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Gaven Simon, ARC’s Market Research Analyst responsible for the Energy Regulation Roundup, talks about this December 2023 Energy Regulation Roundup that covers all major energy regulation news from major regions of the world, including Europe, the United States, and China.
In Europe, the United Kingdom followed in the footsteps of the European Union by announcing its own carbon border adjustment mechanism (CBAM), and this is going to be able to address carbon leakage and further its decarbonization initiatives starting in 2027. The liability by the CBAM will depend on the greenhouse gas emissions intensity of the imported goods and the gap between the carbon price applied in the country of origin, if any, and the carbon price that would have been applied have the good been produced in the United Kingdom. The UK CBAM places a carbon price on some of the most important and most carbon intensive products imported into the United Kingdom, such as aluminum, cement, ceramics, fertilizer, glass, hydrogen, iron, and steel sectors.
As for the United States, during COP 28 in December, the United States Environmental Protection Agency (EPA) announced its final rule to reduce methane and other pollutants from oil and natural gas operations. This rule is expected to avoid an estimated 58 million tons of methane from 2024 to 2038. The EPA recognizes and incentivizes innovation and methane detection technology such as satellite imagery, aerial surveys, and continuous monitoring to detect leaks. The rule also updates several aspects to provide the industry with the lead time needed to comply.
In China, the other largest methane emitter, they announced their methane management plan last month in November, after two years of its initial announcement at COP 26. There was a cold wave that swept across Beijing during the last week of December, and this cold wave set a record for the longest drop in temperature over a period in recorded history. Starting on December 11th, the temperature did not reach zero degrees Celsius for over 300 hours, 12.5 days. This prolonged period of below freezing temperatures pushed the heating capacity of multiple northern cities in China and partially halted a power plant. Other regions cut heating to most government buildings and enterprises to prioritize limited resources for hospitals, schools, and residential buildings.
Tune into Gavin Simon and the Podcast right here.