The WTO ruled that India’s domestic content requirements under its new solar power program were inconsistent with international agreements. Indian officials have said they will appeal the ruling to the WTO’s dispute panel in the next two months.
Photovoltaic solar array, the kind US manufacturers would love to send to India.
The US alleged that India’s ambitious solar program discriminates against US crystalline silicon photovoltaic and thin-film solar panel manufacturers by requiring Indian producers to use locally manufactured silicon or thin-film cells and by offering subsidies to those developers who use domestic equipment. Read more
New EPA water rules were blocked by a federal judge and two Chinese, state-owned aluminum giants could combine forces.
Water Rules Blocked
New water rules from the Environmental Protection Agency aimed at protecting small bodies of water were set to go into effect Thursday, but a federal judge blocked them from being implemented in 13 states.
Those states have sued the federal government over the rules, arguing that they are an overreach, “overly broad and infringe on [state] sovereignty.” Congress has proposed a bill that would force the EPA to rescind or rewrite the rules.
Chinese Aluminum Giant
China is trying to push its two biggest aluminum businesses together as part of a planned shake-up of state-owned enterprises, industry sources said, a move that would create the world’s largest aluminum maker. Power company State Power Investment Corp. is in talks to surrender its aluminum assets to Aluminum Corp. of China, allowing SPI to focus on power construction and generation, three industry sources told Reuters.
The EPA is getting closer to unveiling the final versions of its Clean Power Plan, which targets existing power-generating sources in the United States, and the US manufacturing community has expressed many concerns over the CPP.
However, there is some indication that EPA may make three significant changes to the proposed rule before it finally hits the books, which could alleviate cost- and compliance pain for US businesses:
Easier interstate greenhouse gas emission credit trading
This would get closer to making good on EPA’s promises for a more “flexible rule” by allowing states to trade emissions credits amongst themselves without officially creating a cap-and-trade program, which would be more costly and create barriers to participation, according to Adam Riedel’s article in JDSupra Business Advisor.
EPA may adjust state-specific emission reduction targets
Essentially, this would alleviate the effects that the most manufacturing-economy-dependent states would feel from the proposed rule, since those states would have been disproportionately affected by the emissions targets. It’s pretty clear that EPA overestimated the ease with which some of these states would be able to switch to natural-gas-fired plants, or access renewable energy for its (in many cases non-existent) infrastructure.
Will a recent Supreme Court decision send the EPA back to the drawing board?
Also, the “early mover” states that already began carbon reduction initiatives would have been unfairly hit by the initial emission reduction targets.
EPA may adjust – or remove entirely – the binding interim emission reduction targets
This is exactly the issue that Lanny Nickell, VP of Engineering at Southwest Power Pool, told MetalMiner in an interview he is most concerned about: the virtually unachievable turnaround for interim emissions target goals to be met by 2020, before final goals must be met by 2030.
“Our concern is that the EPA is allowing the states to develop plans to comply with both the interim goals and the final goals, but those plans can be developed as late 2018,” Nickell said. “So if you think about the fact that fairly significant actions have to take place as early as 2020, the period of time between 2018, which is when they will, in theory, complete their plan, and 2020, which is when it would have to be implemented, that’s not a lot of time to build replacement generating capacity.”
He continued, “And it’s not nearly enough time to build transmission infrastructure that would be needed to support any new generation or any change in use of the existing generation capacity that we have.”
But Here’s the Most Interesting Part:
Legal experts are essentially calling the current period ‘the eye on the storm.’ In other words, as Adam Riedel writes on behalf of Manatt, Phelps & Phillips, LLP, “Although the past year has been a relatively tranquil period of waiting and speculating” – as we at MetalMiner have been doing! – “regarding EPA’s regulation of greenhouse gas emissions from power plants, the finalization of EPA’s rules is likely to usher in a transformative period for large sectors of the economy that will last until at least the end of the current administration.”
Which means, folks, get ready to strap yourselves in for a fun ride – and check back in with MetalMiner after the final rule has been announced for in-depth follow-ups on the legal challenges to the final rule of the EPA Clean Power Plan.
The bill would set a deadline for the federal government to decide whether to approve or deny applications to export liquefied natural gas, indefinitely renew the government’s conservation funding program and push toward an electric grid that is better prepared for cyber security and renewable energy, among other provisions.
Mine Permitting Reform Included
Among them was an overhaul of the federal mine permitting process. The bill also includes budget increases for geological surveying. The committee repeatedly emphasized the bipartisan nature of the compromise, which avoided hot-button issues like exporting crude oil, a priority for Republicans but something that Democrats have previously staunchly opposed.
The bill would achieve Republican priorities such as eliminate outdated or redundant mandates such as the long mine-permitting process, and deliver on Democrats’ priorities such as encouraging energy efficiency in federal and commercial buildings, modernizing the electric grid and shoring up its ability to adjust to an increase in renewable energy, among other policies.
The bill was announced on the same day that the House voted to approve its own energy package, a bipartisan bill that is much less ambitious than the Senate version. It is believed that the bills could be reconciled in a House-Senate conference.
A Game Changer for US Industry
The mining and energy modernization aspects of the bill are not just necessary, but crucial to the survival of both metals and manufacturing businesses. Changing the federal permitting process has long been the objective of US-based miners such as Molycorp and federal dollars for upgrades of regional energy grids has the potential to greatly expand renewable energy generation. If this bill can secure the bipartisan votes it was designed to capture, then it can be a real game changer for US energy and manufacturing.
A quiet revolution is going on in the US power generation market, and it may be giving a lesson for those countries dithering over whether to allow hydraulic fracturing (fracking) of oil and natural gas deposits identified but not yet proven.
According to the FT, April was the first month in US history that gas-fired electricity generation surpassed coal-fired generation, (although it came close in 2012 when gas prices were also very weak). By comparison, in 2010 coal provided 45% of US power. In April of this year 31% of US electricity was generated by natural gas compared to 30% for coal, and the trend continues.
In gigawatt terms, wind power is growing even faster than natural gas, flattening the latter in the league tables. US coal capacity dropped by about 3.3 GW during 2014, and the US Energy Information Association predicts it will shrink by a further 12.9 GW this year, while wind power capacity rose by 9.8 GW and gas by 4.3 GW.
Source: Financial Times
The reasons are more complex than simply low natural gas prices, although that, undoubtedly, is a major factor. The Environmental Protection Agency’s failed attempt to force environmental compliance by the back door this year encouraged some coal-fired utilities to see the writing on the wall and either mothball plants or invest in new technology to accommodate the mercury emission and other pollution targets, raising costs.
A recent study by SNL Metals & Miningreported that delays in the US mine permitting process diminish the value of minerals and mining projects – underscoring a need for a streamlined permitting process.
The study, “Permitting, Economic Value and Mining in the United States,” commissioned by the National Mining Association, found that duplicative permitting processes can delay mining projects a decade or longer and those processes, both federal and state, are hindering US mining industry’s ability to meet a rising demand for minerals.
It can take three to five times as long to receive a mining permit in the US than in Canada or Australia. Source: NMA/Minerals Make Life.
Some mining projects lost as much as half of their value while awaiting state or federal approval. Three domestic mines in Arizona, Alaska and Minnesota served as case studies for the research. In one example, SNL found that after eight years of delay the value of Arizona’s Rosemont mine dropped by $3 billion. Alaska’s Kensington mine suffered 20 years of mining delays, while the capital cost of building the mine increased by 49%. Read more
So successful has the state’s switch to renewable energy been that at times the small island grid systems are creating too much energy, or conversely, others are generating too little. Unfortunately, the significant swings in power supply cause enormous system management problems. Hawaii is not alone of course, the islands display a microcosm of what most countries with a significant proportion of renewable power generation suffer: coping with the variability of renewable power supply.
The Smaller the Grid, the Bigger the Shifts
According to the WSJ, though, the smaller the grid the harder it is to manage and they don’t get much smaller than Hawaii’s. Every island has its own grid, none of them connected to any other, compared to the US mainland where just three grids cover 48 states.
The larger the grid, the more capacity it has to absorb fluctuations in power levels. The islands still burn oil for 70% of their power pushing power costs to 34 cents per kilowatt-hour; as a result there has been a massive adoption of solar panels and wind turbines. On Oahu 13% of residential utility customers have solar panels, unprecedented in the US, even compared to green California or super sunny Arizona.
Source: Wall Street Journal
In Hawaii, at any time, up to a third of power could be coming from renewables. If a cloud passes, power levels fluctuate significantly. On Maui, the WSJ reports peak electricity demand is about 200 megawatts. The island has 150 megawatts of renewable capacity, half of it consisting of wind turbines. That means sometimes as much as 75% of power generated comes from variable sources like the wind and sun. Read more
The job of 3D-printing the world’s first office building is being tackled and 27 states have filed a lawsuit against the EPA over new water rules.
3D-Printed Office Building
Plans have been made to 3D-print a 2,000-square-foot office building – along with the furniture for its clients. Shanghai design company Winsun Global will work with architecture firm Gensler, structural engineer Thornton Tomasetti and construction manager Syska Hennessy Group on the project and plans to use reinforced concrete, fiber-reinforced plastic and glass-fiber-reinforced gypsum in a 20-foot-tall 3D printer. The project should require up to 80% less labor and could reduce construction waste by as much as 60%.
Several lawsuits have been filed by 27 states against the Environmental Protection Agency‘s expanded water rules. The states are concerned that the EPA violated the Clean Water Act and other laws when it extended its authority. The separate suits are expected to be combined into one case in federal court.
A steelworkers’ strike looms in the UK while India expands its lead in the world’s largest big economy title race.
UK Workers Authorize Strike against Tata
Shares of Tata Steel fell over 2% on international exchanges after UK unions notified the company that they planned to strike on June 22 over the firm’s proposal to revise the British Steel Pension Scheme (BSPS).
In a filing on June 10, the firm said: “Tata Steel UK (indirect subsidiary of Tata Steel Ltd.) has now been notified by the four unions (Community, GMB, Ucatt and Unite) of their plans to take industrial action in dispute over the company’s proposal to revise the BSPS’ contribution and benefits framework.”
Tata Steel employs more than 17,000 workers at four sites across Wales in Port Talbot, Newport, Flintshire and Carmarthenshire, as well as sites around England including Corby, Hartlepool, Rotherham, Scunthorpe, Teesside and York.
India Will Keep Fastest Growing Big Economy Title
India will continue to be the world’s fastest growing big economy and expand its lead on China over the next two years, the World Bank said Wednesday.
The bank expects global growth to slow this year, only to rebound next year. However, it expects India’s gross domestic product expansion to accelerate to 7.4% this calendar year, 7.8% next year and 8.0% in 2017.
Over the same three years, the multilateral lender predicts China’s growth to slow from 7.1% this year to 7.0% in 2016 and 6.9% the year after that.
In the first half of our conversation with Michael Whatley, policy advisor to Consumer Energy Alliance, we touched on the issues that EPA’s Clean Power Plan, which aims to regulate existing power plants across the country, poses to US manufacturing sector, such as singling out coal-fired electricity generating capacity, grid parity, and some ‘cap and trade’-like effects.
In this second half, we touch on how the major utilities are looking at the rule, what the “European experiment” has taught us, and, in hindsight, what kind of cost/benefit analysis would be helpful if EPA were to get a “do-over” in proposing this rule.
Utilities and EPA Clean Power Plan
MetalMiner: Let’s talk about some of the energy producers, such as Exelon, ComEd, or Duke Energy. What’s their point of view on the EPA Clean Power Plan? What types of approaches, if any, are they taking at this point?
Michael Whatley: These proposed rules are going to require a certain percent of carbon reductions or carbon intensity in each individual state. [We haven’t] seen a lot of the utilities come out and say, ‘we really like these or we really don’t like these,’ because I think that at this point in time, the vast majority of the utilities are looking at it and saying what does this mean, and how are we going to apply it, and what are we going to do? At the end of the day, if you think about the utilities, their major role, according to state law and certainly any federal overlay on it, is to be able to provide reliable electricity for the consumers. A lot of states require that the utilities not only be reliable, but also to be the most cost-efficient that they can within the various rules that are out there. At this point, there really is just a lot of data-gathering assessment that’s going on from the utility world that is looking at the proposed rule going forward.
MM: If the rule goes into effect largely as is – which is a big if – how do you think about the cost impact of this new regulation on US manufacturing? What’s the benchmark of how you measure that?
MW: Consumer Energy Alliance released a study that we put together in conjunction with a number of other groups that looked at what are the potential ramifications of the rule as proposed. And the numbers were fairly staggering. You’re talking about, nationally, a 12% to 17% increase in electricity prices, which could be as much as $41 billion dollars annually. And those are costs that are going to have to be borne by energy consumers. In terms of whether EPA wants to implement rules to ensure that there’s no new coal-fired power plants, there’s probably a way that you could do that in a cost-effective way that’s not going to cause these types of price spikes. The same thing applies with rules on existing coal-fired power plants. If you’re going to phase them out, you have to be able to give utilities and states realistic timelines and opportunities to be able to replace that electricity [capacity]. What EPA has done is come in and say, no, we’re going to have to achieve these cuts. And you’re going to have to use these mechanisms. And you’re going to have very, very tight timelines that you’re going to be able to do it. So we were not really surprised but awfully disappointed with the numbers that we saw in that study.
MM: Would the problems be solved if the timelines were all extended?
MW: I think it’s a combination of both timeline and reduction goals, because if what you’re saying is that you have to reduce carbon intensity by 5% in a state, given these timelines, that could probably work. If you’re going to say you have to reduce it by 20%, but you give companies 15 to 20 years instead of five to 10, then that can probably work. But the combination that we see in this rule of the timelines and the reductions is going to be particularly difficult … It puts the onus back on the states.
“War” on Coal?
MM: Another criticism of the plan that we’ve heard is that some feel that this rule is starting with coal. And it’s a slippery slope. Perhaps we’re going to suddenly find that these rules extend to other power sources. What are your thoughts on that?
MW: We completely agree. We work with the natural gas producers and suppliers all day, every day. The simple fact of the matter is you look at a state like Virginia, where we did a back-of-the-envelope analysis that said if you eliminate every coal-fired power plant and replace it with natural gas, you’re still probably not going to be able to hit these targets. So it really is going to be that you have to bring online new nuclear. And again, the timelines that they’ve put in place don’t allow for new nuclear. They also have a problem that in South Carolina and Georgia where you do have new nuclear facilities that are already under construction and going to be online over the next several years, those will not count towards the reduction capacity, even if they phase out coal, because they’ve already broken ground on those facilities. You have to bring online new renewables in order to get that zero generation capacity. Every state’s going to have to do its own analysis. And that certainly cannot be done on the back of the envelope when you’re talking about long-term electricity programs and plans. So we do feel that this is not just an attack on coal. It really is a program that is going to, ultimately, shake up the entire electricity generation capacity in the country. So as electricity users, that’s why we have this particular concern. There’s a lot of things [to suggest] that EPA clearly is trying to get the states to participate in cap and trade programs and to put in place statewide renewable electricity mandates, which would be the only way that they would be able to meet these goals.
MM: Speaking of cap and trade, just looking at the European experiment, how do you look at what’s going on in Europe comparatively? And what are the lessons learned, or the examples, you look at?
MW: I think the lessons learned are that if you’re going to look at a complex system that’s got a bunch of different moving parts, and a bunch of different fuels that are in the mix, and say, unilaterally, we’re going to take any one of them off the grid and we’re going to do that with unrealistic timelines, then you’re setting yourself up for failure. You know, you look at what happened in Germany where they had a plan to take offline all of the coal. That, in and of itself, was causing tremendous problems in terms of reliability and cost for the consumers. Then after Fukushima, they unilaterally in a knee-jerk fashion said we’re going to take nuclear offline as well. Well, they were able to take the nuclear offline. They shut it down. The problem is that they’re importing electricity generated from coal. And they’re turning their coal-fired power plants back on, which means that their overall carbon emissions are actually going to go up. So I think when you’re talking about establishing a carbon policy, that needs to be done holistically to ensure that we provide electricity for the consumers affordably and reliably.
If EPA Could Have Done It Right…
MM: If you were sitting at the head of the EPA, what type of cost/benefit analysis – or any other kind of analysis – would you do if you were going to try to still tackle this issue without doing it the way they did it?
MW: If you’re going to have a carbon reduction program, and that’s clearly where EPA is going with this, you’ve got to take a look at what are the opportunities that we have has a country to be able to reduce carbon emissions. And the electricity sector is certainly going to be a key component of that. But it’s not the only component of that. Then you have to be able to say, OK, well given our current fleet mix, what are the steps that we can do proactively going forward over a realistic set of timelines to be able to reduce that? If we can reduce carbon emissions from coal-fired power plants by 20%, 25%, or 30% by using new coal-fired power technologies that have been created that are online right now in different facilities around the country and world, why would we not want to explore that instead of unilaterally saying coal is the enemy? We also need to be able to allow for the construction of new nuclear facilities. We need to be able to set it up so that new natural gas baseload facilities, which are new, are going to have the time to get online, that we’ve got the capacity to build pipeline that will get us from the natural gas reserves to these particular facilities, and that you’ve got to be able to work with the states in a much, much more flexible way to allow them to set up the electricity regimes within their individual states. But coming out and saying that we’re going to have a very strict set of timelines, a very strict set of carbon reduction goals, and not give the states any flexibility in terms of how they’re going to get there is not the right way to go about it.
MM: Do you think the EPA will pay attention to those two factors and make some changes in those goals?
MW: We do. You know, what we’re hearing from several states that we’ve been in meetings with, whether it’s with their governors or with their environmental regulators or even their public service commissioner or public utility commission staffs, is that they’re in the process of negotiating and working through these proposed rules with EPA. We hope that as EPA goes through this and they hear from the public, they hear comments from utilities, and from rural electric co-ops, for example, as well as the manufacturers and other consumers like us, that they’ll make sure that this program has enough flexibility in it. Whether it’s through a combination of flexibility on the goals, flexibility on the timelines or both, that we can get there without having price spikes and blackouts.