Japan’s Chubu eyes exporting CO2 to Australia for CCS

Market: Electricity, Emissions, Hydrogen
21/10/24

Japanese utility Chubu Electric Power is considering exporting CO2 to Australia for carbon capture and storage (CCS), as it accelerates efforts to decarbonise industries surrounding Nagoya port in central Japan.

Chubu on 21 October agreed with Japanese upstream firm Inpex's subsidiary Inpex Browse E&P to explore the possibility of establishing a CCS value chain, including capturing CO2 in Japan then transporting it from Nagoya port to Western Australia's offshore Bonaparte basin. Further details, including a timeline and potential export volumes, are still unknown.

Inpex in 2022 was awarded a greenhouse gas (GHG) storage assessment permit in the Bonaparte basin, together with TotalEnergies CCS Australia and Australian firm Woodside Energy. Operator Inpex aims to reduce GHG emissions from its Ichthys LNG project through this potential CCS site, which is expected to begin operations in the April 2030-March 2031 fiscal year and store more than 10mn t/yr of CO2.

Moomba CCS project

The deal came after Chubu on 18 October signed an initial agreement with Australian independent Santos, to assess the feasibility on transporting CO2 from Nagoya port to Santos' Moomba CCS project in the onshore Cooper basin of South Australia state.

The CCS site has already been commissioned, but it is unclear when Chubu is targeting to export CO2 to the site, which has a full 1.7mn t/yr storage capacity depending on gas production. Details will be decided in future discussions, a Chubu spokesperson said.

Chubu and Santos are also planning to study the use of renewable energy, such as geothermal power, to supply energy for other decarbonisation projects in the Copper basin which Santos is developing. Production of hydrogen and synthetic methane, or so-called e-methane, could be such options, the spokesperson told Argus.

These are Chubu's first attemmpt to develop CCS projects in Australia, with the company also on course to establish similar CCS value chains between Nagoya port and Indonesia's Tangguh under a collaboration with BP. Diversification of CO2 export destinations would be necessary, as there is a risk to conducting CCS projects only in Indonesia, said the spokesperson. Chubu and BP completed the feasibility study in March and expanded their partnership in August by signing the next-stage agreement to evaluate cost optimisation across the CCS value chain and business models to enable commercial CCS projects.

Nagoya is Japan's biggest port by cargo volume and located near steel, automotive, aircraft, machine and manufacturing plants, Chubu previously said. The port aims to reduce its CO2 emissions by 46pc by 2030-31 against 2013-14 levels, as industries around the port account for 3pc of Japan's total emissions, the company added.

Japanese firms have intensified their efforts to develop CCS projects, as well as carbon capture, utilisation and storage (CCUS) projects, actively seeking international partnerships. This is driven by Japan's reliance on fossil fuels to ensure energy security and foster economic growth, which necessitates exporting CO2 because of limited domestic storage sites. Japan's parliament in May allowed the government to ratify the 2009 amendment to the International Maritime Organization's London Protocol that will allow the export of CO2.

Japan hopes to commercialise CCS operations that Japanese firms are involved in from 2030-31. But there is growing pressure from the ministry of trade and industry that Japan should accelerate CCS projects, in order to not fall behind in the global market.

By Motoko Hasegawa

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25/10/24

Mexico’s opportunity to clear energy transition woes

New York, 25 October (Argus) — Mexico's new President Claudia Sheinbaum has a chance at the UN's Cop 29 climate conference next month to show that the country wants to catch up to the cleaner energy transition, despite her recent constitutional reforms seen as delaying the shift. With less than a month until the conference starts, it is not clear yet if Sheinbaum will attend the summit or who will be part of the Mexican delegation in Baku, Azerbaijan. The previous administration, that ended on 30 September, had planned to send the former foreign minister alongside a group of youth ambassadors for climate in Mexico. The energy ministry, led by Luz Elena Gonzalez, did not reply to Argus ' requests for information about Mexico's plans for Cop 29. Mexico's participation in previous climate summits during the administration of former President Andres Manuel Lopez Obrador had been minimal as the previous government put little effort into being well represented. Sheinbaum promised to lead the country into a fast and just energy transition. During her inauguration speech, Sheinbaum promised the country will reach 45pc renewable electricity generation by 2030 and implement an ambitious energy transition plan but she did not provide a timeline. In contrast, Sheinbaum has sent more worrying signals to private investors than positive ones because of her decision to move forward with controversial constitutional amendments that show a different picture regarding energy transition and climate. Mexico committed to reducing greenhouse gas emissions by 35pc by 2030 at Cop 27 in Egypt but energy and climate analysts say there has not been any updated information to track the advances on this pledge. "If we look at her agenda, one of Sheinbaum's priorities is the transition to clean energy before 2030," said researcher Ana Lilia Moreno at think tank Mexico Evalua. "But Sheinbaum's energy strategy proposes a centralization of the electricity sector, creating great uncertainty about the rules for the investments coming from the private sector." Private-sector renewable companies appear willing to finally put an end to the impasse experienced during the previous administration. But the energy reform approved by congress, which puts state-owned Pemex and CFE at the center of the energy sector, alongside with the amendments that will overhaul the judicial branch, create an upsetting business environment in Mexico, they say. Investors remain worried that Sheinbaum will continue with her predecessor's energy policies. But the government is committed to not destroy the private energy sector with the reform, but to complement it, said Altagracia Gomez, head of the government's business advisory council. "The priority is to strengthen Pemex and CFE but not at the expense of private companies," said Gomez. The government is now working on legal modifications to implement the reform. These changes will clarify how the government plans to ensure CFE generates 54pc of Mexico's electricity, leaving 46pc to the private sector. But investors hope to see something far away from the energy reform passed in 2021, which was defeated in the supreme court. Slow progress The share of clean electricity in Mexico's power mix was 24.3pc in 2023, according to energy ministry data. Mexico's nationally determined contribution (NDC) includes a target to increase renewables capacity to 40GW by 2030, but development of new clean energy capacity since former President Andres Manuel Lopez Obrador took office in 2018 has been limited. Mexico's total renewable capacity is around 20GW, which it will need to triple over the next six years to reach its target of 43pc of renewable energy in its generation mix by 2030. By Edgar Sigler By Mexico installed power capacity GW Send comments and request more information at feedback@argusmedia.com Copyright © 2024. Argus Media group . All rights reserved.

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US data center growth effect on coal may be limited

24/10/24

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24/10/24

US data center growth effect on coal may be limited

New York, 24 October (Argus) — The US coal industry is pondering ways to respond to the projected boost in domestic power demand linked to planned data centers in the pipeline, but the centers' effect on coal could be mixed or limited. A number of projects have been announced for coming years. But generators are still grappling with uncertain estimates of which major projects in the US will come to fruition, where they will be located and other criteria that will drive demand. "Data center companies are shopping around in different utilities' territories and showing up multiple times and being double counted", said Laurie Williams, director of the Sierra Club's Beyond Coal Campaign. According to the National Telecommunications and Information Administration, there are more than 5,000 data centers currently in the US, and demand for data centers in the country is projected to grow by 9pc annually through 2030. Approximately 8-10 larger data centers could be developed across the US in coming years. A number of large-scale projects, which could include so-called 'big tech' — Apple, Alphabet (Google), Amazon, Facebook (Meta), and Microsoft — are going through the feasibility study phase, Argus sources said. The Sierra Club is expecting electricity demand from data centers to increase anywhere between 5pc-20pc/yr. Some generators that spoke with Argus said they project growth of 9pc/yr, while an "organic" increase in electricity demand was previously expected to be 2pc-3pc. The US Energy Information Administration (EIA) earlier this month projected commercial electricity sales would rise by 3pc this year and 1pc in 2025, helping to boost overall electricity generation. "It is fair to say that the growth of commercial demand for electricity is at least due in part to the effect of data center development," said US Energy Information Administration (EIA) economist Jonathan Church. "We cannot, however, provide a precise estimate of what that effect is or what data center growth is." So far this year, US coal-fired generation has fallen as lower-cost natural gas, nuclear and renewable generation maintained or expanded their leads over coal in the generation mix. EIA expects coal-fired generation to fall in 2024 and edge higher in 2025 . A number of factors still need to come together before more certain projections of data centers' impact on the US coal industry are released, market participants said. Those include state environmental goals and federal regulations, availability of overall energy infrastructure and different generation types, and the approach that the IT sector will pursue when planning new projects. At least some IT companies are favoring lower-CO2 emitting generation. For example, Microsoft, Amazon and Alphabet recently have signed agreements to use nuclear or renewable generation for some projects. Other developers have indicated wanting to buy generation from wholesale electricity markets. In addition, US utilities continue to retire coal units to comply with US Environmental Protection Agency (EPA) rules. The amount of coal-fired generating capacity available in the US is expected to shrink to 163.7GW by the end of 2025 from 177GW in 2023, according to EIA. Longer life for coal plants? But some in the electric power industry are concerned about enough generating capacity being available to meet expected load growth because, in some cases, new generating facilities need to be built to provide the amount of power needed. "With the level of demand increasing, all energy resource consumption will increase," Utah Office of Energy Development acting director Dusty Monks said. "It is not out of the realm of possibility to say these industries (data centers and AI) will surpass the energy use of traditional customers in the next 10-15 years". Some generators that project increased electricity demand driven by data centers have proposed extending the operation of their coal plants. Limited natural gas pipeline infrastructure in some regions and mine-mouth power plants also support increased coal consumption to some extent. Alliant Energy delayed the coal-to-gas conversion of a Wisconsin plant by three years to 2028. Duke Energy may put off some coal-fired power plant unit retirements in Indiana, with the intention of burning coal in the state until 2038 . Elsewhere in the US, companies representing up to 15GW of load — mostly data centers — are seeking service from American Electric Power by 2030. Other utilities are continuing to convert coal-fired facilities to natural gas instead of retiring them. While the EPA has rolled out rules for gas plant emissions, gas units may still be more competitive financially and technologically over coal since gas prices have been lower and new gas units generally are more efficient when used as a backup to intermittent renewable energy. Even power plants in Utah, which traditionally favored coal, generated nearly the same amount of power from gas and coal over the first seven months of 2024 ( see chart ). US coal producers are paying close attention to plans for data centers and possible effects on coal demand but are still scaling back output. US coal mines' output totaled 591.5mn st (536.6mn metric tonnes) this year through 12 October, down by nearly 13pc from the same period in 2023, according to EIA data. Some of the states with the greatest growth in commercial electricity demand still have relatively large amounts of coal-fired generation , the EIA data show. But many of these states are also natural gas generation hubs. This includes Virginia and Texas, which had an outsized share of commercial generation growth last year. The fate and plans of data center projects in the pipeline as well as economics, regulation and company preference will determine the outcome for coal generation. By Elena Vasilyeva Generation in selected states, January-July 2023-24 MWh Coal-fired generation Gas-fired generation Renewables Total States 2024 2023 2024 2023 2024 2023 2024 2023 Arizona 5,593,283 6,228,907 28,916,433 27,939,458 10,905,903 9,452,570 64,588,784 62,083,941 % of total 8.7% 10% 44.8% 45.0% 16.9% 15.2% Georgia 10,887,241 8,828,638 34,824,577 35,144,586 7,318,882 6,552,342 83,496,202 73,139,216 % of total 13% 12.1% 42% 48.1% 8.8% 9.0% North Dakota 13,382,059 12,873,017 1,242,138 1,267,175 9,657,014 9,606,927 24,336,701 23,816,246 % of total 55% 54.1% 5.1% 5.3% 39.7% 40.3% Ohio 17,756,489 16,619,607 48,526,513 44,227,623 4,370,982 2,709,434 81,756,362 73,249,449 % of total 22% 22.7% 59% 60.4% 5.3% 3.7% Oklahoma 3,142,129 2,855,139 27,714,093 25,662,258 25,081,028 23,054,481 56,121,790 51,712,526 % of total 5.6% 5.5% 49% 49.6% 44.7% 44.6% South Carolina 9,885,901 8,792,049 12,670,286 13,811,018 3,254,362 3,198,205 59,528,878 58,292,079 % of total 16.6% 15.1% 21.3% 23.7% 5.5% 5.5% Texas 34,791,194 39,405,356 160,458,170 154,904,393 99,240,556 90,277,178 319,162,821 310,039,675 % of total 10.9% 12.7% 50% 50.0% 31.1% 29.1% Utah 6,954,233 8,802,671 6,720,481 6,762,046 3,452,974 3,331,940 18,090,480 19,499,948 % of total 38.4% 45.1% 37% 34.7% 19.1% 17.1% Virginia 1,190,771 990,257 35,852,015 28,696,547 4,885,261 4,143,970 59,761,590 52,708,332 % of total 2.0% 1.9% 60% 54.4% 8.2% 7.9% Wyoming 13,486,437 16,573,741 2,756,775 1,141,796 6,258,359 5,759,272 22,786,928 23,743,769 % of total 59.2% 69.8% 12% 5% 27.5% 24.3% — EIA Send comments and request more information at feedback@argusmedia.com Copyright © 2024. Argus Media group . All rights reserved.

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World on track for ‘catastrophic’ temperature rise: UN

24/10/24

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24/10/24

World on track for ‘catastrophic’ temperature rise: UN

London, 24 October (Argus) — The world is set for a "catastrophic temperature rise" of up to 3.1°C above pre-industrial levels, unless there is a "G20-led massive global mobilisation to cut all greenhouse gas (GHG) emissions", the UN Environment Programme (Unep) said today in its Emissions Gap 2024 report. It is still "technically possible" for the world to meet the 1.5°C temperature goal set out in the Paris climate agreement, but only with significant effort, the report found. If current commitments for 2030 are met, temperature rise would be limited to 2.6°C-2.8°C above pre-industrial levels. The Paris agreement seeks to limit warming to "well below" 2°C and preferably to 1.5°C. The 2.6°C scenario is based on the "full implementation" of countries' current national climate plans, known as nationally determined contributions (NDCs). But "continuing with current policies only would lead to 3.1°C of warming", Unep said. Countries are due to submit updated NDCs, which would cover a timeframe up to 2035, by February next year. And they "must collectively commit to cut 42pc off annual GHG emissions by 2030 and 57pc by 2035… and back this up with rapid action" in the next round, or the 1.5°C goal "will be gone within a few years", Unep said. The emissions cuts needed are relative to 2019 levels, but GHG emissions reached a record high of 57.1bn t/CO2 equivalent (CO2e) in 2023. To get on track to keep global warming below 2°C, GHG emissions must fall by 28pc by 2030 and 37pc by 2035, both from a 2019 baseline, the report found. The global average temperature for the 12 months from October 2023 to September stood at around 1.62°C above the pre-industrial average, according to EU earth-monitoring service Copernicus. It is "almost certain that 2024 is going to be the warmest year on record", Copernicus added. Invest and implement To ensure that warming is limited to below 2°C by 2030, annual emissions should be 14bn t/CO2e lower than the rate implied by current unconditional NDCs. This refers to elements of the plan that a country pledges to carry out with no external support, whether technical or financial. To hit the target of limiting warming to 1.5°C, annual emissions should be 22bn t/CO2e lower than current unconditional NDCs suggest over the same timeframe. There is "technical potential" for GHG emissions cuts of up to 31bn t/CO2e and 41bn t/CO2e in 2030 and 2035, respectively, the report found. This would "bridge the gap to 1.5°C in both years", and cost less than $200/t of CO2e, it added. Increased deployment of solar and wind power could provide 27pc of the total GHG reduction potential in 2030 and 38pc in 2035, Unep said. And "action on forests" — which are key carbon sinks — could deliver around a fifth of the potential in both timeframes, it added. Electrification and efficiency measures in the transport, buildings and industry sectors would also cut GHG emissions. But a "minimum six-fold increase in mitigation investment" is needed for the world to reach net zero emissions, the report found. The estimated incremental investment is between $900bn and $2.1 trillion annually over 2021-50. This would "bring returns in avoided costs from climate change, air pollution, damage to nature and human health impacts", Unep said. Members of the G20 group of countries, which are responsible for the majority of global emissions, are off track to meet their current goals and must "take the lead by dramatically increasing action and ambition" in new NDCs, Unep said. G20 members, without the recent addition of the African Union as a permanent member, accounted for 77pc of emissions in 2023. The outlook has worsened since last year's Emissions Gap report, which flagged a temperature rise of 2.5°C-2.9°C. By Georgia Gratton Send comments and request more information at feedback@argusmedia.com Copyright © 2024. Argus Media group . All rights reserved.

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EU Parliament sets out Cop 29 position

22/10/24

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22/10/24

EU Parliament sets out Cop 29 position

Brussels, 22 October (Argus) — The European Parliament's environment committee has voted through a draft resolution urging countries to agree on a new collective goal for climate finance at the UN Cop 29 climate conference in Baku, Azerbaijan, in November. Parliament's text calls for "innovative" sources of finance, similar to language used earlier this month by EU ministers when agreeing a general negotiating mandate for the summit. And the responsibility for delivering on the new collective quantified goal (NCQG) for post-2025 should encompass a "broadened contributor base reflecting parties' evolving financial capabilities and historical emission levels", parliament said. Parliament "insists" that emerging economies with high emissions and high GDP should contribute to the new goal, which is designed to be a successor to developed countries' existing commitment to providing $100bn/yr in climate finance over 2020-25. The draft resolution also notes that the NCQG should clearly prioritise "grants-based finance", be socially fair and aligned with the polluter-pays principle, and ensure that the costs of climate change are borne by those with the greatest capacities. Parliament points to "potential financial contributions from the fossil fuel supply chain". Cop 29 should also co-ordinate for an unambiguous signal on transitioning away from fossil fuels. And the resolution contains a call for the European Commission to work on expanding the scope of the bloc's carbon border adjustment mechanism (CBAM) to more sectors, as well as encouraging the introduction of global carbon pricing. While non-binding, parliament would have to approve any international treaty and detailed climate and energy legislation to achieve greenhouse gas emissions cuts. The resolution received a large cross-party majority in committee, indicating a smoother passage in parliament's plenary vote on the matter next month. By Dafydd ab Iago Send comments and request more information at feedback@argusmedia.com Copyright © 2024. Argus Media group . All rights reserved.

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Industry power growth in France below hopes

22/10/24

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22/10/24

Industry power growth in France below hopes

London, 22 October (Argus) — French industrial power consumption growth in recent years has been below the government's expectations, according to junior energy minister Olga Givernet. France has a target to cut by half its greenhouse gas emissions from the industrial sector by 2030. The electrification of industrial processes that formerly used fossil fuels is one of the main levers the government plans to use to reach its target, implying that power demand should increase in the coming years. But demand in the sector has not picked up, Givernet told Argus at the launch of the government's energy sobriety campaign in Paris on 21 October, with existing industry being dependent on fossil fuels for heat in particular. Electricity consumption — across the residential, tertiary and industrial sectors — has fallen sharply since 2022 because of what the government described as a mix of price effects and voluntary sobriety efforts by households and businesses. And consumption on the high-voltage network — mostly from large industrial sites linked directly to the transmission network — has held roughly flat since moving down in mid-2022 ( see demand graph ). These reductions have enabled the power system to regain margins that could accommodate demand growth, particularly if this is flexible, according to transmission system operator (TSO) RTE. Flexible growth could enable the country to soak up otherwise unusable electricity produced in periods of high renewables output. France on 20 October curtailed 15GWh of zero-carbon electricity, including solar energy, because of a lack of demand, the TSO said ( see solar and wind graph ). While the government cited a "dependency" on fossil fuels as the reason for the lack of a jump in power consumption, poor industrial performance could be another cause. Manufacturing production has stagnated in recent years, with output hovering at 100-103pc of the 2021 average so far this year. And output in energy-intensive sectors is far lower than three years ago. The paper, chemicals, glass and steel sectors have seen their production fall to 75-89pc of 2021 values so far this year, according to national statistics agency Insee. Gas demand in these four sectors held below 2015-22 levels in May-July, the latest data available, although this represented a slight rise on the record lows of 2023. Meanwhile, gas consumption by all large industrial consumers connected to the transmission network in August fell to its lowest of any month since at least 2007. Retail electricity prices for French businesses — including network costs and taxes, except value-added tax — were very nearly in line with the EU average of about €200/MWh last year, according to government data. And lower wholesale prices than European neighbours along the curve could provide some incentive for higher uptake of electrification. Calendar-year contracts delivering in 2025-27 were priced at €13.65-17.75/MWh below Germany on 21 October. But at the same time, the government, caught in a budget crisis and intent on slimming its deficit, has put forward an increase in taxes paid by electricity consumers. The exact amount of the increase has yet to be set, but for industry it could come to roughly €5-25/MWh, which could cancel out any decline in retail prices from lower wholesale costs. The government hopes that nuclear power supply contracts , or CAPNs, long-term contracts signed between industrial consumers and French state-controlled utility EdF, will encourage greater consumption. But low market prices have limited the attractiveness of the contracts to consumers, Givernet said, and getting more signed will require "an effort" on the part of both EdF and industrial firms. By Rhys Talbot 20 Oct curtailments: Generation vs prices Monthly consumption on France's electricity networks Send comments and request more information at feedback@argusmedia.com Copyright © 2024. Argus Media group . All rights reserved.

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