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US surprised about Cop troika 'vision' on finance, NDCs

  • Market: Emissions
  • 21/03/24

The US said today that some of the wording in the "vision" set out by the Cop presidencies Troika — comprising the UN Cop 28, 29 and 30 climate summit hosts the UAE, Azerbaijan and Brazil — could be "highly prejudicial" to ongoing negotiations on a new global finance goal for developing countries.

US deputy special envoy for climate Sue Biniaz, taking part in the Copenhagen Climate Ministerial today, said she was "quite surprised" with some aspects of the letter, setting out the "vision", sent by the group of three presidencies to all parties to the UN Framework Convention on Climate Change (UNFCCC).

The troika was created earlier this year and has been welcomed by countries in the Cop process to push forward crucial issues such as setting more ambitious Nationally Determined Contributions (NDCs) — climate goals — for 2025 and climate financing.

"We don't agree with what the letter calls the 'reframing of ambition', and we don't think it's true to the Paris Agreement or to the UAE Consensus [the outcome of Cop 28]," the US delegate said today. She added that the letter suggests that this year's "focus on NDCs should be all about support, and maybe even that support is a pre-condition to NDCs" and "defines 'high ambition NDC' for developed countries as one that includes finance for developing countries". She said that this was "inconsistent with the Paris agreement".

The vision published today is centered on an "aim to raise and reframe ambition for the development process of the next round of NDCs", focusing on supporting parties, mobilising technical and financial resources to "stimulate ambitions" and "utilising existing mechanisms, processes and stakeholders, within and outside the UN system, to channel... finance".

The letter also said that "high ambition NDCs should include ambition in finance, technology and capacity-building resources to developing countries, in the case of NDCs from developed country-parties". Finance, technology and capacity-building are often referred to as 'means of implementation' in the UNFCCC process.

Belgium's climate minister Zakia Khattabi, representing the EU at the opening of the ministerial, expressed similar concerns, saying that the bloc does not support "reframing NDCs as vehicles for the provision of means of implementation".

This comes as a new climate finance goal — the NCQG — following on from the $100bn/yr goal by 2025 must be decided at Cop 29 in November.

"We appreciate the efforts of the Troika and encourage you to focus on delivering the UAE consensus. We strongly believe that it must be delivered, not reinterpreted, fulfilled, not renegotiated," UK energy security and net zero minister Graham Stuart said.

Cop 28 president Sultan al-Jaber told delegates at the ministerial that the letter advocates "strongly for early submission of high ambition NDCs" and that the UAE, Azerbaijan and Brazil committed to submit NDCs aligned with the 1.5°C temperature goal of the Paris agreement by 2025.

The US delegate also pointed out that the letter "omits the key paragraph of the UAE consensus" on economy-wide NDCs including all greenhouse gases (GHG). But al-Jaber reiterated today that NDCs should include these elements, adding that countries should put policies in place to deliver emission reductions of 60pc compared with 2019 levels, before 2035.

It has a commitment from troika countries to submit their own 1.5°C-aligned NDCs by early 2025. The three Cop hosts said they will convene high-level meetings focusing "on the quantity and quality of support needed by parties to ensure NDCs can deliver 1.5°C-aligned just climate transitions."

Developing countries have long called for meaningful climate finance to allow them to implement their emissions reduction plans, but disagreement over funding sources could continue to hinder negotiations going into Cop 29.


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08/10/24

California E15 bill sputters

California E15 bill sputters

Houston, 8 October (Argus) — An attempt by California lawmakers to eventually allow the sale of a 15pc ethanol blend gasoline (E15) to temper consumer fuel prices in California has likely stalled in the state senate. ABX2-9 , sponsored by state assembly member Cottie Petrie-Norris (D), would have required the California Air Resources Board (CARB) to finish its evaluation of the potential for moving to an E15 blend from E10, the highest ethanol blending approved in the state, supported by a fee on ethanol producers. "As you might imagine, I am extremely disappointed to see this common-sense policy fail to move forward as part of the extraordinary session," Petrie-Norris said. The bill cleared the state assembly with no opposition last week as part of a special session called by governor Gavin Newsom (D) to address retail fuel prices. ABX2-9, read for the first time on Monday in the state Senate, has been referred to its rules committee for assignment. But the bill will not be referred to the Special Committee on Fuel Supply and Price Spikes for further action, according to state Senate president pro tem Mike McGuire (D). "While the goals of this legislation are laudable, and we're grateful to the Assembly member's leadership, a more thorough analysis and additional work is needed on the proposal," McGuire said. California, unlike the rest of the country, has a permanent ban on E15 gasoline due to environmental concerns, such as the potential for higher emissions of NOx, which contributes to smog. Outside of the state, retailers are allowed to sell E15 during only the winter months, but the EPA has granted waivers for summertime sales of E15 each of the last three years . For now, the California legislature is focusing on AB X2-1 , which would require in-state refiners to maintain minimum stocks of gasoline and gasoline blending components, a proposal supported by Newsom. The state Senate, which has been slow to heed a request by Newsom at the end of August for a special session, convened this week — with the aim of a speedy close to the session. "With this session we'd like to be able to move quickly and efficiently," McGuire said on Monday. By Denise Cathey and Payne Williams Send comments and request more information at feedback@argusmedia.com Copyright © 2024. Argus Media group . All rights reserved.

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EU finance ministers guarded on Cop 29 position


08/10/24
News
08/10/24

EU finance ministers guarded on Cop 29 position

Brussels, 8 October (Argus) — EU finance ministers have today only outlined general principles on climate finance in preparation for the UN Cop 29 climate talks in Baku, in November, and did not mention an amount for a new finance goal for developing countries. The ministers reaffirmed the EU's commitment to mobilising $100bn/yr in climate finance for developing countries until 2025, as agreed in 2009 at Cop 15 in Copenhagen. But they gave no clarity on an amount for the new collective quantified goal (NCQG) on climate finance, the next stage of the Cop finance goal. EU ministers reiterated the EU's position on setting a "prerequisite" for an ambitious goal of expanding the group of contributors, considering all sources of finance — domestic, international, public, and private. This expanded group should reflect the evolving capabilities and high greenhouse gas emissions since the early 1990s, ministers said. EU countries also suggested that Cop 29 provisions should ensure climate finance is not used for fossil fuel-related activities, and acknowledged the need for swift action to address energy poverty. Multilateral development banks, including the World Bank and IMF, should phase out fossil fuel-related finance "as soon as possible", they said. The ministers also support "innovative" options for broadening finance sources and advancing the international carbon pricing agenda. Later this month, EU states are expected to formally mandate EU negotiators for the conference. EU environment ministers will contribute to it, and are expected to approve their conclusions on 14 October. Previous drafts by environment ministers were light on climate finance commitments . And as in the finance ministers' text, there was no mention of 2040 climate goals, including a 90pc net GHG emissions cut by 2040. By Dafydd ab Iago Send comments and request more information at feedback@argusmedia.com Copyright © 2024. Argus Media group . All rights reserved.

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Dutch TTF gas rises through coal-to-gas switching range


08/10/24
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08/10/24

Dutch TTF gas rises through coal-to-gas switching range

London, 8 October (Argus) — A rally in recent weeks has pushed gas prices up to a range at which even older coal-fired power stations would be more profitable to run than some of the most efficient gas-fired power stations. European gas benchmark price the Dutch TTF front-month has risen strongly over the past two weeks, having closed at €40.57/MWh on 7 October, up from a recent low of €32.80/MWh on 19 September. The higher gas prices have outstripped similar price increases of other energy-related commodities such as coal, with the TTF front-month contract approaching the top of the gas-to-coal fuel-switching range ( see TTF front-month graph ). In assessments on 3 and 4 October, even older coal-fired power stations with an efficiency of 42pc would would be more profitable to run than the newest gas-fired turbines with an efficiency of 60pc, for the first time since early December last year. Geopolitical tensions in the Middle East have contributed to gas' price increase. But with muted LNG deliveries to the continent so far this shoulder season and colder weather than last year, European gas storage sites are less full than they were a year earlier. European stocks were filled to about 94.5pc of capacity on the morning of 7 October, according to GIE transparency platform data, down from 96.7pc a year earlier. Demand has already stepped up strongly in some countries, pushing the continent to some days of net withdrawals from storage earlier in the autumn than in most recent years. While coal prices have also stepped up slightly in turn, partly in reaction to the expectations of higher coal burn, their slower upwards momentum has brought coal largely ahead of gas in the merit order. Many coal trading firms have banked on a strong coal burn this winter, with low trading activity in the shoulder season so far, which incentivises trading companies to keep coal prices close to the fuel-switching level, market participants have told Argus . And prompt prices for European CO2 emissions allowances in September and October so far have been about 20pc lower on the year, closing at an average of €64.24/t, compared with €81.60/t over the same period in 2023. Lower emissions prices benefit higher coal burn as coal is more CO2-intensive than gas, requiring operators to purchase and surrender more CO2 emissions certificates. A similar price movement happened last autumn, when a rally in early October pushed the TTF front-month price to the top of the fuel-switching range. But from early December, when a mild winter reduced the remaining risks for gas security of supply, prices fell through the fuel-switching ranges sharply , to the bottom of the range. Impact probably highest in Germany Germany is one of the last remaining markets with large numbers of both coal- and gas-fired power stations in Europe, leaving the market able to react to price movements in either market more flexibly. The power sector can still provide considerable demand-side flexibility in the German gas market, while coal phase-out plans in the rest of Europe mean the scope for alternating between the thermal generation fuels has narrowed. Gas prices can provide the signal that the market has spare gas for the power sector to burn by falling into coal-to-gas switching territory, while gas prices climb above the fuel-switching range to discourage gas-fired generation when the gas market is tighter. Last winter, gas prices at the very bottom of the fuel-switching range encouraged the highest gas-fired generation in Germany in at least a decade , according to data from European system operators' association Entso-E. While many German coal and gas-fired plants are combined-heat-and-power plants, which do not respond to price incentives as flexibly as pure power plants, the impact of the fuel switch on gas' share in the thermal generation mix was still visible last winter in Germany. In October and November, with prices at the top of the range, gas-fired generation at 6GW met 55pc of the combined call on coal and gas. But when prices dropped through the switching range, gas' share increased to 63pc in December-March, with about 7.3GW of gas-fired generation ( see generation percentage graph ). In addition, the German storage levy of €2.50/MWh, which power producers must pay, pushes gas prices up further in the fuel-switching range. The levy, which is likely to rise further from next year , thus further decreases gas' profitability compared with coal, which could be detrimental for Germany's own coal phase-out plans. By Till Stehr TTF front-month vs fuel-switching range €/MWh German gas- and coal-fired generation and fuel-switching price pc, €/MWh Send comments and request more information at feedback@argusmedia.com Copyright © 2024. Argus Media group . All rights reserved.

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Trump, Harris run on competing visions for energy


07/10/24
News
07/10/24

Trump, Harris run on competing visions for energy

Washington, 7 October (Argus) — Energy has emerged as a centrepiece in the US presidential race between Republican candidate former president Donald Trump and Democratic candidate vice-president Kamala Harris, who have repeatedly fought over whose policies would keep domestic energy prices affordable now and in the future. Trump has promised a return to the policies he championed during his first presidential term, when he opened vast tracts of federal land to oil and gas leasing, scrapped rules that would support electric vehicles (EVs), and halted any serious attempts for the federal government to respond to climate change. Trump has embraced "drill, baby, drill" as a core policy plank, which he argues will be an elixir to voters frustrated with inflation and high prices. Vice-president Harris backs an "all-of-the-above" energy policy, her running mate Tim Walz says, and has a further goal to turn the US into a global powerhouse for the types of clean energy manufacturing and EVs that will be needed to make a difference on climate change. But Harris' remark in 2019 that there is "no question I'm in favour of banning fracking" has come to haunt her campaign, despite saying she has dropped that position. Harris says her experience serving as vice-president has shown her that banning fracking was not needed to support a clean energy economy. "As vice-president, I did not ban fracking. As president, I will not ban fracking," she says. Even so, Trump has tried to sow doubts among voters that Harris is sincere in her new position, which he hopes will cost her in the battleground state of Pennsylvania, a key shale gas producer that accounts for 20pc of US natural gas output. "If she won the election, the day after that election, they'll go back to destroying our country and oil will be dead," Trump says. But Trump's promises on oil and gas — and his attacks on the policies of the Biden-Harris administration — have at times borne little resemblance to reality. Trump claims that if he had won a second term in 2020, oil production would be "four times, five times higher", translating into US crude production in excess of 50mn b/d, or more than half of global production. Trump also says that, if elected, he would cut the price of energy "in half or more within a year of taking office", double electricity production and bring gasoline prices below $2/USG. He will do this through "a national emergency declaration" that will cause a "massive increase" in energy supply, Trump says, although energy analysts say his promises are technically and economically unachievable. Trump's oft-repeated claim that US oil and gas production crashed after he left office is also undercut by basic energy statistics, as is his claim that the US has lost the "energy dominance" it had during his term. The US hit record-high production this year, in excess of 13mn b/d of crude and 100bn ft³/d (1 trillion m³/yr) of gas, while US net petroleum exports climbed to a record high of 1.7mn b/d last year. Regulatory rollback Trump has campaigned heavily on rolling back regulations and cutting energy prices, which he says will persuade manufacturers to "pack up and move their production to America". For every new regulation, he promises to remove "10 old and burdensome regulations from the books", echoing an earlier "two-for-one" regulatory repeal policy he attempted to enforce during his first term in office. Trump has shown particular zeal for eliminating policies he sees as part of the "Green New Scam", a blanket term he uses for clean energy spending under President Joe Biden's signature climate legislation, the Inflation Reduction Act, and climate-related regulations. If Trump's first term serves as a guide, he will again seek to repeal regulations that restrict methane emissions from US oil and gas production, weaken CO2 emission limits for power plants and block tailpipe rules that encourage EVs. "I will end the insane EV mandates," Trump says. Faster permitting will be another top priority, Trump says, after his efforts to pass comprehensive permitting legislation collapsed during his first term. A Harris victory, in contrast, would be key to implementing dozens of climate-related regulations issued under the Biden administration and defending them in court. Expediting federal permitting and "cutting red tape" will also be a priority for a Harris administration, given the impediments it can create for clean energy projects and other infrastructure, according to campaign documents. "No-one can tell me we can't build quickly," Harris says. Federal oil and gas leasing has plunged under Biden, who was unable to carry out campaign promises to ban new leasing but was still able to limit onshore lease sales to 210,000 acres/yr (850 km²/yr) in 2022-23, down from more than 6mn acres/yr in 2018-19 under Trump. Oil and gas groups say expanded federal leasing, particularly in the US Gulf of Mexico, is a top policy priority. Trump has vowed to expand federal oil and gas development if he wins, particularly by enabling drilling in Alaska's Arctic National Wildlife Refuge (ANWR), which he opened to leasing in 2017 but has been held up in reviews since Biden took office. "I'll put ANWR back in play," Trump says. Less clear is how Trump would handle offshore leasing, an issue that backfired in his first term when his push for drilling offshore Florida prompted fury from political leaders in the Republican-led state. Harris has yet to explicitly embrace federal drilling, but she has touted the "record energy production" the US has achieved under the Biden-Harris administration, and supports further growth "so that we never again have to rely on foreign oil", according to campaign documents. A recent bipartisan bill from US senator Joe Manchin suggests there is flexibility from the Democrats on the issue, by offering more federal oil leasing in exchange for fast-tracking electric transmission development. LNG pause in balance Biden's decision earlier this year to pause the licensing of newly-built LNG export terminals has fuelled uncertainty for projects such as Venture Global's 28mn t/yr CP2 project in Louisiana. But the pause is only set to last until early 2025, when the US Department of Energy (DOE) will finish work on a study into whether further exports are in the "public interest" based on factors such as climate change and domestic energy prices. Trump says as soon as he takes office he will approve pending LNG export terminals, which he says are "good for the environment, not bad, and good for our country". Harris has yet to describe her approach to licensing more LNG terminals, the approval of which environmental activists say would be a "climate bomb". But Manchin's permitting bill suggests there is some room for manoeuvre, by requiring the DOE to decide on LNG export licences within 90 days. Oil industry officials are preparing for a fight to retain the existing corporate tax rate of 21pc enacted under Trump in 2017, as Congress is heading towards a "tax cliff" at the end of 2025 that will cost more than $4 trillion to avert. Harris has called for Congress to raise the corporate tax rate to 28pc, but wants new tax credits for industries such as manufacturing. Trump has proposed a lower corporate tax rate of 15pc only "for those who make their product in America". At the same time, Trump's push for an across-the-board import tariff of up to 20pc has alarmed industry officials, who say such a policy would raise consumer prices and potentially trigger a disruptive trade war. 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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Fossil fuel cars phase-out comes up again in Brussels


07/10/24
News
07/10/24

Fossil fuel cars phase-out comes up again in Brussels

Brussels, 7 October (Argus) — The European parliament will this week debate a "crisis" facing the EU's automotive industry which could lead to "potential" plant closures, putting discussions on already-decided CO2 standards for vehicles on the forefront. Members have faced increased efforts by industry arguing for or against speedy review of the EU's regulation on CO2 emission standards for cars and vans. The regulation sets a 2035 phase-out target for new fossil fuel cars. The European commission is expected to give a statement to parliament, but a spokesperson told Argus that any change to the EU CO2 standards for cars and light vehicles would require a legal proposal by the commission to both parliament and EU member states. The priority, the spokesperson said, is on meeting 2025 targets for fleet CO2 reductions, agreed in 2019, but the commission is aware of "different opinions" in industry. Automakers association Acea has been calling for a "substantive and holistic" review of the CO2 regulation. The transition to zero-emission vehicles must be made "more manageable", assessing real-world progress against the ambition level. On the other hand, European power industry association Eurelectric today told members of parliament that bringing forward a review of the EU's regulation on CO2 standards for cars and vans to the start of 2025 would only encourage carmakers to hold off on making lower-priced and smaller electric vehicles (EV). The next CO2 target for car fleets is set to take effect in 2025. It requires a 15pc cut in emissions for newly registered cars. Some member states view the CO2 target cuts, and phase-out of the internal combustion engine (ICE) by 2035, as contentious. The regulation was only approved after a delay to normally formal approval. And parliament's largest centre-right EPP group is calling for a revision of CO2 standards for new cars to allow for alternative zero-emission fuels beyond 2035. As a counterweight to such pressure, Austrian, Belgian, Dutch and Irish ministers today called on commission president Ursula von der Leyen to step up EU action to push decarbonisation of company vehicles, notably light duty vehicles. "We need to consider action on the demand side in order to push zero-emission vehicles sales. Corporate fleets are the EU's most important market segment," the four ministers told von der Leyen. By Dafydd ab Iago Send comments and request more information at feedback@argusmedia.com Copyright © 2024. Argus Media group . All rights reserved.

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