Global Carbon Capture and Storage Institute executive claims CCS-enabled coal-firing is cost competitive with renewables
The Asia-Pacific manager of the Global Carbon Capture and Storage Institute, Alex Zapantis, has challenged conventional wisdom by stating that coal-firing with carbon and capture and storage is “at least [cost] competitive” with renewable energies. Mr Zapantis’s claim relies on including costs for energy storage to make electricity from renewable sources ‘on tap’ at any time, which may be a reasonable assumption when the proportion of renewable energies in an energy mix are high, but not quite as reasonable otherwise. He compared the intermittent nature of renewable power generation to more dependable conventional forms thus: “Think of it this way: if you need to go to a hospital, you can rely on a bus service and hopefully the bus is there at the right time to take you to the hospital when you need to go. Or you can have an ambulance — the ambulance is going to cost you more, but actually the value of the ambulance is much higher.” Mr Zapantis has called for more governmental support for the development of CCS.
Bloomberg, E.ON and Vattenfall call for European ETS price floor
A direct carbon tax such as Singapore is planning (see article further below) may avoid some of the pitfalls of a cap-and-trade emissions system, which has recently been called into question in an editorial by Bloomberg. The piece says that the European Emissions Trading System has failed in its goal of encouraging investment in clean technology, as there have been too many permits in the system, allowing prices to fall too low during times of depressed economic activity. It quotes expert analysis that suggests a price of around US$30/tonne (€28.35) would be needed to make the system effective; the present price is slightly above five euros. Last month, the European Parliament passed reforms to double the number of permits taken out of the market after 2020, which Bloomberg calculates could raise the price to €25/tonne. The piece argues that a floor price for the market is needed as currently exists in the UK and has been proposed in France. E.ON and Vattenfall have both come out in support of a Europe-wide floor price, but there are concerns that it may reduce the competitiveness of some manufacturing industries and impact countries heavily reliant on coal, such as Poland, more than others. However, the Institute of Energy Economics in Cologne has suggested that a floor price of €30/tonne would mean a cost to each European citizen of only €5 per year.
House of Lords report criticises successive governments’ energy policies
A report by the UK’s House of Lords has criticized intervention in the power sector by successive governments, claiming it has left the sector complicated, uncompetitive, and without sufficient capacity in the market. The chairman of the Economic Affairs Committee, Lord Hollick said: “Poorly-designed government interventions, in pursuit of decarbonisation, have put unnecessary pressure on the electricity supply and left consumers and industry paying too high a price.” The report found that industrial power prices are now the highest in Europe, and that consumer prices had risen by 58% since 2003. It also highlighted concerns that nuclear power may not be delivered efficiently, which would place even more pressure on other means of power generation.
Australian metals sector concerned about continuity of electricity supply
The CEO of Australian steelmaker BlueScope, Paul O’Malley, has warned that Australia faces an “energy catastrophe” if gas-fired power plants are not built to provide baseload power generation. Mr O’Malley was talking in the context of recent power failures in Australia, one of which forced BlueScope’s plant in Whyalla, South Australia, to halt operations. His concerns are widely held within the Australian metals sector, with BHP, Alcoa, Rio Tinto and Sun Metals all facing electricity continuity problems over the last year in addition to high prices (in the region of three to five times US prices). Discussion about Australia’s continuity of electricity supply has been low-key in recent years, but has been sparked to life over the last three months after the state-wide South Australian blackout. BlueScope saw its profits rise over the last year as steel prices worldwide rose, driven by increased demand from China, which is, however, already contracting somewhat.
Russia to source gas turbines for Crimea from Iran
Russia is planning on purchasing gas turbines from Iran in order to build two power plants in Crimea, with EU sanctions prohibiting European businesses and individuals from supplying energy technology to the disputed region. The head of Russian state defence conglomerate Rostec, Sergei Chemezov, has said: “Yes, we have problems with turbines, because Germany and some other European countries have banned deliveries to Crimea. We are negotiating with Iran, they are manufacturing similar turbines.” Russia is seeking to impart greater energy autonomy to Crimea, with the two plants having a combined generation capacity of 940 MW. Prices must still be agreed between Iran and Russia, with delivery and installation expected in 2018.
Singapore planning to institute carbon tax
Singapore intends to introduce South-East Asia’s first carbon tax, which would begin in 2019. Finance Minister Heng Swee Keat outlined the proposal in a budget speech, suggesting the price would be around S$10-20 ($US7.1-14.2/€6.7-13.4) per tonne of carbon dioxide-equivalent emissions. The tax would translate to an increase in electricity prices of 2-4%, and revenue from it would go to help industry pay for measures to reduce emissions. Mr Heng said during his speech that “The most economically efficient and fair way to reduce greenhouse gas emissions is to set a carbon tax…Singapore is vulnerable to rises in sea level due to climate change. Together with the international community, we have to play our part to protect our living environment.” Interestingly, the proposal appears to signal a stronger commitment to carbon emissions reductions than Singapore agreed to during the 2015 Paris climate conference.
Possible reform to debt tax deductions worries US utilities
US utilities are fearing that federal tax reforms may be made that will adversely affect their businesses. The reforms in question would do away with allowable deductions related to interest payments on the debt that utilities take on to finance the building of power plants and transmission infrastructure, with analyst firm Morgan Stanley saying disallowing the deductions could reduce utilities’ earnings by up to 8.5%. While stock market pricing appears to indicate that investors do not believe the reforms will go through, uncertainty remains. If they were to go through, however, the news may not all be bad for utilities – some Republicans wish to remove the deductions but reduce company tax, which may help to alleviate the pain.
RWE continues to be affected by low German power prices
RWE has announced that for the second year in a row it will not pay its shareholders a dividend. The company has been forced to write down its assets by €4.3 billion ($US4.5 billion) as a result of falling electricity prices, which have fallen by 66% since a (relatively short-term) peak in 2008. Although prices have picked up somewhat in the last year, they are still low enough to make the outlook for the earnings from RWE’s German power plants bleak, the prices depressed because of a glut of electricity supply from renewable energies, which have enjoyed substantial subsidies in recent years. The company plans to pay a dividend for the 2017 year.
Mercer International buys largest German sawmill plus biomass-fired power plant
Global pulp manufacturing company Mercer International Inc is to buy Germany’s largest sawmill along with a biomass-fired power plant for the price of US$55.1 million plus a further US$9 million of working capital (altogether around €60.1 million). The facility is located in Friesau in central-eastern Germany, the power plant producing approximately 13 MW of electricity and 49.5 MW of thermal energy. Mercer already owns a nearby paper mill and associated power plant, and intends to find ‘operational synergies’ to save money operating both sites.
Thailand’s military government bows to public pressure over planned coal-fired plant
Thailand’s ruling military government has made a rare concession to public pressure, with Prime Minister Prayuth Chan-ocha ordering a renewed and strengthened environmental and health impact assessment to be carried out for a proposed 800 MW coal-fired power plant. Plans for the station, to be built in the touristic Krabi province, had been approved by the government on 17 February, with construction envisaged to start in 2018, but protests by residents and activists appears to have forced a rethink.