Italy’s NECP eyes 11pc of power demand from nuclear
Italy aims to generate at least 11pc of its power demand from nuclear energy by 2050 and could double that amount if necessary as part of efforts to meet its climate goals.
In its new national energy and climate plan (NECP) sent to Brussels yesterday, Rome said its "conservative" scenario envisioned installing 8GW of nuclear power capacity using mainly small modular reactors but also fusion plants.
Italy could build as much as 16GW of nuclear capacity depending on developments across the energy system, according to the document. The ‘with-nuclear' option would provide savings of around €17bn ($18.3bn) compared with not using it. It would also mean less gas consumption tied to carbon capture and storage (CCS) technology.
Italy banned nuclear power in a referendum in 1987 after the Chernobyl disaster, but the current right-wing government of Giorgia Meloni has voiced its support for the technology. Last year it set up the national platform for sustainable nuclear power to map out a timeline for a possible return to nuclear power.
In confirmation of targets set last year, Rome said it aimed to install a total of 131GW of renewable energy capacity by 2030, compared to 58GW in 2021, with a view to meeting 63pc of power demand and 39.4pc of total energy consumption.
Most of the new capacity will be solar photovoltaic (PV), with 79GW expected to be installed driven by new subsidies and easier permitting. Wind capacity is expected to contribute 28GW, with offshore wind providing just 2.1GW.
The plan envisages the development of contracts for difference (CfDs) through auctions for larger plants, as well as a framework to boost power-purchasing agreements (PPAs). Italy's NECP also maps out the development of electricity grids and cross-border interconnections.
"The long-term risk is that the tight renewables penetration targets and the CfD mechanism established by the EU to deliver incentives could lead to a negative impact on spot prices, currently driven in Italy by the price of natural gas and carbon allowances," Italian broker Equita said.
The current final revision of Italy's NECP comes after a cross-sector and public consultation. It was submitted to the European Commission for approval on 1 July, a day after the deadline required by EU law.
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Reformed Australia safeguard scheme faces uncertainties
Reformed Australia safeguard scheme faces uncertainties
Canberra, 2 July (Argus) — Australia's reformed safeguard mechanism triggered more decarbonisation efforts in its first year, but key uncertainties need to be clarified to unlock bigger investments, delegates heard at a Carbon Market Institute (CMI) symposium in Canberra on 1 July. Settings are clear until 2030 but uncertainties over a few major factors beyond that year have been causing hesitation and blocking investments, market experts said. The mechanism became a 'declining baseline-and-credit' emissions trading scheme (ETS) from 1 July 2023 after a reform by the Labor government , which set a emission reduction target of 43pc by 2030 from 2005 levels after taking office in mid-2022. Figures from the first year under the reformed scheme, between 1 July 2023-30 June 2024, will only be known after facilities surrender their units ahead of the 1 April 2025 compliance deadline . The Australian government still needs to define the design of the cost containment reserve , under which safeguard facilities may access Australian Carbon Credit Units (ACCUs) held by the Clean Energy Regulator (CER) at a fixed price that started at A$75 ($50) in the 2023-24 fiscal year to 30 June and will be increased with inflation plus 2pc/yr. "On a fundamental basis, [the reserve] shouldn't be required to be triggered before 2027-28, but we do need price signals to unlock a new wave of investments and capitalise a whole new suite of projects that are not already banked," climate solutions and brokerage firm Core Markets' chief executive Chris Halliwell told delegates on 1 July. Uncertainty over baseline decline rate Under the reformed mechanism, facilities that emit more than 100,000t of CO2 equivalent (CO2e) in a fiscal year face declining baselines and need to surrender ACCUs or upcoming safeguard mechanism credits if their onsite abatement activities were not enough to keep their emissions below thresholds. The rate of decline was set at 4.9pc/yr from 2021-22 to 2029-30 and will be set in five-year blocks from 2030-31 onwards, in line with future updates to Australia's Nationally Determined Contribution (NDC) under the Paris Agreement, with later rates to be defined by 1 July 2027. The government disclosed an indicative decline rate of 3.285pc/yr in the safeguard rules from 2030-31 to 2049-50, said Australian carbon advisory company RepuTex's head of research Bret Harper. But that would mean "a less ambitious" rate than the existing one, even as Australia might set a much more ambitious emissions reduction target by 2035, Harper added. Uncertainty for trade-exposed facilities There is significant uncertainty and risk for so-called trade-exposed baseline adjusted facilities, which are typically smaller industrial participants that face a high risk of carbon leakage. Such facilities can apply for a discounted decline rate as low as 1pc/yr, but several of them do not know whether they will qualify, climate risk and energy transition consultancy Energetics' head of emissions quant David Kazmirowicz told delegates. He mentioned the example of one client, Victoria-based glass manufacturer Oceania Glass, which is the sole producer of float glass products in Australia. "All their competition comes from overseas and they are, putting it mildly, up in arms that there was a domestic policy mechanism triggered without an equivalent for overseas imports," he said. "This facility is looking at existential impacts where, I think, big players in the resource industry are potentially not." Australia has been looking at the possibility of introducing a carbon border adjustment mechanism (CBAM), with a second consultation paper to be published in the "near future", said Australian National University professor Frank Jotzo, who has been leading the carbon leakage review. The first round of consultation showed strong "support for the principle of a CBAM", he added. By Juan Weik Send comments and request more information at feedback@argusmedia.com Copyright © 2024. Argus Media group . All rights reserved.
Australia’s safeguard credit selling interest unclear
Australia’s safeguard credit selling interest unclear
Canberra, 2 July (Argus) — There is buying interest in Australia's upcoming safeguard mechanism credits (SMCs), but selling interest has been scant so far, delegates heard at a Carbon Market Institute (CMI) symposium in Canberra on 1 July. The Clean Energy Regulator (CER) will start to issue SMCs from 2025 onwards to safeguard facilities that report scope 1 greenhouse gas (GHG) emissions below their annual baselines, effectively introducing emissions allowances into the Australian carbon market. Each SMC will represent 1t of CO2 equivalent (CO2e) below the baseline of a facility, which will have the option to either hold it for future use or sell it to facilities that exceeded their thresholds. Facilities that overstep their baselines are required to buy and surrender one Australian Carbon Credit Unit (ACCU) or SMC for each excess 1t of CO2e, and will be penalised if they fail to do so. This means companies in need of units will have interest in buying SMCs, but there are doubts about selling interest, market experts said. "We hear lots of our clients aiming to go out there and buy SMCs, but very few who are going to generate them are willing to sell because they see them as a mechanism for hedging future risk," said sustainability advisory firm Anthesis' climate resilience and decarbonisation lead, Thomas Hodgson. Facilities will be allowed to hold an unlimited number of SMCs until 2030. They will be able to use the credits for safeguard compliance at any point up to that year — irrespective of when the SMCs are issued — but the Australian government has pledged to review post-2030 banking arrangements in the scheduled review of the safeguard mechanism in 2026-27, according to CMI. Climate risk and energy transition consultancy Energetics has been working with 10 clients that account for a combined 15mn t/yr of CO2e in Australia. But most of them were not currently looking at the opportunity of receiving SMCs in the near future, Energetics' head of emissions quant David Kazmirowicz said, highlighting a potentially limited credit issuance. Actual SMC transactions are only expected to pick up once the CER issues the first units in early 2025, when there will be more visibility on issuance volumes as well as selling and buying appetite. These below-baseline credits will be "a certificate to watch", said the regulator's principal economist Georgina Prasad. There will be advantages in banking SMCs for future liability, but several facilities likely to receive the credits are not expected to have any liability in the next several years, according to Australian carbon advisory company RepuTex's head of research Bret Harper. "So this is probably a prime opportunity for them to test the market and see if they can monetise those credits," he pointed out. SMCs are expected to trade at a discount to ACCUs as their use will be restricted to safeguard facilities, excluding them from voluntary and non-federal compliance demand, according to market participants. Safeguard volumes accounted for 75pc of all the nearly 1.2mn ACCU cancellations in the first quarter of 2024, according to latest CER data. Generic ACCU prices have ranged between A$33.75-34.60 ($22.50-23.05) in recent weeks. By Juan Weik Send comments and request more information at feedback@argusmedia.com Copyright © 2024. Argus Media group . All rights reserved.
US judge halts 'pause' on LNG export licenses
US judge halts 'pause' on LNG export licenses
Washington, 1 July (Argus) — A federal judge in Louisiana has ordered President Joe Biden's administration to end its five-month-old "pause" on the approval process for new LNG export licenses until the resolution of a lawsuit by states that said the policy is unlawful. The US Department of Energy (DOE) and other administration officials are immediately "enjoined and restrained" from "halting and/or pausing the approval process" for LNG export applications requesting licenses to export to countries without a free trade agreement with the US, federal district court judge James Cain wrote today. DOE did not immediately respond to a request for comment. The court's ruling is a potential blow for the Biden administration, which had said it would need until the first quarter of 2025 — after the November elections — to finish a more thorough review of the economic and climate-related effects of fully licensing LNG terminals, beyond the 48 Bcf/d of US liquefaction capacity that is fully permitted today. DOE officials have cited concerns that licensing more LNG projects could end up increasing natural gas prices for consumers. "So much has changed, including the volumes of what we're exporting," US deputy energy secretary David Turk said last week at a congressional hearing. "So we said, 'Let's take a step back, let's update our economic analysis." Biden announced the LNG licensing pause in January, delighting climate groups that have argued that approving additional projects would amount to a "climate bomb." But the pause enraged gas industry officials that worried the pause could threaten investments in a set of projects that were nearing a final investment decision. The pause raised uncertainty on the status of LNG export projects that have yet to obtain licenses, including Venture Global's proposed 28mn t/yr CP2 project in Louisiana that last week cleared a key part of the federal permitting process. The court's ruling does not explicitly require DOE to issue new LNG export licenses, or set an explicit deadline for the agency to take final action on pending applications. But the judge said that under the Natural Gas Act, DOE is required to act "expeditiously" once it receives an export application. Before Biden formally announced the pause, some LNG export applications were already subject to reviews that industry officials said amounted to a de facto freeze. In the ruling, Cain said that Louisiana and other states that challenged the LNG licensing pause were likely to succeed on the merits in showing Biden's policy was arbitrary and capricious, in part because DOE failed to provide a "detailed explanation" for its halt of the approval process. Cain said that DOE had made a "complete reversal" from its position in July 2023, when it defended its licensing process in its rejection of a complaint from environmentalists. By Chris Knight Send comments and request more information at feedback@argusmedia.com Copyright © 2024. Argus Media group . All rights reserved.
Japan mulls seeking more gas-fired capacity in auction
Japan mulls seeking more gas-fired capacity in auction
Osaka, 1 July (Argus) — Japan is considering further adding to gas-fired power generation capacity through its long-term zero emissions power capacity auction, given forecasts of rising electricity demand with the rapid adoption of artificial intelligence. A working group under the trade and industry ministry Meti has proposed to look for an additional 4GW of gas-fired capacity over two fiscal years from April 2024-March 2026 via a clean power auction. This came after awarded gas-fired capacity reached 5.76GW in the first auction held in January , with the auction seeking about 6GW over three years. The second auction — which Tokyo plans to hold in January 2025 — could seek 2.24GW, including the remaining 0.24GW in the first auction, for 2024-25 and another 2GW for 2025-26 in a third auction, the working group suggested. It has also proposed to extend the period within which awarded gas-fired projects have to start operations to eight years from the previous six years, given current resource shortages at plant manufacturers. Japan has launched the auction system to spur investment in clean power sources by securing funding in advance to drive the country's decarbonisation towards 2050. This generally targets clean power sources — such as renewables, nuclear, storage battery, biomass, hydrogen and ammonia. But the scheme also applies to new power plants burning regasified LNG as an immediate measure to ensure stable power supplies, subject to a gradual switch from gas to cleaner energy sources. These measures will not necessarily lead to increased demand for LNG, as Japanese import demand for the fuel would further come under pressure from expanded use of renewables and nuclear power. But the power sector will have to secure enough capacity to meet peak demand, especially with power consumption by data centres and semiconductor producers expected to continue to increase. Japan's peak power demand in 2033-34 is forecast at 161GW, up from an estimated 159GW in 2024-25, as the country's digital push will more than offset the impact of falling population and further energy saving efforts, according to the nationwide transmission system operator Organisation for Cross-regional Co-ordination of Transmission Operator. By Motoko Hasegawa Send comments and request more information at feedback@argusmedia.com Copyright © 2024. Argus Media group . All rights reserved.
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