Combustion Industry NewsFrom the IFRF's correspondent in Australia
From the Sydney office
Contributed by Patrick Lavery
Australia, Saturday 4th August 2018
The amount of flaring of natural gas at oil wells decreased globally in 2017, the first time the level has fallen since 2013. Most of the fall was as a result of Russian improvement, as older oil fields were closed and new ones opened, such that despite maintaining the level of oil output, the country flared 11% less gas. Meanwhile, in the USA flaring increased 7% as oil output also increased, meaning that the US now flares the fourth highest amount of gas in the world after Russia, Iran and Iraq. The World Bank, which in 2015 launched an initiative to end routine flaring by 2030, has described the results as “encouraging”.
Forecasted carbon pollution allowance prices for the EU Emissions Trading System are rising, with stronger demand expected when changes to the system reduce the number of available permits beginning in 2019. Current expectations are that prices will be €18.59/tonne (US$21.53/tonne) in 2019 and €20.76/tonne (US$24.05/tonne) in 2020. These expected prices have risen significantly since April of this year, which indicates that as the changes approach, there is a greater realisation of the impact they might have. The European Commission will be hoping that the changes, which include a ‘market stability reserve’ to transfer unallocated permits out of circulation, tightening demand, raises prices enough to incentivise low-carbon investment choices amongst industry across Europe.
The heatwave that has affected much of the world over the past month, with significantly higher average temperatures from London to Sydney, has led Japanese power generators to start up two mothballed oil-fired power plants to meet peaking electricity demand as air conditioning use soars. With most nuclear reactors still not operating after the 2011 Fukushima nuclear disaster, Japan has limited options for power generation, leading to the use of the previously mothballed plants. Other plants have been run at higher-than-normal output to help cope with demand, even above their rated capacities, as electricity prices hit their highest ever level, at US$0.90/kWh (€0.77/kWh). The heatwave has led to more than 80 deaths and over a thousand hospitalisations throughout the country.
A joint venture between Austrian utility VERBUND, steelmaker voestalpine, the Austrian Power Grid, metallurgical research organisation K1-MET, the Netherland’s Energy Research Centre, the Austrian Entrepreneurship Center Network and Siemens is to establish a proton exchange membrane (PEM) electrolysis system to produce hydrogen for steelmaking at one of voestalpine’s steel plants in Linz, Austria. Known as H2FUTURE, the joint venture aims to demonstrate steelmaking from ‘green’ hydrogen produced from renewable energies, seen as a promising way of reducing the carbon footprint of the steelmaking industry, which is estimated to be the source of 6% of manmade CO2 emissions. The electrolysis facility will consume 6 MW of electricity, with a design hydrogen output of 1200 m3 of hydrogen/hour, and a design efficiency rate for turning the electricity into hydrogen of 80%. It is expected to be up and running in 2019, and an industrial scale facility would be the next step for the team. The project is an exciting one for the steel industry and will be followed with interest across the world.
A new report by clean energy advocates ClearPath and the Carbon Utilization Research Council has used economic modelling to estimate that some carbon capture, utiliisation and storage installations in the USA could be profitable by taking US government tax credits on one hand and using CO2 for enhanced oil recovery on the other. The findings are released in a new report entitled Making Carbon a Commodity, which goes on to claim that CCUS could become an industry worth up to US$190 billion (€163 billion) per year to the US economy by 2040 (but more conservatively, US$70 billion), mostly through improved oil output. To foster such an industry, the report recommends public-private initiatives to help fund the large capital outlays required for CCS facilities, introducing or extending shared CO2 transport pipelines (aided by eased building permission processes), and relaxing reporting requirements for the amount of CO2 stored by EOI projects (it is not immediately apparent why, but perhaps because reporting is expensive). The modelling is based on information from the Energy Information Administration which assumes that by 2040, coal and natural gas firing will provide 56% of US electricity, down from 62% last year, but whether that becomes that case is of course unsure. Nevertheless, the report will make encouraging reading for the industry, and may provoke debate amongst regulators.
In further Japanese news, the country is planning to test the transport of captured carbon dioxide by ship. Much of the generation of carbon dioxide in Japan is on the Pacific Ocean side of the country, but the best storage areas are within the Sea of Japan, off the western coast, and shipping is seen as a potentially more economical way to transport captured carbon to the storage sites. To kick start the shipping trials, the Japanese government is to fund the building of specialist ships over the next few years which will initially transport carbon dioxide to a storage facility on the northern island of Hokkaido. These trials will form the basis of further investigation and development. An official of Japan’s Ministry of Economy, Trade and Industry has said that if the shipping is a success, Japan may in the future look to export carbon dioxide to other countries. With Japan relying heavily on fossil fuel-fired power generation, CCS is key to meeting the country’s Paris Agreement targets.
GE is looking to sell the digital arm of its business, according to the Wall Street Journal (via Reuters). Former GE Chief Executive Jeff Immelt made digital business a focus of the company, envisaging GE’s role as a “digital industrial company”, but the strategy has not been as successful as Mr Immelt hoped. Competition from other providers and technical difficulties in the development of its own services has slowed the growth of GE Digital, with revenue flat to the latest quarter this year from the corresponding quarter last year. Programmer layoffs have begun to occur, and new Chief Executive John Flannery says GE’s focus will be narrowed to jet engines, power plants and renewable energy. It is somewhat unclear from the report if the digital services for power plants will be part of the sale of GE Digital, but it appears unlikely to be the case, as those services have been under GE Power until now.
The Financial Times has looked at the changing approach to communications taken by ExxonMobil under its current CEO, Darren Woods, who was appointed at the start of last year. While the company still believes that it will primarily be an oil and gas business in 2040, it is identifying strategies that address climate risk, for instance through reducing methane leakage from oil wells. Moreover, it is making efforts to discuss climate risks with investors, and in July cut ties with the American Legislative Exchange Council, a group of US state lawmakers acting to reduce climate change action. Mr Woods also believes that if some technological breakthrough was made that would allow for heavy transport to dispense with oil, then the time it would take for the technology to be adopted would allow ExxonMobil itself to adapt to the changed circumstances.
Construction of the power generation part of a combined heat-and-power waste incineration plant that also features a ski slope is advancing in Copenhagen. The Amager Bakke plant is the brainchild of Danish architect Bjarke Ingels, the architectural style being what he describes as “hedonistic sustainability” – that is, facilities and infrastructure that have a sustainable function but also feature some aspect of entertainment or hospitality. In the case of Amager Bakke, the entertainment is the ski slope, providing a ‘mountain’ in an otherwise flat Copenhagen, as well as a 85 m climbing wall, complemented by a bar and restaurant. The hedonistic side of the facility is complete and has recently opened to the public, but the waste-to-energy part is still underway, with a former coal-fired plant being converted to fire biomass. The combined design output is 310 MW (63 MW electricity and 247 MW heating), although there are fears – if fear is the word - that Denmark will not produce enough waste to make the plant fully operational.
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