Viewpoint: Australia sets basis for energy transition

: Coal, Electricity, Hydrogen, Natural gas
22/12/19

Australia's energy transition is expected to broaden in 2023 with Canberra to unveil its electric vehicle (EV) strategy, set baselines for facilities with the largest greenhouse gas (GHG) emissions, as well as tighten rules on firms to ensure they are not making false claims about their emissions cuts.

These policies build on the advances made in 2022 for the country's energy transition, which will affect domestic coal and gas consumption as utilities pledged to close coal and gas base-load power plants earlier than previously planned. The federal government in May ushered in deeper GHG emissions cut targets and imposed a renewable energy target of 82pc by 2030. Most of the GHG emissions reduction initiatives are related to Australia's electricity generation sector, which is the country's largest single source of emissions and represent a third of total emissions.

The coal-fired power plant closures and the increase in renewables is projected to cut GHG emissions from electricity generation by 50pc to 79mn t of carbon dioxide equivalent (CO2) by the end of the decade from 158mn t of CO2e in 2021. The fall in power generation emissions puts Australia on track to reduce emissions by 40pc by 2030, just short of its target of a 43pc cut.

The latest Australian emissions projections show CO2 to continue to rise for the transport, agriculture and the fugitive emissions from extracting coal, oil and gas. Canberra also has its sights on transport emissions, which account for around 20pc of Australia's emissions.

Canberra has released a discussion paper on EVs, aiming to align polices at the federal and state level to stimulate EV sales. These possible new policies include setting emissions target for the light vehicle market, improving fuel standards for gasoline cars and providing financial incentives to purchase EVs. The latest national vehicle sales data for November 2022 showed EV sales accounted for 4.7pc of total sales in the month, up from an average of 0.49pc in 2021 of the 1.05mn vehicles sold in 2021.

Australian independent Santos is building a 1.7mn t/yr carbon capture and storage (CCS) unit in the onshore Cooper basin in South Australia, which it intends to capture scope one and two GHG emissions that includes fugitive emissions from the extraction process, but is reliant on carbon credits to fund the venture.

A review of Australia's carbon credit market is to be done in 2023, which may influence the construction of further CCS projects as the carbon credit market requires tighter validity rules given the scale of questionable credits in the market.

The federal government plans to reform the safeguard mechanism, which imposes emissions caps on all facilities emitting over 100,000 t/yr of CO2e, covering around 215 facilities.

Hydrogen future

Australian federal and state governments have been promoting hydrogen from renewable sources as a possible way to decarbonise heavy industry such as steel production and other industrial processes that will be subject to the safeguard mechanism. Few hydrogen projects have been sanctioned beyond the concept stage but 2023 will see the expected opening of the country's first electrolyser facility in Gladstone, Queensland by Fortescue Futures Industries (FFI).

FFI plans to use the electrolysers for the conversion of the Gibson island ammonia plant in Queensland to be run on green hydrogen, with a final investment decision to be made in 2023. This makes 2023 an important year for making inroads into reducing emissions from the industrial processes sector.

All sectors will be affected by Canberra's plans to introduce new climate risk disclosure rules for all firms to provide greater transparency, boost investor confidence particular for investment funds with environment, social and governance mandates and ensure Australia's regulations are up to date with other jurisdictions.

By Kevin Morrison

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24/11/22

Cop 29 goes into overtime on finance deadlock

Developing countries' discontent over the climate finance offer is meeting a muted response, writes Caroline Varin Baku, 22 November (Argus) — As the UN Cop 29 climate conference went into overtime, early reactions of consternation towards a new climate finance draft quickly gave way to studious silence, and some new numbers floated by developing nations. Parties are negotiating a new collective quantified goal — or climate finance target — building on the $100bn/yr that developed countries agreed to deliver to developing countries over 2020-25. The updated draft of the new finance goal text — the centrepiece of this Cop — proposes a figure of $250bn/yr by 2035, "from a wide variety of sources, public and private, bilateral and multilateral, including alternative sources". This is the developed country parties' submission, the Cop 29 presidency acknowledged. Developing nations have been waiting for this number for months, and calling on developed economies to come up with one throughout this summit. They rejected the offer instantly. "The [$250bn/yr] offered by developed countries is a spit in the face of vulnerable nations like mine," Panama's lead climate negotiator, Juan Carlos Monterrey Gomez, said. Negotiating group the Alliance of Small Island States called it "a cap that will severely stagnate climate action efforts". The African Group of Negotiators and Colombia called it "unacceptable". This is far off the mark for developing economies, which earlier this week floated numbers of $440bn-600bn/yr for a public finance layer. They also called for $1.3 trillion/yr in total climate finance from developed countries, a sum which the new text instead calls for "all actors" to work toward. China reiterated on 21 November that "the voluntary support" of the global south was not to be counted towards the goal. A UN-mandated expert group indicated that the figure put forward by developed countries "is too low" and not consistent with the Paris Agreement goals. The new finance goal for developing countries, based on components that it covers, should commit developed countries to provide at least $300bn/yr by 2030 and $390bn/yr by 2035, it said. Brazil indicated that it is now pushing for these targets. The final amount for the new finance goal could potentially be around $300bn-350bn/yr, a Somalian delegate told Argus . A goal of $300bn/yr by 2035 is achievable with projected finance, further reforms and shareholder support at multilateral development banks (MDBs), and some growth in bilateral funding, climate think-tank WRI's finance programme director, Melanie Robinson, said. "Going beyond [$300bn/yr] would even be possible if a high proportion of developing countries' share of MDB finance is included," she added. All eyes turn to the EU Unsurprisingly, developed nations offered more muted responses. "It has been a significant lift over the past decade to meet the prior goal [of $100bn/yr]," a senior US official said, and the new goal will require even more ambition and "extraordinary reach". The US has just achieved its target to provide $11bn/yr in climate finance under the Paris climate agreement by 2024. But US climate funding is likely to dry up once president-elect Donald Trump, a climate sceptic who withdrew the US from the Paris accord during his first term, takes office. Norway simply told Argus that the delegation was "happier" with the text. The EU has stayed silent, with all eyes on the bloc as the US' influence wanes. The EU contributed €28.6bn ($29.8bn) in climate finance from public budgets in 2023. Developed nations expressed frustration towards the lack of progress on mitigation — actions to cut greenhouse gas emissions. Mentions of fossil fuels have been removed from new draft texts, including "transitioning away" from fossil fuels. This could still represent a potential red line for them. Send comments and request more information at feedback@argusmedia.com Copyright © 2024. Argus Media group . All rights reserved.

Opinion: Bridging the divide

24/11/22

Opinion: Bridging the divide

Cop summits put the gap between developed and developing countries in stark relief and demand a strong moderator Baku, 22 November (Argus) — The UN's Cop climate summits always involve a high-stakes test of multilateralism. But the Cop 29 gathering that is crawling towards its conclusion in Baku this week has pushed this concept to its limit. The summit faced serious challenges even before it kicked off. Azerbaijan took on the presidency relatively late in the day and the country's president, Ilham Aliyev, irritated some delegates with an opening speech that lauded oil and gas as a "gift from God" and railed against "western fake news". His comments on European nations' Pacific island territories prompted France's energy minister to boycott the talks, while the Cop chief executive was caught on film trying to facilitate fossil fuel deals. And the broader geopolitical background for the gathering was, of course, "grim", as EU climate commissioner Wopke Hoekstra noted, even before delegates tackled the summit's key discussion topic — money. At the heart of this year's Cop is the need to agree a new climate finance goal — a hugely divisive subject at the best of times. Discussions start with countries' wealth, take into account historical responsibility for emissions, and often end up with accusations of neocolonialism and calls for reparations. Figuring out who pays for what is crucial to advancing any kind of meaningful energy transition — and is hence a regular Cop sticking point. Developing countries have long argued that they are not able to decarbonise or implement energy transition plans without adequate financing, and they are prepared to hold other issues hostage to achieve this. Equally, developed countries will not budge on finance until stronger emissions cuts are pledged. Cop summits throw the developed/developing world divide into stark relief as well as shine an unforgiving light on weak management and oversight of Cop debate — an event where every country has an equal vote and needs a strong moderator to bridge that deepening developed and developing world division. This year's summit falls between two much more heavily-hyped Cops, and next year's host Brazil has already taken centre stage, boosted by also holding the G20 presidency. Cop 29 president Mukhtar Babayev asked Brazil and 2021 host the UK to help ensure a balanced outcome, while a strong focus on climate at this week's G20 summit in Rio de Janeiro lent some support to discussions in Baku. More challenges loom. US president-elect Donald Trump has threatened to pull the US — the world's second-largest greenhouse gas emitter — out of the UN Paris Agreement for a second time, and there are fears that fellow G20 member Argentina might quit too. But the Cop process has dealt with some of these challenges before — it is built to withstand a term or two of an unsympathetic world leader, and any exits from the Paris accord could galvanise others to step up their policy commitments, several delegates in Baku suggest. And the issue overshadowing it all — and the reason nearly 200 countries still turn up each year — is not going away. The world has already warmed by around 1.3°C above pre-industrial levels and this year is set to smash last year's record as the hottest. Leaders from both developed and developing countries spoke of catastrophic floods, droughts, heatwaves and storms. It has become a truism, but when it comes to the tricky issue of money, the only thing more daunting than the cost of tackling climate change is the cost of ignoring it. Send comments and request more information at feedback@argusmedia.com Copyright © 2024. Argus Media group . All rights reserved.

Cop: Drafts point to trade-off on finance, fossil fuels

24/11/22

Cop: Drafts point to trade-off on finance, fossil fuels

Baku, 22 November (Argus) — The new draft on the climate finance goal from the UN Cop 29 climate summit presidency has developed nations contributing $250bn/yr by 2035, while language on fossil fuels has been dropped, indicating work towards a compromise on these two central issues. There is no mention of fossil fuels in either the new draft text on the global stocktake — which follows up the outcome of Cop 28 last year, including "transitioning away" from fossil fuels — or in the new draft for the climate finance goal. Developed countries wanted a reference to moving away from fossil fuels included, indicating that not having one would be a red line. The new draft text on the climate finance goal would mark a substantial compromise for developing countries, with non-profit WRI noting that this is "the bridging text". Parties are negotiating the next iteration of the $100bn/yr that developed countries agreed to deliver to developing nations over 2020-25 — known as the new collective quantified goal (NCQG). The new draft sets out a figure of $250bn/yr by 2035, "from a wide variety of sources, public and private, bilateral and multilateral, including alternative sources". It also notes that developed countries will "take the lead". It sets out that the finance could come from multilateral development banks (MDBs) too. "It has been a significant lift over the past decade to meet the prior, smaller goal... $250bn will require even more ambition and extraordinary reach," a US official said. "This goal will need to be supported by ambitious bilateral action, MDB contributions and efforts to better mobilise private finance, among other critical factors," the official added. India had indicated earlier this week that the country was seeking around $600bn/yr for a public finance layer from developed countries. Developing countries had been asking for $1.3 trillion/yr in climate finance from developed countries, a sum which the new text instead calls for "all actors" to work toward. The draft text acknowledges the need to "enable the scaling up of financing… from all public and private sources" to that figure. On the contributor base — which developed countries have long pushed to expand — the text indicates that climate finance contributions from developing countries could supplement the finance goal. It is unclear how this language will land with developing nations. China yesterday reiterated that "the voluntary support" of the global south is not part of the goal. The global stocktake draft largely focuses on the initiatives set out by the Cop 29 presidency, on enhancing power grids and energy storage, though it does stress the "urgent need for accelerated implementation of domestic mitigation measures". It dropped a previous option, opposed by Saudi Arabia, that mentioned actions aimed at "transitioning away from fossil fuels". Mitigation, or cutting emissions, and climate finance have been the overriding issues at Cop 29. Developing countries have long said they cannot decarbonise or implement an energy transition without adequate finance. Developed countries are calling for substantially stronger global action on emissions reduction. By Georgia Gratton and Prethika Nair Send comments and request more information at feedback@argusmedia.com Copyright © 2024. Argus Media group . All rights reserved.

Japan’s Taketoyo to resume biomass co-firing in 2027

24/11/22

Japan’s Taketoyo to resume biomass co-firing in 2027

Tokyo, 22 November (Argus) — Japan's largest electricity producer Jera aims to resume coal and biomass co-firing at the 1.1GW Taketoyo plant in 2027's first quarter, after a fire halted plant operations in January. Jera announced on 22 November that the thermal power plant in central Japan's Aichi prefecture would resume co-firing wood pellets with coal at a rate of 8pc, around the end of the 2026-27 fiscal year ending in March. This will come after its safety measures are completed. The plant's co-firing rate was 17pc before the serious fire, which was caused by an explosion of dust from wood pellets. The company will consider increasing the co-firing rate again in the future, provided safety can be ensured. But the plant will restart coal-only combustion in early January 2025, operating mainly during the summer and winter seasons, when electricity demand is high. Jera will keep operation rates low at Taketoyo and other coal-fired plants when electricity demand is low and rely more on gas-fired generation, to achieve its initial plan to cut CO2 emissions through co-firing at Taketoyo. Taketoyo started co-firing operations in August 2022 and burned around 500,000 t/yr of wood pellets imported from the US and Vietnam. It will burn 200,000 t/yr after it resumes co-firing at 8pc. The plant will slow down the speed of wood pellet conveyors to reduce friction as a part of safety measures, which means it must also reduce its coal and biomass co-firing rate. It is also currently working on other safety measures, such as installing air pressure conveying facilities dedicated to wood pellets and explosion suppressor systems to inject fire extinguishing agents. The outage at Taketoyo has encouraged Jera to boost replacement gas-fired generation, with the extra gas-fired costs accounting for most of the estimated cost resulting from the shutdown, which could be tens of billion yen in the 2024-25 fiscal year ending in March. By Takeshi Maeda Send comments and request more information at feedback@argusmedia.com Copyright © 2024. Argus Media group . All rights reserved.

Cost of government support for fossil fuels still high

24/11/21

Cost of government support for fossil fuels still high

London, 21 November (Argus) — The cost of government measures to support the consumption and production of fossil fuels dropped by almost a third last year as energy prices declined from record highs in 2022, according to a new report published today by the OECD. But the level of fiscal support remained higher than the historical average despite government pledges to reduce carbon emissions. In an analysis of 82 economies, data from the OECD and the IEA found that government support for fossil fuels fell to an estimated $1.1 trillion in 2023 from $1.6 trillion a year earlier. Although energy prices were lower last year than in 2022, countries maintained various fiscal measures to both stimulate fossil fuel production and reduce the burden of high energy costs for consumers, the OECD said. The measures are in the form of direct payments by governments to individual recipients, tax concessions and price support. The latter includes "direct price regulation, pricing formulas, border controls or taxes, and domestic purchase or supply mandates", the OECD said. These government interventions come at a large financial cost and increase carbon emissions, undermining the net-zero transition, the report said. Of the estimated $1.1 trillion of support, direct transfers and tax concessions accounted for $514.1bn, up from $503.7bn in 2022. Transfers amounted to $269.8bn, making them more costly than tax concessions of $244.3bn. Some 90pc of the transfers were to support consumption by households and companies, the rest was to support producers. The residential sector benefited from a 22pc increase from a year earlier, and support to manufacturers and industry increased by 14pc. But the majority of fuel consumption measures are untargeted, and support largely does not land where it is needed, the OECD said. The "under-pricing" of fossil fuels amounted to $616.4bn last year, around half of the 2022 level, the report said. "Benchmark prices (based on energy supply costs) eased, particularly for natural gas, thereby decreasing the difference between the subsidised end-user prices and the benchmark prices," it said. In terms of individual fossil fuels, the fiscal cost of support for coal fell the most, to $27.7bn in 2023 from $43.5bn a year earlier. The cost of support for natural gas has grown steadily in recent years, amounting to $343bn last year compared with $144bn in 2018. The upward trend is explained by its characterisation as a transition fuel and the disruption of Russian pipeline supplies to Europe, the report said. By Alejandro Moreano and Tim van Gardingen Send comments and request more information at feedback@argusmedia.com Copyright © 2024. Argus Media group . All rights reserved.

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