Articles in Category: Green

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.

As the US Green Building Council finished its annual Greenbuild Conference in Washington, DC, last week, one somewhat unlikely organization came away touting better opportunities for its green and sustainable products: The Steel Market Development Institute.

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Steel, you say? Doesn’t it burn a lot of fossil fuels just to get the iron ore out of the ground? Isn’t the process to turn it into structural beams and bars energy-intensive and dirty, as well? Perhaps, if you’re looking at mined and milled steel only, but if you look at less-obvious concepts like reusability, material reduction through smart design, recyclability, decreased maintenance cost and empowerment of adaptive reuse, steel and, even some other metals, are ahead of the game when it comes to construction specification.


All of these green and sustainable steel-framed buildings might get a boost from new LEED standards. Source: Dmitry Ersler/Adobe Stock

The USGBC introduced will put its latest sustainable building certification, Leadership in Energy and Environmental Design version 4 (LEEDv4), into effect early next year. It  approaches building materials content credits in a completely different way than previous editions of LEED.

“The new version of LEED, the primary changes are in the materials section and those changes are mostly around things like lifecycle assessment, environmental product declarations, transparency really,”  said Mark Thimons, vice president sustainability at the SMDI. “What’s it take to make this product? What’s in it?” Read more

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

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 Renewables MMI fell 3.6% this month, erasing last month’s gains and losing a bit more to hit a fresh all-time low.

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As we cautioned last month, renewables look like they have farther to fall. The low-price range they have been trading in for the past six months is, itself, a downward departure from its previous range, in the 60s, where it had been since January 2013.

Why Renewables Prices Stay Low

The bearish commodity picture is certainly a part of the problem for renewables but the sector looks increasingly price-challenged as most of the metals trading in this range, such as steel, had sharp losses and selloffs in the last year whereas renewables have lost comparatively little of their value in 2014 and 2015.

Renewables_Chart_November-2015_FNLSteel plate, itself, has been a big part of renewables’ falling price range this year. Used in the construction of wind turbines and some certified sustainable construction projects, steel plate prices have dipped under pressure from cheaper overseas imports and a strong dollar.

Silicon and cobalt have fallen, as well, despite strong demand for photovoltaic solar panels. Both wind and solar have proven themselves as power generating technologies, so much so that this week, unlikely advocate BP said the cost of producing energy from renewable sources will fall sharply over the next 35 years. BP’s statement went on to say without a system in place that levies a charge for carbon emitted into the atmosphere, natural gas and coal will remain the cheapest source of supply to 2050.

We’re BP and We’re Here to Help

Hard to believe that BP is truly on the cap and trade bandwagon but, as an entity, it would know energy markets better than most.

BP’s report analyzed the impact of technology on energy production and consumption in coming decades. The oil giant said that a carbon price of $40 a metric ton would make gas a more economical power source then coal—a more carbon-intensive fuel—but a higher carbon price will be needed to make wind and solar more competitive.

“Without a price on carbon, fossil fuels are fiercely competitive,” said David Eyton, BP’s technology chief.

The oil giant’s long-term forecasts project that coal will remain the dominant fuel in power generation by 2035, but will lose market share to natural gas and renewables. In transportation, liquid fuels are expected to continue to dominate in coming decades.

BP and other large oil companies are producing an increasing volume of natural gas, with BP expecting it to comprise 60% of its production by the end of the decade.

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The coal industry has defended its role in the energy mix, highlighting that advanced technologies can sharply reduce carbon emissions and that coal remains a critical fuel, particularly in fast industrializing emerging markets. Mass market adoption will be needed for solar, particularly, to be anything but a power generation pawn in the war between coal and natural gas.

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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

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.

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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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