Environment

Rules and regulatory compliance already got ya down? Well, another one’s comin’…

The final rule of EPA’s Clean Power Plan, set to go into effect mid-summer 2015, will likely have significant financial implications for US manufacturers. The potential cost, supported by several independent third-party studies, could be far below the original estimates put forth by the EPA. This has led to great cause for concern among domestic manufacturers as they already struggle to compete with international companies who, in many cases, receive heavily subsidized energy.

So what are US manufacturers to do? Join us this Friday for the webinar, What EPA’s Clean Power Plan Could Cost US Businesses (and What Procurement Can Do About It).

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The American Iron and Steel Institute (AISI) 2015 General Meeting closed just yesterday here in Chicago, where steel industry folks on the producer and service center sides (to name a couple) came together to discuss key issues surrounding the US steel market landscape, while leaving a crucial issue explicitly unmentioned – but we’ll get to that in […]

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There has been a lot of attention recently to the longer term viability of global fossil fuel reserves. Due to the fall in oil, natural gas and coal prices, the FT reports this week that all the oil majors have slipped into loss as a result of of the low oil and natural gas prices.

Why Manufacturers Need to Ditch Purchase Price Variance

That’s not the reason for the viability questions, though, that attention is due more as a result of future climate change legislation raising the cost of carbon-based fuels. Another article leads with comments made by Glencore Plc’s chief executive, Ivan Glasenberg, in the company’s recent sustainability report.

Glencore’s Bullish

Reacting to investor concerns (not just at Glencore but at all energy companies) he is quoted as saying “Although climate change issues are part of the political, societal and regulatory landscape, we do not believe that the global energy reality will economically support carbon measures that would prevent us from fully utilizing our fossil fuel reserves.”

In essence, what he is saying is a middle way will have to be found between reducing CO2 release and continuing to provide energy at an economically viable cost. Some investors have taken what they see as a moral stand such as the Church of England who have sold their investments in coal mines.

Others, like the heirs to the Rockefeller family and Stanford University are getting out more on economic grounds fearing assets will be “unburnable” if the world is to keep the rise in global warming below 2%. Some scientists have estimated that 80% of the world’s coal will never be mined if this objective is to be met, although it has to be said this does not account for the possibility that technology will ride to our rescue.

Humans do have a habit of coming up with technological developments to overcome challenges. Economically viable carbon sequestration for example could make coal viable even in a world demanding near-zero release of CO2 into the atmosphere. As the article points out, many energy companies appear to cling to the belief their assets will be in the economically recoverable 20% rather than the unrecoverable 80% – which clearly they cant all be.

Although Glencore has major exposure to the sector – they are the world’s largest seaborne coal shipper – they can viably argue theirs are among the lowest-cost and they are more likely than most to be the last coal man standing, and still turning a profit come what may.

Paris Match

Much will hinge on the outcome of this December’s climate change conference taking place in Paris, it is hoped the UNFCCC will achieve consensus among polluters on binding targets. Optimistically, by the end of the meeting, it is intended that all the nations of the world, including the biggest emitters of greenhouse gases, will be bound by a universal agreement on climate.

The chances of success in this respect were increased late last year when China and the USA reached a breakthrough agreement to reduce CO2 emissions. Notably the USA committed to cut carbon emissions 26% and 28% on 2005 levels by 2025 – a marked acceleration of its existing goal to reduce emissions by 17%.

China said it “intends” to start cutting carbon emissions in 2030 and make “best efforts” to peak emissions before 2030. It also agreed to increase the share of non-fossil fuels energy consumption to around 20% by 2030, a target it is already on its way to achieving as the world’s biggest investor in renewable energy.

As the world’s two biggest polluters, it was crucial that these two countries should be on board if the conference in Paris was to have any chance of success. It now looks more likely that binding targets will be agreed and as a consequence policy changes will develop over the next few years that could raise the cost of carbon and make existing fuels less viable.

Whether you agree with the climate change argument or not is irrelevant, the impact on you, your business and society will happen regardless. Fossil fuel resource companies are therefore looking at their position on the cost curve and, regardless of what is being said in public, you can bet it takes up board time.

Which almost as a postscript raises a question: if governments are serious about limiting a rise in global warming by reducing carbon dioxide emissions, surely they would be advised to spend some of the billions they will be raising in carbon taxes and fuel taxes on research into carbon sequestration. If we could economically use that 80%, which some are suggesting may never be burnable, it would keep the lights on for billions in the developed and developing world alike without costing us the planet.

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New metal technologies play a key role in all we do here at MetalCrawler and none could be more promising than Tesla Motors‘ line of batteries for the home. The Chinese yuan may also be on the cusp of being declared not manipulated by the International Monetary Fund.

Tesla Home Batteries

The idea is that homes and businesses powered by solar panels could harvest and store energy during the day that could be used to run homes at night, or be used as a backup during a power outage.

Why Manufacturers Need to Ditch Purchase Price Variance

Although the exact technology involved in the battery, called Powerwall, is a closely guarded Tesla secret, it probably isn’t based on revolutionary concepts, Jordi Cabana, a chemistry professor at the University of Illinois at Chicago told Live Science. Cabana studies new battery materials and said the batteries look as if they are based on the same lithium-ion batteries in Tesla’s cars.

“Just looking at the specs that they publicize, it doesn’t look very different — in terms of the cost — to what they’re putting in their cars,” Cabana said.

The company is also planning to unveil a business-based battery-storage system, called the Powerpack, though the price for that system has not been released yet. Tesla is already taking orders for its residential system, but the products won’t ship until late summer, company representatives said at the news conference.

IMF Close to Calling Chinese Yuan ‘Not Manipulated’

In what would be a blow to US manufacturers, particularly steelmakers, the International Monetary Fund is close to declaring China’s yuan fairly valued for the first time in more than a decade, according to the Wall Street Journal, a milestone in the country’s efforts to open its economy that would blunt US criticism of Beijing’s currency policy.

The fund’s reassessment of the yuan—set to be made official in IMF reports on China’s economy due out in the coming months—follows years of IMF censure of Beijing’s management of the currency.

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The new Clean Power Plan from the Environmental Protection Agency (EPA), set to be finalized in mid-summer 2015, has a lot of US manufacturers worried about whether their bottom lines will be affected. On a global scale, US companies are concerned about how increased compliance and other costs initiated by the EPA Clean Power Plan will hinder […]

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Deepwater Wind began construction off the coast of Rhode Island on a five-turbine wind farm that will, eventually, have the ability to power 17,000 homes.

Why Manufacturers Need to Ditch Purchase Price Variance

The 30-megawatt, $290 million wind power project began construction this week 18 miles off the coast of Rhode Island, but, itself, is a much smaller project than the stalled Cape Wind farm project originally planned for the area around Cape Cod in Massachusetts.

US Wind Power Lags

Offshore wind projects are common in Europe and a real driver of renewable energy success there. The fact that the US is only starting to get into the offshore game is a testament to how the regulatory framework and maturity of the renewable energy industry are both lagging here in the states.

The death knell for the proposed 130-turbine Cape Wind project may have come early this year when the two largest electric utilities in Massachusetts backed out of a plan to buy most of the power that was slated to be generated by the proposed turbine project, the latest casualty of what can only be described as an environmentalist civil war over whether to place turbines off Nantucket Sound.

Green vs. Green

The Humane Society, the International Fund for Animal Welfare, the International Wildlife Coalition and and others are against the project. On the other side are groups that might normally be considered allies, including the Natural Resources Defense Council, the Union of Concerned Scientists and Greenpeace.

Opponents, such as environmental lawyer Robert F. Kennedy, Jr., say the natural environment of the Sound should be preserved and that the industrial nature of the turbines would spoil views from the shore. They also say that native birds would be decimated by the 40-foot-tall turbines.

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The price estimate of discarded metals; including gold, silver, iron and copper, according to the UN’s Global E-Waste Monitor 2014 report is $52 billion in 2014, alone.

Free Webinar: MetalMiner’s Q2 and Q3 2015 Forecasts

The gold itself was valued at about $11.2 billion. Some researchers, according to the report felt that in many cases, it made sense to recover the metals.

More Scrap Recycling Needed

Not much was diverted for recycling. Only about one-sixth of last year’s e-waste was moved from landfills for reuse, according to the report.

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The United Nations (UN) recently put out a listing of countries and regions dubiously leading in the generation of electronic or e-waste.

Free Webinar: MetalMiner’s Q2 and Q3 2015 Forecasts

E-waste, for this discussion, includes electronic and electrical equipment. Everything from printers and computers to discarded cell phones, calculators and other personal electronics was counted by the UN. Even vacuum cleaners, toasters, electric shavers, video cameras were included in the total as all were dependent on being plugged into a wall.

US, China, Dubiously Top E-Waste List

India found itself in the 5th spot, having discarded 1.7 million metric tons of electronic and electrical equipment in 2014. The US (7.1 million mt) followed by China (6 million mt) topped the “Global E-Waste Monitor 2014,” report compiled by the United Nations University (UNU). Together, these two were responsible for about 32% of the total e-waste.

Regionally, most e-waste in the world last year was generated in Asia at 16 million mt. The top three Asian nations with the highest e-waste generation in absolute quantities were China with 6 million mt, Japan with 2.2 million mt and India with 1.7 million mt.

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I always think it harsh, particularly for those of us sitting in northern Europe often under leaden skies, that the Middle East is not only blessed with vast reserves of cheap and easy to extract oil and natural gas, but even more limitless supplies of sunshine.

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When the oil runs out they will become the powerhouse of the world again, but this time generating electricity. True sandstorms in desert areas are a source of considerable maintenance and repair cost, but clearly aren’t a major hindrance as solar and wind farm investments have boomed in 2014 driven increasingly by economics, not subsidies.

Japan and China Investing in Renewables

After all the hand wringing we have done over the years about subsidies paid to wind farms, it comes as a welcome development to report that some 95 gigawatts of increasingly economic renewable generating capacity was created in 2014 at a cost of $270 billion, led by China and Japan who combined, invested $75 billion in solar power.

This is the largest level of new renewable capacity (not including hydro-electric) in one year, at least in terms of GW of capacity. The previous higher spending year, 2011, resulted in lower levels of installed capacity because costs were so much higher then.

Lower Costs

According to the Financial Times, equipment costs have fallen 75% since 2009 while large solar construction and connection costs have fallen by up to 65% in the last four years and solar panel efficiencies are rising making such projects increasingly attractive.

Thierry Lepercq, chairman of Solairedirect, a French company that has 57 solar parks built or under construction around the world said, “We’re generating power at lower prices than other energy sources in Chile, India and South Africa.”

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The US ranks 41st in the world in terms of the ease of gaining federal permits to proceed with construction or infrastructure projects, according to the 2014 World Development Indicators‘ Ease of Doing Business Index.

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Philip K. Howard of Common Good, recently discussed with us how permitting, not funding, is the biggest obstacle to renewing and replacing the nation’s crumbling infrastructure.

A Chief Permitting Officer

Senators Rob Portman (R. – Ohio) and Claire McCaskill (D. – Mo.) have introduced a bill that requires the first chief permitting officer for federal agencies. The bill would impact projects that cost more than $25 million and receive federal dollars, which includes most interstate roads and bridges. However, it does not give the new CPO the right to force individual agencies involved with projects to make decisions or move forward on projects in a timely manner.

“It’s a multi-headed federal bureaucracy that we have,” Howard said. “The problem with their bill is the CPO doesn’t have any authority. He can’t lean on one unreasonable agency if it’s holding up a project. There needs to be a dialectic here. If any one of 19 different agencies involved (in the Bayonne Bridge project in New Jersey) decides it’s going to dig in its heels in, there is no alternative but to give in to what they want. That feeds the paralysis. There needs to be a presumptive authority somewhere. There needs to be someone who can cut through that. If that authority is too high-handed that won’t work, either. You want an incentive for everyone to be reasonable and agree to make decisions within a reasonable timeline.”

In countries that rate higher on the Ease of Doing Business Index, interstate road or bridge projects there is a permitting officer or a department designated as the one stop for permitting and review. You can’t ignore it. There is an internal mechanism where agencies inside the permitting process can, essentially, complain if their concerns are being ignored by the overseeing agency and its CPO.

“If the question is the adequacy of environmental review, the decision maker to draw the line on that would be an environmental official,” Howard said. “If it’s a powerline running through several states, it should be the agency responsible for the adequacy of the power grid.”

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