Brazil's Cbio prices rise as deadline nears

Spanish Market: Electricity, Emissions
28/10/24

Widespread demand for carbon credits two months ahead of the year-end deadline for meeting 2024 goals under Brazil's Renovabio national biofuel policy helped push October Cbio prices up by 17pc over two weeks to R91 ($16), the highest level since May.

Heightened demand from fuel distributors increased the volume of Cbio credits traded on the B3 Brazilian stock exchange. The sum of trades from 1-23 October totaled R742mn, second only to the R1bn reported in February — one month ahead of the 2023 goal deadline. In October 2023, the financial volume of trades was around R691mn.

The Cbio price rally lost momentum after reaching R91 on 21 October, with prices retreating recently. The short-term outlook is positive.

The approaching 31 December deadline for 2024 acquisition goals and potential stricter penalties for non-compliance are driving the increased demand.

An amendment to proposed legislation would include rural producers in Renovabio and make non-compliance with decarbonization goals a crime against the environment. The bill is being processed urgently and could be voted on soon.

"Without news, the [Cbio] market does not have the strength to move," a source from a financial institution linked to Renovabio said, skeptical of the sustainability of the recent price increase.

One issue that has intrigued buyers is the high Cbio inventories among biofuel producers. Producers are holding around 11mn credits, the most since the program started. But it is unclear whether producers are willing to sell or intend to hold the credits.

As of 23 October, the sum of Cbios in the hands of distributors plus the number of credits already retired in the current cycle was 32.3mn, 69pc of the revised 2024 target of 46.4mn credits. Cbio retirement marks the end of its market life under Renovabio. The market is monitoring the 2025 goal, proposed at 40.4mn. The Renovabio committee is reviewing public hearing comments to send to the CNPE in November. The CNPE must approve and publish the 2025 goals by 31 December.

Biofuel associations Unica and Abiogas support a 2025 goal of 42.6mn credits, but warn of a 12.5mn credit surplus by the end of 2024 if defaulting distributors do not change.

By Conrado Mazzoni and Rebecca Gompertz

Related news posts

Argus illuminates the markets by putting a lens on the areas that matter most to you. The market news and commentary we publish reveals vital insights that enable you to make stronger, well-informed decisions. Explore a selection of news stories related to this one.

30/10/24

Guatemala's power capacity tender opens tomorrow

New York, 30 October (Argus) — Guatemala will open a tender for 1.2GW of power capacity on Thursday. The power capacity tender will include supply contracts for 15 years. It will have two components, one to add capacity to existing plants and another for new technologies. It will be the first tender of this kind in eight years. The new capacity is critical as demand is expanding and Guatemala is looking at options to take advantage of opportunities for nearshoring. "This tender is very important, because demand is increasing while supply has been static," Gabriel Velasquez, director of energy planning in the energy ministry, said on the sidelines of the Latin American Energy Organization (Olade) annual meeting in Paraguay. "We want to prioritize renewables, but the technologies chosen will depend on the economic offers we receive." The ministry will also launcha tender for transmission lines in December, the first in 10 years. It will include 483km (300 miles) of 230kV, 138kV and 69kV lines. It will also include two substations. The ministry is simultaneously talking with investors and multilateral development banks to provide power to isolated communities. Velasquez said this could include microgrids and distributed generation using solar technology. Half of Guatemala's electricity currently comes from hydroelectric sources, with another 45pc coming from thermal generation and the rest from other technologies. By Lucien Chauvin Send comments and request more information at feedback@argusmedia.com Copyright © 2024. Argus Media group . All rights reserved.

LatAm-China energy ties lurk for next US leader

30/10/24

LatAm-China energy ties lurk for next US leader

Sao Paulo, 30 October (Argus) — China's growing economic reach into Latin America's energy and commodities has figured little in the latest US presidential campaign, but either Kamala Harris or Donald Trump may eventually have to face the topic. China began formally trying to increase its reach into Latin America in 2018, when it invited the region to be a "natural extension" of its Belt and Road Initiative (BRI). The effort has brought mixed results. So far, 22 countries in Latin America and the Caribbean have joined the massive Chinese infrastructure initiative, but hydrocarbons producers such as Colombia and regional powerhouse Brazil have not. The latter wants to "take the relationship with China to a new level without having to sign an accession contract," the Brazilian special presidential adviser for international affairs Celso Amorim said on 28 October. This came after agriculture minister Carlos Favaro said earlier that joining the BIR would be "positive" for the country. "There are projects that Brazil has defined as a priority and that may or may not be accepted [by Beijing]," Amorim said. Still, China has found other ways of increasing its grasp in Brazil, such as increasing exports of electric vehicles — with automaker BYD setting a R5.5bn ($1.1bn) investment plan in the country — and crude . But China is a major trade partner for all of Latin America. Exports of all goods from Latin America and the Caribbean to China reached a record $208bn in 2023, with Chinese imports into those regions hitting $242bn, according to Boston University Global Development Policy Center. Around 70pc of those exports are of copper, soybeans and crude — the two latter mainly coming from Brazil — while another 20pc comprise of beef and livestock. With or without the BRI, China's larger grasp in Latin America is seen as problematic in the US by both sides of the political spectrum. "The discourse of competition between the US and China has crossed party lines," according to Conrado Baggio, an international relations professor in Cruzeiro do Sul University. "Any candidate for president needs to present a firm and combative rhetoric towards Beijing." Chinese efforts de-dollarize the world economy also concern Washington, but mildly. China along with the other Brics countries — Brazil, Russia, India and South Africa — have led efforts to reduce the world's economy dependence on the US dollar and are working on an independent crossborder payment settlement platform to "minimize trade barriers." But results have been mixed as well. For instance, the Chinese yuan surpassed the dollar as the main currency in bilateral trades between Brazil and China in April-June 2023. But the American currency is still the main coin on over 80pc of Brazilian trade with other countries. "De-dollarization initiatives have hardly gone beyond rhetoric," Baggio said. Harris and Trump have opposing views on many topics and their approach to China is no different. Trump is likely to take a more confrontational stance on China, including higher tariffs and sanctions. That could naturally increase trade between Latin America and China, according to Fernando Galvao, a Brazilian economic analyst. On the other side of the aisle, Harris might choose a more diplomatic strategy. "Harris may prioritize rebuilding international alliances and strengthening multilateral institutions," Galvao added. Still, a Harris administration is more likely to emphasize environmental and human rights issues, which could pressure Latin America to adopt more sustainable policies. Failure to do so could lead to more trade with China, he added. But although the US will certainly keep an eye on China's relationship with Latin America, that is hardly the main concern within the US' foreign relations scope. "Given Washington's increasing involvement in Europe, with Russia and Ukraine, and in the Middle East, with Iran and Israel, Latin America may occupy a secondary position within the US' concerns," according to Baggio. By Lucas Parolin Send comments and request more information at feedback@argusmedia.com Copyright © 2024. Argus Media group . All rights reserved.

UK government consults on oil and gas scope 3 emissions

30/10/24

UK government consults on oil and gas scope 3 emissions

London, 30 October (Argus) — The UK government has opened a consultation seeking views on assessing the effects of scope 3 — or end-use — emissions from proposed offshore oil and gas projects. "Scope 3 emissions from downstream activities need to be assessed… in relation to offshore oil and gas production activities", the government said today. It proposed that a baseline scenario is defined for assessing scope 3 emissions, to set out how the environment "is likely to evolve without the development of a proposed project". The government also proposed that information on "relevant scope 3 categories" is included when a developers applies for a permit. This would include the effects of emissions from the combustion of oil or gas, as well as "other downstream activities", such as refining or transport of fuels. The UK's current process means that developers applying for consent must provide information on scope 1 and 2 — operational — emissions in an environmental statement. But scope 3 emissions are not included, despite making up around 80-95pc of emissions for a typical oil and gas company. The consultation was spurred by a ruling made in June by the UK's Supreme Court. The judgment ruled that consent for an oil development in southern England was unlawful, as the scope 3 emissions were not considered. The government — which was elected in early July, shortly after the ruling — has halted the assessment of any environmental statements related to oil and gas extraction and storage activities, including any that were already being assessed. These would be deferred until the new environmental guidance was in place, expected in spring 2025. The consultation will close on 8 January 2025. Separately, the government will consult by the end of this year on the implementation of its commitment to issue no new oil and gas licences to explore new fields, it said today. The UK has a legally-binding target of net zero emissions by 2050. By Georgia Gratton Send comments and request more information at feedback@argusmedia.com Copyright © 2024. Argus Media group . All rights reserved.

Australia to support four new carbon credit methods

30/10/24

Australia to support four new carbon credit methods

Sydney, 30 October (Argus) — The Australian federal government will support the development of four new carbon crediting project methodologies proposed outside of government, federal energy minister Chris Bowen announced today. A total of 39 expressions of interest under the proponent-led model launched earlier this year were submitted to the Emission Reduction Assurance Committee (Erac), the statutory body responsible for ensuring the integrity of Australia's carbon crediting framework. The four selected proposals will now move on to the development phase. "Capturing opportunities across Australia remains a key priority for the government, and we've been working to deliver on the Chubb Review recommendation to bring forward more innovative ways to reduce emissions," Bowen told delegates at the Carbon Market Institute (CMI)'s Australasian Emissions Reduction Summit in Melbourne on 30 October. Two of the selected methods were proposed by state governments — the "improved native forest management in multiple-use public native forests (INFM)" method, put forward by the New South Wales (NSW) department of climate change, environment, energy and environment, and the "improved avoided clearing of native regrowth (IACNR)" proposed by the Queensland department of environment, science and innovation. The two others came from indigenous groups — the "extending savanna fire management to the northern arid zone" proposed by the Indigenous Desert Alliance, and the "reducing disturbance of coastal and floodplain wetlands by managing hooved animals" proposed by Northern Australian Indigenous Land and Sea Management Alliance. The successful proponents will now lead work on the drafting of the methods, with the Erac to publish the draft methods for public consultation before recommending them to the minister. A representative from the Department of Climate Change, Energy, the Environment and Water (DCCEEW) previously said that developing a new method under the proponent-led model could take 1-2 years. Delays with new methods The development of new Australian Carbon Credit Unit (ACCU) framework methods had been until now led by the federal government, but this has proved "too slow," CMI's chief executive John Connor previously said. Work on a remake of the Environmental Plantings (EP) method, which will make it easier for landholders to undertake projects, is expected to be finalised by the end of the year, Bowen said on 30 October. The method already expired on 30 September this year. And exposure drafts for three other priority methods will only be delivered in the first half of next year, Bowen noted, including the long-awaited government-led Integrated Farm and Land Management (IFLM) method that will combine activities of several existing soil and vegetation sequestration methods into a single method. This includes the key human-induced regeneration (HIR) ACCU method, which expired on 30 September 2023. The DCCEEW had previously indicated the IFLM exposure draft would be sent to Erac by the end of this year, which would then be followed by public consultation. The other exposure drafts are for new savanna fire management methods and for a reformed landfill gas method which could potentially lead to tighter supplies in the future . By Juan Weik Send comments and request more information at feedback@argusmedia.com Copyright © 2024. Argus Media group . All rights reserved.

Central America, Caribbean lag behind renewable targets

29/10/24

Central America, Caribbean lag behind renewable targets

New York, 29 October (Argus) — Central America and the Caribbean are falling behind global renewable goals for 2030, international renewable energy agency Irena said. The next five years "will be crucial for making the necessary investments and implementing concrete political measures," the agency said in a report ahead of the UN's Cop 29 climate conference in Baku, Azerbaijan, next month. Renewable sources accounted for 38.7pc of Central America and the Caribbean's power capacity in 2023, lifted by a year on year installed capacity growth of 5.2pc, or 900MW of new renewable projects. But to achieve the global goal of tripling renewable energy capacity by 2030, the region needs an average annual growth rate of renewables of 16.4pc, Irena said. Some countries have been doing better than others at installing renewable capacity, the report said. Costa Rica, Guatemala and Panama have been expanding renewable capacity, while Trinidad, Dominican Republic and Jamaica are seeking investments. But cost is a problem for small countries attempting to transition from their high dependence on fossil fuels. Some hurdles for small countries can be overcome by tax credits, levies and duty exemptions on key materials and components, Irena suggested. Revenues from fossil fuel taxes could also be used, it said. By Canute James Send comments and request more information at feedback@argusmedia.com Copyright © 2024. Argus Media group . All rights reserved.

Business intelligence reports

Get concise, trustworthy and unbiased analysis of the latest trends and developments in oil and energy markets. These reports are specially created for decision makers who don’t have time to track markets day-by-day, minute-by-minute.

Learn more