PNG Suspends New Carbon Credit Deals While Writing New Rules
Why PNG Bans Voluntary Carbon Credit Deals
The Carbon Credit Market and PNG
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The IPCC’s AR6 report on climate change shows scientific evidence why we should act now or it would be too late.
From 2010 to 2019, the average annual global GHG emissions were at their highest historical levels, as shown below.
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India’s lofty climate goal is at risk due to the financial problems that power retailers face, along with other issues.
Part of the country’s green plan is to increase renewable energy capacity by the end of 2022.
But estimates from BloombergNEF reveal that India is likely to miss its 175 GW target. This translates to around 36% of failing to achieve such renewables goal.
This scenario is an indicator that the country is having structural issues on its way to net zero. The power suppliers, in particular, which control about 90% of the nation’s electricity supply are one of the main culprits.
The financial distress of India’s power retailers is the key reason why its 2022 target seems to fail. They struggle to pay off debts and recover losses, affecting their service delivery.
Such a situation led to power suppliers’ missed payments to power producers. In effect, it also impacts other transactions across the industry, hindering growth.
For instance, wind projects that won government auctions did not manage to take off. This is largely linked to the issues confronting the distribution utilities.
Thus, industry experts believe that it’s imperative not to rely on state power retailers in hitting India’s climate goal.
Otherwise, it will put the nation’s climate goals at risk.
One way to expand its renewables target is to use new technologies like green hydrogen. This prompted the government to use extreme measures to offer citizens affordable, clean energy.
Unfortunately, the quest for clean energy has driven energy prices too high. This makes things even more challenging for the nation to advance its climate plan. Other major factors are also at play.
“Renewable energy is a business where making the most out of the investment is vital”, the CEO of a solar power developer said. But, if there are too many changes in a policy that affect the cost, growth in the sector becomes slow.
Also, taxes and import tariffs increases caused uncertainties in costs. For example, a sharp rise in renewable energy equipment taxes, from 5% to 12%, hit power developers so hard.
Likewise, major solar power developers in India are dubious about the new import tax. They are forced to delay big solar projects, holding 900 MW, because of a high customs tax of 40%.
Such is the case with the renewables partnership between Scatec ASA and Acme Solar Holdings. There are other renewables projects that can largely contribute to India’s climate goal. But those structural issues are putting them on hold.
India managed to report some renewables achievement, 152.9 GW + 72.6 GW, powered by hydro, solar, and wind. But still, such figures are too far from India’s ambitious climate goal set by Modi at the COP26 summit.
The country seeks to have 500 GW of renewables by 2030, getting huge interest from investors.
Yet, what’s even more critical than winning investors’ attention is fixing the major problems hurting the power sector in India.
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What makes Netflix’s carbon offset projects of high quality is its diligent evaluation process. It includes a five-step screening of RFP-based procurement, resulting in identifying the highest-quality nature-based projects
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The pressure to seek net-zero pledges that include Scope 3 emissions is rising.
Here is an overview of the differences between Scope 1, Scope 2, and Scope 3 emissions.
CO2 emissions falling under Scope 3 include value chain emissions, and carbon footprint from suppliers, customers, business travels, company leases, and more.
Businesses with low Scope 1 and 2 emissions, but high Scope 3 emissions may soon face financial issues if they don’t pay attention to it. Why is that so?
Before investors were looking for companies to reduce only operational emissions (Scope 1) and indirect emissions from energy purchases (Scope 2).
But now, they are shifting their focus to the whole business supply chain.
ESG investors are looking for companies that are able to change and commit to achieving climate goals.
Thus, the main question they have concerns the entire activities that firms are doing or not relating to emissions. This means the importance of Scope 3 emissions is of high interest, too. In fact, it is where the largest carbon footprint is happening.
According to the Greenhouse Gas Protocol, there are 15 classes of Scope 3 emissions. GHG Protocol uses a world-renowned standard to measure and manage GHG emissions of companies and their value chains. It identifies “purchased goods and services” and “use of sold products” as most vital.
Take for instance the case of the oil and gas industry. O&G companies often have big Scope 3 emissions from end-product combustion.
Those value chain emissions are even much higher, 6x or more than the combined Scope 1 and 2 emissions.
In fact, many businesses have Scope 3 emissions that account for over 70% of their total footprint.
As investors prefer a low emissions economy, a company’s climate plans have to align with it. But, companies with high supply chain emissions but low operational emissions may find it tough.
The financial challenge is due to various things. These include policy risks, carbon pricing, and shifts in end-product market demand.
Worse is that companies don’t have enough control over their Scope 3 emissions. This makes factoring in and managing supply chains emissions complex and burdensome.
Complicating the issue is a lack of regulatory guidance promoting the importance of Scope 3 emissions.
SEC had recently issued a proposed rule on emissions disclosure. Yet, while it has clear guidelines on Scopes 1 and 2 disclosure, disclosing supply chain emissions is left to the company to determine.
Is Scope 3 emissions “material” to disclose, too? It depends on the firm to decide.
For bigger companies that have been reporting all their emissions, it is a must. But for smaller ones that don’t have the capacity to do it, they are an exception to the SEC’s rule.
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Empowering communities to take climate action
In particular, part of Canada’s 2030 Emissions Reduction Plan is to invest $2.9 billion to make buying zero-emission vehicles (ZEVs) more affordable.
It will also have a regulated sales mandate so that 100% of new passenger cars sold will be zero-emission by 2035. The interim targets for ZEV are 20% by 2026 and 60% by 2030.
Canada’s Emissions Reduction Plan also reveals another $780 million to invest in the power of nature to capture and store carbon. These include the oceans, wetlands, peatlands, grasslands, and agricultural lands. Investments in this area will further explore the potential for negative emission technologies.
Even more crucial is reducing oil and gas methane emissions by 75% in 2030 while creating good jobs. The estimated contribution for the oil and gas sector alone is a 31% reduction from 2005 levels. This is equal to a 42% reduction from 2019 levels.
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AirCarbon Exchange (ACX) signed a partnership with CarbonX to help boost the Indonesian carbon market.
AirCarbon Exchange is a digital exchange seeking to speed up the globe’s journey to net zero. Whereas CarbonX is an Indonesian high-impact carbon asset developer.
They agree to develop the Indonesian marketplace via a memorandum of understanding (MoU).
In general, the agreement will create a complete carbon infrastructure. Through it, participants worldwide can do business in an efficient and transparent fashion.
In particular, the MoU will enable the Indonesian carbon market to scale up. It will give carbon project developers access to ACX’s international carbon market. These include various participants from 30 different countries.
The signing of the MoU is very timely as Indonesia recently declared its commitment to net zero. During the COP26 Conference in Glasgow, it plans to reach its Net Zero Emissions or NZE goal by 2060 or sooner.
In fact, Presidential Regulation Number 98/2021 specifies Indonesia’s NZE target. This new rule on carbon trading created result-based payments for emission reduction projects. It also initiated the formation of a domestic carbon credit scheme to be set up by 2025.
To meet such targets, the nation needs huge investments in its marketplace of about 3.4% to 3.5% of its GDP each year.
And so, all Indonesian carbon market players have to work together to make the NZE plan a reality.
This is where the market platform created by the CarbonX-ACX collaboration comes in. It will help attract more carbon investments and funding.
CarbonX said that if things go as agreed, the market will yield large carbon offset supplies.
Meanwhile, ACX stated that the MoU is another milestone in its aim to be one of the premier carbon markets. They also believe that the partnership will boost Indonesian carbon asset producers.
Founded in 2019, ACX is a hybrid exchange that uses blockchain’s efficiency and speed. It operates through a traditional central order book architecture to perform its trading.
As such, the company bags one prestigious recognition in the voluntary carbon market (VCM). It won the Best Carbon Exchange in Environmental Finance’s 2021 VCM Rankings.
By leveraging ACX’s expertise, the CarbonX partnership will launch on a rapid scale. The Indonesian carbon market may begin to witness more carbon trading activities once the MoU takes off.
Earlier this year, Indonesia partnered with Singapore to advance its climate goals including carbon credits.
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Poland’s biggest airline, LOT Polish Airlines, urged to cancel the EU ETS due to rising jet fuel prices.
LOT Airlines CEO stated that the “EU ‘Fitfor55’ (strategy) needs to be fundamentally reviewed… it is extremely idealistic and I am afraid it is going to kill a number of airlines”
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