COMPLIANCE: EU emissions falling as Brazil and US race to catch up
Record short selling by speculators and dwindling auction supply are set to clash with bearish fundamental pressures as EU Allowance Dec-23s approach expiry next month.
EU ETS emissions from heavy industry are set to fall 7% in 2023 compared to a year earlier due to waning output, particularly among steel and chemicals firms.
A new registry regulation implementing a five-month shift in the annual EU ETS compliance schedule may lead to a change in the market’s seasonality, moving the periods when prices tend to rise amid increasing compliance demand, according to European carbon market analysts and traders. Approximately 4% of companies bound by Germany’s domestic nEHS carbon pricing program failed to report emissions in the second year of the initiative as emissions also fell.
The Albanian government is preparing for the EU’s carbon border adjustment mechanism (CBAM) by increasing its tax on coal as part of a 2024 budget draft that the finance ministry recently presented to the country’s parliament.
The UK is planning to launch its own CBAM that would mirror the full 2026 EU launch date.
The Norwegian government on Friday set out a 2024 budget proposal that would carve out $270 million for it to spend on carbon units to help meet its EU climate policy obligations. The country also signed an MoU with Senegal to cooperate under Article 6 of the Paris Agreement.
The Turkish minister of energy and natural resources has said the country’s ETS will be put into operation next year.
Deforestation in the Amazon has decreased by 22.3% between August 2022 and July 2023, falling to its lowest level in five years, according to a report from Brazil's National Institute for Space Research (INPE), which the government attributed to its environmental policies.
The Brazilian federal government has submitted stronger Nationally Determined Contribution (NDC) targets to the UNFCCC. This increases the country's ambition to reduce GHG emissions to 48.4% below 2005 levels as of 2025, and to 53.1% below 2005 levels by 2030, and cap emissions at 1.32 billion tonnes CO2e by 2025 and 1.20 billon tCO2e by 2030.
A U.S. district judge dismissed natural gas-fired power producer Invenergy’s legal challenge to Washington state’s cap-and-trade program, effectively closing the case following nearly a year of judicial proceedings, court documents showed Nov. 3.
Implementing a federal cap-and-trade policy in the U.S. would complement the Inflation Reduction Act (IRA) in reducing the cost of achieving the power sector's emissions abatement goals by nearly 60%, according to a new paper by think-tank Resources for the Future (RFF),
California regulator ARB issued some 347,200 California Carbon Offsets (CCOs) over the most recent two-week period ended Nov. 7, nearly double the 174,600 granted during the previous bi-monthly issuance in late October, and almost one and a half times larger than the same period in 2022.
California entities regulated under the cap-and-trade system emitted 281.7 Mt of CO2e in 2022, a 3.6% drop from the 292.2 Mt released in 2021, data from state regulator ARB showed on Nov. 6.
Oregon's Clean Fuels Program (OCFP) generated over 660,000 credits, the highest number of quarterly credits in the history of the program, Oregon Department of Environmental Quality (DEQ) figures showed on Nov. 9.
A Virginia Circuit Court dismissed three of four legal challengers to Governor Glenn Youngkin’s (R) repeal of the state's RGGI program, leaving only the Association for Energy Conservation Professionals (AECP) remaining to fight for RGGI in Floyd County court.
The U.S. and Canadian Great Plains lost 1.6 million acres (some 650,000 hectares) in 2021, partially due to federal policies that inadvertently favor conversion over protection of land for the production of biofuel, a report from NGO World Wildlife Fund (WWF) said.
Montreal-based GHGSat's C10 satellite, known as Vanguard, is the world’s first orbital sensor capable of identifying CO2 emissions from individual industrial sites, and was successfully launched from California’s Vandenberg Space Force Base on Nov. 11.
India has released a first set of draft regulations for a domestic carbon compliance scheme, which isn’t expected to become operational until 2026. The Indian market will be carbon intensity-based, and initially cover cement, steel, pulp and paper, petrochemicals, and aluminum. Participants will be able to earn credits by beating their intensity-based targets.
VOLUNTARY: Kasigau Corridor issuances halted, while ICROA toughens up
Standards body and registry Verra halted issuances for the Kasigau Corridor REDD project in Kenya, initiating an investigation into the activities after it was made aware of what it said were serious allegations of physical and sexual abuse.
South Pole chief executive Renat Heuberger is stepping down from his position with immediate effect after losing the support of the board of the company in the wake of last month’s suspension by Verra of the Kariba REDD project in Zimbabwe, the company said.
The suspended Kariba REDD project is financially stable for at least 12 months, according to the founder of Carbon Green Investments (CGI), the organization that developed and runs the huge Zimbabwean avoided deforestation project.
BeZero Carbon downgraded the project’s carbon credits to the lowest possible score, but also took the unusual step of delisting it from further assessment in the future.
ICROA is toughening criteria for certifiers looking for its endorsement amid an explosion of interest, an executive explained in an interview with Carbon Pulse.
The first forward purchase agreement has been signed for carbon credits for avoiding the creation of contrails, a form of non-CO2 pollution created by flying, between Satavia and an unnamed U.S. startup.
The U.S. Department of Agriculture (USDA) Forest Service announced Nov. 3 it plans to start rulemaking for carbon capture and sequestration (CCS) projects on national forests and grasslands.
Democrat and Republican Representatives introduced legislation on Nov. 7 to garner federal government support for interagency work around soil carbon sequestration, research, and monitoring, hoping to appropriate $10 million in funding.
Dairy Farmers of America received $22.9 million from the USDA on Nov. 1 to cut methane emissions by 130,410 Mt of CO2e and incorporate carbon credits sales into the product value chain.
The Latin American and Caribbean (LAC) farming sector has immense potential for attracting green investment through the voluntary carbon market, the multi stakeholder Voluntary Carbon Market Integrity initiative (VCMI) and partners said in a joint policy paper Nov. 9.
Carbonext, minority-owned by Shell, is facing allegations that it persuaded Indigenous people to sign blank pages in order for it to obtain exclusive carbon credit rights and that it did not translate contracts from Portuguese into relevant Indigenous languages, according to an Oct. 31 report by InfoAmazonia.
Accredited REDD+ developers in an Amazonian Brazilian state have more than doubled after the jurisdiction's Secretariat for the Environment (SEMA) confirmed that an additional 14 banks, companies, and institutes were awarded the title of executing agents on Nov. 14.
ICAO’s Technical Advisory Body has recommended that the BioCarbon Fund Initiative for Sustainable Forest Landscapes (ISFL) and Socialcarbon immediately be approved to supply credits to CORSIA’s 2021-23 pilot scheme. It also recommended ICAO give conditional approvals to BioCarbon ISFL, Cercarbono, Forest Carbon Partnership Facility, Global Carbon Council, and Thailand’s Premium VER Program for the 2024-26 first phase. The BioCarbon Registry and Japan’s J-Credit program were encouraged to re-apply for 2024-26 eligibility, while the body found it was not possible to assess four other standards that had applied – Carbonpath, International Carbon registry, South Korea’s KCCI Carbon Standard, and Riverse.
Meanwhile, Malaysian airline AirAsia has predicted CORSIA will face a supply shortage in Southeast Asia, given the few projects in the region eligible to supply units.
Japanese oil and gas firm Inpex has said it will seek to earn around 2.8 million carbon credits each year from its Abadi LNG CCS project in Indonesia.
Japan’s Marubeni has teamed up with Sabah Softwoods Berhad and KTS Resources as local partners to start building up a carbon project portfolio in the Malaysian states of Sabah and Sarawak.
South Korea’s agriculture ministry has signed an MoU with carmaker Kia, Shinhan Bank, and offset platform operator Greenery to develop biochar projects and develop voluntary credits in the farming sector.
Brunei Darussalam is in the process of proposing a carbon pricing roadmap for itself, with intentions to initially develop a domestic voluntary market.
FINANCE: UAE offers to host next UN climate summit, U.S. govt commits to carbon removal purchases
The EU’s climate chief announced that the bloc will contribute a “substantial” amount to a new fund for climate mitigation and adaptation as well as allocate further funding for renewables and energy efficiency.
Germany’s three-party coalition government agreed on an additional five-year package to extend relief for the nation’s EU ETS-covered industry struggling with high electricity prices.
South Korea is planning to set up a $75-113 million public-private climate fund to source Paris-aligned carbon credits from the international market.
The World Bank is encouraging Vietnam to push through with a low-carbon rice program expected to reduce emissions by around 1 MtCO2e, and has offered to help auction off the resulting carbon credits ahead of COP28 in Dubai.
Japan will issue its first GX climate transformation bond next year, from which it hopes to raise over $133 billion over time to help decarbonize its economy, and much of Asia’s.
Manulife Investment Management’s Forest Carbon Fund (FCF) secured $224.5 million in initial commitments along with its affiliated offshore vehicles and was still targeting a $500 million final offering, the company announced Nov. 10.
Scaling up the carbon removal industry in Canada could bring 330,000 new jobs and a $143 billion boost in GDP by 2050, according to a report from Carbon Removal Canada in collaboration with Navius Research.
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All examples in this report are hypothetical interpretations of situations and are used for explanation purposes only. The views in this report reflect solely those of the author and not necessarily those of CME Group or its affiliated institutions. This report and the information herein should not be considered investment advice or the results of actual market experience.