Paris agreement must restrict old carbon offsets: EU
Countries should not be allowed to use carbon offset credits produced before 2020 to meet their greenhouse gas emissions reduction targets under the UN Paris climate agreement, EU climate commissioner Miguel Arias Canete has said.
Negotiators are hoping to complete rules that could establish an international carbon market under the Paris agreement at a UN climate summit in December, after talks on this issue broke down at last year's summit. A sticking point in the negotiations is whether countries will be allowed to use emissions reduction credits generated under the Kyoto protocol's clean development mechanism (CDM), to comply with their Paris agreement targets.
EU climate commissioner Canete has urged countries to restrict the use of these credits. "The use of pre-2020 units towards post-2020 obligations could significantly undermine ambition," Canete said.
The first CDM projects were registered in 2001, meaning that some credits issued by these projects represent CO2 cuts that were achieved more than a decade ago. Countries' Paris agreement targets take effect from 2020.
The issue sits inside Article 6.4 of the Paris agreement, which will set up a sustainable development mechanism (SDM) to succeed the CDM.
Negotiators have not yet decided whether CDM projects, and certified emission reduction (CER) credits generated by them, will be transferred to the new mechanism.
The system should avoid "unrestricted banking" of Kyoto protocol units, Canete said. Failing to avoid this would "undermine ambition from the very beginning", he said.
Canete's comments echo those of some parties in the UN negotiations, who want to use the SDM as a way to start a fresh carbon market, containing only newly issued credits that meet certain standards. But others worry that if CDM credits are not transferred to the new market, the system will not contain enough supply to set up a functioning carbon market. It could take years for SDM projects to start issuing their first credits, meaning the new market could struggle with low liquidity.
Most large carbon markets, including the EU's, have restricted the use of CDM credits for compliance, partly because of concerns over the environmental integrity of credit-issuing projects. Critics of the system say the credits do not represent "additional" emissions cuts — some CDM projects would likely continue cutting CO2 even if they stopped selling emissions reduction credits, so buying their credits does not support "additional" emissions cuts.
Low demand for the credits has caused a large oversupply to build up in recent years, and kept prices low. The price of certified emission reduction (CER) credits has been below €1/t of CO2 since late 2012.
"It is important to be blunt here — the CDM delivered investment, but it did not work for everyone, particularly in terms of additionality, distribution and sustained demand," Canete said.
This year's negotiations on Article 6 will kick off this month at a UN meeting in Bonn. Final decisions are expected to be taken at the UN summit in December, in Santiago, Chile.
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Ship speeds on Red Sea rerouting to 'erode' GHG cuts
Ship speeds on Red Sea rerouting to 'erode' GHG cuts
Edinburgh, 22 February (Argus) — Ships increasing speed as they are forced to sail longer routes to avoid Houthi attacks in the Red Sea could "erode" environmental gains in shipping, the United Nations Conference on Trade and Development (UNCTAD) said today. The shipping sector has for over a decade reduced sailing speeds to cut fuel costs and reduce greenhouse gas (GHG) emissions, UNCTAD said. Speed optimisation is one of the solutions shipowners can consider to improve their rating under the International Maritime Organisation's (IMO) carbon intensity indicator (CII) measures which came into force in January 2023. Container ships' speeds for voyages around the Cape of Good Hope at the southern tip of Africa have increased since the Red Sea disruption started late last year. Container trade flows measured in tonnes account for over half of traffic through the Suez Canal, according to the Suez Canal Authority. Higher speeds are likely being used as a way of adhering to delivery schedules but also to manage fleet capacity, as longer routes mean vessels are employed for a longer period of time. UNCTAD said that these trends could erode environmental gains previously achieved by ships reducing speeds, or slow steaming. The organisation calculated that a ship increasing speed to 16 knots from 14 knots would increase bunker fuel consumption per mile by 31pc. "In this context, longer distances travelled due to rerouting away from the Suez [Canal] and through the Cape of Good Hope imply that greenhouse gas emissions for a round trip from Singapore to northern Europe would rise by over 70pc," it said. Ship tonnage entering the Gulf of Aden declined by over 70pc between the first half of December 2023 and the first half of February 2024, while ships passing the Cape of Good Hope increased by 60pc, UNCTAD noted. The security issues in the Red Sea have also affected insurance costs for shipowners, UNCTAD said. "By early February 2024, some reports indicate [risk] premiums rising to around 0.7pc to 1pc of a vessel's value, from under 0.1pc previously," UNCTAD said, citing a report by ratings agency Moody's. Ships avoiding the Suez Canal, particularly container vessels, also pose a risk to "global supply chains, potentially leading to delayed deliveries, heightened costs and inflation", it said. "The war in Ukraine had already shown the impact of longer distances and freight rates on food prices." UNCTAD estimates that about half of the increase in food prices observed in 2022 resulted from increased transport costs caused by longer distances and higher freight rates. By Caroline Varin Send comments and request more information at email@example.com Copyright © 2024. Argus Media group . All rights reserved.
Australia’s Santos joins OGCI zero methane initiative
Australia’s Santos joins OGCI zero methane initiative
London, 21 February (Argus) — Australian independent Santos has signed the Aiming for Zero Methane Emissions initiative, which seeks "near-zero" methane emissions by 2030 from signatories' operated oil and gas assets. The project, which now has 23 signatories, was launched in March 2022 by the Oil and Gas Climate Initiative (OGCI) — a group of 12 major oil and gas companies. Santos has operations in Australia, Papua New Guinea, Timor-Leste and the US. The company produced 92.2mn bl of oil equivalent in 2023 and has set a target of net zero emissions across scopes 1 and 2 by 2040 for its equity share. The company is also looking to develop three carbon capture and storage (CCS) hubs offshore Australia, which could have a total future storage capacity of up to 35mn t/yr of CO2 — though Santos did not provide a timeframe. Its Moomba CCS project is 80pc complete and the first CO2 injection is expected in the middle of this year. Santos today also formally endorsed a World Bank initiative to eliminate routing flaring from oil operations by 2030. Santos will "will develop and implement plans to achieve its commitment under this initiative", it said. It will also report "flaring and improvement progress" to the World Bank on an annual basis, from 2025. The recent UN Cop 28 climate summit, in November-December 2023, placed scrutiny on oil and gas producers' emissions reduction plans. Companies representing over 40pc of global oil production pledged to cut emissions — including methane to "near zero" by 2030. The summit saw renewed focus on methane emissions , although the frameworks are voluntary. By Georgia Gratton Send comments and request more information at firstname.lastname@example.org Copyright © 2024. Argus Media group . All rights reserved.
Marine fuel global weekly market update
Marine fuel global weekly market update
New York, 20 February (Argus) — A weekly Argus news digest of interest to the conventional and alternative marine fuel markets. To speak to our team about accessing the stories below and access to Argus Marine Fuels , please contact email@example.com. Alternative marine fuels 16 February CMA CGM takes first of 10 LNG-fueled vessels France-based shipping company CMA CGM will take delivery of the first of a series of 10 LNG-fueled container ships this month. 16 February Egypt to load 8-10 more LNG cargoes by end-winter: Eni Egypt could load 8-10 more LNG cargoes "before the end of the winter season", Eni said today. 16 February South Korean refiners opt to co-process biofuels A lack of regional mandates and retreating European demand for hydrotreated biofuels this year has pushed back timelines for new capacity start-ups in Asia-Pacific, driving South Korean refiners to favour co-processing rather than standalone biofuel plants. 15 February WSC proposes fossil-green fuel price gap close The World Shipping Council (WSC) proposed a green balance mechanism to close the price gap between conventional and sustainable marine fuels. 15 February Singapore LNG bunker sales at 5-month high Singapore LNG bunker sales reached a five-month high in January, according to data from Maritime & Port Authority of Singapore (MPA), driven by competitive prices compared with conventional marine fuel. 15 February Lake Charles Methanol to build $3.2bn low-CO2 plant Lake Charles Methanol II announced plans to build a $3.2bn plant that will produce low-carbon intensity methanol and other chemicals at the Port of Lake Charles. 15 February Singapore LNG bunker sales at 5-month high Singapore LNG bunker sales reached a five-month high in January, according to data from Maritime & Port Authority of Singapore (MPA), driven by competitive prices compared with conventional marine fuel. 15 February Maritime sector most promising for H2 in transport: HE The maritime sector provides most opportunities for use of hydrogen-based synthetic fuels in the transport sector, according to a survey carried out by industry body Hydrogen Europe. 15 February JBS says its B100 biodiesel has same yield as diesel Global meat producer JBS said that its 100pc biodiesel fuel (B100) — unblended biodiesel — has an energy efficiency equivalent to diesel and emits up to 80pc less carbon dioxide, based on tests on one of its trucks. 15 February Off-spec bio-blends widen pricing spread The range of prices for marine biodiesel blends in Europe has widened as cheaper product that does not meet the region's diesel engine specifications — as defined by the European EN14214 standard — gains market share. 15 February China turns to domestic ammonia output boost Increased domestic production capacity and weaker downstream industrial demand has the potential to weigh on China's ammonia imports this year. 15 February Mabanaft to build green methanol plant in Australia Hamburg-based Mabanaft has received approval to build a new green methanol plant in Port Augusta, located in southern Australia. 14 February Emerging LNG markets to absorb extra supply: Shell Emerging gas markets in China, southeast and south Asia will absorb much of the increase in LNG supply for the rest of this and the next decade, having been constrained by high prices in 2022-23, Shell said in its global LNG outlook, published today. 14 February Avoid offsets, ETS for carbon removals: Study Carbon dioxide removal (CDR) activities should be promoted for the "right reasons" and at the "right scale", and should not be financed through carbon offset credits or included in emissions trading systems (ETS), according to a recent study by the Institute for Responsible Carbon Removal at American University. 14 February Indonesia ammonia production at risk of curtailments Indonesian ammonia producers could be forced to consider production curtailments or outages if southeast Asian loading prices fall much further. 14 February More than 100 US biogas plants to start up in 2024 The American Biogas Council said 96 new biogas projects with a combined production capacity of 66,000 ft³/minute (9.82bn m³/yr) became operational in the US in 2023. It expects over 100 more to start up this year and said output from these will mostly be used for transportation fuel instead of power production. 14 February Chinese yard advances 271,000m³ LNG carrier orders French engineering firm Gaztransport and Technigaz (GTT) has received an order for eight 271,000m³ LNG tanks from a Chinese shipyard, with delivery of the vessels to be fitted with the tanks scheduled between the second quarter of 2028 and fourth quarter of 2029, GTT said. 14 February SE Asian UCO sees limited hit from US fast-food boycott A consumer boycott on US fast food outlets in support of Palestine is affecting some Indonesian and Malaysian used cooking oil (UCO) supplies, but market participants said the overall impact should be limited. 13 February Carnival commissions new LNG-fueled vessel US cruise ship operator Carnival has ordered a newbuild dual-fuel LNG-powered vessel for delivery in spring 2027. 13 February US House readies vote to end LNG review pause President Joe Biden's temporary pause on the review of new US LNG export facilities could face its first congressional test with a vote on a Republican-backed bill that would eliminate federal licensing of those projects. 13 February LNG carrier declares for Greece's Alexandroupolis The TotalEnergies-chartered 174,000m³ Gaslog Hong Kong has declared for arrival at Greece's new 4.3mn t/yr Alexandroupolis import terminal on 15 February, and could deliver the facility's first cargo. 13 February EU hydrogen plan relies on uncertain imports: T&E The EU should not rely on uncertain imports to meet its overly-ambitious hydrogen targets, says a study commissioned by the Brussels-based climate group Transport & Environment (T&E). 12 February Red Sea issues impact European methanol, derivatives Volatility in shipping markets following attacks in the Red Sea is impacting Europe's methanol market indirectly through higher freight rates and has directly impacted European derivative markets, as a result of reduced vessel availability and rerouting. 12 February Qatar taps Nakilat for second phase LNG fleet expansion State-owned QatarEnergy has selected Qatari state-controlled shipowner Nakilat for the ownership and operation of 25 174,000m³ LNG carriers, to be built at an unnamed shipyard in South Korea. 12 February SBTi validates Maersk's GHG emission reduction targets Danish shipping firm Moller-Maersk has become the first company to have its greenhouse gas (GHG) emissions targets validated under new maritime guidance from the UN-backed Science Based Targets initiative (SBTi). 12 February Spanish independent biodiesel producers under pressure Smaller Spanish biodiesel producers remain under pressure from thin margins that are cutting profits and shutting in some output. They are not being supported by domestic demand, which fell to a seven-year low in 2023. 12 February Mabanaft to apply for ammonia import terminal permit German energy trading firm Mabanaft expects to submit a permit application for its planned 1.2mn t/yr ammonia import terminal at Hamburg in the spring of this year. Alternative marine fuels 16 February Fujairah bunker premiums weaken as ships reroute Delivered bunker premiums have fallen in Fujairah, UAE, the world's third largest bunkering centre. Demand has weakened in recent weeks as a result of route diversions, stemming from the tense security situation in the Red Sea. 16 February US Gulf coast fuel oil spreads widest in 11 months Sulphur spreads between US Gulf coast residual fuel oil grades have reached the widest in 11 months, but that could change as refinery turnarounds likely wind down by late February or early March. 16 February Brazil's Paranagua cargo handling rises in January Cargo handling in Brazil's southern Paranagua and Antonina ports increased by 20pc in January from the same month last year, driven by higher exports and imports. 16 February Brazil's Paranagua port seeks to reach net zero by 2035 Brazil's port of Paranagua is working on a decarbonization plan for delivery by the end of 2026 to help it reach net zero balance greenhouse gas (GHG) emissions by 2035 by developing renewable energy sources such as biogas and hydrogen. 16 February Tanker targeted in Red Sea A Panama-flagged tanker was targeted by a missile in the Red Sea today around 72 miles northwest of Mokha, Yemen, according to security firm Ambrey. 16 February Japan's NYK taps demand for chemical tankers Japanese shipping company Nippon Yusen Kaisha (NYK Line) plans to receive six chemical tankers from late 2026 to 2029, in anticipation of potential demand growth for petrochemical products. 15 February Upper Mississippi ice report canceled on warm weather An annual government ice measurement program for shipping on the upper Mississippi River was canceled this year because of unseasonably warm weather. 15 February Scorpio Tankers upbeat on clean tanker rates New York-listed Scorpio Tankers said it expects strong market fundamentals to keep clean tanker freight rates elevated, even if disruptions to trade flows dissipate. 15 February Magellan Corpus Christi terminal doing maintenance US crude and refined products pipeline operator Magellan Midstream reported maintenance at its Corpus Christi, Texas, marine terminal. 15 February ARA oil products stocks increase on weaker demand Independently-held oil product stocks at the Amsterdam-Rotterdam-Antwerp (ARA) trading hub hit their highest since mid-August, reaching 5.67mn t in the week to 14 February, according to consultancy Insights Global, as demand in the region slowed down. 15 February Panama Canal freezes customer priority ranking The Panama Canal Authority (ACP) will freeze its customer priority ranking used to secure transit slots while temporary water-saving measures remain in place. 15 February Singapore's oil product stocks inch higher Singapore's overall oil product inventories inched upwards, driven by a surge in middle distillate imports, despite both light and heavy distillate stocks falling close to a 2½ month low, showed latest data from Enterprise Singapore. 14 February Petrobras working to rebuy refinery: CEO Brazil's state-controlled Petrobras is in talks with Abu Dhabi's Mubadala to buy the 300,000 b/d Mataripe refinery back, Petrobras' chief executive Jean Paul Prates said on social media. 14 February HSFO Med/NWE spread reaches near seven-month high High-sulphur bunker fuel in the west Mediterranean moved to its strongest premium to northwest Europe this week as attacks by Houthi rebels squeeze supply. 14 February Vitol can do with Saras what Saras cannot do alone Vitol's takeover of Italian independent refiner Saras, set in motion this week, could turn the latter into a specialised tool within the trading company's diverse business, while giving it a stronger footing to compete with rival Trafigura in Mediterranean oil markets. 14 February South Korea lifts 2023 light distillates output South Korean refiners increased light distillates production in 2023, while gasoil output fell. 13 February BP terminals low on fuel due to Whiting refinery outage BP told wholesale fuel customers it is buying refined products on the market to meet contractual obligations amid the continuing outage of its 435,000 b/d Whiting, Indiana, refinery. 13 February Outages hit Ecuador's 2023 refinery production Ecuador's three oil refineries of Esmeraldas, La Libertad and Shushufindi processed an average 146,235 b/d of crude in 2023, down by 5.3pc compared with the previous year, according to operator state-owned Petroecuador's data. 13 February Japan's bonded marine fuel sales fall in 2023 Japan sold less bonded marine fuel in 2023 compared with a year earlier, pressured by limited supply from domestic refineries owing to a series of disruptions. 12 February Suriname refinery undergoing 7-week turnaround Suriname's state-owned oil company Staatsolie's 15,000 b/d Tout Lui Faut refinery will undergo a seven-week turnaround starting on 16 February, Staatsolie said. 12 February US refiners shrug off dip in earnings US refiners' fourth-quarter financial results so far reveal a dip in earnings from the bumper profits of 2022, but the sector remains on a profitable footing and confident. 12 February India's MRPL plans refinery maintenance in Aug-Sep Indian state-controlled refiner MRPL plans to conduct a maintenance turnaround at one unit of its 311,000 b/d Mangalore refinery for around three weeks during August-September, a top official from the company told Argus. 12 February Atlantic basin diesel faces tight spring European diesel markets could be facing a tight spring as refinery maintenance and disruptions in the Red Sea make resupply difficult and expensive. Send comments and request more information at firstname.lastname@example.org Copyright © 2024. Argus Media group . All rights reserved.
Time to turn pledges into plans: Climate leaders
Time to turn pledges into plans: Climate leaders
Edinburgh, 20 February (Argus) — The UN climate summit Cop 28 has delivered historic commitments, but pledges need turning into action, with the deadline for parties to submit new climate plans only a year away, energy and climate leaders told delegates at a high-level roundtable hosted by the IEA. "Now is the time for all stakeholders to step up", Cop 28 president Sultan al-Jaber said today, after listing progress made during the summit last year. Almost 200 countries agreed to triple renewable energy capacity by 2030 and transition "away from fossil fuels in energy systems" in a "just, orderly and equitable manner" under the UN Framework Convention on Climate Change's (UNFCCC) first global stocktake. The historic outcome was dubbed the UAE Consensus. Al-Jaber said that all the parties who signed the consensus must start working on new Nationally Determined Contributions (NDCs) — countries' climate plans — and "adopt comprehensive, economy-wide emission reduction targets that cover all greenhouse gases, and are aligned with the science and keep 1.5°C in reach." But he also warned that a balanced approach must be taken. "The energy transition will lead to energy turmoil if we only address the supply side. We must tackle the demand side at the same time," he said. NDCs are submitted every five years, with the next round due in February next year, ahead of Cop 30 in Brazil. "Everybody needs to have a plan," US climate envoy John Kerry said, adding that what has been agreed at Cop 29 must be implemented to avoid disappointment. "How many countries since the Cop 28 decision was made have implemented plans to transition away from fossil fuels," Kerry asked. He said that G20 countries have a key responsibility, reiterating the need for some large countries to move away from coal. "NDCs are key and need to reflect the decision of the consensus including on plans to move away from fossil fuels," Denmark's climate minister Dan Jorgensen said. Brazilian national secretary for climate change Ana Toni said that parties "need to become real in their second NDCs", and need to produce detailed plans, including on investments. She said Brazil was hoping to have the international community and international agencies such as the IEA helping some countries to develop those plans. The IEA said today that ahead of the next round of NDCs the agency has received "several requests" from countries asking for help on data, analysis and policy advice and will offer some support. It will also keep track of all the pledges made during Cop 28 in co-ordination with the UNFCCC. The IEA will also look into new financial mechanisms to support the energy transition, especially in developing countries. "This is where the IEA can play a big role," Jorgensen said. "We need [the IEA's] data and input in regard to the financing question" and also on the "dangers for countries in not choosing the right path". Al-Jaber pointed out that Cop 29 is "mandated" to deliver the NCQG — the new finance goal moving beyond the previous $100bn/yr target. He reiterated that parties need to move from billions to trillions, but also "activate every source of finance, including policies and incentives to attract private capital. Cop 21 president Laurent Fabius agreed that "billions not trillions" will be needed, but said that Azerbaijan might face a difficult task "because time is short and the international situation is not good". "This is the reason why the Troika will be decisive," he said. Toni said one of the missions of the newly formed Cop presidencies Troika — comprising Cop 28, 29 and 30 hosts the UAE, Azerbaijan and Brazil — is to keep the 1.5°C goal on track. By Caroline Varin Send comments and request more information at email@example.com Copyright © 2024. Argus Media group . All rights reserved.
EU agrees carbon removals framework
EU agrees carbon removals framework
Brussels, 20 February (Argus) — Negotiators for the European Parliament and EU member states have provisionally agreed on a regulation establishing an EU carbon removal certification framework. Parliament said the new rules will allow for farmers to receive payments for carbon removals and set minimum sustainability requirements for carbon farming activities. The provisional agreement paves the way for formal adoption by parliament and EU member states, possibly before the EU elections in June. The new voluntary EU certification framework for carbon removals covers permanent carbon storage through industrial technology, carbon storage in long-lasting products, as well as carbon farming. Parliament noted an extended scope covering carbon farming activities that cut emissions from agricultural soils. And livestock methane emissions reduction is to be included on the basis of a review in 2026. Permanent carbon removals are defined as storing carbon for at least 35 years. And carbon farming activities must continue for at least five years. The agreement also foresees carbon removals and emissions cuts as contributing to achieving the EU's nationally determined contributions (NDCs) — emissions reduction pledges — to the Paris climate agreement. And the European Commission will establish an EU registry for carbon removals and soil emissions reductions within four years of the regulation's entry into force. European waste-to-energy association Eswet noted the specific recognition of biogenic permanent carbon removal via bioenergy with carbon capture and storage. Eswet called for the carbon removals certification framework to interact with the EU's emissions trading system (ETS) so as to provide incentives to remove carbon and accelerate to net zero emissions, which the EU is legally mandated to reach by 2050. But non-governmental organisation Carbon Market Watch (CMW) was more negative, calling for parliament and member states to reject the regulation. The units certified under the framework risk being double-counted by both voluntary carbon markets and as part of the EU's NDCs and climate policies, CMW warned. And sustainability criteria for biomass are not strict enough, probably leading to increased biomass demand. But CMW does see some positive elements, such as biodiversity conditions for carbon farming and a periodic review into the impact of biomass. CMW further said the framework's units will "initially" be ineligible for use under non-EU member state NDCs or the UN's carbon offsetting and reduction scheme for international aviation (Corsia). "The EU should have banned offsetting in voluntary and compliance frameworks, such as the EU ETS and Corsia, and double-counting rather than allow the carbon removal certification framework to slow down decarbonisation efforts," Wijnand Stoefs, CMW's lead on carbon removals, said. By Dafydd ab Iago Send comments and request more information at firstname.lastname@example.org Copyright © 2024. Argus Media group . All rights reserved.