• Combustion Industry News

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      Patrick Lavery

      Combustion Industry News Editor

Trump presidency threatens Paris Climate Agreement while potentially boosting parts of domestic fossil fuel industry

The election of Donald Trump to be the next president of the United States has carried a range of possible implications for the combustion industry. On the international front, there is uncertainty as to the US’s ongoing commitment to the Paris Climate Agreement, with Mr Trump – who in 2012 called climate change an invention of the Chinese – reportedly seeking a way to quickly pull the US out of the deal, which went into force on 4 November, four days before the presidential election. The deal is designed so that it takes three years for a country to withdraw, but the Trump administration may circumvent this fact by pulling out of the agreement’s 1992 parent Framework Convention on Climate Change (which can be done within one year), or simply through a presidential order to delete the signature of the US from the agreement. China has warned Mr Trump that “it is global society’s will that all want to co-operate to combat climate change,” while others at the Marrakech climate talks insisted that the agreement could work even without the involvement of the US, though others, such as India, were more doubtful. Meanwhile, Mr Trump’s support for a more protectionist approach to the economy may be welcome news to US steelmakers battling cheap imports of Chinese steel. In domestic energy policy, Mr Trump appears likely to cancel President Obama’s Clean Power Plan, a move made possible because the plan has been instituted through Mr Obama’s executive power rather than through legislation. This is likely to be accompanied by more support for the fossil fuel industry. One of Mr Trump’s planned actions for his first 100 days was “lift the restrictions on the production of $50 trillion dollars’ worth of job-producing American energy reserves, including shale, oil, natural gas and clean coal,” while another was “lift the Obama-Clinton roadblocks and allow vital energy infrastructure projects, like the Keystone Pipeline, to move forward.” While some of these measures may put back action on climate change, the increasing cost-competitiveness of renewable power generation may prove a greater force than the US president.

Trump presidency unlikely to reverse coal’s slide, according to Reuter’s opinion piece

Things may not go according to plan for Mr Trump with coal. Reuter’s John Kemp has written a piece in light of the election result looking at the fortunes of the coal industry during the Obama administration. Over 400 coal-fired power plants have closed across the US since Obama took office in 2009, and 33,000 coal mining jobs have been lost. Kemp argues that most plant closures have occurred not because of a ‘war on coal’, but because they were old (requiring greater maintenance expenditure) and inefficient. The average plant closed during the Obama administration began generating electricity in 1960, and all of them before 1971, while the average closed plant had only a 80-100 MW output, much smaller than the 500-1,000 MW size considered to be necessary for economic viability these days.  It is likely, then, that regardless of the federal administration, they would have closed. This has been made even more likely by the competition provided by cheap natural gas, with lower capital costs for modern combined cycle gas-fired plants often a more attractive option than refurbishing aging coal plants. In addition, gas has offered more operating flexibility, being able to start-up and shut-down more easily, and adapt to variable loads more fluidly. On top of this, electricity demand in the US has remained relatively flat since 2007. While the Obama administration’s encouragement of renewable power generation capacity has also made life harder for coal, the other realities suggest that the Trump administration will face serious difficulties in bringing life back to the coal industry. This is underlined by the fact that the average coal-fired until still in operation is 39 years old.

China to ramp up waste-to-energy

China is turning to incineration to deal with its mounting solid waste problem, according to a report from Reuters. The country had 223 waste-to-energy plants at the end of 2015, and is planning to double that number in the next three years, increasing the amount of waste burned by 2.5 times to 500,000 tonnes per day by 2020. A symbol of the country’s solid waste problem is the array of landfills around the outskirts of Beijing that are collectively known as ‘the seventh ring road’, and ‘garbage mountains’ and ‘garbage rivers’ across the countryside are also said to be common. In opposition to the plans to increase combustion of the waste is nimbyism (not-in-my-back-yard-ism) plus the traditionally poor profit margins from waste-to-energy; the government plans to correct this through offering incentives such as cheaper water, power and heating for those living near new plants, and higher tariffs for waste-to-energy generators. Companies such as China Everbright International, which builds waste-to-energy plants in China, will be rubbing their hands with glee.

ADNOC and Masdar begin operation of world’s first CCUS system for a steelmaking works

Abu Dhabi National Oil Company has launched the world’s first commercial carbon capture, utilisation and storage system (CCUS) for a steelmaking plant in conjunction with Masdar, the clean technology and renewable energy arm of the Abu Dhabi government. The two entities have formed Al Reyadah, a company with the sole purpose of developing CCUS projects, and the first project is to be at an Emirates Steel plant, capturing up to 800,000 tonnes per year of CO2, compressing and dehydrating it, then using it for enhanced oil recovery in the NEB and Bab oilfields controlled by Abu Dhabi National Oil Company (thereby saving the natural gas usually used for the oil extraction). The project was four years in development, and constructed by Dodsal Group for a price of US$122 million (€114 million).

Leading oil and gas companies launch billion-dollar low-carbon technology fund

Some of the world’s biggest oil and gas companies have joined together to pool US$1 billion (€930 million) to develop climate-friendly energy technologies. The Climate Investments Fund is to be funded by Total, Eni, BP, Repsol, Saudi Aramco, Royal Dutch Shell, Statoil, CNPC, Pemex and Reliance Industries, with a large portion going to carbon capture, utilisation and storage technology development for gas-fired power plants and for reducing methane leakage in gas and oil extraction, as well as improving efficiency in transport and energy-intensive industries. The ten companies together produce around 20% of the world’s oil and gas, and the oil and gas industry is responsible for an estimated 5% of direct manmade greenhouse gas emissions and for producing products that emit a further 32% of manmade emissions. The group has already screened 200 different technologies in consideration for development funding, and may select several to pursue.

Aperio Systems developing cybersecurity technology for power plants

Bloomberg has reported on Israel-based start-up Aperio Systems Ltd., which develops cybersecurity technology for power plants. Aperio focuses on technology which can detect false information within a digital system before the false information can do any harm, notifying operators of any breaches or turbine tampering. CEO Yevgeni Nogin has said to “think of Aperio as a polygraph for process data.” Cyberattacks have already occurred on power plants around the world, an example being last year on a Ukrainian plant, disconnecting backup systems and sending false information to servers in the control room; PricewaterhouseCoopers estimates that attacks on power plants increased 93% last year. It appears that Aperio will have no shortage of customers.

New RWE CEO sees difficult years ahead

The new chief executive of RWE, Rolf Martin Schmitz, has said that the coming years for the company will continue to be difficult as it attempts to make cost efficiencies at the same rate as electricity prices fall. While electricity prices have risen somewhat recently (leading to some mothballed gas-fired plants being restarted), they are still 13% below their five-year average, and Mr Schmitz has said “I can’t see a stable trend on power prices or a trend reversal yet.” RWE will continue to push for a capacity market to be introduced to the country, somewhat similar to the system that has been introduced into the UK in recent years, compensating utilities that provide standby generation capacity. Meanwhile, the company is to shed 2,300 staff by 2020 as it continues its cost-cutting drive, having chopped €1.5 billion (US$1.6 billion) off its expenses since 2013. Since RWE span off its renewable power business, Innogy, RWE’s share price has fallen by 17% (in comparison, the Germany-wide DAX index has risen 0.8%), a sign that the market believes the company’s future profit will diminish.

Total to develop South Pars gasfield in Iran

Total has become the first Western oil company to invest in Iran following the lifting of international sanctions last year. CEO Patrick Pouyanné made the deal, which will have Total expanding the huge South Pars gasfield alongside China’s CNPC, in early November, and Total will use its own cash reserves to finance the move. The deal comes after an earlier agreement with Petrobras, Total capitalizing on its rapid steps to curb expenditure following the oil price crash of 2014 to now expand as most oil companies continue to retract their capital spending.