Thread by @TennantReed

Watching Climate Change Authority event at #cop26 on "Establishing a regional carbon bubble in the Indo-Pacific", chaired by CCA chair Grant King.

First up: PNG - climate emergency calls for a regional climate bubble. 55% of tropical rainforests have been lost via logging and development. CO2 is at 414ppm. 500 not far off unless we do something.

PNG: countries in our region must address this. Glad Australia leading with Japan and Korea. Sure Indonesia, Philippines, Vietnam, Malaysia will talk seriously to no long emit, but preserve.

PNG: Development challenges are hard. Forestry is $1b industry. We can ban logging, but what is there after for PNG? But we have to act, because of threats from climate.
We're moving to greener economy. Signed MOU with Fortescue. Looking at geothermal and solar.

PNG: we have very favourable geology and water for geothermal. Looking to partner with region. Appeal to Australia: why not buy our excess energy from our future renewable hydrogen production?

PNG: we don't have to be forced to move, we are ready to move. We just need someone to come to the table.

Shinichi Kihara, Japan Ministry of Economy Trade and Industry:
Congratulates Australia on net zero by 2050 announcement.
Japan announced net zero by 2050, 46% 2030 goal and strenuous efforts towards 50%.

Japan: announced many initiatives within Japan, but climate is a global challenge and needs wider cooperation. We're working with others on pathways, innovation and engagement. Can't leave countries behind.

Japan: Asia Energy Transition Initiative includes support for planning, transition finance, technology sharing.

Japan: CCUS Network initiative with Japan and Korea could support CO2 crediting scheme.

Japan: Agreement with Australia in June [using old Australian 2050 formulation] on technology-led decarb. Concrete initiative on hydrogen trade via new tanker. Japan committed to secure and sustainable energy future.

James Larsen, Australian govt climate coordinator:
Australia conscious of our role as key supplier of energy and resources to our region. Relationships with Japan, Korea and others have been and will remain fundamental to our prosperity. Hydrogen and other partnerships key.

JL: this is about scaling up the trade and technology we need. Agreements at COP26 with PNG and Fiji are crucial steps.
Carbon offsets will play an important role in 2050 net zero given technical challenges in some sectors.
Projects that draw down carbon will fill the gap.

JL: Neither here nor there where projects take place - atmospheric impact is the same.
A 'carbon bubble' is not insubstantial or prone to burst - it's about high integrity. Real, permanent abatement with tangible commitments. High quality will spur investment.

JL: Robust social and environmental safeguards are needed, cobenefits including for local communities.
Need to build up emissions accounting and national inventory systems.
We've heard the ask from regional countries for support to do this. Fiji and PNG agreements are the start.

JL: Carbon markets need credibility to grow. We'lll build capacity through region and provide support, including via PIF ASEAN and Quad.
Look forward to Indonesia G20 presidency.

JL: Transparency is essential to convert ambition into achievement. We'll continue to set global benchmark on this. Govt announced extra $40m for supporting regional governance/capacity.
Australia looking for more international partners with integrity and transparency.

Korea: DG climate change at MFA Korea. 3 points on carbon markets:
1. Korea willing to use #Article6 to reach its NDCs. We aim at 40% below 2018 by 2030. Very ambitious, huge reduction. 1.7% per year, faster than others. Offsets are one measure to this. May need 30mt in 2030

Korea: We will maximise domestic abatement, offsets are supplementary.
2. MFA working with Vietnam, Myanmar, others on bilateral climate cooperation. Signed Vietnam last May, joint meeting in Korea early next year.
Look forward to successful Art6 rulebook here in Glasgow.

Korea: bilateral with Peru is near completion. Myanmar still ongoing.
Glasgow Article6 discussions are productive so far. But many issues not yet agreed: corresponding adjustments in single year/multiyear; need to include in biennial reports, but maths aren't yet clear.

David Parker, Australian Clean Energy Regulator: CER administers carbon market and reporting. Accelerates net zero, (can say this now), with integrity.
Controversy over offsets with two groups:
some don't like offsets at all;
some have integrity concerns.

CER: if an offset is not real it doesn't help. CER role is in integrity. Baked in at the core of these bilateral agreements. Benefit of int'l arrangement is mutual; mechanism to transfer funds in return for offset; reduces cost of transition.

CER: Long way to net zero, lots of offsets needed because can't get to absolute zero, but must have transparency and be real. Offsets have got into trouble where integrity is absent.
Australian arrangements are advanced and high integrity.

CER: CCA job is in part to keep an eye on CER; important to have independent institutions. Will be good to see this emerge internationally too.
Article 6: outcome unclear, we've been waiting for it a long time.
Bubble arrangement indicates where Art6 may go.

CER: understand initial focus is renewables and nature based solutions - this is where most of Australia's progress has been. But we've just started making it possible to do credits in Australia from CCS - first time anywhere - and had first project registered, Santos in Moomba.

CER: Sequestration is what matters ultimately - beyond reductions - so good to get started on this.

Meg O'Neill, Woodside: welcomes Australian commitment to net zero by 2050, Woodside is aligned. Also welcomes Indo-Pacific Carbon Offset Scheme. Woodside helped with initial design, looks forward to progress.

W: we produce a lot of LNG and export to Asia. Have responsibility to help address climate change. First reduce our own net emissions; secondly invest in products that will help our customers.

W: set targets for ourselves, focus on internal reductions with offsets for remainder.
Offsets play crucial role in limiting net emissions in W and customers. Needed to keep temp goals in reach.

W: Seeing high demand for quality offets, including to offset emissions from shipments of LNG.
So high quality offset systems are a big opportunity.
Pleased by regional leadership of the IPCOS.

W: Success needs political intent, legal frame, institution, stakeholder engagement, resources and capacity. Integrity essential.

W: IPCOS is initially voluntary-focussed but should build towards regualtory offsets that are accepted for use towards NDCs.

Q&A: PNG: IPCOS in early days. What's the next step?
A: in PNG political will is there. Recently legislated framework for action. Corporate plans will drive delivery of NDC. PNG among first to submit NDC update. So we've readied ourselves to walk the path.

PNG We're not a net emitter, but one of the biggest sinkers through our rainforest and oceans.
Point out to Australia that we've shown will. We need Australia to come and partner. Eg we are planting trees; growing mangroves for blue carbon and coastal protection.

Q: Japan and Korea have initiatives of their own. But the bigger and more liquid the market, the better. What prospect of harmonisation or mutual recognition?
Japan: working on Joint Crediting Mechanism, engaged with 17 partner countries.

Japan: Rules for reliability and evaluation are strong. Slightly different across 17, but common. Can share best practices with new initiatives.

Korea: we have domestic ETS since 2015 and private sector is used to it. Need to connect it to other markets, which are quite different - EU ETS carbon prices very different. Art6 very important for connections.

Korea: A6 will have centralised regulatory body for measuring offsets, baselines, many details. Working on bilaterals but ultimately need worldwide connected well functioning market.

CER: need a bigger market. Will see how A6 pans out. Voluntary collaboration between countries doesn't have to mean all at once - will take time. But clubs can emerge of likeminded countries with similar institutions.

CER: Precedents: OECD as main driver of governance of global tax and competition policy systems, based on collaboration between national institutions.
IPCOS will be either consistent with A6 or stand in parallel to it. Built on trust between national institutions.

Q: sharing abatement?
CER: critical rules are against double counting. A6 complicated by question of abatement inside/outside NDCs. But hopefully getting easier to negotatie against double counting with progress on stronger NDCs.

Japan: case by case. Countries demonstrating seriousness on emissions reduction goals and this will change ground for sharing of abatement.

Korea: we must prevent double counting and increase integrity.

Q: what is role of LNG in path to net zero? How significant are offsets in LNG path? What about consumption emissions?
Woodside: LNG will be important part of world energy mix in future. Japan, Korea, China have decarb commitments.

W: Energy mix today still heavily dependent on fuels more CO2 intensive than LNG. LNG will be part of path to bring that down.
W actions on its own emissions include large battery on offshore platform to reduce its gas combustion to sustain operations.

W: But there are limits to internal reductions, that's where offsets come in. Have had carbon team for last 3 years working on various offset opportunities.
International cooperation has big potential. Many customers would like to buy LNG products stapled to high quality offsets

W: But international accounting doesn't really work for this yet. IPCOS very promising in this regard.

Japan on LNG: talking about energy transition for Asia. Challenge is to reach carbon neutrality while still rapidly growing - have to address environment, energy security, economy.
LNG v important today, cleaner than coal, coal-to-LNG is core in many Asian strategies today.

Japan: will gas plants be stranded in 30 years? No, we can solve this. COme to Japan Pavilion to see hydrogen gas turbine tech - retrofitting existing gas turbines, just change furnace part to adopt hydrogen. Tech is already here for 30% blend H2/gas; by 2025 100% H2 will be here

Japan: we do have the technology, need to secure the H2 supply chain and reduce cost. Support Australian H2 hub program and want to get to USD$1/kg H2 ASAP!

Q: offsets come broadly from biosequestration and geosequestration. How realistic is large scale geo? Are people ready to accept this in the region?

W: tech for geoseq is well proven. In US especially, CO2 injection used since 1950s for enhanced oil recovery

W: all CCS elements demonstrated - well bores, handling. Newer in Australia, only 1 big project.
Challenge is economics. Need high purity CO2 stream close to reservoir for injection.

W: Woodside partnering with BP and two Japanese companies for CCS hub in depleted North West Shelf fields. Depends on what customers are willing to pay.

CER: seeing market differentiate offsets, pay premium for offsets with co-benefits, eg savannah burning benefits for indigenous autonomy. Market will make up its own mind quickly.
Regulator has no ideology; a ton is a ton is a ton. Points is to have all options and see what works

Japan: CCS tech proven, but can be improved. We're working on this; Japan demo project for 300kt completed with fibre optic monitoring improvements and microbubble injection of more CO2 at faster rate.
Economics important; Indonesia agreement connecting CCS to Joint Crediting

Japan: can connect CCS to hydrogen in blue H2 - we're talking with Saudi Arabia about blue H2 and blue ammonia. Can do the CCS where it makes best sense.
Importing H2 is very expensive; one concept is import LNG, make H2 in Japan, ship out CO2. Cheaper than importing H2!

Japan: concepts are still being developed.

Korea: we import a lot of LNG, it's better than coal for emissions, but an intermediate step to renewables (we're also trying to reduce nuclear).
We target 30% renewables by 2030; Korean companies working on hydrogen mobility; investing a lot in green hydrogen.

[I had to leave as I realised I was late for a call!]

[I'm back]
Q: integrity and liquidity in offsets markets?
CER: 2 levels of answer.
Technical: proper methods, standards, accounting for additionality, permanence, conservative approaches to allow trust in reality. Institutions matter.

CER: Social/political: environmental integrity and social integrity needed. People who are hosting projects must not be harmed. There have been adverse effects in past arrangements and we must learn lessons.

CER: Agree with W: price discrimination emerging between perceived high/low quality units and emerging industry to advise on this. If companies buy low quality offsets they are at risk. Interests are aligned, haven't heard anyone argue for low quality units.

CER: we're doing a lot on integrity within Australia. Private market growing 25%pa. Currently largely over-the-counter markets - you want offsets, you get on the phone. Broking very thin, prices volatile = hard to bank projects.

CER: So CER putting out tender for Australian Carbon Exchange. Like ASX, hope for deep market, link to Australian national register. Aligning market infrastructure to overall carbon accounting, hopefully getting depth and liquidity. Exchange traded market = more regulation.

CER: this should allow futures market and price curve, enabling business cases for investment and reduced uncertainty and increased supply.

Grant King brings the event to a close.