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Viewpoint: US carbon markets to expand next year

  • Market: Emissions
  • 30/12/20

US cap-and-trade markets are poised for growth, with a number of states and regions looking to emulate the long-running programs in California and the east coast.

Washington state governor Jay Inslee (D) is reviving his efforts to create a greenhouse gas (GHG) cap-and-trade program.

Inslee this month [called for legislation] (https://direct.argusmedia.com/newsandanalysis/article/2169768) that would direct state regulators to establish a carbon market to reduce GHG emissions from major industrial sources and from on-road transportation fuels.

If Inslee is successful in adding a cap-and-trade program in his state, then the entire US west coast would be covered by carbon markets.

Oregon regulators will spend 2021 creating a new CO2 emissions trading program covering output from much of the state's economy. The state Department of Environmental Quality (DEQ) says it will commence the rule-making for its "cap-and-reduce" program next month, kicking off a series of public hearings that will run through June.

The regulations will set CO2 limits on Oregon emitters, including large industrial facilities, transportation fuels and natural gas, and could establish a credit trading program to help with compliance. The program is scheduled to start in 2022.

And in the northeast, a cap-and-trade program to reduce CO2 emissions from on-road transportation fuels is set to launch in 2022.

Connecticut, Massachusetts and Rhode Island, along with the District of Columbia, this month committed to launching the Transportation and Climate Initiative Program (TCI-P) in 2022, while another eight states that have participated in talks around the carbon market have opted not to join at this time.

The initial four TCI-P members have signed an initial agreement that sets the basic framework for the new market, including its starting CO2 limit and flexibility measures, with many details to be filled in during 2021. The participants said the new program will cut CO2 emissions from cars and trucks by at least 26pc from 2022-2032 and generate more than $3bn in revenue for its members.

Many of the states involved in the TCI-P discussions are also members of the Regional Greenhouse Gas Initiative (RGGI), a cap-and-trade program for power plant emissions that is set to expand in 2021 with the addition of Virginia. Pennsylvania regulators will spend the new year finishing work on a proposal to make the state the largest member of RGGI as soon as 2022.

The flurry of state activity comes as president-elect Joe Biden prepares to take office, with his administration likely to help the state and regional carbon markets to flourish in the coming years.

One of the first concrete steps the new administration can take to back the carbon markets would be to drop a federal lawsuit against the Western Climate Initiative. President Donald Trump's administration filed the suit last year, arguing that California lacked authority to link its cap-and-trade system with the Canadian province of Quebec.

California Carbon Allowances firmed immediately following the election, in part because of the likelihood that Biden's administration will drop the litigation.

"States like California that have been fighting President Donald Trump's administration to have state authority in the last four years can focus their attention on improving air quality instead of fighting back against obstruction," Environmental Defense Fund vice president Derek Walker said

Compliance carbon markets are not the only carbon markets that are likely to expand in scope next year. More companies are adopting net-zero emissions commitments and joining groups like RE100 and the Climate Pledge to support efforts to increase renewable energy use and slash emissions. This is leading to greater interest in the voluntary carbon markets.

The Covid-19 pandemic and the economic recession has not dampened corporate interest in setting GHG reduction goals.

"There have been additional commitments from companies on their own net-zero pathways and accelerating those pathways, looking at ways to go beyond carbon neutral to carbon negative," International Emissions Trading Association president Dirk Forrister said this year.


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14/11/24

Cop: ADB, Kazakhstan tie up on early coal retirement

Cop: ADB, Kazakhstan tie up on early coal retirement

Singapore, 14 November (Argus) — The Asian Development Bank (ADB) and Kazakhstan signed an agreement at the UN Cop 29 summit in Baku, Azerbaijan on 13 November to collaborate on the possible early retirement of a coal plant in Kazakhstan. The ADB and Kazakhstan's Ministry of Energy signed the agreement to work on a pilot transaction to reduce the country's greenhouse gas (GHG) emissions, possibly through decommissioning or repurposing a pilot coal plant for renewables or other low-carbon energy technologies. The partners will conduct a feasibility study to identify which plant among a selection of coal-fired power generation, combined heat and power plants, and heat-only boilers could be viable for early retirement. The parties also agreed to analyse the impact that the early decommissioning of the plant could have on Kazakhstan's power and heat supply, and will work together on developing the country's renewable energy generation capacity, and promote regional energy trade. The agreement comes under the ADB's Energy Transition Mechanism, which aims to support the shift away from coal-fired power plants. Kazakhstan is estimated to be the eighth-largest consumer of coal worldwide, with some 25bn t of reserves, said the ADB. About 70pc of the country's electricity is produced from coal, according to the IEA. The country earlier this year projected that it will use 8.6mn t of thermal coal for its heating season this year. State-run Kazakh Invest announced in October that Chinese companies plan to invest billions of dollars in Kazakhstan's coal sector, including the construction of a power plant, even as the country plans to develop new gas fields with a total production capacity of 1bn m³/yr, to switch away from coal for power generation and domestic consumption. By Prethika Nair Send comments and request more information at feedback@argusmedia.com Copyright © 2024. Argus Media group . All rights reserved.

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Cop: French energy minister cancels visit to Baku


13/11/24
News
13/11/24

Cop: French energy minister cancels visit to Baku

London, 13 November (Argus) — French energy minister Agnes Pannier-Runacher on Wednesday cancelled her planned visit to the UN Cop 29 climate summit in Baku, over what she called host Azerbaijan's "unacceptable remarks" on France and Europe. The minister had planned to arrive in Baku on 20 November, to take part in negotiations in the second week of the conference. The French president was not represented in high-level meetings this week, for the first time since the Cop 21 conference in Paris in 2015. "The direct attacks against our country, its institutions and its territories are unjustifiable," Pannier-Runacher told the French senate this afternoon. Azeri president Ilham Aliyev today raised "the so-called overseas territories of France and the Netherlands," while addressing a summit of leaders of small island states. The voice of the populations of the two countries' overseas territories are "often brutally suppressed by the regimes in the metropolis," he said. Aliyev criticised France's response to unrest and protests in the French overseas territory of New Caledonia earlier this year. He called the European parliament and Parliamentary assembly of the council of Europe "symbols of political corruption," and said they shared responsibility with French president Emmanuel Macron for deaths during the events. "Azerbaijan is instrumentalising the fight against climate change for an unworthy personal agenda," Pannier-Runacher said. "It is ironic that Azerbaijan, a repressive and liberticidal regime, is giving lessons in human rights," she said. And the minister criticised Azerbaijan's statements on fossil fuels. President Aliyev yesterday called oil and gas a "gift of god," and said producer countries should not be blamed for supplying market demand. French negotiating teams will work as usual at the conference, with her support from France, Pannier-Runacher said. "We will continue to advocate for the highest level of ambition in the implementation of the Paris Agreement, of which we are the guardians, ten years after its achievement," she said. France had hoped to keep its long-running diplomatic dispute with Azerbaijan under wraps during this Cop. Pannier-Runacher's visit was planned in a climate optic, rather than a bilateral one, with the intention of keeping the two countries' link to the side, a member of the minister's cabinet told Argus last week. Send comments and request more information at feedback@argusmedia.com Copyright © 2024. Argus Media group . All rights reserved.

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No sign of peak in CO2 from fossil fuels: Report


13/11/24
News
13/11/24

No sign of peak in CO2 from fossil fuels: Report

London, 13 November (Argus) — Carbon emissions from fossil fuels are projected to hit a fresh record high of 37.4bn t in 2024, with "no sign" that these have peaked, a team of scientists said today in the 2024 Global Carbon Budget report. Total CO2 emissions are projected to reach 41.6bn t in 2024, up from 40.6bn t in 2023, which includes emissions of around 4.2bn t from land-use change, the report found. It also estimates the global carbon budget remaining before the 1.5°C temperature limit set out in the Paris climate agreement is "breached consistently over multiple years". The remaining carbon budget "has almost run out", the report found. There is a 50pc chance that warming will exceed 1.5°C above pre-industrial levels "consistently in about six years", the report found. There is uncertainty around the estimates, largely owed to the effects of other greenhouse gases (GHGs) such as methane and nitrous oxide, it noted. The Paris accord seeks to limit a rise in global temperature to "well below" 2°C above a pre-industrial average, and preferably to 1.5°C. This year is on track to be the hottest on record , the World Meteorological Organisation said on 11 November — the opening day of the UN Cop 29 climate summit in Baku, Azerbaijan. And drought conditions have helped to reverse a recent downward trend in CO2 emissions from land-use change — such as deforestation — in 2024. Those emissions are set to rise in 2024, after falling by 20pc in the past decade, the report found. Permanent CO2 removals from reforestation and planting new trees is "offsetting about half of the permanent deforestation emissions", it added. And the report authors noted that technology-based carbon removals — typically engineered, rather than nature-based — are at current levels only able to account for one-millionth of the CO2 emissions from fossil fuels. Projections for the highest-emitting countries — China, the US and India — are mixed. China's emissions are projected to increase by 0.2pc in 2024, although the report noted that the range means they could decrease. US emissions are set to drop by 0.6pc, while India's are projected to rise by 4.6pc this year. The Global Carbon Budget report — which will be peer-reviewed — is produced annually by an international team of more than 120 scientists. By Georgia Gratton Send comments and request more information at feedback@argusmedia.com Copyright © 2024. Argus Media group . All rights reserved.

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Cop: Brazil aims for 67pc GHG reduction goal by 2035


13/11/24
News
13/11/24

Cop: Brazil aims for 67pc GHG reduction goal by 2035

Baku, 13 November (Argus) — Brazil energy minister Marina Silva said that the country is aiming to reduce greenhouse gas emissions by 67pc by 2035, compared with 2005 levels, but has failed to explain how oil exploration and production fits in the new ambition. Silva explained today that the country is aiming to reach the top end of its 59-67pc range by 2035, which was shared last week before the UN Cop 29 climate summit in Baku, Azerbaijan. The announcement had raised some doubts from climate experts about Brazil's ambition under its Nationally Determined Contribution (NDC) — climate plan. Silva said today that the range is to account for potential elements that could impact the country's climate plan, such as inflation. "We are focused on having absolute emissions of 850mn CO2e [by 2035]," she said today. "We encourage other countries to having equally ambitious goals." Brazil's new NDC is much more than a figure, Silva said. She described it as a "new paradigm for the social and economic development" of the country. She failed to explain what the new climate goal would mean for oil exploration and production in the country, and Brazil's vice-president Geraldo Ackmin highlighted the potential of Brazil's biofuels industry instead. "Around 85pc of Brazil's fleet is running on flexible engine cars using ethanol," he said. He pointed out to Brazil's potential to lead in sustainable aviation fuels and green hydrogen production thanks to its abundant feedstocks. Responding to Azerbaijan President Ilham Aliyev comments that oil and gas is a "gift of god", Silva said that "gods does give us gifts and we should take them with moderation." "If we have too much sugar we will be diabetic," she said. Some non-governmental organizations (NGOs) said that the new NDC is not in line with limiting global warming to 1.5°C above pre-industrial levels. Brazilian climate think tank Observatorio do Clima criticised the government for not increasing its targets for 2030 and for its failure to announce a plan to end the expansion of fossil fuel production. Oil Change International reiterated that Brazil's goal of being on the "forefront of the global energy transition" is incompatible with its plants to increase oil production over the next decade. Money in trillions Commenting on climate finance negotiations, Silva said that developed economies need to increase their efforts towards delivering financing support to developing countries, and that money needs to be "in trillions". "It is not happening at the speed needed," she added. Cop parties must agree at Cop 29 on a new collective quantified goal (NCQG) — the new finance goal — building on the current $100bn/yr target that developed countries agreed to deliver to developing countries over 2020-25. Brazil's secretary for climate, energy and environment Andre Correa said that developing countries are already frustrated by the fact that the $100bn/yr target was missed. Developed nations surpassed the goal by $15.9bn in 2022, but it was missed in 2020 and 2021, according to the OECD. Some developing countries say it has never been met. Developed countries are calling for a broadening of the contributor base, to include nations whose economic circumstances have changed since the UNFCCC was established in 1992. But Correa said that it would not be fair for rich nations to expect that developing economies contribute in the next finance goal as it is not under the rules of the Paris Agreement. "The discussion has been deviated," he said. "Taking into account that developed countries did not achieve the first attempt, it is reasonable to not ask developing economies to pay." By Jacqueline Echevarria Send comments and request more information at feedback@argusmedia.com Copyright © 2024. Argus Media group . All rights reserved.

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Cop: Developing nations eye sub-targets in finance goal


13/11/24
News
13/11/24

Cop: Developing nations eye sub-targets in finance goal

Baku, 13 November (Argus) — The finance goal for developing countries under negotiation at the UN Cop 29 climate summit in Baku, Azerbaijan, must include a core public finance target from developed countries, with fund allocation floors for least developed countries (LDCs) and Small Island Developing states (Sids), delegates from developing countries said today. The goal, the so-called new collective and quantified goal (NCQG), must include a core public finance provision target by developed countries based on a burden sharing agreement, and a fund mobilisation target, said regional alliance the African Group of Negotiators' (AGN) lead co-ordinator for finance Richard Sherman. The goal should address mitigation — action to reduce greenhouse gas emissions — and also adaptation and loss and damage, he said. Adaptation refers to adjustments to avoid global warming effects, while loss and damage describes the unavoidable and irreversible effects of such change. The goal needs to offer "predictable finance" for adaptation and loss and damage for small economies with more limited resources, and recognise the "special case of Sids", said Samoa's environment minister and chair of the Alliance of Small Island States (Aosis) Toeolesulusulu Cedric Schuster. He said the amount to be agreed at the UN Cop 29 climate summit in Baku for developing countries' climate finance should include "minimum allocation floors" of $39bn/yr for SIDs and $220bn/yr for LDCs. Marshall Islands President Hilda Heine said parties should make sure no finance supporting development of fossil fuels is counted in the new goal. AGN reiterated today that it wants a climate finance commitment of $1.3 trillion/yr by 2030, mostly through concessional instruments and grants. The NCQG follows on from the current $100bn/yr target, which is broadly recognised as inadequate. Developed nations surpassed the goal by $15.9bn in 2022, but it was missed in 2020 and 2021, according to the OECD. AGN contests it has never been met . Negotiations on the NCQG have begun in Baku, but are in the early stages with developed countries unwilling to commit to a figure, a delegate said. A group of leading Multilateral Development Banks (MDBs) estimated yesterday that they could increase climate financing to $120bn/yr by 2030 for low- and middle-income countries. The group, comprising the World Bank and nine other MDBs including the European Investment Bank, hope to leverage an additional $65bn/yr from the private sector. MDBs accounted for around 40pc of the $115.9bn in climate finance provided and mobilised by developed countries to developing nations in 2022, according to the OECD. The role of MDBs is crucial as increased climate ambition can only be met with increased finance, said Chile's environment minister Maisa Rojas. But Fiji's deputy prime minister Biman Prasad said the increase coming from MDBs is not going to translate into "additional finance unless there is a clear agreement at this Cop". By 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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