In this report

Compliance: U.S. includes trading in draft power plant CO2 regulations, D3 RIN prices jump on potential delay in e-RIN rulemaking

The U.S. EPA published a draft rulemaking to slash CO2 output from fossil-fuel fired electricity generators through means such as emissions trading and carbon capture and storage (CCS).

The price of D3 Renewable Identification Numbers (RINs) jumped following a media report on potential delays and federal lawmakers questioning inconsistencies of the U.S. EPA’s proposal to permit electric vehicle (EV) automakers to earn Renewable Fuel Standard (RFS) credits by using renewable electricity produced from biogas.

Non-profit research group CarbonPlan criticised the scientific integrity of Quebec’s recently finalised afforestation and reforestation protocol on private lands that uses a temporary “tonne-year” accounting method to calculate offsets, while ignoring changing “albedo” effects that risked significant over-crediting. The methodology is eligible for emitters under the province’s WCI-linked carbon market.

Eleven carbon credit programmes, including national registries from Japan, South Korea, and Thailand, have applied for eligibility under the 2024-26 first phase of UN aviation body ICAO’s CORSIA global aviation offsetting programme.

European carbon prices (EUAs) posted a 4.1% weekly increase for the period ending May 12 amid strong auction demand, but remain flat to their value as of the end of April, settling at €86.97/tonne on May 15. Prices had drifted to a 14-week low earlier in the month before recovering.

The European Commission announced in an annual update that 272.4 million carbon allowances will be withdrawn from the EU Emissions Trading Scheme (EU ETS) over 12 months starting this September and inserted into the Market Stability Reserve (MSR). Participants said this had already been priced into the market.

Additional sales of EUAs from the bloc’s clean energy Innovation Fund to help finance its plan to ease off Russian energy will only start in 2024 after the auctioning regulation is updated later this year, a source at the European Commission told Carbon Pulse at the start of the month. EUAs jumped following the news.

The EU’s total GHGs fell by 4% in Q4 2022 compared with a year earlier, even as the bloc’s economy grew, according to official data.

Many of Europe’s largest utilities reported a fall in Q1 2023 ETS-covered power generation.

In New Zealand, Lawyers for Climate Action have filed High Court proceedings, seeking a judicial review of the government’s decision to ignore advice from the independent Climate Change Commission, that has sent the NZU price into a downward spiral.

Australia has released legislative documents showing that it will consider in a planned 2026-27 regulatory review allowing emitters in the Safeguard Mechanism use international credits to meet its domestic targets. Meanwhile, the Clean Energy Regulator on May 12 opened a third exit window for projects under contract with the government to sell their ACCUs in the voluntary market instead.

Thailand held a snap election on May 14, which put the liberal Move Forward party in a position to form a coalition government with the populist Pheu Thai party. Move Forward had pledged to set up a cap-and-trade scheme and phase out coal by 2035 if it won.

Papua New Guinea will release its long-awaited carbon market regulations and REDD+ guidelines in June, Environment Minister Simon Kilepa told Carbon Pulse at the recent Carbon Forward Asia conference.

Voluntary: EU votes to prohibit complete reliance on carbon offsets in companies’ sustainability claims

The European Parliament voted to approve a text that would prohibit EU companies from relying solely on carbon credits when making sustainability claims, a drive largely welcomed by voluntary carbon market participants as helping boost transparency.

Turkey will establish a national programme to scale carbon credit supply to help meet its 2053 net-zero target, aiming to expand project activities into a regional market and move away from a reliance on renewable energy projects, the government said, also confirming that plans for an emissions trading system were underway.

Nigeria authorities signed an agreement to advance climate action in the country, including by establishing infrastructure for carbon pricing. Tanzania also said it had opened discussions with the private sector about developing its forest carbon market.

U.S.-based offset developer C-Quest Capital teamed up with oil major Shell’s subsidiary Shell International Eastern Trading Company to replace inefficient incandescent light bulbs with energy efficient LED globes across 8 million households in rural India, avoiding up to 65 MtCO2e over the project’s lifetime.

The Brazilian Senate voted in favour of legislation allowing the sale of voluntary carbon credits from public forest concessions.

Indonesia has mostly finalised rules around the export of voluntary carbon credits, setting out provisions for the procedure to get units registered and put on the domestic exchange. However, there is some uncertainty still as to whether foreign buyers will also be able to purchase units directly from developers, with officials in various ministries giving somewhat mixed messages. The exchange is set to open in June.

Hong Kong-listed China National Building Material has agreed to buy 10 million forest carbon offsets from China Forestry Group Corp., one of the country’s biggest forestry firms. The credits may be a mix of domestic CCERs and units developed under international standards.

Singapore-based Climate Impact X (CIX) will focus its soon-to-be-launched initial price assessments around various standardised REDD+ contracts, the exchange has announced.

South Korean carmaker Hyundai Motors has signed an MoU with two government agencies on cooperating to develop blue carbon projects. Hyundai will use the agreement as a platform to take a leading role in offset development, it said.

Finance: UK pledges finances to Brazil’s Amazon Fund

The UK government pledged £80 million ($100 million) to Brazil’s Amazon Fund to back REDD+ projects that protect the nation’s forests.

Systemica, a Brazilian offset developer active in REDD+ projects sold a minority stake in its company to BTG Pactual, Latin America’s largest investment bank.

UK-based energy company Drax Group inked a $600,000 deal to sell 2,000 carbon removal credits at a price of $300/t from its first bioenergy with carbon capture and storage (BECCS) facility in the U.S.

British multinational asset managers Schroders have launched carbon offset share classes to allow investors to counter Scope 1 and 2 emissions associated with their fund holdings.

The Danish Energy Agency announced the signing of a 20-year contract with utility Orsted to support the delivery of a full-scale CCS project that aims to trap 430,000 tonnes of CO2 a year, while additional funding will come from tech giant Microsoft agreeing to buy the resulting carbon removals.

Finnish carbon offset firm Compensate announced a significant scaling down of its operations due to difficulties in securing additional funding.

The U.S. government plans to launch a carbon removal purchasing programme by year end covering all forms of removals, as a bipartisan group of senators released a bill to support such purchases through a reverse auction mechanism.

Boston-based U.S. private equity investment manager Folium Capital is looking to raise $500 million for Folium Fund III – its Regenerative Natural Resources fund – that will invest in global forestry and agriculture assets combined with carbon sequestration.

Montreal-based ag tech company ChrysaLabs raised C$15 million ($11 million) from entities including Leaps by Bayer, TELUS Ventures, and BDC Capital to expand its soil carbon verification technology.

Carbon financier Carbon Streaming is investing $15 million into U.S. wildfire afforestation, reforestation, and revegetation (ARR) projects that will issue Forecasted Mitigation Units under Climate Action Reserve’s climate forward programme.

U.S.-based investment manager State Street Corporation’s Carbon Asset Servicing Solution will help carbon market investors with administration, deposit services to facilitate investment in both compliance and voluntary markets.

Australian oil and gas company Santos has closed four non-binding MoUs for storage of upwards of 10 MtCO2 annually at its planned CCS facility off the coast of Timor-Leste. The Australian government is supporting CCS development, and confirmed on May 16 it will soon hold a consultation on new offshore CCS acreage.

Eneos, Japan’s biggest oil refiner, along with financial group Fuyo General Lease and sanitary product maker Unicharm, have invested in Eastwood Climate Smart Forestry Fund, operated in the U.S. by Sumitomo Forestry Group. The fund will be formally established in June, and plans to earn carbon credits from its operations.

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