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China’s Coal Imports: Slowest Rate of Growth Since 1998

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China reports electricity demand grew just 0.5% year on year (yoy) to 5,550TWh in calendar 2015, the slowest rate of growth since 1998. With a significant increase in non-thermal electricity generation (nuclear, hydro, wind and solar), coal fired power generation declined by an estimated 4% yoy and coal consumption is estimated to have fallen 5% yoy, building on the decline reported in 2014.

With declining coal consumption, China has moved to protect domestic production by cutting imports. Figures out last week confirm coal imports declined 30% yoy over January-December 2015.

“With the collapse in both Indian (down 34% yoy) and Chinese (down 35% yoy) coal imports in December 2015, the seaborne thermal coal industry is entirely beleaguered,” said Tim Buckley, Director of Energy Finance Studies at the Institute for Energy Economics and Financial Analysis (IEEFA).

“This telling import data confirms the last flicker of hope has been snuffed out, not least for Australia’s Galilee Basin. It also carries massive negative implications for Indonesia’s coal export market, given the concurrent collapse in Indian demand” he said

Within the overall Chinese electricity sector’s +0.5% growth, heavy industry’s consumption fell 1.9% over 2015. In contrast, service sector electricity consumption grew 7.5% and households’ consumption grew 5%. This illustrates the rate at which the economy continues to transition away from heavy industry.

“The decoupling of economic growth and electricity demand is a key driver of the Chinese energy transformation and is being witnessed first hand,” said Mr Buckley.

Coal consumption per kWh thermal power generated fell 1.3% yoy to 315g, maintaining a decade long improvement in average thermal power plant efficiency gains.

This data underlines a significant decline of total coal consumption in China, with IEEFA estimating a reduction of 5% yoy in volume terms, an acceleration on the 2.9% yoy decline in coal consumption reported for 2014.

The NEA confirmed the evidence that has been consistently reported over 2015 that China is successfully diversifying away from thermal power generation at a far-faster than expected rate. Wind, solar, hydro and nuclear continue to gain share at coal’s expense, consistent with the trend evident since 2011.

Thermal power capacity utilisation fell by 9% yoy from 54.1% in 2014 to only 49.4% in 2015, the lowest on record and the first time utilization has fallen below 50%, as an absurd 64GW or more of effectively idle thermal power generating capacity was added.

IEEFA forecasts that China will install an additional 24 gigawatts (GW) of wind, 16GW of new hydro, 6GW of nuclear and a new record of 18GW of solar (60% utility scale, 40% distributed rooftop solar) in 2016. With the economic transition continuing, electricity demand is forecast to grow only 3-4% yoy in 2016; this 64GW of additional zero carbon electricity capacity will be more than sufficient to meet total demand growth.

As a result, the decline in China’s coal production of 2014 and 2015 is expected to continue in 2016. The China Academy of Sciences expects coal production to fall another 4% in 2016 to 3.6 billion tonnes, down from an estimated 3.76 billion tonnes in 2015.[v]

The Chinese Coal Association and National Energy Administration likewise both forecast a further decline in 2016.[vi] The third straight year of decline, again reinforcing that peak coal was passed in 2013.[vii]

Consistent with this, at the end of 2015, the head of China’s National Energy Agency made another significant announcement: China will not approve any new coal mine projects for the next three years and will close down a thousand small mines.[viii]

“The implications of these changes are huge: China’s total country emissions are on track to peak potentially a decade earlier than their official target of no later than 2030.

“This comes at the same time that America has confirmed a 10% year-on-year decline in coal consumption in 2015[ix] (and down a staggering 29.7% yoy to-date in early 2016[x]), plus a three year moratorium of new Federal coal mine leases.[xi]

“The U.S. has also announced a major new policy to end the US$30 billion taxpayer subsidisation of the U.S. coal mining sector by ending non-competitive coal lease tenders, a situation that has gone unchecked for three decades,” he said.

The transformation of the Chinese electricity market combines with significant policy momentum towards lower carbon intensive growth in America. At the same time, India is pursuing a program to install 175GW of renewable energy by 2021/22 and rapidly improve grid efficiency.

“That the three largest economies globally are all moving rapidly in concert to exceed the COP21 Paris agreement sets a very positive scene for 2016,” said Buckley.

Bloomberg New Energy Finance has this week reported that China’s new investment in renewable energy and energy efficiency rose 17% yoy to a record US$110bn in 2015.[xii] This was almost double the U.S. spend of US$56 billion (itself up 8% yoy).

“The net economic and social benefit of this electricity market transformation is abundantly clear”

“The International Renewable Energy Agency (IRENA) on Saturday released new calculations that the macroeconomic impact of doubling the use of renewable energy by 2030 would lead to a 1.1% increase in global GDP. This equates to an economic boost of US$1.3 trillion,” Mr Buckley said.

“Great strides continue to be made in China in terms of growing clean energy investment and improving energy efficiency. This has significant implications for coal-fired power stations in China – in terms of utilisation rates and profitability – as well as for thermal coal miners that have made big bets based on seriously flawed projections of China’s future demand for imported coal.” Ben Caldecott, Programme Director, Smith School of Enterprise and the Environment, University of Oxford

“If Australia is to navigate the rapid changes underway in the global energy sector we will need to build a net zero emissions economy. The Paris agreement, which for the first time committed all the countries in the world to ever-strengthening efforts to cut carbon pollution, built on actions already underway in the world’s biggest economies like China. China is successfully decoupling economic growth from a reliance on polluting industries. If our economy is to avoid being smashed against the rocks of stronger booming global investments in clean energy we must reorient the nation for zero-emission prosperity.” Erwin Jackson Deputy CEO of The Climate Institute

Economy

Will Self-Driving Cars Be Better for the Environment?

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self-driving cars for green environment
Shutterstock Licensed Photo - By Zapp2Photo | https://www.shutterstock.com/g/zapp2photo

Technologists, engineers, lawmakers, and the general public have been excitedly debating about the merits of self-driving cars for the past several years, as companies like Waymo and Uber race to get the first fully autonomous vehicles on the market. Largely, the concerns have been about safety and ethics; is a self-driving car really capable of eliminating the human errors responsible for the majority of vehicular accidents? And if so, who’s responsible for programming life-or-death decisions, and who’s held liable in the event of an accident?

But while these questions continue being debated, protecting people on an individual level, it’s worth posing a different question: how will self-driving cars impact the environment?

The Big Picture

The Department of Energy attempted to answer this question in clear terms, using scientific research and existing data sets to project the short-term and long-term environmental impact that self-driving vehicles could have. Its findings? The emergence of self-driving vehicles could essentially go either way; it could reduce energy consumption in transportation by as much as 90 percent, or increase it by more than 200 percent.

That’s a margin of error so wide it might as well be a total guess, but there are too many unknown variables to form a solid conclusion. There are many ways autonomous vehicles could influence our energy consumption and environmental impact, and they could go well or poorly, depending on how they’re adopted.

Driver Reduction?

One of the big selling points of autonomous vehicles is their capacity to reduce the total number of vehicles—and human drivers—on the road. If you’re able to carpool to work in a self-driving vehicle, or rely on autonomous public transportation, you’ll spend far less time, money, and energy on your own car. The convenience and efficiency of autonomous vehicles would therefore reduce the total miles driven, and significantly reduce carbon emissions.

There’s a flip side to this argument, however. If autonomous vehicles are far more convenient and less expensive than previous means of travel, it could be an incentive for people to travel more frequently, or drive to more destinations they’d otherwise avoid. In this case, the total miles driven could actually increase with the rise of self-driving cars.

As an added consideration, the increase or decrease in drivers on the road could result in more or fewer vehicle collisions, respectively—especially in the early days of autonomous vehicle adoption, when so many human drivers are still on the road. Car accident injury cases, therefore, would become far more complicated, and the roads could be temporarily less safe.

Deadheading

Deadheading is a term used in trucking and ridesharing to refer to miles driven with an empty load. Assume for a moment that there’s a fleet of self-driving vehicles available to pick people up and carry them to their destinations. It’s a convenient service, but by necessity, these vehicles will spend at least some of their time driving without passengers, whether it’s spent waiting to pick someone up or en route to their location. The increase in miles from deadheading could nullify the potential benefits of people driving fewer total miles, or add to the damage done by their increased mileage.

Make and Model of Car

Much will also depend on the types of cars equipped to be self-driving. For example, Waymo recently launched a wave of self-driving hybrid minivans, capable of getting far better mileage than a gas-only vehicle. If the majority of self-driving cars are electric or hybrids, the environmental impact will be much lower than if they’re converted from existing vehicles. Good emissions ratings are also important here.

On the other hand, the increased demand for autonomous vehicles could put more pressure on factory production, and make older cars obsolete. In that case, the gas mileage savings could be counteracted by the increased environmental impact of factory production.

The Bottom Line

Right now, there are too many unanswered questions to make a confident determination whether self-driving vehicles will help or harm the environment. Will we start driving more, or less? How will they handle dead time? What kind of models are going to be on the road?

Engineers and the general public are in complete control of how this develops in the near future. Hopefully, we’ll be able to see all the safety benefits of having autonomous vehicles on the road, but without any of the extra environmental impact to deal with.

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Economy

New Zealand to Switch to Fully Renewable Energy by 2035

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Shutterstock Licensed Photo - By Eviart / https://www.shutterstock.com/g/adrian825

New Zealand’s prime minister-elect Jacinda Ardern is already taking steps towards reducing the country’s carbon footprint. She signed a coalition deal with NZ First in October, aiming to generate 100% of the country’s energy from renewable sources by 2035.

New Zealand is already one of the greenest countries in the world, sourcing over 80% of its energy for its 4.7 million people from renewable resources like hydroelectric, geothermal and wind. The majority of its electricity comes from hydro-power, which generated 60% of the country’s energy in 2016. Last winter, renewable generation peaked at 93%.

Now, Ardern is taking on the challenge of eliminating New Zealand’s remaining use of fossil fuels. One of the biggest obstacles will be filling in the gap left by hydropower sources during dry conditions. When lake levels drop, the country relies on gas and coal to provide energy. Eliminating fossil fuels will require finding an alternative source to avoid spikes in energy costs during droughts.

Business NZ’s executive director John Carnegie told Bloomberg he believes Ardern needs to balance her goals with affordability, stating, “It’s completely appropriate to have a focus on reducing carbon emissions, but there needs to be an open and transparent public conversation about the policies and how they are delivered.”

The coalition deal outlined a few steps towards achieving this, including investing more in solar, which currently only provides 0.1% of the country’s energy. Ardern’s plans also include switching the electricity grid to renewable energy, investing more funds into rail transport, and switching all government vehicles to green fuel within a decade.

Zero net emissions by 2050

Beyond powering the country’s electricity grid with 100% green energy, Ardern also wants to reach zero net emissions by 2050. This ambitious goal is very much in line with her focus on climate change throughout the course of her campaign. Environmental issues were one of her top priorities from the start, which increased her appeal with young voters and helped her become one of the youngest world leaders at only 37.

Reaching zero net emissions would require overcoming challenging issues like eliminating fossil fuels in vehicles. Ardern hasn’t outlined a plan for reaching this goal, but has suggested creating an independent commission to aid in the transition to a lower carbon economy.

She also set a goal of doubling the number of trees the country plants per year to 100 million, a goal she says is “absolutely achievable” using land that is marginal for farming animals.

Greenpeace New Zealand climate and energy campaigner Amanda Larsson believes that phasing out fossil fuels should be a priority for the new prime minister. She says that in order to reach zero net emissions, Ardern “must prioritize closing down coal, putting a moratorium on new fossil fuel plants, building more wind infrastructure, and opening the playing field for household and community solar.”

A worldwide shift to renewable energy

Addressing climate change is becoming more of a priority around the world and many governments are assessing how they can reduce their reliance on fossil fuels and switch to environmentally-friendly energy sources. Sustainable energy is becoming an increasingly profitable industry, giving companies more of an incentive to invest.

Ardern isn’t alone in her climate concerns, as other prominent world leaders like Justin Trudeau and Emmanuel Macron have made renewable energy a focus of their campaigns. She isn’t the first to set ambitious goals, either. Sweden and Norway share New Zealand’s goal of net zero emissions by 2045 and 2030, respectively.

Scotland already sources more than half of its electricity from renewable sources and aims to fully transition by 2020, while France announced plans in September to stop fossil fuel production by 2040. This would make it the first country to do so, and the first to end the sale of gasoline and diesel vehicles.

Many parts of the world still rely heavily on coal, but if these countries are successful in phasing out fossil fuels and transitioning to renewable resources, it could serve as a turning point. As other world leaders see that switching to sustainable energy is possible – and profitable – it could be the start of a worldwide shift towards environmentally-friendly energy.

Sources: https://www.bloomberg.com/news/articles/2017-11-06/green-dream-risks-energy-security-as-kiwis-aim-for-zero-carbon

https://www.reuters.com/article/us-france-hydrocarbons/france-plans-to-end-oil-and-gas-production-by-2040-idUSKCN1BH1AQ

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