In this report

Compliance: EUAs drop amid macro weakness

South Korea 2022 compliance cycle 
Month Offered Sold Price (won)
22-Jul 2,300,000 2,300,000 24,000
22-Aug 2,300,000 2,225,000 27,300
22-Sep 2,375,000 2,014,000 26,900
22-Oct 2,661,000 1,341,200 22,800
22-Nov 2,300,000 567,600 19,500
22-Dec 2,300,000 1,380,000 14,700
23-Jan 1,000,000 643,000 12,900
23-Feb 1,000,000 642,000 12,750
23-Mar 1,000,000 699,400 12,700

From a record-high settlement above €100/tonne in February, the European carbon allowance (EUA) benchmark Dec-23 contract dropped to a seven-week low of €84.75 on March 20, with a weak macroeconomic outlook pressuring the market in the face of bank failures.

The Q1 RGGI auction on March 8 settled at $12.50, a slight discount to the secondary market price prior to the sale and the lowest clearing price in the US power sector carbon market since September 21.

Nova Scotia earmarked 2.6 mln free allowances to provincial utility Nova Scotia Power Incorporated (NSPI) and altered auction purchase limits for this year to address emitters’ compliance shortfall in its cap-and-trade programme terminated at the end of 2022.

The Canadian province of British Columbia announced plans to implement a cap on oil and gas emissions to ensure the province hits its GHG reduction target for the sector and will also consider how credit trading may work under the system.

A group of Paraguay senators put forth legislation that would set up a national carbon offset registry to help track the transfer of credits abroad, with the country required to hold back a portion of these units to meet its own Paris Agreement target.

China’s environment ministry released the final ETS allocation plan for 2021 and 2022, marginally easing the settings for coal-fired power plants compared to the previous draft while leaving the key issues of offset use and permit carryover unresolved.

Despite the regulatory update, weekly trading volume in the Chinese ETS plunged over the past week as observers remain cautious about the supply outlook in the absence of key policies.

Thermal power generation in China declined in the first two months of 2023 despite continued coal expansion, while total generation growth saw a minor increase from a year ago.

South Korea earlier this month sold fewer than 70% of the allowances on offer in its monthly CO2 permit auction amid dwindling buyer interest.

The Korean government has been sued for backtracking on 2030 renewable energy commitments in its latest electricity plan.

Safeguard Mechanism entities needing Australian Carbon Credit Units (ACCUs) to comply with the scheme may face insufficient supply as issuance growth is slowing down while demand is accelerating, the Australian Clean Energy Regulator said.

The Indonesian government has announced a set of regulations to guide the development of CCUS in its oil and gas industry including access to carbon credits.

Singapore has added American Carbon Registry (ACR) and ART TREES as its fourth and fifth global carbon offset standards that domestic companies can use towards their carbon tax obligations.

Voluntary: Verra halts African soil carbon issuance, CAR releases wildfire methodology

Verra halted offset issuances at a soil carbon project in Africa that was subject to scathing criticism from an environmental group regarding additionality and leakage.

The Norwegian Environment Agency suggested that a “reverse fee” mechanism combined with voluntary carbon market (VCM) sales of credits could help boost growth in the industrial carbon removal sector.

Offset registry Climate Action Reserve (CAR) released its Reduced Emissions from Megafires Forecast Methodology to issue credits for future emissions reductions through prevention of wildfires across the American West.

Technology giant Microsoft announced plans to invest in a marine geoengineering project from U.S.-based ocean health company Running Tide that aims to remove 12,000 tCO2 over the next two years from the atmosphere with long-lasting storage at deep ocean depths.

Zere, a new offset platform for Mexican nature-based projects, will pre-sell 100,000 V23 forward credits from a blue carbon project at a discounted price of $15/tonne.

South Korea’s Chamber of Commerce and Industry plans to establish a VCM trading platform in the second half of 2023 as a supplement to the domestic ETS, local media reported.

Seoul has proposed to lower its 2030 target for reducing greenhouse gas emissions in the industrial sector, while planning to expand its domestic carbon sequestration programme and purchase more credits from abroad under Article 6 of the Paris Agreement.

Tokyo-listed Sumitomo Forestry has teamed up with NTT, a leading telecommunications company, to develop a cloud-based data platform exclusively for forest carbon credits, with a demonstration project set to be launched in April this year.

Indonesia’s biggest stock exchange, IDX, is targeting an August launch for its carbon trading platform and will feature four pilot projects.

Singapore-based platform, CIX, is planning to launch nature-based carbon contracts on its new spot trading platform.

Bursa Malaysia’s new carbon trading platform, BCX, completed its first carbon credit auction, which saw domestic buyers purchase all the available 150,000 Verra-registered carbon credits.

An Australian carbon project developer, Corporate Carbon Group, launched an agri-business spin-off company Paniri Agricultural to manage natural assets in the sustainable agriculture industry.

Finance: EU unveils Net Zero industrial proposal

The European Commission presented its Critical Raw Materials Act (CRMA) proposal last week, seeking to reduce the bloc’s dependency on third-countries in sourcing raw materials indispensable for the development and building of clean technology.

The EU executive also unveiled a Net Zero Industrial Act (NZIA) proposal, seeking to set 2030 targets to produce ‘strategically important’ clean technologies domestically, deploy carbon capture, and laying out a plan to further support green hydrogen.

The body also outlined a proposal to reform the bloc’s electricity market, putting the main focus on boosting renewable development and protecting consumers but presenting no significant overhauls of the current power market structure.

Commodity trading house Mercuria unveiled plans on Monday to invest $500 mln in a new nature-based business to fund carbon and biodiversity projects.

Paris-headquartered environmental services firm Carbonx Climate said it helped corporates buy €1 mln worth of engineered carbon removal units from tech-based endeavours. While French investment firm Mirova raised $171 mln for its first closing of the Mirova Gigaton Fund, a blended debt finance vehicle that aims to accelerate the energy transition in the developing world.

A California-headquartered climate tech firm Andes announced completion of $30 mln Series A financing to market its mineralisation-based carbon removal units.

Carbon trading and advisory firm ClearBlue Markets raised $8 mln in a Series A funding round led by Royal Bank of Canada (RBC) to enhance the usability of the firm’s technology platform, supply demand price outlooks, offset development work, and transaction facilitation expertise.

A new carbon project developer Next 150 has raised $2 mln in seed funding from trading and supply chain logistics company Kemexon, and opened offices in Mexico City and Geneva.

The Malaysian government will commit $2.2 mln to kickstart the VCM by providing finance for carbon credits locally, its prime minister announced at a conference.

Transition finance is likely to become China’s priority in developing green finance compared to other policy instruments, given a heightened focus on post-COVID-19 economic recovery and energy security, according to a report from Fudan University’s Green Finance & Development Center.

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