• Combustion Industry News

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      Patrick Lavery

      Combustion Industry News Editor

Business Trends

The Wall Street Journal has carried a report on coal being one of the top issues in the US presidential election campaign. Both the Republican candidate, Mitt Romney, and the Democratic incumbent, Barack Obama, have been at pains to paint themselves as pro-coal. The difference comes in the energy mix and the amount of regulation, with Romney envisioning a largely fossil-fuel based scenario with less regulation, whereas Obama stresses the importance of renewable energies along with clean coal. Three of the swing states in the election, Ohio, Virginia, and Pennsylvania, are coal mining states, which explains much of the importance being placed on coal. While coal use is down in the US because of low natural gas prices, jobs in coal have risen due to exports to countries such as China, Brazil, and India.

And following that coal to India, the Indian coal mining industry, which supplies 75% of domestic demand, is facing a severe long term challenge, according to a report in Reuters. Open-cast mining is currently profitable, but the sites available for it are becoming rarer, in part because of the difficulty in obtaining land and permissions under the democracy that the country is. This means that to sustain the 75% domestic supply rate beyond the next five years, which the government wishes to do, deep mining will be required. However, deep mining is currently not profitable, which suggests a steep price rise occurring after that period, which will in turn affect the economy. It is estimated that extraction of a tonne of coal from open-cast mining costs around $US 13/€10, whereas from deep mining the cost is estimated at $US 75/tonne (€58/tonne), a startling difference. Coal resources themselves are not scarce – India is judged to have the fifth largest deposits in the world – but it seems likely that imports of foreign coal – currently around 50% more expensive than domestic coal – are bound to increase.

The sell-off of Nigeria’s national power generation assets has been compared in a Reuters opinion piece to the privatisation of Russia’s national energy assets in the 1990s. The similarity, the piece claims, is sales to entrenched business and political elites with relatively little experience in the power generation sector. Five bids for power stations and ten preferred bidders for power distribution companies were announced in mid-October, with former military figures behind a number of the approved and preferred companies.  Labour unions and losing firms have alleged a fraudulent process, and the US and British aid agencies overseeing the sales have also been accused of lacking transparency and employing staff with conflicted interests. Nigeria wishes to increase its electricity generation by ten times by 2020, and the privatisation is seen as a key step to achieving that goal.

The European Commission (EC) has cleared the way for the UK government to institute its Green Investment Bank (GIB), which the government intends to finance with £3 billion/$US 4.83 billion/€3.73 billion. At issue was the fact that state aid for low carbon projects might be anti-competitive, but the UK government successfully argued that the loans it would give under its scheme would not be given under competitive conditions. The approval given by the EC is only for four years, however, meaning that the market conditions will be reassessed after that period. The finance is intended for offshore wind power generation, waste-handling plants, energy efficiency measures, biofuels, biomass, carbon capture and storage, marine energy and renewable heat generation, and it is envisaged that finance from the GIB will accompany private investment.

Legislation and Regulation

The European Commission has presented a proposal to substantially change its biofuels policy, with the key change being limiting to 5% the contribution food crop-based biofuels can make to renewable energy targets up to 2020, down from 10%. After 2020, the Commission’s proposal is that such biofuels will not receive any subsidies if they do not lead to substantial greenhouse gas emissions reductions. The proposed change comes after much study and controversy surrounding using food crop-based biofuels, with the main criticisms being that they contribute to high food prices and do not result in substantial emissions reductions. ‘Second generation’ biofuels, which do not compete with food, are seen as the preferred alternative. Food crop-based biofuels currently contribute around 5% to renewable energy targets, meaning that the current industry may not have to cut back, but may not have much room to grow.

A grouping of power generation companies in the United States has filed a federal court request that the US EPA revises a rule on hazardous air pollutants, or expedites their case against the Mercury and Air Toxics Standards (MATS). The heart of the issue is the potential for power plants currently under development to be subject to additional future greenhouse gas requirements, which are to come into force under separate regulations, if the developments are delayed due to the time it takes to come to a decision on the MATS case. As their developments were initiated before the proposed additional greenhouse gas requirements, the developers feel it would be unfair to force them, because of a court delay, to also meet requirements that had come into effect during the delay. The grouping includes Tenaska Trailblazer Partners, Deseret Power Electric Cooperative, Sunflower Electric Power, Tri-State Generation and Transmissions and Power4Georgians, and their case against MATS revolves around its requirements being so onerous that equipment manufacturers cannot guarantee meeting them, which in turn makes financing the developments difficult.


A thoughtful piece by a University of California, Berkeley, professor of law, Stanley Lubman, in The Wall Street Journal has highlighted recent public protests in China that have arisen over environmental concerns, particularly in relation to industrial pollution. A metals plant in Shifang, Sichuan province, and a pipeline in Jiangsu province were given as examples. The piece argues that social stability in the country will rely upon better enforcement of environmental regulations, which are sometimes bypassed by local officials attempting to increase industrial output at the command of national officials.

Research, Development and Technology

Numerical Rocks AS, a small Norwegian company, has been developing software to simulate the storage of carbon dioxide in rock, a tool likely to be useful for carbon capture and storage (CCS) projects and enhanced oil recovery (EOR) applications. The company’s software simulates two phase flow (CO2 and water) through digitised three dimensional images of rock that are at a fine scale enough to incorporate capillaries. This enables simulation of ‘stationary flow’ – the slow ingress of fluid into capillaries which occurs far from injection wells. The company is now working on non-stationary flow simulation.

Company News

Air Liquide has taken a significant step in the South American market, building a new CO2 and power plant in Itabirito, Minas Gerais, Brazil, at the site of a Coca Cola bottling plant. The new plant accompanies a long-term deal to supply CO2, nitrogen and compressed dry air, as well as electric power, steam and chilled water. The plant is innovative in that it purifies the CO2 produced during power generation to a level exceeding the highest beverage grade requirements, which it supplies for use of Coca Cola in the manufacture of its drinks. This, along with the co-locality of the plants, reduces the carbon footprint of both companies. Air Liquide employed Union Engineering to supply the plant, the second time it has done so in Brazil.

Utico Middle East has announced the winning, in conjunction with Shanghai Electric, of a $US 408 million/€315 million contract to build what it says will be the world’s greenest coal fired power plant, in Ras Al Khaimah in the United Arab Emirates, to be completed in 2015, sized at 270 MW. Utico’s managing director, Richard Menezes, was quoted as saying “By deploying Shanghai Electric’s superior energy-efficient and proven technology at the plant, we are confident of reducing flue gas desulphurization, carbon dioxide emissions almost to zero, and setting the benchmark for cleaner energy to the world.” The plant will be designed to capture 100% of carbon at nominal capacity, and 80% during standard operation. The announcement was coupled with an ambitious regional plan for Utico, which wants to supply clean coal energy to more countries within the Gulf Cooperation Council countries – Bahrain, Oman, UAE, Saudi Arabia, Kuwait and Qatar. It is already in talks with Dubai (which wants to produce 12% of its electricity from clean coal) and Oman.

Australian company AGL has announced it has suspended plans for a $US 1.04 billion/€802 million gas-fired power plant it was intending to have built in New South Wales, Australia. A recent fall in demand due to higher prices and mild weather was behind the decision, according to The Wall Street Journal, although for a long-term project and a state with a growing population, these reasons are questionable. The plant was to be built in two stages, each being 500 MW, and General Electric was to be the designer and builder.