Tag Archives: Coal

Edison Plans to Shut Coal-Fired Power Plants in the US

US power utility Edison International announced over the weekend (3-4 March) it would shut two, and possibly three, coal plants in Illinois. Edison will shut down its two Chicago coal-fired power plants–one this year and one by 2014–rather than install pollution-control equipment to comply with state pollution limits, the company said. Edison said it also would probably shut down a third coal plant in Waukegan, Illinois, and possibly others.

The move comes as a result of a collapse in the wholesale price of natural gas in North America, thanks to the boom in domestic production of shale gas. Production from the US “lower-48” states reached 63.7 bcf/d in January, pushing prices on the Henry Hub market as low as USD2.36/mmBtu. This has led to around 175-TWh-worth of coal-fired generation being displaced from the merit order across the country, mainly in the north-east. With the shale gale showing little sign of abating, utilities have reacted by mothballing their coal-burning power plants: American Electric Power Co. Inc. has said it plans to shut down up to 6,000MW (mainly in Ohio) of capacity, while GenOn Energy Inc. said on Wednesday (29 February) it intends to shut down a further seven coal-fired power plants, with capacity of around 3,140MW.

Significance: North America’s experience in coal/gas price differentials comes in stark contrast to the European sector. In Europe, gas prices have regained much of the ground lost since their peak in 2008, thanks to oil-indexed contract rates being dragged up by bullish crude prices. At the same time, much of the coal that was being shipped to the US from Latin America and South Africa is being redirected to Europe, depressing coal prices there. As such, the clean spark spreads in Europe are well below clean dark spreads (in some cases even negative). In addition to this, surging volumes of power supply from renewable energy sources are squeezing the run time of gas-fired power plants (see: Statkraft Places 430MW Gas-Fired Capacity in Cold Reserve).

Therefore, whereas the US is seeing coal pushed out of merit by cheap gas, in Europe the opposite is true.

Meanwhile, elsewhere in the USA, More Than 75 California Leaders Say ‘Yes’ to Solar Power

Solar power is booming in California—in urban and rural areas, along the coast and throughout the Central Valley, in Democratic and Republican strongholds alike—and a growing number of California’s leaders are seeking to build on this foundation by supporting Gov. Jerry Brown’s goal to build 12,000 megawatts (MW) of local, distributed energy throughout the state by 2020. That’s significant—12,000 MW is the equivalent of 24 coal-fired power plants.

To date, 8 Members of Congress, 35 Members of the California State Legislature, and 38 local officials from San Jose and Sacramento to Los Angeles and San Diego have signed on to say: “Yes, I endorse Governor Brown’s pioneering vision to build 12,000 megawatts of clean energy—enough solar energy to cover a million solar roofs—by 2020. By building solar on houses, apartment buildings, offices, schools, and warehouses across California, we can create green jobs, reduce air pollution, and generate clean energy to power our lives.”

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Energy & Water – "The Real Blue Chips"

The latest Energy Bulletin from the Post Carbon Institute discusses “Energy and water – the real blue-chips” and important implications for investors:

“The two most important natural resources are water and energy.”

“In most cases, each is required to procure the other.  First, we use water directly through hydroelectric power generation at major dams, indirectly as a coolant for thermoelectric power plants, and as an input for the production of biofuels.”

“By sector, the two largest consumers of water in the United States are agriculture and electrical power plants.  If we count only fresh water, fully 81% of U.S. use is for crop irrigation.”

“For American corn production, an average of 2,100 gallons of irrigation water is required per bushel which yields 2.7 gallons of corn-based ethanol.  This means that 206 gallons of water is needed per gallon of gasoline substitute, ethanol, before refining.”

“Several studies suggest that up to two-thirds of the global population could experience water scarcity by 2050.  The shortages will be driven by the agricultural sector, which is currently responsible for up to 90% of global fresh-water consumption.

“Water shortages could become much more acute if there is widespread adoption of energy-production technologies that require water as a significant input, such as biofuels.”

“If large quantities of water are diverted to energy production because the market dictates this as society’s priority, there would be a significant loss of food production and a decline in human welfare.”

According to data from the Institute, the water requirements for energy production are substantial. Conventional petroleum extraction requires 10-40 liters of water per megawatt hour of energy, oil refining can demand 80-150 liters of water, and enhanced oil recovery can require a staggering 7600 liters of water per megawatt hour.

Coal integrated gasification, closed loop nuclear cooling processes and natural gas combined cycle plants can require upwards of 20,000 liters of water per megawatt hour.  The production of ethanol from irrigated corn can demand between 2 and 8 million liters of water!

Energy and water resources are tightly integrated.  It is impossible to have one without the other.  Water and energy demand is rising, yet reserves are dwindling, resulting in resource stress and an exciting opportunity set for investors.

Read more about investing in water and natural resources


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Emerging Economies Drive Growth in Primary Energy Demand: BP

Over the next 20 years, emerging economies will drive a 40% growth in primary energy use, says BP in its annual Energy Outlook 2030 report.

The total use of fossil fuels will decline as renewables such as solar, wind and geothermal, as well as nuclear and hydro-power increase their contributions to the global energy mix.

For the first time, these technologies will provide the largest source of growth in new energy, from 5% today up to 18% by 2030.

BP predicts the overall use of fossil fuels will decrease.  Fossil fuels contributed 83% to the growth in energy from 1990-2010, however between 2010-2030 levels will likely drop to 64%.

Oil’s share of this total will gradually decline as use of natural gas use rises.  Despite coal’s recent spike in response to voracious demand from China and India, BP predicts a reverse in its growth trend by 2030.

A whopping 93% of energy growth over the next 20 years will come from emerging economies as Chinese oil consumption grows by 8 million barrels a day (mbpd).  By 2030, Chinese consumption will likely reach 17.5mbpd, bringing it ahead of the United States as the world’s largest consumer of oil.

New energy regulatory policies and the deployment of clean technologies may help slow carbon emissions, BP says, however total global emissions in 2030 are predicted to be 27% higher than today.  Read more…


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U.S. Primary Energy Consumption & CO2 Emissions on the Rise in 2010

Preliminary data from the U.S. Energy Information Administration (EIA) shows U.S. primary energy consumption rose during the first 8 months of 2010, largely because of increased consumption of coal and natural gas.

Compared with data from the first 8 months of 2009, U.S. energy consumption rose by 4%.  Carbon dioxide emissions likewise rose by 4% due to increased combustion of fossil fuels.  The EIA expects U.S. carbon dioxide emissions to increase 3.5% in 2010 after falling 7% in 2009.

As of the end of October, U.S. natural gas inventories are over 3.8 trillion cubic feet (tcf), approximately the same value as last October’s record-setting levels.

Read the EIA Monthly Energy Review and the Natural Gas Monthly Review for more detailed facts and figures….

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Posted by on November 30, 2010 in Traditional Energy


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Chinese Coal Imports to Surpass Monthly Record

Chinese coal imports are expected to reach all-time highs for the months of November and December, according to a research firm that tracks weekly flows of coal to China.

The New York Time’s “Green” blog cites the New York-based firm Commodore Research and Consultancy in these predictions.  Commodore estimates Chinese coal imports to total approx. 16.75 million tons in November, and 17.25 million in December.  This leaps ahead of the previous record of 16.38 million tons set in December of 2009.  The majority of these imports will be used for heating and electricity generation.

China’s growing energy demands have increased its appetite for coal as an energy source.  China is simultaneously expanding domestic coal mining operations, yet it is finding that it must supplement these resources with foreign imports from other resource-rich nations around the world.  It is likely that China’s month on month levels of coal imports will continue to rise dramatically.  Read more….

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Posted by on November 26, 2010 in Traditional Energy


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China to Become #1 Force in Global Energy Markets: IEA

Staggering growth in Chinese energy demand will have dramatic implications for global energy markets and will likely result in higher oil prices and increased greenhouse gas emissions.

In its annual World Energy Outlook report, the International Energy Agency (IEA) predicts that Chinese energy demand – which has already doubled in this past decade – will grow by a whopping 75% by 2035, accounting for over a third of global consumption growth.  Today, China accounts for 17% of world energy demand, but in 25 years that number will likely rise to 22%.

“Chinese energy demand will grow by such huge terms it will put pressure on the global energy markets in terms of oil, coal and to a lesser extent, natural gas,” says IEA Chief Economist Fatih Birol.

China is speeding up construction of both “clean” and “dirty” energy production plants to meet its growing energy demand.  Although the nation is becoming a global leader in clean energy;  building new solar, wind, nuclear and biomass plants; it is simultaneously installing high-emitting coal-fired power plants that will result in substantial greenhouse gas emissions.

China is also acquiring natural resources from around the world at a rapid rate to secure future supplies.  So far in 2010, Chinese companies have spent $24.6 billion on overseas oil and gas, accounting for one-fifth of deal activity in the industry.  Analysts expect this fervent M&A activity to continue.  Read more here and here


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Thermal Coal Prices Spike with High Chinese Demand

Strong demand from China and India have propelled European thermal coal prices to over $100 a ton – its highest peak in two years.

South African coal; normally exported to Europe; has largely been redirected to satisfy demand from Beijing.  As a result, Europe has become more dependent on imports from Colombia and Russia, both of which have reduced their exports.

“Chinese strong imports are supporting coal prices globally,” notes Amrita Sen, coal analyst at Barclays Capital, and this trend shows no sign of slowing down.  For the first time last year, China become a net coal importer, with an estimated 110 million tons purchased overseas this year.

By next year, analysts expect China to overtake Japan as the world’s largest importer of coal, with net imports of approximately 122 million tons.  By 2019, India is expected to supplant China as top importer with a predicted 182 million net coal imports.

“The global coal trade will grow significantly during the next few decades, with total thermal seaborne coal demand set to increase from 680 million tons to 1,187 million tons between 2010 and 2025,” said Jeff Watkins, head of coal at Wood Mackenzie, noting further growth will be “concentrated in the Pacific basic, driven by continued economic development in some of the world’s largest economies.”  Read more…

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Posted by on October 20, 2010 in Traditional Energy


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