Brazil launches coal power program with 2050 end date
The Brazilian government launched a program to encourage the continued use of coal-fired power in the face of a drought-induced power shortage.
The ordinance launched today, which runs counter to most global efforts to penalize coal fired power and other higher carbon fuels, has three objectives: preserving the existing coal power industry — which is concentrated in Brazil's southern region and provides a capacity of 1,572MW; lessening the coal industry's environmental impact; and encouraging contracting of installed coal power capacity.
Coal has became less competitive than other fuels in recent years from an efficiency perspective — with only 32pc efficiency against natural gas' 60pc, for example — while its higher emissions made it less attractive. This led to it losing governmental financing and space in Brazil's power auctions.
The Brazilian coal mining industry has tried to keep the sector alive, as a subsidy being paid by all regulated power consumers is set to expire in 2027.
The proposal calls for unspecified financial incentives for Brazil's coal-fired thermal plants to be put under contract through auctions for the regulated power market. Currently, most of the country's energy is already contracted in this kind of auction, in which the government follows its energy policy to determine which kinds of plants should be considered. The last time a coal-powered thermal plant was hired in an auction was in 2014.
The program also proposes that the government should invest in the modernization of Brazil's coal-fired plants, making them more sustainable, while also making them more attractive during auctions. It also proposes government help in searching for new powerplant financing or retrofitting of existing ones, including using public funding.
The proposal also suggests auction contracts with due dates that extend until 2050, Brazil's current deadline for the decarbonization of its energy grid. The ordinance argues that this is a cheaper alternative to Brazil's risk of an electrical blackout, as coal is an "indigenousfuel, not dollar-denominated."
Related news posts
Australia’s Victoria seeks further gas storage capacity
Australia’s Victoria seeks further gas storage capacity
Singapore, 12 September (Argus) — The state Labor government of Victoria will introduce laws to allow offshore gas storage projects in its waters as it grapples with a predicted supply deficit because of declining Bass strait production. Victoria, which is Australia's largest user of household and commercial gas, will allow gas to be stored in empty gas reservoirs offshore in a bid to boost supply security, Victorian energy minister Lily D'Ambrosio said on 11 September. But the state's waters extend three nautical miles offshore, meaning the laws will not cover most of the state's depleted fields in the Otway and Gippsland basins which lie in federally administered zones. Victoria's largest storage is the 26PJ (694.3mn m³) onshore Iona facility in the state's west, owned by domestic gas storage firm Lochard Energy which plans to expand its capacity by 3PJ . But further capacity is needed to help bridge seasonal gaps, with the new laws possibly advancing privately-owned GB Energy's Golden Beach gas project, which could add 12.5PJ of storage to the grid. The Gippsland basin joint venture (GBJV) and Kipper Unit JV which feed the three Longford gas plants in the state's east have historically supplied about 60pc of southern states' gas, but operator Exxon plans to close one of the plants in July-October , cutting the 1.15 PJ/d facility's capacity to 700 TJ/d and further to 420 TJ/d later this decade. GBJV operated just 50 producing wells and six gas platforms in the 2024 southern hemisphere winter, with Exxon expecting a 70pc reduction in the number of wells from 2010 levels by next winter. The Australian Energy Market Operator's (Aemo) 2024 Victorian Gas Planning Report (VGPR) update confirmed the need for greater supply in Victoria, as declining demand would not offset the loss of supply from the GBJV. Peak southern state winter demand exceeds 2 PJ/d, but at full capacity, pipelines linking Queensland state's coal-bed methane fields to the southern states can meet only 20pc of such demand. Coal and gas-dependent Victoria this year approved its first nearshore gas project in a decade as the government softens its anti-gas stance. LNG import plans The possibility of LNG imports is firming in Victoria, with Australian refiner Viva Energy announcing public consultation has begun on its supplementary environmental effects statement (EES) for a planned floating storage and regasification unit, adjacent to its 120,000 b/d Geelong refinery. The Geelong LNG terminal would have the capacity to supply more than half of Victoria's current gas demand, Viva said on 12 September. The terminal's surplus gas could also flow into the connected southern states of South Australia, New South Wales and Tasmania. A public hearing into the proposal, which could see the import of 45 cargoes/yr, is expected to be held in December before an independent committee reports to the state's planning minister next year. Subject to a final investment decision, works could commence in 2026 to deliver first gas for winter 2028, Viva said, aligning with Aemo's expected shortfall of 50PJ in that year. By Tom Major Send comments and request more information at feedback@argusmedia.com Copyright © 2024. Argus Media group . All rights reserved.
Australia's CER undecided on SMC issuance details
Australia's CER undecided on SMC issuance details
Sydney, 12 September (Argus) — Australia's Clean Energy Regulator (CER) has not yet decided on the level of details that will be published alongside the upcoming safeguard mechanism credits (SMCs), while estimated issuance numbers remain within a "wide" range, delegates heard at a forum in Sydney. The regulator will start to issue SMCs early next year to safeguard facilities that report scope 1 greenhouse gas (GHG) emissions below their annual baselines. Each SMC will represent 1t of CO2 equivalent (CO2e) below a facility's baseline, which will have the option to either hold it for future use or sell it in the market. The CER has an estimated range of SMC issuance numbers for the July 2023-June 2024 compliance year, the first under Australia's reformed safeguard mechanism . But this range is "very wide" as several factors are at play, executive general manager Carl Binning told delegates at a safeguard mechanism forum organised by the regulator in Sydney on 11 September. SMC issuances will be "relatively modest initially" according to Binning, but volumes are expected to build up over time as companies intensify efforts to reduce emissions while baselines converge to industry averages. He declined to provide any internal estimates on SMC issuances. Australian companies need to submit their emissions and energy data under the National Greenhouse and Energy Reporting (NGER) scheme by 31 October, including covered emissions data for individual safeguard facilities. The CER is finalising the so-called energy intensity determinations for each facility, which will be used to set their baselines. Baselines will be based on a production-adjusted framework initially weighted towards site-specific emissions intensity values, transitioning to industry average emissions intensity levels by 2030. Under the reformed mechanism, facilities that emit more than 100,000t of CO2 equivalent (CO2e) in a fiscal year face declining baselines — at a rate of 4.9 pc/yr until 2030 — and need to surrender Australian Carbon Credit Units (ACCUs) or SMCs if their onsite abatement activities were not enough to keep their emissions below thresholds. Australia's Department of Climate Change, Energy, the Environment and Water (DCCEEW) late last year estimated SMC issuances would start at around 1.4mn units in the 2024 financial year ending 30 June 2024, rising to 7.4mn in 2030 and 10.3mn in 2035. Facilities that fall below the coverage threshold of 100,000t CO2e can choose to continue receiving SMCs for up to 10 years — with their baselines continuing to decline if they opt in — and the DCCEEW expects such issuances will be the main source of SMCs by 2035 (see table). Uncertain data level All safeguard facilities will need to give a breakdown of the surrendered ACCUs by the method under which they were generated for the first time from the 2024 financial year, as well as a breakdown of their emissions by CO2, methane and nitrous oxide. The CER will publish 2023-24 safeguard data by 15 April 2025. But while the regulator will also need to publish the number of SMCs issued to a facility, there is still no definition on whether it will disclose where SMCs surrendered by facilities came from, Binning told delegates. "One of the issues we're really wrestling with in the design of our new registry is how much information we tag," Binning said. "I think the marketplace is interested in more granularity… so I'd actually invite feedback on this topic," he added. The CER expects that the new registry replacing the Australian National Registry of Emissions Units (ANREU) will be operational by the end of calendar year 2024. It plans to issue SMCs into the new registry and transfer all ACCUs from the ANREU "gradually" over the following months before the start of the next safeguard compliance period. By Juan Weik Projected SMC issuances (mn) Financial year From safeguard facilities From below-threshold facilities Total 2024 1.36 0.05 1.41 2025 1.62 0.13 1.75 2026 2.27 0.06 2.33 2027 3.20 0.26 3.46 2028 3.52 0.22 3.74 2029 4.34 0.54 4.88 2030 5.67 1.77 7.44 2031 5.31 1.92 7.23 2032 5.29 3.75 9.04 2033 6.77 3.47 10.24 2034 5.82 4.72 10.54 2035 4.80 5.51 10.31 Source: DCCEEW Send comments and request more information at feedback@argusmedia.com Copyright © 2024. Argus Media group . All rights reserved.
Carbon markets need frameworks, Article 6 progress
Carbon markets need frameworks, Article 6 progress
Berlin, 10 September (Argus) — International carbon markets need better frameworks both at domestic and international level, and consistent guidance on the role of carbon credits and their legal nature, a report by the World Bank has found. The report, presented at the World Bank's Innovate4Climate conference in Berlin today, calls for better harmonisation at several levels, including governance structures but also extending to frameworks such as integrity initiatives, independent standards, verification bodies, registers, transaction registries or exchanges. The World Bank also urges progress on the framework for a new UN-supervised carbon market under Article 6 of the Paris climate agreement at the UN Cop 29 climate conference in November in Baku, Azerbaijan. Article 6.4 additionally provides for so-called mitigation contribution units, which could be used in the voluntary carbon market for "appropriate claims", the World Bank said. Greg Murray, founder of the KoKo networks which sell carbon units from projects providing efficient cookstoves to African households, called at the conference today for Europe to show "more leadership" on carbon markets at Cop 29. Article 6 negotiations failed last year to a large degree because of the EU's fears of insufficient environmental safeguards for the more regulated Article 6.4 mechanism. There was "big enthusiasm" at Cop 28 in Dubai last year about the work carried out by the Integrity Council for the Voluntary Carbon Market (ICVCM) and the Science Based Target Initiative (SBTI) to raise standards, Hania Dawood, contributor to the report and World Bank practice manager for climate finance and economics, said at the conference today. But this enthusiasm has had no impact on the market, Dawood said. Agreement is still lacking in ongoing Article 6 discussions on key operational issues related to transparency, environmental integrity and the avoidance of double counting of mitigation outcomes. But the long debates over Article 6 are precisely to ensure the mechanism does not suffer the same fate as the voluntary carbon market, said Swiss climate negotiator Simon Fellermeyer, who has also been a member of the Article 6.4 supervisory body. By Chloe Jardine Send comments and request more information at feedback@argusmedia.com Copyright © 2024. Argus Media group . All rights reserved.
2024 RD production outlook up, 2025 down: EIA
2024 RD production outlook up, 2025 down: EIA
New York, 10 September (Argus) — The US Energy Information Administration (EIA) today upped its forecast for 2024 domestic renewable diesel (RD) production but continued to trim its projections for 2025 as challenging economics for refiners persist. The US is expected to produce on average 208,000 b/d of renewable diesel this year, EIA said Tuesday in its latest Short-Term Energy Outlook (STEO), up by around 1pc from August's forecast. Renewable diesel consumption is expected to hit 237,000 b/d this year, an increase of 1.3pc from the prior month's STEO. But next year, EIA now expects 236,000 b/d of renewable diesel production, down by 3.2pc from the prior forecast and down by 19.7pc from the agency's initial projection in January this year of 294,000 b/d. The agency is also forecasting renewable diesel consumption to reach 255,000 b/d in 2025, a 2.3pc decrease from its estimate last month. Renewable diesel producers have struggled over the last year, as ample supply of fuels used for compliance with government clean fuel programs has helped depress the prices of environmental credits and hurt production margins. More capacity has come online this year — with EIA recently pegging production of renewable diesel and related biofuels like sustainable aviation fuel at an all-time high of 4.9bn USG/yr in June — but uncertainty persists about whether future capacity additions will come on line as planned. EIA also upped its projection for US net imports of renewable diesel, raising its 2024 forecast by 7.1pc to 30,000 b/d and its 2025 forecast by 5.6pc to 19,000 b/d. While a federal tax credit starting next year is expected to discourage biofuel imports, since the incentive can only be claimed for fuel produced in the US, EIA's projections have inched upwards over the course of this year. Biodiesel output target up US biodiesel production this year is expected to average 105,000 b/d, up by around 1pc from August's STEO. US Biodiesel consumption should reach 121,000 b/d this year according to the EIA, down by 0.8pc from the prior forecast. For 2025, EIA raised its outlook for biodiesel production by 5.3pc to 100,000 b/d and for biodiesel consumption by 4.4pc to 94,000 b/d. Today's outlook also includes for the first time more granular data about biodiesel and renewable diesel "that better capture how biofuels are being consumed and the share of total distillate fuel they account for," EIA said. While the agency expects total distillate fuel oil consumption to fall slightly this year, biofuels will account for 9pc of that consumption, up from 8pc last year and 5pc in 2022. By Cole Martin Send comments and request more information at feedback@argusmedia.com Copyright © 2024. Argus Media group . All rights reserved.
Business intelligence reports
Get concise, trustworthy and unbiased analysis of the latest trends and developments in oil and energy markets. These reports are specially created for decision makers who don’t have time to track markets day-by-day, minute-by-minute.
Learn more