President Trump moves to allow controversial oil pipelines while planning to scupper Clean Power Plan
The inauguration of Donald Trump to the presidency of the United States has been followed by a flurry of Trump administration activity in the energy sector. In one of his early acts as president Mr Trump signed executive orders to advance the approval of the construction of the Keystone XL and Dakota Access oil pipelines. The Obama administration had blocked construction the two symbolic pipelines, which were each the focal point of environmental protests in Mr Obama’s second term. Alongside the orders to advance the approval of the pipelines is some renegotiation of the terms of the approval, such that their construction must use US-made materials, which he has said will be good for US steelmakers. Environmental groups have criticised Mr Trump’s actions, with NextGen Climate president Tom Steyer releasing a statement reading “The pipelines are all risk and no reward, allowing corporate polluters to transport oil through our country to be sold on the global market, while putting our air and water at serious risk.” TransCanada, the company leading the Keystone XL project, responded to Mr Trump’s executive order by resubmitting its application to build the pipeline.
Meanwhile, the Trump administration’s plans for the Environmental Protection Agency appear to amount to a “hammering”, according to the new news outlet Axios. Those plans are alleged to include stopping the Clean Air Act greenhouse gas regulations for new and existing coal and gas fired power plants, issuing an executive order barring the EPA from overruling federal and state regulatory and permit decisions unless there is a clear violation of established law, and changing the way the EPA uses science and economics (including stopping the EPA funding scientific research). The communications director of Mr Trump’s transition team, Doug Ericksen, said in an interview that no decisions had yet been made to remove coverage of climate change from the EPA’s website, saying “We’re taking a look…[at] whether climate stuff should be taken down.” More immediately, Mr Trump ordered a temporary media blackout on the Environmental Protection Agency, prohibiting specific press releases, blog updates or posts to the agency’s social media accounts (resulting in ‘rogue’ Twitter accounts), though this was scheduled to last only for a matter of days. There has also been a temporary suspension of all new business activities by the EPA, including awarding any new contracts or grants.
Financial Times argues that UK government needs to enable long term energy projects
The Financial Times has, in the lead-up to the release of the UK’s new industrial strategy, ruminated on the financial challenges of energy and industry policy. The chief headache is finding private investment increasingly concerned with short-term financial returns (several years or less) for industrial assets which may pay themselves off over relatively much longer term (in the rage of 25 years and above). The method of discounting future cash flows integral to performing cost-benefit analyses favours shorter-term investments, discouraging private and government investors alike from infrastructure projects, despite their proven benefit to economies. There is a need, the article argues, for government investment to secure the development of long-term assets. While the article takes as its core example a tidal energy scheme, the critique is also applicable to the combustion industry, and it will be of interest to see if it will have any impact on the new industrial policy when it is released.
UK energy regulator considering scrapping subsidies for small power generators
Meanwhile in the UK, the mooted scrapping of subsidies for gas and diesel fired power generation facilities under 20 MW capacity is threatening reserve electricity supplies, according to another report by the Financial Times. The energy regulator Ofgem has been reviewing the subsidies and has signalled that their reform is likely, which may threaten the economic case for their continued presence in the UK energy mix, where collectively they supply up to 2,000 MW of backup power used during winter. Ofgem’s position is that it is “concerned that the benefit that smaller generators get for producing electricity at times of highest demand has increased significantly and this may be distorting…markets.” Executives in the small-generation sector have agreed that some refinements are needed, but have expressed concern that reform may go too far, suggesting that if the sector was to diminish, the government would not be able to deliver on its intention to close all heavily polluting coal plants by 2025. Such reform may also touch on combined heat and power operators across the UK.
Tanzanian government hoping to spur LNG exports through agreements with major oil and gas companies
The Tanzanian government is seeking to sign agreements with major international oil and gas companies to pave way for the construction of a liquefied natural gas plant as part of an export terminal. Talks are already advanced, with Shell, Statoil, ExxonMobil and Ophir Energy planning to build the US$30 billion (€28 billion) onshore LNG export terminal in conjunction with the state-run Tanzania Petroleum Development Corporation. Setting up the legislative environment and purchasing the necessary land are understood to be the next steps in coming to a deal, which is expected to be agreed in 2018. Tanzania is estimated to have 57 trillion cubic feet (1.6 trillion cubic metres) of recoverable natural gas reserves, much of it offshore.
MIT and Eni extend energy research collaboration
Massachusetts Institute of Technology and Eni have agreed to extend by four years their research collaboration, with Eni to contribute US$20 million (€18.5 million) to support three of the MIT Energy Initiative’s Low-Carbon Energy Centers. The research areas include solar energy and energy storage, but also carbon capture and storage and options for the use of natural gas that is otherwise flared. Eni has been supporting the MIT Energy Initiative since its inception in 2006.
J-Power to turn to gas to meet thermal efficiency targets
Japan’s Electric Power Development Co, otherwise known as J-Power, is looking to fire more natural gas in order to meet the country’s new thermal efficiency targets. Coal is the currently the fuel for something like 95% of J-Power’s 9,100 MW of power generation capacity, a significant portion of that being from aging, more polluting plants. With a thermal efficiency target of 44.3% by March 2031 being set for power generators nationwide, and today’s advanced coal-fired plants being able to reach around 41.5%, J-Power will be forced to turn to gas firing, which can be more than 50% efficient, in addition to updating its coal fleet. However, the company does not have easy access to large-scale LNG import facilities, meaning that it will need to make such provisions or procure them from another utility so that it can service the gas-fired stations it builds. Perhaps because of some particular regulatory ruling (left unclear in the rather confused Bloomberg article), J-Power is also turning to wood firing as an option, planning to fire up to 10% of the fuel together with coal at a new 600 MW coal-fired unit at its Takehara plant in western Japan, due to commence operation in 2020.
Bangladeshi protestors clash with police over proposed coal-fired power plant near World Heritage site
Protestors in Bangladesh campaigning against a new 1,320 MW coal-fired power plant due to be built near the World Heritage Sundarbans mangrove forest – the largest in the world – have had tear gas and water cannons fired on them, after allegedly throwing bricks at police. Around 200 protestors were at the demonstration, of which about 50 were injured. The protestors claim that the project will disrupt the lives of half a million people and increase vulnerability to natural disasters, as well as having a “devastating and irreversible impact on the Sundarbans”. Prime Minister Sheikh Hasina has said that all concerns regarding the plant, a joint venture between Bangladesh Power Development Board and India’s NTPC Ltd, have been addressed. A spokesman for the project has said that the plant will use new, environmentally less-impactful technology.