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US to weaken carbon limits on new coal plants: Update

  • Market: Coal, Electricity, Emissions, Natural gas
  • 06/12/18

Adds details throughout

President Donald Trump's administration is trying to make it cheaper to build coal-fired power plants by rolling back a rule that effectively required new plants to capture and store a portion of their carbon dioxide emissions.

The US Environmental Protection Agency (EPA) today proposed to relax a 2015 emissions rule that industry saw as a de facto ban on new coal plants, given the high cost of building and operating carbon capture equipment. The revised emission limit would be 35-43pc weaker than existing standards for most coal plants and could be achieved without capturing any carbon emissions.

EPA acting administrator Andrew Wheeler said the proposal would replace "onerous regulations" with achievable standards that would enable the construction of coal plants if there were enough market demand. Relaxing the existing rule would also improve public health, he said, by keeping the price of electricity used for heating, cooling and other uses affordable across the US.

"Coal is one of the cheapest forms of electricity," Wheeler said today at an event at EPA headquarters in Washington, DC. "And having cheap electricity, affordable electricity, helps human health absolutely."

The proposal marks another attempt to deliver on Trump's campaign pledge to protect coal jobs. But even EPA's own regulatory analysis projects that no new coal plants are likely to be built through 2035, as market forces support the construction of new gas plants and renewables. Wheeler said it was not EPA's role to decide what types of power plants will be built.

"Whether or not new coal plants will be built in this country is a decision that the utility industry will make," Wheeler said. "We are not trying to pick winners or losers."

The existing 2015 standards were issued under former president Barack Obama and required new coal plants to achieve a carbon dioxide emissions rate of 1,400 lbs/MWh. That rate would require conventional coal plants to capture about 35pc of their carbon, which could then be used for enhanced oil recovery or stored deep underground in aquifers.

The revised standards proposed today instead set a carbon dioxide emissions rate of 1,900 lbs/MWh for large "supercritical" coal plants, 2,000 lbs/MWh for subcritical coal plants, or a 2,200 lbs/MWh emissions rate for plants that burn coal refuse. EPA today proposed similar emission standards for coal-fired power plants that are heavily modified, which would trigger the regulations.
Electric utilities and independent power generators have shown almost no interest in building coal plants because of their high costs compared with other resources and the looming prospect of policies such as a carbon tax. But environmentalists say although market forces make it unlikely coal plants will be built, the weaker standard still sends the wrong signal about climate change.

"This is just one more foolhardy move by a misguided administration that will be judged harshly by future generations," Natural Resources Defense Council senior strategic director David Doniger said.

The all-in cost of electricity from a new coal plant in the US is expected to range between $60-$143/MWh over its lifetime, according to a study published by the financial consultancy Lazard that was updated last month. That compares to $41-$75/MWh for a combined-cycle natural gas plant, $29-$56/MWh for onshore wind and $32-$44/MWh for utility-scale solar photovoltaic.

The proposal was cheered by Republicans who accused Obama's EPA of overreaching with its earlier carbon restrictions on coal plants. US Senate majority leader Mitch McConnell (R-Kentucky), whose state accounted for 5pc of US coal production last year, said the Obama-era regulations would have made it "nearly impossible" to build coal plants.

"This is a crucial step toward undoing the damage and putting coal back on a level playing field," he said.

EPA's new proposal will be less consequential than a separate agency proposal, named the Affordable Clean Energy rule, that would weaken greenhouse gas restrictions that apply to the existing fleet of coal-, gas- and oil-fired power plants. That rule is projected to increase US power sector carbon emissions by 3pc by 2030, when compared with the emission cuts that would occur if regulations issued under Obama were enforced.

The proposal's release comes a day after the release of research showing a surge in climate-warming emissions around the globe. Carbon dioxide emissions from fossil fuels are set to increase by 2.7pc globally and 2.5pc in the US this year, according to research from a major scientific initiative named the Global Carbon Project. Coal last year was the largest source of fossil fuel emissions at 40pc of the total.


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US Fed cuts rate by half point, signals more: Update

US Fed cuts rate by half point, signals more: Update

Adds chairman Powell comments, economic projections. Houston, 18 September (Argus) — The US Federal Reserve cut its target interest rate by 50 basis points today, the first rate cut since 2020, with policymakers signaling they expect to make another half-point worth of cuts by the end of 2024. The Fed's Federal Open Market Committee (FOMC) lowered the federal funds rate to 4.75-5pc from the prior range of 5.25-5.5pc, which was a 23-year high. The Fed had kept the target rate unchanged since July 2023 after hiking it for more than a year in the most intense rate-tightening campaign in four decades to quash inflation, which peaked at 9.1pc in mid-2022. "The committee has gained greater confidence that inflation is moving sustainably toward 2pc, and judges that the risks to achieving its employment and inflation goals are roughly in balance," the FOMC said in its statement after the two-day meeting. "Job gains have slowed, and the unemployment rate has moved up but remains low." In their latest economic projections, the Fed board and policymakers expect the target rate range will end 2024 near a midpoint of 4.4pc compared with an end of year midpoint of 5.1pc projected in June, which implies further cuts amounting to 50 basis points by the end of 2024. Policymakers also penciled in another 100 basis points of cuts over the course of 2025. "We're recalibrating policy down over time to a more neutral level and we're moving at the pace that we think is appropriate given developments in the economy," Fed chair Jerome Powell told a press conference after the meeting. "The economy can develop in a way that will cause us to go faster or slower. The US economy is in a good place and our decision today is designed to keep it there." The Fed's economic projections see core Personal Consumption Expenditures inflation — the Fed's favorite measure of inflation — ending 2024 at a median rate of 2.6pc, down from a prior forecast of 2.8pc. Policymakers see core PCE inflation falling to a median of 2.2pc by the end of next year. The outlook for the unemployment rate for the end of 2024 climbed to 4.4pc from 4pc penciled in at the June meeting. Policymakers expect gross domestic product (GDP) growth to end 2024 at an annual 2pc, slightly down from a prior 2.1pc projection. The latest policy meeting comes as the Consumer Price Index (CPI) eased to an annual 2.5pc in August , down from 2.9pc in July, the Labor Department reported on 11 September. Inflation had ticked up to 3.5pc in March from 3.1pc in January, prompting the Fed to turn more cautious about beginning its rate cuts. US job growth has recently slowed sharply, falling to an average 116,000 in the three months through August from 211,000 for the prior three months. The jobless rate rose to 4.3pc in July, the highest in three years, before edging down to 4.2pc in August. By Bob Willis Send comments and request more information at feedback@argusmedia.com Copyright © 2024. Argus Media group . All rights reserved.

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Volatile energy prices risk the transition: IEF


18/09/24
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18/09/24

Volatile energy prices risk the transition: IEF

Houston, 18 September (Argus) — High or volatile energy prices risk undermining emissions reductions efforts, International Energy Forum (IEF) secretary-general Joseph McMonigle said today at the Gastech conference in Houston, Texas. "If the public starts to connect high prices and volatility to the energy transition, we're in big trouble and we risk losing public support for the transition and climate policy," he said. McMonigle made his comments on a panel with several energy ministers, who discussed the issues of balancing energy security concerns with transitioning to cleaner fuel sources for electricity. When asked what he would consider a "call to action" for the global energy sector, McMonigle suggested investments in emerging technologies. "I think to allow trading of carbon credits is really important to accelerate the transition," he said. "Also, to provide financing for CCS (carbon capture and storage), which I think is one of the technologies that does not have enough investment behind it." By David Haydon Send comments and request more information at feedback@argusmedia.com Copyright © 2024. Argus Media group . All rights reserved.

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Wash. regulators plan for cap-and-trade vote


18/09/24
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18/09/24

Wash. regulators plan for cap-and-trade vote

Monterey, 18 September (Argus) — Washington regulators are making a "contingency" plan in the event of a successful repeal of the state's emissions cap-and-trade program. Initiative 2117, which looks to repeal the state's cap-and-trade program and prevent any similar program from taking its place, will be on state ballots for the 5 November election. "We are doing contingency planning in case the ballot measure passes and will update our covered entities when we do have information — and I know this initiative is creating a lot of uncertainty," said Stephanie Potts, senior planner with the state Department of Ecology today at the Argus North American Biofuels, LCFS & Carbon Markets Summit in Monterey, California. The agency also remains focused on continuing to implement the program, "assuming it continues," she said. Washington's "cap-and-invest" program requires large industrial facilities, fuel suppliers, and power plants to reduce their greenhouse gas emissions by 45pc by 2030 and by 95pc by 2050, from 1990 levels. The department is in an ongoing rulemaking process to expand and amend its carbon offset protocols, and also continues work to gather input for linkage with the Western Climate Initiative, a linked carbon market between California and Quebec. Potts said Washington expects to have a linkage agreement in place by the end of next year. The uncertainty introduced by the ballot initiative over the fledgling market's future has tempered carbon credit prices and activity this year. Argus assessed Washington carbon allowances (WCAs) for December delivery at $30.25/metric tonne on 4 March, their lowest price since the program's inception in 2023. The drop in prices at that time coincided with a statement by Ecology outlining how a successful repeal would end the agency's authority over the program. Earlier this year, the state Office of Financial Management (OFM) released a fiscal impact statement on a successful repeal that assumed an effective repeal date would be 5 December. By Denise Cathey and Jessica Dell Send comments and request more information at feedback@argusmedia.com Copyright © 2024. Argus Media group . All rights reserved.

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Brazil allocates R514mn to combat fires: Correction


18/09/24
News
18/09/24

Brazil allocates R514mn to combat fires: Correction

Corrects value of funding in headline and lead. Sao Paulo, 18 September (Argus) — Brazil will allocate R514mn ($94.3mn) to combat fires spreading across the country, presidential chief of staff Rui Costa and environment minister Marina Silva said this week. The funds are considered "extraordinary" and not a part of the country's overall budget because they are part of a special budget authorized by the supreme court to tackle climate change. Brazil is facing severe drought in all states but two, leading to fires in several regions. The flames are likely to cut the country's 2024-25 sugarcane output , while low river levels have roiled logistics . Part of the funds will be allocated to the environment ministry to reinforce monitoring and combating fires, Costa said. The federal police and the national public security force will also receive extra resources to reinforce investigations and battle environmental crimes. The armed forces will also receive some funds to support operations to extinguish the flames. Another portion will be earmarked to buy food for families in the north that are affected by the low water levels caused by droughts. The government will also issue another provisional measure this week to ease the release of resources from the Amazon Fund, Costa said. President Luiz Inacio Lula da Silva, supreme court chief justice Luis Roberto Barroso, head of the senate Rodrigo Pacheco and lower house speaker Arthur Lira all attended the announcement as a show of unity among the branches. Brazil is also considering increasing penalties for environmental crimes, which Silva considers to be "too low" at the moment. "The sentence of two to four years in prison is light," she said. "And some judges go further and completely relax this sentence." Brazil — which is trying to bolster its image as a climate leader — is also considering creating a climate authority and technical-scientific committee to "support and coordinate the federal government's actions to combat climate change." By Lucas Parolin Send comments and request more information at feedback@argusmedia.com Copyright © 2024. Argus Media group . All rights reserved.

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US Fed cuts rate by half point, signals more to come


18/09/24
News
18/09/24

US Fed cuts rate by half point, signals more to come

Houston, 18 September (Argus) — The US Federal Reserve cut its target interest rate by 50 basis points today, the first rate cut since 2020, with officials signaling they expect to make another half point worth of cuts by the end of 2024. The Fed's Federal Open Market Committee (FOMC) lowered the federal funds rate to 4.75-5pc from the prior range of 5.25-5.5pc, which was a two-decade high. The Fed had kept the target rate unchanged since July 2023 after hiking it for more than a year in the most aggressive increase campaign in four decades to quash inflation, which peaked at 9.1pc in mid-2022. "The committee has gained greater confidence that inflation is moving sustainably toward 2pc and judges that the risks to achieving its employment and inflation goals are roughly in balance," the FOMC said in its statement after the two-day meeting. "Job gains have slowed, and the unemployment rate has moved up but remains low." The Fed board and policymakers, in their latest economic projections, expect the target rate range will end 2024 near a midpoint of 4.4pc compared with an end of year midpoint of 5.1pc projected in June, which implies further cuts amounting to 50 basis points by the end of 2024. By Bob Willis Send comments and request more information at feedback@argusmedia.com Copyright © 2024. Argus Media group . All rights reserved.

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