Articles in Category: Environment

A new report released by the Solar Energy Industries Association and produced by GTM Research forecasts that US Solar installations will more than double next year, reaching 15.4 gigawatts of solar power installed in 2016.

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Worldwide, growth in solar installations is expected to rival the boom occurring in the US. Berlin-based research firm Apricum forecasts that 54 GW will be installed worldwide in 2015, with new capacity additions reaching 92 GW by 2020. The largest market for the most common type of panels, solar silicon photovoltaics will be China, with 180 GW of total capacity installed by the end of 2020, followed by the US (83 GW) and Japan (57 GW).

Solar Panel array

Photovoltaic solar array at the National Renewal Energy Laboratory.

As 2015 ends this week, US installed capacity of photovoltaics stands at 7.4 GW, an improvement over 6.3 GW last year.

Part of the reason for the surge was purchases made by individuals and utilities to beat the scheduled expiration of the federal investment tax credit at the end of the year. That all changed when congress passed a long-term extension of the wind and solar tax credit as part of its omnibus spending deal earlier this month.

Established by the Energy Policy Act of 2005, the wind/solar investment tax credit provides a tax credit of 30% of the value of solar projects. Annual solar installations have grown by at a compound rate of 76% since the act was implemented in 2006. Under the new scheme, the 30% solar tax credit will extend through 2019 and then decline gradually to 10% in 2022. After 2022 the credit will be eliminated for residential solar installations and will continue at 10% for commercial ones. Bloomberg New Energy Finance predicts that the move by congress will add an extra 20 gigawatts of solar power over the next five years.

Solar silicon prices have remained stubbornly low and, while this extension won’t necessarily help them rise, it will spur utilities and homeowners to adopt them for electricity generation. The low prices, in this way, are a feature of expanded adoption and a not a bug as the generous discounts, on top of low prices, will make solar a cheaper alternative to other low-price power supply technologies such as natural gas.

The extension of the tax credit through 2019 is a boon to photovoltaic manufacturers and wind/solar energy suppliers who were quick to celebrate the long-term extension as an important step toward their goal of developing clean energy at an affordable cost through the development of solar projects.

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“This is a game changer for our company and will finally allow us to plan with certainty our growth and expansion over the next several years,” said John Billingsley, Chairman and CEO at Dallas-based Tri Global Energy. “Tri Global Energy plans aggressive expansion of both our wind and solar divisions into diversified geographical areas across the US.”

Today in metals, a judge has frozen the Brazilian assets of mining giants BHP Billiton and Vale SA and a frontrunner has emerged in the sale of Tata Steel’s UK operations

Tata Steel UK Has a Suitor

Investment firm Greybull Capital has emerged as a favorite to buy Tata Steel‘s struggling UK-based unit, in a move that could offer some relief to Britain’s troubled steel sector, Reuters reports.

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Judge Freezes BHP, Vale Mining Assets

A judge in Brazil’s state of Minas Gerais has frozen the Brazilian assets of mining giants BHP Billiton and Vale SA after determining their joint venture, Samarco, was unable to pay for damages caused by a burst dam at its mine last month. In a ruling issued late on Friday, the judge ruled that Vale and BHP could be held responsible for the disaster at the iron ore mine in the state of Minas Gerais, for which the government is demanding 20 billion reais ($5 billion).

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One of the biggest drivers of metal production, and by extension price, in the year ahead could be pollution.

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Sounds a little far-fetched, doesn’t it? Yet, two of the biggest players in the metals markets, China and India, are the two most polluting major economies in the world. For now, Prime Minister Narendra Modi’s India is putting on a brave face, in spite of a recent World Health Organization study of 1,600 urban areas around the world that found India has 13 of the world’s 20 most-polluted cities.

Modi’s Dilemma

The study measured by average ambient PM2.5 levels — a measure of small particulate carbon particles in the air with critical links to lung disease. Modi claims India should not be subject to the same rules as everyone else, because it has so much catching up to do in terms of industrialization and raising large parts of its population out of poverty. Read more

Recently, we welcomed the voice of Heidi Brock, president and CEO of the Aluminum Association, to MetalMiner’s digital pages, in an op-ed titled, “The Challenges Are Real, But the US Aluminum Industry Can Still Thrive” — and naturally, our devil’s-advocate nature forces us to ask, can the entire US aluminum value chain still thrive?

Mainly because the US industry is doing its darndest to become more green, while those in other countries…not so much.

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“North American aluminum’s carbon footprint has fallen by 37% since 1995 and achieved a 26% reduction in energy intensity over the same time period,” Brock wrote in a different op-ed. “We also know that aluminum can improve the environmental performance of other products through lightweighting and recyclability advantages.”

steel coil processing machine inside of steel plant

Can primary aluminum production survive this low-price environment? Source: Adobe Stock/icarmen.

However, she continues, “Aluminum production in China is the most carbon intensive in the world, with its coal-based smelters emitting significantly more greenhouse gases per ton of aluminum than its North American and European counterparts. In fact, a ton of aluminum produced in China is nearly twice as carbon-intensive as that same metal produced here in North America. Given the rapid expansion of high-carbon aluminum production in China, many of the efficiency and emissions reduction gains made by the global aluminum industry over the last several decades are being offset.”

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In light of more than 20 states finally being able to lodge formal lawsuits against the EPA’s Clean Power Plan a month ago, the National Mining Association has commissioned Energy Ventures Analysis (EVA) to drill down into the costs of complying with the rule — for industrial users, commercial user and consumers alike.

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From a high level, EVA expects a “$214 billion increase in wholesale electricity prices, double-digit wholesale electricity price increases in 46 states, and $64 billion to replace lost power capacity serving 24 million homes.”

EPA Clean Power Plan Cost in Pictures

In a visual nutshell, here is what EVA projects the costs of the EPA Clean Power Plan to look like:

Source: Energy Ventures Analysis

Clearly, many of the hardest-to-be-hit states are also the most manufacturing-intensive. Source: Energy Ventures Analysis

US map of electricity prices under EPA CPP

Ouch for the Rust Belt. Source: Energy Ventures Analysis

US map compliance costs power capacity replacement

Source: Energy Ventures Analysis

What This Means for Industrial Manufacturers

According to EVA:

“The consequences for costs are evident in the looming price increases for electricity. EVA’s analysis projects that by 2030, when the CPP is fully implemented, the wholesale price for electricity will spike electricity prices nationwide by 21.2 percent above the non-CPP base case.

Commercial and industrial consumers of electricity will naturally experience the same price increases, which are likely to be passed on to consumers in increased prices for goods and services. Furthermore, the greater natural gas demand by the power sector will increase natural gas prices that will be felt beyond the power sector. Residential, commercial and industrial natural gas consumers’ bills would increase by $6-8 billion/year under the EPA Clean Power Plan to recover higher gas commodity purchase prices. In addition, if the industry requires additional investment in pipeline capacity to meet the power sector’s growing gas demand, these costs would also be passed onto consumers.”

Read the complete report for more context, analysis and, most importantly, EVA’s methodology.

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We wrote recently about the probability that coal assets would become increasingly uneconomic if climate change related legislation such as emission caps and carbon taxes heaped costs on the industry that have, so far, been avoided.

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Well, an article in the Financial Times gives a glimpse of the future as envisaged by Amber Rudd, the UK government’s energy secretary. Speaking to the BBC hours before a speech on UK energy policy, Ms. Rudd announced a major review of the subsidies the UK pays for electricity produced from natural gas in an effort to encourage the replacement of the UK’s coal-fired power stations with combined-cycle, gas-powered technology ostensibly with a view to reduce carbon emissions

Coal vs. Natural Gas

Rudd would say later in her speech that she wants all coal power stations to shut down by 2025. The UK currently produces 21% of its electricity from coal-burning power stations, but those stations produce some 75% of the electricity industry’s CO2 emissions. However, a third of these power stations are expected to close by 2016, so that they meet EU air quality legislation.

Coal cars may not be lining up in the UK soon. Source: Adobe Stock/Carolyn Franks

Coal cars may be a thing of the past in the UK soon. Source: Adobe Stock/Carolyn Franks.

Coal creates roughly twice as much carbon dioxide as gas when it is burned for power. According to another FT article this week, research presented by the American Petroleum Institute shows that in the 25 US states with the highest rate of carbon dioxide emissions from their power generation, switching completely out of coal-fired generation and into gas would more than meet their targets for reductions set under the EPA Clean Power Plan.

For once, where the UK leads the US may follow if the current administration can build a head of steam behind emission reductions following next month’s summit in Paris. We say “may” with caution though. The US coal lobby is infinitely more powerful than the UK coal mining industry and, with an export market dwindling fast, can expect to put up a fierce resistance to the suggestion coal-fired power generation should be abandoned en masse.

Auctions and Emissions

In the UK, Rudd at least recognizes it is not sufficient to heap emission limits on power generation and expect the industry to sort itself out, switching from coal to other options. A recent auction for peak power provision ended up set to hand hundreds of millions of pounds in subsidies to highly polluting diesel generators, which are cheap to build and can undercut the prices offered even by gas plants.

The auction process could be rebalanced to take emissions into account, but that would not, in itself, encourage the industry to invest in new gas plants. For that, the market needs a guaranteed price which only the government can provide, much as it did for a recent new nuclear power plant project. Investors just aren’t willing to make 25-30 year commitments in such a volatile wholesale electricity market as the UK.

No guesses who will end up paying the price of the governments drive to be the “greenest government” ever, as usually consumers will foot the bill for subsidies, but at least with natural gas they have plants capable of meeting base and intermittent peak load in a relatively less polluting manner and, unlike renewables, with total reliability of supply.

In the run up to the Paris Climate Change summit next month, there has been talk of stranded assets among fossil fuel producers. Coal, of course, is the front runner for a number of reasons, but principally because it is the most polluting major fuel under currently usable technology and, as such, the most “at risk” against carbon taxes or tougher environmental emissions legislation

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A recent IMF report states that the fossil fuel industry has been and continues to be subsidized to such a degree that simply ending what it estimates to be the industry’s current subsidies would cut carbon emissions by 20%. The IMF isn’t some academic institution whose conclusions can be easily dismissed, governments and the media listen to what the fund says and its policies touch us all in different ways, so when it speaks so clearly — particularly when it puts it’s weight behind a movement that is gaining momentum in the run up to December’s summit — it has an impact.

IMF Reports Costs of Coal Subsidies

The IMF claims the subsidies are largely made up of polluters not paying the costs imposed on governments by the burning of coal, oil and natural gas, according to an article covering the topic in the Guardian newspaper.

These include the harm caused to local populations by air pollution as well as to people across the globe affected by the floods, droughts and storms being driven by climate change. Leaving aside the global effects on weather, which are contentious both in their extent and effect, ending the subsidies (and therefore cutting consumption) would slash the number of premature deaths from outdoor air pollution by 50% — about 1.6 million lives a year — the report claims.

Of course it’s not as simple as that, such a massive swing from using coal for power generation and alternatives to oil for transport could not be achieved reliably in the short- or even medium-term, renewables are so variable in delivery and most power grids so inflexible they could not cope with a rapid switch but that would not stop the process, merely slow its roll out.

A High Cost

The IMF report estimates the subsidy at $5.3 trillion for 2015, making it greater than the total health spending of all the world’s governments, or put another way the subsidies represent 6.5% of global GDP.

Just over half this figure is the money governments are forced to spend treating the victims of air pollution and the income lost because of ill health and premature deaths. The article not surprisingly sights coal as the dirtiest fuel in terms of both local air pollution and climate-warming carbon emissions and says it is therefore the greatest beneficiary of the subsidies, with just over half the total. Oil, heavily used in transport, gets about a third of the subsidy and natural gas the rest.

Source The Guardian Newspaper

Source: The Guardian Newspaper

Not surprisingly, a large part of this is in Asia with the biggest single source of air pollution as coal-fired power stations and China, with its large population and heavy reliance on coal power, providing $2.3 trillion of the annual subsidies, the paper reports. Read more

Was the mining accident in Minas Gerais, Brazil last week — the one that killed at least two and with 25 people who are still missing presumed dead — a disaster waiting to happen?

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Carlos Eduardo Pinto, a state prosecutor speaking to Reuters seems to suggest it may have been. Following a tailing dam failure last year in the town of Itabirito, which killed three workers, Pinto set up a task force and identified more than 200 dams that needed safety improvements.

Taller Wall Rather Than New Tailings Ponds

Since then, the Samaraco mine, jointly owned and operated by mining giants BHP Billiton and Vale SA, has increased production by a further 37% putting so much strain on the tailings pond structures that Samarco was already working on a dam wall to raise them further at the time the accident happened.

The authorities would have preferred a new structure to have been built but this would have cost more money than simply raising the existing dam higher, so it’s no surprise that, in a state where a large proportion of revenues come from the mining industry, the wall was raised rather than a new pond constructed and local authorities approved the plan. Read more

Whatever one may feel about climate change, and few things can separate friends, family and colleagues more passionately, the fact is the powers that be will be gathering in Paris next month to hammer out deals about reducing carbon emissions.

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Those deals will impact every one of us and not just to the extent that they do or do not have any effect on global temperatures. After initially being a rather reluctant participant in the whole emissions control lobby, at least from the climate change perspective, the US has in recent years taken a leading role in garnering collective action.

Regulations as Local Economy Hurdles

It has avoided the punitive actions taken by some European governments that have disadvantaged their own industries with high power costs in an effort to appear better than the rest in terms of lowering overall carbon emissions. In an article printed in the Financial Times the US is credited with helping to define a nationally determined approach to greenhouse gas reduction targets to which 150 countries representing 85% of the world’s total emissions have submitted proposals, so expect the US to take a very active part in the Paris deal, potentially with ramifications for US industry and consumers.

Some nations in Europe have already made substantial strides to reduce their total emissions although in the process some, like the UK, have left themselves perilously exposed to blackouts after the closure of coal-fired, base-load power generators and hamstrung their energy consuming industries like steel with unsustainably high costs, not to mention residential consumers who pay some of the highest tariffs in Europe. Reductions in carbon emissions have come at a substantial cost.

The China Question

Others, such as China, continue to build coal-fired power stations while at the same time adding nearly as much wind-power generation as the rest of the world put together last year according to Reuters.

Asia, in general, continues to embrace coal for power generation even though natural gas prices have fallen, preferring plentiful and often domestic coal to imported liquid natural gas. Reuters reports that in Asia, alone, this year power companies are building more than 500 coal-fired plants, with at least a thousand more in planning.

“Electricity is increasing its share in total energy consumption (in emerging markets) and coal is increasing its share of power generation,” said Laszlo Varro, head of the gas, coal and power markets division for the International Energy Agency (IEA).

Local Actions Require Global Support

How Asia can possibly achieve a reduction in carbon emissions is not even a question on the agenda, it’s whether the growth in emission can possibly be slowed that is consuming analysts. 40% of the 400 gigawatts in generation capacity to be added in Southeast Asia by 2040 will be coal-fired, the IEA is reported as saying.

That will raise coal’s share of the Southeast Asian power market to 50% from 32%, while natural gas declines to 26% from 44% now. And growth in coal is not only seen in developing economies. Coal’s share of the energy mix in Japan, top importer of LNG, will rise to 30% by 2030, up from 22% in 2010 – without it’s nuclear plants, Japan’s carbon footprint has risen significantly.

Meanwhile India, the world’s fourth-largest emitter is increasing emissions at 8.2% per year – the highest of any major economy in the world and while its carbon intensity, a measure of its emissions relative to its GDP, is half that of China’s, its emission reduction targets are, like many government set targets in India, unlikely to be met.

The announcement this month that China’s coal consumption, and hence carbon emissions, have been under-reported has heaped further pressure on Paris to achieve meaningful change. Statistics in China have always been a haphazard affair and while no wrongdoing is suggested the revelation by the National Bureau of Statistics reported in AsiaOne raised the figures for coal consumption in previous years by as much as 17%.

For 2012 alone, the increase was 600 million tons, — over 70% of the United States’ annual coal consumption — implying that China’s annual emissions of carbon dioxide had been underestimated by more than Germany’s total yearly output.

This underlines how futile, from a total emissions perspective, efforts by small mature markets in Europe are to the overall position. Sure, they give the country the moral high ground to lecture the rest, but, in reality, global action is needed, unilateral action simply damage the domestic economy and materially achieves little.

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So, remote and unimportant as it may seem, the meeting in Paris next month could have a significant impact on us at home. Keep a close eye on what your politicians sign up to and whether they manage to get the big polluters to play the same game.

The battle lines are being drawn. On one side are ranged automotive giants Toyota, Honda and Hyundai pouring billions into hydrogen fuel cells (FCEV), on the other are new upstarts like Tesla and established automotive firms like Nissan committed to the Electric Vehicle (EV) market.

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A bit like the Sony Betamax versus the JVC VHS video cassette recording formats in the ’70s — or Sony and Blu-Ray vs. Toshiba and HD-DVD more recently — the outcome of this monumental tussle will have far reaching ramifications for the industry and the competition will drive innovation and automotive advancement to the benefit of us all.

Unlike Beta/VHS where competing technologies hit the market at more or less the same time, EV has a clear head start on FCEV but like the video cassette market it may be the eventual winner if it is due to the quality of the product as much as the longevity of the experience. With video cassettes, Beta was generally reckoned to offer a better picture quality, in part because it recorded at a higher tape speed, yet its eventual failure had more to do with the fact Beta 1 only lasted 60 minutes compared to VHS’s 120 minutes. That’s the reason Beta is still used today in television production long after it ceded the home video market to VHS. Read more