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June 20, 2015

CP Daily is Carbon Pulse’s daily newsletter.  It’s a free daily summary of their top news plus bite-sized updates from around the world. Our friends at CP have asked us to post this on our blog and offer our readers the opportunity to sign up.

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OUR TOP NEWS:

Pope Francis encyclical warns on use of carbon credits

Using carbon credits would not help global efforts to cut greenhouse gases, according to Pope Francis’s encyclical on climate change released by the Vatican on Thursday.

Loophole could cut EU ETS cap by up to 304m tonnes in 2021 -study

The EU ETS emissions cap could be reduced by as much as 304 million tonnes in 2021 if some richer member states opt to take advantage of a provision to help them meet climate goals in other non-ETS sectors, according to a report released on Thursday.

Impact of unallocated allowances on future EUA prices negligible -analysts

The fate of an estimated 700 million unallocated allowances left over from the current phase of the EU ETS will have a negligible effect on post-2020 EUA prices, analysts said on Thursday.

EUAs dip as concerns mount over evaporating trading volumes

European carbon prices trickled lower on Thursday in very light volumes that squeezed the benchmark contract’s intraday trading range, as concern mounted over evaporating activity in the market.

Last-minute demand sees volume spike in Guangdong

A last-minute rush to cover short positions ahead of Saturday’s compliance deadline has boosted volumes in Guangdong’s carbon market, with nearly a million allowances changing hands over the past two days.

RWE, Vattenfall, E.ON hang on to top spots in 2014 EU ETS emitter rankings

Utilities RWE, Vattenfall and E.ON held on to their respective rankings as Europe’s top GHG emitters in 2014 despite all three cutting their output, according to a report published Thursday.

Putting cars in EU ETS can’t replace other regulations -Arias Canete

The European Commission is not currently planning to propose putting road transport in the EU ETS, and even if it eventually did the measure should not be to replace existing regulations for the sector, EU climate chief Miguel Arias Canete said on Thursday.

Bite-sized updates from around the world:

May 2015 was the hottest on record, say US govt scientists – Record temperatures and impending El Nino set year on course to be warmest since 1880. (RTCC)

Climate aid key to Paris deal, says Amber Rudd – UK’s energy secretary and lead negotiator says financial package for developing countries absolutely essential for global agreement on carbon emissions. (Guardian)

Carbon Glut Limits German Options to Meet Emissions Target – A glut of European Union carbon-emission permits is limiting Germany’s options to meet its 2020 greenhouse gas-reduction target, according to the nation’s environment ministry. (Bloomberg)

Poland Seeks to Balance Pope’s Climate Call With Energy Security – Poland will seek to reconcile its use of coal as a guarantee of energy security with Pope Francis’s warning about the risk of fossil fuels. (Bloomberg)

EPA’s Clean Power Plan a ‘cheap shot’ at Pennsylvania coal – In recent testimony before the Pennsylvania House and Senate Coal Caucuses, Pennsylvania Coal Alliance CEO John Pippy said the U.S. Environmental Protection Agency’s proposed “Clean Power Plan” will be “the cheap shot that cripples the industry.” (Watchdog.org)

Obama admin set to release mandatory carbon cuts for heavy-duty vehicles – Four years ago, in August 2011, U.S. EPA and the National Highway Traffic Safety Administration announced the first federal program to cut carbon emissions from the nation’s biggest vehicles by raising the fuel standards those heavy-duty fleets must meet. (ClimateWire)


Deadline to use Non NZU units in the NZETS looms

May 19, 2015

From 1 June 2015 CERs, ERUs and RMUs (in fact most Kyoto Protocol units) will no longer be eligible for surrender to meet obligations in the Emissions Trading Scheme (ETS). For more details click here

If you are a forest owner trying to use ERUs to extinguish a qualifying liability, simply purchasing units does not complete the process. Units cna only be surrendered by logging into the emissions unit register, selecting the relevant surrender notification and surrendering the requisite number of then eligible units to the Crown account before the end of May 2015.

Thanks to Carbon Match http://www.carbonmatch.co.nz for parts of this content


New Zealand Emissions Trading Scheme EPA facts and figures

August 19, 2014

The EPA released 3 reports on the NZETS recently http://www.epa.govt.nz/e-m-t/reports/ets_reports/annual/Pages/default.aspx

Of 45.5 million tonnes or emissions units surrendered for the 2013 compliance year, only 227,000 were NZUs. The balance were UN offsets predominantly ERUs. As of 1 July 2014 there were some 140 million NZUs sitting in private accounts.

The surrender of 45.5 million in 2013 was dominated by the forestry sector with foresters opting out of the NZETS and deforestation accounting for nearly 27m of the 45.5m.

In 2014 the picture is likely to change with a budget rule outlawing the use of non NZU for forest owners to exit the scheme or deforest. Forest-owner have correspondingly become unwilling to part with their NZU when they are now required  to replace like with like. For May 2015 total surrender will also be a lot lower – perhaps < 20 million. Emitters retain the right to use ERU (and CER) right up until mid 2015.


Carbon Tax Repealed

July 26, 2014

Abolition of the Carbon Tax

The Australian Government has abolished the carbon tax.

The carbon tax repeal legislation received the Royal Assent on Thursday, 17 July 2014 and the bills as part of this package are now law, with effect from 1 July 2014.

Abolishing the carbon tax will lower costs for Australian businesses and ease cost of living pressures for households.

http://www.environment.gov.au/climate-change/repealing-carbon-tax

 


NZETS Gaming prohibited

May 22, 2014

The New Zealand Government budget delivered May 15 prohibits forest owners from exiting the NZETS by surrendering non NZU units. Designed to prevent arbitrage by forest owners selling NZU for $3 then surrendering ERU or CER thereby taking a significant margin and existing the scheme the legislation gave no warning to stamp out a practice that is becoming more widespread.

You can still use Kyoto units (including Emission Reduction Units) for harvesting and deforestation of forest land registered in the NZ
ETS; and for repaying over-allocated units until 31 May 2015. You can also resell them to industrial emitters and pre-1990 foresters who are deforesting until 31 May 2015, or sell them to overseas buyers.

for more information refer to the Sustainable forestry bulletin #50

http://www.mpi.govt.nz/Default.aspx?TabId=126&id=2260


Permanent Forst Sinks Initiative PFSI – scheme review

May 18, 2013

We attended a consultation round on the PFSI this week – Sustainable Forestry Bulletin Issue 44 – May 2013

If you are a participant in the PFSI as a forest owner or purchaser of PFSI AAU we strongly suggest you attend the consultation.

Given the recent changes at DOHA and the New Zealand Government’s decision to opt out of CP2 and join nations in a group outside the Kyoto Protocol the Government triggered a notice period to allow PFSI participants to opt out. Notice of opting out must be completed on the correct form by the 30th June 2013

The opting out of CP2 means that in 2012 the Government will not be able to issue AAU to PFSI participants. The reason why AAU were issued in the first place is the PFSI was a revision of the Forest Act 1949 and preceded the NZETS legislation that created NZU units and the ETS to comply with the Kyoto Protocol CP1.

The Government wishes to continue the PFSI post 2015 and will therefore have to issue a different type of credits – but which type? Or should a new type be created?

The consultation meeting in Christchurch was interesting in the facts and opinions offered:

The facts:

  • 88 Projects approved in CP1, 20,000ha under covenant and 1.2m AAU issued
  • Significant co benefits of the PFSI including biodiversity, erosion control, water quality improvement, flood mitigation and cultural benefits
  • Most applications occurred in 2011-2013
  • Indigenous forest dominated in later years comprising 90% of the applications by area

Opinions

There were various discussions on the value of AAU with international units in the cents. However sellers reported PFSI AAU being seen has having integrity and achieving prices above those of an NZU or other kyoto units (CER 0.40, ERU 0.14)

Discussion focused on how these high quality offsets could be differentiated? Discussion covered revisions to the NZEUR and traceability of projects to allow purchasers to see the projects that resulted in the credits being created.

Opinion was divided on what unit should be issued, given all units are supposed to be fungible but this in practice has been rarely correct. A PFSI unit was preferred ahead of issuing NZU on the basis buyers could distinguish the quality at a glance – gold standard CER was raised as an example of this.

EITG view is that irrespective of the unit issued purchasers will need to be educated – whether is a gold NZU or a PFSI unit neither will be immediately understood. This of course is a common theme in New Zealand’s marketing of any product – compare with the ‘kiwifruit’ and then the gold version of the same

PFSI participants need to move quick to get submissions in for 5th June to allow Ministers to receive advice and create policy. Those opting out need to move before the 30th June.


Doha Decisions on Kyoto Surplus Explained by Carbon Market Watch

March 25, 2013

At COP 18 in Doha at the end of 2012, Parties decided how to deal with the large surplus of Assigned Amount Units (AAUs) from the first Kyoto commitment period (CP1) and how to prevent the accumulation of new surplus in the second commitment period (CP2) of the Kyoto Protocol.

Carbon Market Watch just released a policy brief that explains the decisions that were taken in Doha and examines their implications. You candownload the Carbon Market Watch policy brief here. For a shorter article that explains the issue to people not as familiar with the topic, see theCarbon Market Watch newsletter article from March 2013.

The compromise adopted in Doha has two main elements relating to surpluses from the first and second commitment period.

1.    The decision does not limit the carry-over of surplus AAUs from CP1 but puts limits on their use in CP2. It also makes it impossible for countries without a reduction target in CP2 to sell their surplus to countries with a reduction target. In other words, Russia and other countries with surplus that do not join CP2 will not be able to sell units to CP2 countries. To underline their climate commitments, several countries made political declarations that they will not buy AAU surplus from CP1 in CP2.

2.    Countries also decided to restrict the initial assigned amount (the number of AAUs a country initially receives for CP2) in order to avoid the build-up of new surplus. This amendment makes it impossible for countries to accumulate new surplus AAUs. This amendment may set an important precedent for future decisions on target setting.

The decisions on use restrictions of AAU surplus that were taken in Doha are complex. The newCarbon Market Watch policy brief  tries to explain the issues in a balanced way and discusses the impacts of the Doha surplus decisions on the second commitment period and beyond.

Please do not hesitate to send us comments or questions.

Thank you!
Anja Kollmuss on behalf
ofCarbon Market Watch


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