Articles in Category: Green

The final official act of Senior Associate Supreme Court Justice Antonin Scalia, before his untimely death over the weekend, was —last week — joining the 5-4 majority that stayed the Environmental Protection Agency’s Clean Power Plan while challenges to the new regulations on power plants are heard in a lower court.

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The Atlantic writes that while it’s unlikely that the SCOTUS will revisit its stay — which keeps the new regulations from being enforced until the SCOTUS, itself, or the D.C. Circuit Appellate Court rules — it does draw into question if the High Court, itself, will rule the same way if it takes the case on appeal, essentially because Scalia’s death turns that 5-4 majority into a 4-4 tie. The legality of the Obama administration’s plan is being challenged by 29 states and several power and energy industry groups.

In the language of the Court, taking up a case is “granting a writ of certiorari,” often shortened to “granting cert.” Unlike in a decision on a case, in which five justices determine how the court rules, only four justices need to vote to grant cert in a case. Most experts thought it was likely that the Court—whatever its makeup—would eventually hear the case before Scalia’s death.

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The path to nominating and confirming a justice to replace Scalia on the court has already become a political battle with both parties taking up sides.

The Supreme Court has blocked the EPA Clean Power Plan and U.S. steel shipments ticked up in December, even as they lost ground from 2014 on the entire year.

Supreme Court Blocks Clean Power Plan… For Now

The Supreme Court has blocked President Obama and the Environmental Protection Agency‘s new climate rules for power plants, dealing a major blow to the president’s climate agenda.

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In an order released Tuesday night, the court said it is placing a stay on the EPA’s Clean Power Plan to cut carbon pollution from power plants while industry and state lawsuits move forward. This is not unexpected, as the rule — currently being challenged by 29 states and several industry groups — will be heard at the D.C. circuit court in June and could go through appeals that could last more than a year after that.

The length of the appeals process is important because the High Court granted the request in a 5-4 vote on Tuesday night, saying the rule was on hold until the circuit court reviews it and all Supreme Court appeals are exhausted. The court’s four liberal justices dissented from the decision.

The rules would have required existing electricity generating utilities to reduce carbon dioxide (CO2) emissions by 32% in the next 15 years. The Court “stayed” a decision on implementing the rule while it considers the legal challenges.

White House press secretary Josh Earnest said in a statement that the administration disagrees with the order, but “we remain confident that we will prevail” when the rule is argued on its merits.

That stands in stark contrast to the statements from the 29-state majority challenging the law and the industry groups that have joined the lawsuit.

The American Iron and Steel Institute (AISI) released a statement saying it applauded the decision. Wisconsin Attorney General Brad Schimel (R.), one of the 29 attorneys general challenging the rule, took his applause a bit further.

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“It is an extraordinary action for the Supreme Court of the United States to grant a stay and is telling of the obvious illegality of the rule,” Schimel said in a statement. “It’s imperative that we fight back against the federal government’s intrusion into the affairs of the State of Wisconsin.”

Steel Shipments Up in December, Down for the Year

The AISI also reported that for the month of December, U.S. steel mills shipped 6,556,342 net tons, a 1.5% increase from the 6,457,870 nt shipped in November 2015, and a 17.8% decrease from the 7,978,310 nt shipped in December 2014. Shipments for the full year 2015 were 86,546,657 nt, an 11.9% decrease vs. full year 2014 shipments of 98,248,666 nt.

 

A small 3% price bump in the monthly GOES M3 index doesn’t tell us a whole lot, however, it suggests that prices may have found a floor back in the November/December 2015 time frame.

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Part of finding that floor may have come from good, old-fashioned supply and demand. Consider that the comments from Allegheny Technologies, Inc., Chairman, President and CEO Rich Harshman recently indicated that he would be taking “rightsizing actions” to return ATI’s flat products group to profitability as quickly as possible.

GOES_Chart_February_2016_FNL

Furthermore, speaking of two recent closures he said, “The future restart of the Midland and GOES operations respectively will depend on future business conditions and ATI’s ability to earn an acceptable return on invested capital on products produced at these operations.”

This type of action, particularly the shutdown of the ATI GOES line, helps to bring some additional balance to the market. The rest of the steel industry will need to follow suit to support HRC prices, but that’s another story.

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In addition, TEX Reports suggests that one of the big Chinese mills will suspend two of its commodity grain-oriented sheet lines. MetalMiner could not identify any corroborating source as of press time.

Meanwhile, the most recent import trade data shows a 19% decline in transformer part imports:

Source: Zepol

Source: Zepol

While wound cores held steady:

Source: Zepol.

Source: Zepol.

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There was a lot of talk last year about coal resources needing to be left in the ground if the world was to reach it’s 2-degree-celsius reduction environmental targets.

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The suggestion was that legislation was required to force power generators to switch to less polluting energy sources and, while in the meantime tougher emissions standards have played their part, the market has been much more active than government in encouraging change.

Could 2015 be the beginning of the end for coal-fired power in the US? Source: Adobe Stock/Snap Happy

Could 2015 be the beginning of the end for coal-fired power in the US? Source: Adobe Stock/Snap Happy.

A recent US Energy Information Administration report covered by Reuters states that generators produced 101.86 million megawatt hours (MWh) of electricity with gas in November versus just 87.78 million MWh with coal, the lowest monthly level since May 1980 when monthly coal use was 84.88 million MWh.

How Coal Lost Ground

After more than one hundred years during which coal was the dominant fuel for power generation, some analysts think that when the final data for December is in, 2015 will prove to be the year natural gas took over. Read more

Our Renewables MMI regained some of the ground it lost last year and climbed back up to 52 this month.

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However, renewables are still a market stuck in a low-price rut with little prospect of breaking out of the low range they’ve been settling into over the last four years. Seemingly paradoxically, renewable energy was the biggest source of new power added to U.S. electricity grids last year as falling prices and government incentives made wind and solar increasingly viable alternatives to fossil fuels.

Renewables Lead New Energy Capacity

Developers installed 16 gigawatts of clean energy in 2015, or 68% of all new capacity, Bloomberg New Energy Finance said in its Sustainable Energy in America Factbook released Thursday. U.S. clean-energy investments rose to $56 billion last year, up 7.5% from 2014. The majority, $30.2 billion, went to solar. Investors pumped $11.6 billion into wind energy and $11.1 billion into technology to improve grids, boost efficiency, develop storage systems and other ways to better manage power usage.

Renewables_Chart_February-2016_FNL

With so much investment in the technology, why such a gloomy outlook for the metal products, such as grain-oriented electrical steel and silicon, that go into them? Most are oversupplied and their individual markets have not yet hit bottom in this bearish commodities cycle. We’ve also often lamented that the recently extended tax credits for products that contain these metals actually help keep prices low and discourage any real price inflation based on value.

Low prices for both gasoline in cars and natural gas for electrical power generation will also discourage further adoption as those fossil fuels will look more attractive to investors.

Adoption Keeps Climbing

The good news is that with more adoption, green technologies are getting into the hands of more homeowners, in the case of solar, and more utilities in the case of wind. Some lesser-subsidized technologies such as biomass are also taking a bite out of the electrical power generation market where natural gas is now the dominant player.

Power from natural gas-fired plants accounted for 25% of capacity added to grids last year. Nearly one-third of all electricity in the U.S. is now generated by gas, putting it nearly on par with a declining provider, coal.

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The future is certainly bright for the metal inputs of wind turbines and solar panels. We just wouldn’t advise anyone to invest in these metals right now expecting a turnaround and an escalating market such as nickel’s 2014 climb. Slow, steady and subsidized will win this race.

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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.

Read more

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