The current trading levels of between €16-18 per metric ton are roughly two thirds of the level of the high of 2019 of €29 per metric ton.
“This is a perfect storm for Europe’s carbon market, and it may well lead to some challenging questions about its role in Europe’s decarbonisation strategy once the COVID-19 crisis has passed,” said IHS Markit director Coralie Laurencin.
The EU’s emission trading system (ETS) is one of Europe’ main instruments to convince energy-intensive industries and the power sector to switch to a less polluting production. A rise in prices last year has, for example, led to the switch off of several coal-fired power stations across the continent, and given incentives to turn to renewable energy sources.
The drivers of the price collapse in the ETS according to the analyst firm are a reduced economic activity and power demand, as well as lower aviation demand that will lead to lower 2020 emissions across Europe.
2) SOS: EU Urged To Put Economic Survival Ahead Of Green Deal
Global Warming Policy Forum, 4 April 2020As Europe’s economies are in full lockdown, industries facing total collapse are desperately calling on the EU to water down or at least delay costly climate policies.
In this crisis it is becoming evident that the Green Deal is an existential threat to Europe’s economies and the wellbeing of the general public rather than a benefit.
Eleven million jobs at risk from EU Green Deal, trade unions warn
EU urged to put shipping recovery ahead of green deal
The European Community Shipowners’ Associations (ECSA) said the shipping industry has to recover from the impact of the coronavirus pandemic before it can commit to a green deal. ECSA secretary general Martin Dorsman urged the European Commission to assess the impact of the pandemic on the shipping industry and “work on a recovery plan, before stating that the European green deal is keeping to its deadline no matter what”. [….]
Dorsman said it is “impossible for the industry to continue the process of greening the fleet, which was picking up speed before the [coronavirus] pandemic set in, should this continue”.
Europe’s Car Manufacturers Ask EU Commission To Delay CO2 Emissions Targets In Light Of Coronavirus
Carmakers are requesting that the European Commission “delay the application of certain rules” relating to CO2 emissions in the wake of coronavirus shutdowns across Europe.
Several car manufacturers have sent a letter to the European Commission, enquiring whether “certain rules” can be altered due to the situation created by the coronavirus outbreak.
It’s understood that the request relates to the tough CO2 emissions targets that were introduced for 2020, and if their full implementation can be delayed.
The rules stipulate that the average emissions of all the cars sold by a manufacturer from 2020 must not exceed 95g/km, and if they do, the company will be liable for hefty fines.
Now, though, with car factories and dealers in almost every European country shut down due to government-imposed social-distancing and lockdown measures, brands are concerned they won’t be able to sell the cars needed to meet the target.
Construction Sector Calls On EU To Delay CO2 Regulations
Six industry associations representing the non-road mobile machinery (NRMM) sector have called on the EU to delay the deadlines for CO2 emission limits during the coronavirus pandemic.
CECE, CEMA, EGMF, EUnited Municipal Equipment & Cleaning, Europgen and FEM sent a joint letter to the European Commission asking for a moratorium on the 2020 and 2021 deadlines.
3) German Car Industry Calls On EU To Drop Tighter CO2 Emission Targets
GWPF & Clean Energy Wire & The Local, 3 April 2020
The German car industry is calling for stricter EU climate requirements to be overturned or to be delayed as car sales plummet to lowest level in nearly three decades.
The German car industry has urged the government to back them in efforts to make the European Union drop a planned tightening of emission limits on cars, reports Süddeutsche Zeitung. Leading industry and trade union representatives met with Chancellor Angela Merkel, economy minister Peter Altmaier, and transport minister Andreas Scheuer on 1 April for a crisis meeting in light of the economic difficulties car manufacturers are facing due to the coronavirus. “This not the time to think about further tightening of the CO₂ regulation,” Hildegard Müller, president of in the influential carmaker lobby group VDA later said.
Meanwhile, analysts from the Landesbank Baden-Wurttemberg (LBBW) called it “absolutely necessary” to discuss the European Commission’s CO2 fleet regulations in light of the coronavirus crisis, writes media FAZ. The analysts expect 12 to 15 percent fewer cars being sold worldwide this year, while manufacturers may have to pay 15 billion euros in fines to the EU for failing to comply with CO2 limits. “Surely it cannot be that the state is supporting the economy with short-time work and liquidity aid and at the same time the car manufacturers are supposed to transfer 15 billion euros to Brussels,” said LBBW car analyst Gerhard Wolf. The bank proposed suspending fines for a year, slowing down the tightening of CO2 fleet limits, or introducing a bonus system to reward progress on green mobility.
German car sales plummet to lowest level in nearly three decades
New registrations of cars on German roads plunged in March to the lowest in almost three decades, official data showed Friday, as restrictions to slow the spread of the coronavirus inflicted a heavy blow.
Sales tumbled 38 percent year-on-year to just over 215,100 according to data from the KBA vehicle licensing authority.
“Necessary health policy measures, like the massive limits on public life, closure of car dealerships and limited ability to work in the licensing offices” had braked the car trade, the VDA carmakers’ federation said.
Domestic demand fell 30 percent, while foreign orders were down 37 percent.
In a quarterly comparison, sales in January-March were down 20 percent year-on-year.
“April is likely to be even more catastrophic,” analysts from consultancy EY predicted.
4) Airlines Urge UN Aviation Body To Rethink Climate Measures
EurActiv, 7 April 2020
Airlines are putting pressure on the UN to make it easier for them to curb emissions in the 2020s, as the industry reels from the collapse of air travel because of the coronavirus.
The International Air Transport Association (IATA), which represents the world’s airlines, said it wanted to change the baselines from which traffic growth will be judged in coming years to pre-pandemic levels in 2019.
It said it wanted to “avoid an inappropriate economic burden on the sector” by dropping a planned baseline of average emissions in 2019-2020 that is likely to be much lower than 2019 since many flights are now grounded.
As part of efforts to curb the aviation sector’s growing emissions, countries that are members to the International Civil Aviation Organisation (ICAO) – the UN body responsible for aviation – have agreed an “aspirational goal” to make all growth in international flights carbon neutral after 2020, compared to both 2019 and 2020.
Under the existing plan, countries have agreed to use a market-based offset mechanism known as CORSIA. But the public health crisis and collapse of air travel means emissions from aviation are anticipated to fall this year.
5) Electricity Price Shock: Estonia Plans To Withdraw From EU Emissions Trading Scheme
ERR News, 6 April 2020
Estonia’s finance minister Martin Helme (EKRE) said on Monday that he is looking into whether Estonia could, on a temporary basis, step out of the European Union emissions trading system (ETS) in order to reduce the price of electricity.
The EU has said this is not possible.
The government has lowered the rates of excise duty on electric energy to a minimum allowed by the European Union. The rate will drop from €4.47/MWh to €1/MWh, which means that consumers will pay 3.1 percent less.
“We lowered the excise tax four and a half times. This, however, doesn’t mean that the price of electricity will drop four and a half times, as the excise tax is just one part of the price of electricity,” Helme said at a Tre Raadio program during the weekend.
According to the minister, if Estonia would want to reduce the price of electricity significantly, the country should withdraw from the EU emissions trading system.
“CO2 price makes up half of the price of electricity. I’ve done a bit of research and have also asked the environment ministry to do the same on how to step out of the CO2 scheme, even on a temporary basis,” Helme said. “This is the largest part of the price component, the so-called administrative price.”
“Our electricity is more expensive than in Finland and Sweden,” Helme added. “This is the system of connected vessels – if taxes are very high, prices have to go down and this is done to the detriment of wages.”
6) Goodbye Renewable Energy. Hello Cheap Oil
Ed Cloves, The Daily Telegraph, 3 April 2020
The current dual crises of oil and Covid-19 have thrown the future of renewables in to doubt
Rejoice, climate change activists. Around the world, greenhouse gas emissions are dropping.
The demand for energy, until recently the cornerstone of globalisation and economic growth, has plummeted as countries implement sharp restrictions on movement and social activity in an effort to beat back Covid-19.
Oil has crashed in value, approaching levels not seen in decades, as lockdowns put economies on hold the world over.
Even before oil was engulfed in its latest crisis, it was already facing an existential threat from new forms of renewable energy.
Fossil fuel use hit a record low in the UK last year, as the country increasingly opts for cleaner energy in a bid to rid itself of a reliance on oil, gas and coal by 2050.
Power from hydroelectric plants, or wind and solar farms has never been cheaper or more abundant.
So you might be forgiven for thinking that this most recent crash represents the final nail in the coffin for oil. But not so soon, say experts.
“Low oil and gas prices will place pressure on the economics of renewable energy sources and, without policy support, some renewables that have seen rapid deployment will have to wait for credit markets to recover, ceding ground to cheap hydrocarbons and fossil fuels,” says Reed Blakemore, deputy director of the Global Energy Center at the Atlantic Council.
The double whammy of Covid-19 smashing world economies and public budgets is also likely to harm the prospects of renewable energy.
7) Harry Wilkinson: We Must Not Let Green Extremists Exploit the Coronacrisis
Free Market Conservatives, 7 April 2020
For years, we have been warned that a catastrophic environmental crisis is on its way – whilst living in a world that is uncertain about what a real global crisis looks like. Well, now we know. The coronavirus pandemic is horribly real.
We need to learn the right lessons from how we manage it, and be careful to avoid the worst mistakes. Having the right attitude to risk is key.
Already, environmentalists are applying ‘coronavision’ to the climate change debate. A certain type of green activist welcomes the virus, seeing it as a sort of divine punishment for a civilisation that has lost its way. For most of human history, people have tended to view plagues and other natural disasters in much the same way.
A more sophisticated response comes from decarbonisation advocates who argue that the experience of the pandemic is a striking vindication of the ‘precautionary principle’ – that is, better safe than sorry.
This approach demands that we do everything possible to prevent a climate crisis regardless of the lack of certainty about the efficacy of our ‘preventative’ actions.
That certainly appears to have been happening with the coronavirus – with government after government throwing everything at stopping the spread, however much damage is done to the global economy. And where the virus is concerned – this may well prove to be the correct response.
At the moment it’s a case of ‘wait and see’. The Swedish experiment means we can pit two contrasting strategies against one another. If the precautionary principle does end up being seen as more successful, then we need to be much more aware of its fundamental limitations before extending any lessons more broadly.
For a start, this crisis has been immediate and largely unexpected, in stark contrast to the endless and repeated warnings of a climate apocalypse (perennially postponed). We have more time to adjust to any changes in global temperature, and our knowledge of the climate is already quite advanced.
Using the right information and learning from experience will always beat blind fear. In South Korea, the knowledge gained dealing with an outbreak of Middle East Respiratory Syndrome (MERS) in 2015 was vital. It prompted them to develop an effective test and trace regime, which appears to have been very successful. The whole point here was to avoid having to rely on the precautionary principle, and the costly actions it entails.
Insurance policies worth their salt provide genuine cover against disasters, and at a reasonable price. It is far from clear whether the lockdowns introduced by so many countries will not do more damage to society than the pandemic itself. We will only find out if we try to objectively assess the evidence as it emerges. This becomes much harder when those who raise concerns about the costs of the lockdown are shouted down and dismissed.
Most of all, we need to remember that risk-taking is fundamental to living in a free society. There is no such thing as a zero-risk activity. Deciding what constitutes the riskier course of action is often not obvious and normally subject to our own prejudice. The objective is never to eliminate risk entirely.
For these reasons, Net Zero is looking more and more like the worst possible kind of insurance policy. We are planning to cripple our own economy in the pursuit of steep emissions reductions, all in the (hopefully unfounded) expectation that developing countries will do the same. How on earth will any of this protect us from the floods, droughts and hurricanes that will all inevitably happen, regardless of the severity of anthropogenic climate change?
Goodness knows, if a small fraction of the amount that has been invested in renewable energy had instead been devoted to drought resistant crops, flood defences and on developing more resilient infrastructure, how much better protected we might be.