Canada furthers investment in GHG reductions

  • Spanish Market: Battery materials, Biofuels, Emissions, Hydrogen
  • 18/04/24

The Canadian government plans to have C$93bn ($67.5bn) in federal incentives up and running by the end of the year to spur developments in clean energy technology, hydrogen production, carbon capture utilization and storage (CCUS) along with a new tax credit for electric vehicle (EV) supply chains.

The Canada Department of Finance, in its 2024 budget released on 16 April, said it expects to have the first planned investment tax credits (ITCs), for CCUS and renewable energy investments, in law before 1 June.

The ITCs would be available for investments made generally within or before 2023 depending on the credit.

The anticipated clean hydrogen ITC is also moving forward. It could provide 15-40pc of related eligible costs, with projects that produce the cleanest hydrogen set to receive the higher levels of support, along with other credits for equipment purchases and power-purchase agreements.

The government is pursuing a new ITC for EV supply chains, meant to bolster in-country manufacturing and consumer adoption of EVs with a 10pc return on the cost of buildings used in vehicle assembly, battery production and related materials. The credit would build on the clean technology manufacturing ITC, which allows businesses to claim 30pc of the cost of new machinery and equipment.

To bolster reductions in transportation-related greenhouse gas (GHG) emissions, the government will also direct up to C$500mn ($363mn) in funding from the country's low-carbon fuel standard to support domestic biofuel production.

Transportation is the second largest source of GHG emissions for the country, at 28pc, or 188mn metric tonnes of CO2 equivalent, in 2021.

But the province of Alberta expressed disappointment at the pace of development of ITC support that could help companies affected by the country's move away from fossil fuels.

"There was nothing around ammonia or hydrogen, and no updates on the CCUS ITCs that would actually spur on investment," Alberta finance minister Nate Horner said.

The incentives are intended to help Canada achieve a 40-45pc reduction in GHG emissions by 2030, relative to 2005 levels. This would require a reduction in GHG emissions to about 439mn t/yr, while Canada's emissions totaled 670mn in 2021, according to the government's most recent inventory.

The budget also details additional plans for the Canada Growth Fund's carbon contracts for a difference, which help decarbonize hard-to-abate industries. The government plans to add off-the-shelf contracts to its current offering of bespoke one-off contracts tailored to a specific enterprise to broaden the reach and GHG reductions of the program.

These contracts incentivize businesses to invest in emissions reducing program or technology, such as CCUS, through the government providing a financial backstop to a project developer. The government and developer establish a "strike price" that carbon allowances would need to reach for a return on the investment, with the government paying the difference if the market price fails to increase.

CGF signed its first contract under this program last year, with Calgary-based carbon capture and sequestration company Entropy and has around $6bn remaining to issue agreements.

To stretch this funding further, the Canadian government intends for Environment and Climate Change Canada to work with provincial and territorial carbon markets to improve performance and potentially send stronger price signals to spur decarbonization.


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27/05/24

Japan firms study carbon neutral fuels for auto sector

Japan firms study carbon neutral fuels for auto sector

Osaka, 27 May (Argus) — A group of Japanese companies are exploring the possibility of expanding the use of carbon neutral fuels — such as synthetic fuels, or e-fuels, and biofuels — in the country's automobile sector, aiming to cut carbon dioxide (CO2) emissions from internal combustion engine vehicles. Japanese auto manufacturer Toyota, engineering firm Mitsubishi Heavy Industries and refiners Idemitsu and Eneos said on 27 May that they had signed an initial agreement to jointly carry out a feasibility study by discussing scenarios, roadmaps and necessary regulations to introduce the clean fuels around 2030. The partnership assumes domestic production of e-fuels and biofuels to enhance the country's energy security. They plan to produce e-fuels from CO2 and renewable-based hydrogen, while biofuels will be derived from plants and other sources. But potential output capacity is still unclear. It is also unknown how they will buy feedstocks to produce the clean fuels, creating the possibility for imports and domestic purchases. Japan has pledged to ban sales of gasoline-only passenger cars and a shift to electric vehicles (EVs) by 2035, part of its 2050 net zero emissions goal. But EVs also include fuel-cell vehicles, plug-in hybrids and hybrid EVs. This suggests the country will need cleaner fuels to decarbonise engines burned by fossil fuels. Toyota has already introduced in Brazil since 2007 a hybrid, flex-fuel vehicle that can run on biofuels and gasoline. The company will invest 11bn real ($2.1bn) in Brazil over the next six years to decarbonise and electrify its fleet. But it is still unclear how many flex-fuel vehicles it will introduce in Japan, the company said. To help reduce CO2 emissions from the auto sector, Japan's trade and industry ministry already requires domestic refiners to use 500,000 kilolitres/yr (8,616 b/d) of the crude equivalent of ETBE or bioethanol. Brazil is currently the sole bioethanol supplier to Japan with 55,179 bl delivered in February. By Motoko Hasegawa Send comments and request more information at feedback@argusmedia.com Copyright © 2024. Argus Media group . All rights reserved.

Chinese EV producers step up solid-state battery plans


27/05/24
27/05/24

Chinese EV producers step up solid-state battery plans

Beijing, 27 May (Argus) — Major Chinese auto manufacturers aim to launch mass production of solid-state batteries for electric vehicles (EVs) in the coming years. State-owned SAIC plans to deploy full solid-state batteries in its own EV brands from 2025 and start mass production in 2026. The battery will have an energy density of over 400Wh/kg. This can support at least 1,000km of driving range, according to industry forecasts. SAIC produced nearly 290,000 new energy vehicles during January-April, accounting for 22pc of its total vehicle production, up by 32pc from a year earlier. It is also China's largest EV exporter. GAC Group has also outlined a plan to deploy full solid-state batteries with its Hyber EV brand in 2026. The battery has an energy density of 400Wh/kg that can support more than 1,000km of driving range. Domestic EV producer Nio in last June tested a solid-state battery with a 360Wh/kg energy density and a 1,044km driving range. IM Motors, in which SAIC holds a stake, in April unveiled a plan to launch its IM L6 EV model with an ultra-fast charging solid-state battery with 130kWh of power and support up to 1,000km of driving range with a 900V ultra-fast charging capacity. Chinese EV and battery manufacturers have accelerated their development of solid-state batteries in an effort to make up for the shortcomings of dominant ternary and lithium iron phosphate batteries, such as erratic safety performance or limited driving range. Solid-state batteries with a longer life, smaller size and safer performance are considered the main development direction for the next generation of power batteries in a rapidly developing global EV industry. But there are several challenges restricting mass production of solid-state batteries, particularly significantly higher manufacturing costs, which could complicate Chinese EV manufacturers' production targets. Send comments and request more information at feedback@argusmedia.com Copyright © 2024. Argus Media group . All rights reserved.

Hydrogen industry looks on the bright side


24/05/24
24/05/24

Hydrogen industry looks on the bright side

A tough year for clean hydrogen prospects is giving way to more optimism on projects and demand, writes Pamela Machado London, 24 May (Argus) — The clean hydrogen sector still lacks tangible progress and final investment decisions (FIDs) for projects remain few and far between, but it is reaching a moment of reckoning essential for market maturity, delegates at the World Hydrogen Summit in Rotterdam said this month. When asked whether they were more or less positive than a year ago, industry participants gave diverging answers, but there was widespread agreement that progress on clean hydrogen has been slower than expected in what one called "the year of doldrums". Increasing material and financing costs, the unstable geopolitical situation and a lack of clarity on regulatory frameworks are just some of the challenges developers have faced. This is a "grim environment if you were expecting the Swiss army knife approach" to work, industry body the Australia Hydrogen Council chief executive Fiona Simon said, alluding to the misguided expectation that hydrogen could be used across all sectors to help decarbonise. "We are coming to terms" with the real use and appropriate applications of hydrogen, Simon said, pointing to green steel production. "We are converging on the same concepts and same policies." The industry has reached the point where it is becoming a lot clearer which projects will actually materialise. A greater sense of realism is underpinning discussions, according to Dutch gas company Gasunie chief executive Willemien Terpstra. But delegates widely urged more policy action, especially on the demand side. Spurring on demand will be key to getting to more FIDs, Spanish utility Iberdrola's hydrogen development director, Jorge Palomar Herrero, said. "We can have great intentions and great projects but without the demand they are not going to happen." Even in Europe, which has pushed ahead with efforts to stimulate demand, these have not been enough to spur offtake, Herrero said. Demand-side incentives alone will likely not be enough and eventually there will have to be consumption obligations too, some said. "Carrots" may help to reduce project costs and kick-start production, but "sticks" will be key, delegates heard. Consumption mandates could accelerate momentum in emerging markets that have big ambitions for exports to future demand centres, World Bank private-sector arm IFC energy chief investment officer Ignacio de Calonje said. Governments are now ready to act on these requests, according to Brussels-based industry body the Hydrogen Council's director for policy and partnerships, Daria Nochevnik. "The penny has dropped," Nochevnik told Argus , noting that the need for demand-side action was the number one priority outcome of a ministerial-executive roundtable held in Rotterdam this month. Seeing red, feeling blue But governments must also remove red tape to speed things up, delegates said. European developers in particular are increasingly frustrated with the paperwork involved in funding applications, German utility Uniper vice-president for hydrogen business development Christian Stuckmann said. Shortening lengthy permitting and funding processes is high on governments' lists, Nochevnik noted. Some delegates renewed calls for a wider acceptance of "blue" hydrogen — made from natural gas with carbon capture and storage — to address concerns that, if it is up to renewable hydrogen alone, things will start too late or not at all. There appeared to be widespread consensus that blue hydrogen will have a key role to play, especially in a transitional period, as it can already deliver significant emissions reductions. But there is a "stigma" in Europe, industrial gas firm Linde vice-president for clean energy David Burns said. This could hamper its adoption, which many delegates argued the world cannot afford. Send comments and request more information at feedback@argusmedia.com Copyright © 2024. Argus Media group . All rights reserved.

Brazil Climate Fund can grow threefold: Bndes


24/05/24
24/05/24

Brazil Climate Fund can grow threefold: Bndes

Sao Paulo, 24 May (Argus) — Demand for Brazil's Climate Fund is three times larger than the R10.4bn ($2.02bn) it currently holds, the president of the country's development bank Bndes said on Thursday. "We have a growing demand [for the fund]", president Aloizio Mercadante said during an event held by Rio de Janeiro state's industries federation. "We will perhaps expand the fund, because demand is already three times greater than what we have." Mercadante called on industries and entrepreneurs to present "good, bold projects." The Climate Fund is linked to Brazil's environment ministry and managed by Bndes. It was created in 2009 and uses resources from oil and natural gas exploration to mitigate and combat climate change. By Lucas Parolin Send comments and request more information at feedback@argusmedia.com Copyright © 2024. Argus Media group . All rights reserved.

Q&A: Oman Shell to balance upstream with renewables


24/05/24
24/05/24

Q&A: Oman Shell to balance upstream with renewables

Dubai, 24 May (Argus) — Shell has been in Oman for decades now and had a front row seat to its energy evolution from primarily an oil producing nation to now a very gas-rich and gas-leaning hydrocarbons producer. Argus spoke to Oman Shell's country chairman Walid Hadi about the company's energy strategy in the sultanate. Edited highlights follow: How would you characterize Oman's energy sector today, and where do new energies fit into that? Oman is one of the countries where there is quite a bit of overlap between how we see the energy transition and how the country sees it. Oman is clear that hydrocarbons will continue to play a role in its energy system for a long period of time. But it is also looking to decrease the carbon intensity to the most extent which is viable. We need to work on creating new energy systems or new components of energy system like hydrogen and EV charging to facilitate that. It is what we would like to call a 'just transition' because you think about it from macroeconomic perspective of the country and its economic health. Shell is involved across the energy spectrum in Oman – from upstream gas to alternative, clean energies. What is Shell's overall strategy for the country? In Oman, our strategic foundation has three main pillars. The first is around oil and liquids and our ambition is to sustain oil and liquids production. At the same time, we aim to significantly reduce carbon intensity from the oil production coming from PDO. The second strategic pillar is gas, and our ambition here is to grow the amount of gas we are producing in Oman and also to help Oman grow its LNG export capabilities. The more committed we are in unlocking the gas reserves in the country, the more we can support Oman's growth, diversification, and the resilience of its economy through investments and LNG revenue. Gas also offers a very logical and nice link into blue and green hydrogen, whether in sequence or as a stepping stone to scale the hydrogen economy in the country. The last strategic pillar is to establish low-carbon value chains, predominantly centered around hydrogen, more likely blue hydrogen in the short term and very likely material green in the long term, which is subject to regulations and markets developing. How would you view Oman's potential to be a major exporter of green hydrogen? When examining the foundational aspects of green hydrogen manufacturing, such as the quality of solar and wind resources and their onshore complementarity, Oman emerges as a highly competitive country in terms of its capabilities. But where we are in technology and where we are in global markets and on policy frameworks — the demand centers for green hydrogen are maturing but not yet matured. I think there will be a period of discovery for green hydrogen globally, not just for Oman, in the way LNG started 20-30 years ago. When it does, Oman will be well-positioned to play global role in the global hydrogen economy. But the question is, how much time it is going to take us and what kind of multi-collaboration needs to be in place to enable that? The realisation of this potential hinges on several factors: the policies of the Omani government, its bilateral ties with Japan, Korea, and the EU, and the technological advancements within the industry. Shell has also been looking at developing CCUS opportunities in the country. How big a role can CCUS play in the region's energy transition? CCUS is going to be an important tool in decarbonising the global energy system. We have several projects globally that we are pursuing for own scope 1, scope 2 emissions reductions, as well as to enable scope 3 emissions with the customers and partners In Oman, we are pursuing a blue hydrogen project where CCUS is a clear component. This initiative serves as a demonstrative case, helping us gauge the country's potential for CCUS implementation. We are using that as a proof point to understand the potential for CCUS in the country. At this stage, it's too early to gauge the scale of CCUS adoption in Oman or our specific role within it. However, we are among the pioneers in establishing the initial proof point through our Blue Hydrogen initiative. You were able to kick off production in block 10 in just over a year after signing the agreement. How are things progressing there? We have started producing at the plateau levels that we agreed with the government, which is just above 500mn ft³/d. Block 10 gas is sold to the government, through the government-owned Integrated Gas Company (IGC), which so far has been the entity that purchases gas from various operators in Oman like us, Shell. IGC then allocates that gas on a certain policy and value criteria across different sectors. We will require new gas if we are going to expand LNG in Oman. There is active gas exploration happening there in Block 10. We know there is more potential in the block. We still don't know at what scale it can be produce gas or the reservoir's characteristics. But blocks 10 and 11 are a combination of undiscovered and discovered resources. We are aiming to significantly increase gas production through a substantial boost. However, the exact scale and timing of this expansion will only be discernible upon the conclusion of our two-year exploration campaign in the block. We expect to understand the full growth potential by around mid to late 2025. Do you have any updates on block 11? Has exploration work there begun? We did have a material gas discovery which is being appraised this year, but it is a bit too early to draw conclusions at this stage. So, after the appraisal campaign is completed, we will be able to talk more confidently about the production potential. Exploration is a very uncertain business. You must go after a lot of things and only a few will end up working. We have a very aggressive exploration campaign at the moment. We also expect by the end of 2025, we would be in a much better position to determine the next wave of growth and where it is going to come from. Shell is set to become the largest off taker from Oman LNG, how do you view the LNG markets this year and next? As a company, we are convinced, that the demand for LNG will grow and it needs to grow if the world is going to achieve the energy transition Gas must play a role, it has to play a bigger role globally over the time, mainly to replace coal in power generation and given its higher efficiency and lower carbon intensity fuel in the energy mix. While Oman may not be the largest LNG exporter globally or hold the most significant gas reserves, it is a niche player in the gas sector with a sophisticated and high-quality gas infrastructure. Oman's resource base remains robust, driving ongoing exploration and investment efforts. This growth trajectory includes catering to domestic needs and servicing industrial hubs like Duqm and Sohar, alongside allocating resources for export purpose. We have the ambition to grow gas for domestic purpose and for gas for eventual exports Have you identified any international markets to export LNG? We have been historically and predominantly focused on east and we continue to see east as core LNG market with focus on Japan, Korea, and China. Europe has also emerged on the back of the Ukraine-Russia crisis as growing demand center for LNG. Over time we might focus on different markets to a certain extent. It will be driven on maximising value for the country. By Rithika Krishna Send comments and request more information at feedback@argusmedia.com Copyright © 2024. Argus Media group . All rights reserved.

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