European carbon emissions allowances (EUAs) surpassed the €100/tonne mark for the first time in the market’s 18-year history on Feb. 20. Participants cited technical trading as they struggled to identify fundamental reasons for a 10% gain since the start of the month.

One analyst said that despite imminent policy-driven supply boost as part of so-called REPowerEU legislation, EU carbon prices will top €150/tonne this year. REPowerEU, designed to raise cash to reduce Russian energy reliance, was approved by lawmakers.

The premium for UK Allowance (UKA) prices over EUAs has evaporated after rising to over €32 in mid-2022, as UK emitters are thought to have largely finished replacing forward hedges in European permits with the British equivalent and the impact of a deeper recession begins to be felt.

Returning hydro and nuclear generation is expected to help push EU ETS-covered emissions levels lower in 2023 and weaken compliance demand, despite a strengthening macroeconomic picture and low expectations of a resumption of coal-to-gas fuel switching due to the region’s ongoing need to save gas.

The US Department of State is lending financial support to an effort from research organisation Ecosystem Marketplace that will help developing countries’ governments improve their national climate strategies under the Paris Agreement’s market-based Article 6 and UN’s separate CORSIA mechanism for international aviation through carbon trading.

India published a list of carbon credit mitigation items that can be used under Article 6.2 of the Paris Agreement, further clarifying whether the domestic carbon market will be open to international participants.

South Korea has issued a tender to develop the fourth basic plan for its compliance carbon market, which will incorporate the country’s updated climate goals for 2030, while the Korean ETS continued to see a falling auction price due to the lasting oversupply issue.

Japan’s Cabinet has approved its basic GX plan, a 10-year roadmap towards decarbonisation, including initial arrangements for a domestic carbon pricing scheme that will transition to a full-fledged ETS from 2033, though participants tend to take a wait-and-see approach due to regulatory uncertainties.

Australia’s Safeguard Mechanism may not work as reforms risk the setting of higher emissions caps than what the government had intended, an integrity group warned, while a set of studies stated that the findings of a government-led review will also undermine the effectiveness of the mechanism, saying it was “Incomplete, unsubstantiated, and tortured.”

However, another study found that 75% of emissions reductions at facilities covered by a strengthened mechanism could be done at the source, rather than with the use of offsets.

The Papua New Guinea (PNG) government attempted to quell fears over its governance of carbon market rules following a critical investigative report from Australia’s ABC TV current affairs programme, Four Corners. The PNG’s national authority in charge of carbon market regulations was raided by police, as a carbon market watch group said that the raid was related to official corruption.

Meanwhile, standards agency Verra suspended the registry account of a REDD+ developer in PNG and said it will conduct a review in the light of the Four Corners programme.

Singapore will publish a “white list” of eligible carbon credits that emitters can use to offset up to 5% of their liable emissions under the country’s carbon tax, and said it was aware of another media investigation about offsets, led by The Guardian, on rainforest credits issued by Verra.

US-based carbon offset investor EthicStream on Feb. 15 advanced a strategic partnership with its sister company CarbonEthic that could see the firm eventually acquire tens of millions of offsets from a proposed Canadian improved forest management project, which it claims will be the largest in the Western Hemisphere.

The British Columbia environment ministry on Feb. 16 posted a new draft version of the province’s forest carbon offset protocol, which was repealed in 2015, and incorporates feedback from the previous draft version that saw stakeholders blast its economic viability.

The Swedish Energy Agency has proposed that state-supported removals credits from bioenergy carbon capture and storage (bio-CCS) projects could be sold onto the voluntary carbon market (VCM), with the units counted towards achieving Sweden’s national climate goals, described by experts as a model for how state subsidy and international market involvement could be combined to scale carbon removals.

UK-based fund Counteract that focuses on removals raised £35M from investors, while Wilder Carbon, a standard also based in the country that focuses on developing native habitat restoration projects for the emergent domestic voluntary carbon market, had had its first two projects validated. It will only sell its credits to those taking steps to cut their own emissions.

The Kenyan government is hoping to set out a new framework for its carbon market by the end of the month, a move that could include a percentage of carbon credit cash from voluntary projects going to national and district government budgets.

Nigeria also announced it will announce a carbon tax and determine how best to sell credits to international buyers.

In the forest-rich Democratic Republic of Congo (DRC), a senior government official submitted a proposal to introduce a domestic carbon tax, establish an authority to govern market involvement, and push forward on the implementation of the country’s nationally determined contributions (NDC), as the African nation seeks maximise revenues from its natural resources.

South Pole is exploring additional ways to support the Kariba REDD+ project in case it receives low revenue through the carbon market going forward, the company told Carbon Pulse. This comes in the wake of high-profile media scrutiny on the integrity of credits issued to REDD projects.             

The United Arab Emirates signed deals with Zambia and Tanzania for credits generated by forest conservation projects on the continent and earn carbon credits.

Ireland is due to spend almost €3M to buy intergovernmental carbon units from Slovakia ahead of a deadline for EU nations to comply with their non-ETS climate obligations, with Germany having already concluded similar deals with other EU nations.

The EU’s Green Deal Industrial Plan caused division among lawmakers last week, as most of the bloc’s largest political group refused to back a resolution, weakening the Parliament’s influence on the legislation that is designed to counteract the US Inflation Reduction Act (IRA).

The European Commission meanwhile presented a plan to phase out emissions from heavy-duty vehicles sold in the EU from 2030 onwards, piling pressure on the sector to reduce its carbon footprint. The body also adopted rules seeking to define what constitutes renewable hydrogen as part of a fast-track lawmaking process.

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