Combustion Industry NewsFrom the IFRF's correspondent in Australia
From the Sydney office
Contributed by Patrick Lavery
Australia, Tuesday 28th August 2018
The Trump administration has released its proposed new rule to replace the Obama administration’s Clean Energy Plan. Entitled the Affordable Clean Energy Rule, the new approach has four tenets for reducing greenhouse gas emissions: 1) that on-site, heat-rate efficiency improvements are the best way to reduce emissions; 2) a list of candidate technologies that states can use to establish performance standards; 3) an update to the permitting program for power plants to encourage efficiency improvements; and 4) adequate time for states to devise their plans to reduce emissions. The new rule is less onerous on power plants, replacing the strict carbon dioxide emissions limits of the Clean Power Plan with encouragements to improve efficiencies at plants. One reaction to the new rule covered by the Financial Times is that it will not help to revive coal firing in the USA – gas and renewables are too competitive – but it will help to slow its decline. In declining more slowly, the Environmental Protection Agency’s own estimates are that there will be an additional 350-1080 deaths as a result of air pollution compared to the Clean Power Plan. Given that the rule gives more control to states and is less prescriptive than the Clean Power Plan (which never came into effect because of a ruling by the Supreme Court), it is unlikely to be stayed by the Supreme Court.
Political calculations and manoeuvrings in Australia have led the federal government to step back from legislating its Paris Agreement commitments, and also triggered the fall of another prime minister. Climate and energy policy has been a political handgrenade for close to a decade in Australia, with the first victim being the then opposition leader, Malcolm Turnbull, in 2009. Prime Minister Kevin Rudd was another victim in 2010, and Prime Minister Julia Gillard the third victim in 2013. It was also a factor in the downfall of Prime Minster Tony Abbott in 2015, who gave way to his old foe Malcolm Turnbull. As recently as early August, it appeared that the ‘climate wars’ in Australian politics were over, with the federal government agreeing its National Energy Guarantee policy, which included an emissions reduction target, with the states. However, Prime Minister Turnbull, with a parliamentary majority of just one seat, had been experiencing relatively poor opinion poll results, giving encouragement to rebel members of his party to refuse to support the legislating of the Paris Agreement targets. The refusal triggered a leadership contest within the ruling coalition of the Liberal and National parties, which Mr Turnbull won, but a second leadership contest followed the same week, in which Mr Turnbull did not even participate. (The new Prime Minister, Scott Morrison, was not part of the earlier leadership contest, which was against an ally of Mr Abbott, the immigration minister Peter Dutton. Mr Dutton was subsequently described by one commentator as “not being able to organise a one-car parade”.) In short, it appears the climate wars are not over, and so far Mr Morrison, famous for bringing a lump of coal into parliament on one occasion and telling his fellow politicians not to fear it, has not spoken of emissions reduction targets, instead talking of reliability and cost. But it is hard to resist the conclusion that the leadership manoeuvrings within the government will result in the opposition Labor party, more supportive of climate change action, gaining power in the next federal election, which at the latest will be next May.
Russia, Iran, Azerbaijan, Kazakhstan and Turkmenistan have agreed a deal on the division of the Caspian Sea – a body of water that is home to significant hydrocarbon resources and which has been the subject of disagreement since the fall of the Soviet Union. The agreement is a complex one politically. It will allow Turkmenistan and Kazakhstan to build an undersea pipeline across the Caspian to Azerbaijan, giving Turkmenistan and Kazakhstan a potential route to export their natural gas reserves to Turkey and on to Europe. Meanwhile, it gives exclusive military use to Russia by banning any use of it by non-Caspian countries, and therefore prevents any Nato or Chinese efforts to strengthen military ties with Turkmenistan, Kazakhstan or Azerbaijan. For Azerbaijan, there is the chance to import gas from Turkmenistan, and for Iran the deal improves ties with other countries at a time when there are other international efforts to isolate it. The deal is also of interest to Europe, evidenced by Chancellor Merkel of Germany already having made a visit to the Caucus countries of Georgia, Armenia and Azerbaijan – three countries that would be part of the transport of Central Asian gas to Europe. Such a supply of gas would reduce Germany’s reliance on Russian imports, at least in theory.
The Financial Times has reported that Saudi Aramco, the state-owned energy company which has been preparing for a huge flotation on a stock market, has had its ‘in perpetuity’ oil rights in the country cut to 40 years. As the FT sees it, the move is a reflection of a power struggle within the kingdom, as rival factions within the royal family jostle with each other. But it is officially a part of the preparation for the initial public offering of shares, with energy minister Khalid al Falih (a former chief executive of Saudi Aramco) stating that the new contract is “one of several important steps undertaken to prepare Saudi Aramco for being listed”. Reports have been mounting in recent months that the flotation may not go ahead, and Mr Falih’s claim that the government is planning on proceeding with it “when conditions are optimum, at a time of [our] choosing” seems to indicate that conditions are not optimum now and it is unclear when they will be. The 40 year concession is twice as long as most other oil companies enjoy throughout the rest of the world, but it may still act to increase oil output from the country in the medium term.
A new large-scale carbon capture and storage facility has opened in Jilin, north-eastern China, at a gas refining plant operated by PetroChina. Carbon dioxide captured at the plant is to be used for enhanced oil recovery, with 600,000 tonnes of the gas being stored each year in the Jilin oil field. CCS technology had been tested for the last 12 years at the site before it was implemented at full scale, making it the 18th large-scale CCS facility in the world. More are expected to come in China, with the national government including CCS in its current five-year plan, and a country-wide carbon market soon to be introduced. In fact, two other large-scale facilities are currently under development, suggesting China will become a global leader in the technology. With the country rightly concerned about its environmental future, and with power generation growing at 7.8% over the past year to July, China appears to be making the right moves in regards to CCS.
Wärtsilä is to build a new research and development centre in Vaskiluoto, Vaasa, Finland. Planning for the €200 million (US$232 million) Smart Technology Hub is already underway, with the envisaged opening date being in 2020. Wärtsilä does not intend to use the facility only for its own purposes, but to open it up to other operators in the energy and marine sectors in which the company does the majority of its work. The hub will further increase the Vaasa region’s role as the largest energy technology cluster in the Nordic region.
SIMEC Atlantis Energy, a company usually associated with tidal energy projects, has announced that it is to convert the coal-fired Uskmouth power station in south Wales to fire pellets made from waste. The N+P Subcoal pellets are made from biogenic waste and non-recyclable plastic, and according to the developers, have a chemical composition and heating value ‘comparable’ to bituminous coal, though the S&P Global article covering the announcement states that the calorific value is around 20 MJ/kg as opposed to 29 MJ/kg for hard coal. Co-firing of the pellets with coal is a possibility, and SIMEC is already in discussions with plant owners across the world on possible conversions. The Uskmouth conversion is scheduled to be complete by the end of 2020, and SIMEC sees the plant operating to 2040, beyond the 2025 date set by the UK government for the phase out of unabated coal firing. An agreement is already in place for the sale of the electricity produced to a nearby steel plant run by Liberty Steel, which has a co-owner in common with SIMEC.
Mitsubishi Hitachi Power Systems has completed the construction of the Tanjung Priok combined cycle natural gas-fired generation facility on the Indonesian island of Java, and the plant has commenced operation. The 880 MW facility is composed of two units, with the first (300 MW) going into operation in July and the second in August. The plant was completed ahead of schedule, and features M701F gas turbines, as well as two exhaust heat recovery boilers, one steam turbine and auxiliary equipment from Mitsubishi Hitachi, and generators from Mitsubishi Electric Corp. The plant is currently operating in simple mode, and will switch to combined cycle operation next year.
UK power generator Drax has finished the conversion of its North Yorkshire power plant to biomass firing, with the fourth and final unit being completed in August. The conversions began in 2013, and the fourth conversion was the cheapest of them all, coming in at £30 million (€33 million/US$38 million). Drax plans to convert its other two coal-fired power plants to fire gas in the coming years, already having lodged proposals to the Planning Inspectorate.
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