Industry news
Things I noticed and thought were interesting
Week ending 7th June 2020
1, Blockchain for electricity trading. A large-scale experiment on the Orkney islands off north-west Scotland sees direct electricity trading between producers and consumers of electricity. Much of the electricity generated currently on Orkney is currently wasted because of limited capacity to export to the mainland. The new system allows surplus (and therefore cheap) electricity to be bought by local households for uses such as electric storage heating. The arrival of long periods of close-to-zero prices on the UK and other grids is making the need for automated trading systems such as this ever more urgent.
2, Vehicle-to-grid (V2G). Fiat Chrysler and Engie have begun developing the world’s largest vehicle-to-grid site at a Fiat production plant near Turin in northern Italy. When construction is completed, up to 700 electric vehicles will be able to provide power back into the local grid. The project will offer about 25 MW of potential capacity to offer into the electricity market. Fiat Chrysler says it sees the V2G as a means of improving the competitiveness of EVs by offering their owners a chance to profit from participation in trading in the electricity market. (Thanks to Gage Williams)
3, CCS. Norway is one of the very few countries actively pursuing carbon capture and storage. Progress is patchy. This week Finnish energy multinational Fortum (ultimate owner of the coal plant in note 4) announced the end of the initial trial phase at a large waste-to-energy plant on the edge of Oslo. About 7,000 tonnes of CO2 were captured in two month-long phases, with a capture efficiency of about 90% of a partial stream of the waste gas output. But the whole plant generates about 400,000 tonnes of emissions each year and is one of the largest point sources in Norway outside the oil and gas industry. So the pilot was capturing approximately 10% of total CO2. The intention is now to scale up and begin to transport liquidified CO2 by ship to an onshore centre which will then pipe the CO2 to a depleted offshore field along with emissions from a cement works. The CO2 transportation and storage system will be developed by the Northern Lights consortium of 3 oil majors and is intended to be operational by 2024. (Thanks to Brian Tyler).
4, German renewables. The German government upped its targets for offshore wind substantially, confirming that it is looking for 20 GW by 2030 and setting a goal of 40 GW a decade later. Capacity is about 8 GW today. Germany also lifted the cap on solar installations and the federal government agreed that the states (lander) should take the final decision on whether to restrict onshore wind. Taking together, these changes will probably mean that Germany will hit its target of 65% renewables in electricity supply by 2030. At the same time, we have just seen the opening of what will be the last new hard coal generating plant in Germany. Under current market conditions, it is likely to only operate a few hours a day and Fortum, its owner, makes clear that the new power plant will never pay back its €1.5bn cost. A perfect example of the stranded assets discussed in the Carbon Tracker paper in note 8. The German recovery programme puts €40bn into climate-related projects out of €130bn total, including building insulation, EVs, hydrogen and improved public transport. While not perfect, this a model for other countries.
5, Synthetic fuels from offshore wind. Some of the top Danish companies came together to plan for a large scale synthetic fuels plant in Copenhagen. Wind business Orsted, shipping company Maersk and their partners, including Copenhagen Airport, envisage 1.3 GW of electrolysers by 2030, powered by the forthcoming wind farms off the island of Bornholm. The source of carbon for the synthetic hydrocarbons will come from carbon capture at industrial sites around the Danish capital. When fully operational, the hub will provide about 250,000 tonnes of liquid fuel a year and Copenhagen Airport plans to obtain 30% of its fuel needs from the new refinery. The partners stress that synthetic fuels are not currently competitive with fossil equivalents. The Orsted CEO said ‘our vision to produce sustainable fuels in the Greater Copenhagen area will deliver the necessary industrial scaling to drive the needed cost-out towards making renewable fuels competitive with fossil fuels. With the right policy framework in place, this project could be a defining leap forward for the production of sustainable fuels in Denmark.
6, Power-to-gas-to-power (P2G2P). Siemens, Engie and their partners got European funding for most of the cost of what might be the world’s first large scale P2G2P installation. Surplus renewables will be used to make hydrogen that will be stored. When required, the hydrogen will provide up to 100% of the fuel for a repurposed gas turbine that delivers heat and power in a paper mill in southwestern France. The turbine will be able to provide up to 12 megawatts into the local distribution grid and will be able to operate on either natural gas or hydrogen.
7, Refuse collection trucks. The English city of Manchester bought 27 electric refuse trucks in the largest ever order in the UK. The purchase cost of around £10m/$12.5m was described as ‘only a fraction more’ than the diesel equivalent. Manchester said that this purchase, which will replace half its fleet, will save a surprising 4% of its direct CO2 emissions. According to the city, trials have shown that the electric trucks can meet all requirements for carrying capacity and daily range. Made in the Manchester region, the vehicles are due for delivery by the end of the year. Refuse collection will move rapidly towards electrification, partly because of the noise and pollution advantages in urban streets but also because of the relatively short life of these trucks. The natural rate of replacement is higher than for, say, buses.
8, Capital at risk. Carbon Tracker put out a fully quantified assessment of the money at risk as the industries using coal, oil and gas start contracting. Analyst Kingsmill Bond and his colleagues estimate that ‘a quarter of the global equity market and half of the global corporate bond markets are in sectors linked to the fossil fuel system’. The authors focus on the industries whose health is tied to the continued growth of the fossil industries. This means sectors such as offshore oil exploration or gas turbines, amounting to around $6trn in current value. The number can be compared to the net profits of fossil fuel use passing through financial markets of just $1-2trn a year. This is really path-breaking work, full of vital numbers for the stocks and flows in the world fossil fuel system.
9, Direct Air Capture of CO2 (DAC). Swiss company Climeworks raised $75m, taking the total invested in the company up to $120m. This is the largest sum ever raised for a DAC company. Climeworks is a world leader in the extraction of CO2 directly from the atmosphere, either for the creation of synthetic low carbon fuels or for permanent sequestration into basalt rock . (It was one of the winners of the Stripe competition in note 10). The investment into company from existing investors suggests a growing appreciation of the potential of Climeworks’ approach to DAC, although its projected 2040 capture cost is still $100 a tonne, far greater than that proposed by the proponents of olivine rock weathering.
10, Permanent carbon storage. I wrote a post on the competition run by payments company Stripe to find technologies on which it could spend $1m to permanently sequester CO2. (I covered this in the last newsletter). The bidders offered carbon storage through soil carbon regeneration, various ideas in forestry, enhanced rock weathering, biochar and CO2 storage in building materials. In the longer post, I used the figures provided to Stripe by the 24 bidders to guess wildly at the cost of storing 10 billion tonnes of CO2 in 2040 as around 0.4% of today’s global GDP. This is based on the average of the estimates in all of the bids of about $37 a tonne of carbon dioxide. For comparison, this number is below almost all estimates of the eventual full cost for CCS at gas fired power stations. Most surprising are the 2 bidders’ estimates for the cost of weathering olivine, a widely available geological mineral, at $10 a tonne or less by 2040. If even remotely accurate, these numbers should make us optimistic about the prospects for multi-gigatonne sequestration.
Please consider reading the recent Greenpeace UK manifesto on a green recovery. It provides a terse and powerful rationale for focusing cash and resources on those activities necessary to sharply reduce emissions.
What We Need To Do Now is on the longlist for the Wainwright prize for a book on global conservation.
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