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Friday, May 30, 2014

Clean energy for families

Ineffective burning of wood in traditional stoves causes the deaths of many people around the world.
More than three billion people still burn wood, dung, coal and other traditional fuels inside their homes. The resulting indoor air pollution is responsible for more than 1.5 million deaths a year – mostly of young children and their mothers. Millions more suffer every day with difficulty in breathing, stinging eyes and chronic respiratory disease.





1.5 billion people have no access to electricity, and 85% of the population in Africa don't yet have electricity. 400 million in India have no access to power.

Collecting Firewood
Collecting Firewood

There is enormous unmet demand for access to electricity and clean energy.

Energy is essential to meet our most basic needs: cooking, boiling water, lighting and heating. It is also a prerequisite for good health – a reality that has been largely ignored by the world community.

One of the greatest energy needs across the world is for cooking, something which we take for granted. Without a decent energy supply, people are forced to rely on biomass - wood or animal dung - for cooking. Women and children can spend hours every day searching for increasingly scarce resources. Once they start burning biomass, the thick acrid smoke cause's serious lung diseases turning kitchens into death traps.

Children and their mothers are most at risk, choking, retching and gasping to get air to their lungs which are being attacked and destroyed by smoke. More people die from smoke inhalation than malaria.

According to the World Health Organisation, diseases associated with indoor air pollution claim 1.5 million lives every year - that's one person every 20 seconds.

Thursday, May 22, 2014

Climate policy madness

South Korea confirms carbon market launch

David Twomey · January 16, 2014

More than 400 of South Korea’s largest polluters will see their emissions restricted under the scheme.

South Korea to operate world’s second largest Emissions Trading Scheme and build coal power plants
South Korea to operate world’s second largest Emissions Trading Scheme
and build coal power plants

Past assessments have suggested that the South Korean ETS could be the most expensive in the world with a price of US$90 a tonne of carbon.

The move is the latest example of ambitious climate policy from a country that has won plaudits from green businesses and clean tech firms.

South Koreans to construct $1.3bn coal plant in Kenya

Diarmaid Williams · November 20, 2012

Daewoo International has agreed a deal to build a $1.3bn coal fired power station in Kenya, Africa.

The South Korean conglomerate Daewoo International (KRX: 047050) has entered into agreement with Kenyan Electricity Generating Company (KEGC) to build what will be the largest coal power plant in East Africa having two turbines with 300 MW capacity each, reported Reuters.

Prime Minister of Kenya, Raila Odinga, said during the signing ceremony in Seoul on 18 November that the new power plant would play a key role in his government's objective to add 1500 MW of new generation capacity by 2019.

South Korea's Doosan Heavy Industries: Doosan to Construct Coal-fired Power Plant in Vietnam

February 7, 2014

Doosan announced that it signed an agreement last month in a meeting with Hanoi-based Vietnam Electricity (EVN), with CEO Hoang Quoc Vuong and Vice President Kim Hyun-tak of Doosan attending, to build a 1200MW capacity coal-fired power plant named Vinh Tan 4 for EVN.

The Vinh Tan 4 fossil power plant will be built in Binh Thuan, located 230km east of Ho Chi Min City. Doosan Heavy Industries & Construction will be in sole charge of designing, installing equipment, and test-running the whole construction procurement process known as EPC, or Engineering Procurement Construction. The project will be completed by June 2018.

Wednesday, May 21, 2014

Coal to solve energy poverty? No way!

Nigeria remains the second largest flaring country in the world and emits around $1.8 billion worth of natural gas annually.

Gas Flaring - Disposing of natural gas keeps prices high
Gas Flaring - Disposing of natural gas keeps prices high

But what is more surprising than the eye-popping economic loss is the fact that so much gas is wasted despite the country’s rampant energy poverty.

The entire Nigerian population uses little more grid power than the area immediately surrounding Tokyo’s Narita airport.

See Aminu Hassan and Reza Kouhy (2013) Gas flaring in Nigeria: analysis of changes in its consequent carbon emission and reporting, Accounting Forum 37 (2).

Gas Flaring: The Burning Issue

Coal means money - Ask ICAC

If you are one of the many people surprised at resistance to efforts:
  • to combat climate change and 
  • to replace fossil fuels with alternate energy supplies,
then you may need to consider the financial stakes of the vested interests clinging to coal.
These vested interests include State and Federal Governments and these are in addition to those of coal mining corporations that  mine and sell billions of tonnes of coal a year.

You may wish to estimate the yearly corporate revenues of coal mining corporations from
coal production worldwide that currently sits at around 8 billion metric tonnes
and estimate for these corporations the approximate book value of the reserves of coal needed to maintain that supply for 100 years.

The budgets of State and Federal Governments rely heavily on mining exports.

The Queensland budget in June 2013 forecast royalties from coal mining to be $11 billion over the next 4 years. They also show that the Queensland Government is forecasting annual revenue from these royalties to DOUBLE within 4-5 years.

The Queensland budget in June 2013 stated:
"Royalty revenue estimates revised down by $1.288 billion over the period 2012-13 to 2015-16, primarily because of reductions in coal price forecasts and a higher exchange rate assumption.

Revenue from royalties in 2012-13 is expected to be $548 million lower than forecast in the 2012-13 Budget. This weakness is largely due to export coal prices being significantly lower than expected, and the ongoing strength of the A$-US$ exchange rate.

Royalties are expected to recover from 2013-14 onwards, supported by steady growth in export volumes, a recovery in coal prices and the exchange rate depreciating."
Similarly the New South Wales (NSW) budget in June 2012 shows the extent to which the NSW government budget relies on coal mining royalties.

The New South Wales (NSW) budget in June 2013 revised sharply downwards the revenue estimated a year earlier but still projects growth in royalties in excess of 12 percent each year into the future. Budget papers at Chapter 6 explain:
"Royalties in 2012-13 are estimated to be down $573 million since the 2012-13 Budget reflecting softer coal prices and the high Australian dollar.

Royalties in the four years to 2015-16 are now expected to be almost $2.3 billion less than expected in the 2012-13 Budget, largely reflecting lower coal prices."

Year
in Budget
Report
Qld
2013/14 Budget
($billions)
NSW
2012/13 Budget
($billions)
NSW
2013/14 Budget
($billions)
2012-13 $1.743 $1.878 $1.305
2013-14 $2.125 $2.112 $1.513
2014-15 $2.643 $2.363 $1.796
2015-16 $2.961 $2.518 $1.998
2016-17 $3.356 - $2.111

Monday, May 19, 2014

U.S. Investigators Suspect Missing Malaysia Airlines Plane Flew On for Hours

Investigators Believe Plane Flew On for Total of Up to Five Hours

By Andy Pasztor And Jon Ostrower
Updated March 13, 2014 3:08 p.m. ET

This is Google's cache of
http://online.wsj.com/news/articles/SB10001424052702304914904579434653903086282.
It is a snapshot of the page as it appeared on 17 May 2014 22:24:48 GMT.

WSJ has confirmed that the pilot had the ability to manually turn off the transponder on Flight MH370.
Why is the transponder so significant? WSJ's Jason Bellini has #TheShortAnswer.
U.S. investigators suspect that Malaysia Airlines 3786.KU -9.52% Flight 370 stayed in the air for up to four hours past the time it reached its last confirmed location, according to two people familiar with the details, raising the possibility that the plane could have flown on for hundreds of additional miles under conditions that remain murky.

Former FBI agent Chris Voss joins the News Hub to discuss U.S. investigators' suspicions that Malaysia Airlines Flight 370 stayed in the air for four hours after vanishing from civilian air-traffic control radar.
The investigators believe the plane flew for a total of up to five hours, according to these people, based on analysis of signals sent by the Boeing BA -0.30% 777's satellite-communication link designed to automatically transmit the status of certain onboard systems to the ground.

Throughout the roughly four hours after the jet dropped from civilian radar screens, these people said, the link operated in a kind of standby mode and sought to establish contact with a satellite or satellites. These transmissions did not include data, they said, but the periodic contacts indicate to investigators that the plane was still intact and believed to be flying.

Investigators are still working to fully understand the information, according to one person briefed on the matter. The transmissions, this person said, were comparable to the plane "saying I'm here, I'm ready to send data."

Investigators are trying to determine, among other things, whether the plane may have landed in an unknown location at some point during the period under scrutiny, these people said.

As authorities scramble to analyze and understand all of the transmissions from the missing 777, the situation continues to change rapidly.

The disclosure that the plane kept transmitting has raised a host of new questions and possibilities about what happened aboard the widebody jet carrying 239 people, which vanished from civilian air-traffic control radar over the weekend, about one hour into a flight to Beijing from Kuala Lumpur.

Six days after the mysterious disappearance prompted a massive international air and water search that so far hasn't produced any results, the investigation appears to be broadening in scope.

U.S. counterterrorism officials are pursuing the possibility that a pilot or someone else on board the plane may have diverted it toward an undisclosed location after intentionally turning off the jetliner's transponders to avoid radar detection, according to one person tracking the probe.

The investigation remains fluid, and it isn't clear whether investigators have evidence indicating possible terrorism or sabotage. So far, U.S. national security officials have said that nothing specifically points toward terrorism, though they haven't ruled it out.

But the huge uncertainty about where the plane was headed, and why it apparently continued flying so long without working transponders, has raised theories among investigators that the aircraft may have been commandeered for a reason that appears unclear to U.S. authorities. Some of those theories have been laid out to national security officials and senior personnel from various U.S. agencies, according to one person familiar with the matter.

At one briefing, according to this person, officials were told investigators are actively pursuing the notion that the plane was diverted "with the intention of using it later for another purpose."

As of Wednesday it remained unclear whether the plane reached an alternate destination or if it ultimately crashed, potentially hundreds of miles from where an international search effort has been focused.

In those scenarios, neither mechanical problems, pilot mistakes nor some other type of catastrophic incident caused the 250-ton plane to mysteriously vanish from radar.

The latest revelations come as local media reported that Malaysian police visited the home of at least one of the two pilots.

A Malaysia Airlines official declined to comment. A Boeing executive who declined to be named would not comment except to say, "We've got to stand back from the front line of the information."

On Thursday, Malaysian aviation officials said the flight could have flown for several hours after its last contact, but they said they had received no data indicating this.

The signals to satellites also are being analyzed to help determine the flight path of the plane after the transponders stopped working. The jet was originally headed for China, and its last verified position was half way across the Gulf of Thailand.

A total flight time of five hours after departing Kuala Lumpur means the Boeing 777 could have continued for an additional distance of about 2,200 nautical miles, reaching points as far as the Indian Ocean, the border of Pakistan or even the Arabian Sea, based on the jet's cruising speed.

—Trefor Moss, Gaurav Raghuvanshi, Josh Chin and Jeremy Page contributed to this article.

Write to Andy Pasztor at andy.pasztor@wsj.com and Jon Ostrower at jon.ostrower@wsj.com

Corrections & Amplifications
U.S. investigators suspect Malaysia Airlines Flight 370 flew for hours past the time it reached its last confirmed location, based on an analysis of signals sent through the plane's satellite-communication link designed to automatically transmit the status of onboard systems, according to people familiar with the matter. An earlier version of this article and an accompanying graphic incorrectly said investigators based their suspicions on signals from monitoring systems embedded in the plane's Rolls-Royce PLC engines and described that process.

Friday, May 16, 2014

Coal. Advance Energy? - NO WAY!

Sixty percent (434 gigawatts out of 734 gigawatts) of new coal-fired capacity built in the past decade uses LEAST-EFFICIENT technology.

This unexplained failure to implement “best-in-class” technologies for new coal-fired electricity generation capacity makes it impossible to reduce CO2 intensity of electricity generation.


Source: Energy Technology Perspectives 2014 - Factsheet


The Advanced Energy for Life campaign web site is sponsored by Peabody Energy, "the world’s largest private-sector coal company" that likes to describe itself as "a global leader in sustainable mining and clean coal solutions".
Advanced Energy - Coal keeps going backwards in the future
Advanced Energy - Coal keeps going backwards in the future

The slick marketing claims of Peabody Energy include -
The need for new, 21st Century coal-fueled power plants is well understood by leaders in developing countries and regions.

Clean coal has the power to solve energy poverty, keep energy prices low, fuel the world’s best economies and use advanced technologies to improve the environment.

If, as Peabody Energy claims -

"Clean Coal Energy Technologies Can Combat Energy Poverty"


WHY DID SIXTY PERCENT OF NEW COAL-FIRED PLANTS BUILT IN THE LAST TEN YEARS USE THE LEAST-EFFICIENT TECHNOLOGY?

Great Big Lies - Scrapping the Carbon Tax and Reducing the Cost of Living

Key Points

The Coalition will abolish the carbon tax.
Average Families will be Better Off by $3,000 under the Coalition.
A LIE!
Great Big Liberal Lies
Liberal Lies

The carbon tax indisputably adds to the cost of living, it makes households and families pay more for electricity and gas, it costs businesses more to operate, and it makes everything in our economy more expensive.

Your cost of living is unnecessarily higher because of the carbon tax.

Average families will be more than $550 better off next year alone under the Coalition’s plan than under Labor’s carbon tax. Over the next six years they will be $3,000 better off under the Coalition than under Kevin Rudd’s carbon tax.

And on the Government’s own figures, the carbon tax will increase six-fold between mid-2014 and mid-2019 – reaching $38 a tonne by 2019 and increasing to $350 a tonne over time.

Only the Coalition will scrap the carbon tax lock, stock and barrel.

This means that under the Coalition, average families will be better off by more than $550 a year in 2014-15, rising to around $900 a year in 2019-20.

On 5 August 2013, the Leader of the Opposition, the Hon Tony Abbott MHR, wrote to the Secretary of the Department of Prime Minister and Cabinet to advise him that, should the Coalition form government on 7 September 2013, our first legislative priority will be to scrap the carbon tax.

Only the Coalition will reduce your cost of living by abolishing the carbon tax.

The Coalition could not be clearer: the carbon tax will be gone under a Coalition government and it will be our very first order of business.

Introduction

Financial pressure on Australian families will be dramatically eased.
A LIE!
The Coalition recognises that Australian families are struggling with cost of living pressures. They are seeing their electricity bills increase significantly, even when they have done the right thing and reduced their usage.

Your cost of living is unnecessarily higher because of the carbon tax.

The Government’s own figures show that the carbon tax makes electricity at least 10 per cent more expensive and gas bills at least 9 per cent more expensive, rising each year as the carbon tax increases.

The carbon tax is unequivocally a tax that punishes households for using electricity and it is a tax that increases the cost of everyday items, especially essential items.

The Coalition will act immediately to rescind Labor’s carbon tax.

This toxic, job-destroying tax punishes successful and hard-working Australian businesses, particularly trade exposed businesses.

The carbon tax only causes jobs and emissions to be exported overseas.

The carbon tax has meant:

  • a $9 billion a year new tax;
  • a 10 per cent hike in electricity bills in the first year alone;
  • a 9 per cent per cent hike in gas bills in the first year alone; and
  • higher marginal tax rates for low and middle income earners.
Australians are now going to yet another election with the Labor leader promising “there will be no carbon tax under the government I lead.”

But on Labor’s own figures the carbon tax is set to go to $38 in a few short years and to $350 over the coming decades. Importantly, it will still be $24.15 for the next 12 months. Mr Rudd can change the name, but whether it is fixed or floating, it is still a carbon tax.

If Labor is re-elected, Australians will still be paying more – a total of over $3,000 for the average family over the six years to mid‑2020, on top of $545 this year (on the Government’s own figures). It will continue to be a tax on electricity bills which will hurt Australian families and hurt local businesses.

The Coalition will not let the carbon tax destroy Australian industry and Australian jobs. The carbon tax is an act of economic self-harm that unnecessarily adds to the cost of living.

The Plan

1. Abolish the carbon tax

Australians will have tax cuts funded by smaller government, not by taking money out of one pocket to put it in the other.
A LIE!
The Coalition will abolish the carbon tax.

We have a clear and definitive action agenda to get rid of the carbon tax as a priority.

The Coalition will honour our promise to the Australian people and make abolishing the carbon tax the first order of business, if elected at the next election.

On 5 August 2013, the Leader of the Opposition, the Hon Tony Abbott MHR, wrote to the Secretary of the Department of Prime Minister and Cabinet to make it clear that, if elected, the first priority of a Coalition government will be the repeal of the carbon tax.

The Leader of the Opposition also wrote to the Clean Energy Finance Corporation on 5 August 2013 to make it clear that the Corporation should desist from making any further determinations in relation to grants, funds or financing.

If elected, the Coalition will take immediate steps to implement our plan to abolish the carbon tax:

  • on day one, the Coalition will instruct the Department of Prime Minister and Cabinet to draft legislation that repeals the carbon tax and to have the legislation ready within one month;
  • on day one, the Treasurer will notify the Clean Energy Finance Corporation that it should suspend its operations and instruct the Treasury to prepare legislation to permanently shut-down the Corporation;
  • within the first month, the Cabinet will approve legislation to repeal the carbon tax;
  • on the very first day of a new Parliament, the Coalition will introduce legislation to repeal the carbon tax; and
  • within the first sitting fortnight of Parliament, the new government will introduce legislation to shut-down the Clean Energy Finance Corporation.
As soon as the carbon tax is repealed, the Environment Minister will introduce legislation to enact the Coalition’s Direct Action Plan on climate change and carbon emissions.

We cannot make it clearer: the carbon tax is gone under a Coalition government and it will be our very first order of business from day one.

2. Average Families will be Better Off by $3,000 under the Coalition

With the carbon tax gone, families will be more than $550 better off next year alone under the Coalition's plan than under Labor's carbon tax. Over the next six years they will be $3,000 better off under the Coalition than under Kevin Rudd’s carbon tax.

The Coalition will provide income tax cuts without a carbon tax.

The Coalition will keep the current income tax thresholds and the current pension and benefit fortnightly rates while scrapping the carbon tax.

This means that Australian workers, families and pensioners will keep the tax cuts and fortnightly pension and benefit increases provided in Labor’s carbon tax package, but without the carbon tax.

As a result these tax cuts and fortnightly benefit increases will become genuine cost-of-living relief, worth around $4 billion a year, rather than partial compensation for Labor’s damaging carbon tax hit.

Australians will have tax cuts funded by smaller government, not by taking money out of one pocket to put it in the other. And people’s weekly and fortnightly budgets will be under less pressure as electricity prices fall and gas prices fall and the carbon tax no longer cascades through our economy.

This will also strengthen our economy, because there’ll be less tax hitting Australian businesses but not their overseas competitors – as even Labor now concedes.

Households will be able to plan their futures with confidence, the financial pressure on Australian families will be dramatically eased, and there will be more incentive for ordinary Australians to ‘have a go’ and get ahead.

Companies and small businesses will be much better off without a carbon tax.

We will remove the carbon tax and the cost burden it has placed on businesses which make it difficult to compete internationally when other companies are not paying the same tax.

The Choice

The Government’s own figures show that the carbon tax makes electricity at least 10 per cent more expensive and gas bills at least 9 per cent more expensive, rising each year as the carbon tax increases. The carbon tax is unequivocally an electricity tax that punishes households for using electricity.

There is abundant evidence of households and businesses paying more for electricity because of the carbon tax.

For the past three years the Government has simply been wrong to say households would not be worse off under the carbon tax, because the Government’s own figures showed that millions of households were not fully compensated under the carbon tax scheme.

And now even Labor, in a complete repudiation of everything they said for three years, have conceded that the carbon tax is hurting average families.

Kevin Rudd has announced that – in 11 months’ time, after the next election – he promises to make a change to the carbon tax which would affect the tax rate in just a single year.

In so doing he has declared that cutting the carbon tax rate would “help cost of living pressures for families” and “reduce costs for small business” – exactly what the Coalition has been saying all along.

But under Kevin Rudd’s minor tweaking, the carbon tax will still be a $58 billion tax through to 2020 instead of a $64 billion tax.

Kevin Rudd’s carbon tax will still cost average families $3,000 over the next six years, on top of $545 this year.

And on the Government’s own figures, the carbon tax will increase six-fold between mid-2014 and mid‑2019 – reaching $38 a tonne by 2019 and increasing to $350 a tonne over time.

Only the Coalition will scrap the carbon tax lock, stock and barrel.

Electricity is not a luxury – it is an essential part of daily life. If the Rudd-Gillard Government was even half sincere about taking the pressure off electricity, gas and other utility prices it would start by scrapping its carbon tax.


The Coalition will Abolish the Carbon Tax

COALITION – relative to Labor
LABOR – relative to the Coalition
An economy-wide carbon tax
No
Yes
Impact on families
More than $3,000 better off
More than $3,000 worse off
Tax cuts without a carbon tax
Yes
No
A carbon tax that rises to $350/tonne
No
Yes
Billions of taxpayer dollars spent on foreign carbon credits
No
Yes
A massive carbon bureaucracy
No
Yes
Australia’s carbon emissions
Down
Up
Your cost of living
Lower
Higher
Electricity prices
10 per cent lower
10 per cent higher
Gas prices
9 per cent lower
9 per cent higher
Cost to make an Australian-made car
Up to $400 cheaper
Up to $400 more expensive
Impact on aluminium production
61 per cent higher
61 per cent lower
Impact on coal production
17 per cent higher
17 per cent lower
Impact on steel and iron production
21 per cent higher
21 per cent lower
Local councils better off
Yes
No
Emergency services better off
Yes
No
Hospitals better off
Yes
No
Public transport better off
Yes
No
Schools better off
Yes
No
Small businesses better off
Yes
No
Taxpayers better off
Yes
No

Why the energy industry resists innovation

When workers oppose technology change it is put down to efforts to protect jobs by opposing innovation that boosts productivity.

When industries resist technology change very little comment is heard.

In the energy resources industry new technology boosts efficiency of converting resources into energy. This reduces demand for resources and lowers the cost of energy. It also reduces revenue of the energy resource industry.

The price of natural gas relies both on limiting supply and maintaining demand.

The economic benefits and prosperity created by access to cheap energy are being sacrificed to the short-term commercial interest of energy producers.
The energy industry is not only slow to innovate, it actively resists innovation.
The Luddite Movement in the 21st Century
The Luddite Movement in the 21st Century

A natural gas producer in Australia is accused of manipulating the export market for liquified natural gas (LNG) so that it can increase the book value of coal seam gas reserves on its balance sheet.

The report, which was presented to the NSW Independent Pricing and Regulatory Tribunal (Ipart) on Tuesday, analyses Santos’s $19bn liquefied natural gas (LNG) export facility at Gladstone, known as GLNG.

Credit Suisse’s report says “quite clearly at face value this has been a materially unappetising project”.

The report adds: “Santos now argues that its aim in GLNG was always as much about raising the domestic gas price, and therefore re-rating large parts of the portfolio outside of GLNG, as it was about the project.’


New technology and processes increase the efficiency of converting resources into energy. This reduces demand for resources and lowers the cost of energy.

Santos and another natural gas producer, AGL, are ignoring U.S. technology that can produce natural gas without the costs of drilling for coal seam gas.
GreatPoint Energy produces clean, low cost natural gas from coal, petroleum coke, and biomass utilizing its bluegas™ catalytic hydromethanation process.



GreatPoint Energy's coal gasification technology appeals to China because it allows them to keep using cheap domestic coal, but in a much cleaner manner.

In 2012, GreatPoint announced a $1.25 billion deal to build the first of 34 coal gasification plants in a remote, coal-rich part of China.

The total project will cost an estimated $20 - 25 billion and will supply a trillion cubic feet of natural gas.

This represents a massive leap in the scale of domestic production for China, which last year produced only 107 billion cubic feet of natural gas.

The deal includes an equity investment of $420 million, the largest ever by a Chinese corporation into a venture-capital-funded U.S. company.

Cheaper energy will benefit the Australian economy and the economies of countries that import energy from Australia.

However for Santos new technology that it could use to produce cheap natural gas means the book value of coal seam gas reserves on its balance sheet falls dramatically.


This situation raises questions of energy policy.

It is an example of market failure - the economic benefits and prosperity created by access to cheap energy are being sacrificed to the short-term commercial interest of energy producers reluctant to write-off reserves rendered worthless by innovation.




Further reading -

Technology change resisted by energy industry

Innovations to solve political disputes

The coal lobby scores an own goal

The coal industry's "War on Coal" campaign is all spin


Sunday, May 4, 2014

More mines to shut as coal woes deepen

Matt Chambers | The Australian | April 28, 2014
Coking coal prices from 1996 to present.
Coking coal prices from 1996 to present.

COKING coal prices have slumped to six-year lows, many Australian mines are not making money and the industry is set to close more of the mines that produce the nation’s second most valuable export.

A dramatic fall in quarterly contract prices for the steelmaking raw ingredient has caught ­industry players by surprise and led coal giant Peabody Energy to declare it is considering the ­closure of Australian mines it recently indicated were safe.

As boom-time-approved expansions continue to increase supply, the June quarter coking coal contract price has fallen from $US143 a tonne to $US120 a tonne, which is close to typical cash costs for the east coast ­coking coal industry, according to Credit Suisse analysts.

This means when things such as corporate, financing and sustaining capital are added in, most producers would be losing money.

Peabody chief Greg Boyce revealed the St Louis-based company, which has already cut jobs and shut down some mines here in recent years to stay profitable, was considering closing more Australian mines.

“With the change in the metallurgical coal environment in the last quarter, we’re having some pretty serious looks at a couple of operations,” Mr Boyce told US investors after the release of the company’s first-quarter earnings last week.

“These operations are getting significant scrutiny because at this lower price horizon, they’re much more challenged,” he said when asked if more mine ­closures were coming.

In January, Peabody told investors that a decision to close its Wilkie Creek thermal coal mine should not be taken as any indication that closures of the rest of its operations were being considered.

Coking coal, mainly from Queensland, is the nation’s second-highest export earner after iron ore and brought in $22.4 billion of export revenue last financial year. Thermal coal, used primarily in power stations and mainly from NSW, raised $16.1bn.

Contract coking coal prices that peaked at $US330 per tonne in late 2011 have fallen steadily since then as the US and Australia exported more.

Despite the price drop, BHP Billiton (whose Queensland mines make it the world’s biggest coking coal exporter), Anglo American, Whitehaven and Peabody have all brought on or are bringing on new mines that were approved when nobody saw prices plummeting as low as they have.

As well as the new supply, Chinese steel mills have recently stepped away from buying imported coking coal as uncertainty continues around the Asian powerhouse’s economic growth.

Spot prices have fallen further than contract prices, with the Platts price index slipping as low as $US105 per tonne earlier this month before recovering to about $US110.

“For the second quarter, we have assumed that $US120 will become the benchmark and this will mean that most Australian metallurgical coal producers will be loss-making at the profit and loss level, with FOB (free on board) cash costs typically in the range of $US110 to $US115 per tonne,” Credit Suisse said in a ­client note.

The second-quarter settlement for Queensland coal, which was reportedly signed by Anglo American last month, has led Credit Suisse to cut its 2014 coking coal forecast by $US20 a tonne to $US133.

Most Australian miners have been on a year-long campaign to cut costs, meaning there may not be too much more that can save mines that are losing money.

Even BHP, one of the world’s lowest-cost miners, is making little if any money from coking coal at these prices.

“While costs might be squeezed a little lower, we think the majority of cost-saves have now been made in Australia,” Credit Suisse said.

The bank said BHP generated $US17 per tonne of earnings before interest and tax from its coking coal operations in the first half of 2013-14.

Thursday, May 1, 2014

Technology change resisted by energy industry

When workers oppose technology change it is put down to efforts to protect jobs by opposing innovation that boosts productivity.

When industries resist technology change very little comment is heard.

In the energy resources industry new technology boosts efficiency of converting resources into energy. This reduces demand for resources and lowers the cost of energy. It also reduces revenue of the energy resource industry.

The price of natural gas relies both on limiting supply and maintaining demand.

AGL has revealed that it is expanding production of coal seam gas in New South Wales even though it has NOT evaluated new technology able to rapidly and cheaply increase the supply of natural gas. This new method of producing natural gas would lift supply rapidly and suppress the sharp price rises AGL wishes to obtain from NSW consumers.

On 28 April AGL was asked via its community engagement web site about new technology developed since 2008 and that is being used in China to make natural gas from cheap coal. (See Question 1 below)

Two days later AGL gave AN ANSWER, but it was not an answer to the question it was asked. . (See AGL Answer to Question 1 below)

Two follow-up requests to AGL to give an answer to the question actually asked were handled by AGL as follows:

  1. The first follow-up request with information of which AGL was evidently unaware was ignored. In addition AGL removed this follow-up request from its web site.... (See Question 2 below)
  2. The second follow-up request for an answer taking into account the further information was eventually answered.. (See Question 3 below) AGL's answer is a bald assertion that "coal seam gas production is the best available source to meet the needs of the NSW market".. (See AGL Answer to Question 3 below)

It is clear from the answer AGL gave on 30 April 2014 that it is unaware of the superior technology China has adopted to make natural gas cheaply from coal.. (See AGL Answer to Question 1 below)

AGL is proceeding its push to expand coal seam gas throughout New South Wales without due diligence. This approach is unfortunate:
  1. The environmental damage created by coal seam gas is avoidable.
  2. The financial return to AGL investors will be diminished by using a technology that is no longer the best available for obtaining a supply of natural gas. 
  3. The New South Wales economy will be damaged from the waste of existing coal transport infrastructure, investment in coal mining and loss of jobs. These resources and jobs exist now and can be used to make natural gas.


AGL is not the only Gas Giant ignoring new technology







Question 1

From:  Your Say AGL
Date: 28 April 2014 15:41
Subject: Your question on Your Say AGL website
To:  Askgerbil

Hi there,
Thanks for taking the time to visit Your Say AGL and asking us a question.
You asked:
'China is now using GreatPoint Energy's hydromethanation process to make natural gas from cheap coal. With coal prices low and falling, for how long can AGL's coal seam gas remain competitive? Has AGL conducted an evaluation of this new technology?'
We will get back to you as soon as possible with a response.

Regards
AGL

AGL Answer to Question 1

From:  Your Say AGL
Date: 30 April 2014 11:21
Subject: Response to your question on Your Say AGL website
To:  Askgerbil
 
Hi there,
Thanks for taking the time to visit Your Say AGL and asking us a question.
You asked:
'China is now using GreatPoint Energy's hydromethanation process to make natural gas from cheap coal. With coal prices low and falling, for how long can AGL's coal seam gas remain competitive? Has AGL conducted an evaluation of this new technology?'

An updated response has now been posted on the site.
Our response:

'Hi Askgerbil, thanks for your question.
Coal seam gas is the best available source to meet the needs of the NSW market, in terms of both production capability and minimising environmental impacts.
The concept of hydromethanation has been in the public domain for decades, however, compared to the process of producing natural gas from coal seams, it has a much larger environmental footprint.
There is also some uncertainty around the technology as the industry is still in the early stages of development.'
Please let us know if you have any more questions or if anything needs to be clarified.

Regards
AGL

Question 2

From:  Your Say AGL
Date: 30 April 2014 20:07
Subject: Your question on Your Say AGL website
To:  Askgerbil

Hi there,
Thanks for taking the time to visit Your Say AGL and asking us a question.
You asked:
'Thank you for AGL's view on GreatPoint Energy's technology for making natural gas from coal.

However, the AGL answer (below) is about a "concept in the public domain for decades", and does not answer my question that begins "China is now using GreatPoint Energy's hydromethanation process [patented in the last 5 years] ... "

### AGL's Answer ###
a. "The concept of hydromethanation has been in the public domain for decades"
b. "Compared to the process of producing natural gas from coal seams, it has a much larger environmental footprint."
c. "There is also some uncertainty around the technology as the industry is still in the early stages of development."
###

Please consider an answer to my question, taking into account:
a. GreatPoint Energy's technology is the subject of a collection of patents dating from 2008. It has not been in the public domain for decades.
(Some examples:
http://www.freepatentsonline.com/8192716.html
http://www.freepatentsonline.com/y2012/0305848.html
http://www.freepatentsonline.com/y2013/0042824.html
http://www.freepatentsonline.com/y2010/0121125.html
http://www.freepatentsonline.com/y2009/0260287.html
)

b. GreatPoint Energy's technology does not have a larger environmental footprint than the process of producing natural gas from coal seams.
See GreatPoint Energy's 2011 video at http://vimeo.com/18745900 | "Nothing goes up the stack into the atmosphere".
(Note that a GreatPoint Energy coal gasification plant built at an existing coal-fired power station would need NO additional infrastructure for coal-mining and transport - having less environmental footprint and capital outlay when compared to a large numbers of coal seam gas wells and above ground pipelines.)

c. GreatPoint Energy's technology is not surrounded by uncertainty and is in commercial use in China.'
We will get back to you as soon as possible with a response.

Regards
AGL

Question 3

From:  Your Say AGL
Date: 1 May 2014 09:19
Subject: Your question on Your Say AGL website
To:  Askgerbil

Hi there,
Thanks for taking the time to visit Your Say AGL and asking us a question.
You asked:
'Can AGL add to its answer to my question on GreatPoint Energy's natural gas from coal technology? AGL's first answer only considers an older hydromethanation process and not the specific process developed since 2008 by GreatPoint Energy now being used in China.'
We will get back to you as soon as possible with a response.

Regards
AGL


AGL Answer to Question 3

From:  Your Say AGL
Date: 2 May 2014 11:04
Subject: Response to your question on Your Say AGL website
To:  Askgerbil

Hi there,
Thanks for taking the time to visit Your Say AGL and asking us a question.
You asked:
'Can AGL add to its answer to my question on GreatPoint Energy's natural gas from coal technology? AGL's first answer only considers an older hydromethanation process and not the specific process developed since 2008 by GreatPoint Energy now being used in China.'

Our response has now been posted on the site.
Our response:
'Hydromethanation is still in the early stages of development. GreatPoint Energy reports that laboratory and pilot plant tests have shown the process can work for a range of feedstock, which is the driver behind the company’s joint venture to construct a full scale facility in China.
With NSW facing a shortage of gas supply from 2016, coal seam gas production is the best available source to meet the needs of the NSW market.' 
Please let us know if you have any more questions or if anything needs to be clarified.

Regards
Neil - YourSayAGL