Viewpoint: US carbon markets to expand next year

Spanish 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.

By Jessica Dell

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14/04/25

IMO GHG pricing not yet Paris deal-aligned: EU

Brussels, 14 April (Argus) — The International Maritime Organisation's (IMO) global greenhouse gas (GHG) pricing mechanism "does not yet ensure the sector's full contribution to achieving the Paris Agreement goals", the European Commission has said. "Does it have everything for everybody? For sure, it doesn't," said Anna-Kaisa Itkonen, the commission's climate and energy spokesperson said. "This is often the case as an outcome from international negotiations, that not everybody gets the most optimal outcome." The IMO agreement reached last week will need to be confirmed by the organisation in October, the EU noted, even if it is a "strong foundation" and "meaningful step" towards net zero GHG emissions in global shipping by 2050. The commission will have 18 months following the IMO mechanism's formal approval to review the directive governing the bloc's emissions trading system (ETS), which currently includes maritime emissions for intra-EU voyages and those entering or leaving the bloc. By EU law, the commission will also have to report on possible "articulation or alignment" of the bloc's FuelEU Maritime regulation with the IMO, including the need to "avoid duplicating regulation of GHG emissions from maritime transport" at EU and international levels. That report should be presented, "without delay", following formal adoption of an IMO global GHG fuel standard or global GHG intensity limit. Finland's head representative at the IMO delegation talks, Anita Irmeli, told Argus that the EU's consideration of whether the approved Marpol amendments are ambitious enough won't be until "well after October". Commenting on the IMO agreement, the European Biodiesel Board (EBB) pointed to the "neutral" approach to feedstocks, including first generation biofuels. "The EBB welcomes this agreement, where all feedstocks and pathways have a role to play," EBB secretary general Xavier Noyon said. Faig Abbasov, shipping director at non-governmental organisation Transport and Environment, called for better incentives for green hydrogen. "The IMO deal creates a momentum for alternative marine fuels. But unfortunately it is the forest-destroying first generation biofuels that will get the biggest push for the next decade," he said. By Dafydd ab Iago Send comments and request more information at feedback@argusmedia.com Copyright © 2025. Argus Media group . All rights reserved.

German Green party warns on climate policy for heating

14/04/25

German Green party warns on climate policy for heating

Berlin, 14 April (Argus) — Germany's soon-to-be opposition Green party today warned against the prospective new government's plans for the heating sector, which the Greens say will lead to Germany incurring high fines under the EU's effort-sharing regulation (ESR), particularly as the coalition also seeks to "deliberately delay" the EU's buildings directive. The expected new government coalition parties CDU/CSU and SPD pledged in their coalition treaty more openness and the use of "scope for implementation" to achieve energy efficiency, while emphasising their commitment to reaching climate neutrality by 2045. The coalition also agreed to end the outgoing government's building energy act, with its focus on mandatory renewable energies shares, and instead focus on "achievable CO2 avoidance" as a key performance indicator in the heating sector. In "deliberately" delaying "urgently needed" action, Germany could incur high EU fines while still making heating more expensive for users, the Greens warned, as people are driven into "fossil fuel dependencies" and "cost traps". And the lax implementation of the EU's energy performance of buildings directive (EPBD) threatens to delay refurbishment and energy efficiency, the party said. German energy efficiency association Deneff similarly warned against a delayed implementation of the EPBD and the "vague" role accorded to the carbon price in the building sector. But Deneff commended the coalition's backing of existing energy efficiency support programmes, despite the envisaged end to the buildings energy act. The act was the brainchild of the Green-led outgoing economy ministry, fiercely criticised by the then-opposition CDU/CSU and only half-heartedly supported by outgoing chancellor Olaf Scholz's SPD party. A recent study found that prices under the upcoming EU emissions trading system covering buildings and road transport (EU ETS 2) could turn out much higher than anticipated by the European Commission. Cologne University-based research institute EWI in a recent paper warned that carbon prices under the ETS 2 could climb from about €120/t of CO2 equivalent (CO2e) in 2027 to more than €200/t CO2e by 2035, significantly higher than the current price of €55/t CO2e under Germany's domestic carbon pricing scheme for the sectors. This is because of the sectors' high short-term marginal abatement costs, with necessary investments such as heat pumps and building renovations being cost-intensive and progressing slowly. The Greens on 11 April slammed the coalition treaty for advocating the use of "dubious foreign emissions reductions ", its "excessive" focus on carbon capture and storage technology and touting an "overcapacity" of new gas-fired plants that could lead to a "fossil lock-in". The lower house of parliament the Bundestag on 6 May will elect CDU leader Friedrich Merz as Germany's chancellor, assuming the CDU and SPD parties give the coalition the green light as the CSU did last week. By Chloe Jardine Send comments and request more information at feedback@argusmedia.com Copyright © 2025. Argus Media group . All rights reserved.

Malaysian Fathopes to reach SAF plant FID by 1Q 2026

14/04/25

Malaysian Fathopes to reach SAF plant FID by 1Q 2026

Singapore, 14 April (Argus) — Malaysian biofuel feedstock supplier Fathopes Energy's planned sustainable aviation fuel (SAF) plant will reach a final investment decision (FID) in the first quarter of 2026, it said. Intital engineering design will be done from July to December 2025, Fathopes' director Eddy Leong said at an event on 10 April, speaking on behalf of the company's chief executive Vinesh Sinha. The plant's capacity is unconfirmed. Fathopes signed an initial agreement at the event with testing, inspection and certification company AmSpec Group. They aim to identify, assess and document feedstocks across Asia-Pacific, Australia and New Zealand that can be used at the planned plant. The agreement will take effect from 1 June. Besides used cooking oil (UCO), other waste feedstocks such as palm oil mill effluent (Pome) oil and spent bleaching earth oil (SBEO) will be explored. Fathopes will take the lead in collecting feedstock samples, while AmSpec will analyse their suitability for SAF production. Amspec will help develop an on-site SAF laboratory at the plant to ensure compliance with industry standards and environmental regulations. Fathopes had signed an initial agreement with Danish technology firm Topsoe in February, in which Topsoe agreed to provide catalysts and engineering expertise to assess feasibility of building the refinery. By Sarah Giam Send comments and request more information at feedback@argusmedia.com Copyright © 2025. Argus Media group . All rights reserved.

Q&A: IMO GHG scheme in EU ETS could be 'challenging'

11/04/25

Q&A: IMO GHG scheme in EU ETS could be 'challenging'

London, 11 April (Argus) — Delegates have approved the global greenhouse gas (GHG) pricing mechanism proposal at the International Maritime Organization's (IMO) 83rd Marine Environment Protection Committee (MEPC) meeting. Argus Media spoke to ministerial adviser and Finland's head representative at the IMO delegation talks, Anita Irmeli, on the sidelines of the London MEPC meeting. What is your initial reaction to the text? We are happy and satisfied about the content of the agreed text, so far. But we need to be careful. This week, all member states were able to vote. But in October, when adaption will take place, only those states which are parties to Marpol Annex VI will be able to vote if indeed a vote is called for, and that changes the situation a little bit. Here when we were voting, a minority was enough — 40 votes. But if or when we vote in October, then we need two thirds of those party to Marpol Annex VI to be in favour of the text. Will enthusiasm for the decision today remain by October? I'm pretty sure it will. But you never know what will happen between now and and the next six months. What is the effect of the decision on FuelEU Maritime and the EU ETS? Both FuelEU Maritime and the EU ETS have a review clause. This review clause states that if we are ambitious enough at the IMO, then the EU can review or amend the regulation. So of course, it is very important that we first consider if the approved Marpol amendments are ambitious enough to meet EU standards. Only after that evaluation, which won't be until well after October, can we consider these possible changes. Do you think the EU will be able to adopt these the text as it stands today? My personal view is that we can perhaps incorporate this text under FuelEU Maritime, but it may be more challenging for the EU ETS, where shipping is now included. What was the impact of US President Donald Trump's letter on the proceedings? EU states were not impacted, but it's difficult to say what the impact was on other states. By Madeleine Jenkins Send comments and request more information at feedback@argusmedia.com Copyright © 2025. Argus Media group . All rights reserved.

Q&A: Australia’s Corporate Carbon expands ACCU trading

11/04/25

Q&A: Australia’s Corporate Carbon expands ACCU trading

Sydney, 11 April (Argus) — Australian carbon project developer Corporate Carbon has been expanding its trading capabilities around Australian Carbon Credit Units (ACCUs) on the back of growing supply and wider market maturity. Head of carbon trading Angus Robertson spoke with Argus about the latest developments in the market. Corporate Carbon is one of the biggest suppliers of ACCUs. Is it correct that the company has been issued around 15mn ACCUs, counting both fully-owned projects and partnerships, which would be around 10pc of all ACCU issuances since the scheme started in 2011? Yes, that's the approximate number. We've got around 100 projects. In terms of issuance from a mix of owned projects and offtake agreements with other developers and partners in the industry, the approximate forecast is around 3mn ACCUs/yr. We trade around that and then also have capacity to trade outside of our own projects and within the portfolio, plus operating as a trading entity in the secondary market. The company has been one of the main suppliers to private buyers, and to the federal government through carbon abatement contracts (CACs). But you are also buyers. How does that work? The increased capability of our business to both buy and sell is a reflection of the broader Australian carbon market maturing over the last few years. The beginning of the business was very much built off the back of those CACs. As that policy changed over time, allowing for the partial exiting of those CACs , obviously there's been a lot more focus on the secondary market now. We've seen a lot of trading houses, banks and other financial institutions coming into the market, and with that you get a more mature financial market. So in response to that, we've been building out our trading capacity as well as our broader commercial team over the past few years. We take a portfolio approach and we have a large inventory flow to assist with that growing demand, but there are times when we go out to the secondary market and source units on behalf of clients. You recently partnered with trading and risk management firm Ion Commodities to implement their Carbon Zero tool. How does that translate into your trading capabilities? We see Ion's solution as a really effective trading tool and portfolio management system. It reflects our readiness to operate at a larger scale. By providing those tools, it allows us to focus on the strategic goals of the business, especially from a commercial perspective. It is very much a tool for reporting purposes and the automation capabilities of the system assist with that, but it does have a bit of a flow-on effect in terms of efficiency across the business as well. Going to the market, in the short term, it seems to be all about the upcoming federal elections. Do you expect to see much price volatility within the next few weeks? Yes. As we approach the Australian federal election, we would expect there to be a degree of uncertainty, considering the difference in the two major party outcomes in terms of their take on the carbon market. We would see it as positive in either instance, but I think there is still a degree of uncertainty that should lead to perhaps a degree of illiquidity in the market. The market has been also weighed down by a strong issuance of safeguard mechanism credits (SMCs). Were you surprised with that high volume when it was first disclosed by the Climate Change Authority late last year? I think it was the general market consensus that the number was higher than initially forecast, and [ACCU] market prices definitely reflected that in the following weeks and months after those numbers were disclosed. Once the final numbers were released, I think the market had generally already priced that in by that point. Has that changed your internal outlook for when the ACCU market might see an expected shift from oversupply to undersupply? I wouldn't say our internal view has changed all that much. If the majority of that volume is now weighted towards the early years of the safeguard mechanism, policies might reflect that going forward. Now we would probably see ACCU supply as a potential restriction on the market in the short to medium term. Obviously, there's speculation around certain methods in the ACCU market, where higher forecasts were expected over the following next few years and that's now no longer the case. So probably more around supply than demand in terms of our shifted internal views, and this is more from a trading and market perspective as opposed to our actual projects being affected. So it's more on the supply side than demand, even with the high SMC issuances? Well, obviously the market has reacted to those media releases by the regulator around SMCs. So you know that's already happened — you can't really argue that now. Will there be further policy changes around the safeguard mechanism to account for that? That's a bit of an unknown, but it's definitely potential in the following years. And when you talk about supply constraints, is it mostly the delays with the development of the integrated farm and land management methodology , and potentially lower issuances from a reformed landfill gas method? Those are good examples of general delays in certain methods and the creation of new methods. So yes, our expectation is that this could be a big driver on ACCU prices in the next few years. By Juan Weik Send comments and request more information at feedback@argusmedia.com Copyright © 2025. Argus Media group . All rights reserved.

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