Australian government sees net zero and coal coexisting
Australia is moving towards a carbon neutral by 2050 target but parts of the federal government say this can coexist with a vibrant domestic coal industry, with some suggesting a taxpayer-funded loan scheme to ensure continuing investment in the sector.
Australian prime minister Scott Morrison is expected to take a net zero by 2050 target to the UN Cop 26 climate conference in the UK's Glasgow later this month, although it will be a target based on offsets and carbon sequestration, rather than the closure of the nation's coal industry. The government's main goal is to protect coal, gas, heavy manufacturing and agriculture, while promoting the use of hydrogen, carbon capture and storage, and soil carbon, federal energy minister Angus Taylor said this week. Canberra will provide incentives to cut emissions rather than punishing polluters, Taylor added.
Others have gone further, with federal resources minister Keith Pitt last week suggesting that the government provide an A$250bn ($180bn) lending facility to firms wishing to invest in coal mining in Australia. This will fill the gap left by the exit of traditional lenders from the sector.
The last of Australia's four largest banks ANZ committed a year ago to exiting lending to thermal coal activities from 2030, leaving a small number of private equity firms, overseas corporates and private investors providing finance to the sector, with some banks also declining to finance metallurgical coal projects.
Record breaking thermal coal prices, while driven by firm demand ahead of the northern hemisphere winter, are exacerbated by low investment in the coal mining sector. Some mining firms are unable to expand because of regulatory delays, while most cannot balance the current strong prices against the risk of over investing in an asset that could become stranded in a low-carbon economy.
This investment equation is made more complex by the volatility in coal prices over the past two years, where most Australian thermal coal mines were operating at a significant loss in 2020, and by the ever shrinking pool of investors prepared to provide financing. The uncertainty caused by the change in trade flows, because of Beijing's informal ban on Australian coal imports, adds to why even the most bullish of coal supporters have been looking elsewhere for opportunities to invest over the past couple of years.
States go their own way
While the federal government is balancing the needs of its parliamentarians representing coal-producing regions against a wider community desire for action on climate change, some states are moving forward with their own plans. New South Wales, which exports the most thermal coal of all the Australian states, today announced an A$3bn hydrogen investment plan focused on developing green hydrogen hubs in the coal-producing regions of the Hunter valley and the Illawarra.
High-grade thermal coal prices continue to hit new highs on concerns about energy supplies heading into the northern hemisphere winter. Argus last assessed the high-grade 6,000 kcal/kg NAR thermal coal price at $228.21/t fob Newcastle on 8 October, up from $174.46/t on 10 September, $151.90/t on 30 July and $47.56/t a year previously. It assessed lower grade coal at $142.60/t fob Newcastle for NAR 5,500 kcal/kg on 8 October, up from $108.67/t on 10 September and $42.08/t a year earlier.
Premium hard coking coal prices have more than trebled from early May to hit $409.75/t fob Australia in mid-September before easing slightly. Argus last assessed the premium hard low-volatile coking coal price at $402/t fob Australia on 12 October, up from $110.95/t on 11 May. Lower grade metallurgical coal prices have also increased at a slightly lower rate.
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Fourth temporary Baltimore shipping channel to open
Fourth temporary Baltimore shipping channel to open
Cheyenne, 24 April (Argus) — The Port of Baltimore is preparing to open another, deeper temporary shipping channel this week so at least some of the vessels that have been stranded at the port can depart. The new 35-ft deep Fort McHenry Limited Access Channel is scheduled to be open to commercially essential vessels from 25 April until 6am ET on 29 April or 30 April "if weather adversely impacts vessel transits," according to a US Coast Guard Marine Safety Information Bulletin published on 22 April and distributed by the Maryland Port Administration on 23 April. The channel will then be closed again until 10 May. The channel also will have a 300-ft horizontal clearance and 214ft of vertical clearance. This will be the fourth and largest channel opened by the captain of the port since the 26 March collapse of the Francis Scott Key Bridge. The Unified Command has said that the new limited access channel should allow passage of about 75pc of the types of vessels that typically move through the waterway. Vessels that have greater than 60,000 long tons (60,963 metric tonnes) of displacement will likely not be able to move through the channel and those between 50,000-60,000 long tons of displacement "will be closely evaluated" for transit. There were seven vessels blocked from exiting the port as of 27 March, including three dry bulk carriers, one vehicle carrier and one tanker, according to the US Department of Transportation. Two of the bulk carriers at berth in Baltimore are Kamsarmax-sized coal vessels, data from analytics firm Kpler show. The US Army Corps of Engineers still expects to reopen the Port of Baltimore's permanent 700-foot wide, 50-foot deep channel by the end of May. The Key Bridge collapsed into the water late last month when the 116,851dwt container ship Dali lost power and crashed into a bridge support column. Salvage teams have been working to remove debris from the water and containers from the ship in order to clear the main channel. By Courtney Schlisserman Send comments and request more information at feedback@argusmedia.com Copyright © 2024. Argus Media group . All rights reserved.
EU adopts sustainability due diligence rules
EU adopts sustainability due diligence rules
Brussels, 24 April (Argus) — The European parliament has formally approved a Corporate Sustainability Due Diligence Directive (CSDDD), which will require large EU companies to make "best efforts" for climate change mitigation. The law will mean that relevant companies will have to adopt a transition plan to make their business model compatible with the 1.5°C temperature limit set by the Paris climate agreement. It will apply to EU firms with over 1,000 employees and turnover above €450mn ($481mn). It will also apply to some companies with franchising or licensing agreements in the EU. The directive requires transposition into different EU national laws. It obliges member states to ensure relevant firms adopt and put into effect a transition plan for climate change mitigation. Transition plans must aim to "ensure, through best efforts" that business models and company strategies are compatible with transition to a sustainable economy, limiting global warming to 1.5°C and achieving climate neutrality by 2050. Where "relevant", the plans should limit "exposure of the company to coal-, oil- and gas-related activities". Despite a provisional agreement, EU states initially failed to formally approve the provisional agreement reached with parliament in December, after some member states blocked the deal. Parliament's adoption — at its last session before breaking for EU elections — paves the way for entry into force later in the year. Industry has obtained clarification, in the non-legal introduction, that the directive's requirements are an "obligation of means and not of results" with "due account" being given to progress that firms make as well as the "complexity and evolving" nature of climate transitioning. Still, firms' climate transition plans need to contain "time-bound" targets for 2030 and in five-year intervals until 2050 based on "conclusive scientific" evidence and, where appropriate, absolute reduction targets for greenhouse gas (GHG) for direct scope 1 emissions as well as scope 2 and scope 3 emissions. Scope 1 refers to emissions directly stemming from an organisation's activity, while scope 2 refers to indirect emissions from purchased energy. Scope 3 refers to end-use emissions. "It is alarming to see how member states weakened the law in the final negotiations. And the law lacks an effective mechanism to force companies to reduce their climate emissions," said Paul de Clerck, campaigner at non-governmental organisation Friends of the Earth Europe, pointing to "gaping" loopholes in the adopted text. By Dafydd ab Iago Send comments and request more information at feedback@argusmedia.com Copyright © 2024. Argus Media group . All rights reserved.
Norway-German H2 pipeline hinges on demand: Equinor
Norway-German H2 pipeline hinges on demand: Equinor
London, 24 April (Argus) — Norway and Germany have renewed a commitment to the idea of a hydrogen pipeline, but Norwegian state-owned Equinor expects the link will come in a secondary stage of development as it is focused on hydrogen production in mainland Europe as a first step. Equinor plans to take a final investment decision in late 2025 on its 210,000 t/yr Eemshaven low-carbon hydrogen plant in the Netherlands, the company's director of H2 northwest Europe Henrik Solgaard Andersen said at the Hydrogen and Fuel Cells conference in Hanover. Equinor hopes the project will supply German buyers that participate in the country's carbon contracts for difference (CfD) auctions, which are designed to help large industry decarbonise, Andersen said. Equinor has entered the final phase of studies for the plant. The facility would reform natural gas from the Norwegian offshore to hydrogen with carbon capture and storage (CCS). Undertaking this in the Netherlands means existing pipelines can be used to carry the gas from Norway rather than having to build new links. Equinor sees this as its most mature hydrogen project, followed by one near the German port of Rostock , and one near Ghent in Belgium , according to Andersen. These "local European projects" are designed for early market development and "will be the first step," he said. Equinor expects to start large-scale production of hydrogen in Norway with pipeline exports to the continent only when there is a big enough market, he said. "You don't invest in a pipeline €4bn-6bn just for [transporting] a few molecules," he said. "You need to believe in the market." Equinor in early 2023 announced a plan to supply hydrogen from Norway to German utility RWE for use in power plants. But Berlin has shifted its plans for hydrogen power a couple of times since then. It also has ambitions to use hydrogen in sectors like steel, but companies have not yet taken firm investment decisions, meaning there is uncertainty about how much hydrogen demand will materialise and when. A joint government task force working on a Norwegian-German pipeline has identified the first regulatory barriers that need to be addressed, and private infrastructure companies will continue to study the logistics, according to an announcement from Oslo and Berlin. This will build on the positive feasibility study from last year. German gas system operator operator Gascade, which is developing the AquaDuctus North Sea pipeline connection to Germany, and Norwegian state-owned operator Gassco that is developing the Norwegian side, are aiming for a 2030 start date, the companies reaffirmed this week. Gascade has proposed an open access pipeline that would be able to aggregate hydrogen exports from England, Scotland, Norway, Denmark, and North Sea wind farms. By Aidan Lea Send comments and request more information at feedback@argusmedia.com Copyright © 2024. Argus Media group . All rights reserved.
Ayala’s South Luzon coal plant eligible for retirement
Ayala’s South Luzon coal plant eligible for retirement
Manila, 24 April (Argus) — Early decommissioning of coal-fired power plants in the Philippines has advanced with utility Ayala Energy's 246MW South Luzon Thermal Energy eligible for the US-based Rockefeller Foundation's coal to clean credit initiative (CCCI). The Rockefeller Foundation is a non-profit philanthropic group that creates and implements programmes in partnership with the private sector across different industries aimed at reversing climate change. Ayala has been working with the foundation to further shorten South Luzon's operating life from an original decommissioning date of 2040 to 2030. Doing so could result in the reduction of up to 19mn t of carbon emissions, Ayala said. An assessment by the Rocky Mountain Institute, the technical partner of the foundation for its energy-related projects, found that an early retirement date of 2030 instead of the original retirement date of 2040 could yield positive financial, social and climate outcomes. But decommissioning by this date will require carbon finance. Carbon financing will need to cover costs associated with the early retirement of the power plant's power supply contract, costs associated with 100pc clean replacement of the plant's power generation, plant decommissioning and transition support for workers affected by the plant's early closure, Ayala said. Ayala's listed arm ACEN welcomed the plant's eligibility for the CCCI programme, as its retirement is part of the company's goal to have its power generation portfolio composed solely of 100pc renewable sources by 2025. The Philippines' Department of Energy (DOE) said if successful, the pilot programme could serve as a basis for the development of other early retirement efforts as part of the country's plan to reduce carbon emissions. The DOE is seeking the early decommissioning of coal-fired power plants older than 20 years with a combined total capacity of 3.8GW by 2050, as part of the Philippines' transition to clean energy. By Antonio delos Reyes Send comments and request more information at feedback@argusmedia.com Copyright © 2024. Argus Media group . All rights reserved.
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