March 27, 2018
Global coal plant pipeline is half empty (or is it half full?)
March 27, 2018
Although the IEA reports, in its new Global Energy & CO2 Status Report, that global coal demand rose about 1% in 2017, reversing a declining trend seen over the last two years, NGO’s Sierra Club, Greenpeace and CoalSwarm, in their annual coal plant “tracker”, report that “For the second year in a row, all leading indicators of coal power capacity growth dropped steeply in 2017, including pre-construction planning, construction starts, and project completions.”
The difference in the two views is that the Global Coal Plant Tracker focuses on coal capacity rather than generation. The report notes that “The decline was due primarily to central government restrictions in China and declining financial and policy support in India, although capacity under development in the rest of the world also declined.”
The Tracker concludes that “with declining deployment and high levels of retirement, coal power capacity is now caught in a squeeze: if current trends continue, by 2022 yearly retirements will exceed new capacity and the global coal fleet will begin to shrink.”
That’s based on an “if” of course.
In any case, the Tracker contains a lot of interesting data on global coal capacity developments.
The most important data are found in this table:
It shows that coal power capacity is still growing, although the growth rate is slowing.
With regard to retirements, the Tracker notes that “the past two decades have seen a strong upward trend in coal plant retirements”:
The “three-year moving average” in this chart is going up – but the Tracker does not mention that, as the chart clearly shows, actual retirements have declined over the last three years.
The NGO’s apparently feel the need to continue to give a “positive” (from their perspective) twist to data that are not necessarily that positive.
The IEA, incidentally, in its report, tries to give a positive spin to developments in Carbon Capture, Use and Storage (CCUS).
It notes that the “Petra Nova Carbon Capture project in Houston, Texas was commissioned in 2017. Deployment started in China with the construction of the Yanchang CCUS Project. China accounts for about half of all CCUS projects under serious consideration or planning, including four projects which will apply CCUS to coal-fired power generation. In addition, in the United States, the 2018 Budget Bill and the extension and expansion of the “45Q” tax credits is expected to provide a significant boost for CCUS investment. This could lead to capital investment on the order of $1 billion over the next six years, potentially adding 10 to 30 million tonnes or more of additional CO2 capture capacity. This would increase total global carbon capture capacity by around two-thirds from today’s [very low!] levels.”
The EU ETS is working!
March 27, 2018
For some ten years now, every article and report about the EU ETS (Emission Trading System) has mentioned that the “ETS is not working”.
Now, however, we can report that “Europe’s $38 billion carbon market is finally doing its job”, that is to say, according to a report from Bloomberg news agency.
Bloomberg writes that “Thirteen years after it was created to limit carbon-dioxide emissions, prices for the allowances are rising. European Union policymakers have enacted measures expected to keep the cost of pollution on an upward trajectory through 2030, prompting hedge funds that abandoned the market to pile back in.”
“For a five-year-plus period, this market was in the desert”, Per Lekander, a fund manager at Lansdowne Partners in London is quoted as saying. “What’s happened over the past five months is the investment community getting behind it again and putting on positions.”
This chart shows recent price development in the EU ETS:
“All this is happening without noticeable complaints from industry in part because policymakers from German Chancellor Angela Merkel to U.K. Prime Minister Theresa May have made it clear they want to phase out coal within the next decade, slashing greenhouse gases”, writes Bloomberg. “Companies favor the carbon market because it gives them more flexibility on how to comply with tighter emissions rules than regulation or taxes. The alternative to a market could be much worse for industry.”
“It’s also a good sign for the global effort to rein in climate change, showing that market mechanisms and government policy can persuade industry to step away from fossil fuels in a way that doesn’t create turmoil in the broader economy. Europe’s carbon market is the biggest of more than 45 systems working worldwide and a model being tried everywhere from China to Mexico and parts of the U.S.”
However, this is a bit too optimistic, since, according to the same article, “the European Steel Association, which represents companies including ArcelorMittal and Thyssenkrupp, said higher carbon prices create ‘additional problems’ for an industry suffering with increasing competition from Asian manufacturers.”
In addition, a spokesperson for Dow Chemical said that “The tendency of EU and national policymakers to seek to increase the price of emissions certificates, even though the emissions cap is adhered to, significantly reduces market predictability and makes Europe a less attractive region to invest.”
Even so, Bloomberg insists, “the broader response of business to higher carbon prices has been surprisingly muted — and even supportive.”
The article does not make any long-term predictions. What will happen to CO2 prices when all those coal plants are closed down? For now, the main conclusion is that the ETS is working!
Revolution: renewable energy in U.S. now too big to fail
January 9, 2018
Electric cars may be cheaper than their petroleum counterparts by 2025 if the cost of lithium-ion batteries continues to fall, according to a report from Bloomberg New Energy Finance.
For that to happen, “battery pack prices need to fall even as demand for the metals that go into the units continues to rise”, the London-based researcher said on Thursday.
This is rather likely to happen, notes BNEF: “The expected increase in mass manufacturing of lithium-ion storage should help drive battery prices to as low as $70 a kilowatt hour by 2030. Battery packs averaged about $208 a kilowatt hour in 2017, squeezing profit margins and representing some two fifths of the total costs of electric vehicle.”
BP’s convenient truths
March 27, 2018
Do you believe in the “technology outlook” of oil company BP?
It is a major publication for the company, an update to the previous BP Technology Outlook which appeared three years ago and “still receives over 500 downloads a month”, said David Eyton, Group Head of Technology when he presented the report on 15 March at the Royal Academy of Engineering in London.
But how realistic is it?
Eyton notes that “In the Technology Outlook we try to adopt a strictly techno-economic perspective…
In particular, that means we examine potential advances in technology and their impacts on costs without trying to second guess or model the potential impacts of policy – or indeed consumer choices.
That said, we do overlay a carbon price on our analysis, as a proxy for measures taken to deliver on the Paris Agreement, and to understand how merit orders could change if policy-makers act accordingly.”
What has changed since the 2015 report? You can see that in this chart:
Lower battery costs, lower solar and wind costs? Mmmh, I think this is what is called being “behind the curve”.
Not surprisingly, for an oil company, BP concludes conveniently that decarbonization is easiest to do in the power sector. This is where the Big Switch will take place:
Unfortunately, the chart only compares 2015 to 2050, but doesn’t indicate what happens between those two dates.
Thus, BP is able to come to the incredible conclusion that “Onshore wind power looks set to become the most economical source of electricity by 2050, with grid-scale solar power also becoming much more competitive.” By 2050? Well, certainly onshore wind will be the cheapest by 2050. The question is, when will it become the cheapest? The same goes for solar power.
In transport, a key sector for BP, the report plays the same trick:
This chart assumes a $75 per barrel oil price – but still plots that in 2050, electricity will be just as expensive as oil.
It also suggests that only in 2050 will EVs have reached cost parity with conventional cars. That certainly flies in the face of the projection made by a think tank like Bloomberg New Energy Finance, which sees EVs becoming cheaper by 2025!
Some other convenient truths from BP’s Technology Outlook:
- The way goods and people are transported will continue to change significantly, led by, but not limited to, electrification of lighter duty applications as batteries improve. Liquefied natural gas is projected to become a competitive fuel for heavy duty trucks and some ships, and bio-jet remains one of the only viable solutions to reduce emissions in aviation.
- Space heating is likely to continue to be primarily provided by gas-fired appliances although a high carbon pricing could favour hybrid appliances using heat pumps supplemented with gas, as well as all-electric systems.
Decarbonized gas – including gas with carbon capture, use and storage (CCUS), synthetic gas, bio-gas and hydrogen – has wide potential application in balancing power systems, and in the heating and heavy duty transport sectors.