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German CCS debate heats up as government advances

  • Market: Emissions, Hydrogen
  • 17/09/24

The debate on carbon capture and storage (CCS) is heating up in Germany, as the federal government finalises its carbon management strategy and environmental groups reiterate their warnings on the associated risks.

Environmental group Greenpeace today slammed Berlin's plan to support CCS technology as part of its nascent carbon management strategy. Greenpeace pointed to the technical risks and high costs, and that Europe's only larger CCS sites — Norway's Sleipner and Snohvit — have already encountered "unexpected" problems.

Germany's federal ministry of economic affairs and climate action stressed in a strategy paper last week that CCS is categorised as safe and "not a high-risk technology". The ministry started consultations last week on its strategy with other relevant ministries, with a draft to be sent to parliament in the next few weeks.

The paper stresses that funding will be available only for dealing with technically unavoidable and "hard-to-abate" emissions, based on a "scoring model" developed by the economy ministry that analyses CCS use based on costs, technological availability, avoidance potential, emission source and lock-in risk.

The cement, lime and thermal waste treatment sectors have been given an "A" score, as their emissions are deemed "technically unavoidable", with steam crackers scoring a "B", allowing these sectors to be considered eligible for support.

Blue hydrogen, the glass industry and gas-based direct reduced iron (DRI) technology in the steel industry are rated "C", and aluminium, gas-fired power plants, combined-heat-and power (CHP) plants, and blast furnace technology in the steel industry are rated "D".

The development of CO2 infrastructure should be "private-sector and market-driven" and "as competitive as possible", the paper said, but some "hedging mechanisms" for investors may be necessary in the "ramp-up" phase to mitigate the risks for first movers and leverage the long-term potential for economies of scale. Support would go beyond Germany's carbon contracts for difference (CCfDs), and possibly imply some kind of state backing via public bank KfW.

CCfDs are among the existing funding instruments planned for certain CCS applications for larger industry firms, along with decarbonisation aid for medium-sized companies presented last month.

The ministry plans to set up a CO2 infrastructure working group to co-ordinate planning, possibly alongside other working groups on areas such as CO2 use or storage.

The annual quantities of CO2 to be sequestered in Germany are estimated at 34mn-73mn t of CO2 in 2045.

Germany's amended draft carbon storage bill, which forms the legal framework for the pipeline-based transport and storage of CO2, is now under parliamentary scrutiny.

And Germany will deal with carbon removal and the targets for "technical sinks" in its long-term strategy on negative emissions, which the government aims to present by the end of this year.


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11/10/24

Japanese firms eye developing CCS project in Alaska

Japanese firms eye developing CCS project in Alaska

Tokyo, 11 October (Argus) — Two Japanese firms are looking to develop a carbon capture and storage (CCS) value chain between Japan and US' Alaska state to help achieve Japan's 2050 decarbonisation goal. Japanese trading house Sumitomo and Japanese shipping firm Kline today reached a deal to sign a joint research agreement with US independent Hilcorp, for a strategic partnership to capture CO2 in Japan and transport it on a large liquefied CO2 (LCO2) carrier to storage and injection facilities in Alaska. Oil and gas fields have been developed in Alaska since the 1950s and the total storage capacity of the CCS project is expected to be 50 gigatonnes, equivalent to 50 years' worth of Japan's CO2 emissions, Sumitomo said. The world's first LCO2 transportation for CCS is scheduled to start next year ahead of this project, Kline said. Japanese companies are gearing up efforts to seek overseas storage sites for CO2, as domestic storage sites would be insufficient to store all of the country's possible emissions. Tokyo aims to add 6mn-12mn t/yr of CO2 storage capacity domestically and internationally from 2030, with a target of 120mn-240mn t/yr by 2050. The government has projected that Japan will be able to store up to 70pc of its forecasted CO2 emissions of approximately 240mn t/yr in 2050. Japan's parliament in May allowed the government to ratify the 2009 amendment to the International Maritime Organization's London Protocol that will enable the export of CO2. By Reina Maeda Send comments and request more information at feedback@argusmedia.com Copyright © 2024. Argus Media group . All rights reserved.

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UN carbon market regulator takes 'agile' approach


10/10/24
News
10/10/24

UN carbon market regulator takes 'agile' approach

Berlin, 10 October (Argus) — The regulator of the new UN carbon crediting mechanism under Article 6 of the Paris climate agreement decided on key rules this week, adopting an "agile" approach to difficult issues to allow the rules to adapt to "ever-evolving developments in addressing climate change". The Article 6.4 supervisory body decided at its meeting this week in Baku, Azerbaijan, to adopt standards on methodologies and greenhouse gas (GHG) removals open to additional guidance by parties at the UN Cop 29 climate conference in Baku next month. This will allow the supervisory body to review and further improve the standards "whenever necessary" and to "keep up with market developments", it said. The body has requested that the parties meeting at Cop 29 to endorse this approach. The standards will help project developers create and submit methodologies for their projects, to allow them to be registered under the new Paris Agreement Crediting Mechanism (PACM), the group said. Article 6 takes a bottom-up approach to methodologies, allowing project developers to draw up their own methodologies provided they comply with the standard. The standard includes principles such as the downward adjustment of GHG mitigation paths to "encourage ambition over time" and the selection of a baseline against which the mitigation is measured that is below business-as-usual levels. It also includes provisions for equitably sharing the mitigation benefits between the participating countries. This could also be achieved through applying the so-called Sustainable Development Tool adopted at the meeting. The tool, a key objective of which is to set apart the PACM from its predecessor the clean development mechanism's indifference towards environmental and human rights, will require all participants to assess, demonstrate and monitor the environmental and human rights impacts of their projects. Activity participants must also notify the supervisory body of any potential reversal of the achieved mitigation within 30 days of becoming aware of the event. The supervisory body will establish a Reversal Risk Buffer Pool Account in the mechanism registry to compensate fully for avoidable and unavoidable reversals, by cancelling an equivalent amount of buffer Article 6.4 emissions reductions. The supervisory body has tasked experts on the so-called Methodological Expert Panel with continuing their work on various unresolved principles, such as developing a tool for assessing the reversal risk of removals, including the possible application of upper limits and specific risk factors. The supervisory body did not look into the issue of registries at this week's meeting, considered another tricky issue among several outlined by UK department for energy security and net zero head of carbon markets negotiations Dexter Lee at a conference in London this week. But speakers at the event noted a renewed willingness to agree on Article 6 rules this year. By Chloe Jardine Send comments and request more information at feedback@argusmedia.com Copyright © 2024. Argus Media group . All rights reserved.

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EU CBAM application to UK would be ‘political failure’


10/10/24
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10/10/24

EU CBAM application to UK would be ‘political failure’

London, 10 October (Argus) — Failing to avoid the application of the EU's carbon border adjustment mechanism (CBAM) to the UK would constitute a dereliction of UK climate policy, delegates at a conference this week heard. The application of the EU's CBAM would be "politically toxic" in the UK, Alistair McGirr, group head of policy and advocacy at utility SSE, told the Carbon Forward conference in London. It would risk trade friction, political issues concerning Ireland and lead to UK exporters effectively paying into the EU budget. "If the EU CBAM applies to the UK we have failed in climate politics," he said. CBAM can therefore be a "useful stick" to encourage the UK to link its emissions trading scheme (ETS) back to the EU's system, McGirr said, which would exempt the country from the mechanism. McGirr is "hopeful" a linking agreement could take place ahead of the EU CBAM's implementation in 2026, with the linkage itself operational by 2028. While the recently-elected Labour government has not yet confirmed it intends to link the systems, they already appear more comfortable working with the EU than the preceding Conservative leadership, McGirr said. They may not have acted yet because they do not want to appear too close to the bloc too quickly, he said, and trust between the jurisdictions will also need to be rebuilt. The obligatory review of the EU-UK trade and co-operation agreement could present an opportunity to restart the conversation, said Beth Barker, senior policy officer at UK sustainable business alliance the Aldersgate Group. But while the risk of trade complications is the "one thing that might really drive linkage" it remains politically very difficult, warned Trevor Sikorski, head of natural gas and emissions at consultancy Energy Aspects. He pointed to the lack of trust between the two sides, the potential for differing levels of climate ambition, and the risk the move could be perceived as giving control back to Brussels. The limited size and liquidity in the UK ETS offers a "vision of the future" for the EU's system, McGirr said, and a link to the UK ETS offers one way of expanding the EU carbon market. Under current rules, the EU ETS supply cap is expected to fall to zero by 2039, effectively allowing no emissions from covered sectors. But this legislation "cannot stand" unless the EU wishes to decarbonise through deindustrialisation, head of climate research at fund manager Andurand Capital Mark Lewis told delegates. Lewis "takes it for granted" the UK ETS will be linked back to the EU ETS "way before 2030", he said, agreeing that the application of the EU CBAM to the UK would constitute a "terrible failure of UK climate policy". The EU carbon market should also expand to include credits issued under Article 6 of the Paris climate agreement, he said. The article sets out the framework for two global carbon trading mechanisms, the rules for which are yet to be finalised . But the EU ETS supply cap will not necessarily actually fall to zero as quickly as feared, European Commission advisor Damien Meadows pointed out, because as other sectors are added to the system the cap will be revised upwards accordingly. "We don't need to panic," he said. By Victoria Hatherick Send comments and request more information at feedback@argusmedia.com Copyright © 2024. Argus Media group . All rights reserved.

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Cop 29 president calls for progress on finance


10/10/24
News
10/10/24

Cop 29 president calls for progress on finance

Edinburgh, 10 October (Argus) — The president-designate of the upcoming UN Cop 29 climate summit, Mukhtar Babayev, has urged parties to progress on a timeframe and an amount for the new climate finance goal to be decided at the conference in Baku next month. At a pre-Cop meeting today, Babayev stressed the need to "take seriously the responsibility for identifying a number over a timeframe and come forward with solutions". "We cannot afford to leave too much to be decided at the summit," he added. Cop parties must agree in November on the new collective quantified goal (NCQG) — building on the current $100bn/yr target that developed countries agreed to deliver to developing countries over 2020-25. But there remains a huge divide to bridge between developed and developing nations ahead of Cop 29 . Developed countries have yet to commit to a number for climate finance, while developing nations have for some time called for a floor of at least $1 trillion/yr. The Cop 29 presidency is seeking to build on "possible convergence on certain elements" to provide a solid foundation to discussions on other parts of the goal, Babayev said. Elements for the formulation of the goal include an amount for the NCGQ, timeframes, scope, sources, as well as accessibility and transparency. Babayev did not provide details on potential convergence, but some common ground was found during technical discussions on elements such as access and transparency. "Qualitative elements of the goal such as transparency and accessibility are also essential to ensuring that the goal is both fair and ambitious," he said. "The substantive framework for the draft negotiation text" on the NCGQ will be released in the next few days, according to Babayev. The NCQG is Cop 29's "top negotiating priority", Babayev said, but he also urged parties to turn pledges made last year for the loss and damage fund — which will support vulnerable countries with the irreversible and unavoidable effects of climate change — into contributions. He said that countries need to "respond to the goal of the UAE consensus [Cop 28 agreement] to transition away from fossil fuels in a just and orderly manner taking into account different national circumstances". There is "no time for us to allow for anyone to try and backpedal on what we have collectively committed to in Dubai," Cop 28 president Sultan al-Jaber said at the meeting today. Cop 28 last year ended with an agreement that included transitioning away from fossil fuels and tripling renewable energy capacity globally by 2030. Al-Jaber said that the next NDCs must be aligned with the Paris agreement and the Cop 28 deal to keep 1.5°C — the Paris accord's most ambitious temperature limit — within reach. NDCs "must be economy-wide, cover all greenhouse gases and seize the opportunity of climate action as a driver for sustainable growth", he said. He recognised the efforts of G7 countries in including references to the Cop 28 agreement in their final communique and that he "was very hopeful that the same would happen at G20" later this year. G7 countries in May committed to phasing out "unabated coal power generation" by 2035 — putting a timeframe on a coal phase-out for the first time. They also pledged "to transition away from fossil fuels" in energy systems in a just, orderly and equitable manner, accelerating actions in this critical decade, to achieve net-zero by 2050 in keeping with the best available science", which is the language used in the Cop 28 text. Heads of states and governments in September adopted a pact that also included this wording ahead of the UN general assembly . By Caroline Varin Send comments and request more information at feedback@argusmedia.com Copyright © 2024. Argus Media group . All rights reserved.

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Russia to present climate strategy at Cop 29


09/10/24
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09/10/24

Russia to present climate strategy at Cop 29

Edinburgh, 9 October (Argus) — Russia is preparing to present its climate strategy at the UN Cop 29 climate conference in Baku, Azerbaijan, in November, deputy prime minister Alexander Novak said. Novak convened a meeting with Russian ministries on climate issues on 7 October, in which a forecast for Russia's emissions rates, in line with the country's 'low emissions economic development strategy to 2050', was discussed. The strategy was approved in 2021. It is unclear whether the strategy is linked to Russia's new Nationally Determined Contribution (NDC) — a climate plan to be submitted to the UN. Cop parties are expected to publish their next NDCs to the Paris climate agreement — this time for 2035 — in November-February, as part of a cycle that requires countries to "ratchet up" their commitments every five years. Russia's president Vladimir Putin announced Russia's 2060 net zero ambitions in October 2021, but the country has not updated its NDC since 2020. The Cop 28 agreement signed in the UAE last year included an energy section calling for "transitioning away from fossil fuels in energy systems", a tripling of renewable capacity by 2030 and for "accelerating action in this critical decade", giving the direction countries need to take in the energy transition. The country's main focus is on doubling the absorptive capacity of Russia's forests and producing and exporting more gas, to replace demand for more carbon-intensive oil and coal. Russia has no plans to reduce coal and oil output. Russia's climate envoy Ruslan Edelgeriyev said in November 2022 that Moscow could achieve net zero a decade earlier than in 2060 if its access to international debt markets and technology was not blocked because of the sanctions imposed over Ukraine. While reiterating net zero ambitions last year despite the sanctions, Putin repeatedly called accelerated decarbonisation irresponsible, claiming that it contributed to Europe's energy crisis in 2021. Send comments and request more information at feedback@argusmedia.com Copyright © 2024. Argus Media group . All rights reserved.

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