Australian government sees net zero and coal coexisting

Spanish Market: Coal, Coking coal, Emissions, Hydrogen
13/10/21

Australia is moving towards a carbon neutral by 2050 target but parts of the federal government say this can coexist with a vibrant domestic coal industry, with some suggesting a taxpayer-funded loan scheme to ensure continuing investment in the sector.

Australian prime minister Scott Morrison is expected to take a net zero by 2050 target to the UN Cop 26 climate conference in the UK's Glasgow later this month, although it will be a target based on offsets and carbon sequestration, rather than the closure of the nation's coal industry. The government's main goal is to protect coal, gas, heavy manufacturing and agriculture, while promoting the use of hydrogen, carbon capture and storage, and soil carbon, federal energy minister Angus Taylor said this week. Canberra will provide incentives to cut emissions rather than punishing polluters, Taylor added.

Others have gone further, with federal resources minister Keith Pitt last week suggesting that the government provide an A$250bn ($180bn) lending facility to firms wishing to invest in coal mining in Australia. This will fill the gap left by the exit of traditional lenders from the sector.

The last of Australia's four largest banks ANZ committed a year ago to exiting lending to thermal coal activities from 2030, leaving a small number of private equity firms, overseas corporates and private investors providing finance to the sector, with some banks also declining to finance metallurgical coal projects.

Record breaking thermal coal prices, while driven by firm demand ahead of the northern hemisphere winter, are exacerbated by low investment in the coal mining sector. Some mining firms are unable to expand because of regulatory delays, while most cannot balance the current strong prices against the risk of over investing in an asset that could become stranded in a low-carbon economy.

This investment equation is made more complex by the volatility in coal prices over the past two years, where most Australian thermal coal mines were operating at a significant loss in 2020, and by the ever shrinking pool of investors prepared to provide financing. The uncertainty caused by the change in trade flows, because of Beijing's informal ban on Australian coal imports, adds to why even the most bullish of coal supporters have been looking elsewhere for opportunities to invest over the past couple of years.

States go their own way

While the federal government is balancing the needs of its parliamentarians representing coal-producing regions against a wider community desire for action on climate change, some states are moving forward with their own plans. New South Wales, which exports the most thermal coal of all the Australian states, today announced an A$3bn hydrogen investment plan focused on developing green hydrogen hubs in the coal-producing regions of the Hunter valley and the Illawarra.

High-grade thermal coal prices continue to hit new highs on concerns about energy supplies heading into the northern hemisphere winter. Argus last assessed the high-grade 6,000 kcal/kg NAR thermal coal price at $228.21/t fob Newcastle on 8 October, up from $174.46/t on 10 September, $151.90/t on 30 July and $47.56/t a year previously. It assessed lower grade coal at $142.60/t fob Newcastle for NAR 5,500 kcal/kg on 8 October, up from $108.67/t on 10 September and $42.08/t a year earlier.

Premium hard coking coal prices have more than trebled from early May to hit $409.75/t fob Australia in mid-September before easing slightly. Argus last assessed the premium hard low-volatile coking coal price at $402/t fob Australia on 12 October, up from $110.95/t on 11 May. Lower grade metallurgical coal prices have also increased at a slightly lower rate.

By Jo Clarke

Thermal coal prices ($/t)

Metallurgical coal prices ($/t)

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21/11/24

Cop: Talks in Baku torn between mitigation and finance

Edinburgh, 21 November (Argus) — Developing and developed nations remain at loggerheads on what progress on climate finance and mitigation — actions to cut greenhouse gas emissions — should look like at the UN Cop 29 climate summit. But Cop 30 host Brazil has reminded parties that they need to stick to the brief, which is finance for developing countries. Concluding a plenary where parties, developed and developing, listed grievances, environment minister Marina Silva recognised "the excellent progress achieved" on mitigation at Cop 28. She listed paragraphs of the Cop 28 deal, including the energy package and its historic call to transition away from fossil fuels in energy systems. "We are on the right track," she said, talking about mitigation, but "our greatest obligation at this moment is to make progress with regard to financing". "This is the core of financing that will pave our collective path in ambition and implementation at Cop 30," Silva said, adding that $1.3 trillion for developing countries should be "the guiding star of this Cop". Parties are negotiating a new collective quantified goal (NCQG) — a new climate finance target — building on the $100bn/yr that developed countries agreed to deliver to developing countries over 2020-25. But developed countries insist that a precise number for a goal can only be produced if there is progress on mitigation and financing structure for the NCQG. "Otherwise you have a shopping basket but you don't know what's in there," EU energy commissioner Wopke Hoekstra said. Some developing nations said they need the "headline number first". Some developing countries, including Latin American and African nations as well as island states, have also complained about the lack of mitigation ambition. Cop is facing one of the "weakest mitigation texts we have ever seen," Panama said. But they also indicated that financial support was missing to implement action. Developed countries at Cop 29 seek the implementation of the energy pledges made last year. "What we had on our agenda was not just to restate the [Cop 28] consensus but actually to enhance and to operationalise that," but the text goes in the opposite direction, Hoekstra said, talking about the latest draft on finance. Whether hints that Brazil has mitigation in focus for next year's summit will be enough to assuage concerns from developed countries at Cop 29 on fossil fuel ambitions remains to be seen. The communique of the G20, which the country hosted, does not explicitly mention the goal to transition away from fossil fuels either. The developed countries' mitigation stance grew firmer after talks on a work programme dedicated to mitigation, the obvious channel for fossil fuel language, was rescued from the brink of collapse last week. Discussions have stalled, but another text — the UAE dialogue which is meant to track progress on the outcomes of Cop 28 — still has options referring to fossil fuels. But in these negotiations too, divisions remain. "The UAE dialogue contains some positive optional language on deep, rapid and sustained emissions reductions and the [Cop 28] energy package, E3G said. But Saudi Arabia has made clear that this was unacceptable, while India, which worked to water down a coal deal at Cop 26, is pushing back on the 1.5°C temperature limit of the Paris Agreement. Negotiators are starting to run out of time. Draft after draft, the divide fails to be breached with no agreement on an amount for the finance deal. "We cannot talk about a lower or higher number because there is no number," noted Colombia's environment minister Susana Muhamad. The next iteration should have numbers based on the Cop 29 presidency's "view of possible landing zones". The fact that the draft text on finance has no bridging proposal is a concern, non-profit WRI director of international climate action David Waskow said. Finance was always meant to be the centrepiece of Cop 29. Parties have not formally discussed the goal in more than 15 years, and have been trying to prepare for a new deal through technical meetings for the past two years. But the discussion needs to end in Baku. By Caroline Varin Send comments and request more information at feedback@argusmedia.com Copyright © 2024. Argus Media group . All rights reserved.

Brazil's Bndes approves $1.2bn in Climate Fund spending

21/11/24

Brazil's Bndes approves $1.2bn in Climate Fund spending

Sao Paulo, 21 November (Argus) — Brazil's Bndes development bank approved spending $1.2bn of the Climate Fund in the second and third quarters to finance climate change mitigation projects. The projects that received funding — equal to about 70pc of the fund's total — will prevent 3.3mn metric tonnes (t) of CO2 equivalent/yr, according to Bndes. That would be 16 times more CO2 avoided than the 204,000 t from projects approved in the same period last year. In 2023 the fund released $176mn to 27 projects, most of them being renewable energy projects. The funds will go toward wind energy and biogas projects, urban mobility, bus fleet electrification and light rail transportation, as well as to finance green industries and native forest projects. Interest in developing Brazil's sustainable fuels market is growing, Bndes president Aloizio Mercadante said. "For this reason, we must at least double the resources of the Climate Fund as it is outlined in next year's federal budget," he said. One of several instruments of Brazil's climate change policy, the Climate Fund is linked to the environment ministry and is administered by Bndes. It was created in 2009 and uses resources from oil and natural gas exploration to mitigate and combat climate change. By Maria Frazatto Send comments and request more information at feedback@argusmedia.com Copyright © 2024. Argus Media group . All rights reserved.

Cop: Developing countries reject new finance draft

21/11/24

Cop: Developing countries reject new finance draft

Baku, 21 November (Argus) — Developing countries have expressed discontent with the climate finance draft text released today and continue to stick to their initial positions in negotiations at the UN Cop 29 climate summit, in Baku, Azerbaijan. The Cop 29 presidency earlier today released a new draft text on the key issue of climate finance for developing countries , but entrenched positions remain with no progress on an amount. Countries must agree on a new collective quantified goal (NCQG) — a new climate finance target — building on the $100bn/yr that developed countries agreed to deliver to developing countries over 2020-25. Parties such as the group of 77 (G77) and China, Pakistan and Kenya — on behalf of the African Group of Negotiators — today responded with disappointment at the lack of an amount for finance. They are calling for a figure close to 1.3 trillion/yr in provided and mobilised finance, an amount that has long been pushed forward by developing countries. Developed countries have not indicated a number . "We cannot talk about a lower or higher number because there is no number," said Colombia's environment minister Susana Muhamad. The country seeks to end the country's dependence on fossil fuels , while promoting a transition to clean and renewable energy, but has long said that it is lacking the financial means to do so. The finance goal "is not an investment goal, but there remains text on investment flows," complained the G77 and China group. China's representative emphasised that the text should not "cherry-pick single paragraphs" from the Cop 28 deal, as developed countries seek to add language on fossil fuels agreed in Dubai last year. The finance text should duplicate accurately and fully the wording of the Paris Agreement, they said. China also reiterated that the finance goal is for developed countries to honour their obligations. The country pointed out that although it has provided 177bn yuan ($24.5mn) since 2016 in support of developing countries, "the voluntary support" of the global south is not part of the goal. It is different in nature from the obligation of developed countries to provide financial resources, the Chinese negotiator said. UN secretary general Antonio Guterres today urged parties to "soften hard lines" and focus on the bigger picture. "Finance is not a hand-out… it's a downpayment on a safer, more prosperous future for every nation on earth." "The time to repeat initial positions has come to an end, and parties should find areas of possible compromise," he said. The summit is scheduled to end on 22 November, but many participants said it is likely to overrun. By Prethika Nair and Georgia Gratton Send comments and request more information at feedback@argusmedia.com Copyright © 2024. Argus Media group . All rights reserved.

Cop: EU, four countries commit to 1.5°C climate plans

21/11/24

Cop: EU, four countries commit to 1.5°C climate plans

Baku, 21 November (Argus) — The EU, Canada, Mexico, Norway and Switzerland have committed to submit new national climate plans setting out "steep emission cuts", that are consistent with the global 1.5°C temperature increase limit sought by the Paris Agreement. The EU and four countries made the pledge at the UN Cop 29 climate summit in Baku, Azerbaijan today, and called on other nations to follow suit — particularly major economies. Countries are due to submit new climate plans — known as nationally determined contributions (NDCs) — covering 2035 goals to the UN climate body the UNFCCC by early next year. The EU, Canada, Mexico, Norway and Switzerland have not yet submitted their plans, but they will be aligned with a 1.5°C pathway, EU climate commissioner Wopke Hoekstra said today. The Paris climate agreement seeks to limit the global rise in temperature to "well below" 2°C and preferably to 1.5°C. Canada's NDC is being considered by the country's cabinet and will be submitted by the 10 February deadline, Canadian ambassador for climate change Catherine Stewart said today. Switzerland's new NDC will also be submitted by the deadline, the country's representative confirmed. Pamana's special representative for climate change Juan Carlos Monterrey Gomez also joined the press conference today. Panama, which is designated as carbon negative, submitted an updated NDC in June. It is planning to submit a nature pledge, Monterrey Gomez said. "It is time to streamline processes to get to real action", he added. The UK also backed the pledge. The UK announced an ambitious emissions reduction target last week. The UAE — which hosted Cop 28 last year — released a new NDC just ahead of Cop 29, while Brazil, host of next year's Cop 30, released its new NDC on 13 November during the summit. Thailand yesterday at Cop 29 communicated a new emissions reduction target . Indonesia last week said that it intends to submit its updated NDC ahead of the February deadline, with a plan placing a ceiling on emissions and covering all greenhouse gases as well as including the oil and gas sector. Colombia also indicated that its new climate plan will seek to address fossil fuels, but it will submit its NDC by June next year . By Georgia Gratton Send comments and request more information at feedback@argusmedia.com Copyright © 2024. Argus Media group . All rights reserved.

Cop: EU says finance draft text not acceptable

21/11/24

Cop: EU says finance draft text not acceptable

Baku, 21 November (Argus) — The latest draft of the text on climate financing presented at the UN Cop 29 climate summit is not ambitious enough on mitigation — reducing emissions — and "clearly unacceptable," EU energy commissioner Wopke Hoekstra said today. Parties must agree at Cop 29, in Baku, Azerbaijan, on a new collective quantified goal (NCQG) — a new climate finance target — building on the $100bn/yr that developed countries agreed to deliver to developing countries over 2020-25. The text is the main outcome for the summit. "What we had on our agenda was not just to restate the [Cop 28] consensus but actually to enhance that and to operationalise that," but the text goes in the opposite direction, Hoekstra said. Parties to last year's Cop 28 summit in Dubai made an historic pledge to "transition away" from all fossil fuels. The EU has warned against any backsliding on this pledge . "We cannot accept the view that the previous Cop did not happen," Hoekstra said. A draft text on the mitigation work programme — a process that focuses on emissions reduction — was released by the Cop 29 presidency in the early hours of this morning. It does not mention phasing out or reducing fossil fuels in energy systems, or reference the agreement reached on the latter point at Cop 28 last year. Hoekstra indicated today's text does not provide enough clarity to allow the EU to put a concrete number on the amount of climate finance that should be available. The bloc has insisted the final number for climate financing can come only when other elements, including the structure and contributor base, are settled. But recipient country groups such as the G77 and Like-Minded Developing Countries (LMDC) groups have expressed impatience at the lack of a concrete number. Minor bright spots in the numerous draft texts released overnight include those on Article 6, which governs international carbon credits, Hoekstra said. But the commissioner is "sure there is not a single ambitious country who thinks this is nearly good enough." By Rhys Talbot Send comments and request more information at feedback@argusmedia.com Copyright © 2024. Argus Media group . All rights reserved.

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