California governor eyes carbon market extension

Spanish Market: Biofuels, Electricity, Emissions
10/01/25

California governor Gavin Newsom (D) is planning to start discussions with lawmakers to enact a formal extension of the state's cap-and-trade program.

Newsom included the idea in the 2025-26 budget proposal he released on Friday.

"The administration, in partnership with the legislature, will need to consider extending the cap-and-trade program beyond 2030 to achieve carbon neutrality," the governor's budget overview says.

The California Air Resources Board (CARB) believes it has the authority to operate the program beyond 2030, but a legislative extension would put it on much firmer footing.

The cap-and-trade program, which covers major sources of the state's greenhouse gas (GHG) emissions, including power plants and transportation fuels, requires a 40pc cut from 1990 levels by 2030. CARB is eyeing tightening that target to 48pc as part of a rulemaking that could take effect next year to help keep the state on a path to carbon neutrality by 2045.

Newsom's budget proposal highlighted the need to weigh the revenue received from the program carbon allowance auctions. That money goes to the Greenhouse Gas Reduction Fund (GGRF), which supports the state's clean economy transition through programs targeting GHG emissions reductions, such as subsidizing purchases for zero-emission vehicles (ZEVs).

The budget plan added few new climate commitments, instead prioritizing funding agreed to last year.

The governor's $322.3bn 2025-26 budget proposal would continue cost-saving measures the state enacted in its 2024-25 budget to deal with a multi-billion-dollar deficit. These included shifting portions of expenditures from the state general fund to the GGRF over multiple budget years, such as $900mn for the state's Clean Energy Reliability Investment Plan.

The state's $10bn Climate Bond, passed by voters in November 2024, would cover the majority of new climate-related spending, including taking on $32mn of the reliability plan spending. The change in funding source would allow the state Department of Motor Vehicles to utilize $81mn in GGRF funds to cover expenditures from CARB's Mobile Source Emissions Research Program.

The governor's budget would also advance his proposal from October for CARB to evaluate allowing fuel blends with 15pc ethanol (E15) in the state, as a measure to lower gas prices. CARB would receive $2.3mn from Newsom's proposal to finish the multi-tier study it began in 2018 and implement the necessary regulatory changes to allow E15 at the pump.

Currently, California allows only fuel blends with up to E10 because of environmental concerns, such as the potential for increased emissions of NOx, which contributes to smog, by allowing more ethanol.

With the administration predicting a modest surplus of $363mn from higher state revenues, it is unlikely that California will return to the belt tightening of the past two state budgets. But the state cautions that tension with the incoming president-elect Donald Trump, potential import tariffs and ongoing state revenue volatility should leave California on guard for any potential future fiscal pitfalls.

The state's legislature's non-partisan adviser cautioned in November that government spending continues to outpace revenues, with future deficits likely.

The administration is keeping an eye on the issue, which could result in changes through the governor's May budget revision, state director of finance Joe Stephenshaw said.

By Denise Cathey

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06/03/25

UK T-1 capacity market auction clears at five-year low

London, 6 March (Argus) — The UK T-1 capacity market auction for the 2025-26 delivery year procured 7.94GW of derated capacity at a clearing price of £20/kW, the lowest since the 2020-21 delivery year. The secured capacity was above the central target of 7.5GW. A total of 9.12GW of derated capacity entered the auction, meaning almost 87pc was awarded capacity market agreements. Liquidity has risen in T-1 auctions in recent years as most nuclear units have moved from T-4 to T-1 as they are coming to the end of their operational lives, pushing down clearing prices. Almost 6.3GW of derated capacity — or 79pc of awarded capacity — went to existing generating units. The majority of this, about 3.64GW, was nuclear capacity, followed by about 1.9GW of derated combined-cycle gas turbine (CCGT) capacity and 150MW of open-cycle gas turbines. The 850MW Sutton Bridge CCGT was successful for all of its 773MW derated capacity, which it entered as one unit, while the 850MW Severn plant only saw one unit — with a derated capacity of 387MW — win an agreement, while the other unit failed to secure one. Both units had failed to secure agreements in the previous T-1 auction for the 2024-25 delivery year and had been mothballed until recently. Storage dominates new-build capacity A total of 727.1MW of derated new-build generating capacity was awarded agreements, of which the majority — 560MW — came from new-build storage. A further 160MW of existing storage capacity was awarded agreements. Some of the new-build storage capacity might be batteries seeking "top-up" T-1 agreements before their T-4 agreements begin, as batteries have a shorter build-out time than four years, with the scheme originally designed around the length of time to build a gas-fired plant. Of the new-build storage awarded agreements, the majority — 375MW — went to two-hour duration storage units, reflecting the movement of batteries from over-saturated ancillary market services towards more arbitrage trading in wholesale markets. More than 100MW of derated four-hour duration batteries were also successful, which might reflect the abilities of batteries to "self-nominate" their connection capacity and duration in the capacity market. Many battery providers tend to nominate lower connection capacities and input longer durations to capture higher derating factors and make passing tests easier, although the latter point is a bigger issue for batteries that secure 15-year T-4 agreements, as their units degrade over time. And a total of 188.4MW of derated solar and onshore and offshore wind capacity was awarded agreements, including 55MW from the Moray West offshore wind farm, which has a capacity of 573MW eligible for the capacity market. This is up from 118MW in the previous T-1 auction for the 2024-25 delivery year. Renewable units generally favour contracts for difference (CfDs) over capacity market agreements as they are heavily derated in capacity market auctions. But upcoming auctions could see higher levels of renewable engagement as older units begin to see renewable obligation scheme payments end and newer units start to enter the market on a merchant basis without CfD subsidies. And a total of 247MW of derated capacity of the 500MW Greenlink interconnector with Ireland — which began commercial operations in late January — was awarded an agreement, as well as 185MW of derated proven and almost 500MW of unproven demand-side response (DSR). Most capacity which exited the auction was DSR, and 54.3MW of derated capacity of the 200MW Blackhillock battery energy storage system — which was commissioned earlier this week — also failed to secure an agreement. A total of 42.36GW was secured in the T-4 auction for 2025-26 delivery, bringing the total for the delivery year to more than 50GW. The T-4 auction for 2028-29 delivery will take place on 11 March. The auction is seeking 43.7GW, with almost 44.7GW of derated capacity having confirmed entry. By Helen Senior Derated capacity secured by technology MW Technology Secured capacity Nuclear 3,636.1 Gas 2,374.7 DSR 622.7 Battery storage 725.8 Onshore wind 46.1 Offshore wind 116.2 Waste 76.1 Solar 26.1 Interconnector 247.0 — NESO Send comments and request more information at feedback@argusmedia.com Copyright © 2025. Argus Media group . All rights reserved.

Ireland risks €8bn-26bn costs for missed climate goals

06/03/25

Ireland risks €8bn-26bn costs for missed climate goals

London, 6 March (Argus) — Ireland could be subject to fines of €7.5bn-26.4bn ($8.1bn-28.6bn) if it fails to implement climate measures to meet its 2030 targets under EU regulations, a joint report by the country's Fiscal Advisory Council and Climate Change Advisory Council found. Missing Ireland's commitments could lead to costs of €5.4bn-16.2bn under the EU's effort sharing regulation (ESR), €1.6bn-5.8bn under the land use, land use change and forestry (LULUCF) regulation, and €0.5bn-4.4bn under the renewable energy directive (RED), the report found. Fully implementing the government's climate action plan by 2030 could reduce these costs, but they would still stand at €3.4bn-11.9bn, the report said — €2.7bn-7.6bn under the ESR, €0.5bn-1.7bn under the LULUCF regulation, and €0.2bn-2.6bn under RED. Ireland is on track to exceed its targeted 2030 emissions levels in the sectors covered by the ESR — domestic transport, buildings, small industry, waste and agriculture — by 57pc with existing measures, or by 28pc if additional planned measures are implemented, the report said. Ireland has the fifth-largest gap towards its ESR targets of any EU member state after Germany, France, Italy and Romania, according to the report. Overstepping the target would require Ireland to purchase emissions allowances from member states that have gone beyond their mandated cuts. The report projects the country's emissions under the LULUCF regulation to stand at more than double the targeted level in 2030 based on existing measures, or 7pc above with additional measures. And its renewable energy share under RED is expected to be 12 percentage points below mandated levels with existing measures, or marginally below without. Investing less than half of the maximum potential cost of non-compliance with the regulations in emissions-saving measures could lead to significant progress towards meeting the targets, the report found. Some €4bn could reduce the cost of 700,000 new electric vehicles — representing a third of households — to €15,000 per car and increase charging infrastructure, €7bn could upgrade the country's energy grid, and €1bn could support land improvements such as forestry and peatland restoration. "By not taking actions like these, Ireland faces a colossal missed opportunity to both reduce emissions in line with its commitments and deliver significant improvements in Irish society," the report said. By Victoria Hatherick Send comments and request more information at feedback@argusmedia.com Copyright © 2025. Argus Media group . All rights reserved.

Iraq eyes gasoil imports to alleviate power shortage

06/03/25

Iraq eyes gasoil imports to alleviate power shortage

Dubai, 6 March (Argus) — Iraq's electricity ministry has asked the government to raise gasoil imports as a precautionary measure to ensure the country has enough fuel for power generation head of the peak demand summer months. The request is pending the oil ministry's approval. If authorised, Iraq's gasoil imports could shortly ramp up to 100,000 b/d, almost three times the 35,000 b/d that was imported last month, the oil ministry told Argus . Iraq typically relies on imported natural gas from Iran to generate electricity for its national grid. But Tehran cut gas supplies to its western neighbour in the last quarter of 2024 because of its own power shortages. Insufficient gas from Iran forced Iraqi power plants to switch to burning gasoil, while private consumers generated power from diesel-run units, further exacerbating fuel shortages. Iraq's power generation shortage could soon become more acute as gas imports from Iran are at risk of stopping completely. The waivers that allow Iraq to import Iranian electricity and gas without falling foul of US sanctions are unlikely to be renewed given President Donald Trump's "maximum pressure" policy against Tehran. The latest 120-day waiver is due to expire on 7 March. Meanwhile, Iraq's domestic gasoil production is being curtailed by constraints on crude supply to refineries. Baghdad's commitment to rein in crude production to compensate for past breaches of its Opec+ target has cut available supply for domestic refineries, lowering oil product output, the oil ministry said. Iraq is seeking to address its electricity issues by looking for investment for new power generation infrastructure. The country plans to build new steam and gas plants that could produce up to 35,000MW of electricity, which would bridge the gap between current electricity supply and demand. Baghdad has approached international engineering companies including GE and Siemens to partner in these projects, according to electricity minister Ahmed Moussa, but the government has not disclosed a clear timeline for implementation. By Ieva Paldaviciute and Bachar Halabi Send comments and request more information at feedback@argusmedia.com Copyright © 2025. Argus Media group . All rights reserved.

US clean energy growth hits new high in 2024: Report

05/03/25

US clean energy growth hits new high in 2024: Report

Houston, 5 March (Argus) — The US added a record amount of clean energy capacity last year, driven by gains in utility-scale solar and energy storage, according to an industry report. Developers added about 48,700MW of zero-emissions generation to the US grid last year, an increase of 33pc from the previous record additions set in 2023, according to a quarterly report from the American Clean Power Association (ACP), a trade group. Clean energy — which, for ACP's purposes, includes utility-scale solar, wind and energy storage — accounted for 93pc of all new capacity in the US during 2024, surpassing the 75pc average over the previous five years. A record amount of new utility-scale solar, 33,000MW, fueled the 2024 growth. Energy storage grew by nearly 11,300MW, also a record. At the same time, onshore wind grew by just over 3,900MW, the lowest total since 2013. While the industry expected slower growth last year as a consequence of lengthy interconnection queues and delayed guidance on federal tax credits , the final tally was even lower than anticipated after multiple projects delayed commissioning until 2025, ACP said. The total US clean energy fleet now sits at almost 313,400MW. While onshore wind remains the largest source of zero-emissions generation at about 154,600MW, solar is closing the gap with almost 129,700MW. Energy storage and offshore wind trail at 28,900MW and 174MW, respectively. The US added about 18,900MW of clean energy capacity during the fourth quarter, the second highest increase for any three-month period behind only October-December 2023. About 14,000MW came from photovoltaic projects, the most ever for a three-month period. Texas' clean energy fleet remained the largest in the US at almost 79,300MW, followed by California at about 41,300MW. Iowa, Oklahoma and Florida rounded out the top five, with roughly 13,900MW, 12,900MW and 11,500MW, respectively. By Patrick Zemanek Send comments and request more information at feedback@argusmedia.com Copyright © 2025. Argus Media group . All rights reserved.

UK govt consults on ‘clean energy future’ for North Sea

05/03/25

UK govt consults on ‘clean energy future’ for North Sea

London, 5 March (Argus) — The UK government has launched a consultation on the North Sea's "clean energy future", seeking to balance "continued demand for oil and gas" with the natural decline of the North Sea basin, the country's energy security and climate science. The government has proposed an end to new onshore oil and gas licences in England — as onshore licensing is a devolved matter — and once again confirmed its manifesto pledge for no new oil or gas licences for North Sea exploration. It also confirmed a previous commitment to end the so-called windfall tax on oil and gas producers in 2030. Further oil and gas licences "would not meaningfully increase UK production levels, nor would they change the UK's status as a net importer of oil and gas", the government said. It flagged the North Sea basin's maturity, which means that an absence of new licences makes only "a marginal overall difference to future North Sea production". The "vast majority of future production is expected to come from producing fields or fields already being developed on existing licences", the government said. It noted that while offshore licensing rounds have resulted in up to 100 permits each time, under 10pc of recently issued licences "have progressed to active production". But its halt on new exploration licences would not preclude any licence extensions being granted, the government said. It aims to provide "certainty to industry about the lifespan of oil and gas projects by committing to maintain existing fields for their lifetime". The decision does not affect the issuing of new gas or carbon storage licences, it added. Focus on 1.5°C The consultation also doubles down on the government's previous commitments to "clean power" by 2030 — which would entail a small role for gas-fired power generation, of under 5pc — and its determination to be a leader in climate action. "The science is clear that the world needs to take urgent action and that current plans for global production of oil and gas are not compatible with limiting global warming to 1.5°C," the government said. The Paris climate agreement seeks to limit global warming to "well below" 2°C above pre-industrial levels and preferably to 1.5°C. The government has requested views on its plans to ensure a "prosperous and sustainable transition for oil and gas" and to make the UK a "clean energy superpower", focused on technologies such as offshore wind, hydrogen and carbon capture, use and storage (CCUS). This will boost the UK's economy and energy security, the government said. "Clean energy" is key for energy security, as a reliance on fossil fuels leaves the UK at "the mercy of global energy markets", it added. "CCUS will be a critical component of the UK's energy transition," the government said. It also noted the geological advantage the UK holds for CO2 storage. There is "significant potential for CO2 import", likely from Europe, it said. The government has also sought extensive feedback on the transition for the country's oil and gas workforce. An "offshore renewables workforce" could stand at between 70,000 and 138,000 in 2030, it said, while oil and gas jobs are set to decrease, alongside the North Sea's fossil fuel production. Today's consultation will close on 30 April. And the government will publish its final guidance on an updated environmental framework for oil and gas "in good time", it said. By Georgia Gratton Send comments and request more information at feedback@argusmedia.com Copyright © 2025. Argus Media group . All rights reserved.

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