G7, G20 to push international climate ambition

Market: Emissions
25/11/21

The G7 and G20 summits could act as "accelerators" of international climate ambitions, as Germany's incoming government pledges to take on a leading role in international climate policy during Germany's G7 presidency in 2022.

The parties forming Germany's prospective new government, in their coalition agreement presented on 24 November, pledged that Germany will use its G7 presidency to establish climate partnerships, along with an "international climate club" which would be open to all countries.

The parties — the Social Democrat SPD, the Greens and the pro-business FDP — pledged that the new government they will form will aim to strengthen multilateral co-operation "within the scope of the UN's Sustainable Development Goals and the Paris Agreement".

The new government will also aim to extend German environmental, climate and energy co-operations. These co-operations would focus on boosting growth in renewable power capacity and its corresponding infrastructure, and on green hydrogen production, among other things, the coalition parties said.

The new government would also fulfil its commitment towards the $100bn climate finance pledge, potentially raising its commitment in the future.

Wilfried Rickels of the Kiel Institute for the World Economy said today that the coalition's push for a leading role in climate policy during Germany's G7 presidency "emphasises the necessarily international nature of climate policy".

Policy analyst Lisa Katharina Schmid of the federal environment ministry, which is led by caretaker environment minister Svenja Schulze of the SPD, said on 24 November that G7 and G20 venues offer the possibility of annual "check-ins" which will build up pressure to raise climate ambition.

Germany's federal environmental office UBA is hoping for the G7 and G20 summits to act as an "accelerator" for their members' climate ambitions in the period to 2030, UBA climate expert Juliane Berger said. A study commissioned by UBA which was presented this week, "Advancing multilateral cooperation on climate action", suggests using international venues such as G7 and G20 as "stepping stones".

Non-governmental organisation E3G's Berlin-based policy adviser Jennifer Tollmann pointed out the growing role that nationally determined contributions (NDCs) play at G7 and G20 summits. At the last G20 summit, which took place in Rome last month ahead of the UN Cop 26 climate conference in Glasgow, leaders of the club's countries agreed on reviewing their NDCs, among other climate-related pledges.

Deputy director general at the German federal environment ministry Norbert Gorissen stressed the importance of a "serious follow-up" on the many announcements made at Cop 26. This responsibility falls to the UK presidency of Cop 26, and on all other parties having initiated the announcements, but civil society, think-tanks and international organisations also have a role to play, Gorissen said.

International co-operation played a big role at Cop 26, Gorissen said, adding that "it must play an even stronger role afterwards". The growing role of international co-operation is reflected in the success at Cop 26 in reaching an agreement on the rules for Article 6 — covering international carbon markets — of the Paris climate agreement, Gorissen argued.

The new federal government, under caretaker finance minister Olaf Scholz of the SPD, is expected to be sworn in in the week of December 6, once party members give the green light to the coalition agreement.

By Chloe Jardine

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14/11/24

Cop: German opposition pushes for Article 6

Berlin, 14 November (Argus) — Germany's main opposition parties have welcomed the progress achieved on Article 6 of the Paris Agreement in at the UN Cop 29 climate summit in Baku, Azerbaijan. They have called on Germany and the EU to make better use of the instrument to allow for more cost-efficient climate action. Germany's dominant opposition party, the right-of-centre CDU/CSU, on 14 November commended the framework under Article 6 as an efficient way of reducing greenhouse gas (GHG) emissions. Article 6 of the Paris accord aims to help set rules on global carbon trade. The Article 6 mechanism allows for reductions to happen where they are quickest, cheapest and easiest to be carried out, the CDU head of the working group on climate action and energy, Andreas Jung, said in a debate in the lower house of parliament, the Bundestag. The deputy head of the FDP faction Lukas Koehler, also speaking in the Bundestag on 14 November, called on Germany and the EU to "finally" integrate the Article 6 in their climate action plans. Koehler argued that if for instance Germany's progress in emissions reduction should turn out to be too slow, the country could temporarily shift its efforts — and the associated finance — to where more rapid mitigation might be achieved, such as Brazil. The EU, of which Germany is a member state, will not make use of Article 6 credits, at least until 2030, to reach its so-called nationally determined contribution (NDC) – its climate action pledge — under the Paris climate accord. The EU has been seeing progress on ongoing Article 6 negotiations at Cop 29, the European Commission's principal advisor for international aspects of EU climate policy Jacob Werksman said today, "mostly because parties are now agreeing with the EU and others that were concerned about the transparency and accountability of the bilateral markets that operate under Article 6.2". Werksman believes there is enough momentum for negotiations to be concluded next week, noting that the atmosphere has "improved" compared with previous negotiations, which echoes the sentiment expressed by a number of negotiators earlier this week . Werksman pointed in particular to the US now agreeing with others and helping to broker compromises. Koehler also warned German government representatives in Baku to refrain from "expensive" pledges which may strain the country's budget. Developed countries agreed in 2009 to deliver $100bn/yr in climate finance to developing nations, and Cop 29 is focused on the next iteration of this — the new collective quantified goal (NCQG) . In a statement, Germany — represented by Scholz despite his absence at the Cop — and other G7 members like Canada, France, or the Netherlands agreed that "developed countries must continue to take the lead and live up to existing finance commitments". Germany faces early elections as the government lost its majority last week following the sacking, by chancellor Olaf Scholz of the Social Democrat SPD, of finance minister Christian Lindner of the pro-business FDP party and the FDP's subsequent withdrawal from the ruling coalition. Polls suggest that the CDU/CSU group will easily win the next federal elections which are scheduled to take place on 23 February. The FDP's persistent refusal to allow Germany to take on more debt to enable more public funding, including of clean technologies, was the main reason for Lindner's sacking. By Chloe Jardine and Victoria Hatherick Send comments and request more information at feedback@argusmedia.com Copyright © 2024. Argus Media group . All rights reserved.

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Brazilian senate passes carbon market bill

14/11/24

News

14/11/24

Brazilian senate passes carbon market bill

Sao Paulo, 14 November (Argus) — Brazil's senate approved a bill that will create a regulated carbon market, helping to underpin the country's emissions-reduction targets. The senate approved the bill nearly 11 months after it was passed in the lower house. But the proposal will still need final approval in the lower legislature because of the changes to the text. The approval was celebrated by the Brazilian delegation in the UN Cop 29 climate summit in Baku, Azerbaijan. The carbon market will give Brazil the financial instruments to help meet its emissions reduction targets, environment minister Marina Silva said. 67pc](http://direct.argusmedia.com/newsandanalysis/article/2628248) by 2035 from 2005 levels, Silva said in Baku. The legislation creates the Brazilian emissions trading system (SBCE) and stipulates that companies with over 25,000 metric tonnes/yr of emissions will be subject to the cap-and-trade system. The senate proposal maintained the exemption of the agricultural sector from the cap-and-trade system, but allows companies in this sector to sell carbon credits. The bill also stipulates that the new system cannot overlap with existing carbon-reduction programs, such as the biofuels carbon credit program Renovabio or the excise tax, which will be created in the tax reform. The senate stipulated a fine of up to 3pc of gross revenues for companies that fail to comply with emissions reduction targets. It also removed the requirement that vehicle owners will have to offset carbon emissions, which was included in the lower house proposal. Congress is expected to approve the bill before year-end, following negotiations with leaders in the senate. Once the bill is signed into law, regulations governing the proposal will still need to be approved by the federal government. Send comments and request more information at feedback@argusmedia.com Copyright © 2024. Argus Media group . All rights reserved.

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Cop: Finance talks stuck as parties fail to cut options

14/11/24

News

14/11/24

Cop: Finance talks stuck as parties fail to cut options

London, 14 November (Argus) — Parties at the UN Cop 29 climate summit have agreed on a draft for a new climate finance goal, but it is lengthy, fails to bridge long-standing divisions and still lacks a position on an amount from developed countries. Agreement on finance is key, to ensure that all countries can implement their respective energy transitions and cut emissions, in line with the Paris climate accord. Developed countries agreed in 2009 to deliver $100bn/yr in climate finance to developing nations, and Cop 29 is focused on the next iteration of this — the new collective quantified goal (NCQG). The draft text is riddled with options and brackets, which is not uncommon in the first week of Cop negotiations. But it still has every opinion given in the past year on offer, meaning that parties have a long road ahead to reach agreement. "There is no alternative to this text," Cop 29 lead negotiator Yalchin Rafiyev said today. Developed countries have not provided an amount, but are promoting a "multi-layered goal" and want to expand the contributor base. Meanwhile, developing countries are now pushing for sub-targets of $220bn for least developed countries (LDCs) and $39bn/yr small island developing states (Sids) , while broadly calling for climate public finance of over $1 trillion/yr, mostly in grant and concessional finance. Rafiyev described the text as a "workable basis for discussion". But EU negotiator Jacob Werksman struck a more pessimistic tone, saying that parties are significantly far apart and that it is hard to see where the landing zone lies. Parties stuck to their positions at a high-level finance meeting today, with no sign of movement. "The support goal should be both ambitious and realistically achievable", the US negotiator said — echoing Belgium's representative almost word for word. Developed countries called for more contributors, including from developing countries in a position to contribute. The UN climate body the UNFCCC works from a list of developed and developing countries from 1992 — delineating 24 countries plus the EU as developed — and many of these note that economic circumstances have changed over the past 32 years. Parties such as the UK called for increased mobilisation of private sector finance, through multilateral development banks (MDBs), whose reforms should be accelerated, while Sweden called for enhancing the mobilisation of domestic finance. But these issues are largely outside of the remit of the Cop, even though they may get a boost from upcoming G20 discussions next week. Panama's representative called for trillions, Guatemala said that "finance must be more accessible", with Colombia saying that it is currently "entangled" in development agencies. Zimbabwe told fellow negotiators that it was crucial that developing countries' debt burdens were not increased. Werksman is hoping for some compromise next week, when ministers join negotiations, he said today. Parties had in October reached some convergence after a series of ministerial meetings ahead of Cop 29. He pointed to a finance report released today by a UN-mandated high-level group, that he said, could guide policymakers. International private finance could meet around half of the funds that developing countries need — $1 trillion/yr by 2030 and $1.3 trillion/yr by 2035 — the group said. The possibility of levies — on shipping and air travel — as well as on fossil fuel producers, is likely to be floated too. Many jurisdictions, including the EU, have previously called for taxes and levies to be imposed to provide further climate finance. Colombia called for increased action on global taxation today. But "that requires very careful consideration before we stunt some of our industries", Egypt's representative said today. Delegates representing Tanzania and Marshall Islands reiterated that finance supporting the development of fossil fuels should not be part of the goal. By Georgia Gratton, Victoria Hatherick, Bachar Halabi and Caroline Varin Send comments and request more information at feedback@argusmedia.com Copyright © 2024. Argus Media group . All rights reserved.

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No oil and gas firms are Paris-aligned: Carbon Tracker

14/11/24

News

14/11/24

No oil and gas firms are Paris-aligned: Carbon Tracker

London, 14 November (Argus) — None of a group of 30 oil and gas producers have greenhouse gas (GHG) emissions reduction targets in line with keeping the global temperature rise to well below 2°C, according to a report by think-tank Carbon Tracker. Carbon Tracker examined the announced emissions reductions strategies of 30 firms, including a mix of majors, independents and NOCs. It found that none of them link their GHG emissions to carbon budgets, which would be necessary to limit the global temperature rise in line with the 2015 Paris agreement. Of the 30 companies examined, 19 do not include scope 3 emissions in their targets. Scope 3 covers emissions created by combustion of fossil fuels the company produces, and typically make up the majority of emissions for oil and gas companies. European firms Eni, TotalEnergies, Repsol and BP rank the highest on emissions reductions commitments, having pledged absolute cuts in GHG emissions from production and use of their products by 2030. Of the 19 companies that do not include scope 3 emissions, most also do not have 2050 net zero targets, or interim reductions, and their strategies do not cover all emissions from production and sales on a full equity basis. Algerian state-owned Sonatrach rates at the bottom, as the firm has not disclosed any overarching emissions goals at all. On methane, most firms are aiming for near-zero methane emissions by 2030. But almost all include only directly operated assets in this perimeter, excluding non-operated joint ventures, and not covering companies' midstream assets. The US' Chevron is the one exception, including all assets on an equity share basis. And 25 of the 30 firms have pledged to eliminate routine flaring. But this kind of flaring represents only a small amount of the total for some companies, and very few have committed to eliminating all non-emergency flaring. On the credibility of GHG emissions reduction, Carbon Tracker found that even the top-ranked companies are pursuing strategies that it described as of "questionable credibility." Firms such as Eni and BP have announced assets divestments as part of their strategy, which remove the emissions from those firms' books but do not prevent them from entering the atmosphere. Other firms have announced an intention to use carbon capture and storage, despite uncertainty over the potential of the technology because of its low maturity. By Rhys Talbot Send comments and request more information at feedback@argusmedia.com Copyright © 2024. Argus Media group . All rights reserved.

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Cop: EU ETS volatility problem for corporate CCS case

14/11/24

News

14/11/24

Cop: EU ETS volatility problem for corporate CCS case

Baku, 14 November (Argus) — Price fluctuations in the EU emissions trading system (ETS) make it difficult for carbon capture and storage (CCS) projects to attract finance, delegates at a UN Cop 29 climate conference side event in Baku, Azerbaijan, heard today. Fluctuations in the EU ETS price make it more difficult to model the support provided to CCS projects through avoided compliance costs, law firm Latham & Watkins partner Jean-Philippe Brisson said. These ups and downs are "very difficult for corporates", Japanese bank MUFG director Yukimi Shimura said. The benchmark front-year EU ETS contract has closed at an average of €66.20/t ($69.82/t) of CO2 equivalent (CO2e) so far this year in Argus assessments, compared with €85.30/t CO2e last year. While carbon pricing is an "absolute must" for CCS, if ETS cost avoidance is your only revenue stream it is very difficult to convince financials or board members to support projects, Swiss cement major Holcim vice president Pavan Chilukuri said, as the long-term viability of projects is not guaranteed. Additional funding is therefore needed to accelerate project implementation, Chilukuri said. This could be in the form of revenues from carbon dioxide removal credits — generated when plants run on biogenic energy and the carbon captured — or carbon contracts for difference. The CCS hub concept — where a number of sites capturing CO2 are located near each other to make use of the same transportation and storage infrastructure — can also help to limit costs, he said. But hubs come with their own cross-chain risks, Shimura said, including uncertainty surrounding liability for issues such as delays. The UK government — which is developing two CCS clusters — is doing an "excellent job" to minimise such risks, Shimura said. But more needs to be done in the US and Asia, with a role to be played by governments, she said. Most CCS activity remains concentrated in the US because incentives there are very strong and fixed for 12 years, Brisson said, referring to the $85/t tax credit for CCS offered under the country's Inflation Reduction Act. But even this is now "not good enough", Shimura said, as inflation has pushed costs up since the figure was set. By Victoria Hatherick Send comments and request more information at feedback@argusmedia.com Copyright © 2024. Argus Media group . All rights reserved.

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