EU Cop 29 negotiating mandate light on finance goals
An EU draft negotiating mandate ahead of the UN Cop 29 climate summit reiterates calls for a global approach to carbon pricing and stronger climate plans, but remains light on climate finance commitments.
EU environment ministers are working on the EU's negotiating mandate for the Cop 29 climate talks in Baku in 11-22 November. Conclusions are expected to be adopted in October.
The current text calls on other jurisdictions to "introduce or improve" their own carbon pricing mechanisms, including carbon markets aligned with the Paris Agreement. The EU wants "action" to scale up global carbon pricing and promote harmonisation. Negotiations on outstanding elements of Article 6 of the Paris climate agreement, which includes two market-based carbon pricing mechanisms, will continue at Cop 29.
But the draft merely reconfirms the EU's commitment to existing climate finance goals, although finance is set to be the overarching theme of the Baku summit. In Baku, Cop parties will have to agree on a new climate finance goal — known as the new collective quantified goal (NCQG). This represents the next stage of the $100bn/yr of climate finance that developed countries agreed to deliver to developing countries over 2020-25.
The EU's draft recalls that the bloc and its member states are the world's largest climate finance contributors, providing "at least around" a third of the world's public climate finance. The EU also notes the "overachievement", by developed countries, of the collective $100bn/yr goal for climate finance. Although developed nations surpassed the goal by $15.9bn in 2022, it was missed in 2020 and 2021, according to the OECD. Some developing countries have called for at least $1 trillion-1.3 trillion/yr for the new goal, but developed countries have yet to come forward with an amount.
Barring future input from EU finance ministers, the current draft text vaguely "invites" other countries to scale up international climate finance. The text also emphasises that public finance alone cannot deliver the levels of funding needed to transition to a climate-neutral global economy. Mobilisation of "private, philanthropic, and innovative" climate finance is essential, the text states.
The draft also further urges nationally determined contributions (NDCs) — climate plans — to be aligned with the Paris agreement's 1.5°C global warming limit. The Cop 28 final text last year encouraged parties to have "ambitious, economy-wide emission reduction targets, covering all greenhouse gases, sectors and categories and aligned with limiting global warming to 1.5 °C" in their next NDCs. Countries are expected to hand in updated climate plans to the UN by February 2025.
The EU reiterates the importance of transitioning away from fossil fuels, tripling renewable energy capacity, and doubling annual energy efficiency gains by 2030, also agreed at Cop 28.
The draft climate conclusions further note that NDCs are "collectively" far from being on track towards limiting global warming to 1.5°C and achieving the Paris agreement's long-term goals. But the ministers' draft text makes no mention of any need to readjust the EU's targets, particularly the commitment to a 55pc reduction in greenhouse gas (GHG) emissions by 2030. The European Commission's communication earlier this year, on a 90pc net GHG emissions reduction by 2040 for the bloc, compared with 1990 levels, only "represents a basis" for discussions on an EU NDC to be submitted ahead of Cop 30.
With a nod to Azerbaijan's political situation, the text adds that climate transition needs to be just and follow a "human-rights-based approach".
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California pares LCFS goals to tougher targets: Update
California pares LCFS goals to tougher targets: Update
Updates trade discussion, adds links to other coverage. Houston, 13 August (Argus) — California will pursue transportation fuel carbon reduction targets in 2025 nearly twice as tough as originally proposed under final Low Carbon Fuel Standard (LCFS) rulemaking language released late Monday. The California Air Resources Board (CARB) will consider a one-time tightening of annual targets for gasoline and diesel by 9pc in 2025, compared with the usual 1.25pc annual reduction and a 5pc stepdown first proposed in December 2023. Staff maintained a 30pc reduction target for 2030, compared to the current 20pc target. Final rulemaking language introduced a new 20pc/yr cap on a company's credit generation from soybean- and canola-oil-based biodiesel or renewable diesel to begin in 2028. The updated rule also dropped proposals to require carbon reductions from jet fuel in addition to gasoline and diesel, a controversial proposal aligned with governor Gavin Newsom's (D) ambitions for lower-carbon air travel but which participants warned would not achieve its targets. The new proposal immediately jolted a lethargic credit market that earlier this year slumped to the lowest spot price in nearly a decade under the weight of growing credit supplies. Current quarter trade raced higher by $12.50 — 26pc — in rare after-hours activity less than two hours after CARB staff published the latest documents. Trade continued up to $65/t in the first half of Tuesday's session before retreating in later hours back below $60/t. Public comment on the proposals will continue to 27 August ahead of a planned 8 November public hearing and potential board vote. The program changes could be in place by the end of the first quarter of 2025, according to staff. LCFS programs require yearly reductions to transportation fuel carbon intensity. Higher-carbon fuels that exceed these annual limits incur deficits that suppliers must offset with credits generated from the distribution to the market of approved, lower-carbon alternatives. Surging use of renewable diesel and outsized credit generation from renewable natural gas have overwhelmed deficit generation to create a glut of credits available for future compliance. LCFS credits do not expire, and 26.1mn metric tonnes of credits — higher by 16pc than all the new deficits generated in 2023 — were available for future compliance by the end of March. Credits fell in May to trade at $40/t, the lowest level for current quarter credits since June 2015. California late last year formally proposed tougher annual targets, off-ramps for certain fuels and other changes to North America's largest and oldest LCFS program. Staff had initially targeted March to put ideas including a one-time, 5pc reduction to targets in 2025 and automatic mechanisms to match targets to credit and deficit generation before the board for formal approval, but they delayed that meeting after receiving hundreds of distinct comments on the original proposal. Staff shifted the 2025 target to at least 7pc after an April workshop discussion and another record-breaking quarter of increases in credits available for future compliance. The 9pc recommendation followed the continued growth of credit supplies in recent quarters. Previous modeling estimated that such a target could draw down the credit bank by 8.2mn t in its first year. Uncertainty over how fuel suppliers and consumers would respond to that target led staff to leave in place the proposed 30pc target by 2030. An outright cap on credits generated from soybean- or canola-oil derived biomass-based diesels augments initially proposed "guard rails" on crop-based credit generation through verification. The change would send a stronger market signal preferring waste-based feedstocks for diesel fuels that California expects to replace with zero-emission alternatives, staff said. And staff dropped a proposed obligation on jet fuel used in intrastate flights, estimated to make up 10pc of California's jet fuel consumption. Participants had warned the measure would stoke more credit purchases than renewable jet fuel buying, due to the structure of the aviation fuel market . By Elliott Blackburn Send comments and request more information at feedback@argusmedia.com Copyright © 2024. Argus Media group . All rights reserved.
California narrows LCFS goals to tougher targets
California narrows LCFS goals to tougher targets
Houston, 13 August (Argus) — California will pursue transportation fuel carbon reduction targets in 2025 nearly twice as tough as originally proposed under final Low Carbon Fuel Standard (LCFS) rulemaking language released late Monday. The California Air Resources Board (CARB) will consider a one-time tightening of annual targets for gasoline and diesel by 9pc in 2025, compared with the usual 1.25pc annual reduction and a 5pc stepdown first proposed in December 2023. Final rulemaking language introduced a new 20pc/yr cap on a company's credit generation from soybean- and canola-oil-based biodiesel or renewable diesel to begin in 2028. The updated rule also dropped proposals to require carbon reductions from jet fuel in addition to gasoline and diesel, a controversial proposal aligned with governor Gavin Newsom's (D) ambitions for lower-carbon air travel but which participants warned would not achieve its targets. The new proposal immediately jolted a lethargic credit market that earlier this year slumped to the lowest spot price in nearly a decade under the weight of growing credit supplies. Current quarter trade raced higher by $12.50 — 26pc — in rare after-hours activity less than two hours after CARB staff published the latest documents. Public comment on the proposals will continue to 27 August ahead of a planned 8 November public hearing and potential board vote. The program changes could be in place by the end of the first quarter of 2025, according to staff. LCFS programs require yearly reductions to transportation fuel carbon intensity. Higher-carbon fuels that exceed these annual limits incur deficits that suppliers must offset with credits generated from the distribution to the market of approved, lower-carbon alternatives. Surging use of renewable diesel and outsized credit generation from renewable natural gas have overwhelmed deficit generation to create a glut of credits available for future compliance. LCFS credits do not expire, and 26.1mn metric tonnes of credits — higher by 16pc than all the new deficits generated in 2023 — were available for future compliance by the end of March. Credits fell in May to trade at $40/t, the lowest level for current quarter credits since June 2015. California late last year formally proposed tougher annual targets, off-ramps for certain fuels and other changes to North America's largest and oldest LCFS program. Staff had initially targeted March to put ideas including a one-time, 5pc reduction to targets in 2025 and automatic mechanisms to match targets to credit and deficit generation before the board for formal approval, but they delayed that meeting after receiving hundreds of distinct comments on the original proposal. Staff shifted the 2025 target to at least 7pc after an April workshop discussion and another record-breaking quarter of increases in credits available for future compliance. The 9pc recommendation followed the continued growth of credit supplies in recent quarters. Previous modeling estimated that such a target could draw down the credit bank by 8.2mn t in its first year. Uncertainty over how fuel suppliers and consumers would respond to that target led staff to leave in place the proposed 30pc target by 2030. An outright cap on credits generated from soybean- or canola-oil derived biomass-based diesels replaced initially proposed lighter "guard rails" on crop-based credit generation. The change would send a stronger market signal preferring waste-based feedstocks for diesel fuels that California expects to replace with zero-emission alternatives. And staff dropped a proposed obligation on jet fuel used in intrastate flights, estimated to make up 10pc of California's jet fuel consumption. Participants had warned the measure would stoke more credit purchases than renewable jet fuel buying, due to the structure of the aviation fuel market . By Elliott Blackburn Send comments and request more information at feedback@argusmedia.com Copyright © 2024. Argus Media group . All rights reserved.
China seeks to achieve climate goals with new framework
China seeks to achieve climate goals with new framework
Singapore, 13 August (Argus) — China has announced new guidelines to accelerate the country's energy transition and achieve its decarbonisation goals. Under the guidelines, China expects the scale of its energy conservation and environmental protection industry to reach about 15 trillion yuan ($2.1 trillion) by 2030, according to a statement by the Central Committee of the Communist Party of China (CPC) and the State Council. The country aims to accelerate progress in carbon emission reduction, resource utilisation and green development by 2030. It targets installed capacity of pumped-storage hydropower to exceed 120mn kW by then, and the carbon emission intensity of commercial transport for each unit of turnover to drop by about 9.5pc compared with 2020. China targets to establish a green, low-carbon circular economy by 2035, with carbon emissions declining after reaching their peak. China aims to hit peak CO2 emissions by 2030 and net zero emissions by 2060. China's installed renewable capacity reached 1.653bn kW as of the end of June, accounting for 53.8pc of total installed capacity, according to the National Development and Reform Commission (NDRC). The country achieved almost double its target for non-fossil power generation additions last year at 300GW, compared with a goal of 160GW, according to state-linked China Renewable Energy Engineering Institute. In the new framework, the target for non-fossil fuels in the country's primary energy consumption remains at 25pc by 2030, unchanged from its 2021 nationally determined contribution (NDC), and up from 15.3pc in 2019. China's 2021 NDC also states that it will lower its CO2 emissions per unit of GDP by over 65pc from the 2005 level, and that it will bring its total installed capacity of wind and solar power to over 1.2bn kW. The country is expected to submit its 2035 climate targets to the UN early next year, including updates to its pre-existing 2030 targets. The framework targets five main areas. It aims to optimise land space planning for green and low-carbon developments and seeks to accelerate the low-carbon transformation of the industrial sector. This includes the steel, non-ferrous metals and petrochemical industries. It also targets to advance the low-carbon transformation of the energy sector and develop non-fossil fuel energy and promotes the green transformation of the transportation sector. Lastly it aims to advance the green transformation of urban and rural construction, including agricultural developments. Challenges ahead China's green transformation faces significant challenges despite progress, the NDRC said. The country's energy and industrial sectors remain heavily dependent on coal, straining environmental goals, the commission said. Under the latest framework, the country still aims to promote the clean and efficient use of coal and reasonably control the growth of coal consumption during the 14th five-year plan period, but to gradually reduce it in the subsequent five years. The National Energy Administration (NEA), China's energy regulator, expects the percentage of thermal generation capacity to fall to 45pc by the end of 2024, from 47.6pc by the end of 2023. China in July announced plans to explore co-firing renewable ammonia and biomass at its coal-fired plants , as well as carbon capture, utilisation and storage. These measures will be applied to a number of projects by 2025. The government also plans to develop a fiscal and taxation policy to promote low-carbon developments under the new guidelines, and aims to implement relevant tax incentives, as well as improve the green tax system. It also aims to bolster financial instruments such as green equity financing, green financial leasing, as well as central budgetary investment to provide support for key projects. The new guidelines did not provide any details on methane cuts. The country has yet to set firm methane-reduction targets although it agreed in November to set goals to cover all greenhouse gases. China, dubbed by the Paris-based IEA as the "clean energy powerhouse," is projected to spend $675bn on clean energy this year alone. Its renewable energy power generation deployment has progressed rapidly , but it remains unclear if this will prompt Beijing to raise its decarbonisation ambitions. By Prethika Nair Send comments and request more information at feedback@argusmedia.com Copyright © 2024. Argus Media group . All rights reserved.
Bill would require US EIA to share more SAF data
Bill would require US EIA to share more SAF data
New York, 12 August (Argus) — A bipartisan bill would require the US Energy Information Administration (EIA) to report more granular data about sustainable aviation fuel (SAF), which supporters say would add transparency to an opaque market and help scale up production. The agency currently tracks SAF and offers periodic updates on the fuel's use, though not on any regular cadence like it does with conventional petroleum-based fuels and more established biofuels like ethanol, biodiesel, and renewable diesel. But the US Department of Energy and EIA would have to shift course and provide more frequent and technical SAF updates "as soon as practicable" if the bill, introduced late last week by representatives Mike Flood (R-Nebraska) and Troy Carter (D-Louisiana), ends up passing. According to bill text shared with Argus , EIA would have to report on SAF production across the country and in each state, imports, and the "type, origin, and volume of feedstock" used to make SAF. The bill defines SAF as liquid fuel that produces at least 50pc fewer lifecycle greenhouse gas emissions as conventional jet fuel and that is not produced from petroleum or palm oil derivatives, mirroring eligibility requirements set out in the Inflation Reduction Act for a SAF tax credit. The bill specifically requires that EIA's Petroleum Supply Monthly and Weekly Petroleum Status Report include the new SAF data along with "any other relevant report." Potentially applicable publications include EIA's monthly report estimating biofuel production capacity — which currently lumps SAF together with renewable diesel and lesser-used biofuels — and a monthly outlook that includes production, consumption, and import projections for various commodities. Various biofuels associations — including corn groups that are banking on rising SAF production to create new demand for ethanol — voiced their support. Geoff Cooper, president of the Renewable Fuels Association, said that "this legislation would ensure SAF producers and users have the information they need to make informed decisions and smart investments." While relatively little supply is available today, EIA said last month that SAF production capacity could hit nearly 30,000 b/d this year and increase again in 2025 if planned capacity additions are not delayed. Refiners like Phillips 66, Calumet, and Valero have set plans to convert more of their renewable diesel production to SAF over the next year. There are also other production pathways in various stages of development, such as using ethanol as feedstock or converting syngas from agricultural and forest wastes into liquid fuel. The bill, which has five Democratic and two Republican sponsors, is pending before the House Committee on Energy and Commerce. EIA declined to comment on any policy proposal. By Cole Martin Send comments and request more information at feedback@argusmedia.com Copyright © 2024. Argus Media group . All rights reserved.
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