Articles in Category: Green

We recently wrote about how the spending bill signed in December favors solar power with better and longer renewable energy tax credits than it gives to wind power. However, solar also did better in the extenders” bill than the one technology responsible for generating the most energy from renewables in the US today: biomass.

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The tax extenders package benefits biomass power with an extension of the Section 45 production tax credit (PTC). The PTC for technologies other than solar or wind has been extended for two years, through Dec. 31, 2016. The incentive amount for wind, geothermal, and “closed-loop” biomass — the kind that does not create carbon dioxide — is $0.023 per kilowatt hour. For other eligible technologies such as fuel biomass, municipal solid waste, landfill gas and others, the credit is $0.012 per kw/h.

Can sugar cane bagasse solve our clean electrical power generation problems? Source: Adobe Stock/ idmanjoe.

Can sugar cane bagasse solve our renewable electrical power generation problems? Source: Adobe Stock/ idmanjoe.

In contrast, the legislation allows solar power companies to keep claiming federal tax credits at 30% of the price of a solar array. The credits, which apply to home solar kits as well as big commercial installations, will be good through 2019. After that, though, the credit will begin to drop, declining to 10% in 2022. Credits through 2022 vs. $0.012 cents per kw/h for one year? Even wind did better than biomass with its $0.023 cents per kw/h and an extension of those credits through 2019.

What is Biomass?

Biomass is biological material derived from living, or recently living organisms. In the context of biomass for electrical power generation, this is often used to mean plant-based material, but biomass can equally apply to both animal- and vegetable-derived material. Woodburning stoves are a primitive form of biomass heating. Ethanol for cars also falls under the biomass category as “biofuel” but it’s not used for electrical power generation.

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This week in metals, the US Census Bureau reported initial numbers for steel imports into the US last year.

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The finished steel import market share was an estimated 26% in December and is estimated at 29% for the full year. If the 29% figure holds up, it will be a record for the proportion of finished steel imports coming into the US from elsewhere in one year.

How to combat steel imports? Why not just ban them all?

How to combat steel imports? Why not just ban them all? Source: Jeff Yoders

For all of 2015, US steel production hit 86,843,000 net tons, or about 71% of capacity. That’s down 9.3% from the 95,706,000 net tons in 2014 when the industry ran at nearly 78% capacity.

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29 States that are challenging the Environmental Protection Agency‘s Clean Power Plan on Tuesday urged the US Supreme Court to block the controversial regulations slashing carbon emissions from existing power plants while they’re being litigated, after the Washington, D.C. Circuit refused to issue a stay last week.

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The D.C. Circuit said Thursday that states and industry groups challenging the Clean Power Plan hadn’t satisfied the strict requirements for granting a stay.

In its Supreme Court application for a stay, West Virginia and 28 other states and state agencies argued that a majority of justices would likely agree that the US Environmental Protection Agency doesn’t have the Clean Air Act authority to craft the rule.

The MATS Precedent

The states might have a strong case for the stay simply because the High Court — at least a 5-4 majority of the justices — sided with them in an earlier case, last year, that pitted the EPA against a similar group of states involving its toxic emissions rule, which tried to limit mercury and air toxics, aka MATS.

That ruling set a major precedent for federal agencies, that they had to consider compliance costs before laying down rules and regulations. This would seem to favor the states filing suit to stop the CPP, as its compliance costs are not calculated, in any way, into the “plan.”

States are, rather, given up to three years to come up with their own plans to implement the CPP, although they may elect to have the EPA do that work for them.

The Effect of a Stay

Of course, the Supreme Court still might not stay the rule while the case is heard and simply wait for the D.C. circuit — which did move the case up on its docket to June — to rule and then hear an appeal to its decision, no matter which side wins. That would mean states would need to comply for a process that could take at least a year to shake out in the legal system.

Remembering that the EPA would only need to sway one justice to its way of thinking, then, perhaps the compliance process playing out over a year could favor the federal government. But, considering that Justice Scalia wrote the opinion in the MATS case, the precedent seems to be staunchly against them.

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“It is not rational, never mind ‘appropriate,’ to impose billions of dollars in economic costs in return for a few dollars in health or environmental benefits. Statutory context supports this reading,” Scalia wrote in the MATS decision.

An appeals court will allow the EPA Clean Power Plan to stay in effect while it is argued in court and China’s plans to tame its largely state-run metals producers are starting to become more clear.

Clean Power Plan Will Stay in Effect

The Washington D.C. Circuit on Thursday refused to put the Environmental Protection Agency Clean Power Plan on hold until legal challenges to the rule are completed, but they did fast-track a trial on the legality of the new rule.

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The Obama administration considers this an early victory as it looks to defend and implement the sweeping regulations that would slash carbon emissions from existing power plants.

29 States and several industry groups petitioned to overturn the CPP or, at the very least, block it from being implemented while the legal battle plays out. They’ve argued that they’ll be irreparably harmed by starting the compliance process, even though they’re likely to succeed in convincing the court that the rule is illegal.

However, the D.C. Circuit panel shot the request down in a two-page order, though it said the appeals court would expedite the consideration of the case and schedule oral arguments for June 2.

China’s Metals Transition Plan

China’s plans to set up funds to manage coal and steel capacity closures and stockpiling schemes for metals such as aluminum have offered nervous markets some clarity on the likely future make-up of the country’s sprawling and predominantly state-run metals and mining industries. But it’s still way too early to tell if these initiatives even can be successful in taming overproduction.

As the world’s largest producer of aluminum, steel and other metals, and the biggest consumer of copper and iron ore, China is crucial to global metals markets which have slumped in the past year as Chinese industrial demand growth slowed.

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After weeks of talks between government officials and leading metals producers, Beijing looks set to take a direct approach to managing capacity cuts and layoffs in coal and steel. It will provide smaller-scale financing deals to groups of producers of non-ferrous metals, such as aluminum, for stockpiling and capacity cutback initiatives.

I was asked recently if I thought the world was going to run out of lithium.

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It was the type of question that illustrates the fever that is gripping this small and specialist market, much as the hype that drove rare earth elements through the roof a few years ago and briefly allowed a flood of investment to be available for the development of new mines and processing operations such as Molycorp’s Mountain Pass, only for the market to then collapse again a year or two later.

Don’t Believe the Hype?

An Economist article underlines the case regarding lithium. Much of the recent hype is due to a doubling of lithium carbonate prices imported into China in the last two months of 2015 and comments by analysts from places such as Goldman Sachs calling lithium the “new gasoline” reflecting their opinion that electric vehicles are about to take off — in sales terms, not literally.

Is the investment hype over lithium-ion batteries justified? Source: Adobe Stock/bbbastien.

Is the investment hype over lithium-ion batteries justified? Source: Adobe Stock/bbbastien.

Yet sales of lithium salts such as lithium carbonate and lithium hydroxide make up a market of only about $1 billion per year, small when you consider — like rare earth elements — their ubiquitous presence in just about every electronic gadget. All-electric cars and, increasingly, power tools and products previously powered by nickel-hydride batteries use lithium. Read more

This is part two of a series on the potential of lithium for energy storage and the investor reaction. See part one first if you missed it.

California is said to have ordered its electricity firms to offer 1.3 gigawatts of non-hydroelectric storage capacity within five years, more than double the 0. 5GW of batteries plugged into grids around the world today.

It remains to be seen how popular Tesla’s “Powerwall” electricity storage devices will become, but as the price comes down through competition and technology improvements they will prove popular in countries where solar panels can supply domestic power economically such as Australia and the southern US, or where power supply is intermittent as in India or South Africa.

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So, the market is looking good for lithium even though the technology still needs considerable improvement to achieve truly large-scale uptake. As the Argonne National Laboratory in Chicago is quoted in the Economist as saying, large-scale batteries need to offer hundreds of miles of driving range, be rechargeable in minutes instead of hours, and provide power at costs comparable with natural gas before they can take off. In the meantime, though, supplies of lithium are not, as was the case with rare earths, held in the stranglehold of one country. As this graphic courtesy of the Economist shows, supplies are already well established from several stable, developed mining countries.

Lithium_sources

Source: US Geological Survey.

Lithium minerals have been used for years in the ceramics and glass industry according to the US Geological Survey, so extraction is not a new technology and nor is the supply chain undeveloped.

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Our Renewables MMI fell 4% to start the year, even as congress extended the renewable energy tax credit that gives end users of solar panels, wind turbines and other metal products an incentive for purchases through 2022. Our Renewables MMI fell 4% to start the year, even as congress extended the renewable energy tax credit that gives end users of solar panels, wind turbines and other metal products an incentive for purchases through 2022. This is, of course, the latest in a series of all-time lows.

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We have previously written about the paradoxical nature of government incentives and metal price increases, particularly for the metals that go into renewable products. The solar tax incentive can cover up to 30% of a system’s installation and cost so it definitely helps adoption, but that offset also keeps base prices from rising as the true cost is so different than what consumers are paying.

Renewables_Chart_January-2016_FNL

The renewal, unsurprisingly, also supplements solar silicon products in a much more effective way than, say, the neodymium or the grain-oriented electrical steel used to construct wind turbines. We should not expect to see renewables prices rise until the level of government subsidy for solar begins to taper off in 2020 or until adoption of the underlying generation technologies skyrockets.

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In the meantime, demand is strong, if muted by the subsidy, and the supply of photovoltaic panels available for consumers that want to slap them on their houses to collect the tax credit can only help spur adoption. SolarCity has topped off its PV panel gigafactory in upstate New York and similarly looks forward to selling its panels and passing most of that discount on to consumers.

It will be years before we know if this economic experiment in subsidizing renewables is a success, but all of the ingredients for creating a stronger market in the future are there and paid for.

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When US lawmakers voted to extend lucrative federal subsidies for renewable energy as part of the $1.15 trillion spending deal last month, wind and solar companies celebrated as they looked forward to passing those savings along to customers and reducing their own production costs.

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But are some renewable technologies more promising than others?

You can install PV panels on our roof, collect a tax credit and bring down your own electricity bill. A wind turbine? Not so much. Source: Adobe Stock/rob245.

You can install PV panels on your roof, collect a tax credit and bring down your own electricity bill. A wind turbine? Not so much. Source: Adobe Stock/rob245.

For solar, this is an unqualified windfall as the consumer products manufacturers such as SolarCity and SolarWorld make, mostly silicon photovoltaic panels, can qualify homeowners, banks and other end users for tax credits, but the picture is still murkier for far more costly and technically challenging wind power.

Solar’s Sweet Deal

The legislation allows solar power companies to keep claiming federal tax credits at 30% of the price of a solar array. The credits, which apply to home solar kits as well as big commercial installations, will be good through 2019. After that, though, the credit will begin to drop, declining to 10% in 2022. It will remain at 10% unless legislation eventually eliminates the credit before or after 2022. Read more

Home sales unexpectedly fell last month and China has required its industries to report greenhouse gas emissions.

Home Sales Fall

The National Association of Realtors‘ index of pending home sales fell 0.9% in November after rising 0.4% in October.

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The median projection of economists surveyed by Bloomberg anticipated a 0.7% increase for November.

China Requires Carbon Emission Reporting

China issued national standards for industrial firms to report their greenhouse gas emissions as part of the country’s plan to launch a national carbon market in 2017.

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The new standards, issued by the National Development and Reform Commission (NDRC) on Wednesday, will enable the China to create a statistical system for greenhouse gas emissions and support the establishment of a national carbon trading scheme.

We sometimes indulge our more geeky side and cover topics that, while metals related, are never going to significantly move the needle on metals consumption, pricing or supply and demand. We reserve the right to be geeky.

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While a recent development recently discussed by Mark Shackleton, Professor of Finance and Associate Dean Postgraduate Studies at Lancaster University definitely falls under the “geeky” heading, it could, one day, potentially move the needle for tin demand if the economics permit.

Carbon Capture and Carbon Taxes

One of the biggest dynamics in the next 10 years will be how legislators approach carbon emissions. If they seek to control emissions by putting a significant price on carbon, it will have profound implications for the metals industry, along with just about every energy-consuming activity out there.

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