COP29 Climate Summit: Key Developments and Challenges

The price of the carbon certificate (EUA) managed to close above €69.5, yesterday, 18.11.24. In the long term, EUA continues to fluctuate between €64 and €71. The trend turns bullish above the €71.70 level, according to Carbon Expert analysts.

The 29th United Nations Climate Change Conference (COP29) is hosted in Baku, Azerbaijan, from November 11 to 22, 2024. The summit brought together over 30,000 participants, including global leaders, policymakers, and climate experts to discuss international climate action.

Main Discussions and Outcomes

1. Climate Finance Commitments

A central focus of COP29 was establishing a new global climate finance target to succeed the previous $100 billion annual commitment. Developing nations, led by China, advocated for over $1.3 trillion annually to support mitigation, adaptation, and loss and damage efforts. Wealthier countries acknowledged the necessity for increased funding but emphasized the need for diversified sources, including private sector contributions and innovative financial mechanisms.

2. Operationalizing the Loss and Damage Fund

Building on agreements from COP27, delegates worked to operationalize the Loss and Damage Fund aimed at assisting countries disproportionately affected by climate change. Discussions centered on funding mechanisms, governance structures, and ensuring timely disbursement to vulnerable nations.

3. An International Carbon Market

One of the most significant achievements of COP29 was the adoption of a framework under Article 6 of the Paris Agreement, which governs international cooperation on carbon markets. Article 6 aims to allow countries to voluntarily cooperate in achieving their climate targets by enabling the trading of carbon credits. It provides a legal basis for the transfer of carbon credits between countries, facilitating the use of market-based mechanisms to drive investments in emissions reduction projects.

At COP29, delegates finalized guidelines to operationalize Article 6, ensuring transparency and accountability in carbon trading. These guidelines include measures to prevent double counting of emissions reductions and establish reporting requirements to track the origin and use of carbon credits.

This mechanism is expected to get substantial climate finance, offering countries the flexibility to meet their emission reduction targets through trading while encouraging investments in low-carbon technologies. The integration of voluntary and compliance carbon markets under Article 6 has the potential to scale private sector contributions significantly. Nations expressed optimism that the finalized framework would attract investments in renewable energy, forest conservation, helping to connect climate ambition and actionone with each other.

Challenges Faced

The significant presence of fossil fuel lobbyists at COP29 drew criticism from environmentalists and some delegates. Concerns were raised about the industry’s influence on negotiations and the potential dilution of climate commitments.

Conclusion

COP29 in Baku marked a step forward in advancing international climate policy. The breakthroughs in carbon market mechanisms represent the opportunity to mobilize both public and private climate finance. However, challenges like fossil fuel industry influence and the slow pace of some negotiations show the difficulty of global climate governance. The progress made at COP29 is expected to shape climate strategies and national policies, paving the way for more global climate financing.

COP29 Climate Summit: Key Developments and Challenges

COP29 Climate Summit: Key Developments and Challenges

The 29th United Nations Climate Change Conference (COP29) is hosted in Baku, Azerbaijan, from November 11 to 22, 2024. The summit brought together over 30,000 participants, including global leaders, policymakers, and climate experts to discuss international climate action.

Main Discussions and Outcomes

1. Climate Finance Commitments

A central focus of COP29 was establishing a new global climate finance target to succeed the previous $100 billion annual commitment. Developing nations, led by China, advocated for over $1.3 trillion annually to support mitigation, adaptation, and loss and damage efforts. Wealthier countries acknowledged the necessity for increased funding but emphasized the need for diversified sources, including private sector contributions and innovative financial mechanisms.

2. Operationalizing the Loss and Damage Fund

Building on agreements from COP27, delegates worked to operationalize the Loss and Damage Fund aimed at assisting countries disproportionately affected by climate change. Discussions centered on funding mechanisms, governance structures, and ensuring timely disbursement to vulnerable nations.

3. Carbon Market Mechanisms

One of the most significant achievements of COP29 was the adoption of a framework under Article 6 of the Paris Agreement, which governs international cooperation on carbon markets. Article 6 aims to allow countries to voluntarily cooperate in achieving their climate targets by enabling the trading of carbon credits. It provides a legal basis for the transfer of carbon credits between countries, facilitating the use of market-based mechanisms to drive investments in emissions reduction projects.

At COP29, delegates finalized guidelines to operationalize Article 6, ensuring transparency and accountability in carbon trading. These guidelines include measures to prevent double counting of emissions reductions and establish reporting requirements to track the origin and use of carbon credits.

This mechanism is expected to get substantial climate finance, offering countries the flexibility to meet their emission reduction targets through trading while encouraging investments in low-carbon technologies. The integration of voluntary and compliance carbon markets under Article 6 has the potential to scale private sector contributions significantly. Nations expressed optimism that the finalized framework would attract investments in renewable energy, forest conservation, helping to connect climate ambition and actionone with each other.

Challenges Faced

The significant presence of fossil fuel lobbyists at COP29 drew criticism from environmentalists and some delegates. Concerns were raised about the industry’s influence on negotiations and the potential dilution of climate commitments.

Conclusion

COP29 in Baku marked a step forward in advancing international climate policy. The breakthroughs in carbon market mechanisms represent the opportunity to mobilize both public and private climate finance. However, challenges like fossil fuel industry influence and the slow pace of some negotiations show the difficulty of global climate governance. The progress made at COP29 is expected to shape climate strategies and national policies, paving the way for more global climate financing.

Composting Manure Leads to a Reduction in Methane Emissions

Did you know that any process of composting manure through aerobic fermentation leads to a reduction in methane emissions, which automatically translates into CO2e savings?

And that this can turn into carbon credits?

These questions were addressed in Bucharest on October 2, 2024, in a transparent, interactive, and professional manner by Carbon Expert and Kofert Organic during the stakeholder meeting for the composting projects developed by Kofert Organic in Mihăilești, Giurgiu County, and Băicoi, Prahova County.

The meeting was attended by decision-makers from the Ministry of Environment, the Environmental Fund Administration, and the National Environmental Guard, independent Romanian experts, and representatives from the Circular Economy Coalition. Additionally, there was a renowned and significant international presence, including technology producer Kohshin Engineering Co – Japan, Marubeni Corporation – Japan, Kohshin Europe – Romania, as well as companies from Bulgaria, Hungary, and Saudi Arabia.

The two projects aim to implement Japan’s Kohshin technology for the automated composting of manure and organic fertilizer production, addressing two urgent challenges: manure waste management and soil health improvement. Through partnerships with livestock farms and agricultural enterprises, Kofert Organic is implementing a sustainable solution to turn manure into organic fertilizer, contributing to the United Nations’ Sustainable Development Goals.

“We are delighted with the receptiveness of the Romanian business environment towards adopting innovative technologies and express our hope that the two Kofert projects will achieve their decarbonization goals. Through our direct involvement, we aimed to provide Kohshin partners with an improved algorithm for increasing sustainability, by adding new revenue streams through the monetization of carbon credits,” said Kazunori Sumiya, CEO of Kohshin Engineering Co, Japan.

The main objective of the stakeholder meeting was to understand the project certification process to obtain CO2 credits, as a source for the future development of Kofert Organic’s sustainability.

The partnership between Carbon Expert and Kofert Organic materialized through the completion of pre-feasibility studies to certify the projects with the Gold Standard organization in Switzerland for both projects, analyzing the certification criteria, the steps to follow, associated benefits, and the projects’ environmental and community impact, essential aspects for realizing the projects’ potential in reducing methane emissions.

“For Carbon Expert, the partnership with Kofert Organic, Kohshin Engineering Co, and Kohshin Europe represents a dream come true in our path to development. We have always wanted to contribute to community projects for sustainable agriculture in Romania. We hope to expand this project not only in Romania but also to other parts of the world, so that with the help of Japanese Koshin technology and research conducted by our partners over more than 50 years, we can significantly reduce the amount of chemical fertilizers, replacing them with nutrient-rich organic fertilizers,” stated Casiana Fometescu, founder and CEO of Carbon Expert.

With over 15 years of experience in the carbon market, Carbon Expert is currently running more than 10 projects in Romania, the USA, Germany, and Ireland for voluntary certification together with the Gold Standard certification organization in Switzerland. These voluntary CO2e emission reduction projects are unique in Europe and will pave the way for obtaining voluntary carbon credits (VER – Verified Emissions Reduction) in this region.

Carbon Expert coordinates the “energy and CO2e emissions” working group within the Circular Economy Coalition, targeting the legislative and business environments. It also coordinates the process of obtaining carbon credits for various projects in plastic, aluminum, and glass recycling, energy efficiency projects, and biocompost or biofuel production.

Newsletter Carbon Markets 25/09/24

The price of the European carbon allowance (EUA) on the ICE market rose on Tuesday to €64.21, once again taking cues from the stronger TTF gas market. However, analysts continued to point to technical indicators that could suggest a potential price drop and highlighted possible volatility ahead of Wednesday’s options expiry. The price of the UK carbon allowance (UKA) fell to £38.53 on the ICE market.

EU Carbon Market Slashes Emissions by 47% Over 15 Years

The data reported by EU member states regarding verified emissions in 2023 under the EU ETS show a 15.5% reduction in emissions in 2023 compared to 2022 levels. Given this trend, ETS emissions from key sectors, including energy and heavy industry, are now approximately 47% below 2005 levels and are on track to meet the -62% target by 2030.

The most significant driver of the record decrease in EU ETS emissions was the energy sector, with emissions from electricity generation dropping by a significant 24% compared to 2022. This reduction is due to a substantial increase in electricity production from renewable sources (primarily wind and solar), at the expense of coal and gas.

For the full report, click here.

 BRICS Countries to Partner on Carbon Market Development

In a significant step toward international climate cooperation, BRICS countries (Brazil, Russia, India, China, and South Africa) have agreed to partner on developing carbon markets. This collaboration aims to create integrated markets that can reduce carbon emissions across some of the world’s largest emerging economies. With varying stages of development in each nation, the partnership will focus on sharing best practices, creating harmonized frameworks, and boosting investment in sustainable technologies.

This initiative is crucial for global efforts to meet climate targets, as these countries are major contributors to global emissions. By coordinating on carbon pricing and trading mechanisms, BRICS nations aim to take proactive steps towards reducing their environmental impact while fostering economic growth.

Explore more about this partnership here.

Nature Restoration Law Takes Effect

The European Union’s Nature Restoration Law has officially come into force. Aimed at reversing decades of ecosystem degradation, the law mandates the restoration of 20% of the EU’s degraded ecosystems by 2030, setting the stage for an expansive rejuvenation of natural habitats. This legislation emphasizes the restoration of wetlands, forests, grasslands, and urban ecosystems, addressing biodiversity loss and tackling climate change head-on.

The law represents a commitment to rebuilding resilience in the face of increasing environmental pressures, with a long-term vision for healthier ecosystems by 2050. Restoration projects will now be scaled up across member states, and funding mechanisms have been put in place to support large-scale initiatives. In addition to benefiting biodiversity, the restoration efforts are expected to enhance carbon sequestration, bolster clean water sources, and reduce natural disaster risks such as floods and droughts.

Read more about the law here

Carbon Expert is a consultant in the carbon market, helping you reduce emissions and capitalize on allocation trading opportunities.

With customized solutions, we support you in complying with current regulations and efficiently achieving your sustainability goals.

Source : European Comission, European Parlament, Carbon Pulse, Green Earth

Newsletter: A Boost for the Green Economy in Romania 11/09/2024

European carbon allowance (EUA) prices fluctuated in line with natural gas prices on Monday, ending the session almost unchanged at €65.27, as afternoon selling interest capped earlier gains. UK carbon allowance (UKA) prices ended at £42.44 on the ICE market.

Romania is set to benefit from a substantial €31.5 billion allocation under the EU Cohesion Policy for 2021-2027. Of this total, €13.5 billion is dedicated to the “A Boost for the Green Economy” fund. More information about this directive can be found here :

https://ec.europa.eu/commission/presscorner/detail/ro/ip_22_4662

The “A Boost for the Green Economy” fund is specifically designated to advance Romania’s green transition. This fund is aimed at fostering sustainable development through investments in green energy, carbon emission reductions, environmental infrastructure, and biodiversity conservation.

Among the €13.5 billion allocated funds, €6.75 billion is dedicated specifically to advancing the green transition. This investment focuses on enhancing green energy, reducing carbon emissions, and improving environmental infrastructure. Key areas of funding include :

• green energy initiatives
• carbon reduction projects
• biodiversity conservation
•  green spaces
•  risk management
• sustainable urban mobility

Strategic Investments for Romania’s Green Future

€2.3 billion will be used to upgrade the energy performance of residential and public buildings, and to invest in renewable energy sources and smart energy systems. This will significantly reduce energy consumption and carbon emissions, supporting the decarbonization of Romania’s energy sector.

Additionally, €2.34 billion will be directed towards the water and wastewater sector, enhancing the circular economy with a focus on waste management, re-use, and recycling.

Furthermore, €2.14 billion from the Just Transition Fund (JTF). This fund will target regions in Romania most affected by the phase-out of coal and lignite, concentrating on transforming energy-intensive industries and ensuring a fair transition for the affected communities.

This substantial funding represents a transformative opportunity for Romania, enabling significant strides towards a more sustainable and resilient economy. The investments will not only advance green energy and environmental projects but also ensure a balanced transition for communities affected by the shift away from traditional energy sources.

Carbon Expert is here to assist private businesses in navigating and accessing these vital funds. Our expertise in carbon trading and green consultancy can help you identify and secure the necessary financial resources for your green projects, ensuring you capitalize on the opportunities provided by this substantial investment.

Sources : European Comission, Carbon Credits

Sweden and Malta’s Strategic Move in EU Emissions Trading – 20.08.2024

EUAs posted their third weekly gain in the last month, as modest buying activity was enough to counter active selling pressure, while trading volume shrank as participants headed into the peak summer weekend and UKAs snapped a run of six weekly losses.

Sweden and Malta’s Strategic Move in EU Emissions Trading

In a significant development for the European Union’s climate policy, Sweden and Malta have announced their intention to increase the number of European Union Allowances (EUAs) they plan to cancel under the EU Emissions Trading System (ETS) flexibility mechanism.

The ETS flexibility mechanism, which allows eligible EU member states to cancel a portion of their EUAs instead of auctioning them, was introduced to help countries meet their emission reduction targets under the Effort Sharing Regulation (ESR). The ESR focuses on sectors not covered by the EU ETS, such as transport, agriculture, and waste management, and requires a 40% reduction in these sectors by 2030 compared to 2005 levels.

This decision, which aligns with the EU’s broader targets for reducing greenhouse gas emissions, reflects the commitment of these nations to achieve their emission reduction targets from non-ETS sectors, yet not through concrete emission reduction solutions, but by making some compensations between the allocations distributed to the countries for the EU ETS sectors towards non-ETS sectors, which cannot otherwise fulfill their imposed targets.

Sweden, which had previously refrained from using this flexibility, now plans to cancel up to 5.2 million EUAs, while Malta has increased its cancellation target to 510,300 EUAs.

The timing of this announcement is critical. As the EU gears up for its ambitious 2030 climate targets, the flexibility provided by the ETS is seen as a vital tool for balancing economic growth with environmental responsibility. However, it also highlights the challenges faced by smaller nations like Malta, which must navigate the complex dynamics of the EU’s carbon market while maintaining their economic competitiveness. The introduction of new ETS regulations, particularly in the shipping sector, has raised concerns about the potential economic impact on Malta’s role as a major transshipment hub. The Malta Maritime Forum has warned that the increased costs associated with the EU ETS could lead to a significant loss of business to non-EU ports, particularly in North Africa, threatening Malta’s economic stability and connectivity.

These developments indicate a growing trend within the EU where member states are increasingly utilizing the flexibility mechanisms available to them to meet stringent climate goals while mitigating potential economic drawbacks. As Sweden and Malta move forward with their revised strategies, their actions will likely serve as a benchmark for other EU nations facing similar challenges.

Source: The European Commission, Carbon Credits, Ice.com, Carbon Pulse

EU ETS and the Future of Carbon Pricing – 13.08.2024

The Carbon Emissions Certificate (EUA) closely tracked the natural gas prices on the TTF (Title Transfer Facility) market on Thursday, August 8th, as they once again rebounded from an important technical resistance level before briefly surpassing it at the end of the session. The market struggled to find a clear direction on Friday, August 9th, due to low trading volumes during the summer and the lack of fundamental factors to influence the market. In contrast, Monday’s session on August 12th ended with a significant increase of 4.32% on the ICE ECX exchange compared to the end of last week, reaching a spot price of 72.86 Euro/tCO2.

 Current State of the EU ETS

In 2023, the EU Emission Trading System (EU ETS) ended with a surplus of 2.27 billion emission allowances (EUAs), reflecting a continued trend of high surpluses driven by reduced electricity production and the growth of renewable energy. This surplus, slightly down from the approximately 2.4 billion EUAs in 2022, indicates the ongoing impact of policy interventions and increased renewable energy adoption. Despite these reductions, emissions remain below the system’s cap, allowing the surplus to continue. This surplus is distributed among various reserves, such as the Market Stability Reserve (MSR) and the New Entrants Reserve (NER), ensuring that a significant portion of EUAs remain outside circulation.

The European Commission’s MIX scenario aligned with the EU’s 2030 emission targets presents a different picture. Under this scenario, the surplus could shrink to less than 1.1 billion allowances by 2030. This shift hinges on a significant increase in electricity production to 3,153 TWh by 2030, driven by accelerated renewable energy capacity installation. The MIX scenario also forecasts more aggressive emission reductions across sectors like transport and heating, which would push demand for EUAs, narrowing the surplus and consequently increasing their price. Due to the entrance of these new into the EU ETS in 2026, the EUA certificate price is expected to exceed 100 Euro/tCO2.

The future of the EU ETS is deeply intertwined with the EU’s broader energy transition. As the EU moves towards its 2030 targets, careful consideration of supply and demand dynamics within the ETS will be crucial to ensuring a balanced, effective, and fair carbon market.

Source : European Comission, Carbon Pulse, Carbon Credits, Sandbag

Carbon Market – 23.07.2024

The price of the European carbon certificate, EUA, dropped to €64.79 t/CO2 (Monday’s futures price on July 22, 2024, at the ICE ECX exchange in London), falling below the €65t/CO2 level that had kept the market stable since the beginning of July. This decline was influenced by forecasts of high temperatures and increased energy production from renewable sources, thus weak demand.

New Trends in the Market: Carbon Capture and Storage (CCS)

It is estimated that the EU’s oil and gas industry will store 42 million tons of CO2 annually by 2030. This achievement, while remarkable, falls short of the EU’s ambitious target of 50 million tons annually.

According to the oil industry’s trade association, this gap highlights both the progress made and the future challenges on the European Union’s decarbonization path. Nevertheless, achieving the EU-wide goal requires enhanced collaboration, regulatory support, and the accelerated implementation of carbon capture and storage projects.

The push towards carbon capture and storage (CCS) is part of the EU’s broader strategy to mitigate climate change and fulfill its commitments under the Paris Agreement. CCS technology is seen as a crucial tool in reducing greenhouse gas emissions from hard-to-decarbonize sectors, such as heavy industry and power generation.

Several key projects in Europe are leading this initiative. For example, the Northern Lights project in Norway aims to store up to 1.5 million tons of CO2 annually in its initial phase, with plans for expansion. Similarly, the Porthos project in the Netherlands is set to store approximately 2.5 million tons annually by 2026.

Despite these advances, the industry faces obstacles, including high costs, regulatory barriers, and the need for robust CO2 transport infrastructure. To bridge the gap to the 50 million ton target, stakeholders emphasize the need for increased investment and supportive policies from the EU and its member states.

The coming years will be crucial as the EU’s oil and gas sector intensifies efforts to boost CCS capacity. Achieving the 50 million ton target is not just about technological advancements but also about ensuring a sustainable future for Europe. As the world approaches climate tipping points, the role of CCS in the EU’s climate strategy becomes increasingly prominent in the transition to clean energy.

Sources: European Commission, Carbon Pulse, Carbon Credits

Carbon Market – 09.07.2024

European carbon prices traded in an almost-identical range last week at around 70€ as the summer holiday season swung into its peak period, with technical support and resistance levels compressing slightly as the market’s volatility has calmed, while UK Allowances fell away at around £44.50 after a landslide election result ushered in a centre-left government that is expected to speed up action on climate issues.

Guide for the Optimal Operation of the Voluntary Carbon Market

The Voluntary Carbon Market (VCM) allows companies, organizations, governments, and individuals to buy and sell carbon offset credits voluntarily. A carbon offset represents the reduction of one ton of carbon dioxide or other greenhouse gases achieved through an environmental improvement project, for which it must be demonstrated that emission reductions have been achieved. Emissions are turned into credits that companies can purchase. The projects are varied but mainly involve small community-based activities in developing countries. Reforestation projects, for example, have a strong beneficial socio-economic impact.

The voluntary carbon market aims to provide a mechanism for reducing emissions, channel funding, especially to low- and middle-income countries, and finally, pave the way for the creation of emission trading markets where they do not yet exist. Each project must meet the additionality criterion, meaning the removal or reduction of carbon or greenhouse gas emissions would not have occurred without the offset project.

IETA Guidelines and Challenges of the Voluntary Carbon Market

The International Emission Trading Association (IETA) has recently released new guidelines that analyze the use of carbon credits by industries in the voluntary carbon market and incorporate them into their emission reduction strategies. According to the document, there is a considerable possibility that firms will not meet their short-term environmental targets, risking deviation from the Paris Agreement goals of net zero emissions by 2050. IETA states that the role of the voluntary market is vital in the fight against climate change. It should provide “an efficient mechanism for companies to reduce or eliminate emissions in support of global decarbonization” to channel funding where it is needed, especially in poorer countries.

IETA’s guidelines for using carbon credits can be divided into six categories:

  • Companies must ensure, through their decarbonization policies, that they meet the Paris Treaty targets, both in outlines and interim targets.

  • Companies must quantify emissions according to an internationally recognized standard and publicly report them to access the carbon credit market.

  • Companies must establish and ensure a decarbonization pathway leading to the long-term goal of zero emissions, intermediate targets, and investments in environmental protection and economic growth.

  • Companies must use carbon credits by following a series of steps. They must first start with emission avoidance strategies, that is, implementing technological advancements in production processes. Then, they must move on to the actual reduction of emissions and, finally, the use of carbon markets.

  • Companies must use only officially guaranteed carbon credits issued by a reputable carbon credit program that has received an independent, third-party quality label (such as ICVCM, CORSIA, or ICROA).

We also have such a project in Romania, which receives carbon credits annually from the Swiss organization, Gold Standard, for the emission reductions achieved, approved at the same time by CORSIA (Carbon Offsetting and Reduction Scheme for International Aviation). It is about the PET bottle recycling project in Buzau, developed by the company Greentech S.A., part of the Green Group. For more details about the project and how you can buy Greentech project credits, please contact us or click here.

  • And finally, companies must make the use of carbon credits transparent.

The IETA document states that “the voluntary carbon credit market is at a crucial moment.” It must adapt and evolve at a faster pace to maintain investor confidence and contribute significantly to the global goal of zero emissions by 2050. Carbon credit markets are hampered by the lack of a single system of standards and definitions, which now act to increase business confidence in these markets. The IETA document also emphasizes the growing role of removal credits, which are net reductions of CO2 directly from the atmosphere. These credits could also be a valuable mechanism if companies do not meet their interim targets in the transition to net zero.

The IETA guidelines are in line also with the European Green Claims Directive, which has been proposed by the European Commission and currently under discussion at the European Parliament.

Source: IETA, European Comission, Aither Group, Carbon Credits