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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New technologies aim to boost SAF production
New technologies aim to boost SAF production
London, 26 April (Argus) — A likely rise in global demand for sustainable aviation fuel (SAF), underpinned by mandates for its use, is encouraging development of new production pathways. While hydrotreated esters and fatty acids synthesised paraffinic kerosine (HEFA-SPK) remains the most common type of SAF available today, much more production will be needed. The International Air Transport Association (Iata) estimated SAF output at around 500,000t in 2023, and expects this to rise to 1.5mn t this year, but that only meets around 0.5pc of global jet fuel demand. An EU-wide SAF mandate will come into effect in 2025 that will set a minimum target of 2pc, with a sub-target for synthetic SAF starting from 2030. This week the UK published its domestic SAF mandate , also targeting a 2pc SAF share in 2025 and introducing a power-to-liquid (PtL) obligation from 2028. New pathways involve different technology to unlock use of a wider feedstock base. US engineering company Honeywell said this week its hydrocracking technology, Fischer-Tropsch (FT) Unicracking, can be used to produce SAF from biomass such as crop residue or wood and food waste. Renewable fuels producer DG Fuels will use the technology for its SAF facility in Louisiana, US. The plant will be able to produce 13,000 b/d of SAF starting from 2028, Honeywell said. The company said its SAF technologies — which include ethanol-to-jet , which converts cellulosic ethanol into SAF — have been adopted at more than 50 sites worldwide including Brazil and China. Honeywell is part of the Google and Boeing-backed United Airlines Ventures Sustainable Flight Fund , which is aimed at scaling up SAF production. German alternative fuels company Ineratec said this week it will use South African integrated energy firm Sasol's FT catalysts for SAF production. The catalysts will be used in Ineratec's plants, including a PtL facility it is building in Frankfurt, Germany. The plant will be able to produce e-fuels from green hydrogen and CO2, with a capacity of 2,500 t/yr of e-fuels beginning in 2024. The e-fuels will then be processed into synthetic SAF. Earlier this month , ethanol-to-jet producer LanzaJet said it has received funding from technology giant Microsoft's Climate Innovation Fund, "to continue building its capability and capacity to deploy its sustainable fuels process technology globally". The producer recently signed a licence and engineering agreement with sustainable fuels company Jet Zero Australia to progress development of an SAF plant in north Queensland, Australia. The plant will have capacity of 102mn l/yr of SAF. Polish oil firm Orlen formed a partnership with Japanese electrical engineering company Yakogawa to develop SAF technology . They aim to develop a technological process to synthesise CO2 and hydrogen to form PtL SAF. The SAF will be produced from renewable hydrogen as defined by the recast EU Renewable Energy Directive (RED II) and bio-CO2 from biomass boilers, Orlen told Argus . By Evelina Lungu Send comments and request more information at feedback@argusmedia.com Copyright © 2024. Argus Media group . All rights reserved.
MDBs, parties must deliver on finance: Cop 29 president
MDBs, parties must deliver on finance: Cop 29 president
Edinburgh, 25 April (Argus) — Cop 29 president-designate Mukhtar Babayev pointed to insufficient action from multilateral development banks (MDBs) despite encouraging discussions, and urged all countries to play their part to deliver on climate finance negotiations this year. Climate finance discussions will be an important part of climate negotiations this year, having been "one of the most challenging climate diplomacy topics over the years", Babayev said today at the 15th Petersberg climate dialogue in Berlin — a forum for multilateral discussions. The meeting is a key milestone in climate discussions, paving the way for Cop 29 negotiations. The topic will be key as countries must decide on a new global finance goal to replace the $100bn/yr by 2020 pledge to developing countries made in 2009 and missed by developed countries. Babayev said he was working with a range of actors including MDBs, which have a "special role" as "multilateral public finance contributed the single largest part of the [$100bn/yr] target". Babayev said progress from the MDBs was essential, but while he "had many encouraging engagements during the World Bank and IMF spring meetings in Washington last week , we heard a great deal of concern and worry that we did not yet see adequate and sufficient action". "That must change," he said. He also warned that there is no single initiative able to unlock and increase climate finance flows to trillions of dollars, and instead pointed to "many interconnected elements" that countries will need to consider to set this new finance goal — the so-called NCQG. He added that the NCQG working group has already identified many options. "We know that [there are] strong and well-founded views on all sides," he said. "We are listening to all parties to understand their concerns and help them refine official landing zones based on a shared vision of success so we can deliver a fair and ambitious new goal," he added. "We need everyone to play their part so that we can build up unstoppable momentum where everyone is confident that their contribution is fairly matched by the contributions of others". Germany's foreign minister Annalena Baerbock said industrialised countries need to live up to their responsibilities. "Financial contributions from developed countries and multinational development banks will remain the basis of our efforts," she said, confirming that Germany has a €6bn climate goal for 2025. But she also said that "the world has changed" since the UN climate body the UNFCCC established a list of climate finance donors in 1992. The list has just 24 countries, plus the EU, as contributors. "In 1992, the two dozen countries that provided international climate finance made up 80pc of the world's economy. Now, that share is down to 50pc, and the share of all other countries has more than doubled," she said. She urged other countries in the G20, including China, "to join our effort". She pointed out that the donor base was broader for the loss and damage fund — to tackle the unavoidable and irreversible effects of climate change. Cop 28 host the UAE, which is not part of the 1992 list of donors, was the first contributor of the new fund created in Dubai last year. Babayev said that finance will not be the only important topic discussed at Cop 29 and that work must be done to get "the loss and damage fund up and running". Finalising the Article 6 negotiations will also be a key issue. "We cannot leave everything to market mechanisms," he said. By Caroline Varin Send comments and request more information at feedback@argusmedia.com Copyright © 2024. Argus Media group . All rights reserved.
UK publishes SAF mandate, targets 22pc by 2040
UK publishes SAF mandate, targets 22pc by 2040
London, 25 April (Argus) — The UK will mandate the supply of sustainable aviation fuel (SAF) from next year, targeting a 2pc share in 2025, which equates to around 230,000t of SAF according to the government, and increasing the obligation annually to 10pc in 2030, 15pc in 2035 and 22pc in 2040. The obligation, which falls on the jet fuel supplier, will remain at 22pc from 2040 until it is reviewed and updated, the UK said. The mandate is subject to parliamentary approval. An EU-wide SAF obligation is also due to come into effect next year, targeting a 2pc SAF share in 2025, increasing to 6pc from 2030, 20pc from 2035, 34pc from 2040, 42pc from 2045 and 70pc in 2050. Under the new UK mandate, hydrotreated esters and fatty acids (HEFA) SAF can be used to meet 100pc of SAF demand in 2025 and 2026, but it will be capped at 71pc in 2030 and 35pc in 2040. HEFA is the most common type of SAF today, and is expected to account for over 70pc of global production by the end of the decade, according to Argus data. An obligation for Power-to-Liquid (PtL) SAF will be introduced from 2028 at 0.2pc of total jet fuel demand, rising to 0.5pc in 2030 and 3.5pc in 2040. The EU is targeting a 1.2pc share of synthetic aviation fuels in 2030, rising to 2pc in 2032, 5pc in 2035 and 35pc in 2050. To be eligible under the mandate, SAFs must achieve minimum greenhouse gas (GHG) reductions of 40pc compared with a fossil fuel jet comparator of 89g CO2e/MJ, and must be made from sustainable wastes or residues, such as used cooking oil or forestry residues. SAF from food, feed or energy crops is currently not eligible for support under the scheme, the government said. PtL SAF will need to be produced from low carbon — renewable or nuclear — electricity. Recycled carbon fuels (RCF) from feedstocks like unrecyclable plastics can also be used to meet the obligation. Hydrogen, whether used as fuel precursor or as final fuel, must be bio-hydrogen from wastes and residues, RCF hydrogen or derived from low carbon energy. The mandate will also introduce tradeable certificates for the supply of SAF, with additional certificates awarded for fuels with higher GHG emissions savings. There will be three types of certificates: PtL, standard and HEFA. Buy-out mechanisms will be set at the equivalent of £4.70/l and £5.00/l for the main and PtL obligations, respectively. Formal reviews of the mandate will be conducted and published at least every five years, with the first to be carried out by 2030, the government said. The mandate will be separate from the country's Renewable Transport Fuel Obligation (RTFO). In tandem with the publication of the SAF mandate, the government launched a consultation on four options for an SAF revenue certainty scheme aimed at guaranteeing revenue from SAF and support production in the country. The UK previously said it aims to introduce the mechanism, which will be industry funded, by the end of 2026 . The consultation includes a preferred option for a "guaranteed strike price" (GSP), which would guarantee a pre-agreed price of SAF supplied into the UK market. By Giulia Squadrin Send comments and request more information at feedback@argusmedia.com Copyright © 2024. Argus Media group . All rights reserved.
Indonesia’s UNTR raises 1Q coal production, sales
Indonesia’s UNTR raises 1Q coal production, sales
Manila, 25 April (Argus) — Indonesian coal services and heavy equipment manufacturer United Tractors' (UNTR) coal output and sales increased in the January-March quarter from a year earlier, partly helped by steady demand and favourable weather conditions. UNTR's mining services company Pamapersada Nusantara (PAMA) reported that coal production for its contracted clients was at 32.3mn t in the first quarter, a 21pc increase from a year earlier. Overburden removal at the contracted mines rose by 17pc on the year to 286.3mn bank m³ (bcm). Thermal coal sales from UNTR's own Tuah Turangga Agung (TTA) mine rose by 40pc to 3.2mn t during the quarter from a year earlier. UNTR increased sales volumes to partly offset the impact of the downtrend in prices in the market on its financials. UNTR did not give the production data for its own mine but added that the output should remain stable in the next quarter on forecasts of dry weather ahead. The company's heavy equipment sales fell by 37pc year-on-year to 1,126 units. This was because of a drop in demand in the domestic market following the fulfilment of backlogged deliveries in 2023, it said. 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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