North Sea Emissions Uncovered

Germany's car industry welcomed March 27 a deal between the government and the European Commission over the use of synthetic fuels, or e-fuels, that stymied the EU's hopes of ending sales of new gasoline and diesel cars by 2035. EU Commission Vice President Frans Timmermans announced a deal over the future use of e-fuels in cars on March 25. German government officials said the compromise allows for internal combustion engine (ICE) cars to be still sold after 2035 if they fill up exclusively with CO2-neutral fuels. Earlier this month, Germany said it would only back a new EU law on CO2 emission standards for cars and vans if Brussels mapped a path for e-fuels that can be used in ICE engines after 2035. Italy, another major European car maker, had already opposed the 2035 de-facto ICE car ban, and Czechia had also joined in the opposition. Although not yet produced on a commercial scale, e-fuels combine green hydrogen made from renewable sources, water and captured CO2 to form an alternative to bio-derived liquid fuels such as biodiesel or ethanol. The resulting e-fuels -- such as e-diesel, e-kerosene, and e-methanol -- can be blended with conventional fuels and used as drop-in alternatives in existing internal combustion engines. As a result, they are attractive to both car makers and integrated oil companies with billions of dollars invested in retail fuel networks. "Electric mobility remains the central technology for achieving the climate targets in transport," Hildegard Müller, head of Germany's automotive industry association VDA said in a statement. "E-fuels, however, represent an important extension of the options," she said. EU policymakers had previously sidelined e-fuels from new vehicle emission rules over their questionable environmental credentials and much higher costs of production. The EU's U-turn on e-fuels comes just a month after Timmermans decried the use of e-fuels in cars saying "We should not use them for road transport in any way or form." S&P Global Commodity Insights analysts estimate that plug-in electric vehicles will displace about 1.4 million b/d of gasoline and diesel demand in Western Europe by 2035, rising to around 2.1 million b/d in 2040.

Carbon markets are set to undergo a politically volatile few years as governments resort to pricing mechanisms and border taxes to reach net-zero goals, the president of the International Emissions Trading Association has said. In an interview to S&P Global Commodity Insights, Dirk Forrister said he was confident that by 2030, around 60%-70% of global emissions would be covered by binding emissions limits at a national level, with the next few years likely to be "politically charged" as a result. "The competitiveness aspects are really going to come to the fore, and hopefully we can emerge with models that provide some market connectivity and continuity, but also give assurance that you're actually progressing toward net-zero," he said. This comes as the UN Intergovernmental Panel on Climate Change called for more political commitment and coordination to accelerate global climate action. In its latest report, the UN body said investment in climate mitigation and adaption would have to rise by around three to six times by 2030 for emissions to fall by 43% compared with 2010 levels. Forrister said carbon markets would be central to the pathway to net-zero, but that it was inevitable that geopolitics would shape its evolution. "When you look at the IPCC report and the parade of horrible outcomes that we're facing if we don't address emissions, I think it's going to start changing the politics in a way that politicians are going to need to respond more aggressively," he said. "Now, whether that is done through carbon taxes, cap and trade mechanisms, or command and control -- it doesn't really matter as long as the limits are there." IETA is a non-profit organization dedicated to advancing international cooperation in emissions trading. Consequences of CBAM The EU's Carbon Border Adjustment Mechanism, which will impose a tax on imports of carbon-intensive products, will heighten political tensions, with far-reaching impacts on world trade and the wider energy transition, Forrister said. "I don't see a simple, easy road. I see this one as being pretty bumpy, politically charged," he said, referring to the responses that the EU's trade partners are formulating. Progressively from 2026, CBAM will oblige companies that import into the EU to pay a tax or tariff to account for the difference between the carbon price paid in the country of production and the price of carbon allowances in the EU Emissions Trading System. Forrister said the determination of quantifying carbon intensity in every product would be complicated. The EU says the measure will help put a fair price on carbon emitted during production of imported products while pushing European industry to decarbonize without being undercut by other geographies. Many in the industry believe the mechanism will push exporter countries to adopt domestic carbon prices, while some might challenge the measure at the WTO on protectionist grounds. "We may also see a re-orientation and shuffling of global trade -- where the lowest emitting countries and producers shift a greater share of their exports to meet EU demand," analysts at S&P Global said in a recent note. "Challenges to the legitimacy of CBAM as an environmental tool (and not a trade protectionist tool) through the WTO are possible but unlikely to be successful." Carbon pricing New pricing mechanisms being considered internationally should seek to connect with other existing systems and encourage technological advances, Forrister said. "You want [a carbon price] that has openness to all of the energy efficiency and renewable technologies that are available," he said. "[One] that has a cap, that is giving clear visibility on the direction of travel and that gives the innovators inspiration to put their best minds on the topic, to come up with better and better solutions." Compliance markets currently cover 17% (or around 9 gigaton/CO2e) of total global emissions, according to the latest data from the International Carbon Action Partnership. Carbon-pricing schemes, such as the EU's Emissions Trading System, are considered an effective and economic way to reduce greenhouse gas emissions. There are currently 28 emissions trading systems in force, with 20 more under development globally, particularly in Latin America and Asia-Pacific. But so far, the number of countries or regions using such instruments remains relatively small. Carbon prices also currently vary significantly on a country-to-country basis as there is no global carbon price. Carbon permits under the EU ETS are currently more than 10 times more expensive than compliance prices in China, the industrial powerhouse of the world. Platts, part of S&P Global, assessed EU Allowances for December 2023 at Eur87.65/mtCO2e ($94.33/mtCO2e) on March 24. China's compliance emissions price was valued at Yuan 56.00/mtCO2e ($8.11/mtCO2e) on March 24, according to the Shanghai Environment and Energy Exchange.

Carbon Markets, what's the big idea? Examining their success, structure, and suitability for achieving Net Zero goals. Carbon Markets enable carbon mitigation for activities where direct emission removal is not economically viable. But given the optionality this creates, they also face intense criticism and questions around their legitimacy. In this launch episode of our new short-form series, Connective Wisdom, we bring together a diverse expertise set from across S&P Global Ratings, Sustainable1 and Commodity Insights for an enlightened conversation on their climate purpose.

Henry Edwardes-Evans in conversation with Andrew Glass of Viridios AI.Hear how increased price transparency and CARBEX indices powered by Viridios AI are delivering real impact to the carbon market, from underwriting carbon sequestration projects to Blue carbon markets.Discover the growing corporate interest in carbon credits in support of their decarbonization journeys, and Viridios AI's collaboration with S&P Global Commodity Insights in bringing greater transparency to the process.

Becoming critically important of late, business decisions now-a-days look to incorporate detailed data with regards to greenhouse gas emissions. This highlights the efforts being made globally to address the persistent issue of climate change along with accelerating the process of energy transition. KNOW MORE HERE

What is the Voluntary Carbon Market, how does it work and what role does it have in the global drive to reduce emissions? The first video in this series explains how carbon credits are created and traded in the VCM and who's involved in the market.Learn more about Platts carbon price assessments and indices, daily news and market commentary, from S&P Global Commodity Insights.

The European Union's implementation of a Carbon Border Adjustment Mechanism (CBAM) to support its industry's efforts to decarbonize and prevent carbon leakage is likely to have far-reaching effects on global trade and the wider energy transition. S&P Global Commodity Insights' experts Eklavya Gupte, Coralie Laurencin, Michael Evans and Paula VanLaningham take a deep dive on CBAM, examining its potential impact on a range of industries, political alliances and its influence on carbon pricing and regulation.NOTE: CBAM CO2 emissions data referenced in this podcast relate to emissions modelling totals between 2026-2040.Click here to access prices, news and analytics relating to carbon markets on Platts Dimensions ProMore listening options:

What's the difference between credits from removal and avoidance projects, what's a carbon credit "vintage", and what other factors impact market prices? S&P Global Commodity Insights explains.Learn more about Platts carbon price assessments and indices, daily news and market commentary, from S&P Global Commodity Insights.Watch more videos in this series:What is the Voluntary Carbon Market?Pricing structure in the Voluntary Carbon Market

Navigating a pathway to a low-carbon global economy requires a new plan. The S&P Global Platts Atlas of Energy Transition™, produced in collaboration with S&P Global Market Intelligence, is your map to the sustainable commodity markets of the future. LAUNCH REPORT

Francis Browne in conversation with Michael Waldner of PexaparkS&P Global Commodity Insights has partnered with Pexapark, a leader in the PPA space to bring transparency to renewable markets. The co-branded indices will equip market participants with the confidence needed to look beyond the price and prepare for what's next.Who can I contact to learn more about 3Pi?Francis Browne, Global Head, Generating Fuels - francis.browne@spglobal.comKira Savcenko, Senior Editor, EMEA Power - kira.savcenko@spglobal.com

Join S&P Global experts from our Commodity Insights and Mobility divisions as they delve into the potential roadblocks facing the electric vehicle market in 2023. From fluctuating lithium prices to the phasing out of government subsidies, learn how these factors may impact EV sales and the battery metals market.Stay ahead of the curve as we navigate the challenges and opportunities of the ever-evolving EV industryRelated price assessments: BATLC04 - Lithium Carbonate CIF North Asia $/mt BATLH04 - Lithium Hydroxide CIF North Asia $/mtMore listening options:

There have been combined efforts across the globe among market players and governments alike towards achieving a low carbon future. A key role will be played by clean energy technologies to transform the energy industry and decarbonize the various sectors of economy. However, with the decarbonization of the energy system has also led to it becoming more interconnected and complex. As such, the top 10 cleantech trends of 2023 has been identified and summarized by S&P Global Commodity Insights. These trends not only contribute towards reducing carbon emissions but also confronting climate change. Download this complimentary whitepaper to gain insight into our data and analysis spanning the cleantech spectrum. DOWNLOAD WHITEPAPER

The US has dozens of offshore wind projects in the pipeline as the Biden administration has set its sights on deploying 30 GW of offshore wind by 2030 and 110 GW by 2050. And 11 coastal states have already set procurement targets that exceed 50 GW through 2035 and surpass 75 GW by 2045. But if the industry wants to build the up to 200 GW of capacity necessary to decarbonize power grids and become a staple in federal waters like the oil and gas sector, early and frequent planning must be a priority. What's more, a new report from The Brattle Group -- commissioned by the American Council on Renewable Energy, known as ACORE, and other clean energy advocacy groups – found that proactive transmission planning over the next several decades could save at least $20 billion in transmission costs associated with reaching the country's offshore wind goals. S&P Global Commodity Insights power news editor Kassia Micek spoke with José Zayas, ACORE's executive vice president of policy and programs, about the state of the US offshore wind market, steps needed to achieve development goals, and where the wind, oil and shipping industries link up.Stick around after the interview for Starr Spencer with the Market Minute, a look at near-term oil market drivers.Related content:Offshore wind report urges immediate action to reduce costs, barriers to achieve clean energy goals (premium content)First West Coast offshore wind power lease auction earns $757.1 million in high bidsDOE lab outlines path to triple Biden's offshore wind goal by 2050More listening options: