Published on Sep 24, 2013
Energy News Monitor I Volume X, Issue 15
Red Lines in Green Energy: Lessons for India Lydia Powell, Observer Research Foundation

R

ecent developments in the countries that aggressively pushed renewable energy are not very encouraging.  In Spain the push for solar energy was based on the same arguments that India is making to push its National Solar Mission: There are many sunny days, creation of a new industry will generate new manufacturing jobs, the country can show off its green energy credentials in climate and other multilateral forums, the rate of decline in solar panel costs will enable ‘grid-parity’ sooner than expected, renewable power will contribute to the country’s energy security and so on. But reality is proving to be very different for solar sector investors.  Many of the Spanish investors put money in the sector in 2007, drawn by guaranteed return of 10% and the increase in tariffs for solar power. According to a story in the Economist, the Spanish Government increased the market price for solar electricity to roughly 12 times the market price for electricity. In just a year (2007-08) Spain’s solar PV capacity increased four-fold from 670 MW. Solar thermal capacity increased from 11 MW in 2007 to over 1950 in 2013, a 170 fold increase. In a span of just over six years Spain created the fourth largest solar industry in the world. 

But since 2012, the government has failed to honour its promises and investors’ income has gone down by 40%.  According to The Economists’ story, subsidies to renewable energy have increased 40 fold from €193 million in 2007 to €8.1 billion in 2012. Unlike Germany the increase in tariff is not passed on to the customer and so the cumulative tariff deficit is said to have reached € 26 billion, an increase of €5 billion per year. Following the economic crisis, Spain has been going back on its promises as aggressively as it made them. Its actions are retroactive and so they are affecting both the current and future projects. Outstanding loans for renewable energy are said to be in the range of € 30 billion. As projects have been promised subsidies for 20 years much of the costs for the Government (tax payers) remain despite drastic cuts in subsidies. 

Germany, which has pushed renewable energy with evangelical vigour, is also facing problems but of a slightly different nature. Subsidies for renewable energy in Germany has not only created one if the biggest renewable energy industries in the region but also saddled it with some of the highest electricity tariffs in the region. 

Under its renewable energy law, the feed-in tariff scheme for renewable energy in Germany guarantees the owners of the green energy companies above market rates for renewable electricity for 20 years. As a consequence green energy output has been increasing at the cost of electricity from traditional sources.  The increase in renewable energy output has not only increased average tariff for electricity but also reduced demand for electricity from conventional coal and gas fired plants. The higher rates for renewable electricity are passed on to retail consumers of electricity in through a surcharge in their electricity bills. The surcharge is often inflated by rebates for companies that use more energy. As per news reports in Bloomberg, the surcharge has increased by more than 47% and reached a record in 2013.  It is forecast to continue rising further.  As a result, Germany now has one of the highest prices for electricity in Europe today. 

One consequence of this is that there is a reduction in demand for electricity from traditional electricity utilities which are either shutting capacity or shifting to cheap coal. For example, REW Germany’s second largest utility has decided to shut down 3100 MW capacity after operating profit fell by 62% in the first six months of 2013.  EON, Germany’s largest utility is also shutting down thermal generating capacity including nuclear capacity (for other reasons). This development may seem like victory for green power advocates but it is not on an economically sustainable trajectory. The high electricity tariff is taking a toll on Germany’s industrial competitiveness.  Many large German companies are pressing for abolishing subsidies for renewable energy.  In place of subsidies, the industry is calling for is a system where renewable energy competes on equal terms with conventional power and responds to demand rather than subsidies.  The renewable law was enacted 13 years ago when Germany decided to replace its nuclear plants with renewable energy at the cost of € 550 billion.  The re-elected German Chancellor, promised to review the German renewable energy subsidy law during her campaign for re-election. 

Yet another perverse consequence of subsidies of renewable power in Germany is that it is promoting the use of coal rather than its cleaner burning cousin natural gas. As mentioned earlier Germany’s renewable energy incentivises generation of subsidised energy from wind turbines, solar panels and so on. This surge of subsidised energy has pushed wholesale price of electricity down by 20% in 2012. This drop in wholesale prices has reduced profitability of gas fired power stations which are turning to cheap coal when wind and solar output slows down.  According to Bloomberg reports generation from lignite powered stations which emit three times as much carbon as gas based plants increased to 161 terawatt hours last year, the highest since 1990. The loss on gas based power was € 17.4/kwh and the profit on coal based power was € 8.89/kwh. German utilities and factories emitted 425 million metric tonnes of carbon dioxide in 2012, the most since 2008 on account of increase in coal use for power generation. In this period renewable energy generation increased from 15% to 23%.

Those who are on the green end of the debate would probably say that this is happening primarily because there is no price on carbon emissions. Those on the brown end may point to the collapse of the carbon market and argue that the willingness to pay a price for carbon emissions is not as high as it was presumed to be.  For India the lesson is not from the green or the brown end. The lesson is about the costs of the national solar mission which India is pushing as if its life depended on it.  What the projects goals are and what are the means to achieve them are unclear at this point. The lesson from Spain shows that renewable energy subsidies cannot be funded by the tax payer. The lesson from Germany shows that renewable energy subsidies cannot be paid by the rate payer. India which neither has enough tax payers or rate payers must think seriously about the unsustainable costs of sustainable energy.                                                                Views are those of the author                    

Author can be contacted at [email protected]

POWER

 

Can the New Responsibility Bill for Utilities make the States Responsible?

Ashish Gupta, Observer Research Foundation

T

here is no denying the importance of power sector for a country like ours given its role in boosting economic growth. Though progress has been made, we have failed to capitalize on the developments so far. The generation side had already reached the international level benchmarking in some aspects but the distribution side is still a cause of concern. The distribution sector is weakest link in the value chain. When Electricity Act, 2003 was passed, everyone felt that soon the power sector problems will be resolved. The Act in itself was a major development but many of the objectives are yet to be achieved.  One example is open access for retail consumers. Needless to say, we have certainly failed to capitalize on this crucial development and now face challenges in all fronts. Certainly, nothing is going well for the power sector. Lack of investment, fuel supply agreements issues, coal shortage problems, A T & C losses, rising cases for electricity thefts is only making the situation worse each day.  Banks too are reluctant to further lend money to this sector. The power sector which once regarded as investor’s darling is now heading towards being labelled a pariah.

In order to soothe the situation, the government has announced many schemes for strengthening the distribution side. The recent financial restructuring package for the Distribution companies is one of them. The package certainly boosted the investor’s sentiments but at the cost of the banks finances. The problem lies in our mindset which is accustomed to look for only short term solutions rather than finding out the root cause of why reforms have failed. The process failed because we adopted wrong policies under the influence of our political masters. Therefore announcing schemes or other instruments based on the same policies is not going to serve the purpose.  On the contrary it will add another burden to our stretched exchequer.

Having said that, it is important point out that we persistently refuse to learn from our previous mistakes. To put it bluntly, the political class does not want to learn. The recent draft Model State Electricity Distribution Management Responsibility Bill, 2013 is just a proof of that. There is nothing new but the same old things with some additions in new packaging have been presented. The old Bill was good on paper but it failed to address the core issues faced by the distribution sector.

Well the point here is why are we obsessed with passing number of Bills and secondly why is there a need for a separate Bill stating the roles and responsibility of the State Government & Distribution Utilities? This does not mean that important Bills should not be introduced but passing a bill on State Electricity Distribution Management Responsibility is like the Bill on curbing black magic. Also what the concerned Bill is trying to convey is that out our state distribution utilities are naive and uncompetitive and will continue to remain so unless supported by the State. Why raise fingers at the state distribution utility when they are actually the victims of political whims of the State?  It has been reiterated from the last ten odd years or so that the distribution utilities must be freed from the political clutches but what happened in reality? Nothing!  Therefore simply passing a Bill like this will not change the situation when the sordid vote bank politics is directly linked with electricity distribution and tariffs.

On the overdrawing by the States, the Bill has nothing concrete to offer. The problem is not over drawing but why they are over drawing? The answer is obvious that overdrawing is more lucrative than buying the electricity from the market. Though there is a penalty, it is too low to prevent over drawing. Therefore in the absence of concrete penalty mechanism the prospect of the proposed Bill producing any fruitful result is highly doubtful.

The provision for paying the subsidies to the state electricity distribution companies upfront was already the part of Electricity Act, 2003. Proposing the same thing in the so called new responsibility Bill will not be able to change the working style of the states. This never happened under the Electricity Act which is in place and so the new Bill saying the same thing is nothing but simply a mockery.

If owing to unforeseen circumstances, there are deviations in fulfilling the obligations cast on the state government under this Act, it has been said that the Committee established under section 10 shall make a statement before the State Legislature. This is the best part as most of the time the officials will be engaged in preparing the statement for their defence because every deviation on the part of the states will be due to the unforeseen circumstances.

Having said that, we need to understand a very basic point that simply incorporating responsible points is not going to make the States more responsible. The responsibility will come only when there will be transformation in the working style of the state government complemented with transparency. For that we do not need another Bill but a concrete governance system.                                                                     Views are those of the author                    

Author can be contacted at [email protected]

DATA INSIGHT

All India Indicative Minimum & Maximum Power Tariffs of Domestic Sector Consumers at Different Loads

Akhilesh Sati, Observer Research Foundation

As on April, 2013

Load

State/ Utility

Tariff

 (Paise/KWh)

1 KW

Rajasthan

583

Puducherry

60

2 KW

Maharashtra

616

Puducherry

78

4 KW

West Bengal (Urban)

741

Uttar Pradesh (Rural)

120

6 KW

Maharashtra- Mumbai (Reliance Energy)

859

Uttar Pradesh (Rural)

120

8 KW

Maharashtra- Mumbai (Reliance Energy)

953

Uttar Pradesh (Rural)

120

10 KW

Maharashtra- Mumbai (Reliance Energy)

1009

Uttar Pradesh (Rural)

120

 

 

Source: Central Electricity Authority.

Oil & Gas: India’s Milestones             

Dinesh Kumar Madhrey, Observer Research Foundation

Continued from Volume X, Issue 14......

1957:

ONGC drilled 2 wells at Jawalamukhi in Punjab and found little gas. It suspended the exploration activities there because of the possibility of religious riots in the event of choking of the pathways of the Jawalmukhi temple flame.

1958:

BOC and GoI signed an agreement to take over Nahorkatiya and Moran, fields discovered by AOC, by forming Oil India Pvt Ltd, with the BOC holding 2/3 share and GoI 1/3 share (this changed to equal sharholding in 1961).  ONGC discovered a gas field (Lunej structure) in Cambay basin, Gujarat that year.

First Gas & Oil pool discovered in Jwalamukhi (Punjab) and Cambay. Oil India Limited (OIL) was set up.

1959:

ONGC became the autonomous body by October 15, 1959. ONGC first started exploration in north-western parts (Punjab, Rahasthan, Gujarat and Kutch) of the country between 1956 and 1959.

1960:

ONGC struck oil at Anklesvar (turned out to be largest field of Cambay basin around south of Narmada river, Gujarat) and Rudrasagar (Southwest of Moran, Assam) in 1960. 

A JV between the Government of West Bengal and Standard Vacuum Oil Co., did extensive surveys and drilled many wells during 1954-60 in the state. As all the wells were dry, the project was terminated in 1960.

1961:

Oil was struck by ONGC in Kalol field in the basin north of Narmada river, Gujarat.

1963:

ONGC started offshore seismic surveys in Gulf of Cambay. In the same year ONGC struck oil in Sanand and Nawagam in Gujarat.

1964:

ONGC discovered oil in Lakwa (Southwest of Moran, Upper Assam) in the same year.

1968:

ONGC discovered oil field in Geleki in Assam.

1969:

ONGC discovered the gas field, Manhar Tibba in Jaisalmer.  This was the first gas discovery in Rajasthan in 1969. OIL discovered oil in Kusijan (between Duliajan and Digboi) in Assam. Several oil/gas fields were found by ONGC in the basin north of Narmada of which the major ones were Kalol, Nawagam, Sanand, North and South Kadi.                                                                                                                                      

to be continued…

 

 

NEWS BRIEF

NATIONAL

OIL & GAS

Upstream

RIL management committee to decide cut in gas reserves at RIL's KG-D6

September 22, 2013. A block oversight panel headed by oil regulator DGH will meet shortly to decide on Reliance Industries' proposal to slash gas reserves in main fields in its KG-D6 block by two-third and cut investments by $ 3 billion. The management committee, which also comprises representative of oil ministry, has to decide on accepting revised field development plan (RFDP) that slashes recoverable reserves in D1&D3 fields to 3.4 trillion cubic feet (Tcf) from 10.03 Tcf estimated in the original plan of 2006. Also, two-phase capex plan of $ 8.836 billion (proposed in 2006) has been reduced to $ 5.928 billion. It will decide if 80 per cent drop in production to 13.48 million standard cubic meters per day was due to geological reasons or due to non-drilling the committed quota of 31 wells as claimed by DGH. (economictimes.indiatimes.com)

ONGC said to seek stake in Brazil oil field ahead of Sinochem

September 18, 2013. Oil & Natural Gas Corp. (ONGC) is seeking to raise its stake in a Brazilian oil field that’s also the subject of a bid by China’s Sinochem Group. ONGC Videsh Ltd (OVL) has informed its local partner, Petroleo Brasileiro SA or Petrobras, that it intends to exercise its right to buy a 12 percent stake in the Parque das Conchas field. The price would be more than $500 million. ONGC already owns 15 percent of the field. Royal Dutch Shell Plc (RDSA), the operator of the block, holds 50 percent. Petrobras said it would sell its 35 percent stake in the offshore project to Sinochem for $1.54 billion. The existing partners in the field have the right of first refusal and can block the Chinese company’s offer, Petrobras said at the time. OVL and Shell will together buy the 35 percent stake that Petrobras had planned to sell to Sinochem. Shell would purchase 23 percent of the stake and ONGC the rest. ONGC lost out on a $5 billion bid to buy a stake in Kazakhstan’s biggest oil field in July, after the government exercised its right to step in and purchase it in place of the Indian company. Kazakhstan then sold the stake to China National Petroleum Corp. (www.bloomberg.com)

Downstream

Cabinet approves ` 372.30 bn refinery project in poll-bound Rajasthan

September 21, 2013. The Cabinet has cleared a ` 37,230 crore refinery project in poll-bound Rajasthan, ahead of UPA Chairperson Sonia Gandhi's visit to Barmer to lay its foundation stone and kick-start campaigns for the assembly election in the Congress-ruled state. The refinery project will be the second biggest project in Rajasthan after the Indira Gandhi canal. The proposed refinery will be a subsidiary of Hindustan Petroleum Corporation Ltd with its equity of 74% to be held by HPCL and 26% to be held by the government of Rajasthan, the oil ministry said. HPCL is also scouting for a strategic partner. The project cost is financed through debt and equity, where total equity component is about ` 14,892 crore and ` 22,338 crore debt. HPCL's equity contribution in the project is ` 11,020 crore while the state government will contribution ` 3,872 crore. The state has also offered a financial package of ` 56,000 crore to make the project financially viable in the desert state, the government said. The financial package is spread over 15 years. The Rajasthan government has been pursuing the central government to have a refinery in the state after Cairn India discovered the country's biggest on-land oilfield. It intensified its efforts since 2009 when the first oil was produced from the Barmer block. Cabinet would approve the project before Gandhi's visit the state in September. According to government the greenfield refinery is financially viable after the state government's aids including ` 3,736 crore per year interest-free loan to meet capital expenditure. With all these concessions and after the processing of 50:50 Rajasthan crude and Arab mix, HPCL has projected a GRM (gross refinery margin) of $15 per barrel, which makes the project incredibly attractive.

The 9 million tonne refinery-cum-petrochemical project is expected to be commissioned by 2017 and it will process a mix of crude oil produced from Cairn India's Barmer oilfields, and imported Arab mix. (economictimes.indiatimes.com)

HPCL's Vizag refinery to run at full rate by Sep end

September 20, 2013. Hindustan Petroleum Corp Ltd (HPCL) aims to operate its fire-hit 166,000 barrels per day Vizag refinery at full capacity by the end of this month. HPCL had partly shut the refinery after a fire in one of its two cooling towers. HPCL will use its other cooling tower and partly revive the damaged unit to cool the refined products. (economictimes.indiatimes.com)

Transportation / Trade

CAG seeks Oil Ministry's response on transnational gas pipelines

September 23, 2013. The Comptroller and Auditor General (CAG) of India has sought Oil Ministry's comments on inadequate progress made in transnational gas pipeline projects including the Iran- Pakistan-India (IPI) line. The CAG said gas import from Iran, Turkmenistan and Myanmar through transnational pipelines was under consideration since 1989. The CAG wrote to the ministry saying that there was uncertainty in import of gas through pipelines due to geo-political, technological and security reasons from the beginning. IPI, it said, was conceptualised in early 1989 as Iran- Pakistan pipeline worth USD 2 billion. India joined the project in 2005 and two years later agreed to pay USD 4.93 per million British thermal unit for buying gas from Iran. The pipeline, which was expected to carry 8.7 billion cubic meters of gas, was targeted for completion in 2013, CAG said. India withdrew from the project in 2009 citing security concerns and price of gas as reasons. However, Iran and Pakistan have gone ahead with the project and construction of the Pakistan section was inaugurated in March this year and is expected to be completed in 22 months. CAG said the 1,680 km Turkmenistan-Afghanistan-Pakistan- India (TAPI) pipeline will cost USD 7.6 billion and carry 38 million standard cubic meters per day of gas for India and Pakistan each from 2018. The Myanmar-Bangladesh-India pipeline was mooted in 1997. The 900-km line was to source gas from Mayanmar and Bangladesh for supply into India. New Delhi reached an agreement with Dhaka and Burma in 2005. Bangladesh however withdrew from the project after India refused to accept its three additional conditions, CAG said. The line from Myanmar was re-routed through Mizoram, Tripura and Assam into Kolkata. While there were security related issue, Mayanmar in 2008 concluded a gas sale deal with China. CAG, which is doing a Performance Audit of Supply and Pricing of Natural Gas, asked the ministry to furnish its comments on the issue at the earliest. (economictimes.indiatimes.com)

No pipeline for gas supply to units near Kaziranga

September 20, 2013. Lack of infrastructure like pipelines and meagre availability of gas are hurdles in supply of natural gas to tea units around Kaziranga which were shut down last year for using coal and wood, the National Green Tribunal (NGT) was informed by Assam Gas Company Ltd (AGCL). The claim, which was supported by the ONGC as well, was opposed by the Indian Tea Association which said AGCL is already supplying natural gas to 20 other units in Golaghat district of Assam where the tea manufacturers are also located. On hearing the contentions of the two sides, a bench headed by NGT directed the association to file the names of the 20 units which are purportedly getting gas supply from AGCL. The bench was hearing the plea of tea units around the Kaziranga National Park which were shut down for using wood and coal for their operation and had moved the tribunal seeking directions for supply of natural gas to them. The bench remarked that if AGCL is supplying gas to others in the area then it cannot be unfair to the tea units located in the same region. The NGT will now take up the matter on October 11. The Centre, ONGC and AGCL had been directed by the NGT to clarify whether natural gas can be supplied to tea industries around Kaziranga. (economictimes.indiatimes.com)

Policy / Performance

Two-wheelers guzzle 62 pc petrol, cars only 27 pc: Survey

September 24, 2013. The government touted petrol as the rich man's fuel to stop subsidy. But a recent survey shows 62% of the fuel flowing into the market is consumed by the aam aadmi's sawari — two-wheelers — while about 2% is being sold loose by people to earn their livelihood in remote villages and coastal areas. The survey, conducted by Nielsen for the oil ministry's think tank — Petroleum Planning and Analysis Cell — shows cars account for about 27% of consumption, three-wheelers for 6% and about 2% is used for "other purposes" such as running generators. The survey is part of the ministry's efforts at preparing a roadmap for managing the domestic oil market. (economictimes.indiatimes.com)

India & Venezuela to intensify energy cooperation

September 24, 2013. India to import more crude oil from Venezuela and also exploring possibilities for paying it in rupees, which will save valuable foreign exchange and contain current account deficit (CAD), the government said. Oil Minister Veerappa Moily plans to save $8.5 billion foreign exchange by importing crude oil from sanction hit Iran and pay the country in rupees and looking for similar arrangements with other countries. India pays for Iranian crude in rupees under a special arrangement with Iran because payment in dollar is not possible due to the US and European Union sanctions against the Gulf nation. Venezuelan Petroleum Minister Rafael Ramirez said Indian companies are welcomed to invest in Venezuela. Venezuela has recently offered at least two exploration blocks to Reliance. RIL, which imports about 300,000 barrels of crude oil per day from Venezuela, is also planning to increase the quantity. (economictimes.indiatimes.com)

India allows state energy explorers to extract from shale

September 24, 2013. Oil & Natural Gas Corp. (ONGC) and Oil India Ltd., the country’s state exploration companies, won government approval to extract shale oil and gas for the first time as Asia’s second-biggest energy user seeks to curb imports. ONGC and Oil India will be allowed to tap shale resources in blocks allotted to the companies more than a decade ago, the government said. Shale production will be taxed on par with conventional fields, it said after the cabinet cleared the policy. India is seeking to cut its energy import bill by 50 percent in seven years and to zero by 2030. Increased purchases of crude oil and coal have led to an unsustainable current account deficit and a slump in the rupee to a record last month. Shale extraction uses hydraulic fracturing, which involves blasting water, sand and chemicals underground to release fuel. While environmental groups have objected to the technique on concern it may contaminate groundwater, some countries have adopted the method to boost output. The U.S.’s shale boom helped it overtake Russia as the biggest gas-producing nation in 2009. Oil import costs in India, Asia’s largest energy user after China, surged to a record $144.3 billion in the year through March, or more than 8 percent of gross domestic product. The country holds 6.1 trillion cubic feet of technically recoverable shale-gas reserves in three basins, the U.S. Geological Survey estimated in a report in January 2012. As per available data, six basins -- Cambay (in Gujarat), Assam-Arakan (in the North-East), Gondawana (in central India), KG onshore (in Andhra Pradesh), Cauvery onshore and Indo-Gangetic basins, hold shale gas potential. In future, the Directorate General of Hydrocarbons, the Oil Ministry's technical arm, has proposed to offer areas for shale gas exploration on royalty and production-linked payments to the government. Various studies have estimated recoverable reserves of shale gas at between 6 trillion cubic feet and 63 trillion cubic feet. (www.bloomberg.com, economictimes.indiatimes.com)

Private refiners to get special insurance cover

September 23, 2013. The government has decided to extend to private refiners the special insurance cover it provides to state-run companies that import crude oil from Iran, a measure it hopes will increase imports from the country and thereby help save foreign exchange. The measures is part of the plan outlined recently by oil minister Veerappa Moily to the Prime Minister to cut India's oil import bill by $20 billion. High oil and gold imports are seen as the primary cause of India's record high current account deficit that has contributed significantly to the rapid rupee depreciation. Higher crude imports from Iran can help save precious foreign exchange as India can pay for part of the purchases in rupees according to an the arrangement worked out between the two countries after US & EU led sanctions on Iran made it difficult for New Delhi to settle payments in dollars through foreign banks. India wants to import of 13 million tonnes of crude oil from Iran in the current financial year, but oil firms could import only 2 million tonnes of Iranian crude in first five months of current fiscal year mainly because of insurance problems. Indian general insurance companies provide cover to oil refineries and then re-insure that risk with global re-insurers by paying a premium thus reducing the risk on their books. (economictimes.indiatimes.com)

No sharp hike in diesel prices, petrol prices may fall by month-end

September 23, 2013. The government has developed cold feet about the proposal to increase diesel prices sharply and raise them every week as top Congress leaders and the party's allies are worried about the political fallout of such a move ahead of the festive season and elections in five states; but petrol prices can fall sharply by the end of the month if the rupee remains strong and global prices remain calm. Oil Minister Veerappa Moily had proposed a detailed action plan to the Prime Minister to cut India's oil import bill by $19-20 billion, which included a one-time hike in diesel rate by ` 5 a litre and fuel conservation. The government is worried about the impact of raising prices before crucial assembly elections in Delhi, Rajasthan, Madhya Pradesh, Chhattisgarh and Mizoram. The Election Commission is likely to announce the poll schedule soon. (economictimes.indiatimes.com)

Oil firms challenge CCI jurisdiction in petrol pricing probe

September 22, 2013. The Competition Commission of India (CCI) will soon pass an order on a challenge by oil marketing firms over its authority to investigate alleged cartelisation in fixing petrol prices. The CCI is probing suspected unfair practices by oil marketing companies in setting petrol prices, which has been deregulated by the government. An appropriate order would be passed since the oil companies have said the CCI cannot even look at issues related to petrol prices. The CCI, which keeps a tab on anti-competitive practices across sectors, had referred the petrol pricing issue to its Director General (DG) for investigation after gathering information from the Petroleum Ministry. Cases are referred to the DG, the investigation arm, on finding prima facie evidence of anti-competitive practices. The CCI observed that even after deregulation, petrol prices were revised almost equally by oil firms — Indian Oil, Bharat Petroleum and Hindustan Petroleum. Finding ambiguity in the petrol pricing mechanism, the CCI sought information from the Petroleum Ministry. The Ministry said it was not responsible for fixing petrol prices and that oil marketing companies set the rates directly using a formula. (www.thehindu.com)

Govt wants to resolve disputes between DGH & RIL within legal framework: Vivek Rae

September 19, 2013. Reliance and BP strike a positive note after a marathon meeting with Oil Minister Veerappa Moily and Petroleum Secretary Vivek Rae to thrash dispute between the contractor and the Directorate General of Hydrocarbons (DGH) over relinquishing a large part of the KG-D6 block along with eight discoveries worth over $10 billion. The DGH wants that the contractor to relinquish the area quickly because it had missed the timelines for appraisal of three discoveries and failed to submit the development plan for five others. But, the contractor has a different position on this matter. Both have to resolve their differences at the management committee of the block. The government will step in only if the two sides can't sort out the matter in the management committee, which is headed by DGH. After the meeting, RIL and BP executives expressed hope to resolve the stalemate soon. DGH had asked the oil ministry to direct Reliance to relinquish a large part of the D6 block, which also included eight gas discoveries. DGH insisted that Reliance should also relinquish gas discoveries because it missed contract-specified timelines to develop these finds. (economictimes.indiatimes.com)

POWER

Generation

Mith Virdi Nuclear Power Project faces opposition from villagers

September 23, 2013. Activists against proposed nuclear power project at Mith Virdi in Bhavnagar district of Gujarat are planning a 40 km rally with participation from over 50 villages to mark their protest. Bhavnagar Jilla Gram Bachao Samiti, Gujarat Anu-urja Mukti Andolan and Paryavaran Suraksha Samiti are taking the lead in the protests against 6,000 MW nuclear fired power project. They decided to register their opposition through rally after they learnt that the government of India is moving to further dilute the Nuclear Liability Act to seal the nuclear deal with the US government during Prime Minister's visit to Washington soon. The Government of India is pursuing its nuclear programmes at Koodankulam (Tamil Nadu), Jaitapur (Maharashtra), Mithi Virdi (Gujarat), Kovvada (Andhra Pradesh), Gorakhpur (Haryana), Chutka (Madhya Pradesh) and Haripur (West Bengal) where people are opposing the projects. Communities near the existing nuclear facilities in Tarapur, Rawatbhata, Kalpakkam, Kaiga, Kakrapar and Hyderabad have also been raising voices against radiation leaks and their harmful effects. Existing and proposed new uranium mines in Jharkhand, Andhra Pradesh and Meghalaya have also met with massive protests. (economictimes.indiatimes.com)

Prime Minister to dedicate NTPC's Chhattisgarh power plant to nation

September 19, 2013. Prime Minister Manmohan Singh will dedicate NTPC's Sipat thermal power plant in Chhattisgarh to the nation and lay the foundation stone of the first stage of the company's planned Lara project in the state. The Sipat plant supplies electricity to Chhattisgarh, Madhya Pradesh, Maharashtra, Gujarat, Goa, Jammu & Kashmir, Daman & Diu and Dadra & Nagar Haveli. The Lara project will have two units of 800 MW each in the first stage, which is estimated to cost ` 11,741 crore, and an ultimate installed capacity of 4,000 MW. According to the preliminary agreement between the Chhattisgarh government and NTPC, the state will get 50 per cent of the power to be generated at the Lara project, while the remainder will be sold to Madhya Pradesh, Maharashtra, Gujarat, Goa, Daman & Diu and Dadra & Nagar Haveli. NTPC has an installed capacity of 10,840 MW in the region, with thermal plants operating at Vindhyachal (4,260 MW) in Madhya Pradesh, Korba (2,600 MW) and Sipat (2,980 MW) in Chhattisgarh and Mauda (1,000 MW) in Maharashtra. New projects with a total capacity of 7,160 MW are coming up at Lara, Barethi, Khargone and Gadarwara in Chhattisgarh and Madhya Pradesh. NTPC's total power generation capacity is over 41,000 MW. (economictimes.indiatimes.com)

NHPC to add another 1.25 GW capacity in current Plan period

September 18, 2013. Hydel power producer NHPC plans to start electricity generation from four more projects, having generation capacity of 1,250 MW, in the the current Five-Year Plan period ending 2017. The addition would take the company's total power generation capacity to 6,997 MW. NHPC informed shareholders that so far 452 MW capacity has been added in the current Plan period (2012-17). Chamera-III (231 MW), Teesta Low Dam-III (132 MW), Chutak (44 MW) and all the three units of Nimmo Bazgo project (15 MW X 3) at partial load, have been successfully commissioned. At present, six projects -- having a total capacity of 4,050 MW -- are under construction stage. Out of them, four projects -- with capacity of 1,250 MW -- are slated for commissioning during the current Plan period (2012-17), which would take the installed capacity of the company to 6,997 MW by 2017. NHPC is awaiting approvals for about 10 projects having a total capacity of 8,801 MW. This includes five joint venture projects with cumulative capacity of 3,686 MW. (economictimes.indiatimes.com)

Kudankulam Nuclear plant to begin commercial operation soon: AEC

September 18, 2013. The Kudankulam Nuclear power plant is expected to begin commercial operation soon and its second unit is at an advanced stage of commissioning, Atomic Energy Commission (AEC) said. India is planning to construct a total of 20 more Pressurised Heavy Water Reactors (PHWRs) of 700 MWe each due to their highly competitive capital cost per KWe and a low unit energy cost. At present 14 such reactors are under operation. The Kudankulam nuclear power plant in Tamil Nadu has been embroiled in a controversy and delayed in the wake of agitation led by People's Movement Against Nuclear Energy (PMANE) against the project citing environment and safety concerns. (economictimes.indiatimes.com)

Transmission / Distribution / Trade

Tata Power signs pact with EESL for energy efficiency

September 23, 2013. Tata Power has signed a Memorandum of Understanding (MoU) with Energy Efficiency Services Ltd (EESL), a joint venture of four public sector units including NTPC, to carry out collaborative activities and partnerships in the field of energy efficiency and demand side management. The MoU commences from August 26, 2013 and will remain in force till August 25, 2016. The MOU provides overarching framework and strategy for collaborative activities and partnership for energy efficiency and conservation. (economictimes.indiatimes.com)

Coal linkage panel allows Lanco Babandh to ink FSAs with CIL

September 23, 2013. Amid delays by some firms in inking of fuel supply agreements (FSAs) with Coal India, an inter-ministerial panel has allowed Lanco to enter into the pact, condoning delays in achieving milestone for its 660 MW Babandh power project in Odisha. The Standing Linkage Committee (Long-Term) on Coal after noting that all milestones barring forest clearance for 18 acres could not be achieved, allowed the company to sign the FSA saying it will take effect only after submission of remaining stage II clearance by December 31. (economictimes.indiatimes.com)

Sterlite Grid bags 2 power transmission contracts

September 20, 2013. Sterlite Grid has bagged two contracts to set up two power transmission projects bid out by the government. For Transmission System for Patran 400 KV, Techno Electric & Engineering Company Limited has emerged as the successful bidder. Letter of Intent has been issued to the bidders on September 17, 2013. PFC Consulting Ltd, a wholly owned subsidiary of Power Finance Corporation, offered the three projects for private participation through tariff based competitive bidding. (economictimes.indiatimes.com)

India's Coal imports rise 6.5 times in 7 years

September 20, 2013. India's coal imports surged 6.5 times in the last 7 years and the country is likely to source 82 million tonnes of the fuel in the current financial year. The quantity of imported coal for the year 2010-11, 2011-12 and 2012-13 has been 30 million tonnes, 45 million tonnes and 63 million tonnes respectively. (economictimes.indiatimes.com)

Policy / Performance

Greenpeace approaches Sebi against Coal India

September 23, 2013. Global environmental lobby group Greenpeace filed a complaint with market regulator Sebi against Coal India alleging that the world's largest coal miner, which is slated to go in for a disinvestment soon, has overstated its extractable reserves by a good 16 per cent. The research report was done in 2011, a year after the company's mega public issue and added the CIL continues to claim its reserves at the inflated level. (economictimes.indiatimes.com)

Consumer Forum asks Gujarat Electricity Regulator to reduce fees

September 23, 2013. Not for profit organization Consumer Education and Research Society (CERS) has filed a petition seeking 50% reduction in the fees charged by Gujarat Electricity Regulatory Commission (GERC) for various mandatory issues. CERS claimed that GERC is working as commercial entity and it has fixed deposits worth ` 69.5 crore. Country's one of the richest state electricity regulators GERC's fixed deposits have been swelling year on year. From ` 5 crore in 2005-06, GERC's fixed deposits increased to ` 69.50 crore in 2011-12. According to an analysis presented by CERS for the period between 2004-05 to 2011-12, GERC received total income of ` 92.73 crore and incurred income of ` 19.67 crore. (economictimes.indiatimes.com)

Separate cell should see Uttarakhand hydel projects' recovery: Assocham

September 23, 2013. Industry body Assocham said the Centre should set up a separate cell for overseeing rehabilitation of hydel projects which have suffered huge losses due to the recent calamity in Uttarakhand. The devastating natural disaster in Uttarakhand has severely shaken the confidence of investors in 199 ongoing hydropower projects in the state with an estimated potential of 14.4 GW and existing 45 projects have suffered huge losses.

The estimated capital cost of setting up a small hydro electricity plant ranges between ` 5.5 crore and ` 7.7 crore per one megawatt and the per unit (`/kwh) cost of hydro power generation was estimated ranging from ` 3.54 to ` 5.96. It has also been perceived that the share of hydro electricity would fall from 14 per cent in 2012 to 11 per cent by 2030. (economictimes.indiatimes.com)

Power Ministry proposes to pool imported, domestic gas prices

September 22, 2013. The Power Ministry has proposed to pool prices of imported and domestically produced natural gas to be supplied to power plants stranded by a drop in production of the fuel from Reliance Industries' KG-D6 block. The ministry floated a Cabinet note to seek approval to pool imported liquefied natural gas (LNG) with the fuel available from the KG-D6 block after meeting the requirements of fertiliser units. The move is aimed at helping gas-starved power plants. The proposed electricity tariff was derived after pooling the prices of imported and domestic gas and deducting government subsidy, which requires approval. The tariff may increase to ` 7.50 per unit in 2015-16, when gas will be made available to additional power plants. (economictimes.indiatimes.com)

PowerMin aims for electricity access to all households by 2017

September 21, 2013. The Union power ministry proposes to establish a National Smart Grid Mission (NSGM) by 2014, on the lines of the National Mission for Electric Mobility launched recently by the ministry of heavy industries. The ministry proposes to supply power to all households by 2017 through smart grid technologies under the NSGM. The market size of smart grid projects envisioned is $30-40 billion in the next 15-20 years, at the current price. The ministry aims to put in place policies and programmes to provide access to electricity for all with uninterrupted supply of a daily minimum of eight hours by 2017, and continuous improvement in supply. It envisages aggregate transmission and commercial losses coming to below 15 per cent by 2017, below 12 per cent by 2022 and below 10 per cent by 2027. It proposes full rollout of smart grids in pilot project areas by 2017, in major urban areas by 2022 and nationwide by 2027. (www.business-standard.com)

Odisha forms panel for R-APDRP implementation

September 21, 2013. The Odisha government has constituted a 10-member steering committee headed by the chief secretary for implementation of Restructured Accelerated Power Development and Reform Programme (R-APDRP) scheme in the command area of distribution utility- Central Electricity Supply Utility of Odisha Ltd (Cesu). The panel would also have the development commissioner, secretaries of departments of finance, revenue & disaster management, energy and housing & urban development as members. (www.business-standard.com)

Pakistan to object on construction of four power projects in J&K

September 21, 2013. Pakistan is set to raise objections to the construction of four power projects in Jammu and Kashmir (J&K), the foundation stone of one of which was laid by the Prime Minister recently, at the next meeting of the Indus Commission to be held. A five-member Pakistani delegation will attend the first meeting of the Permanent Indus Commission being held this year. According to the agenda of the meeting, Pakistan's objection to 850 MW Ratle, 120 MW Miyar, 48 MW Lower Kalnai and 1000 MW Pakal Dul hydro projects, proposed to be constructed by India in Chenab basin, will be discussed. In June, Prime Minister Manmohan Singh had kick-started work on the Ratle project on Chenab river as part of efforts to tap hydroelectric potential in Jammu and Kashmir. The 850 MW Ratle project, which is the nation's first hydroelectric project that was bid out through tariff-based international competitive bidding, will cost ` 5,500 crore. (economictimes.indiatimes.com)

Policy on surplus coal likely in a month: Planning Commission

September 20, 2013. The government may come out with a policy on the surplus coal in a month's time, Planning Commission said. Under coal swapping, the private power companies will be allowed to use excess coal from captive mines, allocated to the company for one of its project, for another. Tata Power had asked the government to allow them to divert surplus coal from one plant to another. Tata Power has sought diversion of surplus coal from its Mandakini captive mine in Odisha to the 1,050 MW Maithon project in Jharkhand, which it operates in partnership with Damodar Valley Corporation. The Association of Power Producers (APP) had said that private power companies have agreed to return coal mined from captive blocks to Coal India Ltd if the end-use plant is delayed. (www.business-standard.com

India, Japan vow 'early conclusion' of civil nuclear deal

September 19, 2013. India and Japan vowed for an ‘early conclusion’ of the civil nuclear cooperation agreement even though there are still a range of issues that need to be resolved for implementing the deal. In a meeting between Prime Minister Manmohan Singh’s special envoy for Japan Ashwani Kumar and Japanese Foreign Minister Fumio Kishida in Tokyo it was decided that both sides will take the stalled negotiations forward, which began in 2010, and expedite the talks in order to conclude it early. The joint working group is trying to find out a solution so that the deal gets finalized soon. One of the issues that has acted as a major deterrent from India’s side is Japan’s insistence on India signing the Nuclear Non-Proliferation Treaty (NPT). India, however, has maintained its strict adherence to a ban on nuclear tests that has also granted it a waiver by the Nuclear Suppliers Group (NSG) to do trading in atomic energy. (www.business-standard.com

INTERNATIONAL

OIL & GAS

Upstream

IOOC to develop 16 offshore fields in Southern Iran

September 24, 2013. The Iranian Offshore Oil Company (IOOC) will develop 16 new offshore oil and gas fields off the island of Qeshm in southern Iran to support the island's development as an energy hub. The company said the necessary infrastructures are in place for the development of Towsan, Northwest Towsan, Taftan, Hormuz, Gourzin, Salakh, Forouz A and B fields. Meantime, output at Hangam oil field has risen from 4,000 barrels per day to 30,000 barrels per day, while gas production capacity in Hangam will increase from 80 to 180 million cubic feet as part of the development project, which also includes construction of a 25 MW gas power plant. Forouz B field, which contains an estimated 28 trillion cubic feet of gas in place and 180 million barrels of gas condensate, is expected to produce up to one billion cubic feet of gas and 10,000 barrels of gas condensate daily. The volume of gas will allow the generation of up to 6,000 MW of electricity for consumption in Iran. (www.rigzone.com)

Statoil finds gas at Ice Crystal prospect

September 23, 2013. Statoil reported that it has made a gas discovery at the Iskrystall (Ice Crystal) prospect on production license 608 in the Norwegian zone of the Barents Sea. However, the company pointed out that it had been seeking oil at the prospect. Well 7129/8-2, which was drilled by the West Hercules (DW semisub) rig, has proved an approximately 655-foot gas column, according to Statoil. The firm estimates the size of the discovery to be between six and 25 million barrels of oil equivalent. Ice Crystal was the second of four prospects to be drilled in the Johan Castberg area this year with the aim of providing additional volumes for the Johan Castberg field development project. The first prospect, Nunatak, resulted in a small gas discovery. (www.rigzone.com)

Britain pushing to ease sanctions on BP gas field

September 22, 2013. Britain could be close to agreeing a deal to ease sanctions that have stopped gas production from the North Sea's Rhum field, jointly owned by BP and the National Iranian Oil Co. Production from the field, which once supplied 5 percent of Britain's gas output, has been suspended since 2010 as a result of international sanctions against Iran. But with signs of a thaw in relations between Iran and the West, the government now hopes to win agreement from the European Union and the United States for a sanctions waiver in the near future. (www.reuters.com)

US producers skip Brazil’s biggest oil find as Chinese compete

September 20, 2013. U.S.-based oil companies are skipping the chance to bid for Brazil’s biggest crude discovery while state-run producers from China, India and Malaysia prepare to compete in an Oct. 21 auction. China National Petroleum Corp., China’s biggest oil company, and China National Offshore Oil Corp., its biggest offshore producer, have registered for the Libra oilfield licensing round, the country’s oil regulator said. China Petrochemical Corp., known as Sinopec Group, is participating in the auction through a Brazil-based joint venture with Repsol SA. The 11 registered companies also include Royal Dutch Shell Plc, Total SA, Ecopetrol SA and Petroleo Brasileiro SA, four of the nine largest oil companies by market value. Kuala Lumpur-based Petroliam Nasional Bhd. and Oil & Natural Gas (ONGC) Corp., India’s biggest explorer, also plan to compete in Brazil’s first licensing round, under new legislation that guarantees operating control and a minimum 30 percent stake for Rio de Janeiro-based Petrobras. (www.bloomberg.com)

Nigerian oil cos boost production as majors retreat

September 18, 2013. Nigerian-owned oil companies are boosting their share of the country’s output by taking up fields in restive areas as international energy companies retreat, Ecobank Research said. For more than five decades, Royal Dutch Shell Plc, Exxon Mobil Corp., Chevron Corp., Total SA and Eni SpA pumped about 97 percent of Nigeria’s output, according to Nigerian National Petroleum Corp. Shell and Chevron are selling assets that can produce 300,000 barrels a day from nine onshore and shallow-water oil leases. Stakes in 13 other fields were sold jointly by Shell, Total and Eni since 2010, with most of them bought by smaller Nigerian companies including Seplat Petroleum Development Co., First Hydrocarbon Ltd. and Neconde Energy Ltd. (www.bloomberg.com)

Downstream

First exporting vessel due at Total's Saudi refinery

September 23, 2013. The first vessel to export fuel products from Total's 400,000-barrels-per-day Jubail refinery in Saudi Arabia is due to arrive at the plant. Parts of the Aramco-Total complex have started up over the last few months and the giant refinery is expected to reach full capacity by the end of the year. Jubail will refine Saudi heavy crude into a range of fuels - from gasoline to petroleum coke - for domestic consumption and export. The first 200,000-bpd crude distillation unit (CDU) is operational but the other has yet to start up. The multi-billion-dollar project is central to Saudi plans for boosting refining production to meet the region's growing demand, and is expected to replace most imports by 2014. Aramco would offer up to 80,000 tonnes of fuel oil for export in late September and that Total would likely have one or two cargoes available by the end of the month. The joint venture is looking to export an ultra-low-sulfur diesel cargo of possibly 10 parts per million (ppm) in October. The refinery will produce mostly gasoline and gasoil for domestic use. It is not expected to export any jet fuel this year but may produce some next year, depending on demand. Most of the exported diesel is expected to be shipped to Europe, a move traders say will dramatically alter the market by pushing Indian diesel out of Europe and into Asia. (www.arabianbusiness.com)

Transportation / Trade

Dubai oil firm said to chase buyer for $700 mn deal

September 22, 2013. Dubai-based oil services firm NPS Energy, which tried to sell itself to Norway's Aker Solutions, has once again initiated a sale process to find a buyer, hoping to fetch up to $700 million. Oil services company Aker agreed to buy NPS Energy for about $460 million in May 2012, including $110 million in debt, but the deal collapsed in November after the two parties failed to reach a final agreement. A formal sale process for the business was initiated earlier this year. NPS Energy is part of oilfield services company National Petroleum Services, which was formed in 2004 from the merger of oilfield businesses owned by two large family-owned groups in Saudi Arabia and Qatar. Demand for oilfield services in the Middle East, the world's top oil producing region, has increased rapidly in the last few years. (www.arabianbusiness.com)

Qatargas inks deal to supply LNG to UK firm

September 21, 2013. Qatar Liquefied Gas Company Limited, also known as Qatargas, has signed an agreement to sell liquefied natural gas (LNG) to the UK. The five year sales and purchase deal with Petronas LNG (UK), the UK arm of the Malaysian oil and gas giant, is for an annual LNG volume of 1.14 million tonnes, effective January 2014, the company said. The LNG will be supplied from Qatargas 4 (Train 7), a joint venture between Qatar Petroleum and Shell which started production in January 2011, and will be delivered on board Q-Flex LNG Vessels to Petronas' Dragon LNG Terminal located in Milford Haven. The two companies recently concluded a deal under which Qatargas delivered its first ever LNG cargo to Malaysia. The cargo was delivered in July to Malaysia's first LNG receiving terminal located in Melaka. (www.arabianbusiness.com)

Kinder Morgan says Trans Mountain pipeline 74 pc overbooked for Oct

September 19, 2013. Kinder Morgan Energy Partners LP said its routinely overbooked Trans Mountain oil pipeline between Alberta and the Pacific Coast is oversubscribed by 74 percent for October, meaning shippers will only be able to deliver 26 percent of nominated volumes. It said system throughput ex-Edmonton was 237,789 barrels per day (bpd) for the Trans Mountain Mainline, 101,340 bpd for the Puget Sound line, and 64,289 bpd for Westridge Dock. Nominations have exceeded capacity since late 2010. (www.reuters.com)

Azerbaijan signs new gas deals with Europe, snubs Russia

September 19, 2013. Azerbaijan signed contracts to supply European buyers with gas, offering an alternative supply source to Russia towards the end of the decade. Moscow has increased its diplomatic efforts to bring oil and gas rich Azerbaijan closer to its orbit as Russian President Vladimir Putin has been keen to restore influence over former Soviet republics. Azeri state oil company SOCAR and partners including BP and Statoil selected the Trans Adriatic Pipeline (TAP) for potential gas deliveries to Europe, following more than a decade of planning, dealing a blow for Russia's aspiration for tighter control over gas routes. SOCAR said that buyers of Azeri gas from its Shah Deniz II project are Shell, Bulgargas, Gas Natural Fenosa, Greek DEPA, Germany's E.ON, French GDF Suez , Italian regional utility Hera Trading, Swiss AXPO and Italian Enel. E.ON's contract with SOCAR spans 25 years during which the company will get 40 billion cubic metres (bcm) of gas. European buyers have struggled to find alternatives to Russia's gas producer Gazprom, whose contracts link prices to oil, generally making it expensive compared to the spot market. (www.reuters.com)

Ghana gas pipeline delayed to April - minister

September 19, 2013. Ghana's natural gas pipeline will not begin pumping gas before next April, the country's deputy energy minister John Jinapor said, in a further delay to a project crucial to the country's bid to overcome an energy deficit. Ghana is considered one of Africa's brightest economic prospects because of its stable democracy and exports of cocoa, oil and gold but frequent power cuts raise costs for industry and depress consumer purchasing power. The undersea pipeline which runs from the offshore Jubilee field to a thermal plant near the port city of Takoradi has been hit by funding and other delays. (www.reuters.com)

Wison CFO resigns as bank accounts frozen in China probe

September 19, 2013. Wison Engineering Services Co., supplier to PetroChina Co., said China’s authorities froze certain bank accounts and that its chief financial officer (CFO) Chen Wenfeng resigned, as investigations into company executives continue. The company wasn’t given reasons for stopping its bank accounts, it said. Its chairman and founder Hua Bangsong and a manager in a subsidiary’s finance department, Zhao Hongbin, are still assisting authorities with their investigations, it said. Wison said that Hua was helping in unspecified investigations, a day after its shares plunged 16 percent and were suspended from trading. China is investigating PetroChina Co.’s former Chairman Jiang Jiemin and four senior executives for graft. The nation’s largest oil producer was Wison’s biggest customer before 2012. Wison’s revenue from contracts with PetroChina was around 111 million yuan ($18.1 million), or 5.6 percent of its revenue, in the first half of 2013. Outstanding contracts with PetroChina amount to around 204 million yuan, it said. (www.bloomberg.com)

Bahrain, Saudi approve plan for oil pipeline

September 18, 2013. Saudi Arabia and Bahrain have approved plans to lay a 350,000-barrel per day (bpd) oil pipeline between the two countries, with the link expected to be commissioned by the third quarter of 2016, Bahrain Petroleum Co (Bapco) said. Crude oil will flow from Saudi Aramco's Abqaiq plant via the 115 km pipeline, 74 km of which will run overland and the rest under the Gulf, Bapco said. Bapco said it was working with Saudi Aramco to prepare for an engineering, procurement and construction (EPC) contract tender in the fourth quarter of 2013, with the contract expected to be awarded by the second quarter of 2014. Bahrain relies on output from the Abu Safa oilfield that it shares with Saudi Arabia. (www.arabianbusiness.com)

Railroads look past US oil-move costs helping pipelines

September 18, 2013. As 57,000 miles of U.S. crude pipelines threaten to lure business from railroads, Burlington Northern Santa Fe LLC and Union Pacific Corp. are sticking to their bet on the nation’s energy boom. Domestic oil that was significantly cheaper than imported crude for the last two years allowed refiners to pay rail service’s higher transportation costs rather than use slower, less expensive pipelines. With the oil price difference now narrowing, the share of crude shipped by rail from Williston Basin region in and around North Dakota has decreased for three consecutive months, the longest string of declines since 2011. (www.bloomberg.com)

Policy / Performance

Centrica scraps UK gas storage plan after govt backs off

September 23, 2013. British utility Centrica said it was calling off two gas storage projects after the government refused to help build stockpiling sites, dealing another blow to a sector needed to feed the country's high winter demand. Centrica, which owns household supplier British Gas, said it would incur 240 million pounds in costs for scrapping its offshore project at Baird in the North Sea and putting its Caythorpe plan in east Yorkshire on hold indefinitely. The British government had said subsidising storage projects would be too expensive for taxpayers. Britain's weak gas storage infrastructure was exposed when an exceptionally cold and long winter depleted the country's stockpiling facilities. Profits from running gas storage in Britain have dropped in recent years due to the shrinking price differential between summer and winter gas prices. (uk.reuters.com)

China to raise prices for cleaner fuel to boost production

September 23, 2013. China will raise prices for higher quality fuels starting from year-end, the National Development and Reform Commission (NDRC) said, a move aimed at encouraging oil firms to boost production of cleaner fuels to tackle air pollution. Beijing has urged domestic refiners led by Sinopec Corp to speed up with the upgrade of their plants to produce cleaner fuels. But refiners have said costly upgrades would force them into heavy losses due to the lack of subsidies and state control of fuel prices. In a bid to tackle the problem, prices for automotive diesel and gasoline that meet the national IV fuel standards will be raised by 290 yuan and 370 yuan per tonne respectively, the NDRC said. The price hike for automotive diesel will come into effect at the end of 2013, with higher prices for diesel to come in late 2014. The pricing adjustment will help Sinopec, which has already seen its second-quarter net profit jump after Beijing introduced measures to let domestic fuel prices follow the international market more closely. The national IV fuel standards for automotive diesel are similar to Europe's IV quality with a sulphur content of 50 parts per million (ppm). Prices for diesel that meet the National V standards will be raised by 170 yuan, while gasoline will be increased by 160 yuan a tonne, the commission said. The new national V standards - similar to Euro V with a sulphur content no greater than 10 ppm - will become compulsory by the end of 2017. Automotive diesel, used in trucks and buses, forms just over half of China's total diesel market of about 3.6 million barrels per day. Emissions from sub-quality diesel are a main cause of urban air pollution. (in.reuters.com)

SSGC board clears Pakistan LNG retrofit terminal project

September 23, 2013. The board of directors of Sui Southern Gas Company (SSGC) has given the go-ahead to the liquefied natural gas (LNG) retrofit terminal project for handling import of 500 million cubic feet per day (mmcfd) and has asked the government to also approve the facility. The green signal came after the government asked the SSGC board to clear the way for the LNG retrofit terminal - a unique project which enjoyed no government guarantee. A member of the board raised some objections to the project which the board overrode with a majority vote and then asked the federal government to push ahead with the plan. SSGC also sought legal opinion from experts who clarified that the project structure was in line with Public Procurement Regulatory Authority rules. The new government has approached Qatar to clinch an LNG import deal on a government-to-government basis. However, Qatar is seeking a commitment from Pakistan to establish an LNG terminal before entering into any import contract. The SSGC board also recommended that the price offered for the terminal looked competitive and the government should go ahead with the project. The project will be completed in 22 months at an estimated cost of $163 million. The qualified bidder has quoted 80 cents as tolling tariff. In India, LNG tolling price ranges from $0.605 for 1,400 throughput to $1.106 per million British thermal units (mmbtu) for land terminals. In Indonesia, tolling price is $1.8 per mmbtu for handling LNG at a floating terminal and $1.2 per mmbtu for land terminal. (www.downstreamtoday.com)

Reformed Mexico energy sector could be in place by early 2014

September 23, 2013. The proposed reform for Mexico’s energy constitution could be approved late this year or early 2014, with secondary legislation that will shape Mexico’s energy sector to be finalized in the second half of next year, according to a panel of industry experts at a recent Mayer Brown presentation in Houston on the proposed reform of Mexico’s energy sector. Should the legislative process move forward as planned, the first profit sharing contracts under the new regime would be issued for the bidding process in the second half of 2014, said Duncan Wood, director of the Mexico Institute at the Woodrow Wilson International Center for Scholars. New oil production is expected to begin flowing between three to five years from that date, Wood said. Mexican President Enrique Pena Nieto’s proposed constitutional reform of Mexico’s energy framework – one of the most significant economic changes in Mexico in the past century, Wood noted – will clean the slate and take Mexico’s energy sector back to 1938, the year then-President Lazaro Cardenas nationalized Mexico’s energy industry. (www.rigzone.com)

Japan, Canada close to deal on shale gas export boost

September 22, 2013. Japanese Prime Minister Shinzo Abe and Canadian Prime Minister Stephen Harper are expected to agree to increase Canadian shale gas exports to Japan from around 2020. Canada’s envisioned shale gas exports are likely to total 40 million tons a year. The gas will be shipped after being processed into liquefied natural gas. Canada will be the second country to export shale gas to Japan. The United States plans to start shipping 6.7 million tons a year of shale gas to Japan from around 2017. (www.japantimes.co.jp)

Brazil ready to finance Petrobras in offshore oil auction

September 21, 2013. Brazil's government plans to finance state-run oil company Petroleo Brasileiro SA's participation in the Oct. 21 auction of Libra, country's largest-ever oil discovery. The government is also considering other measures to help cash-strapped Petrobras, as the company is known, pay for the large investments it is required to make in Libra under a 2010 Brazilian oil law. These measures include the raising of Brazilian fuel prices, reduction of dividends on the government's shareholding in Petrobras and changes to the terms of a 2010 oil-for-stock swap. Petrobras has the capacity to explore and produce 100 percent of the oil from Libra, but does not have the financial capacity to cover the investments needed to develop the area. Under the oil law, Petrobras will have to come up with 4.5 billion reais no matter which of 11 companies signed up for the auction win the offshore area. The payment is Petrobras' minimum share of the 15 billion real up-front fee winners will pay Brazil for the rights to Libra. The winning bidder will be the company or group that gives Brazil's government the biggest share of Libra's future output to sell on its own account. Under the law, Petrobras must take a minimum 30 percent stake in the winning group and lead exploration and development in the area as the group's operator. (in.reuters.com)

Ukraine region approves Chevron shale gas deal

September 20, 2013. Ukraine's government moved closer to a new shale gas deal for the country when a regional council approved its draft for a production-sharing agreement with U.S. energy company Chevron. Deputies in the western Ivano-Frankivsk region had sent the draft back to the government a month ago, pressing for guarantees that the environment would be adequately protected during exploration and for a commitment to allocate 10 percent of any gas produced for local consumption. Deputies had voted 62-to-1 in favor of an amended government draft, with 11 abstentions. The approval of a second council in the neighboring Lviv region is required before the government can go ahead and sign an agreement with Chevron. Chevron wants to tie up a deal to explore the Olesska shale field. Royal Dutch Shell has already signed a $10 billion deal for shale exploration and extraction at the Yuzivska field in the east of the ex-Soviet republic. The Kiev government sees shale gas development as important for easing its dependence on costly gas imports from Russia which weigh heavily on its economy. But deputies had expressed concerns over the ecological consequences of shale exploration in the mountainous forest region which is known for tourist resorts. (www.reuters.com)

BP wants spill settlement rejected, Victims claim

September 18, 2013. Victims appealing BP Plc’s $9.6 billion settlement of most economic-damage claims from the 2010 Gulf of Mexico spill said the company also wants approval of the agreement reversed. The victims’ lawyers said in a filing in the U.S. Court of Appeals in New Orleans that BP agreed with them that the accord didn’t meet the legal requirements for class action, or group, settlements. BP contends that the initial approval by a lower court has been “undermined” by the claims administrator’s interpretation of the settlement, the victims said.

BP reached the agreement last year with most private-party plaintiffs. London-based BP has been fighting what it contends is a “misinterpretation” of deal terms by Patrick Juneau, its court-supervised claims administrator, that has swollen the estimated cost of the accord by almost $2 billion in the past year. BP told the appeals court last month that the settlement can’t be approved if the dispute over claim payments isn’t resolved in the company’s favor. BP said it will be forced to pay billions of dollars in compensation to businesses that suffered no losses as a result of the worst offshore spill in U.S. history. (www.bloomberg.com)

POWER

Generation

SA re-opens upgraded power plant

September 23, 2013. South Africa (SA) advanced its electricity infrastructure expansion programme with the re-opening of the 1 200 MW Grootvlei power station in Balfour, Mpumalanga province. Built in the 1960s, the plant was mothballed in 1990 due to excess power in the country at the time. Its reopening follows a R7.2-billion upgrade. President Jacob Zuma said it would give state company Eskom much-needed space in which to conduct maintenance on its other power stations. Zuma said the government had prioritised infrastructure development because it is critical to enabling and promoting economic growth. Zuma said that South Africa had laid down 3 200 kilometres of new transmission lines over the last few years in order to extend the country's power grid to rural communities. Just over one-million new households were connected to the grid over the past five years, Zuma said, benefiting more than four-million South Africans. (www.southafrica.info)

Transmission / Distribution / Trade

Mikano, Schneider Electric join forces on electricity distribution in Nigeria

September 19, 2013. Mikano International has signed a memorandum of understanding (MoU) with Schneider Electric for the sale and distribution of the latter's low voltage products in Nigeria. Designed to improve the accessibility of low voltage products to Nigerians and support local companies, the agreement follows the completion of payment for the privatization of the Power Holding Company of Nigeria (PHCN). As part of the agreement, Mikano will sell and distribute a range of Schneider's low voltage products, including circuit breakers, distribution boards, contactors, motor starters, control and signaling units, as well as switches and sockets using its extensive geographical presence across Nigeria. The company's investment in electricity distribution represents a window to position itself as a leading local partner to Schneider Electric. Schneider Electric said the agreement provides the companies with an opportunity to collaborate and leverage their strength to improve the electricity sector and easy access to Schneider's products. The privatization of the electricity sector is expected to bring more Foreign Direct Investment (FDI) into the Nigerian economy. (utilitiesnetwork.energy-business-review.com)

Policy / Performance

UK's Labour takes on utilities with price freeze plan

September 24, 2013. Britain's Labour party pledged to freeze gas and electricity prices for 20 months if it wins power in 2015, shifting $7.2 billion in costs onto energy companies, which opponents said could lead to power blackouts. Labour leader Ed Miliband said energy companies had been overcharging consumers for too long and that he would freeze prices if he won the May 2015 election. Though likely to be popular with voters, the plan places Labour on a collision course with the energy companies. It could cost energy suppliers 4.5 billion pounds ($7.2 billion). The long-term aim of the price freeze was to buy time for a future Labour government to set up a more powerful regulator with the ability to force companies to lower bills if energy prices fall in the wholesale market. The party would force companies to split up their energy generation and their consumer sales businesses and require all electricity to be pooled and traded on the open market. Britain is Europe's largest gas consumer and has one of the top three traded electricity markets in Europe. (www.reuters.com)

Wyoming coal sale canceled by US on bid at 15 year low

September 19, 2013. The U.S. government rejected the sale of coal in Wyoming after an auction drew the lowest top bid in 15 years, as the outlook for the power-plant fuel weakens because of cheap natural gas and new rules coming out. The Bureau of Land Management turned down the bid of $35 million, or 21 cents a ton, by Kiewit Mining Group Inc., based in Omaha, Nebraska, for the 167 million tons of Powder River Basin coal. The rejection follows a BLM sale in August that attracted no bidders. The company’s offer was less than one-fifth what mining companies paid for similar deposits last year, and the lowest amount per ton since 1998. It didn’t meet the government’s estimate of fair value, the bureau said. Pending rules from the Environmental Protection Agency will depress the use of coal for power generation. The agency is set to issue its proposal for emission controls on new power stations, and follow that up with rules constraining carbon-dioxide emissions from existing plants in 2014. Coal produces twice the carbon dioxide as natural gas when burned to make power. (www.bloomberg.com)

German industry wants end of feed-in tariff on rising power cost

September 19, 2013. Germany’s biggest companies want Chancellor Angela Merkel to abolish a subsidy that made the country Europe’s biggest clean-energy market and helped saddle it with some of the highest power prices in the region. The BDI industry federation that represents about 100,000 companies including Siemens AG and Volkswagen AG wants to get rid of feed-in tariffs that guarantee owners of new clean-energy plants above-market payments for 20 years under the EEG renewable law. Instead, it wants developers to sell their power on the market to encourage output that responds to demand rather than whether the wind is blowing or the sun shining. (www.bloomberg.com)

RENEWABLE ENERGY / CLIMATE CHANGE TRENDS

National

CAG plans performance audit of renewable energy sector

September 24, 2013. The Comptroller and Auditor General (CAG) said that it will undertake performance audit of the new and renewable energy sector at all India level with a view to promoting alternative sources of energy. The Comptroller and Auditor General Shashi Kant Sharma said that it was imperative to encourage renewable sources of energy as the conventional sources like oil, gas, hydel and thermal power may not be able to meet the growing energy demand of the country. Moreover, he said, India would be needing to take host of steps to meet its international commitments with regard to reducing its carbon intensity by 20-25 per cent by 2020 in comparison to its 2005 level. (economictimes.indiatimes.com)

Call for reforms to boost solar power sector

September 23, 2013. Stake holders, experts and state level policy makers are seeking reforms must to facilitate growth of solar energy sector up to its potential. At a time when India's total installed capacity in solar power generation is just about 1800 mw against the Jawaharlal Nehru National Solar Mission's (JNNSM) target of 20,000 MW to be achieved by 2022, Gujarat Energy Research and Management Institute (GERMI) and Centre for Science and Environment (CSE) organised one-day conference on 'the future of solar energy in India' at Pandit Deendayal Petroleum University, Gandhinagar. The participants deliberated issues related to the solar energy sector and came out with suggestions aimed at developing a policy roadmap for the sustainable growth of the sector. Sardar Sarovar Narmada Nigam is in process of setting up a 10 MW solar power plant on top of canal network near Vadodara. (economictimes.indiatimes.com)

Areva says India solar-thermal plant to start by year-end

September 23, 2013. A solar-thermal power plant that Areva SA is building for India’s Reliance Power Ltd. will start operating by the end of this year, the French manufacturer said. The 21 billion-rupee ($335 million) plant would start next month, which is wrong, the company said. The 100 MW project missed a May deadline as authorities in Rajasthan state failed to lay a water pipe to the site in time, Reliance Power said. Solar-thermal plants focus sunlight on liquids to produce steam for turbines and are valued for their ability to deliver electricity around the clock. Areva is the biggest producer of nuclear reactors. (www.bloomberg.com)

India to build world's largest solar power plant in Rajasthan

September 21, 2013. India will build the world's largest solar plant to generate 4,000 MW from sunlight near the Sambhar lake in Rajasthan that will sell electricity at an estimated rate of ` 5.50 per unit. The proposed solar project's capacity is about three times India's total solar power capacity and comparable with coal-fired ultra mega power projects of Tata Power and Reliance Power. It would be set up and run by a joint venture of five public sector utilities BHEL, Power grid Corporation of India, Solar Energy Corporation of India, Hindustan Salts limited and Rajasthan Electronics & Instruments Limited. The first phase of the project, which would be 1,000 MW is expected to be commissioned in 2016. The project would 23,000 acre of land out of which 18,000 acre would be provided by Hindustan Salts limited. The tariff is expected to be competitive. The current cost of solar power in the country is around ` 7 per unit. With the project setting the benchmark cost ` 5.50 per unit, it is expected to bring down the cost of solar power further. Solar Energy Corporation is also trying to get a part of viability gap funding from national clean energy fund managed by the ministry of finance. (economictimes.indiatimes.com)

India offers credit to Cuba for renewable energy projects

September 20, 2013. India is offering lines of credit to Cuba to set up renewable-energy projects that would help reduce the Caribbean nation’s dependence on oil imports. Indian Renewable-Energy Minister Farooq Abdullah met Marino Murillo, vice president of Cuba’s council of ministers, to offer assistance, according to an Indian government. Cuba, seeking to diversify its energy mix and curb reliance on crude imports, consumes three times as much oil as it produces, according to the U.S. Energy Information Administration. The island nation asked for India’s help in developing wind farms and power plants that run on bagasse, a waste product of sugar cane. The politicians’ meeting follows a trip by Abdullah to Santiago, Chile, where the two countries also agreed to cooperate on renewable projects. India, Asia’s biggest wind market after China, plans to double clean-energy capacity to about 60 GW by 2017. (www.bloomberg.com)

Suzlon sells 75 pc in China arm for $28 mn

September 18, 2013. Suzlon said it has sold 75 per cent stake in its Tianjin-based China arm to Poly LongMa Energy for $28 million (over ` 177 crore), after putting it on block for more than a year. Suzlon had entered China, the world's largest wind energy market, in 2006. This divestment is a part of Suzlon's strategy to monetise assets as it battles huge debt. Suzlon, the world's fifth largest wind turbine maker with over 22,500 MW installed capacity in over 30 countries, had expected a valuation of $60 million when it had put Suzlon Energy Tianjin on the block. Suzlon said the first tranche of the payment has already been completed. The Pune-based company, which had a consolidated net debt of ` 13,705 crore as on June 30, plans to raise nearly $400 million by selling its non-core assets across the world. Soon after the ` 9,500-crore debt recast in January this year, Suzlon identified as many as 15 non-core assets, mostly in overseas markets like China, and the US among others, to monetise in a phased manner. The China divestment has also to do with the stiff competition it has been facing from local companies there, making the project unviable financially. Following the sale, which was in the works for over a year now, Suzlon has formed a 25:75 joint venture with Poly LongMa Energy under which the Tianjin-based Chinese firm will take over the management and sales, while Suzlon will remain the technology partner, responsible for manufacturing and quality, Suzlon said. The China plant rolls out the S66-1.25 MW, S82-1.5 MW and S88-2.1 MW turbines. Poly LongMa Energy is into conventional as well green energy investments. Suzlon is also planning to sell stake in its forging business SE Forge. (economictimes.indiatimes.com)

Suzlon unit wins 58 MW of wind orders in UK

September 18, 2013. REpower Systems SE, the German unit of India’s Suzlon Energy Ltd., won orders to supply 58 MW of turbines for four wind farms in the U.K. REpower signed a contract with Vattenfall AB to install 18 turbines with a total capacity of 37 MW, Pune, India-based Suzlon said. Accords were also signed with Broadview Energy Ltd. for three machines generating 6.15 megawatts, Temporis Capital LLP for two turbines producing 6.8 MW and Good Energy Group for 8.2 megawatts from four turbines, Suzlon said. The machines will be installed within a year starting March 2014, Suzlon said. (www.bloomberg.com)

Power units in UP, MP under NGT scanner over pollution

September 18, 2013. The National Green Tribunal (NGT) sought response of the Centre, Madhya Pradesh (MP) and Uttar Pradesh (UP) as well as several industries, including Essar and Hindalco, on a plea opposing new power projects in Singrauli and Sonebhadra districts due to environment concerns. A bench headed by NGT issued notices to the Centre, state governments and several industries, including the Sasan Ultra Mega Power Ltd- an upcoming 3,960 MW coal based power plant of Reliance Power, and sought their replies by October 7. Alleging that pollution and serious ailments are being caused due to coal mining as well as emissions of thermal power stations there, the petition has opposed grant of sanction for any new project or for expansion of existing units till an action plan for improving environmental quality of the areas is implemented. (economictimes.indiatimes.com)

Global

Russia awards first clean-power tender to boost the Industry

September 24, 2013. Russia, the world’s biggest oil producer, offered its first state support for renewable energy by awarding subsidies to 39 clean-power ventures. Russia selected projects with a combined capacity of 504 MW. Solar bidders had the most success, gaining support for 399MW; wind developers won less than a 10th of the capacity offered. President Vladimir Putin approved a subsidy program to boost clean-energy generation in May in a bid to curb reliance on oil, gas and coal for power while cutting emissions. The country plans to expand the share of renewables to 2.5 percent of power output by the end of the decade from 0.8 percent now. The country, which has only a handful of wind and solar plants operating, offered 1,100 MW in wind capacity and 710 MW of solar to be built from 2014 to 2017, as well as some hydropower. Solar developers bid for almost 1,000 MW, and 32 projects were successful. Demand for wind was lower, with only seven projects selected. (www.bloomberg.com)

End of atomic age seen as Merkel’s biggest headache now

September 24, 2013. German Chancellor Angela Merkel faces one task above all others when she returns to her desk on the seventh floor of the Chancellery: fixing the biggest shift to clean energy of any developed country in history. Merkel needs to keep a lid on soaring electricity bills that have provoked consumer and industry anger and clamp down on rising pollution as her government phases out nuclear reactors that have been the backbone of German energy policy. Failure risks hurting Europe’s biggest economy and would spell trouble for Merkel’s new government, whatever its composition. The chancellor said during the election campaign that her priority is changing the EEG law, a 13-year-old subsidy system that was copied around the world and helped turn Germany into Europe’s biggest clean-energy market. Reworking the rules may benefit consumers and reduce incentives wind and solar farms, scaling back work for manufacturers such as Vestas Wind Systems A/S and Trina Solar Ltd. It could either help or hurt utilities such as RWE AG and EON SE. Aimed at increasing the share of renewables to 80 percent of the power mix by 2050 from about 23 percent now, it helped saddle Germans with the third-highest electricity prices in the European Union. In what would be a watershed move for developers of wind and solar plants, Merkel may abolish the EEG system of awarding uncapped above-market payments to developers for 20 years. (www.bloomberg.com)

Airlines face carbon-reduction verdict on $708  bn industry

September 24, 2013. Nations from the U.S. to Russia and the European Union are set for the final showdown over the first-ever global commitment to designing an emissions-reduction market tool for the $708 billion airline industry. Negotiators from more than 190 countries in the United Nations’ International Civil Aviation Organization will decide at a meeting starting whether to back a pledge on a market-based measure for the sector, which is responsible for about 2 percent of greenhouse gases globally. Details of the program, a precedent for a single industry worldwide, would be decided in 2016 and the market would start by 2020. (www.bloomberg.com)

Mexico’s Calderon leads probe of climate change economics

September 24, 2013. Former Mexican President Felipe Calderon is spearheading a study sponsored by seven countries into the economics of climate change, seeking to elucidate the financial benefits of reducing carbon emissions. Calderon’s panel will draw from the experiences of companies and governments around the world in fighting off the ravages of storms and droughts, and in cutting greenhouse gases. It also will use academic research to show the costs and risks associated with climate change and efforts to stem it, publishing a report next September to guide policy makers. The effort by a group that includes Unilever NV Chief Executive Officer Paul Polman and the former leaders of Chile, New Zealand and Mozambique is designed to guide global envoys as they devise a new treaty to fight climate change in 2015. Britain, Colombia, Ethiopia, Indonesia, South Korea, Norway and Sweden are sponsoring the panel. (www.bloomberg.com)

US solar group offers peace plan to avert trade war

September 23, 2013. A solar-energy group is offering a plan to resolve a trade dispute between the U.S. and China, saying import duties currently in place are crippling the industry in both nations. The Washington-based Solar Energy Industries Association plans to announce a proposal to eliminate tariffs on solar gear and establish a fund to help U.S. manufacturers with contributions from China. Tensions between the U.S. and China, the world’s two largest economies, over clean-energy production have threatened to erupt into a trade war within the last year, with both sides imposing duties on imports. The price of polysilicon, the main ingredient in solar cells, has dropped 57 percent since 2010, as both nations grapple for market share. (www.bloomberg.com)

Desalination plants supply 98.8 pc of Dubai’s water, forum is told

September 23, 2013. Desalination plants that make seawater potable supply 98.8 percent of Dubai’s water, with the remaining 1.2 percent coming from groundwater sources, the Arabian Water and Power Forum was told. Dubai is the commercial, banking and tourist hub of the United Arab Emirates, the second-biggest Arab world economy after Saudi Arabia. The arid, water-scarce U.A.E. contains about 6 percent of Earth’s proven oil reserves. Producing desalinated water is so energy-consuming that future water and energy plans must aim for a more sustainable balance, Saeed Mohammed Al Tayer, chief executive officer of the state-owned utility Dubai Electricity and Water Authority, or DEWA, told the forum. (www.bloomberg.com)

EPA won’t require carbon capture at existing coal plants

September 23, 2013. Existing coal-fired power plants won’t be required to install equipment to capture and store the carbon dioxide they emit under new Environmental Protection Agency (EPA) rules. The EPA will issue guidelines for states that allow the use of energy efficiency, clean-energy installations or demand cuts to reduce their greenhouse-gas emissions. The EPA issued a proposal for new coal-burning power plants that would require the expensive capture technology, called CCS. Carbon-dioxide emissions since the Industrial Revolution have led to a warming of the Earth’s temperature in the past 50 years, worsening forest fires, drought and coastal flooding, according to the U.S. Global Change Research Program. Electricity generation accounts for 40 percent of U.S. emissions, putting it at the top of the list of both the EPA and environmental groups such as the Sierra Club in their bids to address global warming. (www.bloomberg.com)

German Greens ready for coalition as clean-energy becomes focus

September 23, 2013. Germany’s Greens party is open to talking to Chancellor Angela Merkel about joining her third-term government as it seeks to refocus on the switch to clean-energy sources to win over alienated voters. The Greens are “ready to hold talks” with Merkel’s Christian Democratic bloc if the request were to come, Claudia Roth, the Greens co-leader, said in Berlin. The party should focus on “core” issues such as sustainability and ecology after its vote share declined and it placed fourth in vote. (www.bloomberg.com)

Global warming slowdown hinders climate treaty effort

September 23, 2013. More than ever, scientists say they’re convinced the Earth’s climate is warming. Yet lawmakers are struggling to do anything about it because the pace of change has unexpectedly slowed. The data has caused a United Nations panel to lower predictions of the pace of global temperature increases by 2100. Still, the most complete assessment of climate science in six years also is likely to conclude that melting ice will make sea levels rise faster than previously projected. The findings muddy the picture about how much carbon dioxide output is affecting the climate, giving ammunition to those who doubt the issue needs urgent action. Jacobs is now an adviser to the Institute for Sustainable Development and International Relations in Paris, which is advising the French government as it prepares for climate treaty talks in Paris in 2015. (www.bloomberg.com)

Obama’s carbon rules seen as new battleground for EPA

September 21, 2013. The U.S. Environmental Protection Agency’s proposed limits on power-plant emissions blamed for climate change is a broad new battleground for an agency that has spent four decades focused on the local impact of pollutants such as lead, mercury and ozone. The draft regulations would impose the first cap on carbon emissions from new power plants, dealing a blow to the market for coal. While restrictions on emissions of sulfur dioxide and other pollutants have been in place for years, these are a first for gases blamed for global warming. While analysts said the immediate impact of the rule will be limited, it sets the stage for the more far-reaching set of rules governing emissions from existing power plants, which account for 40 percent of U.S. greenhouse-gas emissions. Those rules, which the EPA said will not be as stringent, are due by June 2014. Because of low natural-gas prices and the boom in installations of wind and solar power, no new coal plants will be built with or without this rule over the next eight years, according to the EPA. As a result, the agency forecasts that this plan will result in “negligible” costs, benefits, changes in carbon-dioxide emissions and overall economic impacts over that period. Carbon-dioxide emissions since the Industrial Revolution have led to a warming of the Earth’s temperature in the past 50 years, worsening forest fires, drought and coastal flooding, according to the U.S. Global Change Research Program. The EPA proposed a limit of 1,100 pounds of carbon dioxide per megawatt hour for new coal-fired plants, which would require them to capture and store a portion of the carbon dioxide they produce. Traditional coal plants issue 1,800 pounds, according to the EPA. Large natural-gas plants would have a lower standard, 1,000 pounds, which they can meet without a capture technology. (www.bloomberg.com)

Norway drops ‘moon landing’ as Mongstad carbon capture scrapped

September 20, 2013. Norway dropped plans for a full-scale carbon capture plant at its Mongstad refinery after cost overruns and delays, ending a project that was dubbed as the country’s “moon landing” by Prime Minister Jens Stoltenberg. The full-scale project will be halted, Oil and Energy Ministry Ola Borten Moe said. The government will increase spending on a carbon test center at the plant by 400 million kroner ($68 million) and will seek to build a full-scale plant in another location, he said. Stoltenberg, who has likened the project to the U.S. effort in the 1960s of putting a man on the moon, said in 2006 it would create the world’s biggest venture for full-scale carbon capture and spur technology that may become an important export for Norway. The premier’s coalition was ousted in the Sept. 9 general election and he will resign next month. (www.bloomberg.com)

Arctic sea ice melted less this year than 2012’s record

September 20, 2013. Arctic sea ice rebounded in 2013 from last year’s record melting season, though scientists warned that the long-term trend is for the ocean to become increasingly ice-free in the summer. The sea ice covering the Arctic Ocean melts every summer through mid-September before freezing over winter. This year, the ice cover fell to 5.1 million square kilometers at its lowest, the U.S. National Snow and Ice Data Center at the University of Colorado at Boulder said. That’s 50 percent more than 2012’s minimum extent, the lowest in data going back to 1979. Researchers say Arctic sea ice retreat is one of the most visible signs that the planet’s climate is warning. The increased melting is opening the Arctic Ocean to more shipping and exploration for oil and minerals. At the same time, it serves to multiply climate change, because the dark exposed ocean absorbs more of the sun’s heat than the reflective ice. (www.bloomberg.com)

Ozone treaty offers quicker fix for global warming

September 20, 2013. A plan to cut some of the Earth’s most potent greenhouse gases and combat climate change is gathering support. The idea is to bypass log-jammed United Nations climate treaty talks and hand responsibility for reducing refrigerants called hydrofluorocarbons (HFCs) to the Montreal Protocol, an instrument designed to protect the ozone layer. HFCs, made by companies including DuPont Co. and Honeywell International Inc. in a $4 billion global refrigerant industry, are used in products from air conditioners and refrigerators to asthma inhalers. Although less abundant, they’re a far more powerful in damaging the atmosphere than the carbon dioxide that comes from burning fossil fuels. Success in tackling HFCs may provide a route to break the impasse around regulating greenhouse gases. (www.bloomberg.com)

Merkel ally calls for end to clean-energy priority on power grid

September 20, 2013. Germany shouldn’t force power-grid operators to prioritize the distribution and sale of clean energy, according to an ally of Chancellor Angela Merkel. It’s no longer necessary to give new renewable-energy plants preference because clean-power growth targets can be met regardless, said Thuringia Premier Christine Lieberknecht, an executive board member of Merkel’s Christian Democratic Union (CDU). Lieberknecht’s call is the most vocal yet within the CDU to end incentives that have made Germany Europe’s biggest clean-energy market. It indicates that all aspects of the subsidy system are up for review after Sept. 22 elections. Politicians from all parties have urged action to bring down consumer power bills following a boom in solar and wind generation. (www.bloomberg.com)

Abandoned quarries headed to become energy-storage hubs in UK

September 20, 2013. A U.K. company plans to turn abandoned quarries and mines into energy-storage facilities that can absorb power from intermittent sources such as the sun and wind for use when demand peaks. The company’s first project, in North Wales, won planning consent Sept. 2 and is budgeted at about 100 million pounds ($160.8 million), according to London-based Quarry Battery Company Ltd. Construction on the and 50 MW facility should commence in about 18 months. In times of power surplus, the plants pump water uphill to the basins for storage. When demand returns, water is released through turbines to generate electricity, similar to hydroelectric plants. Storage can be used to help balance supply and demand as Britain aims for 15 percent of its energy to come from unpredictable renewable sources by 2020. (www.bloomberg.com)

Carbon trade seen losing globally in Aussie vote

September 19, 2013. Australia is at risk of breaching a global agreement to cut greenhouse gases as power markets signal Prime Minister Tony Abbott will exploit the widest election victory in nine years to repeal the nation’s carbon system. Electricity futures prices show the implied costs of emitting a metric ton of carbon in Australia plunged 18 percent in the two days following the Sept. 7 election, bringing its monthly decline to 55 percent. At their lowest, prices indicated an 80 percent probability that Abbott will overturn the law that charges the nation’s polluters for their CO2 emissions. (www.bloomberg.com)

GCF head prepares first fundraising for 2014

September 19, 2013. The new head of the Green Climate Fund (GCF), charged with disbursing some of $100 billion a year pledged to poor countries affected by climate change, is readying an initial capital raising to conclude as soon as 2014. Developed countries meeting at United Nations climate talks have pledged $100 billion a year to help poor countries cut their emissions and cope with climate change. So far donors have contributed $7.5 million for start-up costs to the GCF, which will be established over the next several years. The GCF may help make climate finance from about 40 richer nations to 150 developing nations more efficient. (www.bloomberg.com)

China renews electric vehicle subsidies excluding hybrids

September 18, 2013. China, under pressure to reduce air pollution, renewed a subsidy program for alternative-energy vehicles such as electric cars. One notable exception: hybrids. The central government will provide as much as 60,000 yuan ($9,800) toward the purchase of an all-electric passenger vehicle and as much as 500,000 yuan for an electric bus, according to the National Development and Reform Commission and finance, science and industry ministries. Fuel-cell vehicles, which are powered by hydrogen, were included for the first time in the plan and will qualify for as much as 500,000 yuan in rebates. China has lagged behind its own target to have 5 million electric automobiles by 2020 because of high prices of battery-powered models, concerns over safety and a lack of charging stations. By the end of last year, when the previous round of subsidies lapsed, there were only 27,800 EVs in use, prompting Industry Minister Miao Wei to suggest in March the government should consider stepping up its promotion of hybrids and other fuel-efficient vehicles. (www.bloomberg.com)

China’s limit on new solar factories seen driving M&A

September 18, 2013. China, the world’s biggest maker of solar panels, will limit construction of new photovoltaic manufacturing plants to curb excess capacity, a move that may spur consolidation within the industry. New solar plants that “purely” expand capacity will be strictly banned, the Ministry of Industry and Information Technology said. Annual spending by companies for research and development and upgrading equipment must total at least 3 percent of revenue and must exceed 10 million yuan ($1.6 million). Chinese authorities have pledged to cut overcapacity in industries from steel to paper as policy makers seek to reduce the economy’s reliance on investments and exports. A global oversupply of solar panels led to a 20 percent plunge in prices last year. (www.bloomberg.com)

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