Introduction
POINT
In Issue 2, we focus on the passed Inflation Reduction Act and the European natural gas price going through the roof. President Joe Biden signed the Inflation Reduction Act of 2022 that will authorize $369 billion for energy security and climate investments, aiming to reduce carbon emissions by 40 per cent by 2030, compared with 2005, which will further shore up the Carbon-neutral related industries. Recently, the global drier conditions and higher temperatures have been frequent and spread. Europe, China, and Japan are all facing different degrees of electric power crisis. In Europe, scorching and dry weather has disrupted fuel shipments through rivers, limiting hydro and nuclear power production and pushing up demand for natural gas and electricity. European natural gas prices soared from €13.365/MWh on March 18, 2021, to €321.41/MWh on August 26, 2022, and the seasonal climate anomaly is only one of the triggers to escalate tension between “Long-term low-carbon Transition” and “Short-term Energy Security”. Winter is coming, and the short-lived high demand in summer is a drop in the bucket compared to the significant need for heating in winter. Although Europe has to restart coal power in the short term, in a long time, to eliminate fossil energy dependence completely and actively respond to climate change, its energy transition will never stop but accelerate.
News
Climate Bill
On August 16, President Joe Biden signed the Inflation Reduction Act of 2022 that will raise approximately $750 billion. Among other things, the law focuses on addressing the growing challenge of climate change. White House officials claimed that this historic legislation will not only lower energy costs for American households, address the climate crisis and reduce the deficit, but will also urge large corporations to pay fairer taxes. The law will authorize $369 billion for energy security and climate investments, aiming to reduce carbon emissions by 40 percent by 2030.
【VIEW】
https://www.investopedia.com/inflation-reduction-act-of-2022-6362263
Green Economy
On August 9, in addition to the 16 projects selected in the first round, four new projects were selected for the Financial Assistance Project Equipment Subsidy Program with Bilateral Credit System, which is still accepting applications for the third round. According to the cumulative greenhouse gas emission reductions that have been calculated, the project is estimated to reduce 19.33 million tons of greenhouse gas emissions by 2030. Under the Plan for Global Warming approved by the Japanese Cabinet in October 2021, Japan’s Ministry of the Environment will continue to promote the deployment of environmental infrastructure through the Joint Crediting Mechanism (JCM).
【VIEW】
https://www.env.go.jp/press/press_00394.html
Carbon Market
India is planning to start a carbon trading market for major emitters in the energy, steel and cement industries. The platform is said to be announced by Prime Minister Modi at Independence Day Celebrations on August 15. The market would initially be limited to hard-to-abate sectors, allowing participants to trade credits earned from cutting emissions. One of its goals is to ensure energy firms can benefit from carbon-capture projects. A detailed plan for establishing the carbon market is likely to be ready in the fourth quarter in 2022.
Carbon Credit
The Ministry of Economy, Trade and Industry (METI) held a steering committee meeting on August 5. In order to meet the amount of credits required in moving toward carbon neutrality, the committee revised the relevant documents to revitalize the J-credit program. The purpose of the program is to promote investment in carbon-neutral related industries by small and medium-sized enterprises, and to secure and strengthen the capacity of forests to absorb greenhouse gas in the medium and long term. The government will certify “carbon credits” by installing energy-efficient and renewable energy equipment and reinforce forest management to reduce greenhouse gas emissions. The credits created by this system can be used for a variety of purposes, including the reporting system of the Global Warming Response Act and carbon offsets.
【VIEW】
https://www.meti.go.jp/press/2022/08/20220810002/20220810002.html
Carbon Neutralization
On July 29, the Japan Chamber of Commerce in China, a committee of Japanese companies and organizations operating in China, released a white paper on the Chinese economy and Japanese companies in 2022, with “Cooperation and Requirements for Carbon Neutrality“ as one of the highlights of the compilation. In the “Carbon Neutrality in China” section, it proposed various incentives for Japanese companies to cooperate and contribute to the achievement of carbon neutrality,The white paper compiles 526 proposals from business associations across China to analyze and address issues faced by Japanese companies (8,353 corporate members).
【VIEW】
https://www.jetro.go.jp/biznews/2022/08/3d91f260445ee11f.html
Green Economy
Alibaba Group will release its 88 Carbon Account on September 8, as part of its initiative to reduce CO2 emissions. This move gives users a clearer picture of their carbon footprint. When users utilize the service in Alibaba company’s platforms, they can earn points for their personal emissions reduction behavior and receive benefits based on the points they accumulate. Addition to that, Alibaba has developed its own “Scope3+” concept and is working to reduce its CO2 emissions. The system is currently supported by the China Environment Joint Certification Center and the Beijing Green Exchange.
【VIEW】
https://36kr.jp/197936/
Perspectives
Climate Bill 【Tan Copsey】
The Inflation Reduction Act stipulates that $37 billion will be spent over ten years in the form of subsidies and tax credits. These investments are likely to greatly promote the state’s goal of reaching net zero emissions by 2050. It is estimated that, by 2030, it could reduce emissions by 41-44% from 2005 levels. While this is still far from the goal set by President Biden, the bill helps hasten more private sector investment. In addition, the bill is expected to help less developed communities to realize low-carbon transition and provide them with a potential economic growth. The bill could be called a “turning point” in U.S. climate policy, and if the money is used properly, it could have a transformative impact.
【VIEW】
https://chinadialogue.net/en/climate/inflation-reduction-act-turning-point-us-climate-policy/
Carbon Tariff
The Carbon Border Adjustment Mechanism(CBAM) is one of the most influential schemes in the field of carbon tariffs, and its coverage extends from electricity, steel, cement, aluminum, and fertilizers to carbon-intensive industries such as organic compounds, plastics, and hydrogen production. CBAM briefly promotes global carbon pricing harmonization by directly affecting imports and exports, which will affect the competitive advantage of exporting companies in the EU, but will trigger adverse effects on developing countries’ exports. The trade pattern of plastics, steel and aluminum, the three highest exporting industries in China’s exports to the EU, will be profoundly affected by CBAM. Although CBAM directly affects upstream products in China’s export trade, its impact will eventually spread to the whole industry chain and hit China’s dominant industries.
【VIEW】
https://mp.weixin.qq.com/s/gW3TRJllQMFzR-etzgdekA
Energy & Tech 【Qiu Yufeng】
Energy Internet, a new integrated energy system, is becoming a new reality with the growing maturity of technologies such as blockchain, Internet of Things（IoT） and cloud computing. Clean energy generation is volatile, intermittent and random, and its properties dictate that the grid can no longer continue the previous dispatching model. On one hand, this requires efforts to improve the level of new energy generation and load forecasting, and on the other hand, to manage electricity consumption effectively. In the energy Internet, power users are no longer passive users of electricity. The users can actively participate in power deployment – sharing excess power, carrying out effective regulation and control of power loads, and building an integrated energy system with controllable loads, coordinated mutual assistance, and laddering applications.
【VIEW】
https://mp.weixin.qq.com/s/jtLlXFfuPJcRWBXZ2Z9MJg
Green Economy 【HondaStories】
Honda and Toyota have cooperated to launch a new project called SUPER FORMULA NEXT50, which is dedicated to developing sustainable race cars to achieve carbon neutrality in that field. This level of close collaboration is based on a relationship that has been built over many years, with engineers and developers from the two companies, openly sharing the results of performance tests and other confidential developments. The promotion of carbon neutrality in motorsports will help spread the concept on a wider scale, which has helped shape the image of these two companies on environmental issues.
【VIEW】
https://www.honda.co.jp/stories/039/?from=kuruma-news
Interpretations
【Carbon Market】Sina Finance: An Interview with Chai Qimin – Climate change can’t be tackled by excessive assistance, and the difference in carbon price is perfectly normal
Technological and policy innovations are needed to address the issue of anthropogenic climate change. In order to achieve carbon neutrality, on one hand, it is important to reduce greenhouse gas emissions from human activities by implementing technically and economically feasible emission reduction pathways in the two major sectors of energy and industry, as well as curbing carbon emissions from buildings and transportation. On the other hands, it is also important to adopt climate change adaptation measures across the whole sector. China’s carbon market, as a source of financing to raise funds for the energy transition, is still in a stage of development and refinement. The different roles of countries at different levels of development ought to be objectively understood. For China, it is reasonable that carbon prices are different in the current time period. In the short term, differences in carbon prices and abatement costs should be tolerated.
【VIEW】
https://mp.weixin.qq.com/s/_6l5BITHAkXy4oHae2kAYw
【Carbon Pricing】Global Zero Carbon: Internal carbon pricing trend among large global companies: How to achieve a win-win situation by reducing emissions and increasing revenue
Internal carbon pricing for companies puts a price on each unit of carbon emissions and requires companies to levy an effective tax on the excess emissions. This approach not only regulates employee behavior in the short term, but also encourages innovation in low-carbon technologies in the long term by redesigning the incentive structure. The CDP study reports that internal carbon pricing mechanisms are currently the most flexible and cost-effective way to effectively mitigate the impact of greenhouse gas emissions, and that they provide significant incentive effects to reduce energy consumption and mitigate the climate crisis. At the same time, the effect of high and low carbon pricing varies greatly. The higher the pricing, the greater the incentive for companies to develop low-carbon development.
【VIEW】
https://mp.ofweek.com/ecep/a256714523387
【Green Economy】Retail Guide：What is Green Transition (GX)? – Commentary from METI’s Green Transition Alliance
The Green Transformation (GX) is a strategy proposed by the Japanese government to transform economic and social systems by shifting to green energy and decarbonization . During this transition, it is essential to establish the cooperation between companies and stakeholders in order to achieve a carbon-neutral global warming control action plan. Companies need to change their business models and strategies in order to create a virtuous cycle between the economy and the environment. However, fundamentally changing business models and strategies is a challenge for private companies, and GX needs to drive change with a high degree of decisiveness.
【VIEW】
https://retailguide.tokubai.co.jp/knowledge/24804/
【Green Economy】Dime: Will “green fintech” flourish in Japan? “Green Fintech” – Combining environmental protection and finance on a global scale
Various services have sprung up around the world under the name of “green fintech”, which combines financial services and information technology with an additional element of environmental protection. An English credit card called TED could visualize the emission of Carbon Dioxide from consumption behavior, allowing consumers to know what kind of lifestyle has the biggest impact on climate change. Italy Green Digital Bank Flowe provided holders of their cards with a service called Flowe ECO balance, which not only allows the visualization of consumption behavior, but also allows card holders to plant trees in Guatemala and to trace the growth status of the trees. Similarly, Antfroest has already invited the participation of six hundred million people in China. More than 3 hundred millions of trees are planted in arid areas in China because of this tree-planting simulation game.
【VIEW】
https://dime.jp/genre/1448828/
【Energy-Saving Technology】TECH+: How can deep learning be used to facilitate a decarbonized society?
In recent years, many companies around the world have been trying to develop hardware technologies to achieve carbon neutrality. But one thing that many people may have overlooked is that artificial intelligence and deep learning are also drivers for achieving carbon neutrality. Google has used deep learning technology to reduce Google’s power consumption by up to 40 percent by using thousands of sensors to detect the operating data of equipment and optimize the settings of cooling equipment based on its operating conditions. SoftBank Group’s SB Energy, which owns mega solar and storage battery systems, is working to develop a model for predicting wholesale electricity prices in order to store electricity when prices are low and sell it when prices rise. Deep learning is different from hardware technologies that are difficult to be useful in society in the short term and can actually reduce energy consumption instantly.
【VIEW】
https://news.mynavi.jp/techplus/article/20220820-2429605/
Academics
【Carbon Emissions Monitoring】Using satellites to uncover large methane emissions from landfills
The Netherlands Space Research Institute (SRON), Harvard University and GHGSat use satellite instruments with different spatiotemporal coverage and resolution to detect and quantify emissions from individual landfills. They use the global surveying Tropospheric Monitoring Instrument (TROPOMI) to identify large emission hot spots and then zoom in with high-resolution target-mode observations from the GHGSat instrument suite to identify the responsible facilities and characterize their emissions. Using this approach,they detect and analyze strongly emitting landfills in Buenos Aires, Delhi, Lahore, and Mumbai.
Using TROPOMI data in an inversion, they find that city-level emissions are 1.4 to 2.6 times larger than reported in commonly used emission inventories and that the landfills contribute 6% to 50% of those emissions.
【Decarbonization Assessment】Institutional decarbonization scenarios evaluated against the Paris Agreement 1.5 °C goal
Scientifically rigorous guidance to policy makers on mitigation options for meeting the Paris Agreement long-term temperature goal requires an evaluation of long-term global-warming implications of greenhouse gas emissions pathways. Hanley Sustainability Institute of the University of Dayton presents a transparent temperature assessment of institutional decarbonization scenarios. They further assess key underlying energy system features that drive emissions pathways, thus providing an evaluation of the structural dynamics that lead a given scenario to satisfy (or not) the Paris Agreement LTTG.
【Carbon Neutrality and Climate】Critical climate issues toward carbon neutrality targets
The target of carbon neutrality is an integrated and extremely complex issue that is widely associated with climate, ecology, energy, environment, society, etc. It results from interactions of multiple systems. It is important to understand the climate dynamics in the context of carbon neutrality. A team from the Institute of Atmospheric Physics, Chinese Academy of Sciences is dedicated to exploring the feedback relationships and interactions between the carbon cycle and climate.They illustrate their perspective of the issues related to “emission peak, carbon neutrality”, including climate dynamics, climate-carbon feedback, interaction between China and global climate and carbon emissions and solutions, etc. Climate change has profoundly affected human production and life. The frequent occurrence of extreme weather disasters in recent years, together with the impact of epidemics, make the future “carbon peak & carbon-neutral” scenario more complex.
【VIEW】
https://www.sciencedirect.com/science/article/pii/S2667325822001248?via=ihub
【Carbon trading】Using emissions trading schemes to reduce heterogeneous distortionary taxes: The case of recycling carbon auction revenues to support renewable energy
Centre for European Economic Research focuses on analyzing the potential economic impact of using carbon revenues to reduce the electricity levy. In its objective to fight climate change, the European Union has defined EU-wide and national targets on climate and energy, combining an objective of emissions reduction, a share of energy from renewable technologies and an improvement in energy efficiency. They find that using the auction revenues to support renewable energy results in a reduction of the electricity levy, a positive income effect for electricity consumers (industries and households) and a rise in electricity demand and production. If ETS sectors are exempted from the levy, the increase in the carbon and energy prices due to the higher electricity demand induces a negative income effect for these energy intensive sectors, which are then worse off than if auction revenues are transferred to households.
【VIEW】
https://www.sciencedirect.com/science/article/pii/S0301421522003585#!
【Carbon Neutrality】Diversity of options to eliminate fossil fuels and reach carbon neutrality across the entire European energy system
The Institute for Environmental Decision of ETH Zurich has developed a high-resolution model of the entire European energy system, showing that a system based on renewable energy sources is feasible, offering a variety of feasible designs for a European energy system that is energy self-sufficient to achieve carbon neutrality. The article suggests that wind and PV energy remain the two main sources of electricity to achieve Europe’s carbon neutrality goals.
【VIEW】
https://www.sciencedirect.com/science/article/pii/S2542435122002367#!
Other resources
“Carbon Neutrality＆Emission Peak” Basic Research Guideline from National Natural Science Foundation of China
【VIEW】
https://www.nsfc.gov.cn/publish/portal0/tab442/info86785.htm
2021 China Carbon Pricing Survey
【VIEW】
http://www.chinacarbon.info/sdm_downloads/2021-china-carbon-pricing-survey/
Inflation Reduction Act of 2022
【VIEW】
https://www.google.com/
Preliminary Report: The Climate and Energy Impacts of the Inflation Reduction Act of 2022
【VIEW】
https://repeatproject.org/docs/REPEAT_IRA_Prelminary_Report_2022-08-12.pdf
Modeling The Inflation Reduction Act Using The Energy Policy Simulator
Events
Upcoming Events
2022.8.4. Webinar Carbon Neutral Trends in Germany – Focus on Regional Energy and Electric Vehicle Trends
【DETAIL】
https://www.kankyo-business.jp/event/27bd9284-c1fd-46d7-a3f1-a0d35a9e20ce
2022.8.19 Webinar Shikoku Symposium on Human Resource Development School -Towards a Carbon Neutral and Decarbonized Society
【DETAIL】
https://www.hokkaido-np.co.jp/article/719786
2022.9.15 Webinar Webinar on the use of bilateral credit system (JCM) in Africa
【DETAIL】
http://carbon-markets.env.go.jp/column/event_report/11711/
Recordings
2022.7.20 Webinar Unintentional greenwashing and how to avoid it
【DETAIL】
https://vimeo.com/732059387
2022. 8. 15 Course Elements in Earth System Governance: The Carbon Market Challenge
【DETAIL】
https://vimeo.com/738139871
2022.1.26 Course China’s national carbon market: A review of 2021 and outlook for 2022
【DETAIL】
https://vimeo.com/670649223