Combustion Industry NewsFrom the IFRF's correspondent in Australia
From the Sydney office
Contributed by Patrick Lavery
Australia, Friday 11th May 2018
The European Commission has revised its Emissions Trading System in a way that addresses the weakness that has plagued it since its inception, the concurrent fixed supply of permits and variable demand for them which resulted in permit prices too low to incentivise cleaner production. Under the revised system to commence at the start of next year, there will be a market stability reserve which takes 24% of surplus inventory out of the market each year between 2019 and 2023, and then 12% afterwards. Fewer permits in circulation will further raise prices, which have already increased by 200% over the past year to €13/tonne (US$15.40/tonne) in anticipation of the revision, with some projections being a price of €20/tonne (US$23.67/tone) in 2019 and €25/tonne (US$29.59/tonne) in 2020. At such prices coal-fired power plants, and to some extent gas-fired plants, will face an even more difficult challenge to remain profitable, or, where there is no alternative power generation, electricity prices will rise. Other emissions-intensive industries such as steel and cement making will also be strongly affected by the revision. Though it will be challenging for these industries, a higher carbon price is something that many industries have called for to incentivise lower carbon production and generation, and it will be highly interesting to see the effect on innovation over the years to come.
The social campaign to urge businesses to divest from fossil fuel assets has had further success, with Europe’s largest insurance company Allianz announcing it will pull out of existing cover for current coal projects. In 2015, the company had already announced it would not cover new coal projects, as have other insurers, but the new announcement takes Allianz’s position beyond that of its competitors. The company claims it will lose €50 million (US$59 million) worth of business through the move. The news comes as coal use fell in Allianz’s home country, Germany, between 2016 and 2017, from 40.3% to 37%, with renewables rising from 29.1% to 33% in the same period. The age of some coal plants, as well as rising carbon permit prices, has contributed to the change.
BP, Chevron, Mitsubishi Heavy Industries America, Southern Company and Denbury Resources (whose core business is enhanced oil recovery using CO2) have formed a group to promote carbon capture, storage and utilisation. The Energy Advance Center is the name of the new endeavour, with the lobbying firm representing it telling news organisation Axios that the aims of the group are to improve the image of fossil fuel companies in relation to greenhouse gas emissions, promote carbon capture, storage and reuse, and enhance economic opportunities from the use of CO2. The new alliance therefore looks to be less technical and more political, but if the politics are successful it may lead to technical development.
Researchers at Lawrence Livermore National Laboratory, the Carnegie Institution for Science, International Institute for Applied Systems Analysis and Stanford University have calculated that there may be commercially viable opportunities in the US for capturing the storing carbon dioxide from bioethanol production. Fermentation of corn to produce ethanol creates CO2 in a purity (~99%) that does not require separation, making it in the first place a good candidate for CCS – the researchers estimate that 60% of carbon emissions could be captured for under US$25/tonne (€21/tonne). To transport and sequester that more economically-captured gas would cost an additional amount of about US$35, making the total to capture and store around US$60/tonne (€50/tonne). With newly revised US tax credits of US$50/tonne of stored CO2 (and US$30/tonne captured and utilised CO2), and the possibility in some states of additional credits or subsidies for low carbon fuels, the economic picture has the potential of becoming an attractive one. The result could be negative carbon emissions, even if bioethanol production itself is not entirely carbon neutral. While not quite in the realm of industrial combustion, the research is interesting because it shows the economic step change the new CCS tax credits make in the US, and more deployment of CCS facilities will reduce costs for the technology regardless of the industry in which it is applied.
Ten finalists have been announced for the US$20 million (€16.8 million) NRG COSIA Carbon XPRIZE, which awards efficient capture and use of carbon dioxide. They include projects to artificially photosynthesize CO2 into methanol, a ‘machine’ to dissolve CO2 into water and react it with brines to produce carbon carbonate and magnesium carbonate, the CarbonCure concrete system which has been covered in the Combustion Industry News before, two other concrete alternative materials, two nanomaterials, a fuel, and a bioplastic material called AirCarbon. Each of the finalists have been awarded US$500,000, with the remaining US$15 million to be split between the winners of the two tracks of the prize – implementation at a coal-fired power plant, and implementation at a gas-fired plant. It is well worth reading The Chemical Engineer’s short description of each project.
A short article on the Wind Power Monthly website has drawn attention to the expected fall in price for the production of hydrogen from wind power. With higher shares of intermittent renewables such as solar and wind power, there will be more occurrences of excess power being generated on the grid level, and creating hydrogen via electrolysis of water is one way to deal with the problem. The more this option is used, the more costs will come down for hydrogen production, and International Energy Agency estimates are that prices will fall from the current ~€0.18/kWh (US$0.25/kWh) to between €0.021/kWh and €0.032/kWh (US$0.025-0.038/kWh) by 2040 – close to as much as 90%. By that time, the IEA estimates that natural gas prices will be higher, at €0.041/kWh (US$0.049/kWh), and such prices suggest that hydrogen might be the preferred fuel, especially if carbon emissions considerations are taken into account, and this would give a different shape to the combustion industry. Long term estimates are notoriously unreliable, however, and time will have to tell.
A former Intergovernmental Panel on Climate Change human geographer, Professor Mike Hulme of the University of Cambridge, has spoken of his view that the most effective way to mitigate climate change at present is to find projects to work on which provide immediate local ‘co-benefits’. This would be an alternative to intergovernmental agreements and explanations of the science of climate change, as Professor Hulme believes climate change has become in some countries a “toxic brand” with much vitriol surrounding it. Instead, a “smarter politics” would involve alternative framings for different projects. An example “co-benefit” project would be the installation of solar panels, which could be framed for one side of politics as delivering independence, and for another as delivering emissions reductions. As Professor Hulme says, “Science is a very powerful way that humans have invented and discovered to understand the way in which the physical world works. Science will not be able to adjudicate on what we should or should not do. We have invented another human tradition — we call it politics — to resolve those sorts of challenges.” Other academics partly agree with Professor Hulme and partly disagree. Some point out that national agreements such as the Paris Agreement have been somewhat effective in delivering mitigation action, while others believe that better communication of the problem will result in more action on it. To this last point Professor Hulme counters that “People who are just as committed to the evidence of climate change have very different views about what energy mix we should have — between fracking, nuclear and solar." As a dissenting view, Professor Hulme’s view will help to sharpen an interesting and necessary debate.
The debate over the best course of action to mitigate climate change comes at the same time as the news that the level of CO2 in the atmosphere has reached its highest level since atmospheric measurements began, at an average of 410 ppm throughout the month of April. The level marks an increase of 30% in CO2 concentrations since the first measurement of 315 ppm in 1958 at the Mauna Loa Observatory in Hawaii, and it is believed that Earth has never experienced such a rapid rise in concentrations of the gas. While the Independent article on the rise sites the current level as the highest in 800,000 years, it also states that the last time levels were above 400 ppm was 3-5 million years ago, during the mid-Pliocene era, and although both statements may not be logically contradictory, there is a confusion in making them both. As a graph from the US National Academy of Sciences shows, CO2 levels have been nowhere near the present level for the last 800,000 years, cycling instead between about 180 and 280 ppm.
A thought should be spared for eight power plant workers who were kidnapped in northern Afghanistan earlier this month. Seven were Indian engineers and the eighth an Afghani, all of them working for the state-owned power company Da Afghanistan Breshna Sherkat, a spokesperson for which said the company is working to ensure their workers’ release. It is not known whether a ransom will be demanded, but kidnaps for ransoms are a common occurrence in the country.
State-owned South African power utility Eskom has announced that it will not schedule any blackouts this year, after rumours that its financial problems would mean a shortage of coal. In fact, chief executive Phakamani Hadebe has stated that six of Eskom’s fleet of coal-fired power plants have less the required coal supplies, but that this was an improved situation to earlier in the year, when seven plants faced shortages. Mr Hadebe is confident the situation will improve further, and although coal is used to produce most of Eskom’s energy, he has said “I can tell you without any shadow of doubt that we are safe.” As Reuters reports, a new board of directors was appointed for Eskom in January after the company was at the heart of a corruption scandal involving the former president Jacob Zuma.
Other articles from week 20:
Technical comments or suggestions should be sent to us by e-mail with this form