Dutch TTF gas rises through coal-to-gas switching range

: Coal, Electricity, Emissions, Natural gas
24/10/08

A rally in recent weeks has pushed gas prices up to a range at which even older coal-fired power stations would be more profitable to run than some of the most efficient gas-fired power stations.

European gas benchmark price the Dutch TTF front-month has risen strongly over the past two weeks, having closed at €40.57/MWh on 7 October, up from a recent low of €32.80/MWh on 19 September. The higher gas prices have outstripped similar price increases of other energy-related commodities such as coal, with the TTF front-month contract approaching the top of the gas-to-coal fuel-switching range (see TTF front-month graph). In assessments on 3 and 4 October, even older coal-fired power stations with an efficiency of 42pc would would be more profitable to run than the newest gas-fired turbines with an efficiency of 60pc, for the first time since early December last year.

Geopolitical tensions in the Middle East have contributed to gas' price increase. But with muted LNG deliveries to the continent so far this shoulder season and colder weather than last year, European gas storage sites are less full than they were a year earlier. European stocks were filled to about 94.5pc of capacity on the morning of 7 October, according to GIE transparency platform data, down from 96.7pc a year earlier. Demand has already stepped up strongly in some countries, pushing the continent to some days of net withdrawals from storage earlier in the autumn than in most recent years.

While coal prices have also stepped up slightly in turn, partly in reaction to the expectations of higher coal burn, their slower upwards momentum has brought coal largely ahead of gas in the merit order. Many coal trading firms have banked on a strong coal burn this winter, with low trading activity in the shoulder season so far, which incentivises trading companies to keep coal prices close to the fuel-switching level, market participants have told Argus. And prompt prices for European CO2 emissions allowances in September and October so far have been about 20pc lower on the year, closing at an average of €64.24/t, compared with €81.60/t over the same period in 2023. Lower emissions prices benefit higher coal burn as coal is more CO2-intensive than gas, requiring operators to purchase and surrender more CO2 emissions certificates.

A similar price movement happened last autumn, when a rally in early October pushed the TTF front-month price to the top of the fuel-switching range. But from early December, when a mild winter reduced the remaining risks for gas security of supply, prices fell through the fuel-switching ranges sharply, to the bottom of the range.

Impact probably highest in Germany

Germany is one of the last remaining markets with large numbers of both coal- and gas-fired power stations in Europe, leaving the market able to react to price movements in either market more flexibly.

The power sector can still provide considerable demand-side flexibility in the German gas market, while coal phase-out plans in the rest of Europe mean the scope for alternating between the thermal generation fuels has narrowed. Gas prices can provide the signal that the market has spare gas for the power sector to burn by falling into coal-to-gas switching territory, while gas prices climb above the fuel-switching range to discourage gas-fired generation when the gas market is tighter.

Last winter, gas prices at the very bottom of the fuel-switching range encouraged the highest gas-fired generation in Germany in at least a decade, according to data from European system operators' association Entso-E. While many German coal and gas-fired plants are combined-heat-and-power plants, which do not respond to price incentives as flexibly as pure power plants, the impact of the fuel switch on gas' share in the thermal generation mix was still visible last winter in Germany. In October and November, with prices at the top of the range, gas-fired generation at 6GW met 55pc of the combined call on coal and gas. But when prices dropped through the switching range, gas' share increased to 63pc in December-March, with about 7.3GW of gas-fired generation (see generation percentage graph).

In addition, the German storage levy of €2.50/MWh, which power producers must pay, pushes gas prices up further in the fuel-switching range. The levy, which is likely to rise further from next year, thus further decreases gas' profitability compared with coal, which could be detrimental for Germany's own coal phase-out plans.

By Till Stehr

TTF front-month vs fuel-switching range €/MWh

DE gas, coal generation, fuel-switching price €/MWh

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25/06/24

Cheaper power key to reach UK’s climate targets

Edinburgh, 24 June (Argus) — The UK's climate plan credibility has improved slightly but no progress has been made to make electricity cheaper, which is key to hit the country's emissions targets, independent advisory body Climate Change Committee (CCC) said in its progress report. The report assesses the UK's progress towards its net zero goals under the current government, which took power in July 2024. The CCC found the UK's 2050 target remains reachable but climate action needs to accelerate, even though policies to cut greenhouse gas emissions have improved. Only half of the 16 key indicators assessed by the CCC, with a relevant benchmark or target, are on track — including offshore and onshore wind operational capacity, sustainable aviation fuel, electric vehicle (EV) charging points and distances travelled by car. EV car sales, heat pump installations, woodland creation and peatland restoration are "slightly off track", while the ratio of electricity to gas prices for households and industries is "significantly off track", the CCC said. The committee noted no progress has been made on actions to lower the cost of power. The government is planning to consult on this "in due course", but CCC urged for actions and timelines. The CCC has identified "ten priority actions" for the year ahead, with cutting the cost of electricity for households and businesses again at the top. Cheaper power will support industrial electrification and "speed up the uptake of clean electric technologies, such as heat pumps and electric vehicles," the CCC said. The transition to renewables will eventually reduce the country's reliance on volatile wholesale gas prices, which are the main driver of electricity prices, it said. "But the government can take immediate action to accelerate this by moving policy costs associated with past schemes, and those that are not directly related to the cost of electricity generation, off electricity bills," the CCC said. Removing electricity policy costs — levied on the unit price of electricity at 20 times the rate of gas — would reduce annual electricity bills by £190 ($258) for a typical household with a gas boiler and by £490 for a typical household with a heat pump, CCC found. "This would bring UK prices into the range of other countries who are ahead on heat pump roll-out," it said. The CCC report assessed policy development from July 2024 to 23 May 2025, so does not take into account policies announced in the recent spending review nor the British Industrial Competitiveness Scheme intended to reduce electricity costs by up to £40/MWh for more than 7,000 electricity-intensive businesses. UK emissions reached 413.7mn t of CO2 equivalent (CO2e) in 2024, including its share of international aviation and shipping, down by 50pc from 1990 and by 2.5pc from 2023, according to the CCC. The year-on-year reductions come mainly from the electricity supply — declining gas generation — and the industry sector. The government will increasingly need to focus on transport, building, agriculture and aviation to reach its emission reduction targets, the CCC said. The report points to encouraging trends in EVs and in heat pump installations, which grew by 56pc on the year, and in woodland creations, but it reiterated action on these fronts must accelerate. Although much of the progress stems from policies set by previous government, the CCC said "bold policies" introduced this year are promising, such as removing planning barriers on renewable deployment and the reinstatement of the 2030 phase-out date for gasoline and diesel vehicles. The market share of new EVs increased on the year in 2024, by nearly 20pc. But CCC noted aviation sector emissions are increasing. The share of sustainable aviation fuel increased to 2.1pc last year from 0.7pc in 2023, but a lot more is required to reach the 10pc SAF mandate by 2030. By Caroline Varin Distribution of past emissions reductions and future emissions savings by sector.pdf Distribution of past emissions reductions and future emissions savings by sector Send comments and request more information at feedback@argusmedia.com Copyright © 2025. Argus Media group . All rights reserved.

Netherlands publishes RED III biofuels draft

25/06/24

Netherlands publishes RED III biofuels draft

London, 24 June (Argus) — The Dutch government's updated draft legislation to transpose the EU's revised Renewable Energy Directive (RED III) notably proposes abolishing double-counting renewable energy contributions from Annex IX feedstocks. The draft introduces a greenhouse gas (GHG) emission reduction mandate for land, inland shipping and maritime shipping, but excludes aviation — which was included in a previous draft . The RED III mandate will take effect in 2026. Obligated parties have to fulfil the mandate by surrendering a sufficient amount of so-called emission reduction units (EREs) in each sector. The mandate's flexible credit allowance allows EREs generated in the land sector to be used to partly meet emission reduction obligations in inland and maritime shipping ( see table ), but EREs from inland and maritime shipping cannot be used by land sector suppliers to fulfil their compliance requirements. Fuel suppliers with overall consumption of more than 500,000 l/yr will need to incorporate a 14.4pc share of renewable fuels in their annual deliveries in 2026. This increases linearly, to reach 27.1pc in 2030. The amount of crop-based biofuels in the land sector will be limited to 1.4pc of the overall energy content of total consumption until 2030, and will not be accepted towards targets in maritime and inland shipping and aviation. The amount of Annex IX Part B biofuels — such as used cooking oil (UCO) and animal fats categories 1 and 2 — that can be counted towards the mandate will be limited to 4.29pc in the land sector and 11.07pc in inland shipping. Obligated parties will be unable to claim EREs from Annex IX Part B fuels used in maritime shipping. The draft also introduces a minimum share of emission reductions that have to be achieved by Annex IX Part A and renewable fuels of non-biological origin (RFNBO), for all sectors. RED III mandates that 5.5pc of all fuels supplied must be advanced biofuels, including at least 1pc RFNBOs by 2030. The Netherlands' draft decouples these targets, to reduce investment uncertainty ( see table ). Refineries that use renewable hydrogen in their production process can claim refinery reduction units — or RAREs — which can be used by a supplier to meet an RFNBO sub-target in various sectors. Correction factor delay The ministry will delay its plans to apply a "correction factor" of 0.4 to its "refinery route" stimulus for hydrogen demand, in order to ensure the measure does not undermine direct use of hydrogen in transport. The correction factor means the value of emissions reductions credits generated through the use of renewable hydrogen for transport fuel production would be limited to a certain percentage of those generated through direct use of renewable hydrogen or derivatives in transport. The government leaves the option open to impose a correction factor from 2030. Although the EU Fuel Quality Directive increases the maximum share of bio-based components to 10pc in diesel, the Dutch government said fuel suppliers must continue to offer B7 — diesel with up to 7pc biodiesel — as a protection grade, because of the large number of cars incompatible with B10. Companies will be able to carry forward any excess EREs to the next compliance year. Companies with an annual obligation can carry forward up to 10pc of the total amount of EREs needed to fulfil their obligation in a year, with registering companies allowed to carry forward 4pc. Dutch renewable fuel tickets (HBEs) carried into 2026 will be converted into EREs on 1 April 2026, the government said. By Evelina Lungu and Anna Prokhorova Overview of future Dutch obligations pc CO2 2026 2027 2028 2029 2030 Land (Road) Sector-Specific Obligation 14.4 16.4 22.8 24.8 27.1 Flexible Credit Allowance 0.0 0.0 0.0 0.0 0.0 Total Obligation 14.4 16.4 22.8 24.8 27.1 Annex 9A Sub-Obligation 3.1 4.5 5.9 7.3 8.8 RFNBO Sub-Obligation 0.1 0.1 0.4 0.8 1.1 Conventional Biofuel Limit 1.2 1.2 1.2 1.2 1.2 Annex 9B Limit 4.3 4.3 4.3 4.3 4.3 Maritime Sector-Specific Obligation 3 3 4 5 6 Flexible Credit Allowance 1 2 2 2 3 Total Obligation 4 5 6 7 8 Annex 9A Sub-Obligation - - - - - RFNBO Sub-Obligation 0 0 0 0 0 Conventional Biofuel Limit 0 0 0 0 0 Annex 9B Limit 0 0 0 0 0 Inland Waterways Sector-Specific Obligation 3 4 6 8 12 Flexible Credit Allowance 1 1 2 2 3 Total Obligation 4 5 8 10 15 Annex 9A Sub-Obligation - - - - - RFNBO Sub-Obligation 0 0 0 0 0 Conventional Biofuel Limit 0 0 0 0 0 Annex 9B Limit 11 11 11 11 11 The Ministry of Infrastructure and Water Management *RFNBO: Renewable fuel of non-biological origin Send comments and request more information at feedback@argusmedia.com Copyright © 2025. Argus Media group . All rights reserved.

Erex to start Vietnam biomass co-firing tests in August

25/06/24

Erex to start Vietnam biomass co-firing tests in August

Tokyo, 24 June (Argus) — Japanese renewable energy developer Erex plans to start coal and biomass co-firing test runs at thermal power plants in Vietnam from August. Co-firing test runs will start at the 110MW Na Duong plant in August and at the 115MW Cao Ngan plant in September, Erex said on 20 June. Both plants are owned and operated by Vietnam National Coal and Mineral Industries (Vinacomin). The Japanese company announced in April that it was planning co-firing test runs at the two plants , but had not previously disclosed when the tests would start. The trial operations are expected to last for several months and burn locally produced wood chips, starting from 5pc co-firing and gradually increasing to 20pc. The two companies will renovate the plants in 2026-27 after the trial operations and start commercial co-firing operations around 2027-28, Erex said. Erex said it also plans to conduct co-firing test runs at Vinacomin's 670MW Cam Pha plant in 2027-28 and start commercial operations around 2029-30. The company aims to carry out co-firing at six Vinacomin plants with a combined capacity of 1,585MW, including Na Duong, Cao Ngan, and Cam Pha. The co-firing projects are part of Vietnam's net zero strategy. Erex is eyeing carbon credits from the plants once commercial co-firing begins. The company aims to sell some of the carbon credits in Japan and is currently negotiating with Vietnamese government on this. Erex is expanding its renewable energy business in Vietnam and southeast Asia. In addition to co-firing projects, the company aims to operate a total of 19 biomass-fired power plants in Vietnam. The first of these, the 20MW Hau Giang plant, started commercial operations in April. Erex also plans to build up to five biomass-fired power plants in Cambodia. The company projects that profits from Vietnam and Cambodia will account for more than half of its overall earnings by around 2030, from nearly negligible levels in 2024. By Takeshi Maeda Send comments and request more information at feedback@argusmedia.com Copyright © 2025. Argus Media group . All rights reserved.

Ontario weighs domestic biomass-based diesel quota

25/06/23

Ontario weighs domestic biomass-based diesel quota

New York, 23 June (Argus) — Ontario is considering requiring that domestically produced renewable fuels make up 3pc of the province's diesel pool, an effort to help biodiesel producers struggling to adapt to policy changes in the US. Ontario late last week requested input on a proposal to supplement existing provincial biofuel blend requirements with a new mandate for Canadian production, similar to a domestic content rule that took force in British Columbia this year. Ontario already requires that renewables like biodiesel and renewable diesel make up 4pc of diesel consumption each year, but this proposal would require that three-fourths of that mandated volume come from biofuels produced in Canada. The Ontario Ministry of the Environment, Conservation and Parks says the proposal is in response to a new clean fuel tax credit that took effect in the US this year, which can only be claimed by US producers. A US Department of Agriculture report late last year said that there were six remaining operational biodiesel plants in Canada and that the industry has historically sent almost all its fuel into the US, which up until this year treated foreign biodiesel as eligible for a federal tax credit. At the same time, US biofuels have increasingly entered Canada to meet demand from low-carbon fuel standards federally and in British Columbia. In those programs, higher-carbon fuels that exceed annual carbon intensity limits incur deficits that suppliers must offset with credits generated from approved lower-carbon alternatives. The Canadian biofuel industry has pushed officials to respond. British Columbia as a result began requiring this year that renewables make up a minimum 8pc of diesel fuels supplied in the province, up from 4pc, and that this mandated volume must come from Canadian producers starting in April. British Columbia-based renewable diesel producer Tidewater Renewables has also unsuccessfully pushed Canada to impose duties on US product. The Ontario environment ministry said the domestic mandate, if finalized, would be a "temporary, time-limited measure" that would last as long as US subsidies "threaten Ontario's biodiesel industry." The new US tax credit that excludes foreign refiners is currently set to lapse after 2027, but Republican lawmakers have floated using a massive budget bill they want to pass in the coming weeks to extend the incentive through 2031. While full regulatory text is not available, as is typical for this early stage of the Ontario rulemaking process, it appears the proposal would otherwise keep intact the general structure of the province's biofuel mandate. The program offers more credit to lower-carbon fuels, which led to a slightly lower than 4pc biofuel blend rate for the diesel pool in 2023, according to a report from trade group Advanced Biofuels Canada. The domestic content proposal would also not affect a separate mandate that biofuels make up increasing amounts of the gasoline pool through 2030. By Cole Martin Send comments and request more information at feedback@argusmedia.com Copyright © 2025. Argus Media group . All rights reserved.

Iran fires missiles at US military base in Qatar

25/06/23

Iran fires missiles at US military base in Qatar

London, 23 June (Argus) — Iran today fired missiles at a US base in Qatar in retaliation for the weekend attack on its nuclear facilities. The Iranian military said the US' Al-Udeid base was its target. The Qatari government said it intercepted the missiles and there were no deaths or injuries. Tensions in the region have been stretched since the US bombed Iranian nuclear facilities at the weekend. US president Donald Trump today again expressed a desire for regime change in Tehran, which in turn said US military interests were now legitimate targets. Earlier, Qatar closed its airspace and the US and UK embassies there issued safety warnings to their citizens, suggesting this Iranian attack was flagged and expected. The price of Ice Brent crude fell by as much as 4.5pc in the wake of the Iranian attack to an intraday low of $72.48/bl, having hit a five-month high of $81.40/bl earlier in the day. The Iranian move echoes its attacks on US military targets in Iraq after the US' killing of senior Iranian military commander Qassem Soleimani in January 2020. Perhaps mindful of this, foreign firms operating in Iraq today started removing some employees from the country. Regional airlines began cancelling and rerouting flights across the Middle East, with flight tracking showing almost no flights in the air above the Mideast Gulf. By Ben Winkley Send comments and request more information at feedback@argusmedia.com Copyright © 2025. Argus Media group . All rights reserved.

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