China ETS: Emissions prices settle at record low

Spanish Market: Coal, Emissions
20/08/21

Prices in China's emission trading scheme (ETS) have fallen to the lowest level since the market started trading last month, while trading volumes also dropped this week.

Prices settled at 49 yuan/t ($7.50/t) of CO2 equivalent (CO2e) today, below the Yn51.23/t settlement on the first trading day on 16 July.

Total volumes were 1.42mn t of CO2e this week, including 22,012t of open-bid trades and 1.4mn t of bulk agreements. The volume of open-bid trades has now fallen for five straight weeks.

The weighted-average open-bid price was Yn50.54/t this week, 7.6pc lower than a week earlier. The average price for the bulk agreement transactions was Yn45/t, down by 10.5pc from last week.

The ETS is a new initiative for China, has many shortcomings and needs to be improved, Huang Runqiu, China's ecology and environment minister, said this week. "We must be cautious and steady in the progress," he said.

The environment ministry is the government body overseeing the ETS and China's climate change policies.

More details on regulation of emissions trading are likely to be published soon, Huang said. China will set up a voluntary emissions reduction mechanism and include more emissions entities and third-party traders in the ETS to help increase market activity.

China certified emissions reduction (CCER), a voluntary emissions reduction programme that typically covers forestry and renewable power projects, has not yet been adopted by the national ETS. CCER trading has been included in the pilot ETSs that operate in seven cities and provinces, with total CCER volumes of 1.94mn t last week.

China's national forestry and grassland administration is pushing ahead with a trading scheme for forestry and grassland carbon sinks, officials said in a briefing today. The ministry will encourage forestry projects to participate in the national ETS as part of the carbon offset mechanism.

Weekly policy review

China's top economic planning body the NDRC has issued new warnings to some local governments that missed targets to control energy intensity in the first half of this year.

Nine provinces or regions — Guangdong, Jiangsu, Yunnan, Fujian, Shaanxi, Guangxi, Ningxia, Qinghai and Xinjiang — have been issued code red warnings after increasing their energy intensity in January-June. These provinces must suspend approvals of new energy-intensive projects for the rest of the year, the NDRC said in a statement on 17 August.

The warnings could encourage some provinces to consider power rationing over the high demand winter season.

China ETS volumes, prices

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07/11/24

EU's Hoekstra balances divergent calls on climate

Brussels, 7 November (Argus) — EU climate commissioner Wopke Hoekstra, nominated again for the role, balanced conflicting calls around climate legislation in a hearing today with members of the European Parliament (MEPs). Some MEPs were in favour of tougher climate legislation, while others demanded delays to targets. Hoekstra defended key climate energy legislation, including EU CO2 reduction targets for cars and vans, while maintaining a cautious approach on expansion of the EU emissions trading system (ETS) to new sectors. Hoekstra committed to a 2026 ETS review that touches upon maritime, aviation, municipal waste and negative emissions, in response to a question from German centre-right EPP MEP Peter Liese, who has been a key parliament negotiator for ETS reforms. "Negative emissions are a cornerstone of making it to net zero. I'll absolutely look into the ramifications, whether this could be included," said Hoekstra, commissioner-designate for climate, net-zero and clean growth. If international efforts to reduce aviation emissions do not deliver, Hoekstra is also open to an ETS that equally impacts EU and international aviation. Hoekstra underlined the pivotal importance for "predictability" of legislation for industry, referencing certain firms' concern at a 12-month delay to the bloc's deforestation regulation. Hoekstra promised a "dialogue" with the car industry about sticking to CO2 standards for cars and vans and the phase-out, from 2035, of new vehicles with an internal combustion engine (ICE). Hoekstra is "all in" for ensuring the EU car industry's success. But the Dutch politician is reticent about delaying penalties for carmakers that do not meet CO2 standards from 2025. For biofuels and e-fuels, Hoekstra does not want to change current EU legislation. The EU should not open the "box that was closed" by EU legislation, notably with a 2035 phase-out that only foresees use of the ICE with non-biogenic CO2 neutral fuels. "I feel there is a bright future for biofuels. We need more, particularly in many other domains," he said, equally noting that the EU needs to "focus first and foremost on electrification". And Hoekstra could give no clear deadline for phasing out fossil fuel subsidies in the EU, but said he would do his best to create transparency on the issue. Speaking notes prepared in advance of the hearing already indicated a cautious approach to new elements in future climate policy. Hoekstra underlined the need for a "business case" for decarbonisation in agriculture and forestry, mirroring the approach taken by EU agriculture commissioner-designate Christophe Hansen. By Dafydd ab Iago Send comments and request more information at feedback@argusmedia.com Copyright © 2024. Argus Media group . All rights reserved.

Trump victory raises climate law questions

06/11/24

Trump victory raises climate law questions

Houston, 6 November (Argus) — Federal tax incentives enacted through US President Joe Biden's signature 2022 climate law could survive in some fashion during a second Donald Trump administration, but their ultimate fate could depend on a Republican majority in Congress. While details of president-elect Trump's plans will unfold in the coming months, the Inflation Reduction Act (IRA), which established tax incentives for clean electricity and the related supply chain, is very much up for review, according to panelists during a post-election webinar hosted by US law firm Bracewell. Beyond the presumed policy shift, the Biden administration is still working to finalize guidance for some of the IRA's incentives, such as production and investment tax credits for clean energy, and regulators have yet to outline other provisions in the law beyond cursory notices. The confluence of those factors could chill renewable energy development, at least in the near term. "Investors stand the risk of being whipsawed to some degree in terms of not having the comfort they need to make a billion-dollar investments on new clean energy facilities," Bracewell tax policy lead Tim Urban said. In addition, an expected 2025 tax bill could move around several trillions of dollars, "and some of that bill could either end up being IRA fixes or IRA repeals or curtailments," he said. Much will depend on whether Republicans retain a majority in the House of Representatives, which would give them control of Congress after they regained a Senate majority on Tuesday. That would open the door for budget reconciliation — the same process through which Democrats passed the IRA in 2022 — and allow Republicans to make changes to the law with a simple majority vote rather than the 60 typically required to bypass the Senate's filibuster rules. In other words, Republicans would not have to reach across the aisle to compromise with Democrats. While some Republicans have objected to outright ending the IRA, they have not yet faced the "horse trading" and intraparty pressure that accompanies negotiations around major legislation, according to Urban. "I'm still optimistic that that much, if not all the IRA may be salvageable, but I think there's a lot of work to be done," he said. Project developers have signaled a similar outlook , noting that renewable energy expanded during the first Trump administration, despite investment in newer sectors like offshore wind flagging ahead of the 2024 election. Even for offshore wind, they expect a slower pace of development rather than a complete abandonment of the industry by the US. The biggest change could come from competing priorities, with Trump's policies potentially making the all-in cost of resources like natural gas more attractive than renewables. Even without details, Trump's desire to see oil and gas producers " drill, baby, drill ", and his first term in the Oval Office offer some broad insight into how his policies could manifest. "One hallmark of the first Trump administration was to not pick winners and losers on technologies or type of energy," said United States Energy Association chief executive Mark Menezes, who served as US deputy secretary of energy in 2020-21. That meant making sure nuclear could be treated equally with other sources and "renewables weren't forced on a particular group if they didn't want to have renewable power, for example," he said. The incoming administration is likely to pursue a "rather aggressive approach to fossil fuel expansion", with a raft of "immediate" executive orders to support that goal, according to Scott Segal, co-chair of Bracewell's policy resolution group. But the IRA will likely be handled with a "scalpel" rather than a "sledgehammer", he said. By Patrick Zemanek Send comments and request more information at feedback@argusmedia.com Copyright © 2024. Argus Media group . All rights reserved.

Cop 29 finance talks need leadership after Trump win

06/11/24

Cop 29 finance talks need leadership after Trump win

Edinburgh, 6 November (Argus) — Donald Trump's US presidential election victory will likely affect finance negotiations during the UN Cop 29 climate summit starting next week, but the US can still play a role while other developed countries step up to the plate, according to observers. Key negotiations at Cop on a new finance goal for developing nations, the so-called NCQG, could be "severely undermined" by Trump's victory, as the prospect of Washington withdrawing from the Paris Agreement may discourage other countries from engaging with US officials, non-profit IISD's policy adviser Natalie Jones told Argus . Trump pulled the US out of the Paris Agreement during his last term in office, calling it "horrendously unfair", and he has signalled he will do so again. "This could potentially weaken ambitions" at Cop 29, but it is unlikely to derail negotiations, Jones said. Observers agree that the US can still play a role in talks on the new finance goal, a key topic at this year's summit. Parties to the Paris deal will seek to agree on a new finance goal for developing nations, following on from the current $100bn/yr target, which is broadly recognised as inadequate. "The Biden administration still has a critical window to support vulnerable nations' calls to mobilise climate finance and deliver a strong climate target," civil society organisation Oil Change International's US campaign manager Collin Rees told Argus . The Biden administration's delegation, which will still take part in Cop 29, will not change position at this stage, according to Jones. And the US could continue to show some leadership, she said, adding that Washington likely intends to release its 2035 Nationally Determined Contribution (NDC) early. Countries' new climate plans must be submitted to the UN climate body the UNFCCC by February 2025, but the US could release its NDC at Cop 29 before Trump takes power early next year, she said. "President Biden must do everything he can in the final weeks of his term to protect our climate and communities," including on fossil fuels, Rees said. The prospect of Trump pulling the US out of the Paris accord could cause initial anxiety at Cop 29, Climate Action Network executive director Tasneem Essop said. But "the world's majority recognises that climate action does not hinge on who is in power in the US". "As we saw before and will see again, other countries will step up if the US reneges on their responsibilities and stands back," Essop said. Trump's victory might also present the EU with an opportunity to strengthen its leadership among other developed countries, according to Jones. "It is really on the EU and other countries to step up now," she said. This is a view echoed by German Green lawmaker Michael Bloss, a member of the European Parliament's delegation at Cop 29. "Europe needs to become the adult in the room," Bloss told Argus . The EU cannot rely on the US anymore and must become a global climate leader to ensure success at Cop 29, he said. Meanwhile, Oil Change's Rees stressed that the NCQG is a collective goal. "Other major economies must now step forward to fill the gaps, much as they would have needed to in any scenario given how the US has long refused to pay its fair share," he said. By Caroline Varin and Dafydd ab Iago Send comments and request more information at feedback@argusmedia.com Copyright © 2024. Argus Media group . All rights reserved.

Mozambique’s Maputo port halts receipt of coal cargoes

06/11/24

Mozambique’s Maputo port halts receipt of coal cargoes

London, 6 November (Argus) — Mozambique's Maputo port has stopped accepting cargoes after the main entry point for trucking South African coal to the port was temporarily shut today because of rioting in the area. Authorities issued advisories to close the Lebombo port of entry, the main trucking route that links South Africa to Maputo, after media reports surfaced of trucks being torched in Mozambique. "[Maputo Port Development Co], in co-ordination with customs and other relevant Mozambican border authorities, has taken the decision to stop reception of cargo at the Port of Maputo," the operator told customers on Wednesday. Unrest in the country began after national elections on 9 October when the ruling party declared victory with a disputed 71pc of votes and extended its 49-year rule. Opposition to the election results in Mozambique has led to country-wide protests, now escalating to violence and rioting. Mozambique Ports and Railways Authority (CFM) issued a communique on 6 November informing customers about suspension of rail operations to ensure safety of staff and operators. On Monday, truck drivers were instructed to park on the side of the road and leave their vehicles. Customs officials also did not allow truckers to leave Mozambique for South Africa with any processed goods. Sources told Argus that traders were desperately looking for truckers to move coal bound for Maputo to Richards Bay instead "to make up for lost volumes". Trucking rates in South Africa are shooting up as a result. This will "lead to consolidation at non-RBCT ports or higher sales prices", a South Africa based trader said. "[The] implied demurrage has gone up at Richards Bay's Multipurpose and Dry Bulk terminals because of port queues," he added. Maputo serves as an increasingly important export port for South African coal producers who have taken to trucking or railing coal across the border owing to the transit problems South Africa's state-owned rail operator Transnet Freight Rail is experiencing. About 2.7mn t of South African thermal coal was exported from Maputo between January to October this year, according to Kpler data. The coal export figure stood at 5.48mn t for 2023. The dry bulk terminals at Maputo are privately owned by infrastructure operator Grindrod. It has 7.5mn t of export capacity for managing coal and magnetite. By Ashima Sharma Send comments and request more information at feedback@argusmedia.com Copyright © 2024. Argus Media group . All rights reserved.

EU expected to approve climate, energy commissioners

06/11/24

EU expected to approve climate, energy commissioners

Brussels, 6 November (Argus) — Former Danish climate minister Dan Jorgensen is expected to be confirmed late this month as EU energy and housing commissioner, having received clear support after his hearing in front of EU parliament members. Similarly, centre-right political support is expected to ensure a vote for reconfirmation of Wopke Hoekstra as climate commissioner. Jorgensen has received approval from the joint hearing committee, after his hearing yesterday. During the hearing, he promised a plan for affordable energy, a roadmap to end Russian energy imports, a clean energy investment plan and an electrification action plan. He focused on cost, noting the need to work towards lower energy prices in Europe and recognised nuclear energy as "part of the solution". But Jorgensen avoided giving detail on contentious issues, adding no precise date for an end to Russian energy imports. Although he backed a 2040 renewables target, he gave no approximate percentage share, or range, for renewables in final energy consumption by that date. German member Christian Ehler said his centre-right EPP group would "in the end" support Jorgensen following "reasonable" performance. Ehler wants the future commissioner's statements on hydrogen and related delegated acts, especially on low-carbon hydrogen, to be "concretised quickly". Industry group SolarPower Europe welcomed Jorgensen's clarity around not seeking fundamental changes to electricity market rules, but their proper implementation. A power industry source, though, pointed to his "other ideas" on specifics, notably on how to increase market liquidity . Documents prepared for the 7 November hearing of current climate commissioner Wopke Hoekstra give little concrete detail on revision of the bloc's emissions trading system (ETS). Hoekstra is expected to take a similarly cautious approach as that of designated EU agriculture commissioner Christophe Hansen on ETS integration to cut agriculture's 11pc share of EU greenhouse gas (GHG) emissions. But Hoekstra is expected to be more open about using the 2026 ETS review to lower thresholds for EU ETS inclusion from 2031, including for maritime shipping, bioenergy with carbon capture and storage (Beccs) and direct air capture with carbon storage (Daccs). The European Parliament is expected to vote on the new commissioners during its 25-28 November plenary in Strasbourg. By Dafydd ab Iago Send comments and request more information at feedback@argusmedia.com Copyright © 2024. Argus Media group . All rights reserved.

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