Coal firing expected to rise in Asia
The Wall Street Journal has reported on the expected rise of coal in the Asian region. It has quoted energy consultants Wood Mackenzie as estimating that coal currently accounts for 35% of power generation capacity in the continent, with a rise expected to 48% by 2030 (which echoes the International Energy Agency’s prediction that coal consumption will double in Asia between 2010 and 2020, to 210 million tonnes). Amongst the countries pushing their coal generating capacity are Vietnam (currently building nine plants), Indonesia (with a plan to increase its share of coal), Malaysia (currently building four plants), and Thailand (wanting to increase its coal share). In addition to these, the giants of India, China and Japan are all expected to increase their coal use. Such developments signal coal’s continued worldwide prominence in power generation, and the need to develop economically viable means of limiting carbon emissions from coal generation, if global emissions are to be curbed.
UK government shift position on biomass subsidies
The UK government has proposed new arrangements for subsidies for biomass-fired plants, in its draft Electricity Market Reform delivery plan. Under the proposals, subsidies to existing biomass-firing power plants will be capped at 400 MW per plant, and subsidies will end by 2027. Furthermore, there will be no subsidies for new-build biomass plants that are solely for electricity generation, though combined heat and power stations will receive some support. The Department for Energy and Climate Change (DECC) justified its new position by stating “In the medium to long term, new build electricity-only biomass plants do not offer as cost effective a means of decarbonising the electricity grid as other renewables technologies, including offshore wind.” The move, which is a retreat from the government’s previous position of subsidies for all biomass firing, appears to have been made under pressure from environmental groups, which are concerned about the sustainability of biomass. Wood pellets burned in the UK are often sourced from North America, and an investigation by the BBC had revealed that some trees had been felled exclusively for the production of the pellets. But the more penetrating criticism has been that biomass-firing offers poorer carbon savings than gas-firing, which, according to the BBC, DECC has acknowledged. The Renewable Energy Association has urged the government to reconsider the proposals, while the Royal Society for the Protection of Birds welcomed the move on the grounds that biomass firing could be dirtier than coal firing. The consultation period on the proposal ends on 25 September.
US court orders EPA not to delay biomass power plant rules
Across the Atlantic, the regulation of biomass power plants has also been in the news. The US Court of Appeals has struck down the Environmental Protection Agency’s decision in 2011 to postpone rules being issued for such plants, although the court did not specify when new rules need to be in place. The EPA had justified the delay by saying that it needed time to properly assess the net environmental effect of biomass firing, but the environmental groups which brought the case to court argued that this did not mean biomass firing should not be regulated.
Northeast US region lowering carbon cap
The north-eastern US Regional Greenhouse Gas Initiative, a joint carbon cap-and-trade system which includes the states of Maine, New Hampshire, Vermont, Massachusetts, Rhode Island, Connecticut, Maryland, New York and Delaware, is to lower its cap from 150 million tonnes to 83 million tonnes this year. The move comes with reduced economic activity and the shift to natural gas having reduced emissions significantly, making the sizable lowering of the cap feasible. After 2014, the cap will be reduced by 2.5% per annum. The last auction for permits, which factored in the lower cap, had a price of $US 3.21 per short ton ($US 3.54/tonne, €2.68/tonne). Some analysts expect the system to one day be retired when a national scheme is put in place.
China bringing more focus to environmental problems
China is increasing its focus on environmental problems arising from industrialisation, according to The Wall Street Journal. The national government has recently said it would name the country’s dirtiest cities, and force factories to publish their environmental performance. Local government officials are also being given environmental targets to supplement economic growth ones. The moves come after numerous environmental protests, extremely high smog levels and concerns about food purity. In addition, a recent study showed that in certain areas, pollution from coal combustion was reducing life expectancy by more than five years. The environment minister, Zhou Shengxian, put it pithily, saying “If development turns healthy people into unhealthy people, this is a parody of development. We need to slow down from the current pace of growth.”
RWE npower to close Tilbury, UK station in October
In more UK biomass news, RWE npower announced in early July that it will halt work on the development of a biomass-fired power plant at its Tilbury, UK, power station, and instead close the station in October this year. In 2010, RWE converted all three of the station’s units from coal to fire using biomass and waste, which the company considers to have been a technical and commercial success. However, this month it made the decision not to extend the plant’s life, which is believed to come from commercial uncertainty and some technical difficulties, some of which may have come from the 2012 fire at the wood hoppers at the plant. The scheduled 31 October plant closure is in line with the European Commission’s Large Combustion Plant Directive, though, according to The Guardian, RWE is open to selling the plant so that its operation may continue. If the plant closes, there are likely to be 220 job losses.
RWE begins construction of biogas plant in Germany
In further biofuel related news from RWE, the company has begun construction of a novel biogas plant in Bergheim, in the German state of North Rhine-Westphalia. It will take alternative energy crops from regional agriculture, make a raw biogas, and then treat it into a natural gas quality which can be fed into the gas grid. The plant is due to be complete in the second quarter of 2014, and is designed to produce 7.4 MW worth of natural gas, which RWE sees as being used for combined heat and power plants. The RWE press release states that feed crops will include “silages of whole plants, grass and maize, as well as sugar beets, alfalfa, and agricultural fertilizers. New energy crops, such as silphium perfoliatum and wildflowers will also be tested in the plant.”
Vattenfall to restructure following writedown; sells Danish operations
Swedish power company Vattenfall, one of Europe’s largest electricity producers, has moved to restructure its business after being forced to write down about 6% of its value (29.7 billion Krona/$US 4.6 billion/€3.4 billion). It will split its operations into a Nordic division and a continental Europe division, which will be primarily composed of operations in the Netherlands and Germany. At the same time, it has sold its Danish operations to Danish company COWI. In its continental division, Vattenfall forecasts a riskier market, and has flagged the possibility of finding venture partners. Around half the writedown in value came from its assets in the Netherlands (Vattenfall having overpaid in 2009 for the acquisition of Nuon), with the rest coming from writedowns of German coal assets and a reduction in the valuation of its goodwill.
Jindal brothers competing to purchase Stemcor’s Indian assets
Two of India’s richest industrialists, brothers Naveen and Sajjan Jindal, are competing to purchase the Indian iron ore assets of private British steel trading company Stemcor. Neveen Jindal, head of Jindal Steel and Power (and a member of Indian parliament), is reported to have bid around $US 800 million (€602 million) for the assets, located in the state of Orissa. Meanwhile, Sajjan Jindal, head of JSW Steel, has written to Stemcor to express his company’s interest, suggesting a higher valuation. Stemcor, which has annual revenues of around £5.1 billion ($US7.8 billion/€5.9 billion), is under pressure from its creditors to pay off £780 million of debt, sparking the Jindals’ interest. According to sources referred to by the Financial Times, the brothers have an amicable relationship and usually avoid competing directly, most often coming to informal agreements between themselves.
New Eskom power plant facing additional delay
South African state-owned utility company Eskom is facing an additional delay to the completion of the 4.8 GW Medupi power station, with the station now expected to start operating in mid-2014 with an initial capacity of 800 MW. The station is recognised as hugely important in avoiding the need for power cuts across the country, as Eskom’s total power generation capacity is 42 GW, meaning Medupi will increase generation capacity by more than 10%. With the delay, there is expected to be at least a 700 MW gap in electricity supply in the country next year. Eskom is also facing other difficulties, with a forecast revenue shortfall of 8% predicted in future years.