Trump administration reportedly split on Paris Agreement, while new EPA chief does not agree human activity is primary cause of global warming

The New York Times has reported on debate within the Trump administration as to whether or not the US should withdraw from the Paris Agreement on Climate Change. Leading the ‘withdraw’ side is Stephen K. Bannon, Mr Trump’s senior advisor, while Mr Trump’s daughter Ivanka, and his Secretary of State, Rex Tillerson (former CEO of Exxon) oppose the withdrawal, fearing it could have diplomatic consequences. During his election campaign, Mr Trump promised to revoke former President Obama’s climate change policies, and it may be that Mr Bannon’s urging of withdrawal has the objective of maintaining Mr Trump’s reputation of honouring his election promises, though Mr Bannon may simply be opposed to the Paris Agreement on principle, having previously published articles claiming that climate change is a hoax. Following his election, Mr Trump asked his staff to investigate the mechanism for withdrawing from the Paris Agreement (a process which may take up to four years if enacted), and it appears as though the administration may now have clarified what mechanism it would use, as Mr Trump is expected to make a decision shortly.

Meanwhile, Mr Trump is preparing to sign an executive order to begin the repeal of Mr Obama’s domestic climate change initiatives, including the Clean Power Plan, and the new head of the US Environmental Protection Agency, Scott Pruitt, has said in an interview that he does not agree that human activity is a primary contributor to the “global warming that we see”. He went on to say that “measuring, with precision, human activity on the climate is something very challenging to do and there is tremendous disagreement about the degree of impact.” Mr Pruitt’s current position is therefore somewhat unclear, in that it appears he agrees that global warming is occurring, but has not yet attributed a chief cause, although presumably it would be down to a natural planetary cycle. Scientists and environmental groups have sharply criticised Mr Pruitt for his remarks.

Chatham House paper saying wood firing not carbon-neutral criticised by industry group

British think-tank Chatham House has released a paper, Woody Biomass for Power and Heat: Impacts on the Global Climate, which claims that wood firing is not usually a carbon-neutral means of generating power. The chief argument is that because most wood that is fired comes from existing forests (which take decades or centuries to grow), there is no effective ‘carbon cycle’ in which carbon is captured as trees grow and then released as wood is combusted, to be captured again by growing trees. Instead, the paper argues that biomass firing is worse for the climate than coal, because to produce the same amount of power, more carbon dioxide is released when burning wood. The paper says that the real climate benefit from forests would be if wood was unburned – for instance, if it was used to produce furniture instead. (The paper allows that firing sawmill wastes, including black liquor, would indeed be climate-beneficial.) It concludes that “current biomass policy frameworks are not fit for purpose.” The UK’s Renewable Energy Association has criticised the paper, outlining a series of misunderstandings it says it is based on. The principal one is that managed forests are growing and absorbing carbon dioxide continuously, meaning that the carbon cycle is in fact in place, rendering the fact that biomass firing is more carbon intensive than coal irrelevant. It also rejects a claim in the paper that sawmill residues that would otherwise be used commercially are taken by the energy industry for combustion, resulting in carbon emissions that would not have normally occured. The REA claims that the energy industry could not do this on a cost basis, and says further that the wood firing industry “[uses] some parts of the forest’s produce that the timber industry doesn’t want.” Finally, it concludes that “biomass cuts carbon, supports forests, and delivers reliable energy at a lower cost,” referencing a detailed 2016 study by the US Department of Energy. Given Chatham House’s high international standing, the findings of its paper may nevertheless be accepted by governments.

Shell executive calls for carbon to be priced worldwide

The upstream director of Shell, Andy Brown, has used an address at the opening session of International Petroleum week in late February to state that the oil and gas industry must do more to encourage legislators to introduce taxes on carbon dioxide emissions and support carbon capture and storage. Pointing out that only 13% of worldwide anthropocentric CO₂ emissions were taxed, he further stated that he believed a price of at least £18 ($US22/€20.5)/tonne CO₂-equivalent emissions was required to push the power industry towards lower-carbon emissions. He also said that CCS would be needed to manage emissions after 2040.

Australian government considering financing CCS development through ‘green energy bank’

The Australian government is considering allowing funds from the state-owned Clean Energy Finance Corporation (known also as the ‘green energy bank’) to be used to fund the development of carbon capture and storage technology. The Federal Energy Minister, Josh Frydenberg, has said “We’re going to look at all our options because of the challenges that we face, namely to ensure energy security [and] energy affordability, as we transition to a low-emissions future.” In a sign of how political the energy sector has become, the shadow energy minister responded to Mr Frydenberg by saying “This would be an outrageous act of vandalism against a successful financing mechanism for renewable energy, for energy efficiency projects and for genuine low-carbon technology.” The CEFC has access to AUD$ 2 billion (€1.44 billion/US$1.52 billion) annually.

Chinese government to cut steel and coal-fired power generation capacity to “make the skies blue again”

The Chinese government has announced it will this year cut steel production capacity by 50 million tonnes, coal production capacity by 150 million tonnes, and coal-fired power generation capacity (existing and planned) by 50 GW, as it intensifies efforts to “make the skies blue again”. Both steel and coal-fired capacity cuts would be in the region of 5% of total national capacity, making them highly significant, although previous cuts to steelmaking capacity have sometimes simply closed non-operating plants (even while actual output has increased). The announcement comes in the context of the Greenpeace finding that approvals for new coal-fired power plant capacity fell by 85% over the last year. The Chinese premier, Li Keqiang, has also recently publically declared that the state would strengthen monitoring of heavy industry and crack down on companies that violate air quality rules. The efforts are probably a reflection of widespread discontent amongst Chinese people regarding the levels of pollution they must endure.

Think tank says India may build its last coal-fired power plant in 2025

India’s Energy and Resources Institute has published a report saying that if renewable power generation technologies continue to fall in price as they have been in recent years, and other policy settings are ‘right’, then India would build its last coal-fired power plant in 2025, and stop firing the fuel completely by 2050. The Institute’s analysis includes consideration of storage for power generated by renewables, assuming that within a decade, the costs for storage plus renewable power generation will be cheaper than coal-firing (the total costs for renewables plus storage falling by half in that period). The ‘right’ policy settings are mainly around a restructure of the market, rather than high levels of subsidies. With India the world’s fastest growing major polluter of greenhouse gases (increasing its emissions by 5-8% in recent years), and being reliant on coal-firing for 60% of its electricity, the possible change would be a huge one. India currently has plans to add another 65 GW of coal-fired capacity over the next few years, as Prime Minister Narendra Modi seeks to deliver electricity to more of the 240 million Indians who currently do not have a reliable supply.

GE close to $1 billion deal to supply gas turbines and associated equipment

Bloomberg has reported that GE is close to securing a deal with Caithness Energy with a potential worth of more than US$1 billion (€949 million) for the supply of gas turbine equipment. The deal may include as many as six H-class gas turbines (developed at a cost of US$2 billion (€1.9 billion), as well as steam turbines and other equipment, with the orders expected to be finalised through the next two years. The orders would continue the success of GE’s H-class turbines, which the CEO of GE Power, Steve Bolze, has described as the “best new-product launch in the last 20 years for the power business,” having sold 58 HA units already. Two of those units were purchased by Caithness Energy in 2015, and will go online next year. Separately, GE has made a deal with Mexico’s Gas Natural Fenosa to maintain a range of equipment in a deal worth US$130 million (€123 million), building on capabilities it acquired through the purchase of the energy division of Alstom.