Tata Steel sale pushed back until after Brexit poll

The sale of Tata Steel’s UK assets has been pushed back beyond the date of the ‘Brexit’ poll, 23 June, when UK voters decide if the UK should stay in the European Union. Tata’s board is to meet sometime around 25-26 June, which the Financial Times understands is the last date for potential buyers to sign an agreement. The sale was politicised from the very start because of the thousands of jobs which could be at stake if the final buyer does not retain all staff, or if some assets are not sold and instead closed. However, with the Brexit poll looming, the political nature of the sale has taken on more significance, as it is assume ‘Leave’ campaigners would paint any job losses as a failure of the European Union to protect European industry. (This is in spite of reports that the UK scuppered efforts from other European countries, including France and Italy, to strengthen protection for the European steel industry.) It appears that the government, with Prime Minister David Cameron supporting the ‘Remain’ campaign, has leant on Tata to delay the sale, though the government has denied it, and though certain prominent members of the government support the ‘Leave’ campaign. Tata had originally wished to finalise the sales by the end of May, mid-June at the latest. Two bids are known to have been submitted thus far: one from Liberty House (which has recently bought other UK steelmaking facilities), and a management buyout called Excalibur, though other parties are said to be interested in some or all of the assets.

World Cement article reviews cement industry’s plan to tackle carbon emissions

An article in World Cement has looked at the cement industry’s plans to tackle carbon dioxide emissions. In 2015, 18 cement companies signed the Low Carbon Technology Partnerships initiative, which aims to reduce carbon emissions from ‘business-as-usual’ by 20-25% by 2030, following a multi-tiered action plan. The move was driven by the belief that while political attention is presently focused on the power sector, it will move also to highlight the emissions of other industries, such as cement, steel, and papermaking. Capture of carbon from cement kiln flue gases has already been proven, and carbon capture and storage will be at the crux of the cement industry’s efforts to reduce emissions, while secondary measures will include clinker substitution, the use of alternative fuels, and better thermal and process efficiencies. Although the technology for CCS is in place, the economics are not; the article suggests that a higher carbon price would help correct this, as would an otherwise stronger policy environment. It is also suggested, quite reasonably, that the first CCS installations in the cement industry will be those which can utilise the captured CO₂ for enhanced oil recovery. Further articles on the matter are to follow later this month in World Cement.

BBC piece highlights differences in investment decisions between conventional and renewable power generation

An opinion piece by the BBC South Asia correspondent has highlighted the different investment choices which conventional and renewable power generation (in the form of wind and solar) present in India, and how the differences have in the past favoured conventional power generation. Of the lifetime expense, including the initial capital investment and the operating and maintenance costs over the operating life, renewable power generation tends to have the vast majority of investment up front. For thermal power generation, because of the need to buy fuel and because of higher maintenance costs due to the corrosive nature of the products of combustion, lifetime costs are more uniform over the life of the plant, though still weighted towards the initial capital cost. Even if the total lifetime costs are similar, the different expense profiles, when considered in the light of interest rates, present different investment choices – it is more expensive to invest in renewables, because more cost (and therefore interest payments) is taken on earlier. This difference is accentuated at higher interest rates, as have typically been present in South Asia, leading more investors to favour conventional power generation. However, according to the BBC, this picture is beginning to change, with interest rates falling, the base rate currently being at a historic low of 6.5% (still much higher than the near-zero levels in the developed world). The piece argues that this, coupled with falling costs for solar energy, will lead to a huge transformation in the near future in the deployment of power generation capacity. It is indeed a persuasive argument.

EU carbon price rises amidst speculation about market changes

Bloomberg has reported on the recent gains in the price of carbon within the European Emissions Trading System, the value rising from a low in February of around €4.75/tonne (US$5.46) to around €6.40/tonne (US$7.35) in early May (after falling 40% at the start of the year). The rise has been attributed to talk amongst European officials of means of tightening the ETS to raise prices. One proposal, from the European Parliament’s lead lawmaker for the ETS, Ian Duncan, has been to reduce the number of permits in the system after 2020, cutting them at a greater rate each year. Another proposal has come from French President Francois Hollande, who has suggested a carbon ‘price corridor’, which would institute a minimum to prices (and presumably a maximum). Mr Hollande has asked Gerard Mestrallet, the chief executive of Engie, to draw up rules for such a system. As Mr Mestrallet told a press conference, “Our idea is to propose a carbon corridor, with a growing minimum price over time, because the current market signal is not enough.” Any changes that do come into effect will certainly have an impact on European power generators.

NETL-sponsored research project develops turbine material to withstand 1,500 ^oC temperatures

A research project sponsored by the US National Energy Technology Laboratory, in which researchers from HiFunda LLC and the University of Connecticut worked, has developed a new material for use in turbines. The oxide is called yttrium aluminium garnet, and is deposited using a new technique known as solution precursor plasma spray. In lab experiments, YAG has been found resistant to temperatures up to 1,500 ^oC, a hugely significant increase from the limits of turbine materials to date, which usually allow temperatures up to 1,200 ^oC. Given that turbines operate more efficiently at higher temperatures, the new material, if proven at industrial scale, could offer better overall efficiencies, reducing fuel usage and also emissions of pollutants (per unit of electricity produced). As the NETL’s press release states, nine major industrial partners are now testing YAG in production facilities. The combustion industry will await the results with hope.

ExxonMobil and FuelCell Energy ‘very excited’ about fuel cell technology to purify flue gases from power plants

The Financial Times has reported on ExxonMobil’s efforts to develop its own carbon capture technology, in which it is working with FuelCell Energy. As may be surmised from the latter’s name, the partnership’s technology centres around the use of fuel cells, but its application is a novel one. The idea is that the cell operates downstream from conventional boilers, taking flue gas as the feed in additional to natural gas, and generating power and a concentrated stream of carbon dioxide. To a 500 MW gas-fired plant, the partnership says it estimates the fuel cell could add an additional 120 MW of output, although how much additional natural gas that would take is unclear. The vice-president of research and development at Exxon, Vijay Swarup, said that the company is “very excited” about the potential of the technology.

University of Kentucky’s CAER awarded funding extension for advanced coal technology research

The University of Kentucky’s Center for Applied Energy Research has been awarded a five-year extension in federal US funding for the United States-China Clean Energy Research Center, which was established in 2009. The US$2.4 million (€2.1 million) grant was awarded by the Department of Energy, with the aim of helping to develop advanced coal technology, particularly carbon capture and storage. Dr Kunlei Liu will serve as the principal investigator, leading one research team, while Dr Mark Crocker will lead another.

Axpo Group looking to sell Italian gas-fired plant stakes

Swiss power company Axpo Group is seeking to sell its stakes in three Italian gas-fired power plants, according to Reuters. Rizziconi Energia plant (in the south of Italy, fully owned by Axpo), Calenia Energia plant (85% owned, near Naples), and SEF (49% owned, in the north of Italy) are the plants in question, with Axpo having set a deadline of 10 May for non-binding bids, the price said to be in the region of €300 million (US$345 million). In December, the company stated that it was reviewing its ownership of all of its assets, after suffering from low wholesale power prices.