.

The pipeline can transport up to 14.6 million tons of CO2 per year, or about 20% of all oilsands emissions in Alberta.

The government is expected to decide on the new CCS hub by later this month.

--Reporting by Abdul Latheef, alatheef@opisnet.com

--Editing by Jeremy Rakes, jrakes@opisnet.com

© 2022 Oil Price Information Service, LLC. All rights reserved.

Falling NA Carbon Prices May Recover Faster Than During Pandemic: Analysts

March 4, 2022

Declining California Carbon Allowances (CCA) and Regional Greenhouse Gas Initiative (RGGI) prices -- due to the Russian invasion of Ukraine -- may recover faster from a crash at the start of the COVID-19 pandemic, analysts said.

Since last week, CCA prices fell around $4.05/mt, while RGGI prices shed nearly 70cts/st, according to OPIS pricing data.

"So far, we have not seen a sell-off like we saw during COVID, as the current crisis would be more geographically contained and have less impact on California/Quebec specific economies, unlike COVID which resulted in lockdowns in (both locations)," ClearBlue Markets CCA analyst Anop Pandey told OPIS.

When the COVID pandemic lockdowns first began in March 2020, OPIS assessed prompt prices for RGGIs fell to a low of $4.55/st, while CCAs bottomed out at $12.51/mt, $4.17/mt below the then-floor price of $16.68/mt. Weeks later, RGGIs returned to pre-pandemic prices by April 2020, while CCAs price levels bounced back by October 2020, according to OPIS pricing data.

On Friday, the Intercontinental Exchange (ICE) CCA forward December 2022 futures contract traded as low as $26.49/mt, while the RGGI forward December 2022 futures contract traded at a low of $13.50/st by 3 p.m. CT.

In a report released Thursday, Aishwaria Verma, an analyst with CaliforniaCarbon.Info, attributed the drop in CCA prices to investors shedding "$86 million worth of positions" from the Krane Funds Advisors' KFA Global Carbon ETF (KRBN), which launched in July 2020. "At present, the KRBN fund alone holds roughly 15% of all long positions held by financial participants," Verma said in the report.

Listed on the NYSE under the ticker KRBN, the ETF combines major European and North American cap-and-trade schemes into a single investable fund, which include CCAs, RGGIs and European Union emissions allowances (EUAs). OPIS CCA and OPIS RGGI assessments underlie the IHS Markit Global Carbon Index (GLCARB), which serves as a benchmark to the KFA Global Carbon ETF (KRBN).

As the invasion continued, EUAs tanked 20.79 euros/mt ($22.69/mt) this week, according to OPIS pricing data.

EUA prices are tied to the natural gas prices and with the Nord Stream 2 line between Germany and Russia blocked last week due to the Ukraine crisis, energy supply in Europe could be disrupted, ClearBlue Markets said in a report on Thursday.

"With Nord Stream 2 off the table, few gas-to-coal power possibilities and full capacity LNG networks, Europe has limited short-term opportunities to recover energy crisis," the report said. "In this critical situation, many countries in the EU could need to rethink their coal exit plans and look to increase capacity to help shield against impending industry slowdowns. This will put upward pressure on emissions."

Natural gas fundamentals also play a role in "RGGI, where member states have different coal and gas power generating capacity," according to the report. "High natural gas prices do lead to bullish pressure on RGGI allowances, but the fact that RGGI is decoupled from EU politics, the allowances have not faced a similar sell-off."

Both CCA and RGGI prices are expected to eventually recover, although analysts could not predict when that would happen as the Russia-Ukraine crisis continues to develop.

"It will be hard to say where the CCA will go over the next week, given the unstable situation in Eastern Europe," Pandey said. "But with prices now below the February settlement, we believe the downside is minimal and we could see CCA stabilising more."

While RGGI prices have not fallen as dramatically this week, CaliforniaCarbon RGGI Analyst Craig Rocha told OPIS on Tuesday the drop may not last long. "The massive drop seems temporary and likely to rebound," Rocha said.

--Reporting by Mayra Cruz, mcruz@opisnet.com

--Editing by Bridget Hunsucker, bhunsucker@opisnet.com

© 2022 Oil Price Information Service, LLC. All rights reserved.

Delaware to Adopt California's Zero Emission Vehicle Regulations

March 4, 2022

Delaware will join 13 other states in adopting California's Zero Emission Vehicle (ZEV) Regulations and provide drivers looking to purchase an electric vehicle (EV) with more choices at dealerships in the state, Gov. John Carney (D) said Thursday.

The ZEV program, which is managed by the Delaware Department of Natural Resources and Environmental Control (DNREC), is designed to accelerate the commercialization of battery-electric, plug-in hybrid and fuel cell EVs, the governor's office said in a news release.

The regulations mandate that a certain percentage of vehicles delivered for sale in a state are ZEV vehicles, and manufacturers receive credits for each delivered vehicle based on the type, range and other factors, Carney's office said. Manufacturers must meet a ZEV credit amount each year based on average annual sales.

Implementation of the ZEV regulations would not take place until model year 2027 to provide manufacturers time to adjust their inventories and prepare dealerships, but there are currently at least 45 ZEV models available to customers in the U.S., with over 1.5 million ZEVs already sold nationwide, Carney's office said. Transportation is the leading source of greenhouse gas (GHG) emissions in Delaware, the governor's office said.

"In 2017, we signed on to the U.S. Climate Alliance, committing to reduce our carbon emissions by at least 26 percent by 2025. Adopting ZEV regulations will help us make progress on those goals, as well as the other goals outlined in Delaware's Climate Action Plan," Carney said in a release.

"By adopting the ZEV regulations, Delaware drivers won't have to go out of state to find an electric vehicle to purchase, and our dealerships will benefit by keeping Delaware customers in Delaware. By creating a better environment for the sale and purchase of electric vehicles, and aligning the environment with massive investments in infrastructure from the Bipartisan Infrastructure Law, we will create a positive electric vehicle future in our state." Increasing the number of ZEV vehicles on Delaware roads along with building out the state's EV charging network are key strategies outlined in the state's Climate Action Plan, DNREC Secretary Shawn Garvin said in the release.

The DNREC Clean Vehicle Rebate program offers rebates up to $2,500 within 90 days of a vehicle purchase of lease before June 20, 2022, and the DNREC announced in November a $1.4 million grant program to expand the state's electric charging network, with funding for targeted areas where there is limited access to fast charging stations, the governor's office said.

Almost $18 million over five years will be provided to Delaware through the federal Bipartisan Infrastructure Law to build out the state's EV charging networks along major routes. The law also contains possible funding opportunities for electric transit buses, electric school buses and other EV infrastructure.

--Reporting by Jeremy Rakes, jrakes@opisnet.com

--Editing by Mayra Cruz, mcruz@opisnet.com

© 2022 Oil Price Information Service, LLC. All rights reserved.

IncubEx to Launch Voluntary Carbon Offset Marketplace Next Month

February 22, 2022

U.S. environmental derivatives firm IncubEx said Tuesday that it will launch its previously announced carbon offset exchange March 25.

The Voluntary Climate Marketplace (TVCM) will be a venue for trading global carbon offsets and other bespoke environmental attributes, the Chicago-based company said in a news release.

TVCM is being launched in collaboration with Trayport, a subsidiary of the Canadian financial services company TMX Group.

IncubEx said the launch date was set after extensive development and the first successful trade on Trayport's Joule platform in December. TVCM will feature live bids and offers on a broad set of carbon offsets, the company said. It will support offsets from Gold Standard, Verified Carbon Standard (Verra), Climate Action Reserve and American Carbon Registry, IncubEx said.

--Reporting by Abdul Latheef, alatheef@opisnet.com
--Editing by Michael Kelly, michael.kelly3@ihsmarkit.com

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India's Cairn Oil & Gas Unveils Net-Zero Carbon Targets By 2050

February 22, 2022

Cairn Oil & Gas has committed to achieving net-zero carbon by 2050, while it continues to invest $4 billion over 3-4 years to double its oil production, said India's largest private sector producer of crude oil in a media release on Feb. 21.

Cairn said its ESG objectives will broadly focus on initiatives such as uplifting the lives of people in operational areas through sustainable livelihood opportunities to 1 million people, in the use of renewable energy, planting 2 million trees by 2030.

It also emphasized its investments in sustainable management of freshwater requirement of its Rajesthan and Ravva operations using saline aquifers while more than 96% of the produced water is being recycled through reinjection, Cairn added.

The private sector crude oil producer also planted 279 acres of mangroves along the coasts of the Bay of Bengal and the Arabian Sea.

Cairn did not say how it plans to substantially lower its carbon footprint while embarking on an expansion drive to increase its crude oil production.

The company currently produces crude oil from Rajesthan, Andhra Pradesh and Gujarat, and has hydrocarbons reserves of approximately 2.2 billion barrels of oil equivalent, according to its website.

"Guided by the philosophy of `Zero Harm, Zero Waste, Zero Discharge', we have formulated robust ESG (environmental, social, and corporate governance) targets for our operations which will help India's energy sector become more efficient and enable the country's journey towards aatmanirbharta," said Agarwal, Founder and Chairman of Vedanta, using the Hindi word for 'self reliance'.

Vedanta is the parent company of Cairn.

--Reporting by Thomas Cho, Thomas.Cho@ihsmarkit.com
--Editing by Carrie Ho, Carrie.Ho@ihsmarkit.com

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Canada to Reinvest Carbon Proceeds in New Green Initiatives

February 15, 2022

Canada has launched a fund to reinvest proceeds from its Output-Based Pricing System (OBPS) in new initiatives to reduce greenhouse gas (GHG) emissions and to deploy clean technologies.

Environment and Climate Change Canada (ECCC) said Monday in a news release that the OBPS Proceeds Fund will use carbon levy collected from heavy industry in the provinces of Manitoba, New Brunswick, Ontario and Saskatchewan.

About C$161 million ($126 million) from the 2019 compliance period will go toward projects that reduce pollution, ECCC said.

The OBPS is one of five carbon pricing regimes in Canada. Under the system, regulated facilities exceeding their emission limits can purchase federal offset credits generated from activities not already incentivized by carbon pollution pricing.

The OBPS Proceeds Fund will comprise two streams: the Decarbonization Incentive Program (DIP) and the Future Electricity Fund (FEF). The DIP is a merit-based program to support clean technology projects that will help decarbonize industrial sectors over the long term while the FEF will support clean electricity programs.

"The amount of funding available through the DIP for each province will vary depending on the carbon pricing proceeds collected from facilities in each respective province where the federal OBPS currently applies or applied in the past," ECCC said in the release.

The DIP is currently accepting applications for project funding to return OBPS proceeds collected in the 2019 compliance period.

Proceeds collected from electricity-generating facilities covered by the OBPS will be returned through funding agreements with governments of jurisdictions where the federal carbon pollution pricing system currently applies or applied in the past, the department said.

Carbon analyst firm ClearBlue Markets said Monday that the proceeds fund "is a long-awaited funding opportunity for Canada's industry sectors and will provide key financial incentives for achieving their GHG reductions."

--Reporting by Abdul Latheef, alatheef@opisnet.com

--Editing by Bridget Hunsucker, bhunsucker@opisnet.com

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US DOE Backs Project to Explore Carbon Storage Potential at Nickel Site

February 14, 2022

The U.S. Department of Energy (DOE) has awarded $2.2 million in funding to a Rio Tinto-led team to explore carbon storage potential at the Tamarack nickel joint venture in central Minnesota, the mining giant said Monday.

The Anglo-Australian company said in a news release that it will contribute an additional $4 million to finance the three-year project.

Rio Tinto said it has assembled a team of researchers to explore new approaches in carbon mineralization technology to store carbon safely and permanently as rock.

The company said the team will work with partners including the DOE's Pacific Northwest National Laboratory, Columbia University and the Icelandic carbon mineralization company Carbfix.

Until now, large-scale carbon mineralization projects have focused on areas with certain types of rock formations known as basaltic lava geology such as Carbfix's sites in Iceland, it said.

In contrast, the Tamarack project includes a large bowl of what is known as porous ultramafic rock, which has the potential to safely store hundreds of millions of tons of carbon in solid form through natural reactions, Rio Tinto said.

The project will include laboratory studies and field work to confirm the carbon storage potential of the site and develop a road map by 2025 to guide decisions on implementation, Rio Tinto said.

--Reporting by Abdul Latheef, alatheef@opisnet.com;

--Editing by Jeremy Rakes, jrakes@opisnet.com

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DOE Offers $28 Million to Develop Clean Hydrogen Technologies

February 7, 2022

The U.S. Department of Energy (DOE) is offering $28 million in funding to develop next-generation clean hydrogen technologies that will help decarbonize the economy.

The DOE's Office of Fossil Energy and Carbon Management (FECM) said Monday that the money will go to research and development as well as to front-end engineering design projects that will advance clean hydrogen for transportation, industrial use and electricity production.

Hydrogen is traditionally produced in the country using natural gas without carbon capture, which is not clean.

The funding will support innovative approaches to produce clean hydrogen at lower costs from materials that include municipal solid waste, legacy coal waste, waste plastics and biomass with carbon capture and storage.

"These next-generation hydrogen technologies will play a significant role in decarbonizing the U.S. economy and advancing the Biden-Harris Administration's goal of net-zero greenhouse gas emissions by 2050," the FECM said in a news release.

In June 2021, the DOE launched a program called Hydrogen Shot as part of a broader Energy Earthshots Initiative, seeking to reduce the cost of clean hydrogen by 80% to $1 per 1 kilogram in 1 decade (111).

FECM acting Director Jennifer Wilcox said her office is committed to making clean energy sources more affordable through key initiatives such as the Hydrogen Shot.

Currently, hydrogen from renewable energy costs about $5 per kilogram. The DOE believes achieving the Hydrogen Shot's 80% cost reduction goal can unlock new markets for hydrogen, including steel manufacturing, clean ammonia, energy storage and heavy-duty trucks.

--Reporting by Abdul Latheef, alatheef@opisnet.com;

--Editing by Jeremy Rakes, jrakes@opisnet.com

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Top Companies Using False Climate Pledges to 'Greenwash' Image: Report

February 7, 2022

Some of the biggest corporations in the world are avoiding meaningful climate action, and are instead using false, misleading or ambiguous green claims, according to a new study released Monday.

After assessing the pledges made by 25 top global companies, the Climate Corporate Responsibility Monitor 2022 concluded that their commitments would reduce their emissions by only 40% on average, not 100% as suggested.

The joint study between the environmental groups NewClimate Institute and Carbon Market Watch found that Unilever, Nestle, Deutsche Post DHL, Walmart, Google, Amazon and IKEA are among companies vastly exaggerating their sustainability efforts.

No company achieved a "high integrity" rating in the report. A.P. Moller-Maersk received a "reasonable integrity" rating while Apple, Sony and Vodafone got a "moderate integrity" rating.

"The rapid acceleration of corporate climate pledges, combined with the fragmentation of approaches means that it is more difficult than ever to distinguish between real climate leadership and unsubstantiated greenwashing," the report said. "This is compounded by a general lack of regulatory oversight at national and sectoral levels."

The 25 companies reported combined revenues of $3.18 trillion in 2020, or about 10% of the total revenue from the world's largest 500 companies. Their total self-reported emission footprint in 2019 amounted to about 2.7 gigatons of carbon dioxide equivalent (GtCO2e), or 5% of global emissions, the study said.

Carbon Market Watch said the ramifications of the companies' outlandish claims are significant.

"Greenwashing is not a victimless crime as consumers and decision-makers are fooled into thinking that companies are doing all they can to address their climate impact," Gilles Dufrasne, policy officer at Carbon Market Watch, said in a news release accompanying the report. "It is time that governments step in to regulate corporate claims and put an end to misleading advertisement."

The study raised concern about the companies' 2030 targets, saying they fell well short of the ambition required to limit global warming to 1.5 degrees Celsius, the aspirational goal of the Paris Agreement.

The report said standard-setting agencies such as CDP and the Science Based Targets initiative (SBTi) are lending credibility to low-quality and misleading targets.

It said these organizations face a potential conflict of interest, if performing the role of both defining the standard as well as assessing companies against their own criteria and guidelines.

"Our extensive inspection of companies' targets often reveals specific details or loopholes that call those companies' apparent ambition into question," the report said. "For the majority of the 18 companies assessed in this report with an SBTi approved 1.5°C (or 2°C) compatible target, we would consider that rating either contentious or inaccurate, due to various subtle details and loopholes that significantly undermine the companies' plans."

Based on the findings, Carbon Market Watch has issued a package of policy recommendations to combat greenwashing.

It called on governments to ban corporations from making "net zero" and "carbon neutrality" claims. The group also said that companies must report absolute emission reductions separately from any emission reductions financed outside of their value chain, rather than one single aggregate number.

--Reporting by Abdul Latheef, alatheef@opisnet.com;

--Editing by Lisa Street, lstreet@opisnet.com

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Summit Carbon Solutions Files Permit to Build 680-Mile CCS Pipeline in Iowa

February 2, 2022

Summit Carbon Solutions has filed a permit application with the state of Iowa for a pipeline project that will transport carbon captured at multiple ethanol refineries across the state to geologic storage in North Dakota, the company said on Tuesday.

The project, which will eventually extend into Minnesota, Nebraska, North Dakota and South Dakota, will capture CO2 emissions from 12 Iowa ethanol plants situated along 680 miles of pipeline in the state, the company said.

Summit said participating ethanol plants will be able to cut their carbon footprint in half, ensuring "the environmental and economic sustainability of these facilities for the long term by opening new markets and improving profitability."

Summit in July said that it received an investment from farm equipment-maker John Deere to advance the project.

The company also has reached agreements with 31 Midwest biorefineries to capture and permanently store their CO2 emissions. Summit said the completed network will be able to capture and store more than 10 million tons of CO2/year.

Bruce Rastetter, CEO of Summit Agricultural Group, a unit of Summit Carbon Solutions, said the filing of the permit means the company is on track to hit its 2024 date to begin operations.

The company said it has begun acquiring right-of-way easements for the pipeline across its five-state footprint and will advance the permitting process in the four other states in the coming months.

--Reporting by Patrick Newkumet, pnewkumet@opisnet.com;

--Editing by Jeff Barber, jbarber@opisnet.com

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Group Says Australian Offset Veto Could Stifle Carbon Markets

January 31, 2022

An Australian industry group is criticizing proposals that would allow the government to veto certain types of offset projects, warning that it could impact both compliance and voluntary carbon markets.

The Carbon Market Institute (CMI) said Monday in a news release that the veto would apply to new or expanded projects under the human-induced regeneration (HIR) and native forest from managed regrowth (NFMR) carbon farming method.

The institute said the changes are a response to undocumented concerns about adverse impacts on agricultural production or local communities.

"Unsupported by any firm evidence, this is an extraordinary double whammy proposal from a Liberal National government. It is a direct intervention into landholder decision making and imposes excessive red tape," CEO John Connor said in the release.

Connor said the proposals risk supply to the government's flagship climate market, the Emission Reduction Fund (ERF).

The ERF provides financial incentives to organizations and individuals to reduce emissions. Participants earn Australian carbon credit units (ACCUs) for every ton of carbon dioxide equivalent (CO2e) they store or avoid emitting.

The group said HIR and NFMR projects accounted for 95% of contracted abatement at the last ERF auction and have generated over half of the total abatement from all vegetation projects under the scheme to date.

It warned that, if approved, the amendments could stifle critical investment in the carbon markets at a time of when rising demand and limited supply have seen ACCU prices rise to nearly A$60 ($42) from A$16.50 ($11.5) this time last year.

Agriculture Minister David Littleproud, however, played down the issue, telling the Australian media that "there's nothing to fear in this."

--Reporting by Abdul Latheef, alatheef@opisnet.com;

--Editing by Michael Kelly, michael.kelly3@ihsmarkit.com

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White House EV Focus Leaves Biofuels Industry Feeling 'Ignored': IRFA Chief

January 26, 2022

The Biden administration's focus on electric vehicles (EVs) as a way to decarbonize the transportation sector has left biofuel producers feeling "ignored and marginalized," Monte Shaw, executive director of the Iowa Renewable Fuels Association (IRFA), said on Tuesday.

In remarks delivered at the group's annual renewable fuels summit in Des Moines, Shaw said the industry is "fed up" with what it sees as a lack of attention to renewable fuels and is "fired up to succeed in spite of it," citing several White House actions designed to significantly increase the number of EVs on U.S. roads.

Shaw took particular issue with Biden's Dec. 8 executive order that would require the government to buy only zero-emission light-duty vehicles by 2027.

"Talk about whiplash," Shaw said, noting that the executive order came only a day after EPA Administrator Michael Regan reaffirmed the administration's commitment to increasing renewable fuels uses during the rollout of its proposed 2021 and 2022 Renewable Volume Obligations (RVOs) under the Renewable Fuel Standard (RFS) program.

Shaw also criticized the Dec. 20 release of the administration's final greenhouse gas (GHG) emission standards for passenger cars and light-duty trucks for failing to restore incentives for flexible-fuel vehicles (FFV) or create a high-octane, low-carbon fuel pathway.

"In two weeks, biofuels went from being a critical part of the low-carbon strategy to just a speed bump on the highway to an all-electric future," Shaw said.

He said, however, that the administration's planned massive buildout of EVs and their fueling infrastructure will likely run up against EV production constraints and environmental concerns tied to increased battery production.

And while Shaw said he believes biofuels can make a meaningful impact on carbon emissions this decade, the timeline for EVs is less certain.

"Whether from rare earth metal supply chain constraints, computer chip shortages, an electric grid that is already overloaded in large population centers, lack of consumer acceptance, environmental damage to sensitive areas from mining, or geopolitical realities, while EVs are certainly coming, they are certainly not coming as fast" as some politicians desire, he said.

Further, Shaw argued that when it comes to assessing carbon impacts, biofuels often come under more scrutiny than EVs.

Biofuels, he said in his remarks, are a "ready solution" to climate change that are "being ignored ... while nothing but praise is being showered on a technology that is still years away from being impactful and whose impact might not be as rosy as they claim."

Still, Shaw said the biofuels industry "can't focus on frustration," and must work to accomplish several goals this year, including pushing EPA to move ahead with plans to deny more than 60 pending small-refinery exemptions and finalize the 2022 RVO. In addition, he said the industry will press the agency to increase blending targets in its proposed 2021 RVO, while arguing against its plan to reopen and reduce the 2020 blending targets.

He also said his group will continue to push for biofuels funding in the administration's Build Back Better act, which after stalling in the Senate, is considered likely to be broken up into small pieces of legislation, and for greater in efficiencies at the farm and plant level that can reduce the industry's carbon footprint.

"Politicians in D.C. might try to dismiss or marginalize our importance," Shaw said, "and just like over the past two decades, we will prove them wrong."

--Reporting by Patrick Newkumet, pnewkumet@opisnet.com;

--Editing by Jeff Barber, jbarber@opisnet.com

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Maersk to Eliminate Emissions at Ports With Offshore Charging Stations

January 26, 2022

Danish shipping group A.P. Moller-Maersk on Tuesday announced it plans to install offshore charging stations around the world to enable idle vessels to power from clean electricity instead of fossil fuels.

The company is aiming to remove 5.5 million mt of carbon dioxide within five years of commercial rollout, eliminating particulate matter including oxides of nitrogen (NOx) and sulfur oxides (SOx) while reducing air and noise pollution.

To achieve that end, Maersk's offshore marine service division, Maersk Supply Service, is launching an offshore vessel-charging venture, Stillstrom, which has developed technology that will allow vessels to charge while being safely moored to a buoy.

According to the statement, the buoy is large enough to charge a service operation vessel (SOV)-sized battery or hybrid-electric vessel. The same technology will be scaled and adapted to supply power to larger vessels, thereby enabling vessels of all sizes to turn off their engines when idle.

The press release did not explain the specifics of the working technology.

The first full-scale offshore charging station will be demonstrated with another Danish energy company, Ørsted, in Q3 2022, when the charging buoy will supply overnight power to one of Ørsted's SOVs at an offshore windfarm. The energy firm will be responsible for the grid integration of the charging buoy.

Ørsted intends to make publicly available any intellectual property generated during the design of the buoy's integration into the offshore wind asset to maximize the potential uptake of the carbon-reducing innovation across the offshore wind sector.

--Reporting by Yuanlin Koh, lin.koh@ihsmarkit.com;

--Editing by Carrie Ho, Carrie.Ho@ihsmarkit.com

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FEATURE: Biomass Map Aims to Boost Nature-Based VCM Integrity

January 25, 2022

A U.S. technology startup believes its innovative solution to measure natural capital could go a long way to address the issue of integrity in the voluntary carbon market (VCM) if all participants embrace it.

The Chloris Biomass Map was unveiled this month by Boston-based Chloris Geospatial.

The global dataset of aboveground biomass (AGB) shows changes in carbon stocks during 2003-2019. It measures both growth and degradation of biomass on land.

"The map is a demonstration of a technology that can help the voluntary carbon market by providing transparency on the performance of landscapes," Chloris Co-founder and CEO Marco Albani told OPIS on Friday.

The former Harvard researcher said in an interview that there are concerns about the environmental integrity of the use of terrestrial carbon in offsetting programs. He said these are concerns that have been expressed by various parties, some of which have merit.

"A lot of these questions on integrity hinge on what is really happening -- is carbon really being removed from the atmosphere, or what we are seeing happening in one place is just the consequence of something happening somewhere else," Albani said.

Chloris has identified the challenges project developers and other stakeholders face: verifying and monitoring activities in inaccessible locations, measuring and reporting on natural changes in biomass stock vs. impacts of human activity and accurately identifying which countries are contributing to -- and being impacted by -- greenhouse gas (GHG) emissions.

The mapping tool could help fix these problems.

Chloris currently offers a 5x5-kilometer (3X3-mile) map, freely available to the public for noncommercial use through Microsoft's Planetary Computer, while a higher-resolution version of 500 meters (1,640 feet) is available to clients.

The company can also produce 30-meter (98 feet) maps of the tropics on demand. Albani said that will take about six weeks, but Chloris should be able to create them in a matter of hours in the second half of this year.

The company is also working on turning its products into a software so that customers can get the insights from its analytics through a platform. The first version in expected later this year or early 2023, Albani said.

Technology Fusion

Chloris, named after the Greek goddess of spring and nature, was launched in early 2021, but the technology behind the map had been under development for nearly two decades.

The company uses the remote-sensing method known as light detection and ranging (LIDAR) along with wall-to-wall satellite imagery as well as machine learning and deep learning data fusion to measure the biomass.

The methodology was developed by Alessandro Baccini, a co-founder and chief scientific officer of Chloris and a research professor at the Center for Remote Sensing at Boston University.

"Chloris wanted to develop a technology that is actually able to provide a comprehensive measurement of carbon change over the landscape from the local level to the global scale because that is the type of issue that we are facing," Baccini said at a recent webinar, referring to the climate crisis.

Both Baccini and Albani believe the Chloris map offers better accuracy because it is not based on land use/land cover methodology, which is often beset by an endless debate on what is a forest.

"We are not saying what is the forest and what is not the forest. We are measuring how much carbon is in vegetation in a certain place," Albani explained.

Full of Surprises

The map revealed several surprises.

It found that China had become a "terrestrial carbon sequestration giant" over the past two decades despite being the world's largest emitter of GHG.

The map showed that carbon stocks in China continuously increased during the study period, storing 15.6 gigatons of carbon dioxide equivalent (GtCO2e). At an average sequestration of 1.2 GtCO2e per year, Chloris estimates this carbon sink is larger than the global emissions from aviation.

"I was surprised to see how much sequestration is there in China. I did not expect China to be the largest," Albani said.

For context, China's GHG emissions passed the 14-gigaton threshold for the first time in 2019, rising to 27% of the global emissions, according to independent U.S. research firm Rhodium Group. That was more than the carbon footprint of the entire developed world combined.

Another interesting point was that forests are recovering fast from past disturbances in central and southern Europe, and not in Scandinavia where the carbon stocks have been more stable.

The vegetation of the European Union stored over 3.4 GtCO2e during 2003-2019, equivalent to almost the entire emissions of 2019 for the 27 member states. France, Italy, Spain, Germany and Greece saw net increases in AGB while Latvia, Austria, Sweden and Finland witnessed net decreases.

The Chloris Biomass Map also captured the devastation caused by the Vaia storm in northeastern Italy on Oct. 29, 2018, when more than 280 million cubic feet of wood was destroyed.

That showed both the accuracy of the map and the size of the storm, Albani said.

During November's COP26 climate summit in Glasgow, U.K., Chloris was named one of the top 12 companies chosen to join the UpLink Innovator Network of the World Economic Forum. The same month, Chloris raised $2.5 million in a first-round seed investment.

--Reporting by Abdul Latheef, alatheef@opisnet.com;

--Editing by Lisa Street, lstreet@opisnet.com

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IETA Sets Up Task Force to Explore Digital Carbon Market

January 20, 2022

The International Emissions Trading Association (IETA) on Thursday announced the formation of a task force to examine the emerging digital carbon market and recommend steps to ensure its integrity.

The Geneva-based organization said in a news release that the team will be led by IETA Governing Council Chair Lisa DeMarco.

The move comes amid a surge in cryptocurrency carbon market activity.

New crypto venture KlimaDAO alone has purchased and retired more than 14.5 million tons of carbon credits using digital tokens, according to its website.

"Digital innovations offer powerful new approaches to carbon market design and performance, and we are eager to explore the expansion of their proper use,"

IETA President and CEO Dirk Forrister said in the release. "Like any aspect of carbon markets, the efficacy of digital tools depends on their ability to engender broad public and market confidence, rooted in high environmental integrity."

The task force will undertake a review of the market and recommend best practices for achieving integrity, the IETA said.

The process will involve inputs from experts within the IETA membership and the wider carbon market community, it said.

--Reporting by Abdul Latheef, alatheef@opisnet.com;

--Editing by Jeremy Rakes, jrakes@opisnet.com

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Anthesis Expands VCM Business With Acquisition of Climate Neutral Group

January 19, 2022

British sustainability consulting firm Anthesis Group on Wednesday announced its acquisition of the Dutch environmental solutions provider Climate Neutral Group, expanding its voluntary carbon market (VCM) business.

"This merger strengthens Anthesis' full-service net-zero offering from avoidance and reduction strategies to the provision of high-quality carbon offsetting, technology innovation, extensive project development capabilities and certification," the company said in a news release.

The acquisition will also enable Anthesis to extend its international reach by entering the Benelux and South African markets, where Climate Neutral Group has a presence, the company said.

Anthesis said it acquired the shares of the company from the Dutch impact investor DOEN Participaties. Anthesis will now have 800 sustainability specialists with offices in 20 countries.

The financial terms of the deal were not disclosed.

Headquartered in Utrecht, Netherlands, Climate Neutral Group has supported more than 3,000 businesses with greenhouse gas footprinting, reduction and offsetting initiatives since its establishment in 2002, Anthesis said.

It said the company has completed 3,750 carbon analytics and reduction programs and offset more than 12 million tons of carbon dioxide equivalent (CO2e) through impact-led projects.

"By operating as one team, Climate Neutral Group's projects will now support Anthesis' ambitions of removing 3GT (gigatons) of CO2e for its clients by 2030," Anthesis said.

This is the 15th merger and acquisition for the Anthesis Group since it was established in 2013, and the second deal announced this year following the acquisition of Provision Coalition, a Canada-based consultancy focused on sustainability in the agri-food sector.

--Reporting by Abdul Latheef, alatheef@opisnet.com;

--Editing by Michael Kelly, michael.kelly3@ihsmarkit.com

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Shipping Company A.P. Moller-Maersk Accelerates Net Zero Timeline

January 12, 2022

Danish shipping company A.P. Moller-Maersk on Wednesday said it was advancing by a decade its pledge to achieve net-zero greenhouse gas emissions from its operations.

The company said it now plans to reach net-zero emissions by 2040 instead of the 2050 target it had initially set in 2018.

The speed-up in achieving the goal comes as Maersk acknowledges that many of its customers have their own net zero goals that it must help them meet.

More than half of Maersk's top 200 customers have ambitious science-based or zero carbon targets for their supply chain, and they are dependent on us helping them reaching these targets," said Mads Stensen, the company's senior sustainability advisor.

The company has already put in place to reduce emissions and increase green offerings across its operations by 2030. These plans include having 25% of all ocean cargo and 30% of air cargo transported using green marine fuel or sustainable aviation fuel (SAF). Maersk has announced plans to add green methanol-fueled vessels to its fleet starting around 2024 to help reduce its carbon footprint.

The company said it plans to reduce the carbon footprint of its air operations by capitalizing on "synergies from our fuel development activities including potential engagement in SAF development and production."

The company's announcement didn't include plans for reducing the carbon footprint of land-based operations, since it primarily involves indirect emissions from companies contracted to supply truck, rail and barge services.

The company said it plans to announce a 2030 target for these emissions later this year after conducting an assessment of its supplier and operating network.

The company said it expects efforts to reduce emissions from its land operations will include a shift to lower-emission transport modes and development of green alternatives and electrified transport based on renewable energy.

The company has also set of goal of 90% green operations by 2030 in its contract logistics and cold chain operations. While touting its efforts to cut emissions, Maersk called for global regulations "to steer the right behavior and create a true level playing field." It said the International Maritime Organization (IMO), which sets shipping regulations, has "so far moved at a slower pace than we hoped."

The Maersk announcement called on the IMO by the end of 2023 "to secure significant progress towards the adoption of a global target for shipping for net zero in 2050 or earlier."

The IMO's last conference in November ended without any new emissions targets or regulations aimed at decarbonizing shipping. The group said it expects to submit its targets for discussion at a Spring 2023 meeting.

International shipping emits 2-3% of global greenhouse gas emissions (GHG), according to the IMO. The group's initial target for the reduction of GHG emissions from shipping is 50% from a 2008 baseline by 2050. Maersk CEO Søren Skou has said the group's ambitions are too low.Maersk is the world's second-largest container shipping company, recently surrendering the top spot to Mediterranean Shipping Co. It has a fleet of more than 700 vessels.

-- Reporting by Steve Cronin, scronin@opisnet.com;

--Editing by Bayan Raji, braji@opisnet.com

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UNFCCC, AirCarbon Exchange to Promote Offsetting Through CDM Credits

January 12, 2022

The United Nations Framework Convention on Climate Change (UNFCCC) is partnering with AirCarbon Exchange (ACX) to promote carbon offsetting using Certified Emission Reductions (CERs) generated under the Clean Development Mechanism (CDM), the two parties said Wednesday.

They said in a news release that the partnership will allow ACX clients worldwide to purchase and retire CERs to offset their emissions. ACX will be the second exchange in the world and the first in Asia to list the units.

The CDM is a project-based greenhouse gas offset system established under the 1997 Kyoto Protocol.

At November's COP26 climate summit in Glasgow, U.K., countries agreed to replace the CDM with a set of carbon market mechanisms under Article 6 of the Paris Agreement, but they also approved the sale of CERs issued since 2013.

James Grabert, director of the Mitigation Division at the UNFCCC, said the partnership will enable early movers to reward projects already underway with the CDM.

"By offsetting emissions through CDM projects that have ongoing crediting periods, investors can support the successful transition of such projects to the Paris era," Grabert said in the release.

ACX said it will facilitate the use of CERs in the carbon markets by connecting verified climate-friendly projects with investors seeking quality credits to meet their objectives.

"We look forward to working with the UNFCCC to direct much-needed finance to a wide range of carbon projects under the UN Clean Development Mechanism," Thomas McMahon, CEO and co-founder of ACX, said.

Two percent of the proceeds from CER sales go to the UNFCCC Adaptation Fund, which was established to finance projects in countries that are particularly vulnerable to the adverse effects of climate change.

--Reporting by Abdul Latheef, alatheef@opisnet.com;

--Editing by Jeremy Rakes, jrakes@opisnet.com

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Denmark's European Energy, Port of Hanstholm Aim For Carbon-Neutral Site

January 5, 2022

Danish renewable energy developer European Energy will work with the Port of Hanstholm to produce e-methanol and green hydrogen in a bid to turn the port into a carbon-neutral facility, it said this week.

European Energy is involved in the production, storage and supply of renewable energy. It has signed a letter of intent with the port to build solar and wind energy facilities and a plant to produce e-methanol and hydrogen.

"We are in the process of identifying possible local carbon dioxide sources in and around the Port of Hanstholm as suppliers for an e-methanol plant, which is a green alternative to the ships' current oil consumption," European Energy CEO Knud-Erik Andersen said in a statement Monday. "At the same time, we are looking at the construction of a hydrogen plant...we can revolutionize the port's industrial cluster and meet tomorrow's energy needs."

The goal for the two entities is to transform most of the larger port area into a local energy community, to be called Hanstholm Energifaellskab, European Energy said in the statement. Negotiations on a final agreement will begin in early January 2022 with a view to establishing further energy plants during 2023.

--Reporting by Rob Sheridan, rsheridan@opisnet.com;

--Editing by Anthony Lane, alane@opisnet.com

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China ETS Prices Hit Record High Post-Compliance Cycle

January 5, 2022

Prices of Chinese Emissions Allowance (CEA) trading under China's national compliance emission trading scheme (ETS) rose to a record high on a Tuesday with a few participants still trying to cover their emissions for the 2019-2020 compliance period that had already closed on Dec. 31, said industry sources.

The CEA price for listed agreement rose to close at CNY 57.29/mt ($9.02/mt) on Tuesday, up 5.66% from the previous close on Dec. 31 and the highest since the July ETS launch. A total 2,000 mt listed agreements traded on Tuesday at an average price of CNY 57.29/mt while another 329,094 mt of block transactions were registered the same day at an average price of CNY 57/mt.

China's national ETS, which debuted on July 16 last year, covered carbon emissions of around 4.5 billion mt/yr, or a total 9 billion mt, over the first 2019-2020 two-year compliance period. The first trading cycle covered only the power generation sector involving 2,162 entities.

The Ministry of Ecology and Environment (MEE) reported on Dec. 31 a 99.5% compliance rate based on volume for the first cycle, which would mean around 45 million mt of emission are yet to be covered by allowances or offsets.

For this first compliance cycle, CEAs are allocated to participants, who can then buy or sell them according to their individual needs. According to market estimates, the total allocated quotas for this cycle amounted to around 9 billion mt, roughly in line with the total ETS compliance coverage.

But not all of these CEA allocations would be available for trading as some entities might opt to reserve their unused quota for future use, market sources said.

China's eastern city of Suzhou has already reported the country's first case of failure to submit sufficient emission quotas from a Zhangjiagang-based company, according to a news release by the city's ecology and environment authority on Monday. The reason was not specified.

According to current regulations, there is a grace period within which non-compliant companies can still submit rectifications. This grace period is to be defined by the respective regional authorities.

Current ETS regulations also allow participants to offset a maximum 5% of their emissions using the Chinese Certified Emission Reduction (CCER) credits, a form of voluntary carbon offsets.

Major state-owned power generation enterprises such as State Power Investment Corp. (SPIC), Datang Group, Huadian Group said to have lowered their overall emission costs through the purchase of CCERs.

($1 = CNY 6.36)

--Reporting by Lujia Wang, Lujia.Wang@ihsmarkit.com;

--Editing by Hanwei Wu, hanwei.wu@ihsmarkit.com

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OPIS 2022 Preview: Renewable Energy Certificates Poised for Bullish Year

December 29, 2021

Market sentiment in the Renewable Energy Certificates (RECs) markets has been bullish for most of 2021 and remains that way going into next year as demand continues to pick up as more entities make commitments to be net-zero, carbon neutral or use 100% renewable energy. With those commitments, markets participants said supply has gotten tighter.

More projects are slated to come online next year, which will produce more RECs supply, but even so, it is unclear if that supply will be enough to balance out the demand and keep prices from rising further.

The market structure for the PJM region remains in contango as the end of the year approaches, with forward-year vintages earning at least a 5cts/MWh premium over current year vintages due to the expectation of increased demand and tighter balances.

REC pricing this year in the Mid-Atlantic climbed from around $14/MWh to trading close to $20/MWh in the PJM region, according to OPIS data. OPIS assessed PJM Tri Qualified V22 at $19.20/MWh on Dec. 14, more than $5/MWh higher than where the market was at the beginning of May.

The increase in price was similar in other PJM markets, with Pennsylvania, New Jersey and Maryland Class I or Tier I RECs all assessed above $19/MWh in mid-December.

Both NEPOOL and Massachusetts are in a backwardated structure between the prompt year and forward year.

In Massachusetts, the backwardation can be tied to the Alternative Compliance Payments (ACPs), which calls for the Class I ACP to decline from $71.57/REC in 2020 to $60/REC in 2021 to $50/REC for 2022 and $40/REC for 2023, according to ClearBlue Markets.

In Connecticut, where the market structure is in flat to a slight contango as of mid-December, the Class I ACP dropped to $40/REC for 2021 and after due to 2018 legislation, according to ClearBlue Markets, which adds that the "ACPs provide off-ramps for entities struggling to comply."

NEPOOL Dual Qualified prices went from below $38/MWh in September to over $43/MWh in October and have since eased to under $40/MWh, according to OPIS data. The same happened in the Connecticut and Massachusetts RECs markets.

In addition to the increased demand supporting prices, a change to the Maryland's Renewable Energy Portfolio Standard (RPS) could have an impact on supply starting in 2022. Senate Bill 65 was passed by the Maryland Legislature and went into law without Gov. Larry Hogan (R) signing it in June.

The "bill excludes black liquor, or any product derived from black liquor, from eligibility for inclusion in the State's Renewable Energy Portfolio Standard (RPS) as a 'Tier 1' resource." Black liquor is a byproduct of paper production. The bill applies to all RPS compliance years beginning Jan. 1, 2022.

According to the most recent Maryland RPS compliance report from the Public Service Commission, in 2019, black liquor was the second-most-used energy source for Tier I RPS compliance at 23%. Wind was the most-used energy source at 43%, small hydroelectric was third at 11%, municipal solid waste was next at 11% and wood and waste solids made up 7%.

The gains seen in REC markets bolstered exchanges, including Nodal Exchange, which reported record monthly trading and open interest volumes in its power and environmental markets each month from August through November and a quarterly record in the third quarter, with sources expecting the growth and interest in the markets to continue into 2022.

In terms of REC open interest, the exchange reported over 148,000 contracts -- including all REC futures and options -- an increase of 77% from the start of the year. Total REC volume traded in 2021 up to Dec. 14 rose 73.5% year on year to 160,128 total contracts. For the Texas CRS Wind REC market, Nodal reported open interest of 20,096 lots on Dec. 14, over double the total at the beginning of the year, while volume was at 46,259 lots, up from 18,138 year on year.

The Texas solar and wind markets both had a flat to slight contango market structure as of mid-December.

Prices for Texas CRS Wind futures on Nodal rose from $1.73/MWh at the beginning of the year to a high of $7.35/MWh on Aug. 12 before easing to $4/MWh on Dec. 10. Texas CRS Solar futures saw a similar roller coaster, rising from $2.43/MWh at the start of the year to $9.50/MWh on Aug. 18 before declining to $5.65/MWh on Dec. 10, Nodal reported.

In all, the exchange reported more than 58 million megawatt hours (MWh) of renewable energy traded on Nodal from the beginning of year until Dec. 14.

"We witnessed some impressive growth in volumes over the course of 2021 across environmental markets on Nodal Exchange," said Dan Scarbrough, president and chief operating officer at IncubEx. "The volume growth in our hybrid voluntary REC markets, especially Texas CRS Wind and Solar contracts, illustrates the rising interest levels in renewable energy certificates as another instrument used to meet net-zero and 100% renewable goals. We continue to see growing interest across the REC and broader environmental markets as well, with notably a greater than 50% market share in exchange-traded REC volume in MWh year to date."

--Reporting by Jeremy Rakes, jrakes@opisnet.com

--Editing by Barbara Chuck, bchuck@opisnet.com

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British, Australian Firms Plan Global Network of Marine Fast Chargers

December 29, 2021

Marine fast-charging network operator Aqua superPower has announced a strategic partnership with direct current (DC) technology provider Tritium to expand the business worldwide.

The British company said last week in a news release that it has been rolling out its network of chargers, with recent installations along the French and Italian coasts.

The company plans to install a further 150 chargers next year, with substantial deployment growth to come thereafter.

Tritium, based in Australia, manufactures hardware and software for DC fast chargers for electric vehicles. Aqua said Tritium's robust, sealed-against-the-elements hardware combines seamlessly with its own network.

The company said its adoption of Tritium's technology will promote its mission to reduce the impact of boating on the marine environment by developing an all-electric and integrated global ecosystem of marine fast chargers.

The collaboration will expand clean commercial water transport beyond luxury yachts to ferries, shuttles and watercraft used for everything from laundry and food delivery to fishing and passenger transport, it said.

The global electric boat market is expected to be worth over $20 billion by 2027, Aqua said. The company estimates that there will be more than 1 million electric boats by the end of the decade.

--Reporting by Abdul Latheef, alatheef@opisnet.com

--Editing by Jeremy Rakes, jrakes@opisnet.com

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Toyota Increases EV Investment in Net-Zero Push

December 15, 2021

Toyota Motor Corp. announced Tuesday it is increasing its investment in batteries to 2 trillion yen ($17.58 billion) and launch 30 electric vehicle (EV) models by 2030, in a bid to achieve carbon neutrality.

The announcement comes as traditional automobile companies join EV and clean energy firm, Tesla Inc. to step up their transition to net-zero carbon emissions.

According to news agency, Kyodo News, Toyota is ready to invest 8 trillion yen on electrified cars by 2030 and roll out 30 EV models by that year, which goes beyond the 15 models Toyota earlier said it would have available by 2025.

"The energy situation varies greatly from region to region. That is exactly why Toyota is committed to providing a diversified range of carbon-neutral options to meet whatever might be the needs and situations in every country and region," President Akio Toyoda said at a press conference on Dec. 14.

To achieve carbon neutrality, the automaker is also developing hydrogen-fueled cell EVs and hybrid cars.

The luxury vehicle division of Toyota, Lexus, said it aims to realize a full lineup of battery EVs in all sectors by 2030 and to have battery EVs account for 100% of its sales in Europe, North America, and China, which accounts for 1 million units globally.

Furthermore, it is targeting battery EVs to make up 100% of its global vehicle sales by 2035.

The 2 trillion yen investment will also include a new $1.29 billion automotive battery manufacturing plant in North Carolina, U.S. with four production lines that will begin production in 2025, an earlier press release stated.

($1 = 113.751 yen)

--Reporting by Yuanlin Koh, lin.koh@ihsmarkit.com;

--Editing by Hanwei Wu, hanwei.wu@ihsmarkit.com

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ExxonMobil Unveils Plan for Methane Emissions Monitoring at Global Scale

December 13, 2021

ExxonMobil is teaming up with atmospheric data provider Scepter to deploy satellite technology at a global scale for the real-time detection of methane.

The U.S. supermajor said Monday in a news release that the deployment will start in 2023, increasing to 24 satellites over three years and forming a large constellation capable of monitoring operations around the world.

A component of natural gas, methane is much more potent than carbon dioxide (CO2). It accounts for nearly one fifth of global GHG emissions.

ExxonMobil's move comes a month after more than 100 countries agreed to cut methane emissions by 30% by the end of the decade. The Global Methane Pledge was issued at the COP26 climate summit in Glasgow, U.K.

"This is another example of how ExxonMobil is investing in technology with leading innovators to align with the Global Methane Pledge," Bart Cahir, senior vice president of unconventionals at ExxonMobil, said in the release.

The company said its plan has the potential to redefine methane detection and mitigation efforts and could contribute to broader satellite-based emission reduction work across a dozen industries including energy, agriculture, manufacturing and transportation.

In the first phase of the project, the companies will design and optimize the plan for satellite placement and coverage, initially focused on capturing methane emissions data from ExxonMobil's operations in the Permian Basin.

ExxonMobil said Scepter's technology has shown the ability to accurately collect data on methane while also identifying sources of carbon dioxide, nitrogen oxides, sulfur oxides and other greenhouse gases.

The two companies are also pioneering a proprietary data fusion system that reconciles information collected from multiple detection methods including ground-based monitoring devices.

By consolidating the data, scientists could unlock valuable insights and opportunities to further quantify and validate programs that reduce methane emissions, ExxonMobil said.

A major United Nations report released in June called for an urgent and sharp reduction in methane emissions in the fight against climate change.

The Global Methane Assessment said human-caused methane emissions can be reduced by as much as 45%, or by 180 million tons a year, by 2030.

That would avoid nearly 0.3 degrees Celsius of global warming by the 2040s and complement all long-term climate change mitigation efforts, said the report.

--Reporting by Abdul Latheef, alatheef@opisnet.com;

--Editing by Jeremy Rakes, jrakes@opisnet.com

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UK Unveils Zero-Emission Concept Aircraft for Long-haul Travel

December 6, 2021

The United Kingdom on Monday unveiled a zero-emission concept aircraft that could fly nonstop between London and San Francisco, a development the country's transportation minister said would make "guilt-free" travel a step closer.

The government said in a news release that the liquid hydrogen-powered midsize aircraft is being developed under the state-funded FlyZero project, led by the Aerospace Technology Institute (ATI). The project aims to realize zero-emission commercial aviation by the end of the decade.

The aircraft would be capable of flying 279 passengers halfway around the world without a stop, or anywhere in the world with just one stop to refuel, according to the release.

"Imagine flying anywhere in the world with zero emissions! Guilt-free flying is one step closer today," British Transportation Secretary Grant Shapps tweeted Monday.

In 2019, the last year for which data are available, global aviation accounted for 2.8% of total carbon dioxide (CO2) emissions, according to the International Energy Agency (IEA). The industry has pledged to become net zero by 2050 through efficiency improvements and expanded use of sustainable aviation fuel (SAF).

The British government said FlyZero showcases the huge potential of liquid hydrogen-powered aircraft as the U.K. drives for a cleaner and greener air travel future. That effort is led by the Jet Zero Council, a partnership between industry and government.

"At a time of global focus on tackling climate change, our midsize concept sets out a truly revolutionary vision for the future of global air travel keeping families, businesses and nations connected without the carbon footprint," FlyZero project director Chris Gear said in the release.

In September 2020, European aircraft manufacturer Airbus unveiled three concepts for zero-emission (ZEROe) commercial aircraft, also powered by hydrogen. The company said at the time that it aimed to put them into service by 2035.

Airbus has since set up two centers to manufacture cryogenic tanks to accelerate the development of hydrogen-propulsion technologies.

--Reporting by Abdul Latheef, alatheef@opisnet.com;

--Editing by Jeremy Rakes, jrakes@opisnet.com

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3DOM Invests $10 Million in G8 Subsea to Boost Renewable Power Generation

December 6, 2021

Japan's 3DOM is investing up to $10 million in Singapore's G8 Subsea in a transaction agreement which also includes business collaboration and a share swap in a bid to boost renewable power generation in Asia.

Under the agreement, 3DOM SG will become the primary supplier of batteries and energy storage solutions for all G8's wind, solar and hydro power projects.

3DOM SG will also supply technology and systems for the monitoring of battery conditions and appropriate allocation of new and second-life batteries for projects. In addition, both companies will jointly explore new opportunities for renewable power generation, including thermal power generation using biomass-derived pellets.

In the share swap, 3DOM's wholly-owned subsidiary, 3DOM Singapore (3DOM SG), will issue 8% of the new shares of 3DOM SG's enlarged issued share capital.

This 8% represents 24% of G8's enlarged issued share capital, according to the Dec. 6 statement.

"We are very pleased for the chance to supply our advanced lithium-ion batteries for G8's renewable energy storage applications in Singapore and across Asia," said 3DOM SG Representative Director & CEO Shusuke Oguro.

The pair will also explore business related to electric mobility, including the implementation of a total-zero-carbon-emission model for commercial transport businesses, where electric vehicles are provided by lease/subscription and charged with renewable energy.

The goal is to reuse these vehicle batteries in stationary energy storage applications, establishing a circular system of new-life and second-life use that takes advantage of 3DOM batteries' longevity, the statement said.

G8 is now able to integrate 3DOM's battery and fuel cell systems to offer complete and long-life energy storage solutions to our commercial and utility clients," said G8 Founder & Managing Director Gerald Tan.

G8 currently has over 2.5 GW of renewable energy and subsea transmission projects under development in Asia.

--Reporting by Yuanlin Koh, lin.koh@ihsmarkit.com;

--Editing by Hanwei Wu, hanwei.wu@ihsmarkit.com

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ICAO Extends Approval of ART Credits for Global Aviation's Carbon Market

December 2, 2021

The Architecture for REDD+ Transactions (ART) program said Wednesday that the International Civil Aviation Organization (ICAO) has extended the eligibility of ART-issued carbon credits for compliance under the Carbon Offsetting and Reduction Scheme for International Aviation (CORSIA).

Initially approved to supply units generated between 2016 and 2020, the recent ICAO decision expands eligibility to include credits generated during 2021-2023, ART said in a news release.

The decision marks the first ICAO approval of a jurisdictional REDD+ crediting program to offer post-2020 vintage credits for airlines to meet their targets, it said.

The ICAO decision was based on ART's recent updates to its program requirements to ensure avoidance of double counting of credits used for CORSIA, the release added.

CORSIA was adopted by the United Nations agency in 2016. Under the scheme, airlines can offset the growth in emissions by purchasing carbon credits and moving toward the use of SAF.

The program is in its pilot phase until 2023. Participation will become mandatory in 2027 for all 193 UN member states, except for the least developed countries.

--Reporting by Abdul Latheef, alatheef@opisnet.com;

--Editing by Jeremy Rakes, jrakes@opisnet.com

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Calif. Cap-and-Trade 2022 Auction Floor Price Set at $19.70/mt: CARB

December 2, 2021

The 2022 Auction Reserve Price (ARP) for the California cap-and-trade program quarterly auctions will be set at $19.70/mt, the California Air Resources Board (CARB) announced Wednesday.

The 2022 ARP is set $1.99/mt over the 2021 ARP of $17.71/mt.

Analyst firm ClearBlue Markets correctly predicted the 2022 ARP in November, owing to high inflation of 6.2% reported by the U.S. Bureau of Labor Statistics.

The annual ARP is calculated at 5% along with inflation.

"Therefore the escalation is a whopping 11.2%," ClearBlue said in a Nov. 15 note. "California and Quebec each use a jurisdiction-specific (Consumer Price Index) in accordance with their respective regulation. Because it is the higher of the two jurisdictions, the California auction price floor sets the (Western Climate Initiative)-wide floor price each year, and Quebec has aligned its cost containment levels with those of California as well."

Meanwhile, Quebec's cap-and-trade program, which is linked to California's, has their 2022 ARP set at C$18.69/mt, C$1.33/mt over the 2021 ARP of C$17.36/mt.

 

--Reporting by Mayra Cruz, mcruz@opisnet.com ;

--Editing by Kylee West, kwest@opisnet.com

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Australia Releases Roadmap to Increase Bioenergy Usage

November 23, 2021

The governmental Australian Renewable Energy Agency (ARENA) released on Nov. 18 a Bioenergy Roadmap that lays out a framework for a sustainable bioenergy industry in Australia that can help lower emissions and increase fuel security, among other benefits.

The Roadmap was developed to identify bioenergy's role in Australia's future energy mix and designed to help inform future policy and investment decisions, ARENA said.

According to the Roadmap, the bioenergy sector can contribute around A$10 billion ($7.25 billion) to Australia's GDP annually and create 26,200 new jobs, reduce emissions by about 9%, divert an extra 6% of waste from landfill, and enhance fuel security.

"The dependence of Australia's transport sector on imported crude oil and refined petroleum products such as petrol, diesel and jet fuels has grown over the past two decades. More local biofuel production could help further diversify these fuel sources," the report stated.

The roadmap defines bioenergy as a form of renewable energy generated from the conversion of biomass into heat, electricity, biogas and liquid fuels. While bioenergy currently accounts for just 3% of Australia's total energy consumption, modeling done for the Bioenergy Roadmap shows that this proportion could be increased to up to 20% by the 2050s.

Among the areas of development, the roadmap has identified is the need to enable bioenergy opportunities in sectors where there are limited low carbon alternatives. The report highlighted three sectors in particular-industrial heating, aviation and gas gird injection.

According to the report's modeling, bioenergy can provide up to 244 PJ per annum of renewable industrial heat by the 2030s, representing around 33% of the total industrial heat market; up to 1,908 megaliters (ML) of sustainable aviation fuel (SAF) can be produced by the same timeline to supply around 18% of the aviation fuel market, and up to 105 petajoules (PJ) of renewable gas can be incorporated into gas pipelines, accounting for 23% of the total pipeline gas market.

Bioenergy can also complement other low emissions alternatives, according to the Roadmap. Up to 2,605 ML per annum of road transport biofuels can be produced for local consumption, accounting for 7% of the total road transport fuel market.

The Roadmap also proposed steps to develop Australia's bioenergy resources and ecosystems, including the building of "biohubs" and establishing industry guidelines and standards.

To support implementation of the Bioenergy Roadmap, ARENA announced the same day it has received $33.5million in additional funding from the government but did not provide further details on how the money would be used. ARENA has itself provided over A$131 million in funding towards bioenergy projects across Australia over the past eight years.

($1 = A$1.38)

--Reporting by Hanwei Wu, hanwei.wu@ihsmarkit.com;

--Editing by Carrie Ho, carrie.ho@ihsmarkit.com

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CARB Approves $1.5 Billion Program to Meet California's 2035 ZEV Target

November 22, 2021

The California Air Resources Board (CARB) on Friday approved a proposal to spend $1.5 billion to increase access to clean vehicles and other mobility options designed to support the state's plan to ensure that all light-duty cars and medium-duty trucks sold in the state by 2035 are zero-emission vehicles (ZEVs).

The agency said the funding represents the state's largest-ever annual investment in clean transportation incentives, more than doubling the largest past spending. Supported projects range from consumer rebates for clean cars to incentives for cleaner trucks, as well as mobility options.

CARB added that more than half of the $1.5 billion fiscal year 2021-2022 funding is targeted to benefit lower income communities and those disproportionately burdened by environmental pollution.

"California is backing up our commitment to clean the air in overburdened communities with the largest state investment yet in zero-emission vehicles and sustainable transportation," CARB Chair Liane Randolph said in a statement.

"This unprecedented mix of incentives and funding will continue to support our equitable transition to zero-emission cars and accelerate the commercialization of zero-emission technologies for medium and heavy-duty trucks and buses,"

Randolph said. "The action the Board took today is designed to clean up the communities hardest hit by air pollution and surge ahead in our effort to move away from fossil fuels and reach carbon-neutrality by 2045 or sooner."

The investments are part of California's comprehensive strategy for improving air quality and reducing greenhouse gas emissions in the transportation sector, the state's largest source of air pollution and climate-changing gases. Funding for fiscal year 2021-2022 marks the first installment in the historic three-year $3.9-billion budget that builds on programs to support ZEVs and their infrastructure over the past decade, CARB said.

The current investment is designed to accelerate California's transition to clean cars, trucks, and off-road equipment, including adding 1,150 drayage trucks, 1,000 school buses and 1,000 transit buses -- all zero emission -- to meet Gov. Gavin Newsom's 2020 executive order to reach 100% ZEV sales for cars and medium-duty trucks by 2035 and for heavy-duty trucks by 2045.

Funded projects include:

--$525 million for clean car rebates through the statewide Clean Vehicle Rebate Project. The money is expected to last three years to cover an increase in consumer demand for zero- and near-zero-emission cars.

--$150 million for clean transportation equity investments benefitting income-qualified individuals and those overburdened by pollution, including money for the state's "Clean Cars 4 All" program that provides up to $9,500 to help income-qualified Californians upgrade older vehicles to new or used zero-emission plug-in electric, plug-in hybrid or hybrid cars.

--$843 million for heavy-duty and off-road equipment investments. This includes funding for demonstration and pilot projects, vouchers for advanced clean trucks, financing for small truck fleets transitioning to cleaner technologies, and funds for drayage trucks, and transit and school buses, all of which are primed to rapidly transition to zero-emission technologies.

--Reporting by Jeff Barber, jbarber@opisnet.com;

--Editing by Aaron Alford, aalford@opisnet.com

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UN Agency Approves CORSIA Criteria for Sustainable Aviation Fuels

November 16, 2021

The International Civil Aviation Organization (ICAO) has approved new criteria for sustainable aviation fuels (SAF) eligible under the Carbon Offsetting and Reduction Scheme for International Aviation (CORSIA).

The United Nations agency said Friday in a news release that by making use of SAF that meets the new environmental criteria, airlines operating international flights can claim associated reductions in their CORSIA offsetting requirements.

CORSIA was adopted by the ICAO in 2016. Under the scheme, airlines can offset the growth in emissions by purchasing carbon credits and moving toward the use of SAF. The program is in its pilot phase until 2023. Participation will become mandatory in 2027 for all 193 U.N. member states, except for the least developed countries.

"This approval should incentivize the production of SAF so that they can fulfil their important role in aviation's green transition," ICAO Council President Salvatore Sciacchitano said in the release. "It also emphasizes the continuing importance of pursuing a globally harmonized approach to mitigating emissions from international aviation operations."

Globally, the aviation industry accounted for 2.8% of emissions in 2019, the last year for which data are available, according to the International Energy Agency.

At the recently concluded COP26 climate summit in Glasgow, U.K., a group of 18 countries launched a new coalition to help reduce aviation emissions.

The International Aviation Climate Ambition Coalition aims to cut the industry's carbon footprint at a rate consistent with efforts to limit global warming to 1.5 degrees Celsius. Its supporters include Canada, France, Japan, Ireland, Norway, New Zealand and the U.S.

--Reporting by Abdul Latheef, alatheef@opisnet.com
--Editing by Jeremy Rakes, jrakes@opisnet.com

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ACR Approves Carbon Offset Methodology for Small Private Forestlands

November 16, 2021

The American Carbon Registry (ACR) has approved the first carbon reduction and removal methodology designed specifically for small private forestlands, a developer of forest carbon products said Nov. 16.

Finite Carbon said in a news release that the methodology would provide a new carbon market incentive for non-industrial forest landowners with 40 acres to 5,000 acres. The company plans to use it to offer carbon removal programs through its Core Carbon platform.

Jessica Orrego, director of forestry at ACR, said the approval could open up the carbon market to 200 million forested acres, the combined area held by small landowners in the U.S.

Until now, the high costs of project development, monitoring and reporting had prevented them from participating in the market, Finite Carbon said. The new methodology will help lower these costs, it said.

"With this methodology, we can empower private owners of forested land to access, create and manage their carbon offsets on a single platform," Sean Carney, CEO of Finite Carbon, said in the release. "Now with the American Carbon Registry's fully transparent registry system and carbon accounting standards, we are thrilled to be able to offer small landowners new opportunities to benefit from sustainable stewardship."

A major player in the carbon offset business, Pennsylvania-based Finite Carbon said it generated over one-third of all California compliance offset supply and delivered more than $500 million to landowners. Its portfolio includes nearly 3 million acres of forestland, the company said.

--Reporting by Abdul Latheef, alatheef@opisnet.com
--Editing by Jeremy Rakes, jrakes@opisnet.com

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COP26: Green Corridors Could Be 'Tipping Point' for Net-Zero Maritime

November 15, 2021

Green corridors could accelerate the decarbonization of the "hard to abate" maritime sector, industry leaders said at the unveiling of the Clydebank Declaration at last week's COP26 climate summit in Glasgow, U.K., though calls remain to increase co-ordination in maritime policy and legislation.

The U.K.-led declaration, which has 19 signatories to date including the U.S., Japan and Denmark, aims to establish zero-emissions shipping trade routes between ports -- or green shipping corridors -- by the end of this decade. "This is the starting pistol for the industry to invest, research, and to develop green technologies with confidence," said U.K. Minister of Transport Robert Courts at the opening address of the declaration launch.

Shipping represents some 3% of total global CO2 emissions, and the sector's emissions could rise by as much as 50% by 2040 without a concerted collective effort, according to an International Maritime Organization (IMO) study.

Denmark's transport minister Benny Engelbrecht said there needs to be at least six of these green shipping corridors by the middle of this decade. By 2030, the aim is to have at least 200 of well-to-wake zero-emission fuelled ships -- powered by green hydrogen, green ammonia, green methanol, and biofuels – and their fuel consumption to make up 5% of that of the global deep-sea fleet's. "Green corridors could be the tipping point of green maritime solutions," Engelbrecht stated.

One of the first corridors considered is the Australia-Japan iron ore route, which is touted to become the first large-scale ammonia-powered route, according Faustine Delasalle, Co-Executive Director of Mission Possible Partnership. The existing political collaboration between the two countries means there is more potential for policy support that bridges the cost gap to fossil fuels at a cost of $250 million to $350 million per year. Delasalle said that the additional cost for steel would be minute and for end-products such as cars would be less than 1%. For fuel supply, Australia has announced green hydrogen production capacity (which can be converted into green ammonia) of 29 GW by 2030, said to be more than 30 times the level needed for the project to start up. The mission aims to reach 20% of zero-emission fuels on that route by 2030 through the deployment of eight to 10 green-powered ships.

Another deep-sea route being considered for a green corridor is the Asia-Europe containership, which currently generates more GHG emissions than any other single global trading route. The pipeline of announced green hydrogen projects of more than 60 GW in Europe, the Middle East and Australia will be sufficient to fuel the initial vessels. In addition, with growing demand for decarbonization throughout the value chain going down to consumers, this corridor could allow cargo owners to share costs via a "book and claim" system that could be rolled out to other corridors if successfully adopted here. Furthermore, if the European Union's Fit for 55 shipping proposals go ahead, revenue from CO2 emissions could close the cost gap to 25% by 2030.

Morten Bo Christiansen, Head of Decarbonization of Danish shipping giant Maersk, said at Wednesday's session that they want to get the demand signal out to scale up production of green fuels. Maersk announced in August they will have eight ocean-going containership vessels operated on carbon-neutral methanol that will be delivered in 2024 and will only order ships from now on that will run on green fuels. Maersk customers supporting the venture include Unilever and the H&M Group. However, Christiansen believes a carbon tax of $150 per ton is needed to "level the playing field" with green fuels currently costing three to four times that of fossil fuels.

The Clydebank declaration agreed that participation by operators in the green shipping corridors would be voluntary, and all vessels transiting a green corridor would not be required to be zero emissions or to participate in the partnerships.

Pressure increased on the IMO to increase their ambitions, including statements at the launch from U.S. Secretary of Transportation Pete Buttigieg and Japan's Minister of Land, Infrastructure, Transport and Tourism Saito Tetsuo (joining by video) to adopt a goal of net-zero emissions in the maritime sector by 2050.

Alex Hewitt, CEO of renewables group GWP, highlighted the need for action now. Large-scale green energy projects take 10 years lead time for development and construction, Hewitt said. GWP, which looks to find the cheapest renewable energy in the world to build at scale, aims to produce 3 million tons per year of green ammonia by 2028-2029. To secure commitment to finance and long-term offtakes, "policy, IMO alignment is very important," Hewitt said.

--Reporting by Karen Tang, ktang@opisnet.com 
--Editing by Michael Kelly, michael.kelly3@ihsmarkit.com 

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COP26: Glasgow Climate Pact Agreed After China, India Downgrade Coal Pledge

November 14, 2021

GLASGOW -- Raw power plays and raw emotions spilled out in dramatic fashion on the final day of the COP26 climate change summit, as India and China forced assembled nations to weaken a commitment to phase out coal use before agreeing to the Glasgow Climate Pact, a deal that demands countries pledge tougher emissions cuts next year and establishes new rules for international carbon markets.

Saturday began with the COP26 president, British politician Alok Sharma, publishing completed "clean" texts of the proposed pact, the result of two weeks of intense haggling between representatives of 196 nations that for the first time contained no brackets around apparent points of contention.

But an informal stocktake plenary scheduled for 11 a.m. that would allow negotiators to raise publicly any objections to the texts was repeatedly delayed, despite Sharma twice requesting in full view of cameras relaying the proceedings that delegates in the main hall take their seats.

Instead, masked negotiators continued to form several huddles in the main hall of the Scottish Event Campus. U.S. climate envoy John Kerry was locked in conversation with China's veteran COP negotiator Xie Zhenhua and his translator for more than fifteen minutes, with Kerry gesticulating and putting his hand on Xie's shoulder, while Xie repeatedly pointed to a text, asking a bespectacled Kerry to read it.

Kerry, who had earlier been surrounded by developing country negotiators, proceeded to talk with the EU's lead negotiator Frans Timmermans in full view of the cameras. The U.S., EU, Indian and Chinese negotiators were later reported to have slipped away from the hall for a meeting.

Various rumors circulated about the cause of the delay, with some pointing to the unhappiness of developing countries that their demand for a transaction tax - known as a Share of Proceeds - on the transfer of voluntary carbon market credits under Article 6.2 of the Paris Agreement had fallen by the wayside and that a "loss and damage" fund to help developing countries hit by extreme climactic events had been blocked by western nations.

The informal stocktake began three hours later than scheduled, and Sharma proposed adjourning it to pave the way for nations to convene and agree the texts later in the evening.

"These texts are now clean," said Sharma, and were "founded on a search for consensus", with the U.K.'s former secretary of state for business urging countries not to use the eleventh hour of negotiations for "leverage".

But his request for adjournment was ignored, and dozens of countries staged interventions over the following two and a half hours, with many nations raising objections before saying that they would support the Glasgow Climate Pact.

However, India's lead negotiator Bhupender Yadav set proceedings alight, blasting the "cover decision" - the framing document for the wider agreement - and its call to phase out coal and end fossil fuel subsidies.

"Targeting any particular sector is uncalled for. Every country will arrive at net zero as per its own national circumstances," said Yadav, who is also India's environment minister. "Developing countries have a right to their fair share of the global carbon budget and are entitled to the responsible use of fossil fuels within this scope. In such a situation, how can anyone expect that developing countries can make promises about phasing out coal fossil fuels and subsidies?"

Seeking to speak after Yadav, Frans Timmermans, the architect of the EU's 'Fit for 55' proposals to slash its carbon emissions, told assembled negotiators: "Having listened to the first couple of interventions, I wonder if we are not at risk in stumbling in this marathon a couple of meters before the finishing line."

"Please embrace this text so that we can bring hope to the hearts of our children and grandchildren. They will not forgive us if we fail them today," said Timmermans to loud applause.

The session was adjourned after two and a half hours of interventions, setting the stage for the closing plenary a few hours later in the main hall.

OPIS managed to enter the hall before the formal plenary began and stayed behind the delegates at the back of the hall over the course of the next four hours. Before the proceedings started, a negotiator for one of the world's largest economies confirmed to OPIS that a deal had been struck behind the scenes.

But once the final session began, it quickly emerged what the price of that agreement had been. China and India sought the floor, with Yadav noting conversations with the COP26 president "and various stakeholders" between the two sessions. Yadav then proposed a "phase down" of unabated coal use, a watering down of the previous text which called for a "phase out".

The International Energy Agency predicts that coal use will be responsible for 14.8 billion metric tons of the 33 billion mt of carbon that it forecasts will be emitted by energy-related sources in 2021, a near record for the coal industry. The IEA says that unabated coal demand must fall to 1% of global energy use by 2050 if the world is to hit net zero carbon emissions by mid-century.

The last-minute watering down on the coal pledge was blasted by Switzerland, Liechtenstein and Mexico, with the latter noting that other nations had been told that they could not re-open the text and push for their own modifications. "How will we measure this phase-down?" Fiji's negotiator Aiyaz Sayed-Khaiyum asked pointedly.

"I apologize for the way this process has unfolded. I am deeply sorry...But I think as you have noted, it is vital that we protect this package," said Sharma, whose voice cracked at that moment as he fought back tears.

But the amendment was then carried without objection, and Sharma proceeded to adopt the different parts of the Glasgow Climate Pact.

Loud applause greeted the moments when the texts establishing the rules of international carbon market trading, collectively known as Article 6 of the Paris Agreement, were formally agreed, with John Kerry smiling and hugging his team and other delegates.

The failure to reach an agreement on those rules since COP21 in Paris had been "a pebble in our shoes", Timmermans said earlier this week, stymieing a potential boom in carbon offset projects and trading at a time when developed nations and corporations are eager to find ways of offsetting their emissions.

The rules agreed in Glasgow avoid double-counting of carbon offset credits by both project hosts and the foreign buyers of those offsets, offering a boost to the integrity of future markets.

Another aspect of Article 6 that was resolved by the Glasgow summit related to the billions of credits generated by around 8,000 carbon offset projects under the framework of the now-defunct Clean Development Mechanism (CDM), which the host countries of those projects wanted to include in the new Article 6.

Critics of the old credits' inclusion in the new framework argued that many of those projects are of dubious quality and additionality, and that their transference to the Article 6 system could swamp the new market. In the event, only credits registered over 2013-2020, representing around 100-120 million mt, will be transferred.

Kerry looked altogether more pensive as he rounded the back of the hall and exited to face the press.

"We raised ambition here in Glasgow," Kerry told journalists. "This was not business as usual...we emerge from Glasgow having dramatically raised the world's ambition to solve this challenge in this decade and beyond."

"Even after what happened here today, the phase-down of coal is on the books, it's part of the decision," said Kerry, noting that a COP text mentioned coal and fossil fuel subsidies for the first ever time.

Sharma described the summit's agreement as a "fragile win", arguing that the goal of limiting global warming to 1.5 degrees Celsius above pre-industrial levels was still attainable. COP26 had kept "1.5 alive," he said, "but its pulse is weak".

The United Nations Environment Programme said last week that even if nations honor their latest round of emissions pledges made at COP26, the world is on course to warm by 2.5 degrees Celsius by the end of the century.

--Reporting by Anthony Lane, alane@opisnet.com
--Editing by Frank Tang, ftang@opisnet.com

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COP26: Switzerland to Lead Emission Offset Trading Under Paris Agreement

November 12, 2021

Switzerland is set to pioneer implementation of Article 6 of the Paris Agreement with six partner countries that will allow bilateral trading of high-quality emission reduction credits to contribute to Switzerland's national climate targets, the country's Minister of Transport Simonetta Sommaruga said Thursday during a press conference at COP26 in Glasgow, Scotland.

The six partners are Peru, Ghana, Senegal, Georgia, Vanuatu and Dominica. Some of the agreements have already been signed prior to COP26.

These bilateral agreements will enable the trading of emission reductions, known as internationally transferred mitigation outcomes (ITMOs), created from climate projects authorized by both governments and which meet the standards of the Paris Agreement.

"A carbon market aligned with the Paris Agreement is now accessible," announced Sommaruga.

Frameworks have been created to ensure that emission reductions achieved cannot be double-counted so that the host country's climate targets and priorities are safeguarded, noted Sommaruga.

A host country is the receiver of carbon credits that are generated from projects overseas.

Sommaruga added that the countries will only recognize climate protection projects that otherwise would not have occurred in the host country.

Switzerland updated in September its nationally determined contribution (NDC) to explicitly cap offsets using ITMOs at 25% while at least 75% of reductions are to be originated from within the country.

"The pioneering frameworks go beyond cooperation between states. They allow public or private entities to invest in and use ITMOs for voluntary climate engagements, "said Sommaruga.

"Voluntary climate actors can now avoid double-claiming between their voluntary engagements and climate targets of states," she added.

Switzerland has meanwhile also pledged $25 million contribution to the Adaption Fund (AF) that provides financing on climate action projects in less developed countries.

The country has committed to reduce greenhouse gas (GHG) emissions by at least 35% of 1990 levels by 2025 and 50% by 2030.

--Reporting by Lujia Wang, Lujia.Wang@ihsmarkit.com; Editing by Yuanlin Koh, lin.koh@ihsmarkit.com

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COP26 Will Emit Twice as Much Carbon as Previous Climate Summit, Data Show

November 12, 2021

Total carbon dioxide (CO2) emissions from COP26 in Glasgow, U.K. will more than double the amount produced by the previous climate summit held in Spain two years ago, according to reports from the UN, Spain and consultancy data.

CO2 emissions at COP26 will total the equivalent of around 105,500 metric tons, according to a recent report published by British consultancy Arup. That's double the 51,101 mt of CO2 equivalent produced at COP25, according to data in a report co-authored by the Spanish government and the United Nations Framework Convention on Climate Change (UNFCCC), published in December 2019.

Most emissions generated by COP26 in Glasgow are estimated to come from international flights, equating to more than 60% of the baseline footprint for COP26, according to the Arup report. There has been a huge number of overseas delegates attending COP26, including officially registered fossil fuel lobbyists from 27 countries, including Canada, Russia and Brazil.

The fossil fuel lobby at COP26 is larger than the combined total of Puerto Rico, Myanmar, Haiti, Philippines, Mozambique, Bahamas, Bangladesh and Pakistan, countries worst affected by climate change in the past two decades, according to analysis released by Global Witness, Corporate Accountability, Corporate Europe Observatory and Glasgow Calls Out Polluters.

"All unavoidable emissions will be offset through the purchase and cancellation of UNFCCC-recognised offsets such as Certified Emission Reductions," Arup said in the report. "[These will be] sourced from a range of project types, across a geographically diverse range."

Examples of projects include those which support sequestration of carbon through reforestation and forest regeneration, various projects based in the U.K., and those projects that are Gold Standard certified with UN Sustainable Development Goals co-benefits, Arup said in the report.

--Reporting by Rob Sheridan, rsheridan@opisnet.com; Editing by Yazdi Merchant, ymerchant@opisnet.com

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COP26: U.S. and China Pledge to Step Up Joint Efforts on Emission Reductions

November 11, 2021

U.S. and China, the world's two largest emitters, announced Wednesday a joint declaration to step up their efforts on net-zero transitions in this decade that include action plans on curbing methane emissions during the COP26 climate summit in Glasgow, Scotland.

The declaration that has laid out basic frameworks of their cooperation is an extension and recollection of the parties' earlier statements released in April this year but is again short on details.

In the latest declaration, the two countries intend to cooperate on several areas that include setting up regulatory frameworks and environmental standards related to greenhouse gas (GHG) emissions in the 2020s, promoting clean energy usage and technologies as well as the deployment of carbon capture, utilization and storage (CCUS) and direct air capture technologies.

The countries also highlighted urgency on methane mitigations and are set to convene a meeting in the first half of 2022 to discuss the specifics on enhancing the measurement, mitigation and policies related to methane emission.

"Methane is 80 times more destructive and potent than CO2...cutting methane emissions is the single, fastest and most effective way to limit warming and that's why it's been a top priority for President Biden," said John Kerry, U.S. special presidential envoy for climate, during a news conference on the declaration.

China plans to develop a national plan to achieve significant methane emission reduction in the 2020s before COP27. The U.S. has already launched a national methane emission reduction action plan.

For CO2 emission reduction, the two parties will cooperate on various policies to support renewable energy integration and improve energy efficiency though no specific plans have been provided.

"In the area of climate change, there is more agreement between China and the U.S. than divergence, making it an area with huge potential for cooperation," said China's special climate envoy Xie Zhenhua who spoke before Kerry during the same news conference.

The two countries plan to launch a working group to promote and review the progress of the actions spelled out in their joint statement and declaration.

--Reporting by Lujia Wang, Lujia.Wang@ihsmarkit.com 
--Editing by Yuanlin Koh, lin.koh@ihsmarkit.com 

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COP26: New Maritime Task Force Set to Drive Decarbonization in Shipping

November 11, 2021

A Just Transition Maritime Task Force, a new initiative to drive decarbonization in shipping and support millions of seafarers during the shipping industry's transition to net zero, was announced at the COP26 climate summit in Glasgow, U.K. on Wednesday.

The new task force aims to drive the shipping's green transition, identify best practice across the value chain, and provide policy recommendations for an equitable transition, with a specific focus on developing economies, according to a press statement by the International Chamber of Shipping (ICS).

Founding members include the ICS, the International Transport Workers' Federation, and the United Nations Global Compact, the world's largest corporate sustainability initiative. Other influential UN bodies including the International Labor Organization and the International Maritime Organization have committed to join the taskforce as formal partners.

"We are all about to face the single largest transition in modern times, and all of us will be affected," Guy Platten, ICS secretary general said in the statement. "Many of our seafarers come from developing nations, who are witnessing first-hand the effects of climate change. We must ensure they are given the green skills they need to keep global trade moving, and that developing nations can have access to the technologies and infrastructure to be part of shipping's green transition."

There are over 1.4 million seafarers globally, with the majority of this workforce originating from emerging economies, according to the website.

A meeting is expected to take place in December to begin setting up the next steps for the Just Transition Task Force.

--Reporting by Benita Dreesen, bdreesen@opisnet.com 
--Editing by Rob Sheridan, rsheridan@opisnet.com 

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COP26: Draft Framework Text Calls on Countries to Revise Emissions Targets

November 10, 2021

GLASGOW - The draft of the COP26 climate change summit "cover decision," which sets the framework for texts still under negotiation, requires nations to submit revised emissions reduction pledges by the end of next year.

The request comes as the pledges, known as nationally determined contributions (NDCs), were slammed by the United Nations as doing next to nothing to change the likely emissions trajectory.

The United Nations Environment Programme [UNEP] this week recalculated its predictions for global warming by the end of the century in light of the new promises on emissions made in Glasgow, and forecast that temperatures will be2.5-2.7 degrees Celsius higher by the end of the century compared to pre-industrial levels. That far exceeds the aim of the Paris Agreement, which aim to limit global warming to 1.5-2 degrees Celsius.

"These estimates remain very similar to the estimates published in the [UNEP]Emissions Gap Report 2021 due to limited changes to 2030 emissions," said UNEP Tuesday.

"We are not where we need to be and we need to step up with much more action," said Inger Andersen, the U.N. agency's executive director. "At this point, when we look at what has come in [with] the additional pledges, frankly, it's an elephant giving birth to a mouse."

In the draft, nations are urged "to revisit and strengthen the 2030 targets in their NDCs ... by the end of 2022". If countries agree to the draft text, they will have to "convene an annual high-level ministerial roundtable on pre-2030ambition, beginning ... November 2022".

The proposal marks a sharp break from the "ratchet mechanism" agreed upon atCOP21 in Paris in 2015, when nations said they would submit revised pledges to cut emissions every five years. Countries such as China, Russia and Saudi Arabia could resist the new decision.

The draft text also "calls upon" nations to accelerate phasing out coal and subsidies for fossil fuels, and contains new money announced Tuesday for funds helping developing countries. There are brackets around the new money pledged to the Least Developed Countries (LDCs) Fund and the Adaptation Fund, suggesting that the 46 LDCs are still haggling to boost contributions from richer nations.

Delegates have previously said to OPIS that an increase in the size of those funds could result in LDCs dropping their demand for a 2-5% levy to be applied to voluntary carbon market (VCM) trades. This demand for the share of proceeds of future VCM trades is one of three issues related to Article 6 - the rulebook that would govern and expand international carbon market trading that proved insurmountable at the last two COPs.

Those negotiations, which continue at Glasgow and chaired by ministers from Singapore and Norway, were still revolving around how to avoid double-counting of carbon credits, the transitioning of carbon credits generated by projects into Article 6's Sustainable Development Mechanism and VCM share of proceeds, the U.K.'s lead negotiator Archie Young said Wednesday during a press conference.

"Those remain the three main sticking issues," Young said. "We are encouraged that parties continue to engage on those issues and we have heard a number of bridging solutions being put forward. It remains to be seen how parties are responding to those ... and whether they will be able to reach resolution."

The president of COP26, British politician Alok Sharma, said at the same press conference: "On finance, there remains a lot of work to do, but we have seen some positive announcements, such as the $350 million in contributions to the Adaptation Fund and $413 million for the Least Developed Countries Fund. I hope this supports a good atmosphere in negotiations."

"In addition to the cover decision, texts are still evolving ... On Article 6 the text has narrowed and the choices are clear. It will be a matter of political will now to close this outcome," Sharma said.

"My team and I then intend to review progress across all issues from 7 p.m. [U.K. time] ... I expect to be near final texts overnight ... I still have the intention of closing COP26 at the end of Friday ... Everyone must come armed with the currency of compromise," said the U.K. government's former secretary of state for business.

Sharma said that the U.K. presidency was looking at rebalancing the amount of money going to LDCs to help them reduce greenhouse gas emissions, known as mitigation finance, in favor of adaptation finance, which helps countries deal with the effects of climate change.

“There is no doubt a real ask from developing nations, from climate vulnerable[countries] for more to be done on adaptation...we are pushing very hard to see whether there is something to be delivered in terms of rebalancing between adaptation and mitigation finance."

In 2020, a total of $1.6 billion was approved by multilateral climate funds for mitigation projects in developing countries, whereas $586 million was approved for adaptation projects, according to the United Nations.

--Reporting by Anthony Lane, alane@opisnet.com 
--Editing by Bridget Hunsucker, bhunsucker@opisnet.com

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COP26: Nineteen Countries Sign Pledge for Zero-Emission Shipping Corridors

November 10, 2021

A coalition of nineteen signatories on Wednesday agreed to create zero emissions shipping trade routes between ports to speed up the decarbonization of the global maritime industry, according to a U.K. government policy paper, the Clydebank Declaration, published Wednesday.

Signatories to the declaration are committed to identify and take steps with relevant ports, operators and other partners along the value chain to decarbonize specific shared maritime routes.

The proposed zero-emission maritime corridors will allow major trade partners to accelerate land-side investment needed in clean energy and zero-emission electro-fuel infrastructure at ports. The countries agreed to support at least six such corridors by 2025, and to collaborate on developing supplies for zero emissions fuels, on infrastructure required for decarbonization and on regulatory frameworks.

"It is our aspiration to see many more corridors in operation by 2030," the countries said in a mission statement.

The declaration sits within the Zero-Emission Shipping Mission, an international coalition aiming to create alliances between countries, the private sector and research institutes. The agreement also further supports the greenhouse gas strategy of the International Maritime Organization (IMO) which intends to reduce emissions from international shipping by 50% by 2050.

First signatories include Australia, Belgium, Canada, Chile, Costa Rica, Denmark, Fiji, Finland, France, Germany, the Republic of Ireland, Japan, the Republic of the Marshall Islands, the Netherlands, New Zealand, Norway, Sweden, the United Kingdom and the United States.

U.S. Transportation Secretary Pete Buttigieg said the declaration was "a big step forward". The U.S. was "pressing for the IMO to adopt a goal of zero emissions for international shipping by 2050," said Buttigeig.

Shipping, which transports about 90% of world trade, accounts for nearly 3% of the world's CO2 emissions.

--Reporting by Benita Dreesen, bdreesen@opisnet.com
--Editing by Rob Sheridan, rsheridan@opisnet.com

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COP26: CARB Signs Declaration With New Zealand, Québec on Climate Change

November 9, 2021

The California Air Resources Board (CARB) signed a joint declaration in Glasgow, U.K., with the governments of New Zealand and Québec to cooperate in the fight against climate change, the board said Tuesday.

The aim of the joint declaration is for the three governments to share information, experiences and best practices and promote environmental integrity of carbon pricing instruments to reduce greenhouse gas (GHG) worldwide as California, New Zealand and Québec fight climate change, CARB, on behalf of California, said in the news release.

California and Quebec's Cap and Trade programs are currently linked through the Western Climate Initiative. CARB has also been "conducting technical exchanges" with New Zealand and Quebec for the last couple years, the agency said.

Today's joint declaration also states the governments' shared intention to explore opportunities for potential future alignment of their respective cap-and-trade programs, CARB said.

"And it recognizes a shared understanding of the importance of carbon pricing and the reform and phase out of environmentally harmful subsidies, as efficient and critical tools for reducing greenhouse gas emissions at the scale necessary to limit the global average temperature increase to 1.5°C," CARB said in the release.

The joint declaration recognizes the need to reduce GHG emissions in accordance with the latest findings of the Intergovernmental Panel on Climate Change, CARB said.

"Cooperation between jurisdictions on climate action is absolutely essential to addressing the climate crisis. We are proud to be doing so with New Zealand and Québec," said CARB Chair Liane Randolph in the release. "We look forward to aligning our respective climate programs where possible and strengthening and amplifying the impact of these programs in the process."

CARB added that the joint declaration acknowledges the common intent of the three jurisdictions to transition toward net-zero GHG emissions while creating new jobs in the low- or net-zero emission sectors and facilitating a transition for people impacted by the shift to a carbon-neutral economy.

CARB consulted with the other governments through Assembly Bill 32, which was approved by the California legislature in 2006. AB 32 directed CARB to consult with other national governments and jurisdictions to identify effective strategies and methods to reduce GHG emissions and manage GHG control programs and to facilitate the development of integrated and cost-effective regional, national and international GHG reduction programs, the board said.

--Reporting by Jeremy Rakes, jrakes@opisnet.com 
--Editing by Kylee West, kwest@opisnet.com 

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COP26: Supply Chain Set to Become Main Source of Agri-Food Emission

November 9, 2021

The food supply chain is on track to overtake farming and land use as the largest contributor to greenhouse gases (GHG) in the agri-food sector in many countries, the Food and Agriculture Organization (FAO) said in a new study released Monday at the COP26 climate summit in Glasgow, U.K.

The United Nations agency attributed the rise in emissions to rapid growth driven by food processing, packaging, transport, retail, household consumption, waste disposal and the manufacturing of fertilizers.

Data from the study show that the world's agri-food systems accounted for 31% of total global emissions in 2019, or 16.5 billion metric tons of carbon dioxide equivalent (CO2e), a 17% increase over the past three decades. Of that, 7.2 billion mt came from within the farm gate, 3.5 billion mt from land use change and 5.8 billion mt from supply-chain processes.

The latter category already emits the most CO2, while on-farm activities were by the far the major emitters of methane and nitrous oxide, although food waste decay generates significant amounts of methane as well, the study said.

The report also found that emissions from land use changes such as turning forests into cropland decreased by 25% over that time, while emissions within the farm gate increased by only 9%.

"That highlights how supply-chain factors are driving the increase in overall agri-food system GHG emissions," the FAO said in a news release.

It said the report builds on a wave of recent efforts to quantify GHG trends to facilitate mitigation measures and alert policy makers to emerging trends. FAO senior statistician Francesco Tubiello, who wrote the study, said that the most important trend over the 30-year period is the increasingly important role of food-related emissions generated outside of agricultural land, in pre- and post-production processes along food supply chains.

"This has important repercussions for food-relevant national mitigation strategies, considering that until recently these have focused mainly on reductions of non-CO2 within the farm gate and on CO2 from land use change," Tubiello said in the release.

Within the supply chain, household consumption processes were the leading source of GHG emissions in China, food waste disposal was the dominant pathway in Brazil, the Democratic Republic of Congo, Indonesia, Mexico and Pakistan while the retail sector dominated in the U.S, Russia and Canada. On-farm energy use was the largest source of emissions for India, the report said.

Such variations point to different potential mitigation strategies and also to likely trends in the future, according to the report. For example, food-system emissions as a share of the total declined globally to 31% by 2019 from 40% in 1990. However, in regions dominated by modern agri-food systems it was the opposite, rising to 31% in Europe from 24% and to 21% from 17% in North America.

"Notably, this emission growth was driven by carbon dioxide, confirming the growing weight of pre- and post-production processes which typically involve fossil-fuel energy use," the report said.

Agri-food system GHG emissions from Asia, the world's most populous region, are by far the greatest, followed by Africa, South America, Europe, North America and Oceania. However, the study found that GHG missions from pre- and post-production phases of the food supply chain accounted for more than half of the agri-food system total in both Europe and North America, while the figure was below 14% for Africa and South America.

The analysis was prepared in collaboration with the UN Statistics Division (UNSD), the International Energy Agency (IEA), Columbia University and the Potsdam Institute for Climate Impact Studies. The FAO said that the study will help enable targeted implementation of net zero pledges made by countries.

--Reporting by Abdul Latheef, alatheef@opisnet.com 
--Editing by Rob Sheridan, rsheridan@opisnet.com 

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COP26: Shipping Can Drive the Global Uptake of Net-Zero Fuels, Say Delegates

November 9, 2021

The shipping industry can be a driver for the uptake of zero carbon fuels, according to participants at the "Shaping the Future of Shipping" session, held on the sidelines of the COP26 climate summit in Glasgow, U.K. Tuesday.

Calling on governments to support the risks that the market is taking, participants said it is the government's role to acknowledge and incentivize first movers in the uptake of zero-carbon fuels in the shipping industry.

To meet the International Maritime Organization's (IMO) emissions targets, thousands of zero-carbon vessels will need to be on the water by 2030 and more than 60% of the emissions reductions required by 2050 will come from technologies that are not commercially available at the present time, according to speakers at the session.

"Shipping used to be at the low end of the oil queue and now the sector needs to move up in the oil refining chain," said Jeremy Nixon, CEO ONE Group Singapore. "This requires a lot of R&D in new fuels, but the industry is ready and moving ahead of governments."

Cutting the shipping industry's carbon footprint will require a multitude of solutions with a lot of debate as to which fuel has the most potential, including ammonia, biofuels, hydrogen, and methanol. While electric batteries are already starting to play their part for ships on shorter routes, advances in clean fuels are required for larger vessels such as cargo ships and tankers travelling long distances.

"Industries have always migrated towards the most efficient fuel [as a cost] and now entire sectors will have to make decisions based on other [environmental] criteria," said Christopher Wiernicki, president & CEO ABS USA. "Success is going to be a team sport."

--Reporting by Benita Dreesen, bdreesen@opisnet.com
--Editing by Rob Sheridan, rsheridan@opisnet.com

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COP26: Industry Leaders Call for Coordination in Maritime Legislation

November 8, 2021

The shipping industry urgently needs a set of streamlined rules and measures and a clear and long-term international regulatory framework to drive the decarbonization path, participants at the 'Shaping the Future of Shipping' special COP26 climate summit event said on Saturday.

"We cannot work on the basis of some rules here and different rules elsewhere; politicians should get their act together and tell us what to do. Our biggest issue is unclarity on the political field. Come out with clear rules and we will comply," said Svein Steimler, President and CEO of NYK Group Ltd, Europe.

In his opening remark, moderator Lord Adair Turner, Chair UK Energy Transition Commission, mentioned that the challenge for shipping decarbonization is coordination rather than economics.

"If we had one global government, we would have one clear policy on regulation and pricing; but the challenge is that we don't have it. However, we do have one global regulator, the International Maritime Organization (IMO)," he added.

In 2018, the IMO pledged to cut international shipping emissions by 50% by 2050 from 2008 levels. Last June, the IMO adopted new guidelines, including short-term mandatory provisions on the technical energy efficiency of ships' propulsion systems and their operational carbon intensity.

IMO's decisions were, however, seen as inadequate by a significant part of the industry, 'creating a void that others are now starting to fill', market analysts previously mentioned.

Meanwhile, the European Union has pledged to become net-zero by 2050 and has adopted the European Climate Law, which made new emissions reduction targets and climate neutrality goal binding.

Vassilios Demetriades, Shipping Deputy Minister of Cyprus, said: "It is time for the IMO to make progress and raise the level of ambition, not just on commitments but also but also on changing mindsets. It is important to breach the gap between the regulators and the shipping industry."

"And to be pragmatic. The industry might need a longer transition period for R&D on new fuels, than currently set out by the IMO," Demetriades added.

Rolf Habben Jansen, CEO of Hapag-Lloyd Germany commented: "We don't see that many road-blocks to decarbonize short term, the biggest issue is a lack of clarity on the political field, rules for older ships, safety guidelines; there are a lot of things we don't know yet and we need to make long term decisions."

In his closing speech, IMO's Secretary-General Kitack Lim announced that IMO member states are working on new emission reduction proposals and on a global market-based pricing mechanism. "At COP26, the calls for action from the industry are 'loud and clear'. I feel a kind of pressure and understand the urgency to facilitate R&D for future fuels," he said.

Eyes now turn to this week's IMO environmental meeting (MEPC77) where delegates are expected to make new pledges. MEPC77 runs 8-12 November.

--Reporting by Benita Dreesen, bdreesen@opisnet.com
--Editing by Karen Tang, ktang@opisnet.com

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COP26: The End of Coal - Key Deals Mark Shift Away From Fossil Fuels

November 8, 2021

Two key deals announced Thursday from the COP26 climate summit in Glasgow, Scotland, marked "historic" progress to accelerate the end of coal, the fossil fuel that is the biggest source of emissions that led to climate change.

The agreements, unveiled at the summit, included a new 'Global Coal to Clean Power Transition Statement' that saw 23 nations - including Indonesia, Vietnam, Poland and South Korea - making new commitments to phase out coal power, and a pledge by 25 countries - featuring Italy, Canada, the U.S. and Demark - to end international public support for coal by the end of 2022.

Recent announcements from China, Japan, and South Korea to end overseas coal financing meant all significant public international financing for coal power has effectively ended, the Nov. 4 statement said.

"...With these ambitious commitments that we are seeing today, the end of coal power is now within sight," said COP26 President, Alok Sharma.

These deals come alongside an announcement by the Powering Past Coal Alliance, an international campaign which has already secured 28 new members including Ukraine, Chile and Singapore, to pledge to quit coal.

This could shift an estimated $17.8 billion a year in public support out of fossil fuels into the clean energy transition, which is critical for keeping the goals of the Paris Agreement of limiting warming to 1.5°C alive, the statement continued.

However, the agreement is not binding, and was not signed by several major energy countries including China, Japan, Germany, and South Korea.

Since the Paris Agreement was adopted, there has been a 76% drop in the number of planned new coal plants globally in the last six years, according to the media release.

In separate announcements, the multilateral Climate Investment Funds said it will invest about $2.5 billion to help developing countries that rely on fossil fuels phase out coal to clean energy, initially focusing on South Africa, India, Indonesia, and the Philippines.

Indonesia and the Philippines announced pioneering partnerships with the Asian Development Bank to support the early retirement of coal plants.

An $8.5 billion deal to support South Africa's just transition to clean energy was also announced earlier on Tuesday.

--Reporting by Yuanlin Koh, lin.koh@ihsmarkit.com;

--Editing by Hanwei Wu, hanwei.wu@ihsmarkit.com

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COP26: Slashing Direct Air Capture to $100/mt Beyond Billionaires' Bankroll: Expert

November 8, 2021

GLASGOW - Slashing the cost of sucking carbon dioxide out of the atmosphere and permanently storing it underground to $100/mt by 2030 is feasible but developing the technology in that timescale could prove beyond the means of billionaires funding the field, one of the U.K.'s leading scientists told OPIS Monday.

"It could be knocked down to the $100/ton level by 2030, but only with a very substantial resource push and development push with lots of money being thrown at it, beyond even what the billionaires can afford," said Myles Allen, professor of geosystem science at the University of Oxford, in response to OPIS' questions during an event at the Norwegian Pavilion at the COP26 climate change conference.

Currently, carbon dioxide removal (CDR) technologies typically extract carbon from the atmosphere for more than $1,000 per metric ton. The Climeworks-owned Orca facility in Iceland, the world's largest direct air capture and storage plant, can capture just 4,000 metric tons of carbon per annum at a cost of roughly $600/mt.

The deployment of technology after 2030 to remove carbon dioxide from the atmosphere forms a key part of the International Energy Agency's proposed pathway to achieving global net-zero carbon emissions by 2050. However, research in carbon removal technologies "is currently grossly underfunded" said SINTEF, a Norwegian research institute, at COP26 last week.

The United States' Department of Energy launched a "Carbon Negative Shot" research fund Friday to slash the costs of direct air capture technology that sucks carbon out of the atmosphere to below $100/mt.

The U.S. Energy Secretary Jennifer Granholm announced the initiative at COP26, saying in a statement that finding ways to lower the cost of CDR technology would be a critical part of hitting net-zero carbon emissions by 2050.

"By slashing the costs and accelerating the deployment of carbon dioxide removal, a crucial clean energy technology, we can take massive amounts of carbon pollution directly from the air and combat the climate crisis," the Department of Energy said in a statement Friday.

Tony Lent, a long-time investor in climate change-related technologies, last week identified the family offices of technology billionaires as a key source of likely future financing of CDR research and development, in addition to foundations and governments.

"What's really important is that you have a lot of technology billionaires who have decided that what they want to do with their family offices is work on climate change," Lent told OPIS on Tuesday. "That number right now is 10-15 family offices. I wouldn't be surprised if that number doubles or triples in the next 10 years because so many people are cashing out of their fintech or other technology companies."

But Allen said that the only way of driving CDR technology costs down to $100/mt by 2030 involved creating offset instruments that combine nature-based solutions credits with direct air capture credits. The professor, an author of several UN Intergovernmental Panel on Climate Change reports, said he will soon produce a paper that makes the case for such financial instruments.

A few U.S. oil companies have made investments in direct air capture, most notably Occidental Petroleum through its Oxy Low Carbon Ventures business. Last week, its Vice President of Technology Dr. Rob Zellner said at the IETA Pavilion at COP26 that he foresees his company driving down its direct air capture facility costs to "the lower end" of a $100-300 range by 2030.

--Reporting by Anthony Lane, alane@opisnet.com;

--Editing by Bridget Hunsucker, bhunsucker@opisnet.com

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COP26: Global Hydrogen Toolbox Launched to Aid Public-Private Partnerships

November 5, 2021

The International Renewable Energy Agency (IRENA) and the World Economic Forum launched a Global Hydrogen Toolbox at the COP26 climate summit in Glasgow, U.K., in aid of public-private partnerships that seek to accelerate green hydrogen deployment.

The new toolbox, "Enabling Measures Roadmaps for Green Hydrogen," outlines pathways to increase green hydrogen deployment worldwide.

The road-maps series shows the Top 10 objectives supporting measures and critical timelines for their implementation in areas such as cost reduction, demand growth, international standards, infrastructure, and technology development.

An example of an objective and measure is the introduction of carbon contracts for difference -- a demand touted multiple times by the nascent low-carbon hydrogen industry -- to close the cost gap for hydrogen use in hard-to-abate sectors.

IRENA Director-General Francesco La Camera said, "Green hydrogen needs to be transitioned from its current niche role to a global energy carrier with widespread usage across sectors and this will require an integrated policy approach. Our Enabling Measures Roadmaps will help countries lead the way for a global hydrogen market and meet global net zero objectives."

Roberto Bocca, head of shaping the future of energy and materials platform at the World Economic Forum, added: "These road maps articulate a clear pathway for making hydrogen a significant part of the future energy mix. Private sector and policymakers working hand in hand can now forge a credible path toward a green hydrogen economy."

IRENA and the World Economic Forum plan to continue developing the road-maps series beyond the initial ones for Europe and Japan to multiple regions of the world.

The toolbox has been developed through consultations with both industry and international organizations.

--Reporting by Cuckoo James, cjames@opisnet.com;

--Editing by Barbara Chuck, bchuck@opisnet.com

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COP26: Emissions of the Richest 1% Threaten Climate Goals, Study Warns

November 5, 2021

The carbon footprint of the world's richest 1% will be 30 times greater than what is compatible with the 1.5-degree Celsius goal of the Paris Agreement by 2030, an Oxfam study warned Friday.

"Carbon Inequality in 2030" also said that emissions of the world's poorest 50% will remain well below climate goals.

The research was conducted by the Institute for European Environmental Policy (IEEP) and the Stockholm Environment Institute (SEI) for the British charity.

It was released as delegates continued consultations at the COP26 climate summit in Glasgow, U.K., on keeping the Paris goals alive.

Limiting global warming to well below 2 degrees C, and preferably to 1.5 degrees C, are the goals of the 2015 Paris Agreement, but recent studies concluded that current global pledges to reduce emissions fall far short of what is needed.

The latest Oxfam study said that to be compatible with the Paris goals, every person on Earth would need to cut their carbon dioxide (CO2) emissions to an average of 2.3 tons per year by 2030, roughly half the average of today.

But the richest 1% are on track to emit 70 tons of CO2 per person annually by 2030, while the poorest 50% will be responsible for just 1 ton per person a year.

In all, the richest 1% are expected to account for 16% of total global emissions by 2030, up from 13% in 1990 and 15% in 2015., Oxfam said.

The charity said that the briefing builds on last year's report, which estimated that the richest 1% were responsible for twice the emissions of the poorest 50% from 1990 to 2015.

"A tiny elite appear to have a free pass to pollute," Nafkote Dabi, climate policy lead at Oxfam, said in a news release. "Their over-sized emissions are fueling extreme weather around the world and jeopardizing the international goal of limiting global heating."

The study also found that the total emissions of the richest 10% alone are set to exceed the 1.5-degree C-aligned level by 2030, regardless of what the other 90% do.

Lead author Tim Gore, head of the Low Carbon and Circular Economy program at the IEEP, said the global emissions gap to keep the 1.5-degree C goal alive is not the result of the consumption of most of the world's people.

"It reflects instead the excessive emissions of just the richest citizens on the planet," Gore said.

Oxfam called on world leaders to focus on targeting deeper emissions cuts by 2030 and ensure that the richest people make the most radical cuts.

 

--Reporting by Abdul Latheef, alatheef@opisnet.com;

--Editing by Bridget Hunsucker, bhunsucker@opisnet.com

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COP26: New Energy Initiative Targets Remote and Indigenous Communities

November 5, 2021

Canada, Mexico and the U.S. have launched a North American initiative to support their remote and indigenous communities transition to clean, renewable and reliable sources of energy.

The initiative was announced Thursday at the COP26 climate summit in Glasgow, U.K. It is part of a five-year global program spearheaded by the International Renewable Energy Agency (IRENA), an intergovernmental organization headquartered in Abu Dhabi, U.A.E.

The three countries are already working together on climate issues under the Environmental Cooperation Agreement that went into force in July 2020 along with the United States-Mexico-Canada Agreement (USMCA). That work is led by the Montreal-based Commission for Environmental Cooperation (CEC), which will also take a major role in implementing the new initiative.

"Remote and indigenous communities are disproportionately impacted by energy challenges," CEC Executive Director Richard A. Morgan said in a press statement. "The CEC's North American initiative will help lay the foundation for a global effort to support communities transition to renewable energy."

The CEC said that it will help operationalize the first phase of the program, focusing on the creation of core knowledge on decentralized renewable energy solutions. It will also conduct a regional case study of best practices that will provide models and strategies for countries facing similar challenges.

IRENA's global initiative is designed to help communities reliant on diesel-based electricity grids transition to green power.

--Reporting by Abdul Latheef, alatheef@opisnet.com;

--Editing by Rob Sheridan, rsheridan@opisnet.com

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COP26: Trafigura Commits to Decarbonizing Shipping, Aluminium Sectors

November 4, 2021

The Trafigura Group confirmed its commitment to decarbonisation and the uptake of low-carbon technology in the shipping and aluminium sectors during the COP26 climate summit in Glasgow, U.K. Thursday, the commodities trading company said in a press statement Thursday.

The World Economic Forum, together with the U.S. Special Presidential Envoy for Climate John Kerry, announced the First Movers Coalition during COP26 on Thursday, of which Trafigura is a founding member.

The coalition, a new platform for corporate commitments to create demand for low carbon technology, focuses on eight key sectors, seven of which account for more than a third of global carbon emissions but do not have cost competitive energy alternatives to fossil fuels, according to Trafigura. Phase one commitments announced Thursday comprise the aviation, trucking, shipping and steel sectors, while phase two commitments for the remaining sectors, including aluminium, will follow in 2022.

"The First Movers Coalition is an important initiative that will drive investment in technologies and solutions to achieve net zero," Jeremy Weir, executive chairman and CEO of Trafigura said in the statement. "In the shipping sector, this marks another important signal by industry of its willingness and readiness to decarbonise. We now need an enabling global regulatory framework to accelerate progress and put a price on carbon for marine fuels."

Trafigura has committed to own and operate six ammonia-carrier vessels which will be converted to use low-carbon ammonia as their primary fuel source by 2030, if technically feasible. This represents less than one-fifth of Trafigura's current owned shipping fleet of between 45 to 65 wet and 50 to 55 dry vessels, according to the trading house.

The ammonia-carriers will be capable of switching fuels from conventional fuel oil to low-carbon (blue or green) ammonia when the MAN Energy Solutions two-stroke ammonia engine that Trafigura is co-sponsoring becomes commercially available.

Trafigura is also committed to working with the First Movers Coalition to agree future purchasing commitments for low-carbon aluminium, to incentivise and work with producers and consumers of aluminium to decarbonise the industry, according to the statement.

--Reporting by Rob Sheridan, rsheridan@opisnet.com
--Editing by Yazdi Merchant, ymerchant@opisnet.com

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COP26: Phasing Out Coal Key to Meeting 1.5C Global Warming Target

November 4, 2021

'Consigning coal to history' was the key takeaway of the UK Secretary of State for Business, Energy and Industrial Strategy (BEIS) Kwasi Kwarteng at the COP26 climate summit in limiting growth in global temperatures to 1.5 degrees Celsius by 2050.

Opening the Presidency event 'Making the global transition to clean power a reality', Kwarteng said that for developed nations this should occur by 2030, and for developing countries by 2040.

He added that progress on the energy transition must be five times faster than it currently is.

The work of the Energy Transition Council (ETC), created under the COP26 presidency bringing the U.K. and several nations and financial institutions together to help phase out power generated from coal and replace it with non-fossil fuel based power, will now be extended to 2025 instead of being phased out in 2022 as initially planned

The secretary of state told the summit the U.K. provided a good example of the move away from coal generated power. In 2012 around 40% of U.K. electricity was generated by coal, but this had fallen to 2% in 2021 and by 2024 it will be eliminated entirely.

In a panel discussion that followed Kwarteng's speech, the CEO of the Climate Investment Funds, Mafalda Duarte, reported that 80% of electricity globally is generated from fossil fuels and this accounts for 75% of Greenhouse Gas (GHG) emissions. Coal, Duarte continued, is the biggest emitter of GHGs out of all fossil fuels and its use to generate electricity has grown by a third over the past decade.

Explaining the enormity of the task, she said currently 1,400 gigawatts (GW) are generated by renewable energy sources globally, but to fully replace fossil-fuel generated power by 2050, 70,000 GW of power will need to be generated from renewable sources. 1GW is roughly the amount of electricity consumed by a medium-sized town.

Fellow panelists emphasized that the phase out of coal-generated electricity must be just and fair, i.e. it must be affordable and easily accessible by any individual and was key to meeting the Special Development Goal (SDG) 7 under the Paris Agreement - access to power for every global citizen. For example, in their speech the Asian Development bank stated that 150 million people in Asia have no access to power and 350 million have unreliable access to it at present.

The Global Energy Alliance for People and Planet (GEAPP), an initiative launched on Tuesday made up of private philanthropic funds, multilateral and development finance institutions, and governments, aims to unlock $100 billion over the next 10 years and create or improve 150 million jobs by speeding up investment in energy transition and renewable power solutions. It states this investment could cut carbon emissions by 4 billion tons over the period.

--Reporting by Yazdi Merchant, ymerchant@opisnet.com
--Editing by Karen Tang, ktang@opisnet.com

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COP26: IEA Chief Fatih Birol Gives Support to Beyond Oil and Gas Alliance

November 4, 2021

Glasgow -- International Energy Agency (IEA) Executive Director Dr. Fatih Birol said Thursday he supports all "helpful" climate and energy initiatives, including the Beyond Oil and Gas Alliance (BOGA), which is asking governments to put a firm deadline on producing oil and gas and to stop issuing new permits for exploration.

When asked by OPIS whether he supported the new initiative -- announced by the governments of Denmark and Costa Rica in September -- Birol said, "I support all the initiatives which are helpful in addressing our energy and climate goals."

Birol's comment came Thursday afternoon just after he exited a packed event held at the Norwegian Pavilion during the COP26 climate summit.

BOGA's goal of a fixed deadline for oil and gas exploration -- the first state-led initiative of its kind -- aligns with the IEA's Net Zero by 2050 report released in May. The shelving of all oil and gas projects yet to be committed as of 2021 was one of 400 key milestones judged necessary by the IEA to achieve net zero carbon emissions globally by 2050.

Costa Rica does not extract oil, while the Danish government decided last year to ban new oil and gas exploration in Danish waters in the North Sea and end oil production by 2050. The country has been one of Europe's largest oil and gas producers but has become a leading producer of offshore wind power.

"The science is clear: to keep the 1.5 degrees Celsius target of the Paris Agreement alive, we need significant reductions in fossil fuel production," Dan Jorgensen and Andrea Meza, the climate and energy ministers of Denmark and Costa Rica, respectively, said in a joint article in The Scotsman newspaper shortly before COP26 began.

"Transitioning away from fossil fuels means not only making strides on the demand side of the equation, but also establishing clear pathways and timeframes on the supply. It's time we close the growing gap between fossil fuel production and our climate targets," the ministers said.

A team member of a COP26 delegation familiar with BOGA told OPIS earlier this week that an update on how many countries have joined the initiative might be provided at the climate summit next week.

Birol has issued several warnings in 2021, arguing that governments are not moving fast enough to enable an energy transition amid a sharp bounce-back in global carbon emissions, which the IEA says fell by 5.8% last year but which it forecasts will rise by almost 5% this year. "Our numbers show we are returning to carbon-intensive business-as-usual," Birol said in March.

"Unfortunately ... this year global emissions will increase substantially, the second largest increase in history," he said in May. "There is a growing gap between the rhetoric that we hear from governments and industrial leaders and what is happening in real life."

During a speech Thursday at the Nordic Co-operation Pavilion, the IEA chief struck a more optimistic note, hailing the carbon reduction pledges made by countries at COP26. He said the IEA had revised down its forecast for global warming if nations honor their new commitments. "We ran our models once again," Birol said. "The result is extremely encouraging. We would have a temperature trajectory consistent with 1.8 degrees Celsius. ... This is excellent."

--Reporting by Anthony Lane, alane@opisnet.com
--Editing by Bridget Hunsucker, bhunsucker@opisnet.com

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COP26: Global Ports Eye Climate Change but Many Still Lack Basic Strategies

November 3, 2021

Major international ports need to be prepared for the challenges of climate change, but many regions lack the appropriate strategies of adaptation and mitigation, according to speakers at the International Marine Hub ports conference Wednesday.

In many regions around the world, rising sea levels are not monitored, and rising temperatures and their impact on workforce are not factored into port operations.

The impact of a mid-range climate change predicted by 2050 on the river Thames (compared to a 1981-2000 baseline) reveal a scenario with 10% more rainfall in winter, more frequent heat waves, an increase in wind speed, more fog days and increased water heights and flooding risks, according to a recent climate assessment conducted by the Port of London.

"It would be completely unthinkable to not take climate adaptation and mitigation seriously," said Robin Mortimer, CEO of the Port of London Authority, U.K. "In most cases, there is no immediate action needed but thinking through and planning what you will do at a certain point is key."

"This could affect not only the economic operation of our Port (international supply chain disruption, shift in cargo type, disruption in river traffic, loading/offloading issues), but also increase safety risks (air quality, bridge visibility) and enhance environmental issues such as bank erosion, water quality and habitat migration," Mortimer explained.

Climate change cuts across all port stakeholders, speakers said.

"We are looking at chemical companies, tank terminals, dry and break-bulk industries together with power plants and utility owners, for their involvement right from the start," said Marc Eisma, environmental manager, Port of Rotterdam.

The United Nations Conference on Trade and Development, which is responsible for dealing with development issues, particularly international trade, recently said that climate change adaptation and resilience planning should become "a major priority" for all ports.

Ports are essential for global trade-led development: with over 80% of world trade volume carried by sea, ports are crucial infrastructure nodes, key to future trade and development prospects, particularly in developing regions, according to UNCTAD.

In developing regions, ports are particularly exposed to various natural hazards, due to their locations along open coasts or in low-lying estuaries and deltas, making them extremely vulnerable to climate risks such as rising sea levels, storm surges, waves and winds, riverine and pluvial flooding, as well as tectonic events, such as tsunamis.

While there is no single approach for ports, prevention and mitigation of climate risks should become a major priority requiring finance, technology and capacity-building, as well as co-ordinated policy responses and supportive legal and regulatory approaches, UNCTAD said.

The International Ports event, hosted by Peel Ports in collaboration with the British Ports Association, the U.K. Major Ports Group, Maritime U.K. and the City of Glasgow College, is organized on the sidelines of the COP26 summit in Glasgow, Scotland.

--Reporting by Benita Dreesen, bdreesen@opisnet.com
--Editing by Rob Sheridan, rsheridan@opisnet.com

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COP26: Carbon Price Floor Could Cut Emissions by 12%, Says Report

November 3, 2021

Establishing an international carbon price floor (ICPF) could reduce global greenhouse gas emissions by more than 12%, the World Economic Forum and accounting giant PwC said in a new joint report Wednesday.

The cost of implementing an ICPF would be less than 1% of GDP and even that could be offset by avoiding economic losses associated with global warming and potential productive uses of carbon revenues, the report said.

"The contraction of global GDP under four ICPF scenarios modeled ranges from 0.1% if only high-income countries and high-emitting industries are included to 0.6% if all countries and all sectors are included," it said.

The report, which is modeled after a proposal from the International Monetary Fund (IMF) earlier this year, was released on the third day of the COP26 climate summit in Glasgow, U.K. The IMF said in June that the creation of a price floor could help jump-start emissions reductions needed to meet the goals of the Paris Agreement - limiting global warming to well below 2 degrees Celsius, and preferably to 1.5 degrees C.

The IMF paper called for a three-tier carbon price floor, with prices of $75/metric ton, $50/mt and $25/mt for advanced, high and low-income emerging markets, respectively.

Wednesday's report said that carbon is currently priced at anywhere from $0 to over $130/mt in different parts of the world. That creates an uneven playing field and limits the climate ambition of countries that fear loss of international competitiveness. An international carbon price would effectively reduce emissions by up to 12.3%, according to the report.

"The effect of the carbon price floor on global greenhouse gas (GHG) emissions reductions relative to the business-as-usual baseline ranges from a 9.5% decrease in GHG emissions under the core scenario to a 12.3% decrease when all regions, sectors and gases are included in the ICPF," it said.

In addition, significant carbon leakage, or the shifting of emissions from one jurisdiction to another because of lower carbon prices, can be avoided, the report showed.

Bob Moritz, global chairman of PwC, said that introducing an ICPF could make a significant contribution to tackling global warming by accelerating emissions reductions.

"We found this could be done without severe economic damage to livelihoods and business, although the effects would be somewhat uneven across the world. The costs to society and business of failing to act are far greater," Moritz said.

The report said that the revenues raised through carbon pricing would be as high as 3% of GDP in some regions and could be used to help manage the transition.

Four key challenges

The report also identified four key challenges to implementing an ICPF.

A price floor requires both national and international support and must be seen as helping everyone, including economies that rely heavily on fossil fuel for energy.

Second, by design, an ICPF would not prescribe the details of domestic carbon pricing schemes other than the price floor and the sectors covered.

Third, although the overall impact on global GDP would be modest, spurring the transition to a net zero world would require a major transformation in the structure of global economies.

The fourth challenge is how to address innovation and additional policies to change behavior.

"Meeting climate ambitions requires deep behavioral and structural change and the development and deployment at scale of technologies that either do not exist or are in their infancy today," the report concluded.

--Reporting by Abdul Latheef, alatheef@opisnet.com
--Editing by Rob Sheridan, rsheridan@opisnet.com

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COP26: New Alliance Launch in Renewable Energy Push

November 2, 2021

The Global Energy Alliance for People and Planet (GEAPP) will launch on Tuesday at the 26th UN Climate Change Conference of the Parties (COP26) in Glasgow, Scotland with the goal of providing one billion people in Asia, Africa, and Latin America with renewable energy while reducing global carbon emissions by four billion mt.

Over the next decade, the Alliance aims to unlock $100 billion in public and private capital and tackle three profound human problems simultaneously - reaching one billion people with renewable energy, reducing four billion mt of carbon emissions, and creating or improving 150 million jobs, it said in a Nov.
2 press release.

The organization, which includes eight multilateral and development-finance institutions will parlay $10 billion of the $100 billion fund to developing and emerging economies who apply for technical support and funding to advance ecosystems of clean energy projects.

The Alliance de-risk expensive early stages of project development by helping countries test strategies and innovative technologies that may have a higher initial risk profile and help scale workable solutions.

The Bezos Earth Fund said it will give $500 million to that initiative, joining the likes of The Rockefeller Foundation and IKEA.

At the same time, Jeff Bezos' fund pledged $2 billion in an effort to fight climate change through landscape restoration and the transformation of food and agricultural systems.

"The world is undergoing an economic upheaval, in which the poorest are falling farther behind and being battered by climate change's effects. Green energy transitions with renewable electrification are the only way to restart economic progress for all while at the same time stopping the climate crisis," said Dr. Rajiv J. Shah, President of The Rockefeller Foundation.

The organization is also looking to increase investment and impact in sub-Saharan Africa, Asia, and Latin America by recruiting a diverse set of new partners. To that end, RF Catalytic Capital, Inc., a public charity launched in 2020 by The Rockefeller Foundation will help facilitate the Alliance's multi-partner investment.

"...By bringing the leading technical providers and financing agents together, the Global Energy Alliance for People and Planet is well placed to become the most significant initiative to extend clean, reliable energy to those who don't have it, while eliminating carbon pollution," said Andrew Steer, CEO of Bezos Earth Fund.

--Reporting by Yuanlin Koh, lin.koh@ihsmarkit.com
--Editing by Hanwei Wu, hanwei.wu@ihsmarkit.com

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COP26: World Leaders Vow to Halt and Reverse Deforestation by 2030

November 2, 2021

More than 100 world leaders on Tuesday pledged to halt and reverse global deforestation by the end of this decade in the first major agreement of the COP26 climate change conference in Glasgow, Scotland.

The 110 signatories of the Glasgow Leaders' Declaration on Forest and Land Use include Brazil, Canada, China, the Democratic Republic of the Congo, Indonesia, Russia, the U.S. and the U.K.

The deal is backed by more than $19 billion in public and private funding, the British government said. The declaration emphasized the critical and interdependent roles of forests, biodiversity and sustainable land use in enabling the world to meet its climate goals.

"We, therefore, commit to working collectively to halt and reverse forest loss and land degradation by 2030 while delivering sustainable development and promoting an inclusive rural transformation," the leaders said.

Tuesday's pledge covers 85% of the world's forests, an area of more than 13 million square miles.

Forests absorb around one-third of the global carbon dioxide (CO2) released from burning fossil fuels every year, but they are being destroyed at an alarming rate, according to multiple studies.

Even large parts of the Amazon rainforest are now emitting more CO2 than they absorb due to deforestation and climate change, a year-long study led by Brazil's National Institute for Space Research revealed in July.

"If we want to keep the Paris (Agreement) goal of 1.5 degrees (Celsius) in sight and support communities in the frontline of climate change, we must protect and restore the world's forests, and I believe we can do it," British Prime Minister Boris Johnson said Tuesday.

"What is most significant about this declaration is not just the range of countries coming together, but also that we are working in partnership with the private sector, with philanthropists, with indigenous people and local communities to address the economic drivers of deforestation," Johnson said.

The commitment will be supported by a pledge to provide $12 billion of public finance from 12 countries, including the U.K. Another $7.2 billion will come from the private sector. In addition, CEOs from more than 30 financial institutions will commit to eliminate investment in activities linked to deforestation, the U.K. government said.

One philanthropist who has risen to the occasion is Amazon chairman Jeff Bezos.

On Tuesday, the Bezos Earth Fund pledged $2 billion to help restore nature and transform food systems as part of its $10 billion commitment to fight climate change and advance environmental justice and economic opportunity.

The commitment adds to a $1 billion pledge for nature announced at Climate Week New York City in September to help create, expand, manage and monitor protected and conserved areas.

Speaking at the event, Bezos said when people hanker for the so-called good old days and glamorize the past, they are almost always wrong because life is much better today than it was in the past.

"But there is a notable exception. The natural world is not better today than it was 500 years ago when we enjoyed unspoiled forests, clean rivers and the pristine air. This is an unacceptable anomaly. And it is one we can reverse," he said.

Sustainable trade initiative

The British government also announced Tuesday an initiative to protect rainforests from further destruction while ensuring development and trade is sustainable.

The Forest, Agriculture and Commodity Trade (FACT) Dialogue will bring together key agricultural producers and consumers to discuss how to make this process greener and more sustainable.

Eighteen countries participated in the initial consultations to develop a route map for future international trade that will protect forests, the government said. Over 10 million hectares of forest are destroyed through global commodity production alone each year, it said.

The FACT Dialogue aims to agree principles for collaborative action, a shared roadmap for the transition to sustainable supply chains, and international trade.

--Reporting by Abdul Latheef, alatheef@opisnet.com
--Editing by Rob Sheridan, rsheridan@opisnet.com

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COP26: Scientists Admit Crucial 'Knowledge Gap' in Clean Energy Transition

November 1, 2021

European climate scientists on Monday admitted to representatives of the energy sector that a "knowledge gap," between climate impact assessments and behavioral science on the one hand and the energy sector on the other, could adversely impact a smooth energy transition.

The delegates, from the scientific community and the energy sector, were speaking at a panel organized by the European Union on the sidelines of the COP26 summit in Glasgow.

Scientists also offered up broad-based recommendations on energy transition policy and pointed to emerging climate-related studies in the energy sector, while the industry acknowledge the knowledge gap and spotlighted the role of hydrogen.

Below are key speaker-by-speaker highlights, questions (by industry) and answers (by scientists):

National Grid

Acting as a representative of the energy sector, David Wright from the National Grid elaborated on the challenges to clean energy transition from an industry perspective. He noted the need for behavioral changes to accompany technological shifts, low-carbon electricity generated via hydrogen and the protection of electricity infrastructure from extreme weather events.

Hydrogen is the future of electricity generation, especially in industry, Wright said, adding, "We need to take our methane gas grids, decarbonise that using either renewable gas, or more likely hydrogen, moving forward. Because, whatever pathway you're on, you're going to need a hydrogen economy. Hydrogen is going to need to be the principal energy source for heavy industry, for power generation, for storage and also, in some locations, in how we heat our homes."

Question (Wright): ""Many technology advancements have already happened. Now, it's about the pace with which we deploy them. How can behavioural science with those technological advances really help us accelerate net zero?"

Question (Wright): The protection of electricity infrastructure would increasingly become a challenge as extreme weather events unfold. "How can we with robustness and certainty predict impact of climate change on our assets?"

Energy UK

Simon Markall, deputy director of external affairs at Energy UK, also requested the scientists to highlight the role played by behavioral science in energy transition.

Question (Markall): "As climate scientists, you convinced us in the energy industry to change. Now we need to convince our customers. How do we do it?"

Exeter University and Met Office

Richard Betts, head of Climate Impacts research at Met Office, responded to some of the questions.

Answer (Betts to Wright on climate impact on assets): "The task of climate science is changing, and diversifying. One of the tasks is about assessing the risks of extreme weather." Betts said corporates could turn to existing global impact studies as a starting point, and turned the spotlight on the High-End Climate Impacts and Extremes (HELIX) study that examined the possible effects of warming of 1.5 degrees C, 2 degrees C, 4 degrees C and 6 degrees C compared to pre-industrial levels. HELIX utilized advanced computer models and vast datasets to output its projections.

Betts also highlighted the UK's third national Climate Change Risk Assessment led by the Climate Change Committee, which is more UK-specific.

"However, we're not going to be able to give you firm predictions [on specific areas]." Energy companies are left with no choice but to hedge both ways, he said.

University of East Anglia and World Energy & Meteorology Council

Alberto Trocolli highlighted the short-term weather forecast studies his institute had done for energy majors, including Anglo-Dutch oil major Shell.

Answer (Trocolli to Wright on climate impact on assets): We focused on the management aspect for the energy sector. "How can we, for example, anticipate a heat wave and plan around that in order to avoid a big spike in electricity price?"

Managing energy systems efficiently also has the benefit of cutting emissions, Trocolli added. Moreover, it is important for scientists to simplify analytical, model-based science for energy sector users as a communication gap between the two is a common problem.

International Institute for Applied Systems Analysis

Elina Brutschin, research scholar at the International Institute for Applied Systems Analysis, said the institute is currently involved with the ENGAGE project, a joint feasibility study on multiple climate pathways by both natural and social scientists.

Answer (Brutschin to Wright and Markall on behavioral science): "One point is really clear. Climate targets requires an unprecedented level of change within the supply as well as demand side of the energy sector."

The ENGAGE project used historical data and multi-scenario projections to analyze pros and cons of different pathways. "Only a few countries, and most of them OECD members, have managed to achieve the scaling up of solar and wind that would be required globally for reaching 1.5 or 2 degree targets."

"We find that relying on supply-driven options might not be enough. Especially in developed countries, the demand side mitigation could be essential. But here, as was also highlighted in the questions, we have a major knowledge gap."

Group of Chief Scientific Advisors to the European Commission

Nebojsa Nakicenovic from the International Institute for Applied Systems Analysis and the current deputy chair of the Group of Chief Scientific Advisors to the European Commission also offered up the board's recommendations to accelerate a clean energy transition.

The board's three broad-based recommendations:

  1. Integrate "decarbonised energy sources, electrification and the use of blue and green hydrogen" to develop flexible and resilient low-carbon EU energy systems.
  2. Ensure an "inclusive and participatory environment" to recognize multiple stakeholders making low-carbon energy choices.
  3. Know "carbon pricing is a driving force" in an effective multi-pronged regulatory system.

The board's statement on current high energy prices in Europe:

  1. Make energy production less expensive via major upfront investments; phase out coal.
  2. Encourage high carbon prices, while simultaneously protecting 30 million-40 million people in Europe at risk of energy poverty.
  3. Policymakers need to garner support for clean energy transition via public engagement.

--Reporting by Cuckoo James, cjames@opisnet.com
--Editing by Michael Kelly, michael.kelly3@ihsmarkit.com

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COP26: Carbon Pricing Over $75/t by 2030 to Limit Warming, Says IMF

November 1, 2021

Additional global carbon pricing measures at above $75 per ton by 2030 is necessary to limit global warming by 1.5 to 2 degrees Celsius (C), because mitigation pledges by policymakers at current levels alone would not be enough to achieve that emissions reduction target adopted at the 2015 Paris Agreement, according to the International Monetary Fund (IMF).

In a staff report issued Sunday at the start of the COP26 climate change conference being held Oct. 31-Nov. 12 in Glasgow, Scotland, IMF said that achieving the Paris Agreement's temperature goals requires cutting global carbon dioxide (CO2) emissions by 25%-50% within this decade, followed by a rapid transmission to net-zero emissions.

"The world is currently not yet on track so there is an urgent need to narrow gaps in climate mitigation ambition and policy," IMF said.

The IMF report shows that unchanged global policies will leave 2030 carbon emissions far higher than need to "keep 1.5 alive," IMF Managing Director Kristalina Georgieva said in a blog in conjunction with the report.

Reductions of 55% below baseline levels in 2030 would be urgently needed to meet the goal of limiting to 1.5 degrees C, and cuts of 30% to meet the 2 degree C objective, said Georgieva, the former World Bank CEO who succeeded Christine Lagarde as the head of IMF in 2019.

IMF, a body comprising 190 countries to promote global financial stability and monetary cooperation, has around $1 trillion to provide loans, financial assistance and resources to members which are mostly developing economies.

Currently, 135 countries representing more than three-quarters of global greenhouse gas emissions have committed to net zero by midcentury; however, that would still leave a shortfall only achieving one and two-thirds of the Paris Agreement temperature goals, according to the Georgieva.

Abatement costs are still manageable, said Georgieva. To put global emissions within range of a 2 degree C target would cost 0.2%-1.2% of GDP, with the biggest burden falling on richer countries. And in many nations, the cost of shifting away from fossil fuels may be offset by domestic environmental benefits, most notably reductions in deaths from local air pollution, she said.

However, even with sufficiently ambitious pledges, the world still need policies to implement the emissions cuts, said Georgieva.

Carbon pricing, or charges on the carbon content of fuels or their emissions, should play a central role, especially for large emitters, said Georgieva, as such a policy would provide a price signal to redirect private investment to low carbon technologies and energy efficiency.

"But the gap between what's required versus what's in place is very large. A global carbon price exceeding $75 per ton would be needed by 2030, to keep warming below 2 degrees," she said.

Georgieva cited a June proposal by the IMF staff to set up an international carbon price floor among a small group of large emitters.

A carbon price floor could jump start emissions reductions because this need not come at the cost of the economy, and it could also avoid border carbon adjustments because it offers differentiated pricing for countries at different levels of economic development, according to the IMF.

"Without an urgent narrowing of ambition, policy, and financing gaps, a dangerous cliff-edge for emissions reductions beyond 2030 will be set up -- greatly increasing transition costs, and potentially putting temperature goals permanently beyond reach," said Georgieva.

--Reporting by Frank Tang, ftang@opisnet.com
--Editing by Michael Kelly, michael.kelly3@ihsmarkit.com

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Hertz's Tesla Move Likely to Have Impact Beyond Rental Market

October 26, 2021

The decision by Hertz to purchase 100,000 Teslas by the end of next year will not only boost the car rental company and electric vehicle manufacturer, but could also go a way toward advancing public interest and acceptance of EVs, according to an industry advocate.

Hertz announced the purchase Monday, saying it would allow the company to offer the largest EV rental fleet in North America and one of the largest electric vehicle fleets in the world.

The company also said it had ordered new EV charging infrastructure across its global operations.

Marc Geller, a spokesman for the Electric Auto Association, said Hertz's choice of Tesla -- which operates an extensive network of fast-charging stations -- will likely be key to the success of the company's initiative.

"It matters that it's Tesla, not a Nissan Leaf or a Chevy Volt, which might have some presence in the car rental market," Geller said. "With a legacy automaker electric vehicle, there are DC fast charging networks in most cities in the country, but they are not as robust and reliable as Tesla's suprercharger network. When you rent an electric vehicle, you want to know that you can easily charge it."

"The existence of Tesla's supercharging network, which works seamlessly, will lead to zero frustration," he said.

Geller said renting a Tesla from Hertz will likely mean the driver can use the Tesla network, with the charging fee included in the customer's final bill. The ease of charging will provide needed peace of mind to customers who have never driven an EV, even if they are unlikely to drive beyond the car's single-charge range or are staying at a hotel that offers on-site charging stations.

"As long as Hertz and Tesla work that out, this will go really, really well for both companies and lead to an experience for the driver that I fear would not be as seamless in a vehicle from a legacy auto maker," Geller said.

The order will also provide a benefit to Tesla, which in 2020 delivered about 500,000 vehicles, according to the company. Tesla says it has delivered about 380,000 vehicles in the first half of 2021.

"For Ford, 100,000 vehicles is one thing. For Tesla, it's another thing," Geller said.

The company's stock rose 12.66% on Monday following Hertz's announcement, pushing its price to about $1,024 per share and the company's market capitalization to more than $1 trillion.

Geller said he expects the infusion of a large number of Teslas into the car rental market will have an impact beyond travelers looking to book a memorable ride during a vacation or business trip.

Teslas are already popular on peer-to-peer car sharing networks such as Turo, as people who are considering buying their own EVs will rent a vehicle for a few days to see what the ownership experience is like before making a purchase.

Geller said he expects the Hertz acquisition will lead more people to try out how EVs fit into their daily lives and commutes.

"For someone who is thinking 'Do I really want a Tesla or an electric car,' this is a great way of trying it out. They could rent the car for two or three days and see if it is worth plunking down $40,000 for one of their own."

--Reporting by Steve Cronin, scronin@opisnet.com
--Editing by Michael Kelly, michael.kelly3@ihsmarkit.com

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Greenhouse Gas Levels Hit Record Highs in 2020, Says UN Agency

October 26, 2021

Greenhouse gas (GHG) levels reached record highs last year, putting global climate goals at risk, the World Meteorological Organization (WMO) said Oct. 25.

The United Nations agency said in its latest Greenhouse Gas Bulletin that the concentration of carbon dioxide (CO2), the single most important GHG, exceeded 413 parts per million in 2020 after breaching 400 ppm in 2015.

It said the increase in CO2 from 2019 to 2020 was slightly smaller than 2018 to 2019, but larger than the average annual growth rate over the past decade.

The increase in other heat-trapping gases such as methane and nitrous oxide was also higher than the average annual growth rate over the past 10 years.

The WMO said that the economic slowdown from the COVID-19 pandemic did not have any discernible impact on the atmospheric levels of GHG and their growth rates, although there was a temporary decline in new emissions.

The report said that from 1990 to 2020, the warming effect on our climate by long-lived GHG increased by 47%, with CO2 accounting for about 80% of this increase.

The bulletin was released ahead of next week's UN climate change summit, known as the Conference of Parties (COP26), in Glasgow, Scotland.

"The Greenhouse Gas Bulletin contains a stark, scientific message for climate change negotiators at COP26," WMO Secretary General Petteri Taalas said in a news release. "At the current rate of increase in greenhouse gas concentrations, we will see a temperature increase by the end of this century far in excess of the Paris Agreement targets of 1.5 to 2 degrees Celsius above pre-industrial levels. We are way off track."

The WMO estimates that about half of the CO2 emitted by humans is absorbed by oceans and land ecosystems, but it warned that the effects of climate change might reduce their ability to absorb CO2 and act as a buffer against larger temperature increase.

As an example, the organization cited the transition of parts of the Amazon rainforest from a carbon sink to a carbon source.

Ocean uptake of CO2 might also be reduced due to higher sea surface temperatures, it said.

"The last time the Earth experienced a comparable concentration of CO2 was 3 to 5 million years ago, when the temperature was 2 to 3 degrees C warmer and sea level was 10 to 20 meters (33 to 66 feet) higher than now. But there weren't 7.8 billion people then," said Taalas.

The WMO said that reducing atmospheric methane in the short term could support the achievement of the Paris Agreement and help in reaching many of the UN's Sustainable Development Goals due to multiple co-benefits of methane mitigation.

"But this does not reduce the need for strong, rapid and sustained reductions in CO2," the agency said.

--Reporting by Abdul Latheef, alatheef@opisnet.com
--Editing by Jeremy Rakes, jrakes@opisnet.com

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Chevron Sets Net Zero Target by 2050

October 11, 2021

Chevron announced on Oct. 11 its net zero target for equity upstream Scope 1 and 2 emissions by 2050 and plans to reduce its Scope 3 emissions as well.

Chevron's announcement comes with the recent issuance of an updated climate change resilience report that further details the company's ambition to advance its lower carbon future.

The 75-page report details how Chevron plans to incorporate Scope 3 emissions into its greenhouse gas (GHG) emissions targets by establishing a Portfolio Carbon Intensity (PCI) target inclusive of all three scopes from the use of its products, it said in a news release.

The company has set a target of reducing Scope 3 emissions by 5% by 2028 when compared to 2016 standards.

"This target is aligned with Chevron's strategy which allows flexibility to grow its traditional business, provided it remains increasingly carbon-efficient, and pursue growth in lower-carbon businesses," Chevron said in the release.

Scope 1 emissions includes direct GHG emissions, while Scope 2 includes indirect GHG emissions from sources like imported electricity and steam and Scope 3 including other indirect emissions including the use of products.

"Solutions start with problem solving, which is exactly what the people of Chevron do -- and have excelled at for over 140 years," said Michael Wirth, Chevron's chairman and CEO, in the news release. "This report offers further insights about our strategy, how we are investing in lower-carbon businesses and why we believe this is an exciting time to be in the energy industry."

Chevron's announcement follows Phillips 66 saying at the end of September that it planned to reduce GHG emissions from its operations and energy products by 2030, setting goals of reducing Scopes 1 and 2 emissions intensity from operations by 30% and Scope 3 emissions intensity of its energy products by 15% below 2019 levels.

 

--Reporting by Jeremy Rakes, jrakes@opisnet.com;

--Editing by Mayra Cruz, mcruz@opisnet.com

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EU Carbon Prices to 'Kaboom' by Mid-2020s, Swedish Bank Says

October 8, 2021

European Union emissions allowance (EUA) prices could "kaboom" and reach hundreds of euros by the middle of the decade as the number of EUAs in the cap-and-trade EU Emissions Trading System (ETS) falls, potentially getting ahead of the adoption of new carbon-abating technologies and necessitating market intervention by EU authorities, Swedish bank SEB has told OPIS.

The EU Commission's Fit for 55 package of climate change policy proposals released in July included a cut in the number of EUAs in circulation and a sharper fall in the annual issuance of allowances, but the scramble for supply by mid-decade could see the cost of carbon "rocketing," according to Bjarne Schieldrop, carbon markets analyst at SEB.

"We might thus get some circuit-breakers or safety valves against uncontrollable price rises installed in the EU ETS market before it happens," Schieldrop told OPIS on Thursday. "If not, I think we will get to a point of 'kaboom' in the EUA price," he suggested.

EUAs have already doubled in price this year to around 60 euros this week, making the cost of EU carbon compliance contracts the second most expensive in the world, with only U.K. emissions allowances issued under the country's new ETS pricing higher.

The Fit for 55 proposal released in July aims to cut EU emissions by 55% by 2030, and the package of measures envisages a lot of the heavy lifting in reductions by the 10,000 carbon-polluting installations subject to the EU ETS.

"The mind-blowing thing about the proposals from the European Commission this summer [is,] what does the [EU ETS] cap need to decline from 2021 to 2030? It needs to decline by 50%, and that's when my brain bubbles over," said Schieldrop at the Carbon Forward 2021 virtual conference held this week. "This is a political paper plan, and this is then going to happen in reality as well.

At some point in time, two or three years out [from now] this paper plan will crash with reality."

Schieldrop added that many countries will have challenges with the reductions goal because of the world's fossil energy dependent economy.

"Looking at the time frames of industrial abatement, [it takes] five-10 years to change. The speed of the reductions required are just mind-boggling.... We get to the crunch-time point where the CO2 prices go to 200 euros, 300 euros, which they don't do today because we have a huge reserve buffer amongst other things," said Schieldrop at the conference.

That "reserve buffer" was a reference to a surplus of EUAs that accumulated during the depths of the global financial recession in 2008-09 when industrial demand for EUAs plummeted, even as new supply hit the market, a legacy that pulled their prices down to less than 3 euros/mt by 2013.

The surplus of EUAs, also known as the Total Number of Allowances in Circulation (TNAC), totaled 1,579,000 tons at the end of 2020, but is set to be rapidly whittled away over the next few years because of the EU's Market Stability Reserve mechanism.

Morgan Stanley utilities and clean energy analyst Rob Pulleyn, speaking at the Carbon Forward conference, also pointed out the difficulties in achieving substantial emissions abatement by industries subject to the EU ETS.

"The pace of abatement we assume in the carbon system is optimistic given the initiatives so far," Pulleyn said. "Even with optimistic assumptions around abatement, what we're going to see is a very tight [EU] carbon market probably in the second half of the decade when the TNAC has been eroded to effectively zero. And the deficit in the traded market as free allowances are eroded and new sectors are added [to the EU ETS] is going to grow and grow.

"That effectively leads to more competition for securing these credits in the traded market at ever higher prices," Pulleyn argued. "That is to ensure that we get carbon prices which move beyond the abatement [from] coal to gas [fired electricity generation] switching and into industrial switching territory....

Carbon capture storage could be viable from 70 to 100 euros/mt, green hydrogen perhaps a notch higher than that to start with."

SEB pointed to the political response to the recent meteoric rise in European natural gas prices -- which rose to the oil equivalent price of almost $300/bbl earlier this week before crashing back -- as an augury of likely EU intervention in the workings of the ETS if EUA prices spike later in the decade. Several EU governments have been forced to take emergency measures to limit the hit to citizens' disposal income, with think tanks like the Brussels-based Bruegel Institute estimating that surging energy prices will result in EU consumers' energy bills being 100 billion euros higher this winter.

"The explosion in natural gas prices we have seen this year will have political consequences," Schieldrop told OPIS. "It is a very important reminder of what happens to the price of a commodity if it gets into a squeeze: boom! And then both consumers and industry suddenly have a big problem."

"With such a recent and dramatic experience at hand, I think that politicians might think that this could also happen to the EUA market at some point in time ... again, with dire consequences for the consumers of power," SEB suggested.

Nonetheless, the bank foresees short-term weakness for EUA prices.

"I think that as natural gas prices eventually fall back to normal again, we'll likely see a sell-off in the EUA price as well. If so, it would be a very good buying opportunity," Schieldrop said.

--Reporting by Anthony Lane, alane@opisnet.com;

--Editing by Lisa Street, lstreet@opisnet.com

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$1.2 Trillion Needed For Hydrogen Sector to Reach Net Zero by 2050, Says IEA

October 4, 2021

Putting the world on track for net zero emissions by 2050 will require $1.2 trillion of investment in low-carbon hydrogen supply and use through to 2030, according to the International Energy Agency (IEA).

To date, countries that have adopted hydrogen strategies have committed at least $37 billion, while the private sector has announced an additional investment of $300 billion, the IEA said in its Global Hydrogen Review for 2021 report published Monday.

In the main scenario of the IEA's Net Zero by 2050 report released earlier this year, hydrogen use extends to several parts of the energy sector and grows six-fold from current levels to meet 10% of total final energy consumption by 2050, all supplied from low-carbon sources.

In 2020, hydrogen demand stood at 90 million metric tons, produced almost exclusively from fossil fuels, resulting in almost 900 million mt of carbon dioxide emissions. However, the use of electrolyzers, which produce hydrogen from electricity, could help reduce this level of emissions, the IEA said.

"We estimate that $90 billion of public money needs to be channeled into clean energy innovation worldwide as quickly as possible - with around half of it dedicated to hydrogen-related technologies," the IEA said in the report released Monday. "While the adoption of hydrogen as a clean fuel is accelerating, it still falls short of what is required to help reach net zero emissions by 2050."

Global electrolyzer capacity reached just over 300 megawatts (MW) by mid-2021.

With all current projects under development, global hydrogen supply from electrolyzers could reach more than 8 million mt by 2030. But that's well below the 80 million mt required by that year to be on the trajectory for hitting net zero CO2 emissions by 2050 that was laid out in the IEA's roadmap for the global energy sector.

Additionally, one of the main stumbling blocks to producing low-carbon hydrogen is the cost gap with hydrogen produced from unabated fossil fuels. At present, generating hydrogen from fossil fuels is the cheapest option in most parts of the world.

Depending on regional natural gas prices, the levelized cost of hydrogen production from natural gas ranges from $0.50 to $1.70/kilogram. Using carbon capture, utilization and storage (CCUS) technology to reduce carbon emissions from hydrogen production increases the levelized cost of production to as much as $2/kg, while the use of renewable electricity to produce hydrogen can hike production costs to as much as $8/kg, according to the IEA.

The IEA suggests that there is scope for cutting production costs through innovation. In the IEA's Net Zero Emissions by 2050 Scenario (NZE scenario) the cost of hydrogen from renewables falls to as low as $1.3/kg by 2030. Under this NZE scenario, the costs of hydrogen produced from renewable electricity could fall to just $1/kg in the longer term by making hydrogen from solar power cost-competitive with hydrogen from natural gas -- even without the deployment of CCUS.

But while the adoption of hydrogen as a clean fuel is accelerating, it currently falls far short of what is needed to help reach net zero emissions by 2050, according to the IEA. Even if all of the plans announced by companies and governments are realized, total hydrogen demand would only grow to 105 million mt by 2030 -- below the 200 million mt outlined in the IEA's NZE scenario.

Low-carbon hydrogen production could reach more than 17 million mt by 2030 - but that's just one-eighth of the production level required in the NZE Scenario, the IEA said in the Global Hydrogen Review for 2021.

"Europe is leading electrolyzer capacity deployment, with 40% of global installed capacity, and is set to remain the largest market in the near term on the back of the ambitious hydrogen strategies of the European Union and the United Kingdom," the IEA said in the report. "But boosting the role of low-carbon hydrogen in clean energy transitions requires a step change in demand creation. Governments are starting to announce a wide variety of policy instruments, including carbon prices, auctions, quotas, mandates and requirements in public procurement...Their quick and widespread enactment could unlock more projects to scale up hydrogen demand."

--Reporting by Rob Sheridan, rob.sheridan@ihsmarkit.com;

--Editing by Anthony Lane, alane@opisnet.com

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Quebec's Financial Sector Unveils Plan to Accelerate Green Transition

October 4, 2021

Quebec financial institutions managing more than C$900 billion ($713 billion) in assets on Oct. 4 made a commitment to help tackle climate change through responsible financing.

Signatories of the Statement by the Quebec Financial Centre for a Sustainable Finance include the pension fund Caisse de depot et placement du Quebec (CDPQ), insurers Desjardins and IA Financial Group, banks Societe Generale Canada and BNP Paribas Canada and low-carbon investor Greater Montreal Climate Fund.

The statement was issued ahead of a summit hosted by Finance Montreal, an organization dedicated to making Montreal a world-class financial hub.

The signatories have pledged to strengthen the sustainable finance ecosystem by developing local expertise and bolstering disclosure and transparency.

They have also agreed to accelerate the integration of environmental, social and governance (ESG) principles into their operations.

"A very strong signal is going out today. Quebec's financial sector has a game plan to support a green, just and responsible transition for the Quebec and Canadian economies," Jacques Deforges, CEO of Finance Montreal, said in a news release. "This important engagement will help position Quebec as a center of sustainable finance excellence in North America."

Finance Montreal said it will monitor the implementation of the initiative.

 

--Reporting by Abdul Latheef, alatheef@opisnet.com;

--Editing by Jeremy Rakes, jrakes@opisnet.com

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COP26: India Keeps the World Guessing on Net Zero Despite Solar Success

October 1, 2021

The famous greenery of Kerala is on full display as airplanes descend on Kochi, the most vibrant city in the southern Indian state.

But the coconut trees, after which the state is named, are not the only "green" sight that grabs attention from travelers.

Tens of thousands of solar panels are laid across fields near Cochin International Airport, generating enough electricity to run the entire operation of the airport, which handles more than 10 million passengers annually.

In August 2015, months before the landmark Paris Agreement was signed, Kochi became the first fully solar-powered airport in the world, reflecting India's embrace of renewable power.

Today, India is the fifth-largest solar power producer after China, the U.S., Japan and Germany. It has an installed capacity of 44.3 gigawatts (GW), according to the Indian Ministry of New and Renewable Energy.

In its "India Energy Outlook 2021" published in February, the International Energy Agency (IEA) said that the country "is on the cusp of a solar‐powered revolution."

The IEA projected that solar growth would match coal's share in India's power-generation mix within two decades in the stated policies scenario (STEPS), or even sooner in the United Nations Sustainable Development Goals (SDGs) scenario.

"As things stand, solar accounts for less than 4% of India's electricity generation and coal close to 70%. By 2040, they converge in the low 30%s in the STEPS, and this switch is even more rapid in other scenarios," the report said.

"This dramatic turnaround is driven by India's policy ambitions, notably the target to reach 450 GW of renewable capacity by 2030."

India also has other robust green energy programs, especially wind power.

Accounting firm Ernst & Young's 2021 Renewable Energy Country Attractiveness Index (RECAI) ranks India third behind the U.S. and China, up by one place from the previous ranking.

Net Zero Debate

Despite such achievements, the stark reality is that India remains the fourth-largest emitter of greenhouse gases (GHG) after China, the U.S. and the European Union (EU).

China has set a net zero goal of 2060 while the U.S. and the EU aim to achieve that in 2050, but India has yet to announce a deadline. On Wednesday, the IEA said in a new report that China could achieve carbon neutrality even before 2060.

China and India were also among countries that failed to submit new or updated climate plans known as nationally determined contributions (NDCs) to the UN as the deadline closed this summer.

India's first NDC set three goals: reduce emissions intensity by 33% to 35% below 2005 levels by 2030; achieve 40% cumulative electric power installed capacity from non-fossil fuel-based energy resources by 2030; and create a carbon sink of 2.5 to 3 billion tons through new forest and tree cover, also by the end of this decade.

Now pressure is mounting on the country to set a net zero target ahead of the UN Climate Change Summit, known as the Conference of Parties (COP26), which opens Oct. 31 in Glasgow, Scotland.

U.S. Special Presidential Envoy for Climate John Kerry was in India recently, pushing the government to raise its climate ambitions but apparently with not much success.

India has refused to say whether it will announce a target before the summit because it is worried that any pledge to stop or reduce the use of fossil fuels could harm its economic growth.

Potential Trajectory

A highly respected former bureaucrat weighed into the debate last month, saying that technological developments now make it possible for India to offer a trajectory, which peaks emissions in the next decade and then reduces them to net zero over time.

"We could offer such a trajectory at COP26, provided other major countries make similar commitments," Montek Singh Ahluwalia said in "Getting to Net Zero: An Approach for India at COP26," a paper released by the New Delhi-based think-tank Centre for Social and Economic Progress.

The former vice chairman of India's Planning Commission under reformist prime minister Manmohan Singh said that studies reviewed in the paper suggest that India could reach a peak by 2035 and get to net zero sometime between 2065 and 2070.

He said India could even do better if some of the technologies currently under development become commercially viable earlier than expected.

"Diplomatic pressure cannot be a reason for adopting a course of action that is not in our national interest, but in this case, there are good reasons for changing our stand," the former World Bank economist wrote.

 

--Reporting by Abdul Latheef, alatheef@opisnet.com;

--Editing by Bridget Hunsucker, bhunsucker@opisnet.com

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China's Jiangsu Sailboat to Build CO2-to-Methanol Plant for EVA Production

September 28, 2021

Jiangsu Sailboat Petrochemical, a subsidiary of east China-based conglomerate Shenghong Group, signed an agreement on Sept. 27 with Icelandic Carbon Recycling International (CRI) to build a 150,000 mt/yr carbon dioxide (CO2) to green methanol plant, according to a Shenghong news release published on its social media platform on the same day.

The project set to be commissioned in 2022 will utilize CO2 captured from industrial waste gases, the company said, noting that its phase one investment costs near 300 million yuan ($46 million). The project will be able to indirectly reduce 550,000 tons of CO2 emission per annum once integrated into the downstream production and application, according to company estimates.

According to the project plan, green methanol produced will be fed into Sailboat's existing methanol to olefin (MTO) plant and downstream production facilities to produce 20,000 mt of photovoltaic (PV) ethylene vinyl acetate (EVA) resin. The PV EVA resin can be turned into 50 million square meters of PV films that can fulfil the requirement for a 5 gigawatts (GW) solar power generation facility that is the same amount of power generation from two million-kilowatt thermal power plants, according to Shenghong.

PV films offer protection to photovoltaic components. PV EVA resin is a core material to produce PV films and is most commonly produced through coal to chemical processes in China, according to the company.

CRI owns a proprietary Emission to Liquids (ETL) technology that coverts recycled CO2 and hydrogen into methanol. The company delivered in February the complete process design package for the first-of-its-kind 110,000 tons/year CO2 to methanol plant using recycled industrial waste gases to China's Henan Shuncheng Group in Anyang. The project is expected to be commissioned by end of this year, said CRI.

CRI also owns the George Olah plant in Iceland, currently the only commercial scale CO2-to-methanol plant in the world.

 

--Reporting by Lujia Wang, Lujia.Wang@ihsmarkit.com;

--Editing by Hanwei Wu, Hanwei.Wu@ihsmarkit.com

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Carbon Offset Market Could Grow 50-Fold by 2050: Bank of America

September 27, 2021

The global carbon offset market may expand by 50 times by 2050 as more companies voluntarily set net-zero targets, Bank of America said in a report released September 27.

The bank said in "Carbon Offsets: Volunteer Hero for Net Zero" that after more than two decades, the market remains "relatively small."

In 2020, offsets equivalent to 210 million metric tons of emissions removed or avoided were issued, accounting for just 0.4% of total global emissions, the report said.

The bank said reaching net-zero emissions would likely require around 7.6 gigatons of carbon dioxide offsets or removal, which could lead to a 50-fold increase in the size of the market. At the low end, offset demand would likely grow to at least four times its current size, it said.

"Either way, more offset supply will be needed and with some buyer preferences shifting toward higher-cost carbon recovery projects, prices may need to rise to ensure adequate supply," the bank said.

The bank also said that agreement on the contentious Article 6 of the Paris Agreement at November's United Nations Climate Summit (COP26) in Glasgow, Scotland, could lead to broader adoption of offsets. Article 6, the only section of the 2015 agreement that has yet to be settled, spells out three mechanisms, two of them based on markets and one on a non-market approach, to help countries achieve their emissions reduction goals, or nationally determined contributions (NDCs).

The bank said while many governments have aspired to reach net-zero emissions during the 2050-2060 timeframe, current policies remain insufficient to adequately incentivize the changes necessary to reach these lofty goals.

It said, currently, carbon offsets cost between $2 and 20 per metric ton, "a relatively cheap way to decarbonize."

The bank said global greenhouse gas (GHG) emissions have accelerated since the mid-1950s and reached more than 40 Gt per year in recent years. But current emissions trading systems (ETS) and carbon taxes cover less than 25% of global GHG emissions.

So, companies have taken initiative to set emissions targets voluntarily, paving the way for an expansion of the offset market, the bank said. Buyers primarily retired forestry and land-use offsets to meet voluntary and compliance targets, followed by renewables projects.

It said most sectors within the S&P 500 have significant commitments to non-net-zero emissions targets, but only the energy and utilities sectors have more than one-third of companies committed to net-zero targets.

The report comes two weeks after Ecosystem Marketplace said that a surge in corporate interest had triggered a spike in demand for voluntary carbon markets (VCM) this year.

The nonprofit said that the VCM is on track to hit $1 billion in annual transactions in 2021 if current levels of activity continue.

--Reporting by Abdul Latheef, alatheef@opisnet.com;

--Editing by Bridget Hunsucker, bhunsucker@opisnet.com

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Industry Leaders Call for Full Decarbonization of Shipping by 2050

September 22, 2021

More than 150 companies and organizations representing the entire maritime value chain on Sept. 21 called for decisive government action to enable full decarbonization of international shipping by 2050.

The Call to Action for Shipping Decarbonization initiative is spearheaded by the Global Maritime Forum (GMF), a nonprofit dedicated to promoting the sustainable development of the industry. It is supported by the World Economic Forum and other partners.

"Decarbonizing shipping should leave no country behind," GMF CEO Johannah Christensen said in a news release. "To make the transition to zero emission shipping and fuels equitable and inclusive, policy measures must make sure that decarbonizing shipping also brings jobs and opportunities to people in developing countries and emerging economies."

The signatories include shipping giants A.P. Moller-Maersk and Hapag-Lloyd; oil supermajors BP and Royal Dutch Shell as well as the Panama Canal Authority and the Port of Rotterdam.

Ships transport more than 80% of global trade and account for almost 3% of greenhouse gas (GHG) emissions, according to the International Maritime Organization (IMO).

In 2018, the United Nations agency adopted a climate strategy, which aims to reduce the industry's emissions by at least 50% from 2008 levels by 2050.

The signatories are urging world leaders to align shipping with the goals of the Paris Agreement -- limiting global warming to well below 2 degrees Celsius, and preferably to 1.5 degrees C.

They said the private sector is already taking concrete actions to decarbonize shipping. This includes investing in pilot projects, building carbon-neutral vessels and buying zero-emission shipping services.

"Now governments must deliver the policies that will supercharge the transition and make zero-emission shipping the default choice by 2030," the signatories said.

 

--Reporting by Abdul Latheef, alatheef@opisnet.com;

--Editing by Michael Kelly, michael.kelly3@ihsmarkit.com

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Climate Week NYC: Delta, PwC Join Coalition to Protect Tropical Forests

September 21, 2021

Two more companies have joined the LEAF Coalition, which plans to mobilize more than $1 billion by the end of 2021 for the protection of tropical forests, the U.S. nonprofit that coordinates the program said Sept. 21.

Emergent said on the second day of Climate Week NYC 2021 that U.S. carrier Delta Air Lines and accounting giant PwC will join 10 other companies and three governments in the Lowering Emissions by Accelerating Forest finance (LEAF) Coalition.

The initiative was launched by Norway, the United Kingdom and the U.S. at April's virtual climate summit of world leaders hosted by President Joe Biden.

Amazon, Airbnb, Bayer, Boston Consulting Group, E.ON, GlaxoSmithKline, McKinsey & Co., Nestle, Salesforce and Unilever are the other participants.

"This is just the beginning," Eron Bloomgarden, executive director and founder of Emergent, told a webinar at Climate Week NYC. "We need to go much bigger; we need to move faster; we need to massively increase ambition."

LEAF members are required to commit to deep voluntary cuts in their own emissions, and their contributions to the coalition are in addition to such reductions.

In March 2020, Delta Air Lines committed $1 billion over 10 years to mitigate all emissions from its global operations.

"And it is not an easy commitment for us. We are a hard-to-abate sector," said Amelia DeLuca, managing director of sustainability at Delta, at the webinar.

"We want to take action now because we don't want our consumers to have to choose between seeing the world and saving the world."

Wineke Haagsma, director of corporate sustainability at PwC, said the time is right for the company to join the coalition, which she called a "great fit for PwC."

Haagsma also noted that in September 2020 the company announced its commitment to reach net zero emissions by 2030.

"In the meantime, we want to mitigate the impact of our emissions today. So, we compensate our emissions through supporting high-quality carbon offsetting projects," she said.

Emergent said the response from tropical forest countries to the coalition's call for emissions reduction proposals has been very positive.

It said LEAF received proposals from more than 30 jurisdictions that together encompass more than 1.2 billion acres of forest, with potential volumes well in excess of LEAF's initial target of 100 million tons.

The coalition is expected to announce the first set of agreements by the end of the year, Emergent said.

Payments to countries will be made on an annual or biannual basis as reductions in deforestation are achieved in the years 2022 through 2026, it said.

 

--Reporting by Abdul Latheef, alatheef@opisnet.com;

--Editing by Jeremy Rakes, jrakes@opisnet.com

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Texas RECs Trade Continues to Flourish on Nodal Exchange

September 17, 2021

The Nodal Exchange has continued to see rapid growth in its Texas Renewable Energy Certificates (RECs) markets this year, with volumes growing exponentially over the same period a year ago.

Through Thursday, the exchange has had trade volumes of 42,674 lots so far this year, up over 400% for the same period in 2020 when Nodal had 10,273 lots. In September, the exchange has had trades totaling 7,634 lots, which is over 10 times more than the 600 lots that Nodal had in the first half of September 2020. Along with the growth in volumes, prices have also increased. For Texas CRS Wind V21 contracts, prices have ranged from $1.28/MWh to $7.35/MWh over the last year, with prices on Thursday settling at $4.80/MWh, according to Nodal.

The prices for Texas RECs continue to be much cheaper than prices for RECs in the NEPOOL and PJM regions, OPIS pricing data shows.

PJM Tri Qualified V22 RECs were assessed by OPIS at $16.525/MWh on Thursday, while NEPOOL Dual Qualified V22 RECs were assessed by OPIS at $38.25/MWh on Thursday.

IncubEx President and COO Dan Scarbrough said the continued growth in the Texas CRS wind and solar contracts is part of a larger trend as more entities push for net zero targets. IncubEx works with Nodal to market and grow the environmental markets.

"The continued growth of the Texas CRS wind and solar contracts is illustrative of the macro trends driving environmental markets -- the corporate push toward net zero and renewable goals and growing interest from compliance and trading entities seeking exchange benefits and capital efficiencies," Scarbrough said.

"We're also seeing growing interest in contracts for all environmental commodities. So we do see momentum continuing to build in the broader renewables and emissions space."

In addition to the Texas markets, Nodal pointed specifically to the NAR Registered RECs from CRS Listed wind energy facilities; NAR Registered RECs from CRS listed solar energy facilities; and M-RETS RECs from CRS listed wind energy facilities futures -- also known as M-RETS Wind futures -- as three markets that are attracting similar participants to the Texas markets.

--Reporting by Jeremy Rakes, jrakes@opisnet.com
--Editing by Kylee West, kwest@opisnet.com

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APAC Airlines Group Commits to 2050 Net Zero Target; SAF Is Key Component

September 16, 2021

The Association of Asia Pacific Airlines (AAPA) announced September 13 its commitment to net-zero emissions by 2050, a goal it said would depend heavily on sustainable aviation fuels (SAF) among other factors.

AAPA is a not-for-profit association representing 14 major airlines from across north, southeast and central Asia. Its net-zero emissions goal is more ambitious than that of the global trade association, the International Air Transport Association, which is targeting to half aviation emissions by 2050 relative to 2005 levels.

In the industry's efforts to reduce carbon emissions, SAFs would almost completely replace fossil fuels on commercial flights by 2050, AAPA said. "Significant quantities of SAF will be needed by the industry as 80% of emissions are from flights over 1500 km, for which aircraft powered by alternative energy sources such as electricity and hydrogen are not available," AAPA elaborated.

Asia-Pacific will make up around 40% of global SAF demand but production facilities in the region are lacking, said Subhas Menon, director-general of AAPA. Sufficient resources would have to be allocated to convert feedstock such as agricultural waste, waste oils and other biomass into SAF, he added.

The Carbon Offsetting and Reduction Scheme for International Aviation (CORSIA) would also be important in helping AAPA achieve its target, Menon said. CORSIA is an United Nations-backed international carbon offsetting scheme, which Menon said AAPA fully supports and "will continue to encourage states to fully participate."

As for other solutions such as direct carbon capture and carbon sequestration, Menon said these investments, when viable, could complement other net-zero emissions efforts.

--Reporting by Hanwei Wu, hanwei.wu@ihsmarkit.com;

--Editing by Carrie Ho, carrie.ho@ihsmarkit.com

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Climate Change Could Displace 216 Million People by 2050: World Bank

September 16, 2021

Climate change could force 216 million people to migrate within their own countries by 2050 and migration hotspots could emerge as early as 2030, the World Bank warned in a report released September 13.

By 2050, sub-Saharan Africa could see 86 million internal climate migrants; East Asia and the Pacific, 49 million; South Asia, 40 million; North Africa, 19 million; Latin America, 17 million; and Eastern Europe and Central Asia, 5 million, the bank said in the report, "Groundswell Part 2: Acting on Internal Climate Migration".

The report, however, said decisive collective action could reduce climate migration sharply.

"It is important to note that this projection is not cast in stone," said Juergen Voegele, vice president of sustainable development at the World Bank. "If countries start now to reduce greenhouse gases, close development gaps, restore vital ecosystems and help people adapt, internal climate migration could be reduced by up to 80% to 44 million people by 2050."

The study builds on the first Groundswell report released in 2018, which covered sub-Saharan Africa, South Asia and Latin America.

By deploying a scenario-based approach, the latest report explores potential future outcomes, which can help decision-makers plan ahead.

"The approach allows for the identification of internal climate in- and out- migration hotspots, namely the areas from which people are expected to move due to increasing water scarcity, declining crop productivity and sea-level rise, and urban and rural areas with better conditions to build new livelihoods," the bank said in a news release.

Voegele said the report also clearly lays out a path for countries to address some of the key factors that are causing climate-driven migration

Its policy recommendations include:

--Reducing global emissions and making every effort to meet the goals of the Paris Agreement -- keeping global warming well below 2 degrees Celsius and preferably no more than 1.5 degrees C.

--Embedding internal climate migration in far-sighted green, resilient and inclusive development planning.

--Preparing for each phase of migration, so that internal climate migration as an adaptation strategy can result in positive development outcomes.

--Investing in better understanding of the drivers of internal climate migration to inform well-targeted policies.

--Reporting by Abdul Latheef, alatheef@opisnet.com;

--Editing by Jeremy Rakes, jrakes@opisnet.com

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Saskatchewan's Carbon Capture Strategy to Focus on Enhanced Oil Recovery

September 8, 2021

The Canadian province of Saskatchewan on September 7 unveiled its carbon capture, utilization and storage (CCUS) strategy, saying it will prioritize projects involving enhanced oil recovery (EOR) despite warnings from environmentalists that such projects will delay the transition away from fossil fuels.

EOR is the process of pumping captured carbon dioxide (CO2) to depleted oil reservoirs to extract oil that would have otherwise remained underground. The CO2 is then sequestered in the ground.

"Saskatchewan is already a world leader in carbon capture, particularly with enhanced oil recovery, which leading environmentalists agree countries can't achieve Paris accord targets without," Energy and Resources Minister Bronwyn Eyre said in a news release. "EOR also emits 82% fewer emissions than traditional extraction methods."

Environmental groups have, however, voiced concern over the proliferation of carbon capture projects.

In July, more than 500 organizations urged Canada and the U.S. to stop pursuing carbon capture as a climate policy. They said almost all existing projects are tied to EOR, which is disastrous for the climate as it results in more oil extraction and more carbon emissions when that oil is burned.

In a separate letter in March, a coalition of 47 Canadian organizations had urged the federal government not to extend subsidies for EOR projects.

Eyre said the government wants to build on Saskatchewan's energy strength and make the province the most competitive jurisdiction in Canada to invest in CCUS technology and infrastructure.

The government anticipates that CCUS projects will attract investment of more than $2 billion and sequester over 2 million tons of CO2 annually.

Over the past 25 years, Saskatchewan EOR projects have sequestered more than 40 million tons of CO2. They have also resulted in over 100 million barrels of incremental oil production, the government said.

With its new strategy, Saskatchewan said it will aim to expand the province's Oil Infrastructure Investment Program (OIIP) to include CO2 pipeline projects and work with the energy sector to evaluate the EOR royalty regime to ensure that CO2 injection projects remain highly competitive.

The province will also advance the development of a CCUS greenhouse gas (GHG) credit generation program, recognized under Saskatchewan's emissions management framework.

"The Government of Saskatchewan continues to call on the federal government to engage with the province to advance these priorities, which will help meet federally mandated emission targets," the province said.

While the Canadian government is a strong supporter of carbon capture programs, EOR projects are not eligible for tax credits. Saskatchewan has called that "disappointing."

 

--Reporting by Abdul Latheef, alatheef@opisnet.com;

--Editing by Jeremy Rakes, jrakes@opisnet.com

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RGGI Prices May Surpass $23/st by 2030 with Penn. Participation: Report

September 8, 2021

Regional Greenhouse Gas Initiatives (RGGI) prices could climb as high as $23.10/st by 2030 with support from bullish financial players should Pennsylvania join the consortium, according to a report by analyst firm ClearBlue Markets.

Released September 3, ClearBlue's report said it expected RGGI allowance prices to reach $9.50/st by the end of 2021 as more financial players enter the secondary market.

"We then expect prices to rise to the level between $11.88 and $13.07 in 2025, before rising to a level between $18.37 and $23.10 by 2030," according to ClearBlue's report. "The high end of our price forecast is due to the effect of Pennsylvania joining RGGI in 2022 scenario."

Pennsylvania is currently working on joining the consortium and recently gained approval of its final form rulemaking from the Independent Regulatory Review Commission (IRRC) last week and the Environmental Quality Board (EQB) in July.

The state has been aiming to join RGGI since Pennsylvania Gov. Tom Wolf (D) signed an executive order in October 2019 ordering the state's Department of Environmental Protection (DEP) to draft rulemaking to begin participation in 2022.

Currently, RGGI is made up of 11 member states: Connecticut, Delaware, Maine, Maryland, Massachusetts, New Hampshire, New Jersey, New York, Rhode Island, Vermont and Virginia.

Under the program, fossil-fuel power plants with more than 25 megawatts of generation capacity must offset emissions with either RGGI allowances or approved offset credits.

Should Pennsylvania overcome final hurdle of review by the state's office of the attorney general, it could also face opposition in the General Assembly if the Assembly adopts legislation to block entry into RGGI.

In June, House Bill 637 passed through the Environmental Resources and Energy Committee, which would prevent Pennsylvania from joining RGGI without approval from the General Assembly.

A similar bill, Senate Bill 119, would also require legislative approval before the state can join the consortium.

"Both Bills are making their way through the legislative process but won't see any updates until the State's General Assembly return from summer recess on September 27th," ClearBlue's report said. "In any case, even with the passage of the Bills, Governor Wolf can veto the Bills, which he did with asimilar Bill passed in 2020."

At the start of 2021, OPIS assessed RGGI prices for prompt delivery at $8.08/st which quickly strengthened by 86cts/st to $8.94/st while forward delivery began at $8.16/st and climbed by 84cts/st to $9/st in January.

Since that peak, RGGI prices fell over $1/st to $7.73/st for prompt delivery and $7.805/st for forward delivery in April before steadily increasing past $9/st for both timings in late August.

ClearBlue said financial entities without compliance obligations under RGGI were behind the strengthening prices and could continue to push prices past $23/st by 2030, should Pennsylvania join.

"The higher expected price outlook, despite the higher expected cumulative balance, is because of the anticipated continued influx of speculative volume into the RGGI market over the next decade," ClearBlue said.

On Wednesday, the day of the third quarter auction, the RGGI V21 December 2021 contract traded on the Intercontinental Exchange between $9.17/st and $9.30/st and on the Nodal Exchange between $9.15/st and $9.30/st by 1 p.m. CT. On Tuesday, OPIS assessed the RGGI V21 December 2021 price at $9.155/st.

 

--Reporting by Mayra Cruz, mcruz@opisnet.com;

--Editing by Kylee West, kwest@opisnet.com

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Pennsylvania's Regulatory Review Commission Approves Final RGGI Rule-making

September 1, 2021

The Pennsylvania Independent Regulatory Review Commission (IRRC) on September 1 approved (3-2) final form Regional Greenhouse Gas Initiative (RGGI) rule-making, clearing another hurdle for the state to join the multistate cap-and-trade consortium in 2022.

The state's Environmental Quality Board (EQB) last month voted to advance the rule-making to the IRRC.

The DEP drafted the RGGI regulation on the command of a 2019 executive order signed by Governor Tom Wolf (D). Pennsylvania has a climate goal to reduce CO2 emissions by 25% by 2025 and 80% by 2050, compared to 2005 levels.

Pennsylvania's RGGI participation would reduce 188 million tons of carbon dioxide (CO2) over a decade, according to the Department of Environmental Protection.

RGGI has 11 member states: Connecticut, Delaware, Maine, Maryland, Massachusetts, New Hampshire, New Jersey, New York, Rhode Island, Vermont and Virginia. Under the program, fossil-fuel power plants with more than 25 megawatts of generation capacity must offset emissions with either RGGI allowances or approved offset credits.

Before the vote Wednesday, RGGI secondary market prices strengthened 10.5cts/st for forward delivery on futures exchanges.

The Intercontinental Exchange (ICE) V21 forward December 2021 futures contract traded between $9.10/st and $9.20/st, up from the Tuesday OPIS assessment of $9.095/st. Meanwhile, the contract traded on Nodal Exchange at $9.10/st by 3:30 p.m. CT.

After the IRRC vote, the National Resources Defense Council said in a statement that the rule-making will meet additional regulatory obstacles before Pennsylvania joins RGGI.

"The Office of Attorney General has thirty days to review the legality of the IRRC's regulations and Pennsylvania's General Assembly could adopt a resolution to oppose the regulations," the group said.

--Reporting by Mayra Cruz, mcruz@opisnet.com;

--Editing by Bridget Hunsucker, bhunsucker@opisnet.com

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