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US to weaken carbon limits on new coal plants: Update

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

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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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19/09/24

LNG-burning vessels well positioned ahead of 2025

LNG-burning vessels well positioned ahead of 2025

New York, 19 September (Argus) — Vessels outfitted with dual-fuel LNG-burning engines are poised to have the lowest marine fuel expense heading into 2025 when the EU will tighten its marine EU emissions trading system (ETS) regulations and add a new regulation, " FuelEU", from 1 January 2025. Considering both regulations, at current price levels, fossil LNG (also known as grey LNG) will be priced the cheapest compared with conventional marine fuels and other commonly considered alternative fuels such as biodiesel and methanol. The EU's FuelEU maritime regulation will require ship operators traveling in, out and within EU territorial waters to gradually reduce their greenhouse gas (GHG) intensity on a lifecycle basis, starting with a 2pc reduction in 2025, 6pc in 2030 and so on until getting to an 80pc drop, compared with 2020 base year levels. The FuelEU GHG intensity maximum is set at 85.69 grams of CO2-equivalent per MJ (gCO2e/MJ) from 2030 to 2034, dropping to 77.94 gCO2e/MJ in 2035. Vessel pools exceeding the FuelEU's limits will be fined €2,400/t ($2,675/t) of very low-sulphur fuel oil (VLFSO) energy equivalent. GHG emissions from grey LNG vary depending on the type of marine engine used to burn the LNG, but ranges from about 76.3-92.3 gCO2e/MJ, according to non-governmental environmental lobby group Transport & Environment. This makes a number of LNG-burning, ocean-going vessels compliant with FuelEU regulation through 2034. The EU's ETS for marine shipping commenced this year and requires that ship operators pay for 40pc of their GHG generated on voyages within, in and out of the EU. Next year, the EU ETS emissions limit will increase to 70pc. Even with the added 70pc CO2 emissions cost, US Gulf coast grey LNG was assessed at $639/t VLSFOe, compared with the second cheapest VLSFO at $689/t, B30 biodiesel at $922/t and grey methanol at $931/t VLSFOe average from 1-18 September (see chart). "In 2025, we expect [US natural gas] prices to rise as [US] LNG exports increase while domestic consumption and production remain relatively flat for much of the year," says the US Energy Information Administration. "We forecast the Henry Hub price to average around $2.20/million British thermal units (mmBtu) in 2024 and $3.10/mmBtu in 2025." Provided that prices of biodiesel and methanol remain relatively flat, the projected EIA US 2025 LNG price gains would not affect LNG's price ranking, keeping it the cheapest alternative marine fuel option for ship owners traveling between the US Gulf coast and Europe. LNG for bunkering global consumption from vessels 5,000 gross tonnes and over reached 12.9mn t in 2023, according to the International Maritime Organization (IMO), up from 11mn t in 2022 and 12.6mn t in 2021. The maritime port authority of Singapore reported 111,000t of LNG bunker sales and the port authorities of Rotterdam and Antwerp reported 319,000t in 2023 from all size vessels. Among vessels 5,000 gross tonnes and over, LNG carriers accounted for 89pc of LNG bunker demand globally, followed by container ships at 3.6pc, according to the IMO. The large gap between LNG global and LNG Singapore, Rotterdam, and Antwerp bunker demand, is likely the result of most of the demand taking place at the biggest LNG export locations where LNG carriers call, such as the US Gulf coast, Qatar, Australia, Russia and Malaysia. By Stefka Wechsler USGC bunkers and bunker alternatives $/t VLSFOe Send comments and request more information at feedback@argusmedia.com Copyright © 2024. Argus Media group . All rights reserved.

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Industry decarbonization talks mark progress: EDF


19/09/24
News
19/09/24

Industry decarbonization talks mark progress: EDF

Houston, 19 September (Argus) — Growing decarbonization discussions in the oil and gas industry is a sign that momentum is building toward reducing emissions, according to Mark Brownstein, senior vice president of energy transition for the Environmental Defense Fund (EDF). Brownstein, speaking on the sidelines of the Gastech conference in Houston, Texas, noted a "robust conversation" was happening to address CO2 and methane emissions from natural gas use, which was "something you would not have seen five years ago." "Now, what would really make me happy, is to come back here next year, and see that it's not just talk," he said. "That there's real investment, that there's real action and that we're actually beginning to see emissions of methane and other pollutants going down." Brownstein noted that more than 70 companies in the oil and gas industry have committed to the COP 28 decarbonization charter to get to near-zero methane emissions by 2030. "That is a commitment that needs to be expanded to all players," he said. "A commitment that needs to be expanded by investment and real action. I believe the industry can do it. But of course you need to see it." Earlier this year the EDF helped launch MethaneSAT, a satellite that will allow for real-time monitoring of global methane emissions, aimed at bringing transparency to global emissions data. 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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Fed rate cuts 'no bearing' for CCUS: NET Power


19/09/24
News
19/09/24

Fed rate cuts 'no bearing' for CCUS: NET Power

Houston, 19 September (Argus) — Interest rate cut by the US Federal Reserve this week have "no bearing" on carbon capture, use and storage (CCUS) projects, according to the chief executive of power technology company NET Power, since most are still in the development phase. The majority of CCUS projects are in the "pre-revenue" stage with companies that are still "more focused on the engineering" aspects, chief executive Danny Rice said on the sidelines of the Gastech conference in Houston, Texas, today. The Fed on Thursday cut its target interest rate by 50 basis points, the first cut since 2020 and following an aggressive rate increase regimen to fight inflation. Lower interests rates lower borrowing costs for companies. Rice said earlier in the day during a CCUS panel discussion there was still a need to "get capital costs down". "Historically it would be challenging to deploy a new technology and scale into a flat or declining market, but ... we're talking about decarbonization for power generation," Rice said. "Power generation is growing globally." CCUS projects and other carbon capture technologies have been repeatedly criticized by non-governmental organisations as an excuse for continued fossil fuel use, although the UN Intergovernmental Panel on Climate Change has backed the technology. Rice stressed the importance of an "objective, physics-driven view" for policy regarding decarbonization, describing CCUS projects for gas-fired powerplants as the most cost-effective method to decarbonize power. "People are going away from this exercise of 'what's clean or not'," Rice said. "What matters is the outputs. The affordability, the reliability, the carbon intensity." 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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Kosovo confident in winter 24-25 supply: TSO


19/09/24
News
19/09/24

Kosovo confident in winter 24-25 supply: TSO

London, 19 September (Argus) — Kosovar transmission system operator (TSO) Kostt is confident it can meet demand over the winter season through domestic generation and imports, Kostt told Argus in an interview ahead of the Energy Week Western Balkans conference. Domestic generation capacity is not enough to meet demand during periods of high consumption, such as during the winter season, and imports will be necessary during peak tariff periods to meet demand, the TSO said. Maximum demand over the upcoming winter season is expected to reach 1.45GW, and transmission capacity can reach 1.85GW under normal operating conditions, Kostt said. Kosovar distribution company Keds and energy supplier Kesko had to import up to 35pc of power during peak periods in December last year, when peak demand reached 1.1GW. Annual maintenance at the 680MW Kosova B lignite-fired plant was completed on 18 August, and the plant is scheduled to be fully available over the winter season. Constraints on the electric system should be reduced in the upcoming winter season, as Keds has started metering the four Serbian-majority municipalities located in the country's north in January . Kostt was responsible for supply in the region last year, but received payment through subsidies from the Kosovar government, rather than tariffs. But subsidies were sometimes delayed, which created challenges in balancing real-time deviations within Kostt's control area, the TSO said. An agreement was reached last year with Serbian state-owned utility EPS subsidiary Elektrosever to normalise power supply for the Serbian majority municipalities, which were not paying for the unauthorised withdrawal of electricity. Elektrosever is now responsible for supply in the region and submits daily nominations and adheres to balancing requirements, although Kostt still meets its financial requirement to cover losses in the transmission system. There have been no violations of the operational terms since the agreement went into effect on 1 January, Kostt said. "System operations have become more stable, and deviations are now within the Entso-e acceptable limits," Kostt said. And Elektrosever has agreed to Kostt's request to submit an electricity supply plan for the region for 2025. By Annemarie Pettinato Send comments and request more information at feedback@argusmedia.com Copyright © 2024. Argus Media group . All rights reserved.

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Western Australia to allow some onshore gas exports


19/09/24
News
19/09/24

Western Australia to allow some onshore gas exports

Darwin, 19 September (Argus) — Western Australia's (WA) state government will allow onshore developers of gas fields to export about 20pc of their output as LNG during a five-year window, in response to a growing failure to bring on new supplies for the domestic market. WA previously banned onshore gas exports, except in the case of Australian independent Beach Energy's 250 TJ/d (6.7mn m³/d) Waitsia stage 2 project . Beach may be required to share its infrastructure with fellow Perth basin firms, the WA government said, to expedite market access for new projects. Australian mining firm Mineral Resources, which has argued for permission to export 85pc of the gas from its Lockyer project as LNG and fellow WA-based firm Strike Energy may benefit from the changes, as both hold significant reserves in the Perth basin. The changes apply to new onshore developments or existing projects seeking to expand production. Developers are required to reserve 80pc of gas produced for WA, with this rising to 100pc from 2031 onwards. The policy shift follows dire outlooks for WA's gas supplies as the state attempts to wean itself off coal-fired power generation. It currently contributes about a third of the electricity into the state's largest power grid. A parliamentary report last month warned WA cannot rely on sporadic appeals for more gas to meet demand. "These policy changes are sensible responses that balance the need for Western Australia to secure its energy future while encouraging onshore producers to bring on more gas supply as and when it is needed," mines and petroleum Minister David Michael said on 19 September. The 15pc reservation for offshore LNG projects will continue, while WA has promised more transparency on the policy with the publication of a yearly WA Domestic Gas Statement to reveal how producers are meeting obligations, with a review to take place after two years. An interim parliamentary report tabled earlier this year showed about 8pc of the state's offshore gas output has reached WA consumers since 2006, representing just over half the required volumes. Following public criticism of LNG producers' contributions, Australian independent Woodside Energy has since pledged an extra 32PJ (854mn m³) of domestic supplies by the end of 2025 . WA will also seek to strengthen laws designed to prevent companies banking prospective onshore oil and gas tenements, with a review into the "use it or lose it" policy to be led by the state's energy department. By Tom Major Send comments and request more information at feedback@argusmedia.com Copyright © 2024. Argus Media group . All rights reserved.

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