China ETS: Emissions trading volumes, prices recover
Trading volumes in China's national emissions trading scheme (ETS) rose fivefold this week, while prices edged higher.
The total open-bid transaction volume over 13-17 September was 32,090t of CO2 equivalent (CO2e), compared with 6,312t CO2e last week. Volumes surged to 21,900t today, ahead of the mid-autumn festival that will close markets on 20-21 September.
This week's weighted-average price increased by 1pc from a week earlier to 43.99 yuan/t ($6.81/t). The closing price today was Yn43.43/t, down by 1.3pc from 10 September.
There were no bulk agreements traded for a third straight week.
Chinese authorities have been calling for improvements to the carbon pricing mechanism. China should develop rules to set emissions caps, which would create the basic foundation for an effective carbon trading market, and also include more emissions sectors and third-party participants in the ETS, the government-backed China Council for International Co-operation on Environment and Development (CCICED) said in a 10 September report.
The national ETS initially covers only thermal fuel-based power generation. Allowances have been awarded for free by the government, based on relative carbon-intensity benchmarks rather than absolute emissions, reducing incentives to trade on the ETS.
Weekly policy review
China will improve its voluntary greenhouse gas emission offset trading mechanism, while also including offset projects such as forestry carbon sinks, renewable energy and methane utilisation in the national ETS, top governing body the state council said this week. The comments were part of a guidance document on reforming the ecological protection compensation system, with the aim of increasing incentives for low-carbon projects and initiatives.
Shanghai's ecology and environment agency said this week it had begun preliminary work to include the petrochemical, chemical, steel, metal and aviation sectors in the national ETS, including emissions data reporting and accounting.
China is intensifying measures to clamp down on industrial energy consumption after some provinces missed their energy use and intensity targets in the first half of this year. The government will set total energy consumption quotas for each year and tighten approvals for new projects with high energy use and intensity, as well as ban approvals for new energy-intensive projects if a provincial government misses its energy-control target for a certain period, top economic planning agency the NDRC said.
The NDRC will also raise the frequency of energy use reviews of each province to quarterly instead of annually for the 2021-25 period.
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EU Cop 29 negotiating mandate light on finance goals
EU Cop 29 negotiating mandate light on finance goals
Brussels, 14 August (Argus) — An EU draft negotiating mandate ahead of the UN Cop 29 climate summit reiterates calls for a global approach to carbon pricing and stronger climate plans, but remains light on climate finance commitments. EU environment ministers are working on the EU's negotiating mandate for the Cop 29 climate talks in Baku in 11-22 November. Conclusions are expected to be adopted in October. The current text calls on other jurisdictions to "introduce or improve" their own carbon pricing mechanisms, including carbon markets aligned with the Paris Agreement. The EU wants "action" to scale up global carbon pricing and promote harmonisation. Negotiations on outstanding elements of Article 6 of the Paris climate agreement, which includes two market-based carbon pricing mechanisms, will continue at Cop 29. But the draft merely reconfirms the EU's commitment to existing climate finance goals, although finance is set to be the overarching theme of the Baku summit. In Baku, Cop parties will have to agree on a new climate finance goal — known as the new collective quantified goal (NCQG). This represents the next stage of the $100bn/yr of climate finance that developed countries agreed to deliver to developing countries over 2020-25. The EU's draft recalls that the bloc and its member states are the world's largest climate finance contributors, providing "at least around" a third of the world's public climate finance. The EU also notes the "overachievement", by developed countries, of the collective $100bn/yr goal for climate finance. Although developed nations surpassed the goal by $15.9bn in 2022 , it was missed in 2020 and 2021, according to the OECD. Some developing countries have called for at least $1 trillion-1.3 trillion/yr for the new goal, but developed countries have yet to come forward with an amount. Barring future input from EU finance ministers, the current draft text vaguely "invites" other countries to scale up international climate finance. The text also emphasises that public finance alone cannot deliver the levels of funding needed to transition to a climate-neutral global economy. Mobilisation of "private, philanthropic, and innovative" climate finance is essential, the text states. The draft also further urges nationally determined contributions (NDCs) — climate plans — to be aligned with the Paris agreement's 1.5°C global warming limit. The Cop 28 final text last year encouraged parties to have "ambitious, economy-wide emission reduction targets, covering all greenhouse gases, sectors and categories and aligned with limiting global warming to 1.5 °C" in their next NDCs. Countries are expected to hand in updated climate plans to the UN by February 2025. The EU reiterates the importance of transitioning away from fossil fuels, tripling renewable energy capacity, and doubling annual energy efficiency gains by 2030, also agreed at Cop 28. The draft climate conclusions further note that NDCs are "collectively" far from being on track towards limiting global warming to 1.5°C and achieving the Paris agreement's long-term goals. But the ministers' draft text makes no mention of any need to readjust the EU's targets, particularly the commitment to a 55pc reduction in greenhouse gas (GHG) emissions by 2030. The European Commission's communication earlier this year, on a 90pc net GHG emissions reduction by 2040 for the bloc, compared with 1990 levels, only "represents a basis" for discussions on an EU NDC to be submitted ahead of Cop 30. With a nod to Azerbaijan's political situation, the text adds that climate transition needs to be just and follow a "human-rights-based approach". By Dafydd ab Iago Send comments and request more information at feedback@argusmedia.com Copyright © 2024. Argus Media group . All rights reserved.
California pares LCFS goals to tougher targets: Update
California pares LCFS goals to tougher targets: Update
Updates trade discussion, adds links to other coverage. Houston, 13 August (Argus) — California will pursue transportation fuel carbon reduction targets in 2025 nearly twice as tough as originally proposed under final Low Carbon Fuel Standard (LCFS) rulemaking language released late Monday. The California Air Resources Board (CARB) will consider a one-time tightening of annual targets for gasoline and diesel by 9pc in 2025, compared with the usual 1.25pc annual reduction and a 5pc stepdown first proposed in December 2023. Staff maintained a 30pc reduction target for 2030, compared to the current 20pc target. Final rulemaking language introduced a new 20pc/yr cap on a company's credit generation from soybean- and canola-oil-based biodiesel or renewable diesel to begin in 2028. The updated rule also dropped proposals to require carbon reductions from jet fuel in addition to gasoline and diesel, a controversial proposal aligned with governor Gavin Newsom's (D) ambitions for lower-carbon air travel but which participants warned would not achieve its targets. The new proposal immediately jolted a lethargic credit market that earlier this year slumped to the lowest spot price in nearly a decade under the weight of growing credit supplies. Current quarter trade raced higher by $12.50 — 26pc — in rare after-hours activity less than two hours after CARB staff published the latest documents. Trade continued up to $65/t in the first half of Tuesday's session before retreating in later hours back below $60/t. Public comment on the proposals will continue to 27 August ahead of a planned 8 November public hearing and potential board vote. The program changes could be in place by the end of the first quarter of 2025, according to staff. LCFS programs require yearly reductions to transportation fuel carbon intensity. Higher-carbon fuels that exceed these annual limits incur deficits that suppliers must offset with credits generated from the distribution to the market of approved, lower-carbon alternatives. Surging use of renewable diesel and outsized credit generation from renewable natural gas have overwhelmed deficit generation to create a glut of credits available for future compliance. LCFS credits do not expire, and 26.1mn metric tonnes of credits — higher by 16pc than all the new deficits generated in 2023 — were available for future compliance by the end of March. Credits fell in May to trade at $40/t, the lowest level for current quarter credits since June 2015. California late last year formally proposed tougher annual targets, off-ramps for certain fuels and other changes to North America's largest and oldest LCFS program. Staff had initially targeted March to put ideas including a one-time, 5pc reduction to targets in 2025 and automatic mechanisms to match targets to credit and deficit generation before the board for formal approval, but they delayed that meeting after receiving hundreds of distinct comments on the original proposal. Staff shifted the 2025 target to at least 7pc after an April workshop discussion and another record-breaking quarter of increases in credits available for future compliance. The 9pc recommendation followed the continued growth of credit supplies in recent quarters. Previous modeling estimated that such a target could draw down the credit bank by 8.2mn t in its first year. Uncertainty over how fuel suppliers and consumers would respond to that target led staff to leave in place the proposed 30pc target by 2030. An outright cap on credits generated from soybean- or canola-oil derived biomass-based diesels augments initially proposed "guard rails" on crop-based credit generation through verification. The change would send a stronger market signal preferring waste-based feedstocks for diesel fuels that California expects to replace with zero-emission alternatives, staff said. And staff dropped a proposed obligation on jet fuel used in intrastate flights, estimated to make up 10pc of California's jet fuel consumption. Participants had warned the measure would stoke more credit purchases than renewable jet fuel buying, due to the structure of the aviation fuel market . By Elliott Blackburn Send comments and request more information at feedback@argusmedia.com Copyright © 2024. Argus Media group . All rights reserved.
Mexico June trade gap driven by falling crude exports
Mexico June trade gap driven by falling crude exports
Mexico City, 13 August (Argus) — Mexico's trade balance swung to a deficit of $1.04bn in June, impacted by reduced oil exports at lower prices and a weaker peso. The trade gap in June flipped from a $1.99bn surplus in May, acccording to statistics agency Inegi's final estimate, as exports fell at nearly twice the rate of declines in imports. Exports fell by 12pc to $48.9bn in June from the prior month, while imports declined by 7pc to $49.9bn from the prior month. The trade balance was in deficit for four of the six months in the first half of 2024. The deficit in the first half of the year was $5.5bn compared with a $6.5bn deficit a year earlier. In explaining the June deficit, Banorte cited "a slight moderation in oil prices relative to May, with the Mexican oil mix averaging $73.49/b in the month; a depreciation of the Mexican peso; and the temporary suspension of exports of some agricultural products to the US." Likewise, exports were down 5.7pc from June 2023, while imports were 3.6pc lower than a year earlier. The deficit was below Mexican bank Banorte's forecast for a $450mn surplus in June. Inegi breaks Mexico's trade data into two broad categories of "oil" and "non-oil", where the oil category includes crude, natural gas, oil derivatives and petrochemicals. Non-oil includes everything else from light vehicles and farm goods to copper and other mined minerals, Exports in the broad oil category declined by 33pc to $2.1bn in June from $3.2bn in May, with imports down by 13pc at $2.82bn in June from $3.23bn in May. Exports were down by 27pc from a year prior, with imports down by 26pc. Within this, crude exports were valued at $1.73bn in June, a sharp drop from $2.15bn in May and lower than the $2.44bn in the same month of 2023. Natural gas imports, meanwhile, were valued at $395mn in June from $316mn in May and $469mn in June 2023. Non-oil exports reached $46.8bn in June, with $15.6bn from automotive exports. This was down by 5pc and 5.2pc, respectively from May. Still, as reported last week by Mexico's auto associations , auto exports have climbed by 8.4pc in the first seven months of the year from a year earlier. By James Young Send comments and request more information at feedback@argusmedia.com Copyright © 2024. Argus Media group . All rights reserved.
California narrows LCFS goals to tougher targets
California narrows LCFS goals to tougher targets
Houston, 13 August (Argus) — California will pursue transportation fuel carbon reduction targets in 2025 nearly twice as tough as originally proposed under final Low Carbon Fuel Standard (LCFS) rulemaking language released late Monday. The California Air Resources Board (CARB) will consider a one-time tightening of annual targets for gasoline and diesel by 9pc in 2025, compared with the usual 1.25pc annual reduction and a 5pc stepdown first proposed in December 2023. Final rulemaking language introduced a new 20pc/yr cap on a company's credit generation from soybean- and canola-oil-based biodiesel or renewable diesel to begin in 2028. The updated rule also dropped proposals to require carbon reductions from jet fuel in addition to gasoline and diesel, a controversial proposal aligned with governor Gavin Newsom's (D) ambitions for lower-carbon air travel but which participants warned would not achieve its targets. The new proposal immediately jolted a lethargic credit market that earlier this year slumped to the lowest spot price in nearly a decade under the weight of growing credit supplies. Current quarter trade raced higher by $12.50 — 26pc — in rare after-hours activity less than two hours after CARB staff published the latest documents. Public comment on the proposals will continue to 27 August ahead of a planned 8 November public hearing and potential board vote. The program changes could be in place by the end of the first quarter of 2025, according to staff. LCFS programs require yearly reductions to transportation fuel carbon intensity. Higher-carbon fuels that exceed these annual limits incur deficits that suppliers must offset with credits generated from the distribution to the market of approved, lower-carbon alternatives. Surging use of renewable diesel and outsized credit generation from renewable natural gas have overwhelmed deficit generation to create a glut of credits available for future compliance. LCFS credits do not expire, and 26.1mn metric tonnes of credits — higher by 16pc than all the new deficits generated in 2023 — were available for future compliance by the end of March. Credits fell in May to trade at $40/t, the lowest level for current quarter credits since June 2015. California late last year formally proposed tougher annual targets, off-ramps for certain fuels and other changes to North America's largest and oldest LCFS program. Staff had initially targeted March to put ideas including a one-time, 5pc reduction to targets in 2025 and automatic mechanisms to match targets to credit and deficit generation before the board for formal approval, but they delayed that meeting after receiving hundreds of distinct comments on the original proposal. Staff shifted the 2025 target to at least 7pc after an April workshop discussion and another record-breaking quarter of increases in credits available for future compliance. The 9pc recommendation followed the continued growth of credit supplies in recent quarters. Previous modeling estimated that such a target could draw down the credit bank by 8.2mn t in its first year. Uncertainty over how fuel suppliers and consumers would respond to that target led staff to leave in place the proposed 30pc target by 2030. An outright cap on credits generated from soybean- or canola-oil derived biomass-based diesels replaced initially proposed lighter "guard rails" on crop-based credit generation. The change would send a stronger market signal preferring waste-based feedstocks for diesel fuels that California expects to replace with zero-emission alternatives. And staff dropped a proposed obligation on jet fuel used in intrastate flights, estimated to make up 10pc of California's jet fuel consumption. Participants had warned the measure would stoke more credit purchases than renewable jet fuel buying, due to the structure of the aviation fuel market . By Elliott Blackburn Send comments and request more information at feedback@argusmedia.com Copyright © 2024. Argus Media group . All rights reserved.
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