• Combustion Industry News

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      Patrick Lavery

      Combustion Industry News Editor

IEA speculates golden age of coal in China has passed

The International Energy Agency has suggested that China may have experienced a peak in coal demand which may lead to a decline in the global appetite for the fuel. With a slowing economy and a domestic push to reduce terribly high rates of air pollution in its cities tending to reduce China’s consumption, the IEA has stated in its Medium-Term Market Report that “The golden age of coal in China seems to be over.” The Agency predicts that Chinese coal demand will decrease from the 2,843 mega-tonnes of coal equivalent in 2014 to 2,640 Mtce by 2020, with global use to decline from 5,540 Mtce to 5,509 Mtce. Coal prices are also expected to remain low, having fallen 80% since their peak in 2008, and India is expected to become the second largest firer of coal in the world, eclipsing the United States, but still behind China. The predictions, however, are reliant on forecasts of economic growth, which themselves are notoriously uncertain, as well as the cost-competitiveness of alternative means of power generation, including renewables and nuclear. A signal of the IEA’s current view, though, was provided by Executive Director Fatih Birol, who recently told a meeting in Singapore that high-carbon investments may be risky in light of the Paris Climate Conference.

Gas prices falling and to remain low with looming supply glut

A blog entry in the Financial Times has considered global movements in gas prices in light of the continued decline of the oil price, which fell below $US 33 last week, a level not seen since 2004. While somewhat overshadowe by oil prices, gas prices have also been falling, with those in Japan and Korea down by 50% in 2015 (and 70% since 2013). Oversupply, the problem for oil, appears likely to be repeated in the gas market, with many supply projects currently underway, despite a spate of cancellations. Taking Australia as an example, seven new gas fields are expected to come online in the next two years, quadrupling export capacity. Worldwide, gas production is expected to rise 40% in the next few years, while there is little evidence of an increase in demand. The expected result is that gas prices will continue to fall, hurting gas companies, but also coal and oil suppliers, as some users are able to switch fuels. The Financial Times singles out Shell as the potential biggest loser, having invested heavily in gas and with its looming takeover of BG, which will make it the world’s largest gas company.

Bangladesh reluctantly pursuing huge boost in coal-firing

Elswhere in the Financial Times there has been a report on Bangladesh’s plans to increase its share of power generation from coal. Being a low-lying, populous, developing country, Bangladesh is considered one of the most vulnerable to the effects of climate change, and with coal firing currently being amongst the more greenhouse-gas polluting power generation forms, it might be expected that the country might shy away from its use. Quite the opposite is true, albeit with reluctance on the part of the government. Bangladesh’s goal is to increase the share of coal firing from the present 2% to 50% by 2030, as it moves from 8 GW in total power generation capacity to 33 GW, in the process transforming its economy. Coal is the go-to fuel, as it is likely to become the cheapest available energy source in the region as domestic gas supplies are depleted. The Bangladesh University of Engineering Technology’s Professor Ijaz Hossain put it pithily, saying “What choice do we have? It’s either coal or nuclear. LNG is too expensive.” The tension between economic development and environmental harm is demonstrated by the 1,320 MW coal-fired Rampal project, currently being constructed 15 km from world’s largest contiguous mangrove forest. The forest is home to the Bengal tiger amongst other diverse fauna and flora, while large coal ships will unload their cargo at a dolphin sanctuary within the wildlife park. Furthermore, the mangrove barrier, which may become damaged, protects the populated area of the country from cyclones, which are likely to become more severe with climate change. One mitigating circumstance is that the coal plants will utilize ultra-supercritical technology, meaning they will be highly efficient and less polluting than may have been. The use of such technology will also clear the way for financing from OECD countries, which recently put in place rules to prevent the financing of inefficient coal-firing plants.

Japanese court ruling harbinger for reintroduction of nuclear

A court ruling in Japan has been interpreted as a sign that the country may be preparing to resume generating nuclear power following the 2011 Fukushima Nuclear Disaster. The Fukui District Court overruled an earlier injunction against the restarting of two nuclear reactors owned by Kansai Electric Power Co, and also rejected an appeal to block the restarting of another two reactors. According to the report by Reuters, the decisions signal the Japanese judiciary’s approval of tightened security measures for Japanese nuclear reactors. Kansai Electric is now planning to begin restarting the reactors this month, with further reactors to be restarted in February. There is, however, the prospect of an appeal against the court’s decision, with a professor of law at Meiji University stating that he could not see how the court cleared the prior safety issues. If Japan’s nuclear sector does revive substantially, it will have a large impact on the combustion industry.

Carbon Clean Solutions becoming leader in carbon capture with patented solvent

World Finance has run an article looking at the progress of Carbon Clean Solutions (CCSL), a company which began in an exchange of ideas between two colleagues at university in Delhi. Basing their business on APBS, a patented solvent for carbon capture which can remove up to 90% of carbon dioxide from a flue gas, the company has become something of a world leader in the field. In November last year, tests began at Technology Centre Mongstad, the Norwegian government’s CCS research centre, after research partnerships with the US Department of Energy, Imperial College London, and the Dutch Organisation for Applied Scientific Research. The technology has also been applied in five large-scale plants across the world, the combined endeavours earning the company recognition as a Technology Pioneer at the 2015 World Economic Forum. The company claims that its technology can capture carbon at $US 10/ton (€10.12 per metric tonne), being up to 20% cheaper than competitors in terms of capital costs and up to 30% less in operating costs. With the market for carbon capture likely to expand, it appears Carbon Clean Solutions’ prospects are good, though there is a great deal of research underway around the world to find more efficient alternative methods.

Saudi Electricity Co engages General Electric to lead construction of new gas-solar plant

Late December saw Saudi Electricity Co agree a deal with a consortium led by General Electric to build a 1,390 MW combined-cycle gas-fired power plant with a 50 MW solar power generation component in the north of the kingdom, at Waad Al Shamal. The $US 980 million (€910 million) project is due to be complete in 2018, and is the second deal for a major power plant signed by SEC in the space of two months. General Electric is to supply the turbines for the Waad Al Shamal plant, while the solar component will be sub-contracted out.

UK government assistance to Drax for biomass conversion subject of EC competition investigation

After the positive news Drax received in early December that the UK government was ready to subsidise electricity if the company converted one of its coal-fired units to biomass, a setback was encountered at the very end of the year. After previously finding that the conversion would be in line with the EU’s environmental objectives, the European Commission has opened an in-depth investigation into whether the UK government’s subsidy would constitute improper state aid, the concern being that the conversion may be more profitable than forecast, meaning that state aid would be an unnecessary burden on taxpayers. A further concern is that the conversion would increase Drax’s purchasing power in the wood pellet market, creating a distortion, reducing competition. Drax has responded by welcoming the investigation.

Energy Financing Team testing its first Balkans power plant

UK-based investment firm Energy Financing Team has announced that it has begun testing its first power station, the 300 MW Stanari coal-fired plant in northern Bosnia. EFT are spending €560 million ($US 601 million) on the plant and the expansion of a nearby coalmine, a signal of the scope of their ambition as they look to build their business in southern and central Europe. The China Development Bank is part-financing the project, while Dongfang Electric Corp is providing equipment and constructing the plant, another demonstration of China’s increasing activity in the Balkans.