Keppel, ADB to explore Asia-Pacific energy transition
Singapore conglomerate Keppel has signed an agreement with the Asian Development Bank (ADB) and Enterprise Singapore (EnterpriseSG) to explore $800mn worth of decarbonisation projects and blended finance opportunities in Asia-Pacific.
Keppel, ADB, and EnterpriseSG will focus on energy transition and environmental sustainability projects,said Keppel on 20 August, and the firms are targeting a total project value in excess of $800mn over 2025-30. The projects will collectively be able to abate at least 1mn t/yr of CO2 equivalent, once they are completed.
Keppel will develop and operate these projects, which include the decarbonisation of power generation, renewable energy, electric mobility and green buildings, as well as water treatment, and resource recovery from waste including bio-energy and waste-to-energy in Asia-Pacific.
The firms will also collaborate on blended finance and explore the potential use of concessionary financing, which "will further improve bankability, support development outcomes, and help mobilise private investment for the projects," said Keppel. The collaboration will begin with opportunities in southeast Asia, although more details were not provided.
Carbon credits to accelerate coal-fired phaseout
Keppel last week also signed an agreement with Philippine energy firm Acen and Temasek subsidiary and investment platform GenZero to accelerate the retirement of the 246MW South Luzon coal-fired power plant in Batangas, the Philippines, through the use of carbon credits, and replace it with a clean energy despatch facility.
The firms will jointly explore the origination and utilisation of Transition Credits (TCs), which are high-integrity carbon credits generated from the emissions reduced through retiring a coal-fired power plant early and replacing this with clean energy sources. They serve as a complementary financing instrument to reduce the economic gap for the early retirement of these plants.
The project is expected to be one of the first converted coal-fired plants in the world to generate TCs, said the firms. The origination and sale of the TCs will help to finance and expedite the retirement of the 246MW South Luzon power plant by 10 years to 2030, as well as support just transition initiatives.
The firms will collaborate with the Rockefeller Foundation's coal to clean credit initiative (CCCI) and the Monetary Authority of Singapore's (MAS) Transition Credits Coalition (Traction).
The project will "explore the development of end-to-end technological solutions and economic model of the coal-to-clean transition," said Keppel, and will focus on the replacement of the South Luzon plant with a mid-merit integrated renewables and energy storage system consisting of solar plant and battery storage.
The project "could also come under Article 6 of the Paris Agreement collaboration between the Philippines and Singapore," said the firms. Singapore and the Philippines last week signed an agreement to collaborate on cross-border trade of carbon credits, whereby the countries will work towards a legally binding implementation agreement on carbon credits, to develop high-integrity carbon markets.
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Borealis, Infinium in CO2-based polymer deal
Borealis, Infinium in CO2-based polymer deal
London, 20 August (Argus) — Austrian petrochemical company Borealis will manufacture polyolefins at its site in Porvoo, Finland using CO2-based "e-naphtha" produced by US by e-fuels firm Infinium. Under the agreement, Infinium will ship "commercial" volumes of e-naphtha to Porvoo from its facility in Corpus Christi, Texas. The first shipment departed the US in May. The e-naphtha is a "sustainable drop-in alternative" to fossil-based naphtha, the firms said. It will be processed in the same way to create polyolefins. E-naphtha can be produced from CO2 from biogenic sources or from carbon capture at industrial facilities such as oil refineries. The e-naphtha feedstock will be tracked through the polymer production process under an ISCC+ certificate, which Infinium's Corpus Christi facility has received. "Atmospheric carbon is a strategic element of the Borealis Circular Cascade approach to foster the transition toward greater circularity in plastics and carbon," said Borealis' vice-president of circular economy solutions Mirjam Mayer. "It allows us to serve the needs of our customers while reducing their carbon footprints." By Will Collins Send comments and request more information at feedback@argusmedia.com Copyright © 2024. Argus Media group . All rights reserved.
ASX rules out listing stratified ACCU futures
ASX rules out listing stratified ACCU futures
Sydney, 20 August (Argus) — The Australian Securities Exchange (ASX) is not considering listing method-specific Australian carbon credit futures contracts as it aims to focus on generic products, ASX's head of commodities, Daniel Sinclair said. The exchange on 29 July launched annual environmental futures contracts for physically-deliverable Australian Carbon Credit Units (ACCUs), New Zealand emissions units (NZUs), and Australian large-scale renewable generation certificates (LGCs), aiming to provide a transparent and efficient marketplace for environmental commodities. So far, ACCUs have been the only contracts that traded, with just 16 lots changing hands over the first three weeks of trading for a combined 16,000 units. Each futures contract comprises 1,000 ACCUs, or the equivalent of 1,000 t of carbon dioxide (CO2) avoided or reduced by carbon projects approved by the Clean Energy Regulator (CER). Australia has witnessed a growing secondary market for ACCUs in recent years, as the country has tightened the safeguard mechanism of the compliance market. More than 100 companies have been actively trading ACCUs, according to the CER. Sinclair described the bilateral and over-the-counter (OTC) market as "very robust" at the Carbon Market Institute (CMI)'s Singapore Carbon Market and Investor Forum on 16 August. But while liquidity in the secondary spot market is currently split among three main products — generic, generic without the avoid deforestation method (labelled "no AD"), and human-induced regeneration (HIR) ACCUs — the ASX plans to maintain its focus on generic products only. "What we've seen in many commodity markets around the world is this need to centralise liquidity around the derivative, and then the differentials — whether it's co-benefits, method, premium or discounts — are expressed as a basis or a differential to the underlying future," Sinclair said in a panel discussion. "If we tried to do an HIR future, AD future or [Environmental Plantings] EP future on its own, the market would not work; it would fail as liquidity would be bifurcated." The so-called generic ACCUs include different carbon credit methods, with most volumes coming under the avoided deforestation and landfill gas methods . The emergence of the "no AD" label in spot trading was a result of the revocation of the avoided deforestation method for new projects in early 2023 due to integrity issues, with existing projects still allowed to receive credits for the remaining of their crediting period. HIR ACCUs have become a popular option for buyers looking to step away from generic products, though premiums for that method tightened significantly early this year following negative academic and press coverage around certain types of HIR projects. Generic ACCUs have traded between A$34.25-34.50 in August, mostly at tight discounts of A$0.15-0.30 to no AD and A$0.25-0.50 to HIR ACCUs. The HIR premium was around A$3 late last year. Compliance buying Sinclair explained that a key difficulty in introducing the new ACCU futures was their need to align with compliance market requirements. "One of our challenges in launching the new ACCU futures was ensuring they support the compliance market," Sinclair said. "These products need to be deliverable — they need to be able to deliver into the registry and usable for offsetting surrender obligations." Buyers of generic ACCUs in the secondary market typically only know what methods their supply is coming from upon delivery, when units are transferred between accounts at the CER's Australian National Registry of Emissions Units (ANREU) registry. New products have been introduced in the market to manage risk, including swaps through which buyers and sellers can change volumes — swapping for instance generic and HIR units. Each of the ASX's carbon futures contracts is listed on an annual basis out to five years with delivery months varying according to compliance surrender deadlines for each scheme in Australia and New Zealand. The final trading day for the 2025 ACCU contract is 4 March 2025, nearly four weeks before the CER's surrender deadline of 31 March 2025 for companies under the safeguard mechanism. Participants with open positions at the time of the contract expiry will be required to transfer or receive ACCUs via the ANREU registry within three business days following the final trading day. Most of the futures buyers opting for physical delivery are expected to be safeguard facilities, and there is consensus in the market that most of these entities would choose least cost carbon abatement — that is, generic ACCUs. But as all safeguard facilities will need to start disclosing the methods of their surrendered credits , some of them may want to avoid methods like avoided deforestation, participants told Argus on the sidelines of the event. This could support the continuity of the "no AD" premium over generic products, however small the spread has been. "I think there will be different views in the room about whether avoided deforestation should be delivered into a futures market, but the way we view it is the futures give you the capacity to hedge risk and should align with the CER surrender requirements," Sinclair said. By Juan Weik Send comments and request more information at feedback@argusmedia.com Copyright © 2024. Argus Media group . All rights reserved.
Azerbaijan needs to pull its weight at Cop 29
Azerbaijan needs to pull its weight at Cop 29
London, 19 August (Argus) — Oil and gas producer Azerbaijan, which heads the Cop 29 UN talks, is expected to step up its climate ambitions and lead by example to help craft a critical finance deal. But it lacks the international profile of Cop 28 and Cop 30 hosts, the UAE and Brazil, respectively, its counterparts in the so-called troika. Azerbaijan has committed to reducing its net greenhouse gas emissions by 35pc against 1990 levels by 2030, and by 40pc by 2050. As in most post-Soviet states, emissions plummeted after independence in 1991, before rebounding with rising oil and gas output. In 2016, emissions stood at 54mn t of CO2 equivalent (CO2e), down from 79mn t CO2e in 1990 — so only modest reductions are necessary to reach Azerbaijan's mid-term target of 51.4mn t/yr. A commitment to absolute reductions places Azerbaijan in a minority among Cop parties. Only 37pc of the latest nationally determined contributions (NDCs) — or climate plans — make this pledge, the UN climate body UNFCCC said last year. And 46pc promise reductions compared with ‘business-as-usual' scenarios, which allow for increases in absolute emissions. Azerbaijan committed to having renewables accounting for 30pc of power capacity by 2030, up from about 15-17pc in the past decade. The ambition is laudable, but installing a relatively small amount — 1.5GW — of intermittent renewable capacity is unlikely to move the needle much on Azeri power-sector emissions. Cop parties last year pledged to triple global renewable capacity to 11TW by 2030. And the sector makes up only a small part of total Azeri emissions. As a troika member, Azerbaijan is expected to lead by example by setting more ambitious goals in its next NDC — due in 2025 — after Cop 28 called for a transition away from fossil fuels. The largest source of emissions is oil and gas production, which accounts for 90pc of the country's exports and a third of its GDP, according to the World Bank, which lists Azerbaijan among the countries that have most to lose from the effects of the transition. Leading from behind Some low-hanging fruit will allow Azerbaijan to reduce emissions in the sector for little cost. The country signed up to the Global Methane Pledge this year, committing to cut emissions by 30pc by 2030. These emissions have risen by 11pc since Azerbaijan last reported them in 2018, according to NGO Global Witness. Azerbaijan's role as an increasingly important gas supplier to the EU could constitute a strategic asset, allowing it to assert its weight at the talks, after the presidency fell into its lap last year when Russia vetoed other choices. It sent 12bn m³ of gas to the EU last year and a similar amount to Turkey and Georgia. Azeri president Ilham Aliyev has consistently highlighted the country's ambition to increase exports to the EU to 20bn m³ by 2027, while extolling the parallel pursuit of a "green agenda" . But while Europe's need for gas is more acute since the near-halt to Russian supplies in 2022, the easing of the energy crisis means that the continent is no longer quite so desperate to court alternative suppliers. Otherwise, Azerbaijan would appear to have few of the advantages possessed by other members of the troika, or holders of previous important Cops. It lacks the demographic heft and strong south-south diplomatic ties of Brazil, the wealth and regional influence of the UAE, and the institutional prestige and deep integration in regional blocs of France or the UK. Agreeing on a new finance goal for developing countries is key at this Cop. And Azerbaijan will need to put aside its regional and global disputes to push through solid commitments from donor countries if the talks are to be considered a success. By Rhys Talbot Azerbaijan's gross GHG emissions by sector, 2016 Send comments and request more information at feedback@argusmedia.com Copyright © 2024. Argus Media group . All rights reserved.
White House confidence grows in climate law
White House confidence grows in climate law
Washington, 19 August (Argus) — US president Joe Biden's administration is feeling increasingly assured that climate-related tax credits in the Inflation Reduction Act (IRA) will be safe from repeal, as hundreds of projects funded through the law take root in areas represented by Republican officials. The law — two years old last week — created an estimated $663bn of tax credits through to 2033 that are available for wind and solar projects, biofuel producers, electric vehicle (EV) manufacturers, clean hydrogen production and other energy projects. White House officials say tax credits created by the law are giving companies the certainty to invest in clean energy and zero-emission vehicle projects, prompting an estimated $282bn in investment that is creating jobs in Republican-led districts. "No Republicans voted for the IRA, but they know their constituents are receiving the benefits," Biden's climate adviser, John Podesta, says. The majority-Republican US House of Representatives last year voted 217-215 to pass a bill that would repeal nearly all the law's clean energy tax credits. But 18 House Republicans said last week that they now believe a full repeal would be a "worst-case scenario" that would waste billions of dollars and undercut projects in their districts. Non-profit organisation Climate Power estimates that nearly 60pc of the energy jobs created since the law passed are in Republican-led districts, which tend to be in rural areas that are well suited to manufacturing or utility-scale energy projects. Republican presidential nominee Donald Trump — now losing ground in polls to the Democratic nominee, vice-president Kamala Harris — says he aims to claw back any unspent funds for climate spending. If Trump wins, repealing the IRA's tax credits could help offset the costs of extending $4 trillion in tax cuts set to expire in 2025. But while Trump regularly attacks federal support for EVs, he has moderated his criticism after picking up an endorsement from leading EV manufacturer Tesla's chief executive, Elon Musk. "I'm for electric cars, I have to be, because Elon endorsed me very strongly," Trump says, although he adds that EVs should only have a "small slice" of the market. There is a growing understanding that scrapping the IRA is "just bad politics", Podesta says. The White House expects repealing the law will become more difficult with time, as more businesses and consumers benefit from the tax credits. Last year, 3.4mn households received $8.4bn in energy tax credits created by the law, and the administration expects that number to grow. The White House is now pressing industry officials to speak up about the benefits of the law, which replaced short-term tax credits with incentives that will last 10 years or longer. "They need to shout that from the rooftops a little bit," Podesta says. Work remains The Biden administration still needs to implement key parts of the IRA, such as issuing final guidance for the ‘45V' clean hydrogen tax credit, finalising a programme to collect fees from oil and gas companies for methane emissions, and developing regulations that will govern the new ‘45Z' tax credits for clean fuels. Federal permitting remains a major obstacle to the expansion of clean energy projects, particularly power lines that can take a decade or more to approve. The US Senate last week voted a bipartisan permitting bill out of committee that would fast-track approval of electric transmission projects, and in exchange expand federal oil and gas leasing and end the effective ‘pause' on new US LNG export licensing. Congressional negotiators expect progress on the bill during the ‘lame duck' session of Congress after the 5 November elections. By Chris Knight Send comments and request more information at feedback@argusmedia.com Copyright © 2024. Argus Media group . All rights reserved.
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