• Combustion Industry News

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      Patrick Lavery

      Combustion Industry News Editor

Business Trends

The European Union carbon allowance price fell to a record low of €5.99/tonne early this month. The low came after the EU released preliminary emissions data for 2011 which showed lower than expected emissions, meaning a glut of supply of allowances. The lower emissions, which fell from 2010 to 2011 by around 2.4%, were attributed by analysts Tschach Solutions as being due either to warmer weather (and a lower power demand for heating) or to energy efficiency improvements.  Since April 2011 the price has fallen by two thirds. According to 70Watt Consulting, the present oversupply would be sufficient to meet forecast demand up until 2020, though a major lift in economic growth would trigger a recovery in the price. Barclays’ carbon research team said the price reflected the fact that the EU could make more ambitious carbon reduction targets that would still carry manageable compliance costs.

Orders for power plant facilities and other heavy industrial plant taken by South Korean firms in the first quarter of 2012 were 5.6% lower than the first quarter of 2011, Xinhua has reported. The drop was attributed to delayed orders from countries in the Middle East, which is South Korea’s biggest export market, and was mainly in the oil and gas processing sector. The overall drop was in spite of the fact that orders from Asian countries increased hugely (by 674.8%), including orders received by Doosan Heavy Industry. It is expected that overall orders will rise significantly in the next quarter.

Legislation and Regulation

The Danish parliament agreed on 22 March that the country would work to be fossil fuel free by 2050, Forbes has reported. The government followed this announcement up by releasing its Energy Strategy 2050, which also includes a commitment to increase the share of renewable energy electricity production to 35% by 2020. Apart from a conversion to renewable sources (including a 50% share from wind generation by 2050), the strategy includes energy efficiency, smart grid, biogas and renewable heat initiatives.

A coalition of US environmental groups has initiated a lawsuit against the US Environmental Protection Agency to force them to finalise standards for coal ash. The coalition, including the Sierra Club and Earthjustice, say that the EPA has failed to deliver on promises to introduce new standards following a 2008 spill from a coal ash storage in Tennessee, which carried a clean-up cost of more than $US 1 billion. The EPA proposed two different regulations for coal ash in 2010, and finalisation is expected mid-year. The lawsuit appears to be a way of exerting pressure on the EPA to meet this expectation. The coalition of groups fears groundwater contamination from coal ash stores.

Technology, Research and Development

The UK Department of Energy and Climate Change has announced a new £1 billion contest for a technology to capture carbon in energy production from coal or gas, either either post- or pre-combustion. Entries close on 3 July, with decisions to be made by the northern autumn. The prize is the highest ever offered globally for such technology, and, according to the Financial Times, seven consortiums are vying for a slice of it, including ones led by Scottish Power, 2Co Energy, and Summit Power. On top of the prize, the UK government has announced it will include benefits for carbon capture technologies when it reforms its electricity market, and provide £125 million for research and development, including a new carbon capture and storage research centre. It is the second time that the UK government has run such a competition. The last collapsed six months ago after the winning consortium, led by Scottish Power, could not agree financial terms with the UK government.

Company News

Scottish Power last month announced that it will shut its 1,200 MW coal-fired power plant at Cockenzie, East Lothian, Scotland. The final operating day is planned to be 31 March, 2013, when under the EU Large Power Plant Directive concerning heavily polluting power plants, the plant will run out of operating hours. From this month the plant began operating at a reduced power output of 550 MW so that those operating hours are extended to the planned date.

E.ON has announced that it will commence buying CO2 permits bit by bit when Phase III of the European Emissions Trading System begins in 2013. Phase III involves full auctioning of permits, meaning power companies, which have so far received allocations of free permits partially covering their CO2 emissions, will be forced to purchase permits/offsets for all of their emissions. E.ON has stated that the step-by-step strategy has been adopted so that it can react to emissions as they occur in a market of uncertain power demand.

Marathon Petroleum Co has made an agreement with the US EPA and the Department of Justice to cap its natural gas flaring and improve efficiency controls on combustion devices. A dispute had arisen out of allegations that Marathon was violating the Clean Air Act. The spending on improvements to combustion equipment is to reach $US 51.5 million, $45 million of which has already been spent. Marathon is also to pay a penalty of $460,000.

Other News

The entirety of Cyprus suffered a blackout at dawn on 4 April after a problem at one of the island’s power stations triggered the breakdown of the entire generation and supply system, according to Xinhua. The blackout lasted around 6 hours in many areas.