• Combustion Industry News

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      Patrick Lavery

      Combustion Industry News Editor

Business Trends

China moved last year to increase the profitability of its power generators to attract new investment, and that trend is set to continue, according to the Wall Street Journal. Generators have been squeezed in recent years as electricity prices have not been allowed to rise with coal prices – at Huaneng Power, net margins dropped from 17% in 2004 to 2% in 2011, as coal increased 75% in price over the same period. Last November saw the first electricity price rise in two years – at 5%. China’s target of a 16% drop in energy consumption per unit of output between 2011 and 2015, the report argues, will force further electricity price increases to fund more efficient energy production.

In a related and somewhat conflicting article, Xinhua reports on a China Electricity Council statement that the stagnant growth in new power plants will mean a power supply shortage of 30-40 million kW this year. The Council predicts investment to be made in non-thermal power generation because of the low profitability of thermal power generation and China’s emissions reduction targets.

Reuters reports that the Portuguese investment bank Espirito Santo has predicted that the price of carbon in Europe could double this year as the European Commission reduces the amount of free credits. This would mean an increase in profits for companies such as E.ON, RWE and CEZ, amongst others.

Legislation and Regulation

South African Finance Minister Pravin Gordhan has announced that the country will introduce a greenhouse gas emissions levy from the 2013/14 financial year, which in South Africa starts 1 April. The levy (preliminarily set at R120/€12/$US16 per ton) would be applied to emissions over a certain threshold, yet to be determined. ‘Trade exposed’ sectors of the economy are to be given additional relief. The phase out of tax-free thresholds is to take place between 2020 and 2025. A draft policy paper is to be published later in the year.

China has set new energy intensity targets for many of its high energy sectors, including steel, which is to decrease gross energy intensity by 18% by 2015, the Wall Street Journal reports. Last year’s target of a decrease of 3.5% in energy intensity did not appear to be on track, although the target of 1.5% decreases in sulphur dioxide and nitrogen dioxide emissions did.

Research and Development

Twelve Canadian oil sand firms have made an agreement to develop and share technology to reduce emissions from the production of crude from oil sands, Reuters has reported. The twelve firms, including Royal Dutch Shell and Suncor Energy, together produce 80 per cent of Canadian oil sand crude. The new group is called the Canadian Oil Sands Innovation Alliance.


Recent research has estimated that wild forest and grassland fires kill 339,000 globally per year through their air emissions. The study was led by Dr Fay Johnston of the University of Hobart, Australia, and published in the journal Environmental Health Perspectives. Around half the deaths were found to be in Africa.

A report to US Congress has stated that a reduction in power plant emissions has resulted in substantial improvements to water quality in acid sensitive lakes and streams. NOx emissions from power plants were estimated as having reduced by two thirds since the 1990 Clean Air Act Amendments. The report says further reductions would allow full recovery in the most sensitive aquatic environments.

The journal Science has reported that the world’s oceans may be turning acidic faster today than they did in the past four major extinction periods over the last 300 million years. The acidification is a result of carbon emissions, with around one quarter of emissions being absorbed by the oceans.

Company News

Foster Wheeler has won a contract to provide project management consultancy services for the 2Co Power Don Valley Project in the UK. It is to be an integrated coal gasification combined cycle (IGCC) plant of 900 MW installed capacity, and include carbon capture, utilisation and storage (CCS) to capture 90% of input carbon, as well as enhanced oil recovery (EOR). The project is in its early stages, with an investment decision to be made in 2013.

Foster Wheeler has also won a contract for the design, supply and erection of a biomass-fired circulating fluidized bed steam generator to Lunds Energi, southern Sweden. The plant is to be 35 MWe, burning up to 50% demolition wood as part of the 100% biomass feed, with commercial operation scheduled for 2014.

Another Foster Wheeler win has been a contract for the supply of a waste heat boiler to LUKOIL Nizhegorodnefteorgsyntez Refinery, Nizhny Novgorod region, Russia. It will be the second boiler of its type supplied to the refinery.

Alstom and its joint venture partners Mudajaya and Shin Eversendai have signed a contract with Tanjung Bin Energy Issuer Bhd to provide a 1000 MW supercritical coal-fired power plant in Johor, Malaysia. Alstom is to supply all key power generation equipment and be in charge of the overall engineering, project management and commissioning, in a contract worth €830 million to the company. It is to be commissioned in 2016.

Air Liquide has signed a new long-term contract with Evraz Highveld Steel and Vanadium, South Africa’s second largest steel maker, to supply oxygen through a new air separation unit (ASU) worth around €40 million. It is to supply 770 tonnes of oxygen per day, and is to be commissioned at the end of 2013.

Drax, which operates the UK’s largest coal-fired power plant, in Yorkshire, UK, has shelved plans to build a dedicated biomass unit but will instead invest in co-firing facilities if government funding assistance is provided, the Financial Times reports. It said it is ready to invest up to £500 million in biomass co-firing equipment if government funding support is increased moderately. Drax had announced plans in 2011 to build three new dedicated biomass-firing plants in a £2 bn co-operation with Siemens.