Japan’s power sector gets gas boost as coal fades

  • Spanish Market: Coal, Electricity, Natural gas
  • 03/04/24

Japan's power sector is accelerating the phasing out of inefficient coal-fired plants to help reduce the country's greenhouse gas emissions. But LNG-based gas-fired generation capacity is forecast to increase, at least over the next decade.

Availability of coal-fired capacity will fall to 49.95GW in the April 2033-March 2034 fiscal year, down by 4pc, or 2.26GW, from 2023-24, according to an annual survey by nationwide transmission system operator the Organisation for Cross-regional Co-ordination of Transmission Operators. The latest outlook is more aggressive compared with the previous year's survey that showed the addition of coal-fired capacity by 290MW to 50.94GW during the 10 years to 2032-33.

No more new coal-fired power units are scheduled to be installed by 2033-34, after the 650MW Yokosuka No.1 and No.2 and the 500MW Saijo No.1 units began commercial operations in 2023. This suggests Japan's coal demand for power generation will fall further from the 102mn t consumed in 2023, based on government data.

But gas-fired capacity in 2033-34 is predicted to increase by 5pc, or 4.12GW, from 2023-24 to 83.54GW. The power sector is planning to start up 13 new gas-fired units with a combined capacity of 6.414GW during the period, while scrapping 2.295GW. Japanese power producers used 37.17mn t of LNG in 2023.

The addition of gas-fired capacity will help increase Japan's overall thermal power capacity to 149.46GW in 2033-34, up by 660MW from 2023-24, offsetting falls in coal- and oil-fired capacity. Oil-fired capacity is expected to drop by 1.19GW to 15.98GW during the period.

But thermal capacity in 2033-34 could be well below Japan's renewable power generation capacity, which is predicted to increase to 178.03GW by then, up by 29pc or 40.5GW from 2023-24. Renewables include hydroelectric, wind, solar, geothermal, biomass, waste and storage battery power sources. The power sector is boosting renewables capacity, especially solar and wind, up by 25.9GW to 100.55GW and by 12.36GW to 17.98GW respectively over the next decade.

Japan's overall power generation capacity is predicted to be 361.16GW in 2033-34, assuming 33.08GW of nuclear capacity will be available. This could meet expected peak demand of 161GW in the same year, up by 3GW from 2024-25. The firm power demand will be supported by Tokyo's digital push, although a falling population and further energy saving efforts will erode electricity consumption.


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Brazil biomethane parity prices R2.43-2.79: Correction


21/05/24
21/05/24

Brazil biomethane parity prices R2.43-2.79: Correction

Corrects CNG truck round-trip freight rates in 8th paragraph. Sao Paulo, 21 May (Argus) — Biomethane parity prices in Sao Paulo and Rio de Janeiro states, Brazil's two largest hubs, ranged between R2.43-2.79/m³ (49-56¢/m³) on 23 February, according to the market's first price indicators launched by Argus . That represents the marginal price that can be charged by biomethane producers from gas distributors, reflecting daily Cbio carbon credits assessments and weighted averages of natural gas prices in Rio de Janeiro and Sao Paulo. It is the first specifically calculated Brazilian biomethane price indicator in a market that has often lacked transparency. Biomethane producers traditionally have determined their prices on a case-by-case basis, depending on a series of factors such as the consumer's need for the green attribute, which fuel the biomethane gas will substitute and logistics costs. Initially, the biomethane sector looked to LPG prices for reference, as industry machinery only needs small alterations to substitute one fuel for the other. But the LPG market is much more consolidated and stable in its supply than biomethane. The international crude industry and Brazilian real-dollar exchange rates also influence the market, leading to distortions that do not reflect the renewable natural gas (RNG) market's true conditions. Market participants are still learning the ropes of the biomethane sector, as all of its production and supply structures are new in Brazil, according to Hugo Nery, chief executive of landfill company Marquise Ambiental, part of the joint venture that controls the 110,000 m³/d GNR Fortaleza biomethane plant. All biomethane plants certified by hydrocarbons regulator ANP within Brazil's national biofuels Renovabio policy are eligible to issue Cbio carbon credits, which is a compliance market for fossil fuel distributors to compensate their sales' impact. But this segment is still much smaller than it could be for biomethane manufacturers, according to biomethane producer Gas Verde's chief executive Marcel Jorand. Still, Cbios are the most liquid alternative to pricing the green attribute of biomethane in Brazil, with other certification models still in preliminary stages and not openly traded. Producers are adopting their own solutions to biomethane transportation challenges. Marquise Ambiental's strategy is to build its new biomethane plants near distribution networks, Nery said. GNR Fortaleza was the first plant in Brazil to inject biomethane directly into a distribution network and supplies 20pc of Ceara state's gas demand. On the other hand, biomethane generators Gas Verde and Zeg Biogas supply their customers through CNG truck deliveries. Argus ' CNG truck freight rates, based on Sao Paulo costs, show that each cubic meter of gas delivered on a 150km (93.2-mile) round trip cost R0.005/km on 23 February. Gas Verde and Zeg Biogas eye opportunities for longer-distance deliveries, using LNG trucks that have more range compared with CNG truck freights, or injecting gas into pipelines. Biomethane producers are finding demand for RNG outstripping supply available to the market. Zeg Biogas expects to start up a 30,000 m³/d biomethane plant in Minas Gerais state on the second half of the year. The company aims to explore the off-grid market in the region and expects to sign four additional contracts this year and increase its production capacity, according to chief executive Eduardo Acquaviva. Gas Verde, which owns Brazil's largest biomethane plant in Seropedica, Rio de Janeiro state, with 204,000 m³/d of capacity, also expects to expand. The company will transform nine biogas-fired thermal power plants into biomethane generators in the next 18-24 months. By Rebecca Gompertz Send comments and request more information at feedback@argusmedia.com Copyright © 2024. Argus Media group . All rights reserved.

Australia's Woodside plans CCS for Browse gas project


21/05/24
21/05/24

Australia's Woodside plans CCS for Browse gas project

Perth, 21 May (Argus) — Australian independent Woodside Energy is planning a carbon capture and storage (CCS) element for its Browse gas project offshore Western Australia (WA), but blamed stalled approval processes for the slow progress. The North West Shelf (NWS) life extension — which was first referred to regulators in 2018 — needed to be approved before Browse could progress further, chief executive Meg O'Neill said at the Australian Energy Producers conference held in WA's capital Perth this week. The life extension would allow the joint venture and third-party users to use the NWS project facilities until around 2070. WA's Environmental Protection Authority (EPA) recommended that the NWS life extension be approved in 2022, if it reduces its greenhouse gas (GHG) emissions to net zero by 2050. But the process remains incomplete, awaiting state and federal ministers' decisions and a final issuance of conditions for the project. WA's Office of the Appeals Convenor is still working through responses to the EPA's recommendation, which it must then report to the environment minister alongside its own recommendations, a process which was interrupted by the resignation of a senior bureaucrat last year. Woodside wanted to progress the CCS side of the Browse project before the end of 2024, O'Neill said, but the lack of certainty regarding approval timelines affected other elements of the project. "We've been working closely with the [federal government], state regulators and the Browse JV on the right approach to the environmental approvals, there are a couple of possible pathways that we are evaluating and we hope to be lodging the requests for approving that element of the project within this year," O'Neill said on 21 May. "But part of why we've been very disciplined in our work on Browse and not ramped up engineering work is because it is very difficult to get line of sight for when we'll get those approvals. With personnel changes at the appeals convenor we really don't have very good line of sight unfortunately." The 368bn m³ Browse development is considered critical to WA's future as a major LNG exporter and could provide long-term certainty for the 16.9mn t/yr NWS LNG, where partners have already signalled they will close a 2.5mn t/yr train later this year. Average gross GHG emissions from the three Browse fields are between 6.4mn-6.8mn t/yr with an additional 7.7mn t/yr once Browse gas is liquefied, resulting in total emissions of 14.1mn-14.5mn t/yr of CO2 equivalent, according to the environmental impact statement Woodside released in 2022. This necessitates a CO2 solution for it to progress under Canberra's net zero scope 1 emissions rule instituted last year. By Tom Major Send comments and request more information at feedback@argusmedia.com Copyright © 2024. Argus Media group . All rights reserved.

Lower fuel costs lift Indian cement producers' margins


21/05/24
21/05/24

Lower fuel costs lift Indian cement producers' margins

Singapore, 21 May (Argus) — Lower prices of petroleum coke and thermal coal, the two key fuels used in producing cement, helped raise margins at Indian cement producers over January-March compared with a year earlier. India's largest cement producer Ultratech increased its January-March profit by more than 35pc from a year earlier to a record 22.58bn rupees ($271mn) because of subdued kiln fuel costs. The company's blended coke and coal fuel costs for the quarter fell to $150/t, down by 22.7pc from a year earlier. Ultratech's overall energy costs for cement during the quarter fell by 21pc from a year earlier to Rs1,025/t, with total power and fuel costs down by nearly 9pc to Rs48.39bn. Fuel typically accounts for about a third of cement production costs. The Argus cfr India 6.5pc sulphur coke assessment averaged $116.50/t in the quarter ended 31 March, down by nearly 32pc from the year-earlier average of $170.92/t. This price was last assessed at $109.50/t on 15 May. Thermal coal prices were also lower from a year earlier across most origins. Ultratech sold 35.08mn t of cement during January-March, up by 11pc on a year earlier. Higher cement sales typically boost coke and thermal coal consumption as cement producers use these as fuel in kilns. Industry participants were able to realise a higher profit despite a lower cement price during January-March, primarily because of a cushion from the reduced fuel costs. Ultratech realised Rs5,170/t of cement for January-March, down by 3.8pc from the year earlier and 6pc lower from October-December. Fellow producer Shree Cement raised its sales by 8pc from a year earlier to 8.83mn t over January-March. But the firm realised Rs4,721/t of cement during January-March, down by 3pc from a year earlier. Lower fuel costs helped it to boost the latest quarter's profits by 21pc from the previous year to Rs6.62bn. Fuel costs eased by 28pc to Rs1.82/unit. Shree expects fuel prices to remain stable in the coming months. Cement prices in key markets fell by an average 7.5pc over January-March from the previous quarter, while exit prices in March were lower by 9-10pc compared with average rates for the same period, said cement producer Dalmia Bharat. The price drop during January-March was far more than what the firm had seen in similar period in any previous year. Cement producers resorted to price cuts to gain more market in the latest quarter with rising production capacity. But cement demand growth is expected to outpace the rate of capacity additions in the coming years. The industry is expected to grow capacity at a compounded growth rate of 7-8pc/yr in the next few years, said Adani, which owns and operates listed cement companies Ambuja Cement and ACC. The group forecasts India's cement demand to grow at 8-9pc/yr over the next five years. Adani's power and fuel costs fell by 13pc from a year earlier to Rs1,219/t during January-March. A high share of coal from domestic captive mines and opportunities to buy imported coke will further lower its fuel costs, the company said. Ambuja doubled its January-March profit from a year earlier to Rs15.26bn. Firmer April-June outlook Lower priced coke cargoes purchased during January-March are expected to help cement producers partly offset the impact of pressured cement realisation for April-June, said a market participant. Cement prices remain weak as demand is affected because of India's 19 April-1 June general elections . Cement plants typically hold fuel inventories of 60-90 days, including supplies in the pipeline and cargoes on the water. The full benefit of reduced fuel prices comes with a lag of up to three months. This is especially true of coke cargoes coming from the US where the transit time is around 45 days. By Ajay Modi Send comments and request more information at feedback@argusmedia.com Copyright © 2024. Argus Media group . All rights reserved.

Australia pauses pro-upstream offshore oil, gas reforms


21/05/24
21/05/24

Australia pauses pro-upstream offshore oil, gas reforms

Perth, 21 May (Argus) — Australia's federal resources minister Madeleine King acknowledges the political situation in the nation's upper house of parliament the Senate prevents any deal to clarify consultation requirements for the nation's offshore oil, gas, carbon capture and storage (CCS) and renewables sectors. The Senate last week passed the Labor party-led federal government's legislation on changes to deductions permitted under the Petroleum Resources Rent Tax (PRRT) and a new fuel efficiency standard for light commercial and passenger vehicles . But the deal struck with the Greens party and two independent senators meant the government withdrew amendments designed to specify which stakeholders must be consulted under law before receiving environmental permits. King blamed the Greens for her government removing the amendments from the agenda. "My disappointment is not for the industry but the community that will remain subject to inadequate and inappropriate consultation requirements for longer," King said on 21 May at the Australian Energy Producers conference in Perth. "The Greens political party and the crossbench independents and others promoted widespread misinformation in relation to the proposal that would ensure the community had the benefit of clarity and certainty in consultation." Environmental lawyers delayed field drilling and pipeline laying for Australian independent Santos' $4.6bn Barossa backfill project from late 2022 until early 2024, citing insufficient consultation with traditional owner groups, in a case ultimately dismissed by the Federal Court of Australia. Changes to offshore laws were promised by the federal government in January with concerns legal tactics could lead to further lawsuits aimed at driving up costs for LNG backfill, offshore wind power projects or CCS. Climate campaigners saw the changes as a vehicle for easing scrutiny on developers and its politicians promised to oppose any changes. But having dealt with the Greens instead of the Liberal-National coalition on legislation for fuel efficiency and the PRRT because of the latter's demands that the approvals process for oil and gas be expedited, Labor is less likely to now receive support for changes to consultation ahead of next year's federal election. The future gas strategy released by the federal government this month said new supplies are urgently needed, as gas-fired power generation will likely replace firming capacity provided by retiring coal-fired power plants. The report also found multiple reasons for Australia's low gas exploration investment, including difficulties with the approvals processes, legal challenges and market interventions that may lead international companies to focus on lower cost and lower risk fields in other jurisdictions. 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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