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Combustion Industry News

From the IFRF's correspondent in Australia
From the Sydney office
Contributed by Patrick Lavery
Australia, Sunday 9th April 2017

US President Trump signs order designed to rescind Clean Power Plan

US President Donald Trump has issued an order which encourages the rescinding of the Obama administration’s Clean Power Plan. The order calls for agencies to “take appropriate actions to promote clean air and clean water for the American people,” but balances this against “regulations that potentially burden the development or use of domestically produced energy resources,” going on to state that agencies and departments “appropriately suspend, revise, or rescind those that unduly burden the development of domestic energy resources beyond the degree necessary to protect the public interest or otherwise comply with the law.” The Clean Power Plan set carbon emissions limits on coal and gas fired power plants which were seen, for coal, as being onerous to the extent that use of the fuel would be drastically reduced. While the Trump administration claims the measures will return jobs to the crippled coal mining areas of the country, it is doubtful this will occur. Although the standards were indeed strict, the chief cause of the decline in coal mining has been the availability of cheap shale gas, which shows no sign of diminishing. Other factors have also been at play, as Reuter’s John Kemp has persuasively argued – electricity demand has been stagnant, and renewables have become more prominent. Looking forward, the outlook for coal in the US is poor, as many plants are aging and are likely to be replaced not by new coal-fired plants but with gas-fired plants or renewables. The capacity-weighted average age of coal plants is 41 years, while for gas the same average is just 17. In addition, the intermittency of renewables places a grid demand for more flexible conventional power generation, which is better suited to gas-firing. A survey by Reuters of 32 US utilities, in which 20 said the order would not change their plans, five said they were reviewing, six did not respond, and one said that it would extend the life of some of its coal plants, gives weight to these conclusions. It seems that for coal miners and the Trump administration, there shall be little joy from the presidential order.

US coal producers reportedly split on support for Paris Agreement

Meanwhile, coal producers in the US are split on whether the Trump administration should withdraw from the Paris Agreement on climate change, according to Politico. Peabody Energy, Arch Coal and Cloud Peak Energy, the country’s three top coal producers, have indicated they will not publicly object to the US staying in the agreement, especially if there is US support for clean coal technology as part of honouring the agreement. Other coal producers, such as Murray Energy, remain opposed to the Paris Agreement, which they fear will further reduce demand for their product. The Trump administration is expected to outline its position on the Paris Agreement in late May.

Coal industry to remain leading source of heat and power at global level, according to FT opinion piece

The Financial Times has provided a useful brief review of the state of the coal industry around the world, after pointing out that various headlines could give either a rosy or a dismal view of it, depending on which were selected. The truth, as the FT sees it, is somewhere in the middle – while coal firing is declining rapidly in the UK and some other developed nations, it is fairly steady in Germany, in retreat because of shale gas in the US, predicted to rise in absolute numbers in China, and grow in other developing countries, particularly India. There is likely to be more of a shift to higher efficiency firing, though this will be somewhat limited. The article concludes that coal will “remain the leading source of heat and power and will meet something like a third of the world’s energy needs” until renewables beat it on price.

Carbon Disclosure Project ranks 14 European utilities by preparedness for low-carbon future

Research by the Carbon Disclosure Project to rank Europe’s utilities according to preparedness for a low-carbon future has found Germany’s RWE and EnBW, the Czech group CEZ, and Spain’s Endesa to be the least prepared, while Austria’s Verbund, Spain’s Iberdrola and Finland’s Fortum were the most. The study was commissioned by a range of financial management institutions, with the idea being that better preparedness for a low-carbon future signals a better commercial future for the energy companies, and hence a better investment. Fourteen companies were ranked. Both RWE and EnBW responded to the report by saying they were committed to climate goals in line with the Paris agreement.

Russian President Putin claims human activity has not contributed to climate change

Russian President Vladimir Putin has implied to media that human activity has not contributed to climate change, as France24 has reported. Mr Putin said that an Austrian explorer with a photographic memory had visited an Arctic archipelago, part of Soviet territory, in the 1930s. Shown photos of the same islands twenty years later, the same explorer stated that icebergs had receded. Mr Putin argued that during this period there were “no such anthropological factors”, and that therefore climate change is not influenced by human activity. There was no denial that climate change is in fact occurring, and the Russian president stated that the issue is to adapt to change, rather than trying to stop it. The rather strange argument about the causes of climate change may have been made for strategic reasons, as Mr Putin told a conference that climate change may result in “more propitious conditions for using this [Arctic] region for economic ends.” Meanwhile, the new head of the US EPA, Scott Pruitt, has clarified his own position on the causes of climate change, saying that humans do contribute to it, but to what level remains uncertain.

US shale industry turns to DNA technology to enhance efficiency

In a story that supports the idea of a tech-driven second shale revolution in North America, Reuters has reported on the US shale industry’s use of DNA technology to improve detection of productive wells. DNA samples are extracted from microbes found in rock samples, then compared with DNA from oil wells to identify similarities and differences, a technique the speeds up the time to identify productive areas. Ajay Kshatriya, chief executive and co-founder of Biota Technology, which developed the application of the technology to shale fields, says that it can cut as much as 10% off the cost of production. This is on top of the other innovations already made in recent years, which have reduced production costs by up to half, and made shale oil production highly competitive with traditional producers in OPEC and other countries. The use of DNA analysis and comparison avoids mistakes such as applying insufficient pressure to reach oil, and of drilling wells too close together. Biota says its technology costs producers less than 1% of the total costs of a well, which can cost between US$4-8 million (€3.7-7.5 million).

Asia’s first commercial-scale CCS project to begin construction

Asia’s first commercial-scale carbon capture, utilisation and storage-equipped facility is set to enter its construction phase, with a final investment decision being made at the end of March. The CCUS facility will be installed to service two coal gasification plants owned by Yanchang Petroleum, one of China’s largest oil and gas companies, and will capture up to 400,000 tonnes per year of CO2, using the gas for enhanced oil recovery. The plant is located near Xi’an, the capital of Shaanxi Province in central China. Alex Zapantis, Asia Pacific General Manager of the Global CCS Institute said of the news that "Four years ago, this was an industrial plant venting CO2 into the atmosphere. Today, just four years later, it is a standard-bearer for clean technology.”

Chinese considering power sector merger to create US$230 billion conglomerate

The Chinese government is considering merging power generator Datang and coal miner Shenhua, in what might create a US$230 billion (€216 billion) conglomerate. The impetus is the ongoing contract fiction between Shenhua and a range of power producers, with Shenhua looking for higher prices for its coal and the power producers refusing. It is uncertain if the merger will go through, as other high-profile state-owned companies have resisted mergers in the past, such as Sinopec and PetroChina.


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