European steel industry looking to new European Commission to set positive direction

The policies of the next European Commission, to be in place between 2015-2020, will be vital to the rebuilding of the European steel industry, according to Voestalpine CEO Wolfgang Eder. The industry still has not recovered from the economic crisis which began in 2008, with 60,000 jobs having been lost, and output at around 75% of 2007 levels. Over-capacity is still at around 30-40 million tonnes/annum, and European electricity prices are around twice those of the US, with gas prices four times higher. On the upside, demand for steel is expected to grow by 3.5% this year, while the recent earnings of European steelmakers have been encouraging. However, it is future EC policy which is considered key. The industry is seeking policy which puts industrial development on a par with environmental goals, and is encouraged by recent signs from the EC and European politicians. “I very strongly believe that industrial policy has to be a core agenda for the EU. I give and the European parliament gives whole-hearted support to a new emphasis on industrial policy,” Reuters quoted the co-chair of the European Green Party as telling the recent European Steel Day conference in Brussels. The big unknown, though, is how the next Commission will act.

Russia signs gas deal with China estimated at $US 400 billion

Russia is to begin supplying around 38 billion cubic metres of gas per year to China from 2018, after a deal loosely estimated at $US 400 billion (€293 billion) over 30 years was struck between the two countries. The agreement was signed (at the unusual hour of 4 am) by Russian President Vladimir Putin during a visit to Shanghai, and is the culmination of a decade-long process of negotiation, according to the BBC, which says an agreement on price had held the deal up. For Russia, it secures a new customer amidst uncertainty in the West; for China, it diversifies suppliers and allows the country to cut down on coal firing, and thus ease air pollution problems. While the estimated value of the deal is enormous, the BBC opines that the deal could be even more significant as a herald of further major trade deals between the two countries.

BJP victory in Indian elections signals shift to greater business focus

The recent victory for the Bharatiya Janata Party (BJP), led by Narendra Modi, in the Indian national elections marks a major shift in the country’s direction, according to The Wall Street Journal. The country’s economic growth rate has dropped over recent years, believed to be due in part to hold-ups in having major industrial projects approved. The prevailing sentiment in India seems to have been one of frustration at the lack of development (in comparison, say, to China), and the hope amongst most voters is that the new government will spur it forward. This is likely to mean an industrial spurt, with steel mills and power plants amongst the projects that may go ahead. It appears India may offer significant business opportunities for heavy industry over the coming years.

US EPA publishes rules regarding fish kills in cooling systems

The US Environmental Protection Agency has continued its busy time with power-plant-related regulation, issuing in mid-May rules regarding harm to fish. When power plants draw cooling water from nearby natural water sources, aquatic life drawn in with the water is often harmed or killed, sometimes through impact with screens designed to filter out solid matter from the water. The EPA estimates that power plants kill around 2.1 billion fish, larvae and crustaceans per year. The new rules oblige plants to install best-available technology (from a choice of seven options), if the relevant state authority deems it necessary. They apply to around 550 existing plants that draw more than 9.1 ML/day of water and use at least 25% for cooling, built more than 25 years ago (after which it became mandatory to install modern fish-protection devices). The rules were welcomed by the power industry, but disappointed some environmental groups, who were pushing for rules regarding water efficiency to be included. Many of the plants the rules will apply to will be nuclear plants, as cooling water requirements are often higher, but they do not apply exclusively to such plants.

Obama administration laying groundwork for community support of new carbon rules

Reuters has carried an interesting piece on the ‘fieldwork’ being done by the Obama administration, chiefly through the Environmental Protection Agency, to gain community support for new carbon emissions rules for power plants, expected next week. The campaign has been running for the past year, with visits to colleges, medical centres, and community forums, meeting with over 3000 people and 300 groups, including people and groups opposed to the new rules. Most interestingly, the campaign has chosen to frame the new carbon rules not so much in terms of climate change mitigation, but in terms of public health, chiefly air quality, reflecting the belief that more tangible benefits make a stronger impression on the general public. Such a campaign for acceptance is unprecedented, according the report; if successful, one wonders if it may set an example for environmental regulations of the future.

UK government proposes new rules to encourage fracking

New rules have been proposed by the UK government in an effort to encourage the fracking industry, as the BBC reports. Under them, fracking companies would be granted access to deposits 300 m below ground (assumedly of private properties), though rules concerning access to surface areas remain unchanged. Companies would be obliged to pay £120,000 (€148,000/$US 202,000) per well to those living above, and there would be a new notification system to inform residents of any local fracking taking place. The rules are designed to encourage the fracking industry, which the government sees as a means to reduce energy costs and increase security of supply within the kingdom. A recent report by the British Geological Survey estimated that there is between 2.2 and 8.6 billion barrels of shale oil (but no gas) in the Weald Basin in the south of England, though experts estimate only 1% of this might be extracted. Larger deposits, including gas, are located in the north of England.

Balkans flooding knocks out major Serbian power plant

The devastating floods in the countries of the Balkans have reduced the operating capacity of the 4 GW Nikola Tesla power plant in Serbia to only around 20%. Domestic power generation in Serbia is now at around 67.3 GWh, substantially short of the 79 GWh of daily average consumption. Electricity is being imported from neighbouring countries such as Hungary as a stop-gap measure until domestic generation can restart, costing the country between half a million and a million Euros per day, and lifting energy prices in those countries. The Nikola Tesla plant’s problems have been the result of the flooding of the Kolubara open-cut coal-mine, severely reducing available coal; a cut in coal supply lines (from flooded railway tracks); and technical problems at the plant itself. Some of these problems will be overcome in the short-term, but others, such as the flooded mine, may take many months to recover from.

Tepco plans to expand outside Kanto region

Tokyo-based power utility Tepco is planning to expand out the region of Kanto, its traditional area of business, as it attempts to attract new customers, according to Reuters. The 2011 Fukushima Nuclear Disaster resulted not only reputational damage to Tepco, but sparked a liberal restructuring of Japan’s power sector, allowing utilities to compete in regions they were formally not allowed to. This has brought opportunity but also threat for Tepco – Kansai Electric and Chubu Electric have both already started to compete for customers within the Kanto area, meaning that Tepco’s planned expansion (which has a modest target of 4% of total sales by 2024) may not occur along with a net increase in customers. However, Tepco also intends to sell gas into other regions in competition with gas supply companies, which may have a better effect on its revenues. It will source the electricity it sells outside of Kanto from third-party generators, presumably including a margin of profit.  Japan has the highest electricity prices in the developed world, in part due to the shutdown of the country’s nuclear power plants post-Fukushima.