Articles in Category: Environment

This is part-2 of a series on India’s climate change plan. If you missed part 1, see yesterday’s post.

India is the world’s fourth-largest carbon emitter – after China, the US and the European Union – but, so far, it has resisted attempts to limit its energy use, asking developed nations, which it largely blames for the greenhouse gases, to fix the problem themselves.

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So, in that sense, yes, India’s recent Intended Nationally Determined Contribution (INDC) for 2030 was indeed “path-breaking.”

Development + Emissions Cuts

Economists, as well as industry analysts, are trying to figure out how the country will juggle development of its infrastructure and industry, especially in the light of the ‘Make In India’ campaign, and keeping pollution levels down.

The INDC mentioned some big-ticket infrastructure projects such as the dedicated rail freight corridor to shift away from road transportation. Researchers such as Navroz Dubash, senior fellow at the Centre for Policy Research, New Delhi, has dubbed this section as “somewhat vague.” But in the same breath, analysts and environmental groups have welcomed it because it brings a climate perspective to a huge portion of the economy, including energy, transportation, water, forests, agriculture.

Unlike countries such as China and the US, the Indian plan does not commit to an absolute reduction or peak level for carbon emissions, acknowledging, tacitly, that India’s pollution will continue to grow, although maybe at a slower pace.

Is Industrialization Possible Without Coal-Fired Power?

On another front, analysts have found India’s continued commitment to expanding coal power capacity quite perplexing. In the submitted plan, coal continues to dominate India’s power generation.

Reacting to this, Greenpeace was quoted in a Bloomberg report that expansion of coal power would hamper India’s development prospects by worsening the problems of air quality and water scarcity as well as contribute to the destruction of forests and the displacement of communities.

Clearly, there seems to be some measure of conflict between India’s energy use and its desire to keep the climate clean. In the past, India has often mentioned its growth plans — providing electricity to over 50% of Indians, the construction of roads and infrastructure, all of which will require energy-intensive processes like steel and automobile production, as well as natural resource mining. India is the fastest-growing region of the world, most of it powered by fossil fuels.

Reconciling Growth and Green

A research paper drawn up by the Brookings Institution, earlier in the year, articulates this well. It asks: how can India thread the needle between climate disaster and premature economic stagnation?

Though the challenge was great, it said, India will be an important enough partner at the upcoming climate talks to articulate a set of red and green lines. India, said the institute, would find it difficult to accede to any deal that would make its ongoing industrialization “the first industrial revolution in history to be nipped in the bud by international restrictions.”

There are others like former climate adviser to the UN climate secretariat, Mukul Sanwal, who predicted that by 2030, India was likely to use less coal than China and the US. People are discounting hydro-electric power in India, slated to be a big area of development.

Others, like Arunabha Ghosh, founder of the Council for Energy Environment and Water, have pointed out that the government was already spending on combating the adverse effects of climate change through its renewables program. Given India’s 300 million-plus people lacking access to electricity and the many development challenges industrialization poses, committing to more emissions cuts in the absence of support could risk its development imperatives.

For now, at least, the Indian government seems to be making all the popular choices. It recently announced an increased renewable energy target of 175 gigawatts by 2021-22, from the earlier predicted 38 GW. Of this, 100 GW was planned from solar, 60 GW from wind, 10 GW from biomass energy and 5 GW from hydro-electric. If these targets were realized, renewable energy was expected to contribute about 20% of electricity generation by 2021-22.

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The targets have been revised because India wanted to get more electricity from renewable energy, said Ashvini Kumar, Managing Director of Renewable Energy Corporation of India.

The author, Sohrab Darabshaw, contributes an Indian perspective on industrial metals markets to MetalMiner.

Recently, when Indian Environment Minister Prakash Javadekar referred India’s plan for tackling climate change as “a huge jump” for the country, he was not far off the mark, really.

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It’s been only a few days since India submitted its Intended Nationally Determined Contribution (INDC) for 2030 with a focus on clean energy to the United Nations (UN). The plan was presented about a month ahead of a major global warming conference in Paris, with India being the last of the 140 nations in the conference to submit a strategy.

A Vague ‘Plan’

While the plan, overall, received a thumbs up from a vast section of domestic and international environmental groups, the question on everyone’s mind is will India be able to pull this balancing act between development and climate control? Before going into that, let’s just understand some of the salient points of the INDC:

  • India intends to produce about 40% of its electricity in 2030 from “non-fossil fuel based sources” like solar, wind or hydroelectric power, with help from international funds and technology advances.
  • It pledged to reduce the emission intensity of its GDP by 35% over 2005 levels by 2020.
  • It will plant more trees by 2030 to absorb 2.5 to 3 billion tons of carbon dioxide.

The INDC mentioned some big-ticket infrastructure projects such as the dedicated rail freight corridor to shift the population from fossil-fuel-intensive road transportation. Researchers such as Navroz Dubash, senior fellow at the Centre for Policy Research in New Delhi, has dubbed this section as “somewhat vague.”

Environmental Community Still Embraces It

Yet, in the same breath, researchers have welcomed it because the plan will bring a climate-influenced perspective to a huge portion of the economy, including energy, transportation, water, forests and agriculture.

Unlike countries such as China and the US, the Indian plan does not commit to an absolute reduction or peak level for carbon emissions, acknowledging, tacitly, that India’s pollution will continue to grow, although (maybe) at a slower pace.

“India, even though not a part of the problem, has been an active and constructive participant in the search for solutions,” was one of the remarks in the 38-page INDC. Thus, the country made it clear that though its contribution to causing global warming is “relatively small as compared to the developed nations,” it was game to mitigate its adverse impacts, something that was expected to cost anything between $1 and $2 trillion.

Responsibility for Emissions

India, incidentally, is the world’s 4th-largest carbon emitter – after China, the USs, and the European Union. It has, so far, resisted attempts to limit its energy use, asking developed nations, which it largely blames for the greenhouse gases, to fix the problem. So, in that sense, yes, India’s INDC was indeed “path-breaking.”

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Economists as well as industry analysts were trying to figure out how the country would juggle its 2 responsibilities – development of India’s infrastructure and industry, especially in the light of the Make In India campaign, and trying to keep the pollution levels down.

The author, Sohrab Darabshaw, contributes an Indian perspective on industrial metals markets to MetalMiner. This is part 1 of a 2-part look at India’s climate blueprint.

This is part 2 of a series on ethical investments in mining and metals firms. See part 1 if you missed it yesterday.

A significant development in recent years has been the rise of so-called ethical investment funds. Every defined contribution pension plan has a small group of members who want their fund’s investments to reflect their own ethical values, even if no 2 investors are likely to totally agree on what constitutes ethical and what doesn’t.

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Take the case of gold, there are numerous cases of environmental devastation linked to gold mining, very often linked to (but not restricted to) poisoning of water and soil with arsenic and mercury used in the extraction process.

Hello, Newmont

Yet firms such as Newmont Mining, which has been repeatedly accused of such failures still makes it onto the Dow Jones Sustainability Index. So, if the major miners like Newmont, Rio Tinto and so on cannot be considered as ethical companies in part because of their size, influence over third party certification reports and legal clout whenever a protest is raised, what about smaller, artisanal miners who single source and have to work more closely with organizations such as Fairtrade and Fairmined? Read more

While our Renewables MMI is the only major index that showed positive growth this month, essentially erasing last month’s loss and increasing 1.8% to 55 from a score of 54 in September, it’s still mired in the low price trend it’s been stuck in for the last 5 months.

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That mini-trend, itself, was a drop from the renewable materials’ previous price range when it fluctuated in the 60s, itself a low-price trend. That string of monthly prices lasted all the way back to 2012.

As we have noted before, the renewables MMI is a bit of an outlier index. Its supply and demand picture hasn’t changed that much since we began tracking it, with demand for wind turbine metals, electrical transmission raw materials and solar silicon still operating as fairly niche markets.

Renewables_Chart_October-2015_FNLHow the Lockout GOES

A lot of the component metals of the index continue to suffer price problems due to market gluts that have nothing to do with end user adoption, particularly steel plate. We also can’t discount the fact that supplies may be a bit more constrained this month, at least for US grain-oriented electrical steel, due to the now 7-week-long worker lockout by Allegheny Technologies, Inc., 1 of only 2 US GOES producers. ATI claims that production is carrying on as usual, but work stoppages such as these rarely happen without some in production. Even a perceived lack of supply of GOES could cause buyers who need it to stockpile the metal.

On the demand side, another application of silicon solar photovoltaic panels is being attempted in California, using the solar power generated from them to heat, desalinate and clean used farm water for irrigation in the Golden State’s water-deprived central valley, the source of much of the produce enjoyed by the rest of the nation. It’s another of many promising applications that we don’t see affecting prices anytime soon. We’ve been there before.

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We expect renewables to continue to trade in this range for the rest of the year and likely for much of the next until commodities, as a class of investments, experience a wider market recovery. If you are a buyer of silicon, GOES or other renewables we would caution against buying forward as prices have shown no sign that this is a bottom and another shoe could drop at anytime, even in this low range.

TThe Renewables MMI® collects and weights 8 metal price points used extensively within the renewable energy industry to provide a unique view into renewable energy metal price trends over a 30-day period. For more information on the Renewables MMI®, how it’s calculated or how your company can use the index, please drop us a note at: info (at) agmetalminer (dot) com.

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This is part 2 of a 2-part series on scrap recycling in India, check out part 1 if you missed it yesterday.

The overall Indian recycling rate is about 25%. Compare this to the US – which is a net exporter of scrap with recycling rates of 80 – 90% and Europe, which has recycling rates in excess of 70%.

India’s annual scrap consumption is about 21 million metric tons while its imports are about 7 mmt a year, making it the world’s third-largest importer of scrap. A Frost & Sullivan report claimed India’s metal recycling industry had the potential to grow 11.4% per year until 2020 – but that comes with a big rider. Growth can only happen once the import duty and other free trade hurdles have been removed.

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India, incidentally, is perhaps the only country in the world to impose an import tax on steel scrap. This happened 2 years ago. The Metal Recycling Association of India has been on the forefront of a campaign to get the import tax stricken, with the current political administration even agreeing to look at the demand favorably.

So, while semi-finished products can be imported duty-free into the country, there is a 5% import duty on steel scrap, thus impacting the profitability of recyclers.

But the story on aluminum scrap is the exact opposite. India’s aluminum demand has been growing at an annual rate of about 11%, compared to a global growth of 6%. Part of the growth is fueled by imports including of aluminum scrap, especially from China.

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Indian Commerce Minister Nirmala Sitharaman recently told parliament that the government was considering a request for doubling the duty on aluminum imports to 10%, following representations that imports of aluminum scrap, especially from China, and the metal’s decreasing global prices were adversely impacting the industry in India.

What India Must Do to Increase Scrap Recycling

Essentially, for the Indian recycling sector to get an impetus and turn into a net earner, analysts including Frost & Sullivan, recommended the Indian Government initiate the following:

  • Removal of  the basic scrap import duty
  • Offer Special Economic Zones, the benefits of which will enable industry status for the metal recycling sector
  • Subsidize lending rates which will add more financial muscle in this sector

We’re glad that got your attention. We’re just not convinced that it will happen. Yet, we received an industry alert to that effect. Allegedly, a new law in China (for which we can find no public reference) goes into effect January 1, 2016 banning “unqualified” petcoke.

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So what? you might say. Well, petcoke is a necessary raw material in aluminum production.

china_petcoke_565

Will this pile of petcoke set off a global aluminum shortage? Image courtesy of China Environment

But before we move to the point of hysteria our readers might find it helpful to understand the quick criteria we deploy in determining whether or not we’ll publish something forwarded to us:

  • Does the news item have the potential to impact one of the metal markets we cover?
  • What is the likely order of magnitude of said news item?
  • Do we think this will have any impact on the underlying metals price? And if so, in what direction?

A set of criteria that seems relatively straightforward to us right?

Why This Law Might Not Matter

Even ThomsonReuters’ Andy Home sounded the alarm bells on this issue. However, we here at MetalMiner remain more skeptical.

The email from an associate in China, who has extensive experience in that country’s aluminum industry sent an overview with the headline, “New law in China to hit global aluminum market.” Andy Home undoubtedly received the same information.

The basics of the situation include the following:

  • China [may have] implemented a new law starting January 1, 2016 that bans the import, sale or burning of “unqualified” petcoke.
  • Petcoke is an essential raw material used to make aluminum.
  • There is no clarity as to what will be considered “unqualified” petcoke. “Unqualified” pertains to the sulphur content. If a 3% sulfur (and up) standard is adopted, the thought is that there could be severe ramifications to the aluminum industry. If a 5% sulfur standard is considered “unqualified” then there will be a much smaller impact.

Is China Really Tackling Its Greenhouse Gases?

Without a doubt, petcoke yields more greenhouse gas emissions than its cousin coal. And China, for obvious reasons, wants to clean up its environment. Limits to the sale and usage of petcoke represent as logical an opportunity as any to help reduce harmful pollutants.

Time and again we’ve heard China say that they want to clean up their environment. And yet the country’s actions suggest otherwise.

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Therefore, we fail to understand how one could draw the conclusion that the aluminum market would actually be harmed and some sort of supply shortage might ensue.

This is part 1 of a 2-part series on Chinese petcoke and what a potential ban might mean. Check in tomorrow for part 2!

US company SunEdison, Inc., one of the world’s largest global renewable energy development companies, has announced it has signed a Memorandum of Understanding (MoU) with the provincial government of Tamil Nadu in India to develop 2 gigawatts of wind and solar energy in the next 5 years. The 2 gw are part of SunEdison’s larger plan to develop 15.2 gw of renewable energy in India by 2022.

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“SunEdison is dedicated to furthering India’s renewable energy program, and has committed to develop and construct 15.2 gigawatts of clean and cost-effective wind and solar power projects in the country by 2022,” stated Pashupathy Gopalan, SunEdison’s president of the Asia-Pacific and Sub-Saharan Africa regions, in a statement. Gopalan signed the MoU at the Tamil Nadu Global Investors Meet at the Chennai Trade Center with Tamil Nadu Chief Minister Ms. Jayalalithaa. Read more

India has lost a case against the US at the World Trade Organization over protection for local crystalline silicon and thin-film solar cells.

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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.

Solar Panel array

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.

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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.

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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.

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Learn about the cost impact of proposed rule on US manufacturing industry, including steel production.

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:

  1. 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.

  1. 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.

EPA white board

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.

  1. 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.”

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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.

RELATED: For now, enjoy some well-informed speculation on the costs and effects of the plan.