Alternative Truths And Some Hard Facts About Coal
In this newsletter:
1) China And Pakistan Join Forces For World’s Biggest Brown Coal Programme
Bloomberg, 1 April 2017
2) U.S. Coal Miners Find A New Buyer In Asia
OilPrice 23 March 2017
3) Why Is Asia Returning to Coal?
The Diplomat, 17 February 2017
4) Nick Butler: Alternative Truths And Some Hard Facts About Coal
Financial Times, 3 April 2017
5) China’s Clean Coal Lesson
The Australian, 3 April 2017
6) John Constable: The Rising Trend Of UK Industrial Electricity Prices
GWPF Energy Comment, 2 April 2017
Bloomberg, 1 April 2017
2) U.S. Coal Miners Find A New Buyer In Asia
OilPrice 23 March 2017
3) Why Is Asia Returning to Coal?
The Diplomat, 17 February 2017
4) Nick Butler: Alternative Truths And Some Hard Facts About Coal
Financial Times, 3 April 2017
5) China’s Clean Coal Lesson
The Australian, 3 April 2017
6) John Constable: The Rising Trend Of UK Industrial Electricity Prices
GWPF Energy Comment, 2 April 2017
Full details:
1) China And Pakistan Join Forces For World’s Biggest Brown Coal Programme
Bloomberg, 1 April 2017
In the dusty scrub of the Thar desert, Pakistan has begun to dig up one of the world’s largest deposits of low-grade, brown, dirty coal to fuel new power stations that could revolutionize the country’s economy.
China-Pak Economic Corridor will be constructed from 2014 to 2030.
The project is one of the most expensive among an array of ambitious energy developments that China is helping the country to build as part of a $55 billion economic partnership.
A $3.5 billion joint venture between the neighbors will extract coal to generate 1.3 gigawatts of electricity that will be sent across the country on a new $3 billion transmission network.
“When I came it was a mess. There was nothing here,” said Dileep Kumar, one of the first mining engineers at lead contractor Sindh Engro Coal Mining Co., standing atop the mile-wide hole in the earth, busy with yellow trucks and diggers on the floor below. “Now look at it. This wasn’t possible without the Chinese.”bs
On paper, Pakistan could be one of Asia’s top economies, with almost 200 million people spread over an area twice the size of California, from the ice-bound peaks of the Karakorum to the warm, dry shores of the Arabian Sea.
But it remains hobbled by corruption, political turmoil, terrorism and poverty, all underpinned by a crippling shortage of energy.
The country has natural gas reserves, four nuclear-power stations and the world’s largest dam. Some 700 kilometers north of the Thar mine another Chinese company is helping build a solar farm eight times the size of New York’s Central Park.
Yet power outages remain a way of life with blackouts of 12 hours or more even in Karachi and Islamabad. By one estimate, the shortage of electricity is wiping 2 percentage points off economic growth every year.
Thirst for energy is taking Pakistan in the opposite direction of Western countries that are trying to reduce coal power, or use cleaner-burning fuel and technologies.
Germany, which still relies on coal-fired stations for two fifths of its electricity, has promised to switch half of them off by 2030.
Pakistan, by contrast, relies on coal for just 0.1 percent of its power, according to the Pakistan Business Council. The Thar projects and others could see that jump to 24 percent by 2020, according to Tahir Abbas, analyst at Karachi-based brokerage Arif Habib Ltd.
Pakistan’s coal reserves would give the nation a cheap domestic alternative to expensive oil and gas imports.
The nation spends about $8 billion a year on imported petroleum and is one of the region’s biggest buyers of liquefied natural gas.
In an effort to curb the import bill and meet demand for power, Pakistan plans to dig up some of the world’s biggest known deposits of lignite, a lower-grade brown coal. But first, it must clear 160 meters of sand to get to the coal.
Full story
2) U.S. Coal Miners Find A New Buyer In Asia
OilPrice 23 March 2017
Dave Forest
An Important shift is now underway in global coal trade. With a completely new export route opening up for U.S. producers over the last few weeks.
To South Korea.
Platts reported yesterday that coal buyers in Korea have seen a surge of bookings for U.S. thermal coal. With sources telling the news service that 1.5 million tonnes of total U.S. supply have now been arranged for delivery between July and September.
This isn’t just a one-off transaction either. With all five of Korea’s utilities having reportedly booked U.S. exports for Q3.
That big shift for Korea’s coal buyers is happening largely due to changing regulatory rules. With a new tax regime on coal imports into Korea scheduled to take effect as of April 1.
The new tax rules favor imports of lower-calorie coal — with the 5,000 kcal/kg mark being an important financial threshold for buyers. Under the revised tax scheme, coal shipments less than 5,000 kcal/kg will be assessed import duty of 27,000 won per tonne ($24.30/t).
By contrast, shipments between 5,000 and 5,500 kcal/kg will be taxed at 30,000 won/t ($27/t), while coal above 5,500 kcal/kg will see a rate of 33,000 won/t ($29.70/t).
All of which means that Korean buyers want coal below 5,000 kcal. But not too much so, as really low-value supply won’t be as functional in power generation.
U.S. coal fits that bill perfectly. With American producers putting out a 4,850 kcal/kg product that attracts the lowest tax rate but still provides a lot of energy per tonne.
That ideal market position looks set to create a mini-boom for U.S. exports into Korea. With the 1.5 million tonnes booked so far this year already representing a 43 percent increase on U.S.-sourced shipments for all of 2016 — when Korean buyers brought in just 1.05 million tonnes for the entire year.
That could give a lift to some U.S. miners. Particularly those in Wyoming and Montana, which have ready access to Pacific Coast export terminals such as Canada’s Westshore facility. Watch for more import deals being struck, and for figures on rising Korean demand for American product.
3) Why Is Asia Returning to Coal?
The Diplomat, 17 February 2017
The fossil fuel is undergoing an unexpected renaissance in the region.
By Grace Guo
Just a few short years ago, few would have dared to predict that coal could have a future in the energy policies of emerging and developed countries alike. Yet the fossil fuel is undergoing an unexpected renaissance in Asia, buoyed by technical breakthroughs and looming questions about squaring development with energy security.
For Japan, coal has emerged as the best alternative to replacing its 54 nuclear reactors, which are deeply unpopular with the population and seen as symbols of devastation after the Fukushima Daiichi nuclear disaster six years ago. Mindful of the public mood, the government of Shinzo Abe has completely given up on the country’s dream of nuclear self-sufficiency, and pulled the plug in December on the $8.5 billion experimental reactor project at Monju. On February 1, the government pledged to decommission all reactors and replace them with 45 new coal-fired power plants equipped with the latest clean coal technology. In this, Tokyo seeks to achieve two overreaching goals: preserve its energy security and stay on course to fulfill the obligations set forth by the 2016 Paris Climate Agreement.
But why did Abe go with coal and not renewables or, say, natural gas? After Fukushima, Japan initially ramped up its imports of liquefied natural gas, but realized that LNG would be prohibitively expensive in the long-term. Cost-conscious, the government has instead opted for high-efficiency low-emissions (HELE) coal plants and plans to market its clean coal technologies abroad in addition to implementing them at home. Coal power already made up 31 percent of Japan’s energy mix in 2015 but under the current plan, the fossil fuel will become the country’s primary power source by 2019.
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Japan’s embrace of coal puts it squarely within the general trend for Asia, where countries are turning to the fossil fuel for a host of different reasons. For India and China, the million-dollar question that any energy strategy has to answer is: “Does it promote or does it hinder the country’s economic development?” That question has been at the center of fierce debates and even though both Beijing and New Delhi have been adopting renewable energies, it doesn’t seem that coal’s position is threatened.
As China deals with a slowing economy and India tries to keep up with the demands of a fast-growing and increasingly affluent population, the only way to reconcile energy demands with public outcry over emissions and pollution is by finding cost-effective ways of integrating low-emissions coal technology into their power infrastructure. And much like in Japan, that task may not be as daunting as it looks.
India’s policymakers, for their part, have to deal with rapid development and population growth that make coal indispensable to meeting the expected 3.5 percent increase in year-on-year demand for electricity between now and 2040. At the same time, Prime Minister Narenda Modi and his ministers need to urgently tackle an air pollution crisis that contributes to over a million premature deaths every year. India’s deadly smog is not just the result of growing industrial activity, but it also stems from illegal practices like the crop burning and reliance on wood burning for cooking and heating homes.
Full post
4) Nick Butler: Alternative Truths And Some Hard Facts About Coal
Financial Times, 3 April 2017
Is coal finished, to be displaced by renewables in a move that will solve climate change and clean up air quality across the world? Is coal — as one headline writer put it recently — in free fall?
Or is it still the dominant and growing source of power and heat in countries that make up the bulk of the global economy? Hasn’t its future just been rescued by President Donald Trump’s announcement that he is scrapping the environmental regulations that threatened coal use in the US?
Casual readers could be forgiven for being confused. Consider the following statements, all published in reputable papers over the last few weeks:
Let’s try to find a more objective interpretation of what is happening.
First, in a few places led by the UK — the country where the burning of coal fuelled the first industrial revolution — coal use is being systematically phased out by regulation. Hopes that the life of the coal industry would be sustained by the development of carbon capture and storage have faded and were downgraded in the UK government’s new medium-term energy outlook last month. The result is that almost every pit has closed and the remaining power stations running on imported coal are on death watch.
But the UK is the exception. In Germany, coal retains a secure share of the market and as long as the Social Democratic party remains part of the government there will be no serious plans to eliminate it, whatever the rhetoric on climate change and environmental sustainability. Jobs and votes come first.
In the US, the main threat to coal is not environmental regulation but price competition from low-cost natural gas. Coal is the principal victim of the shale gas revolution and the revival of the shale industry will intensify that competitive challenge over the next decade. It is very hard to see how any action by the US government, short of mandating the use of coal, can rescue an industry that has already seen a number of once-famous companies — such as Peabody Coal — file for bankruptcy. Coal will retain a local market in a limited number of states but with prices so low that production could become uneconomic.
China is the world’s largest user of coal (burning more than 50 per cent of the global total) and is pursuing a serious policy of encouraging renewables and setting a ceiling on coal demand growth. It seems likely that many of the coal plants built in the last decade will be underused and some of those being built now (again to provide jobs) are not needed. Demand may be coming to a peak but it is not there yet and to talk about a collapse in demand is wrong.
The biggest challenge and the most important factor in the global coal market is India. Demand continues to grow and new coal-fired plants are being added every week. India may never match the levels of consistent economic growth seen in China over the last 30 years but the transformation of the country into a major economic power is underway. The problem is that to grow, it needs the cheapest possible form of power on a large scale and for the moment that is coal. Nuclear, solar and wind will all contribute but coal is the pre-eminent source of supply and Indian imports will shape the world market.
Coal is plentiful and cheap and will be made cheaper still if US producers, under pressure from gas in their domestic market, export more.
It is possible to see oil demand peaking over the next decade — partly because new technology in the form of electric vehicles could eat away its core transport market. Coal, however, is a very different commodity. It sells on price and in the markets where it is dominant it retains a crucial competitive advantage.
Until the new sources of energy supply can beat the current low prices coal will remain the leading source of heat and power and will meet something like a third of the world’s energy needs. The proportion burnt in high efficiency, low emission plants will rise but that will remain a fraction of the total for the foreseeable future, not least because coal users cannot afford the upgrades necessary. Coal is the energy source of choice, through necessity, of the poorer half of the world.
Times may be tough for the industry, and the continued use of coal in sub-critical technology may be bad for the environment, but like it or not coal is not in free fall.
5) China’s Clean Coal Lesson
The Australian, 3 April 2017
Rowan Callick
Chinese engineer and inventor Feng Weizhong has an easy answer to how China plans to keep slashing coal use and power-station emissions while relying on coal to provide at least 55 per cent of its massive energy demand for decades to come.
The effervescent Professor Feng, who is also general manager of a large Shanghai power plant, explained to The Australian how the country can contrive to do both at the same time.
“Simple! It’s clean coal!”
China’s national energy administration has enlisted Feng as its champion in renovating outdated power plants and developing new ones that meet its needs to make more energy from lower fuel inputs, while emitting far less pollution and carbon dioxide.
Feng recently took The Australian on a tour of his virtually spotless Waigaoqiao Number 3 power station, which produces 138 per cent as much electricity as the Yallourn coal-fired plant in Victoria’s Latrobe Valley.
It operates with a workforce 53 per cent the size of the Australian generator, emits just 13 per cent as much carbon dioxide equivalent, and its efficiency — measuring how much of the energy in the coal ends up as electricity — is 166 per cent that of Yallourn. It took three years to build, and opened in July 2008.
The innovative Waigaoqiao Number 3 Plant has recently attracted senior-level visitors from the energy sectors of the US, Japan, Brazil and Russia — including the head of the American Energy Administration.
And while feted by the American Society of Mechanical Engineers, who last year presented him with their top annual award, he has yet to be approached by any agencies or corporations from Australia about helping to solve the country’s unfolding baseload crisis highlighted by South Australian blackouts.
Feng, 62, personally holds 40 patents, including in the US and Europe. “And we have a great team here to execute this new technology,” he said.
The staff now being recruited at the plant have a minimum master’s degree qualification. Many have PhDs.
Most coal plants around the world remain at the less efficient subcritical level, but Feng has also invented new technology to upgrade them rather than dismantle them altogether. “We can increase their efficiency greatly,” he said.
But the Australian government’s trade and investment arm, Austrade, would not answer specific questions about whether it has contemplated seeking to attract the expertise or investment of Feng and his team.
Instead, an Austrade spokeswoman listed five investment priorities agreed by state and territory governments, which include energy. Within that sector, she said: “This would include international investors from a number of countries which have an interest in clean-coal technology including Japan, South Korea, China, India and the US.”
And the US may well take a closer look at clean-coal technology after Donald Trump last week unveiled a sweeping overhaul of Barack Obama’s climate-change laws. The US President signed several pro-fossil-fuel changes, which place job creation ahead of laws restricting carbon emissions. He also unravelled much of his predecessor’s climate-change initiatives, including ordering a review of Obama’s signature Clean Power Plan, which restricts greenhouse gas emissions at coal-fired power plants.
Full story
6) John Constable: The Rising Trend Of UK Industrial Electricity Prices
GWPF Energy Comment, 2 April 2017
Dr John Constable: GWPF Energy Editor
The emerging trend in UK electricity prices to industry confirms civil service advice to Mr Blair, which he ignored, that the EU Renewables Directive (2009) would disadvantage the UK relative to other members of the European Union. If the Industrial Strategy is to succeed, the Renewables Directive will have to be repealed, post-Brexit, and immediate steps should be taken to resile from its commitments.
In 2007 the UK government department responsible for energy policy, the Department of Business Enterprise and Regulatory Reform (BERR), prepared a short paper to inform ministers of the likely impacts of the proposed European Union Renewable Energy Directive. This document was leaked to the Guardian, and is still available online from that source.
BERR’s study reported that the EU Commission itself estimated the total annual cost of the Renewable Energy Directive target at 24 billion euros in 2020 (See Table 4). BERR thought this was an underestimate, but also estimated the costs to the UK at some £6–10 billion per year (See Table 3, but note that the table unfortunately gets the figures for a 14% and a 15% target the wrong way round).
In other words, in 2007 the UK government estimated that the UK alone would bear between 25% and 40% of the total EU-wide cost of the Renewables Directive targets, a share disproportionate to its population and the size of its economy.
This obviously unreasonable burden resulted from the fact that the UK, unlike other European states such as Germany and Denmark, had only recently introduced substantial renewables subsidy programmes (the prudent and modest Non-Fossil Fuel Obligation was succeeded by the extremely generous Renewables Obligation in 2002). Consequently, the country started from a low base of renewable energy and had no renewables industry.
Instead, it had switched heavily towards natural gas for both heating and electricity, a move which of course rendered both sectors much lower emitters of carbon dioxide than they would otherwise have been and at very low cost. In other words, the proposed Renewables Directive seemed almost purpose-built to punish the UK for choosing the most economic route towards a low emitting energy system, namely natural gas, and to hobble the country in comparison to those EU states which had chosen to adopt renewables.
Nevertheless, in spite of BERR’s warning, Mr Blair, then Prime Minister, committed the United Kingdom to the Directive target, which became law in 2009 and requires that the UK obtain 15% of its Final Energy Consumption from renewables, across all sectors, electricity, transport and heating. No subsequent government has shown any sign of retreating from this obligation.
However, when the EU Renewables Directive is transubstantiated into British law by the Great Repeal Act, it should be high on Mrs May’s list for subsequent deletion since it is not only bad in itself but, exactly as predicted by the civil service in 2007, puts the UK at a considerable disadvantage as compared to the member states of the European Union.
Anyone doubting this need only look at the recently released estimates of industrial electricity prices as compared with major competitors. The following figure, drawn from data published by the Department of Business Energy and Industrial Strategy (BEIS), charts electricity prices from 2005 to 2015, with and without taxes, for six members of the European Union, Denmark, France, Germany, Italy, Spain, and the United Kingdom (red line).
Figure 1: Industrial electricity prices (p/kWh) without taxes (left panel) and with taxes (right panel) for Denmark, France, Germany, Italy, Spain, and the United Kingdom (red line). Source: Drawn by the author from data published by BEIS.
The UK imposes electricity policy costs through levies prior to taxation, so it is unsurprising that it has the highest prices without taxes, but it is still in joint third position when those taxes are included. Bad though that position is, it is the trendover the last decade that gives the most cause for anxiety. Only the UK in this group (and indeed in the EU 15) has a consistent rising trend in electricity prices, and all the other countries have a falling trend. There are doubtless a number of causes behind this fact, but what BERR identified in 2007 as the disproportionate burden placed on the United Kingdom by the Renewables Directive target is a substantial part of the explanation.
Due to the provision of coerced market share and generous subsidies, the UK generated about 82.8 TWh of electrical energy from renewables in 2016, up from about 25 TWh in 2009 [See BEIS, Energy Trends, table 6.1. This is not far short of the approximately 100 TWh per year (about 1/3 of demand) required of the electricity sector by the National Renewable Energy Action Plan (NREAP) which sets out the means to reach the Directive target. As is well known, this growth has been dearly bought, with subsidies currently amounting to about £5 billion a year, and accounting for a significant fraction of the retail price to all consumers.
Indeed, in the last release of the now discontinued Estimated Impacts of Energy and Climate Policies on Prices and Bills the Department of Energy and Climate Change (DECC) calculated that the price of electricity to a medium sized business in 2014 was 39% higher than it would have been in the absence of polices.
We can conclude, therefore, that BERR’s 2007 analysis was sound. The EU Renewables Directive (2009) has indeed put industries operating in the United Kingdom at a significant disadvantage as compared to those operating in other EU countries.
In fact, the same dataset from BEIS shows that this disadvantage is evident at a global level. The following figure compares electricity prices with and without taxes in the United Kingdom, Canada, Japan, Poland, Turkey, and the United States:
Figure 2: Figure 1: Industrial electricity prices (p/kWh) without taxes (left panel) and with taxes (right panel) for Canada, Japan, Poland, Turkey, the United States, and the United Kingdom (red line). Source: Drawn by the author from data published by BEIS.
As with Figure 1, while the rankings in 2015 are important it is the trend that deserves close attention. The UK alone has consistently rising prices over the period. Even in Japan, where there are of course very special circumstances, prices are starting to fall, and the rising trend in US prices is both modest in itself and arguably unlikely to continue under the current president’s America First agenda.
Mr Blair made a strategic error by neglecting BERR’s warning about the Renewables Directive. It is not too late to correct that mistake, and the delivery of an “Industrial Strategy” in the context of Brexit provides the framework and the opportunity. However, two years is too long to wait; government would be well advised to take steps to immediately reduce the iniquitous effects of the Renewables Directive before any further harm is done.
Bloomberg, 1 April 2017
In the dusty scrub of the Thar desert, Pakistan has begun to dig up one of the world’s largest deposits of low-grade, brown, dirty coal to fuel new power stations that could revolutionize the country’s economy.
China-Pak Economic Corridor will be constructed from 2014 to 2030.
The project is one of the most expensive among an array of ambitious energy developments that China is helping the country to build as part of a $55 billion economic partnership.
A $3.5 billion joint venture between the neighbors will extract coal to generate 1.3 gigawatts of electricity that will be sent across the country on a new $3 billion transmission network.
“When I came it was a mess. There was nothing here,” said Dileep Kumar, one of the first mining engineers at lead contractor Sindh Engro Coal Mining Co., standing atop the mile-wide hole in the earth, busy with yellow trucks and diggers on the floor below. “Now look at it. This wasn’t possible without the Chinese.”bs
On paper, Pakistan could be one of Asia’s top economies, with almost 200 million people spread over an area twice the size of California, from the ice-bound peaks of the Karakorum to the warm, dry shores of the Arabian Sea.
But it remains hobbled by corruption, political turmoil, terrorism and poverty, all underpinned by a crippling shortage of energy.
The country has natural gas reserves, four nuclear-power stations and the world’s largest dam. Some 700 kilometers north of the Thar mine another Chinese company is helping build a solar farm eight times the size of New York’s Central Park.
Yet power outages remain a way of life with blackouts of 12 hours or more even in Karachi and Islamabad. By one estimate, the shortage of electricity is wiping 2 percentage points off economic growth every year.
Thirst for energy is taking Pakistan in the opposite direction of Western countries that are trying to reduce coal power, or use cleaner-burning fuel and technologies.
Germany, which still relies on coal-fired stations for two fifths of its electricity, has promised to switch half of them off by 2030.
Pakistan, by contrast, relies on coal for just 0.1 percent of its power, according to the Pakistan Business Council. The Thar projects and others could see that jump to 24 percent by 2020, according to Tahir Abbas, analyst at Karachi-based brokerage Arif Habib Ltd.
Pakistan’s coal reserves would give the nation a cheap domestic alternative to expensive oil and gas imports.
The nation spends about $8 billion a year on imported petroleum and is one of the region’s biggest buyers of liquefied natural gas.
In an effort to curb the import bill and meet demand for power, Pakistan plans to dig up some of the world’s biggest known deposits of lignite, a lower-grade brown coal. But first, it must clear 160 meters of sand to get to the coal.
Full story
2) U.S. Coal Miners Find A New Buyer In Asia
OilPrice 23 March 2017
Dave Forest
An Important shift is now underway in global coal trade. With a completely new export route opening up for U.S. producers over the last few weeks.
To South Korea.
Platts reported yesterday that coal buyers in Korea have seen a surge of bookings for U.S. thermal coal. With sources telling the news service that 1.5 million tonnes of total U.S. supply have now been arranged for delivery between July and September.
This isn’t just a one-off transaction either. With all five of Korea’s utilities having reportedly booked U.S. exports for Q3.
That big shift for Korea’s coal buyers is happening largely due to changing regulatory rules. With a new tax regime on coal imports into Korea scheduled to take effect as of April 1.
The new tax rules favor imports of lower-calorie coal — with the 5,000 kcal/kg mark being an important financial threshold for buyers. Under the revised tax scheme, coal shipments less than 5,000 kcal/kg will be assessed import duty of 27,000 won per tonne ($24.30/t).
By contrast, shipments between 5,000 and 5,500 kcal/kg will be taxed at 30,000 won/t ($27/t), while coal above 5,500 kcal/kg will see a rate of 33,000 won/t ($29.70/t).
All of which means that Korean buyers want coal below 5,000 kcal. But not too much so, as really low-value supply won’t be as functional in power generation.
U.S. coal fits that bill perfectly. With American producers putting out a 4,850 kcal/kg product that attracts the lowest tax rate but still provides a lot of energy per tonne.
That ideal market position looks set to create a mini-boom for U.S. exports into Korea. With the 1.5 million tonnes booked so far this year already representing a 43 percent increase on U.S.-sourced shipments for all of 2016 — when Korean buyers brought in just 1.05 million tonnes for the entire year.
That could give a lift to some U.S. miners. Particularly those in Wyoming and Montana, which have ready access to Pacific Coast export terminals such as Canada’s Westshore facility. Watch for more import deals being struck, and for figures on rising Korean demand for American product.
3) Why Is Asia Returning to Coal?
The Diplomat, 17 February 2017
The fossil fuel is undergoing an unexpected renaissance in the region.
By Grace Guo
Just a few short years ago, few would have dared to predict that coal could have a future in the energy policies of emerging and developed countries alike. Yet the fossil fuel is undergoing an unexpected renaissance in Asia, buoyed by technical breakthroughs and looming questions about squaring development with energy security.
For Japan, coal has emerged as the best alternative to replacing its 54 nuclear reactors, which are deeply unpopular with the population and seen as symbols of devastation after the Fukushima Daiichi nuclear disaster six years ago. Mindful of the public mood, the government of Shinzo Abe has completely given up on the country’s dream of nuclear self-sufficiency, and pulled the plug in December on the $8.5 billion experimental reactor project at Monju. On February 1, the government pledged to decommission all reactors and replace them with 45 new coal-fired power plants equipped with the latest clean coal technology. In this, Tokyo seeks to achieve two overreaching goals: preserve its energy security and stay on course to fulfill the obligations set forth by the 2016 Paris Climate Agreement.
But why did Abe go with coal and not renewables or, say, natural gas? After Fukushima, Japan initially ramped up its imports of liquefied natural gas, but realized that LNG would be prohibitively expensive in the long-term. Cost-conscious, the government has instead opted for high-efficiency low-emissions (HELE) coal plants and plans to market its clean coal technologies abroad in addition to implementing them at home. Coal power already made up 31 percent of Japan’s energy mix in 2015 but under the current plan, the fossil fuel will become the country’s primary power source by 2019.
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Japan’s embrace of coal puts it squarely within the general trend for Asia, where countries are turning to the fossil fuel for a host of different reasons. For India and China, the million-dollar question that any energy strategy has to answer is: “Does it promote or does it hinder the country’s economic development?” That question has been at the center of fierce debates and even though both Beijing and New Delhi have been adopting renewable energies, it doesn’t seem that coal’s position is threatened.
As China deals with a slowing economy and India tries to keep up with the demands of a fast-growing and increasingly affluent population, the only way to reconcile energy demands with public outcry over emissions and pollution is by finding cost-effective ways of integrating low-emissions coal technology into their power infrastructure. And much like in Japan, that task may not be as daunting as it looks.
India’s policymakers, for their part, have to deal with rapid development and population growth that make coal indispensable to meeting the expected 3.5 percent increase in year-on-year demand for electricity between now and 2040. At the same time, Prime Minister Narenda Modi and his ministers need to urgently tackle an air pollution crisis that contributes to over a million premature deaths every year. India’s deadly smog is not just the result of growing industrial activity, but it also stems from illegal practices like the crop burning and reliance on wood burning for cooking and heating homes.
Full post
4) Nick Butler: Alternative Truths And Some Hard Facts About Coal
Financial Times, 3 April 2017
Is coal finished, to be displaced by renewables in a move that will solve climate change and clean up air quality across the world? Is coal — as one headline writer put it recently — in free fall?
Or is it still the dominant and growing source of power and heat in countries that make up the bulk of the global economy? Hasn’t its future just been rescued by President Donald Trump’s announcement that he is scrapping the environmental regulations that threatened coal use in the US?
Casual readers could be forgiven for being confused. Consider the following statements, all published in reputable papers over the last few weeks:
- The share of electricity production in the UK accounted for by coal fell to just 3.5 per cent in the third quarter of 2016.
- Worldwide, the number of new coal-fired power stations starting construction fell by over 60 per cent in 2016.
- Over-supply has pushed thermal coal prices down to half the level reached in 2010.
- Some 42,000MW of new coal-fired generating capacity was brought on stream in China last year and Beijing announced that coal consumption was set to rise by 19 per cent over the next five years, despite rapid growth in the use of renewable sources.
- In spite of extensive subsidies for renewables, 40 per cent of electricity in Germany last year came from coal, leading to an increase in carbon emissions in 2016.
- Across the world 50 per cent of aluminium, 70 per cent of steel and 40 per cent of electricity are produced from coal.
Let’s try to find a more objective interpretation of what is happening.
First, in a few places led by the UK — the country where the burning of coal fuelled the first industrial revolution — coal use is being systematically phased out by regulation. Hopes that the life of the coal industry would be sustained by the development of carbon capture and storage have faded and were downgraded in the UK government’s new medium-term energy outlook last month. The result is that almost every pit has closed and the remaining power stations running on imported coal are on death watch.
But the UK is the exception. In Germany, coal retains a secure share of the market and as long as the Social Democratic party remains part of the government there will be no serious plans to eliminate it, whatever the rhetoric on climate change and environmental sustainability. Jobs and votes come first.
In the US, the main threat to coal is not environmental regulation but price competition from low-cost natural gas. Coal is the principal victim of the shale gas revolution and the revival of the shale industry will intensify that competitive challenge over the next decade. It is very hard to see how any action by the US government, short of mandating the use of coal, can rescue an industry that has already seen a number of once-famous companies — such as Peabody Coal — file for bankruptcy. Coal will retain a local market in a limited number of states but with prices so low that production could become uneconomic.
China is the world’s largest user of coal (burning more than 50 per cent of the global total) and is pursuing a serious policy of encouraging renewables and setting a ceiling on coal demand growth. It seems likely that many of the coal plants built in the last decade will be underused and some of those being built now (again to provide jobs) are not needed. Demand may be coming to a peak but it is not there yet and to talk about a collapse in demand is wrong.
The biggest challenge and the most important factor in the global coal market is India. Demand continues to grow and new coal-fired plants are being added every week. India may never match the levels of consistent economic growth seen in China over the last 30 years but the transformation of the country into a major economic power is underway. The problem is that to grow, it needs the cheapest possible form of power on a large scale and for the moment that is coal. Nuclear, solar and wind will all contribute but coal is the pre-eminent source of supply and Indian imports will shape the world market.
Coal is plentiful and cheap and will be made cheaper still if US producers, under pressure from gas in their domestic market, export more.
It is possible to see oil demand peaking over the next decade — partly because new technology in the form of electric vehicles could eat away its core transport market. Coal, however, is a very different commodity. It sells on price and in the markets where it is dominant it retains a crucial competitive advantage.
Until the new sources of energy supply can beat the current low prices coal will remain the leading source of heat and power and will meet something like a third of the world’s energy needs. The proportion burnt in high efficiency, low emission plants will rise but that will remain a fraction of the total for the foreseeable future, not least because coal users cannot afford the upgrades necessary. Coal is the energy source of choice, through necessity, of the poorer half of the world.
Times may be tough for the industry, and the continued use of coal in sub-critical technology may be bad for the environment, but like it or not coal is not in free fall.
5) China’s Clean Coal Lesson
The Australian, 3 April 2017
Rowan Callick
Chinese engineer and inventor Feng Weizhong has an easy answer to how China plans to keep slashing coal use and power-station emissions while relying on coal to provide at least 55 per cent of its massive energy demand for decades to come.
The effervescent Professor Feng, who is also general manager of a large Shanghai power plant, explained to The Australian how the country can contrive to do both at the same time.
“Simple! It’s clean coal!”
China’s national energy administration has enlisted Feng as its champion in renovating outdated power plants and developing new ones that meet its needs to make more energy from lower fuel inputs, while emitting far less pollution and carbon dioxide.
Feng recently took The Australian on a tour of his virtually spotless Waigaoqiao Number 3 power station, which produces 138 per cent as much electricity as the Yallourn coal-fired plant in Victoria’s Latrobe Valley.
It operates with a workforce 53 per cent the size of the Australian generator, emits just 13 per cent as much carbon dioxide equivalent, and its efficiency — measuring how much of the energy in the coal ends up as electricity — is 166 per cent that of Yallourn. It took three years to build, and opened in July 2008.
The innovative Waigaoqiao Number 3 Plant has recently attracted senior-level visitors from the energy sectors of the US, Japan, Brazil and Russia — including the head of the American Energy Administration.
And while feted by the American Society of Mechanical Engineers, who last year presented him with their top annual award, he has yet to be approached by any agencies or corporations from Australia about helping to solve the country’s unfolding baseload crisis highlighted by South Australian blackouts.
Feng, 62, personally holds 40 patents, including in the US and Europe. “And we have a great team here to execute this new technology,” he said.
The staff now being recruited at the plant have a minimum master’s degree qualification. Many have PhDs.
Most coal plants around the world remain at the less efficient subcritical level, but Feng has also invented new technology to upgrade them rather than dismantle them altogether. “We can increase their efficiency greatly,” he said.
But the Australian government’s trade and investment arm, Austrade, would not answer specific questions about whether it has contemplated seeking to attract the expertise or investment of Feng and his team.
Instead, an Austrade spokeswoman listed five investment priorities agreed by state and territory governments, which include energy. Within that sector, she said: “This would include international investors from a number of countries which have an interest in clean-coal technology including Japan, South Korea, China, India and the US.”
And the US may well take a closer look at clean-coal technology after Donald Trump last week unveiled a sweeping overhaul of Barack Obama’s climate-change laws. The US President signed several pro-fossil-fuel changes, which place job creation ahead of laws restricting carbon emissions. He also unravelled much of his predecessor’s climate-change initiatives, including ordering a review of Obama’s signature Clean Power Plan, which restricts greenhouse gas emissions at coal-fired power plants.
Full story
6) John Constable: The Rising Trend Of UK Industrial Electricity Prices
GWPF Energy Comment, 2 April 2017
Dr John Constable: GWPF Energy Editor
The emerging trend in UK electricity prices to industry confirms civil service advice to Mr Blair, which he ignored, that the EU Renewables Directive (2009) would disadvantage the UK relative to other members of the European Union. If the Industrial Strategy is to succeed, the Renewables Directive will have to be repealed, post-Brexit, and immediate steps should be taken to resile from its commitments.
In 2007 the UK government department responsible for energy policy, the Department of Business Enterprise and Regulatory Reform (BERR), prepared a short paper to inform ministers of the likely impacts of the proposed European Union Renewable Energy Directive. This document was leaked to the Guardian, and is still available online from that source.
BERR’s study reported that the EU Commission itself estimated the total annual cost of the Renewable Energy Directive target at 24 billion euros in 2020 (See Table 4). BERR thought this was an underestimate, but also estimated the costs to the UK at some £6–10 billion per year (See Table 3, but note that the table unfortunately gets the figures for a 14% and a 15% target the wrong way round).
In other words, in 2007 the UK government estimated that the UK alone would bear between 25% and 40% of the total EU-wide cost of the Renewables Directive targets, a share disproportionate to its population and the size of its economy.
This obviously unreasonable burden resulted from the fact that the UK, unlike other European states such as Germany and Denmark, had only recently introduced substantial renewables subsidy programmes (the prudent and modest Non-Fossil Fuel Obligation was succeeded by the extremely generous Renewables Obligation in 2002). Consequently, the country started from a low base of renewable energy and had no renewables industry.
Instead, it had switched heavily towards natural gas for both heating and electricity, a move which of course rendered both sectors much lower emitters of carbon dioxide than they would otherwise have been and at very low cost. In other words, the proposed Renewables Directive seemed almost purpose-built to punish the UK for choosing the most economic route towards a low emitting energy system, namely natural gas, and to hobble the country in comparison to those EU states which had chosen to adopt renewables.
Nevertheless, in spite of BERR’s warning, Mr Blair, then Prime Minister, committed the United Kingdom to the Directive target, which became law in 2009 and requires that the UK obtain 15% of its Final Energy Consumption from renewables, across all sectors, electricity, transport and heating. No subsequent government has shown any sign of retreating from this obligation.
However, when the EU Renewables Directive is transubstantiated into British law by the Great Repeal Act, it should be high on Mrs May’s list for subsequent deletion since it is not only bad in itself but, exactly as predicted by the civil service in 2007, puts the UK at a considerable disadvantage as compared to the member states of the European Union.
Anyone doubting this need only look at the recently released estimates of industrial electricity prices as compared with major competitors. The following figure, drawn from data published by the Department of Business Energy and Industrial Strategy (BEIS), charts electricity prices from 2005 to 2015, with and without taxes, for six members of the European Union, Denmark, France, Germany, Italy, Spain, and the United Kingdom (red line).
Figure 1: Industrial electricity prices (p/kWh) without taxes (left panel) and with taxes (right panel) for Denmark, France, Germany, Italy, Spain, and the United Kingdom (red line). Source: Drawn by the author from data published by BEIS.
The UK imposes electricity policy costs through levies prior to taxation, so it is unsurprising that it has the highest prices without taxes, but it is still in joint third position when those taxes are included. Bad though that position is, it is the trendover the last decade that gives the most cause for anxiety. Only the UK in this group (and indeed in the EU 15) has a consistent rising trend in electricity prices, and all the other countries have a falling trend. There are doubtless a number of causes behind this fact, but what BERR identified in 2007 as the disproportionate burden placed on the United Kingdom by the Renewables Directive target is a substantial part of the explanation.
Due to the provision of coerced market share and generous subsidies, the UK generated about 82.8 TWh of electrical energy from renewables in 2016, up from about 25 TWh in 2009 [See BEIS, Energy Trends, table 6.1. This is not far short of the approximately 100 TWh per year (about 1/3 of demand) required of the electricity sector by the National Renewable Energy Action Plan (NREAP) which sets out the means to reach the Directive target. As is well known, this growth has been dearly bought, with subsidies currently amounting to about £5 billion a year, and accounting for a significant fraction of the retail price to all consumers.
Indeed, in the last release of the now discontinued Estimated Impacts of Energy and Climate Policies on Prices and Bills the Department of Energy and Climate Change (DECC) calculated that the price of electricity to a medium sized business in 2014 was 39% higher than it would have been in the absence of polices.
We can conclude, therefore, that BERR’s 2007 analysis was sound. The EU Renewables Directive (2009) has indeed put industries operating in the United Kingdom at a significant disadvantage as compared to those operating in other EU countries.
In fact, the same dataset from BEIS shows that this disadvantage is evident at a global level. The following figure compares electricity prices with and without taxes in the United Kingdom, Canada, Japan, Poland, Turkey, and the United States:
Figure 2: Figure 1: Industrial electricity prices (p/kWh) without taxes (left panel) and with taxes (right panel) for Canada, Japan, Poland, Turkey, the United States, and the United Kingdom (red line). Source: Drawn by the author from data published by BEIS.
As with Figure 1, while the rankings in 2015 are important it is the trend that deserves close attention. The UK alone has consistently rising prices over the period. Even in Japan, where there are of course very special circumstances, prices are starting to fall, and the rising trend in US prices is both modest in itself and arguably unlikely to continue under the current president’s America First agenda.
Mr Blair made a strategic error by neglecting BERR’s warning about the Renewables Directive. It is not too late to correct that mistake, and the delivery of an “Industrial Strategy” in the context of Brexit provides the framework and the opportunity. However, two years is too long to wait; government would be well advised to take steps to immediately reduce the iniquitous effects of the Renewables Directive before any further harm is done.
The London-based Global Warming Policy Forum is a world leading think tank on global warming policy issues. The GWPF newsletter is prepared by Director Dr Benny Peiser - for more information, please visit the website at www.thegwpf.com.
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