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CARBON COMMENTARY NEWSLETTER

This is a weekly newsletter about low-carbon energy generation and efficiency. I summarise the blog posts I have published during the previous week and comment on news stories that have interested me in the last few days. Subscribe at www.carboncommentary.com.

Industry news

Things I noticed and thought were interesting

Week ending 3rd February 2019

1, Power to methane. Another power to methane installation opened, this time in Switzerland. This pilot plant uses Electrochaea's biological method for methanation. Single cell organisms floating in water digest hydrogen and CO2 and exude methane, which is then captured and can be inserted into the natural gas grid. The size of this plant is small: 12 metres square with a 12 metre tower in which the organisms live and work. But it is another demonstration of the increasing interest in ‘power to gas’ in central Europe as a means of dealing with temporary surpluses of power
 
2, Cost of capital. Belgian specialty chemicals company Solvay said it had achieved a reduction in the cost of money lent by its banks if it achieved its goals for cutting emissions from its operations. (No numbers given). Solvay has promised to decrease the absolute level of its CO2 output (whatever the growth in its sales) by one million tonnes from late 2018 to 2025. It has already decreased its emissions intensity (volume of greenhouse gases per unit of output) by 32% in the last three years. At the other end of the sustainability spectrum, an Oxford research institute confirmed earlier work that showed that investors and lenders are demanding higher returns from fossil fuel projects. This will increase long-term oil and gas prices as more of the returns are taken by financing costs. Very roughly, this research indicates that investors have shifted to demanding 20% internal rates of return on big international projects, increasing the likely break-even price of oil to $80 a barrel, double today’s estimated value.
 
3, Hydrogen in Australia. The opposition Labor Party made hydrogen a plank of its campaign for the 2019 national election. It offered substantial commitments towards building a large hydrogen manufacturing and export sector, focused on Queensland in the east of the country. The amounts proposed topped US$800m. Opinion polls suggest Labor will win the election and Australia is therefore likely to join France as countries with explicit national commitments to drive the development of hydrogen as a medium for energy storage. (Thanks to Shean Bond)
 
4, Electric excavators. Norwegian firm Pon Equipment converts diesel Caterpillar excavators to battery power. 300 kWh of stored electricity will give about 7 hours of work. The 3.4 tonnes of batteries will add little to the overall weight of the machine, which promises 80% of battery capacity after 10,000 hours of use. At about $650,000, the price for the excavator is probably twice that of the original but it will be able to work in environments where diesel pollution is banned on construction sites, such as in central Oslo. In addition, the quietness is an advantage. The price difference with diesel will fall over time, said Pon Equipment.

5, France circular economy. Interesting results from a survey of French shopping habits for textiles. 62% of respondents said that they had bought second hand, 91% said they had repaired clothes, 40% said they had bought clothing with recycled material in. We can be doubtful about the accuracy of these figures but 80% said that they had changed their habits and become more ‘ecological’ in their purchasing decisions.
 
6, Oil companies and EVs. Shell bought Greenlots, a US company that manages the installation of fast chargers and provides network software that enables EVs to charge at an increasing range of charging locations across the US. The price wasn’t disclosed. Shell has made a range of investments in EV charging but remains lukewarm about the sector, saying it was still ‘small’ and therefore it was still focusing its attention on renewable energy.
 
7, CO2-neutral shipping. About 3% of international CO2 emissions are from shipping. Maersk, the world’s largest operator of container ships said in December that it intended to be CO2 neutral by 2050. Last week the company gave a few more details of its plans, saying its first zero ship will be operating in 2030. The executive giving the presentation said that the company hadn’t decided which technologies to pursue. (The most likely are either synthetic methanol or hydrogen with a fuel cell). The investigation of alternative routes will take about six years, and then a decision will be taken as to fuel type to use. Construction of the ship will begin in 2028 for delivery in 2030. Good news in one way, but also an indication of long all the world’s shipping is going to take to decarbonise. In a related development a project run by Innovation Norway announced a design for a refuelling vessel that will provide liquid hydrogen as a bunker fuel for future fuel cell ships.

8, GE and gas turbines. I published an article with Dr Charlie Donovan of Imperial College Business School about the lessons from the continuing problems in GE’s gas turbine’s division, which recently reported a quarterly loss of nearly $900m. We looked at each part of GE’s turbine business, including segments such as emergency maintenance and efficiency upgrades that are usually thought to be largely unaffected by the shift to renewables. We showed how all parts of the division have been unexpectedly damaged by the ‘carbon bubble’. None have been immune. This week GE reported its annual results, saying that it saw the global gas turbine stabilising at ’25-30 GW’ a year, about a third of its predicted levels less than two years ago and indicated – for the first time, I think – that the problems in the industry were ‘secular’ and not merely ‘cyclical’.
 
9, Using surplus electricity. I heard an impressive short talk from ALienergy, a community enterprise on the west coast of Scotland, where the huge resources of wind are under-used because of a lack of grid capacity. ALienergy is installing an array of photobioreactors that will use surplus electricity to power 5kW LED arrays in 1000 litre water tanks populated by valuable food products such as the algae spirulina. The LEDs will be turned on and off as electricity availability changes without seriously affecting output. Nutrients will come from waste from whisky distilleries and cattle farms. I didn’t get detailed figures for expected outputs but this experiment seems to me to be a powerful linkage of renewable electricity and the food industry.
 
10, Solar trends. Respected industry analysts said that 3 GW of solar PV was ready to be installed on the UK grid without subsidy. (3GW is about 3% of world solar installations last year). Costs are ‘heading towards £40/€45/$53 per megawatt hour’ in the UK, Wood Mackenzie wrote, at a time when wholesale electricity prices are 50% higher than this. In Germany, 3 GW of PV was put on the ground in 2018 as lower prices encouraged more rapid growth. 50% of this was accompanied by some form of storage.
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