In this report

Compliance: EUAs ease back from record February highs

European carbon allowance prices (EUAs) eased back from record highs seen in February, shedding 8% over the last two weeks to settle at €92.18 on Mar. 3.

The EU is said to be eyeing a summer start for sales of tens of millions of frontloaded carbon allowances under the bloc’s REPowerEU programme designed to help wean the bloc off Russian energy. Officials are considering scheduling them at the same time as they update this year’s auction calendar for new MSR-related withdrawals.

California regulator ARB’s Board will vote on tightening the cap-and-trade programme by end-2024, with the changes potentially going into effect the following year, a government official said, as the California and Quebec governments divulged plans to evaluate annual emission caps and banked allowance supply in the WCI-linked carbon market.

ARB Chair Liane Randolph also told a California legislative committee that the agency must strengthen the cap-and-trade regulation in order to hit the state’s more ambitious 2030 GHG reduction target of 48% below 1990 levels.

The WCI Q1 current vintage auction on Feb. 16 cleared at $27.85, the highest price in three sales, and at a 12-cent discount to the secondary market level.

Additionally, the inaugural Washington state cap-and-invest auction on Feb. 28 cleared at $48.50, over 20% above where allowances were valued on the secondary market prior to the sale.

California regulator ARB invalidated 13,040 California Carbon Offsets from a Wisconsin-based Central Sands Dairy project developed by Camco, as it was found for the second time to have violated state waste management permit and groundwater standards.

A new research study from non-profit advocacy Environmental Defense Fund (EDF) and the University of Florida’s Department of Biology questioned the integrity of California’s forestry offset protocol that resulted in over-crediting of 100% of units issued for several project sites.The Canadian government published a refrigerant carbon credit protocol that will apply nationwide under the federal offset system and unveiled details of four other protocols currently under development.

The South African government is taking steps towards introducing a tradeable component to the country’s carbon tax regime, it said in a budget review, that could effectively change the base rate tax into a price ceiling. The system allows offsets to be cancelled against the tax for up to 10% of a firm’s emissions.

The Australian government launched the second round of its National Soil Carbon Innovation Fund with A$20M to ramp up the project type.

An Australian industry body has recommended vintage limits to be placed on ACCUs being used for compliance purposes under the Safeguard Mechanism.

The spot market for NZUs in late February continued to sink in one of the biggest corrections in the market’s history, despite the quarterly auction being nearby.

China’s state planner has underlined the role of coal in the country’s energy transition while applying weak language on the development of carbon markets in the latest government plan.

China saw coal power projects accelerate dramatically in 2022 with new permits reaching the highest level since 2015, a report from Global Energy Monitor has found.

India’s carbon market must be well-designed to avoid pitfalls that would undermine its effectiveness, according to a report from the World Resources Institute, while another think-tank report stated that the transitional phase of the new framework should be aligned with overseas examples, such as in South Korea and the EU.

India published a list of thirteen activities that would be eligible for carbon credits claims under Article 6.2.

Indonesia launched its carbon trading scheme for the power sector, covering 99 coal plant units with capacity of over 100 MW connected to the grid.

Voluntary: France announces €100M funding at One Forest Summit

French President Emmanuel Macron announced €100M in funding for a new forest protection scheme at the One Forest Summit in Gabon that will use scientific evidence to compensate countries via biodiversity certificates proven to have protected or restored natural resources.

European oil firm, Tullow, signed a letter of intent with the forestry commission of Ghana to secure 1.2M credits from nature-based carbon projects in the country as part of a jurisdictional REDD+ deal.

Cote d’Ivoire also signed an MOU with both a local and a foreign developer to explore the expansion of reforestation carbon credit projects in the country.

Meanwhile, Rwanda will, in April, outline plans for involvement in international carbon markets including those under Article 6 of the Paris Agreement, its minister of environment said.

Michigan-based Carbon Market Exchange (CMX) claims its 1B credit project pipeline will exceed 25% of the size of the entire voluntary carbon market and is aiming to transact over 50M VERs this year.

Meanwhile, offset registry Climate Action Reserve (CAR) announced it will commence development of a forest carbon protocol specific to Guatemala, continuing the U.S.-based standard’s trend of country-specific endeavours.

New carbon credit insurance firm Oka raised $7M in seed funding and plans to roll out a suite of insurance products starting this year.

Japan signed a pact with ten Asia-Pacific countries at a regional summit of ministers to achieve decarbonisation of their economies, embracing a broad-brush approach that will leave a role for abated fossil fuels in their energy transition strategies.

The Japanese government has committed A$2.35B ($1.6B) to develop a controversial hydrogen supply chain project to produce and liquefy the fuel for shipping from Australia to Japan.

Mitsui's subsidiary will start offering J-Credits from May onwards, making it Japan’s first privately-owned marketplace to trade such credits beyond the Tokyo Stock Exchange.

The committee steering the J-Credit programme has approved a new methodology on paddy rice cultivation.

South Korea’s SK Securities is planning to further broaden its presence in the voluntary carbon market (VCM) as a project developer and provider of offsets for domestic buyers, following its recent purchase of international credits.

Indian carbon offset developer EKI forged a partnership with Inclusive Energy to enhance MRV of energy projects in the VCM.

Indonesia received its first advance payment of $20M for REDD+ activities in the East Kalimantan province from the World Bank’s Forest Carbon Partnership Facility (FCPF).

The Papua New Guinea (PNG) government released details of its long-awaited carbon market regulations that are schedule to be implemented by the end of March.

Finance: EU’s CBAM punitive for Africa’s GDP

The EU’s carbon border adjustment mechanism (CBAM) could wipe some $16B off Africa’s total GDP, experts have calculated, with the continent seen as among the most exposed to the divisive policy.

Large industrial companies in the EU are expected to soon be able to buy gas attained via the European Commission’s joint gas purchasing scheme in an effort to lower costs for companies and consumers.

In a knock-on effect of the European scramble to secure liquified natural gas (LNG), analysts expect key Asian economies such as India, Bangladesh, and Pakistan to draw out coal and oil used for power generation as they prioritise security of supply, a move that could prop up global energy sector emissions for several years.

CMX announced an initial offering of $100M worth of Regulation D and Regulation S offsets powered by DealMaker, a Canadian fintech capital raising platform.

Bermuda-based Titania Re issued a $125M catastrophe bond to Ariel Re as collateralised reinsurance cover that includes a first of its kind carbon offset feature for the environmental impact of rebuilding homes after natural disasters.

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