EU Aluminum Groups Wants Exclusion from Carbon Border Tax

Simon H
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EU Aluminum Groups Wants Exclusion from Carbon Border Tax

European aluminum manufacturers are pushing for their industry to be excluded from the pilot phase of the EU’s carbon border adjustment system.

European Aluminum – which represents smelters and manufacturers, said the tax plan will damage its members and consumers while hastening so-called “carbon leakage” which allows firms to relocate activities outside the EU to evade strict climate regulations.

They are arguing that the proposal will put them at a competitive disadvantage with overseas competitors while doing little to address climate change. The manufacturers believe that the Carbon Border Adjustment Mechanism (CBAM) will promote Chinese and Russian “resource shuffling”. This will allow manufacturers transfer their low-carbon output to Europe while selling their less environmentally friendly output elsewhere in the globe.

The CBAM is the centerpiece of the “Fit for 55” package, a levy meant to target imports from countries that have not committed to achieving carbon neutrality by the middle of this century while protecting domestic businesses that are not subject to the same stringent environmental requirements.

The carbon tax on imports is expected to earn about €10 billion per year in revenue. With steel, cement, fertilizers, and aluminum imports all be targeted in a three-year transitional period beginning in 2023.

The CBAM would replace existing mechanisms that attempt to limit carbon leakage under the EU’s emissions trading scheme for these items.

These are free emission permits and, more importantly for the aluminum sector, cash compensation for carbon-related power expenses.

Aluminum produces 6.7 tonnes of CO2 per tonne of metal on average and European aluminum smelters are paid for 75% of their indirect emissions with state aid. They are presently subject to a carbon fee, which is reflected in their power pricing.

Because of Europe’s marginal pricing structure for energy, which is often set by coal-fired power plants, even producers utilizing hydro and nuclear power have to pay.

According to producers, if the existing carbon compensation program is repealed, European smelters would face greater costs, and will put them at a competitive disadvantage to rivals in the rest of the globe. It would also encourage Chinese and Russian producers to simply divert their low-carbon output to Europe, avoiding any CBAM charge, while selling their other products elsewhere in the globe with no impact on their carbon footprint.

Rusal, the world’s largest aluminum producer outside of China, has previously announced intentions to divide its assets into a low-carbon firm aimed at the European market and a new entity geared at the Russian domestic market.

EU To Propose an Overhaul to its Carbon Market, this biggest change since 2005

Simon H
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EU To Propose an Overhaul to its Carbon Market, this biggest change since 2005

This week, the European Union is expected to propose an unprecedented revamp of its carbon market, attempting for the first time to put a price on shipping emissions.

On July 14th, the European Commission, the EU’s executive arm, will present its “green fuel” rule for EU shipping. It is part of a larger reform package aimed at meeting the EU’s revised climate targets.

The EU has committed to reducing net carbon emissions by 55% (when compared to 1990 levels) through to 2030, becoming climate neutral by 2050.

The EU says this will require a 90% reduction in transport emissions over the next three decades.

To meet these aims, the EU intends to undergo the most extensive overhaul of its Emissions Trading System (ETS) since the policy’s inception in 2005. The ETS, which is now the world’s largest carbon trading scheme, is largely expected to expand to cover shipping for the first time.

This has the region’s shipowners worried and according to Lars Robert Pedersen, deputy secretary general of BIMCO, the world’s largest international maritime association, the industry is concerned about the EU’s ambitions.

He claimed that the plan was “not conducive” to international policy, that it would fail to cut regional carbon emissions, and that it would ultimately drain money from the shipping industry that could otherwise be spent on decreasing emissions in the fleet.

An alleged leaked plan for the first-ever rule forcing ships to gradually transition to sustainable marine fuels, surfaces last week.

The EU has stated that action to address EU international emissions from navigation and aviation is “urgently needed,” and attempts to address these issues will aim to increase the production and use of sustainable aviation and maritime fuels.

Pedersen cautioned against panicking over the leaked draught, stressing that it might be altered in the coming days and that there are many more barriers to clear before the proposals become EU policy.

The final revisions would first need to be negotiated by EU member states and the European Parliament, a process that analysts say might take two years.

Shipping, accounts for around 2.5% of worldwide greenhouse gas emissions, is seen as a particularly challenging industry to decarbonize because low-carbon fuels are not generally available at the scale required.

Furthermore, the shipping sector is not the only one that has spoken out against the EU’s proposals.

Industry experts are concerned as the leaked draught does not promote investment in low-carbon fuels like renewable hydrogen and ammonia. Instead, it claims that the proposal favours liquefied natural gas and “questionable” biofuels as alternatives to marine fuel oil.

The European Union’s Emissions Trading System (ETS) is the bloc’s primary mechanism for lowering greenhouse gas emissions that cause climate change. It requires high-polluting industries, ranging from aviation to mining, to purchase carbon credits in order to create a financial incentive for enterprises to pollute less.

However, one issue now plaguing the plan is so-called “carbon leakage,” in which corporations shift output (and emissions) elsewhere due to the relative expense of polluting in Europe.

The EU is intended to solve this issue, potentially introducing the carbon border adjustment mechanism as early as 2023. The strategy aims to level the playing field in terms of carbon emissions by imposing domestic carbon price on imports.

Shell Signs Contract For Carbon Neutral LNG with PetroChina

Simon H
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Shell Signs Contract For Carbon Neutral LNG with PetroChina

Shell announced that it has signed a five-year contract with PetroChina to supply the Chinese company with carbon-neutral liquefied natural gas (LNG) cargos.

Many businesses, particularly those in the fossil fuel industry, are using carbon offsets to compensate for emissions that they are unable to reduce in their operations.

The two companies will “cooperate to offset life-cycle carbon dioxide equivalent (CO2e) emissions generated across the LNG value chain, using high-quality carbon credits from nature-based projects” for each cargo delivered under the agreement, according to Shell.

Offset projects based on nature, such as reforestation, protect, transform, or restore land, allowing nature to add oxygen and absorb carbon dioxide emissions.

Shell made the announcement as PetroChina received its first carbon-neutral LNG cargo at China’s Dalian port.

“This first term deal is an important step in scaling up the market for carbon-neutral LNG, and we are extremely grateful to our valued partner PetroChina for their collaboration in enabling this industry milestone,” said Steve Hill, Executive Vice President Shell Energy, in a press release.

Shell stated that the offsets would come from its own portfolio of emission-reduction projects in nature.

Many environmental groups are dubious of the use of carbon offsets, warning that the capacity to pay for emission reductions elsewhere may extend the use of fossil fuels, which are largely blamed for climate change.

The 2015 Paris Agreement on Climate Change intends to limit temperature rises to 1.5 degrees Celsius beyond pre-industrial levels, which scientists predict will necessitate transitioning the world into a net zero economy by 2050.

Russia Signs New Law Regulating CO2 Emissions

Simon H
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Russia Signs New Law Regulating CO2 Emissions

President Vladimir Putin signed legislation in early July mandating the country’s top greenhouse-gas emitters (GHG) to submit carbon data to a new government agency.

This marks Russia’s first moves toward controlling carbon emissions since joining the Paris climate agreements in 2019.

According to the Russian news agency TASS, the new law requires carbon reporting beginning in January 2023 for firms generating 150,000 tonnes of carbon or more. This is set to decreased down to companies producing 50,000 to 150,000 tonnes by January 2025.

“An accounting system is being implemented, and carbon dioxide is becoming a regulated substance,” Greenpeace spokesperson Vladimir Chuprov told Reuters. “A system for accounting and reducing emissions is evolving. This is a need for a trading system for greenhouse-gas emissions.”

With such measures in place, Russia hopes to achieve its Paris Agreement commitment of reducing emissions to 70% of 1990 levels by 2030.

The new rule will, predictably, have the greatest impact on Russia’s oil and gas industry as Russia flares the most associated gas of any country on the planet.

gas flaring volumes 2016-2020 in billion cubic meters

After a 2012 World Bank research projected that flaring cost the economy $5 billion in yearly costs, Russia began to take the issue seriously.

According to Bloomberg, oil and gas exports will account for 40% of Russia’s national budget in 2021, and while European demand for oil declines, Russia is increasing investment in East Siberian production, such as Rosneft’s Vostok project, to serve Asia, where demand for oil continues to rise.

Russia’s target date of 2023 for starting GHG reporting coincides with the same year that the EU will implement the Carbon Border Adjustment Mechanism (CBAM), which The Bank of Russia estimates could cost Russia up to 8.2 billion Euros per year.

Source: https://jpt.spe.org/russia-to-require-carbon-reporting-under-new-climate-change-law

Carbon Credit Market to Reach $100 Billion a Year By 2050

Simon H
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Carbon Credit Market to Reach $100 Billion a Year By 2050

The Institute of International Finance’s CEO believes voluntary carbon credits have great upside potential and projects the market may be worth up to $100 billion per year by 2050.

Governments and corporate leaders are under increasing pressure to deliver on pledges made as part of the historic Paris Agreement in advance of this year’s COP26, which will be hosted in Scotland, in early November.

The Taskforce on Scaling Voluntary Carbon Markets (TSVCM) released the second phase of its roadmap for developing a large-scale and transparent carbon credit trading market recently.

According to the TSVCM, it will enable more companies to put their net-zero promises into action by investing in emissions-reduction projects, where they believe it would have the greatest impact.

The private-sector-led project, established last year by former Bank of England governor Mark Carney, believes a broad-based carbon market is “essential” to limiting global temperature rise to 1.5 degrees Celsius above pre-industrial levels – the global aim outlined in the Paris Agreement.

Carbon credits are permits that allow a corporation to emit a specified quantity of greenhouse emissions. They are intended to provide a financial incentive for high-polluting businesses to reduce their pollution.

The voluntary carbon offset market is distinct from cap-and-trade programs such as Europe’s flagship Emissions Trading System (ETS), which has a finite carbon budget and allows emitters to sell allowances.

Companies in the voluntary market, on the other hand, are more likely to be attempting to reach internal targets to decrease their carbon footprint.

The TSVCM had previously stated that in order to fulfil the Paris climate objectives, the voluntary carbon market would need to increase 15-fold and might be valued up to $50 Billion by the end of the decade.

A Carbon Floor Proposal

Simon H
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A Carbon Floor Proposal

Staff at the International Monetary Fund (IMF) have suggested a carbon-price floor to reduce global warming over the next decade, claiming that climate change poses significant threats to the world’s economies.

A report was issued earlier in June and is being discussed by the IMF executive board and members. The reports recommended varying minimum carbon-price levels for nations based on their stage of development as one possibility.

By using a 3-tier price floor ($25, $50, $75 per tonne) among United States, China, the European Union, India, the United Kingdom, and Canada. This could help cut global emissions by 23 % from baseline levels by 2030.

According to IMF officials, this would substantially improve the efficiency of the Paris Agreement aim of limiting temperature increases below 2 degrees Celsius.

The concept is similar to the argument over a minimum worldwide corporation tax rate.

By focusing on a small number of large emitters, this would make negotiations easier and could still cover a large percentage of global emissions, thereby taking a major step towards the cuts in greenhouse gases.

While a tax is one possibility for establishing the price floor, the IMF believes it may also be accomplished through regulation or carbon trading.

With Carbon trading, the proceeds may be used to compensate consumers for price increases as well as to assist firms and people in transitioning from high- to low-carbon activities.

According to IMF officials, the proposal would be more successful and less controversial than border-adjustment carbon taxes, which are charges on the carbon content of imports.

And if it is expanded out to cover the whole G20 nations (which emit 85% of global carbon-dioxide emissions), the proposal may stimulate a slight additional decrease in emissions, according to the IMF experts in the paper.

Original source: https://www.bnnbloomberg.ca/imf-staff-propose-carbon-price-floor-to-slow-climate-change-1.1618752

Global Carbon Dioxide Levels Reach 4 Million Year High

Simon H
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Global Carbon Dioxide Levels Reach 4 Million Year High

Based on geological data gathered over the six decades that scientists have been measuring atmospheric CO2, this year’s peak seems to be the greatest in up to 4.5 million years.

Geological data reveal the three centuries ago, before the industrial civilization began, there were 280 CO2 molecules for every million molecules of air.

The amount of CO2 measured in PPM (Parts Per Million) shot up to 316 PPM back in the late 1950’s. Since then, it has climbed upwards to 419 PPM.

In other words, by burning fossil fuels in generators and automobiles, humanity has raised concentrations of the most significant greenhouse gas by 50%.

Researchers projected as early as April 2020 that pandemic-related economic disruptions that substantially lowered emissions will have almost little influence on CO2 trajectory.

The May average increased by 1.8 ppm over May 2020, which was somewhat less than the yearly growth rate in 2017 and 2011.

CO2 concentrations in the atmosphere change year to year, averaging around 2.5 ppm each year from 2010 to 2019.

The figures are influenced not just by pollution, but also by changes in the rate at which seas and plants absorb CO2.

The atmospheric concentration has a seasonal cycle, with a high in May when plants in the Northern Hemisphere (where the majority of them reside) begin to take CO2 into tissue.

Original source: https://www.bnnbloomberg.ca/co-reaches-its-highest-level-in-more-than-4-million-years-1.1613801

Russian Petrochemical Giant Plans to use Forest Carbon Credits to Offset Emissions

Carbon Credits
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Russian Petrochemical Giant Plans to use Forest Carbon Credits to Offset Emissions

Sibur PJSC intends to offset part of its emissions beginning in 2024 by exploiting the carbon-capture potential of Russia’s vast forests. Sibur will explore purchasing carbon credits from projects that plant trees or increase the ability of existing woods to absorb CO2, making it one of the first Russian firms to do so.

Sibur is already assisting with a pilot carbon monitoring project in western Siberia to examine the potential of local forests as carbon sinks.

The Russian government is eager to capitalize on the “carbon sink” potential of its enormous forests, but such initiatives have been criticized by climate experts.

President Vladimir Putin estimated in April that Russia’s biosphere absorbs roughly 2.5 billion tonnes of CO2 equivalent each year, however this amount has to be confirmed scientifically.

Carbon-offset schemes have been criticized by scientists and campaigners for a lack of adequate monitoring. Europe, which aims to be the world’s first climate-neutral continent by 2050, does not accept any offset contributions in its emissions-reduction strategy.

According to Sibur’s head of sustainable development, Sibur wants to proceed with the offsets because “they are essential to our investors, our clients; it is precisely one of those situations when market needs go beyond regulatory expectations.”

To maintain a level playing field for domestic businesses, the EU intends to impose a charge on emissions contained in some imported goods. The so-called Carbon Border Adjustment Mechanism (CBAM) would apply to businesses such as cement and power, and would be implemented as early as 2023. The EU has said that countries with comparable emission-reduction efforts may be exempt from the charge.

Later this July, the European Commission is expected to release a draught legislation outlining the mechanism’s specifics. According to Russia’s Energy Ministry, the levy may cost the country’s oil and gas industry $3 billion to $4 billion each year.

Sibur is concerned about the likelihood of the tax, but has yet to submit an estimate for its own possible losses and is waiting for the commission’s recommendation. The firm is revising its environmental, social, and governance plan through 2025, which will be available in the second half of this year and may contain more aggressive emission-reduction objectives.

Source: https://www.bnnbloomberg.ca/sibur-plans-to-use-russia-s-forests-to-offset-carbon-from-2024-1.1609726

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