Australia’s Origin to keep Eraring coal plant on line
Australian utility firm Origin Energy and the New South Wales (NSW) state's Labor government have agreed to keep the nation's largest single power facility open for at least two more years.
The deal involves Origin shelving plans to close the 2,880MW Eraring coal-fired power plant near the NSW city of Newcastle next year, and operating the generator until 19 August 2027 and potentially until April 2029.
A generator engagement project agreement has been signed, under which Origin will receive compensation covering the cost of running the 40-year old plant, while aiming for the plant to generate at least 6TWh for the two additional fiscal years it will run. Eraring produced 12.15TWh last year, Origin's 2023 annual report showed.
The firm must decide by 31 March in 2025 and 2026 whether it will enter the underwriting arrangement for the following financial year. If Origin profits from its Eraring plant during these years it will pay NSW 20pc of the proceeds, capped at A$40mn/yr ($26.5mn/yr), but no compensation will be paid after 30 June 2027.
Origin can claim no more than 80pc of Eraring's financial losses each year from NSW and the compensation is to be capped at A$225mn each year, if it does opt in. Origin spent A$147mn for generation maintenance and sustaining capital on Eraring in 2023, with A$69mn owing to costs associated with the facility's ash dam.
Eraring provides around 20pc of NSW's delivered electricity and was scheduled to be replaced by the 2,200MW pumped hydro scheme known as Snowy 2.0 — which has experienced significant delays and will not be on line until 2029 — and the 750MW Kurri Kurri gas-fired power station also being developed by federal government-owned Snowy Hydro, which is to be commissioned later this year.
Coal-fired power generation
The viability of coal-fired generators has been declining for some time as Australia's renewable power generation grows to nearly 40pc of the total grid capacity. Widespread rooftop solar is driving electricity prices into negative territory during daylight hours and disrupting the profitability of large-scale generators.
Origin has committed to a 460MW battery energy storage system (BESS) at the site of Eraring, which it says will provide two hours of firming capacity to the national electricity market. Australia's Clean Energy Council said the announcement must be backed by measures to integrate new renewable generation and storage into the NSW grid with "clear signals and support" to rapidly transition to renewables.
Planning issues and rising costs have stymied the federal and state governments' plans to increase Australia's dependence on large-scale wind, solar, pumped hydro and BESS projects to replace coal generators. Canberra is aiming for an 82pc renewables share for Australia's electricity production by 2030.
Coal-fired generation increased on the year for January-March because of a warmer-than-average summer and increased availability.
Related news posts
Q&A: Corporate reporting and certification schemes
Q&A: Corporate reporting and certification schemes
London, 28 June (Argus) — Corporate reporting standards and obligations are becoming more granular and falling under greater scrutiny across the EU, after new rules came into force at the start of 2024. Argus spoke to net zero adviser Nils Holta at environmental solutions provider Ecohz to review changes to EU legislation and consider their impact on wholesale energy attribute certificates markets. Edited highlights follow: Let's start by decoding the acronyms and taking stock of changes to reporting standards this year. What do the principles of the CSRD and ESRS look like? How do these align with the EU Taxonomy? These are all thematically related pieces of legislation, that are not formally linked to each other. The Corporate Sustainability Reporting Directive (CSRD) and the EU Sustainable Investment Taxonomy are two of the angles of a sustainability transparency triangle completed by the Green Claims Directive (GCD). Through these policy mechanisms, the EU seeks to cover sustainability reporting, sustainability criteria for investments, and marketing information to consumers. Essentially, the EU is trying to add sustainability as a new dimension of the single market, alongside standardised comparisons on quality and price. The CSRD relates more to the finance side. Through the annex with the European Sustainability Reporting Standards (ESRS), it details how companies should report on their sustainability impact, their sustainability-related risks, and any financial opportunities that arrive as a result of sustainability matters. It has been developed as an addition to European financial disclosure requirements, and in Norway, for instance, it has been transposed through amendments to the "accounting law" (Regnskapsloven). For financial undertakings, the Sustainable Finance Disclosure Regulation (SFDR) plays much the same role, albeit at a higher level of granularity. On the consumer-facing side, companies will soon be required to adhere to the GCD when promoting their products' environmental profiles to final consumers in what the EU calls "explicit environmental claims". While not quite the same as sustainability reporting, it fits in a market dynamic where the EU expects economic actors to be more transparent about the environmental qualities of their products — like we are used to for price and quality. Finally, we have the EU Taxonomy for sustainable activities, or just the Taxonomy. The Taxonomy is a list of economic activities with clear criteria on how they can be performed sustainably, and, in some cases, how they can be considered a transitional activity to more sustainable options. The Taxonomy also mandates that large undertakings and financial actors disclose the percentage of their Capex [capital expenditure], Opex [operating expenditure], and turnover that is invested in, finances, or derives from activities that are considered sustainable under the Taxonomy. Here is the link to the CSRD (ESRS), GCD and SFDR. If you are required to report on the percentage of your investments or turnover that is associated with sustainable activities, you need to know how all the companies you invest in are performing. And through the CSRD they are required to share this information in a transparent and streamlined manner. If, as a company, you want to make a claim about a product's environmental profile, you are now also required to possess and sort the information necessary to found that claim through the same directive. So here we have the triangle — the Taxonomy and SFDR push investors towards sustainable investments. The GCD provides consumers with a choice to consume sustainably, and the CSRD and ESRS ensure that companies have the information necessary for the other two to work. So the EU wants you to base Taxonomy reporting or environmental claims on the information published in your CSRD reporting? Not quite. I should stress at this point that EU law does not require companies to use the same methodologies for their CSRD reporting as for explicit environmental claims under the GCD or for showing criteria alignment with the Taxonomy. The simple reason is that communication to different audiences — shareholders, financial sector institutions, consumers — might require different approaches. It is, however, very simple to base claims under the Taxonomy or GCD on information gathered for CSRD reporting, and I have seen companies rely on CSRD reporting for claims of Taxonomy-alignment in their annual reports. How are things changing within the CSRD in terms of how industrial and corporate (I&C) companies will need to document energy — power and gas — consumption throughout their supply chains? What does it mean in terms of scope 2 and 3 emissions? This is a good place to clarify terminology. The CSRD is an EU directive that mandates sustainability reporting, sets out how member states are responsible for making sure companies report, and details which categories of companies need to report. All in all, we are taking about at least 50,000 EU-based companies and maybe another 10,000 non-EU companies with operations in the EU, as a rough assessment. The ESRS are the technical standards, outlining — over some 300 pages — how companies can assess what information they need to report and how this can be reported. The ESRS go into detail regarding how questions about energy consumption and climate transition plans or supply chains are asked and framed. Thank you for the clarification, and now back to the market-based vs location-based reporting? In general, the ESRS move towards market-based reporting. Emissions are to be reported by scope — 1, 2 and 3 — separately and using both market-based and location-based methodologies for Scope 2. They are also to be reported against total turnover, so investors can see the greenhouse gas intensity of their investments' turnover. At the same time, the ESRS clearly state that energy consumption must be reported using the market-based methodology in the case of Scope 2, and that it "can" be market-based in Scope 1, which for most companies would primarily relate to gas. The latter is highly technical and is tied to the EU emissions trading system monitoring and reporting requirements. Disclosing companies must report Scope 3 as it was reported to them. There is no option to not report on Scope 3 emissions outside of Europe, which means that these 60,000 or so companies will push their own reporting requirements through their entire value chain. It also means that oil and gas companies will finally need to include emissions from combustion of their own products in their sustainability reporting. Considering that changes to the CSRD will lead to greater focus on Scope 3 emissions, how is this likely to impact the energy attribute certificates (EAC) markets? Are you already seeing changing approaches to EAC procurement? How do biomethane and hydrogen fit into the picture, and is there a role for carbon offsets? What we are seeing is a greater corporate interest in understanding their own value chain and getting their suppliers to cover Scope 2 consumption with EACs. They can even use the divergence between location and market-based reporting to stress how much they actually achieve by sourcing renewable energy. The result is quite literally the difference between the two numbers. The ESRS do not open for carbon offsets as a way of reducing total emissions. Any offsets must be reported separately. Biomethane and hydrogen would both serve to decarbonise your gas combustion, so mainly Scope 1. However, the requirements for credible claims to consumption are tied to a bundled model, so we expect less focus on certificate trade and more focus on efficient value chains to deliver the product as a whole. There are a lot of open questions here tied to member state transposition of the Renewable Energy Directive (RED) III — and in some cases RED II — and to the coming Union Database for renewable fuels. How will the GCD impact consumer disclosure requirements and how does it tangentially relate to the Taxonomy? Do you expect this to also drive more granular purchases in EAC markets? When procuring EACs, will additional specifications such as eco labels become more prominent in the market? There is no specific link between the GCD and the Taxonomy, but Taxonomy-alignment would definitely be one of the things that can be communicated and substantiated in a way that is aligned with the GCD. Using an eco-label is a way to distinguish your product among several who all use renewable electricity. However, it is difficult to assess exactly how companies and consumers will react to this information in the long term. In the near future, we expect the GCD to lead to a reduction in environmental performance claims overall, at least until companies have a decent understanding of what and how they should communicate. The fine is up to 10pc of total turnover. There are often questions around how nuclear power is viewed in the EU Taxonomy — can you clarify that? And how do you see nuclear power — through scope 2/3 — playing a role in I&C companies documenting carbon neutrality through disclosure mechanisms? There has been a growing trend of energy suppliers offering carbon-neutral tariffs as opposed to renewable owing to the greater cost of documenting renewables through EACs, on top of already higher outright power and gas prices. Do you see I&C customers taking a similar route? Under the Taxonomy, nuclear is not considered renewable. It is, however, acknowledged as carbon-neutral, and we see several EU initiatives targeted at promoting "low-carbon" rather than renewable solutions. There is also an addendum to the Taxonomy, where nuclear and gas-fired power plants can be considered Taxonomy-aligned under certain circumstances. For gas, this relates to replacing coal and being time-limited in nature; while for nuclear, it is tied to a series of environmental and waste-treatment requirements. As long as the market recognises a qualitative difference between renewable and nuclear, EACs for each will be priced differently. Send comments and request more information at feedback@argusmedia.com Copyright © 2024. Argus Media group . All rights reserved.
Accident disrupts coal deliveries to Australian port
Accident disrupts coal deliveries to Australian port
Shanghai, 28 June (Argus) — An accident on the Blackwater railway system has disrupted coal exports from Australia's 102mn t/yr Gladstone port in Queensland, which may take some time to resolve. The accident occurred on the main Blackwater rail line that connects coking and thermal coal mines in the lower and middle Bowen basin into Gladstone, including the Curragh, Jellinbah East, Blackwater and Kestrel coking coal mines, as well as the Rolleston and Minerva thermal coal mines. A truck collided with a car at Raglan — 50km north of Gladstone — at approximately 3am Australian Eastern Standard Time (5pm GMT) on 28 June, bringing down overhead power lines and coming to a stop across the railway track. "The accident is affecting coal services on the Blackwater system, together with freight and passenger trains which use this rail corridor," a spokesperson at Queensland Coal Network operator Aurizon told Argus . Recovery work is under way and the repair process is "expected to take a number of days" to restore the line, according to Aurizon. It is unclear how long repair works may take, although it is likely to be less than a week, an Australia-based source suggested. "It's still a bit early to say [what the impact will be]," another source said. "I'd guess they will try and get one line back up and running at a slower throughput rate while other lines/electrics are fixed." The Moura rail system — which also delivers coal into Gladstone — continues to operate, delivering coal from the lower grade coking coal and pulverised coal injection (PCI) grade mines of Dawson and Baralaba. The Gladstone RG Tanna coal terminal has a vessel queue of 12 as of 25 June, from 13 on 21 May and 23 on 23 April, although this may climb if the derailment disrupts coal deliveries for more than a few days. Hard coking coal typically accounts for around a third of Gladstone's total exports, with lower-grade coking coal and thermal coal each accounting for a third. Tighter supplies ahead The accident is expected to further tighten supplies, especially with upcoming rail closures and maintenance on some of Aurizon's coal-hauling networks in July-August. The closure will involve one planned 96-hour maintenance closure on the Blackwater system and a 84-hour planned closure of the Gregory branch of the rail system. The rail operator will also carry out bridge renewal work, with one track and a two-track bridge closed for two weeks, based on plans announced last year. "It is acknowledged that [this] will result in some capacity constraints during that period," an Aurizon spokesperson said on 7 June. Argus last assessed the premium hard coking coal price at $237/t fob Australia on 27 June, down from $249.50/t on 3 June. The fob Australia low-volatile PCI price was assessed at $186.85/t fob Australia on 27 June, up from $169.15/t on 3 June. The price spread between fob Australia premium low-volatile coking coal and low-volatile PCI has tightened gradually in the last six months, from $143.35/t on 2 January to $50.15/t on 27 June. Send comments and request more information at feedback@argusmedia.com Copyright © 2024. Argus Media group . All rights reserved.
Biden, Trump trade attacks in presidential debate
Biden, Trump trade attacks in presidential debate
Washington, 28 June (Argus) — The first presidential debate of the 2024 election drew out few new details on energy policy, as President Joe Biden and former president Donald Trump hammered each other on issues such as inflation and the state of the US economy. The debate, held in Georgia on Thursday without a live audience, marked the first time Biden and Trump have shared a stage since their last debate in 2020. Biden, who is trailing Trump in many polls, at times struggled to clearly articulate his policy positions — or even to be heard — while Trump repeatedly sought to blame Biden for issues such as high inflation and the outbreak of military conflicts in Ukraine and Israel. "He has not done a good job," Trump said. "And inflation is killing our country. It is absolutely killing us." The substance of the debate was largely overshadowed by the candidates' inability to dispel voters' concerns about them. Needing to put to rest worries about his age, the 81-year-old Biden often appeared feeble and confused. Trump refused to acknowledge he lost the last election and continued to defend the mob that attacked the US Capitol on 6 January 2021. Biden throughout the debate defended his record on the economy, while focusing many of his attacks on Trump's personal conduct, including Trump's conviction on 34 counts in a case involving alleged hush money payments to an adult film star. Biden also criticized Trump's handling of the Covid-19 pandemic, which Biden said ultimately contributed to high inflation. "He didn't do much at all," Biden said. "By the time he left, things were in chaos." The debate repeatedly focused on federal tax policy, particularly a range of tax cuts enacted during Trump's presidency that are set to expire in 2025. A key provision of that tax package cut the top corporate tax rate to 21pc from 35pc. Biden said he would make the tax system more fair by increasing taxes on the wealthy, while arguing that Trump's policies would result in higher inflation and additional costs for consumers. Trump has said he would extend the expiring tax cuts, which are expected to cost $4 trillion over a decade, in addition to seeking deeper tax cuts and a 10pc tariff on all imports. Trump said he rejected the findings of many independent economists that such a tariff would drive up prices for consumers and add to inflation. "It's just going to cause countries that have been ripping us off for years — like China and many others, in all fairness to China — it's going to just force them to pay us a lot of money." Biden argued Trump's policies would result in higher inflation and additional costs for consumers. "He now wants to tax you more by putting a 10pc tariff on everything that comes into the United States of America," Biden said. Trump pivoted to issues such as energy and regulations when he was asked about his actions during the attack on the Capitol. "On January 6, we were energy independent," Trump said. And when pressed on whether he would pursue policies to deal with climate change, Trump focused on having "clean air" and "clean water", while defending his decision to pull the US out of the Paris climate accord. "It was a rip off of the United States, and I ended it because I didn't want to waste that money," Trump said. Biden said Trump did not do a "damn thing" when in office to clean up the air and water and criticized his inaction on climate change. Biden defended his suite of climate rules and support for clean energy, but he failed to tout passage of the Inflation Reduction Act, which provided support for electric vehicles, renewable energy and advanced manufacturing. On foreign policy, Trump insisted that a variety of global conflicts would have never occurred if he was in office. He contended that the war in Ukraine would abruptly be resolved if he were re-elected. "I'll have that war settled," Trump said. "I will get it settled, and I'll get it settled fast before I take office." Biden defended his record on foreign policy, saying he ushered through crucial support that has helped in the defense of Ukraine and Israel. Biden said that stood in contrast to Trump, who he said "encouraged" Russian president Vladimir Putin to invade other countries and has threatened to undermine Europe's defenses against military attacks. "This is a guy who wants to pull out of NATO," Biden said. The debate occurred just days before the US Supreme Court is expected to decide whether Trump, or any other president, should be immune from criminal prosecution for actions taken in office. Trump's attorneys have argued he should be immune from prosecution for any official acts while holding office, which could affect a criminal charge that he sought to undermine the 2020 election. By Chris Knight Send comments and request more information at feedback@argusmedia.com Copyright © 2024. Argus Media group . All rights reserved.
US House panel advances waterways’ projects bill
US House panel advances waterways’ projects bill
Houston, 27 June (Argus) — A Congressional committee on Wednesday advanced a bill to authorize a bundle of US port and river infrastructure projects for the US Army Corps of Engineers (Corps). The Water Resources Development Act (WRDA) biennially authorizes projects handled by the Corps' civil works program aimed at improving shipping operations at the nation's ports and harbors, and along the inland waterway system. The traditionally bipartisan legislation also approves flood and storm programs, and work on other aspects of water resources infrastructure. The House of Representatives' Transportation and Infrastructure Committee on Wednesday passed the bill by a 61-2 vote. The Senate Committee on Environmental and Public Works passed its own version of the bill on 22 May by a 19-0 vote. Neither the full Senate nor House have yet voted on the bills, which will need a conference committee to sort out different versions. A key difference is that the House bill did not include an adjustment to the cost-sharing structure for lock and dam construction and major rehabilitation projects. The Senate measure adjusted the funding mechanism so that 75pc of costs would be paid for by the US Treasury Department's general fund, with the rest coming from the Inland Waterways Trust Fund. The 2022 version of the bill made permanent an increase to 65pc from the general fund and 35pc from the trust fund, which is funded by a barge diesel fuel tax. The House committee's decision not to include the funding change drew disappointment from shipping interests. The Waterways Council was "disappointed that the House did not include a provision to modernize the inland waterways system", but was hopeful that conference negotiations would result in its inclusion, Tracy Zea, chief executive of the group, said. The latest House version of the bill authorizes 12 projects and 160 new feasibility studies. Among the projects receiving approval were modifications to the Seagirt Loop Channel near the Baltimore Harbor in Maryland. The federal government would pay $47.9mn towards an estimate $63.9mn project to widen the channel, which would help meet future demand for capacity within the Port of Baltimore. That would include increased container volume at the Seagirt Marine Terminal. The project was in the works before the 26 March collapse of the Francis Scott Key Bridge temporarily diverted freight from Seagirt and many other port terminals. The committee also authorized $314.25mn towards a resiliency study of the Gulf Intracoastal Waterway. The study would consider hurricane and storm damage and identify ways to improve navigation, reduce the maintenance requirements, and provide resiliency. The waterway connects ports along the Gulf of Mexico from St Marks, Florida, to Brownsville, Texas. The House version of the bill also includes provisions to strengthen flood control, wastewater, and stormwater infrastructure. "Critically, WRDA 2024 will help communities increase resiliency in the face of climate change," representative Rick Larsen (D-WA) said. By Abby Caplan and Meghan Yoyotte 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