The IEA (international energy agency) published its net-zero emission roadmap in response to a request from the UK presidency of the upcoming COP26 UN climate summit to inform the discussions in November 2021. The report is also the result of years of activist pressure on the IEA, ironically a body created to promote interests in oil and gas to relocate its analysis on keeping global temperature increases to less than 1.5°Celsius. The observation in the report that ‘there is no need for investment in new fossil fuel projects (in oil and gas fields as well as in coal mines) beyond projects already committed as of 2021 in IEA’s ‘net zero pathway’ received widespread coverage in the media and praise from activist climate change organisations. Not surprisingly, countries that depend on fossil fuels including India did not necessarily welcome the call to stop investments in fossil fuels. IEA member countries Japan, Australia, and Canada as well IEA associated countries India and Indonesia along with the Philippines and the Organisation of the Petroleum Exporting Countries (OPEC) expressed apprehension over IEAs ‘one-size-fits-all’ approach towards the goal of decarbonisation. Though the IEA report is littered with cautionary statements such as ‘the contraction of oil and natural gas production will have far‐reaching implications for all the countries and companies that produce these fuels’, and ‘changes in energy consumption will result in a significant decline in fossil fuel tax revenues’—a situation that is very relevant for India—, its path towards a net-zero carbon world is paved with recommendations of strong government intervention in the energy sector to influence investment decisions and behavioural choices towards specific technologies and fuels.
The inputs and outputs of IEA’s elaborate modelling exercise to create a net-zero carbon world brings to mind Aristotle’s practical syllogism. Inputs in the model are hardwired to outputs that they have not only influenced outputs but in a sense identical to the inputs. It is a circular walk—an amazingly elaborate and highly instructive way of getting from A to B, from inputs to outputs, from assumptions to scenarios.
According to the IEA, its net zero emission path way would give a 50 percent chance of staying below 1.5°C with no overshoot, if paired with stringent cuts to non-CO2 greenhouse gases and emissions from forestry and land use. When net-zero emissions are achieved as per the road map, the amount of energy used by the global economy falls by eight percent by 2050, despite a doubling of Gross Domestic Product (GDP), increase in population of more than two billion people and the provision of universal energy access by 2030. By 2050 just over a fifth of energy supplies comes from fossil fuels, compared with more than two-thirds from renewables and around a tenth from nuclear. Renewable energy (RE) becomes the largest source of energy by 2030 and continues with an exponential rise thereafter.
The IEA’s blueprint includes more than 400 global milestones for different sectors and technologies to guide the world towards net-zero emissions. Besides these targets, the report also identifies seven key pillars of decarbonisation which are energy efficiency, behavioural changes, electrification, renewables, hydrogen and hydrogen‐based fuels, bioenergy, and carbon capture, utilisation and storage (CCUS), with milestones that span different sectors.
Energy efficiency: The report calls for huge changes in the transportation sector. Apart from implementing strict fuel efficiency standards, the report wants global bans on internal combustion engines (ICEs) after 2035. According to the report, this should increase the number of electric vehicles on the road from one percent today to 20 percent in 2030 and 60 percent in 2040.
Behavioural changes: The report mentions three main types of behavioural changes required (i) reducing wasteful energy use (ii) transport mode switching (iii) materials efficiency gains. The report recommends increasing the global plastics recycling rate from 17 percent in 2020 to 27 percent in 2030 and 54 percent by 2050 and also mentions reducing motorway speed limits to 100 kilometres per hour (km/h). One recommendation closer to the homes of energy consumers is reducing excessive hot water temperatures in buildings (homes) to reduce energy use.
Electrification: According to the report, the direct use of low carbon electricity in place of fossil fuels is one of the most important drivers of emissions reductions accounting for around 20 percent of the total reduction achieved by 2050. Electricity’s share of final energy demand rises from 20 percent today to nearly 50 percent by 2050 in the net-zero emission scenario.
Renewables: RE particularly wind and solar generation are expected to increase by more than eightfold by 2050. The share of RE in electricity generation rises from 29 percent (including hydropower) in 2020 to over 60 percent in 2030 and nearly 90 percent by 2050.
Hydrogen: Hydrogen and fuels derived from hydrogen expand from less than 90 million tonnes (MT) in 2020 to more than 200 MT in 2030; the proportion of low‐carbon hydrogen rises from 10 percent in 2020 to 70 percent in 2030. The auto fleet that isn’t fully electrified worldwide by 2050 is made up of hydrogen‐powered cars. Approximately half of the hydrogen produced globally in 2030 is via electrolysis, and the remainder is from coal and natural gas with carbon capture and sequestration. Barely any low-carbon hydrogen today is green, meaning it is produced using electrolysis powered by renewables.
Bioenergy: In 2050, electricity generation using bioenergy fuels reaches 3300 terawatt-hours (TWh), or fivepercent of total generation. Bioenergy also provides around 50 percent of district heat production. By 2050, bioenergy supplies 30 percent of the energy in cement production and six percent of energy in paper production. Household and village biogas digesters provide renewable energy and clean cooking for nearly 500 million households by 2030. Liquid biofuels act as bridge fuels until all transportation is electrified. Land used for bioenergy crops increases from 330 million hectares (Mha) to 410 Mha, a 25 percent increase.
Carbon capture, utilisation and storage (CCUS): Around 95 percent of total CO2 captured in 2050 is stored in permanent geological storage and fivepercent is used to provide synthetic fuels. Estimates of global geological storage capacity are considerably above what is necessary to store the cumulative CO2 captured and stored.
RE overtakes coal by 2026, passing oil and gas before 2030. Coal sees a four-fold drop, with no final investment decisions for new coal plants unless they are equipped with CCUS. The least efficient coal plants are phased out by 2030 and any left in 2040 retrofitted with CCUS. As stated in the report, for solar “this is equivalent to installing the world’s current largest solar park roughly every day”. Other renewables also witness significant increases, with hydropower capacity doubling and bioenergy generation increasing fivefold by 2050. Nuclear power is also important in the net-zero scenario, with its overall output doubling by 2050. After RE, nuclear would be the largest remaining source of electricity by 2050. However, it drops below 10 percent of total generation and its share in richer nations actually falls over this period.
Liquid fuels halve from 38 percent of demand today to 19 percent in 2050. Gaseous fuels maintain their share of the mix but with hydrogen matching a reduced role for natural gas by 2050. Oil demand never returns to its 2019 peak and declines by nearly 75 percent from 2020 to 2050. This means continued investment in existing oil fields is sufficient to meet demand. The same is true of natural gas, even though demand does continue increasing until the 2030s. Over the coming decades, oil and gas become increasingly concentrated in a few major countries, mainly in the Middle East and North America. According to the report, all of the technologies needed on the path to 2030 already exist. But by 2050, nearly half the emissions cuts are expected to come from technologies which are still largely in the demonstration or prototype phase, such as advanced batteries and direct air CCUS.
The conclusions summarised above are the output from a confluence of analytical models: The World Energy Model that forms the basis of IEAs annual World Energy Outlook, IEAs technology-oriented Energy Technology Perspectives model coupled with GAINS and GLOBIOM models from the International Institute for Applied Systems Analysis (IIASA) and the Global Integrated Monetary and Fiscal (GIMF) model of the IMF (International Monetary Fund). While models have their strengths and limitations, the assumptions that underpin IEAs confluence of models, which are crucial to get expected outcomes, appear to be improbable.
The key assumptions in the model are (i) technology neutrality, with adoption driven by costs, technological readiness, country and market conditions, and trade-offs with wider societal goals; (ii) universal international cooperation, in which all countries contribute to net-zero, with an eye to a “just transition” and where advanced economies lead; (iii) an “orderly transition” that seeks to minimise stranded assets “where possible”, while ensuring energy security and minimising volatility in energy markets.
The first assumption of technology and fuel neutrality are not evident in the modelling exercise with an unambiguous preference for technologies and fuels favoured by climate activists. Trade-offs with wider social goals receives only a passing mention. The second assumption of universal international cooperation appears far-fetched especially in the light of the response to the COVID-19 pandemic which is characterised by the absence of universal international cooperation. This is also true of ‘just transition’, a term appropriated from 1970s social movements which is watered down to meaninglessness. Once again, the COVID-19 crisis and the response to it has clearly demonstrated that inequalities widen when equal solutions are applied to an unequal world. The IEA recommendations also reflect a flawed assumption of equality in the priorities of the rich and the poor. The third assumption of an orderly transition is not likely as many fossil-fuel producing countries expect stranded assets to increase along with volatility in energy markets as oil and gas production concentrates in Persian Gulf countries. The uncertainties in the assumptions and inputs in the model are so wide that IEA appears to have decided that the exploratory mode of asking ‘what would you like the facts to be’ to be more rewarding than the adversary mode of asking ‘what are the facts’?
But this does not mean that this tremendous modelling exercise has no value. The value of the IEA model is not so much in the end-product but in the process of the building the model that identifies all the important variables and their crucial relationships. The important insight is not the process by which assumptions are transformed into outcomes but the system consisting of beliefs, markets, institutions, desires, plans, prices, etc. that generate these assumptions. The idea behind the model is that we travel hopefully towards the goal of net-zero emissions rather than arrive.
India may build new coal-fired power plants as they generate the cheapest power, according to a draft electricity policy document, despite growing calls from environmentalists to deter use of coal. Coal’s contribution to electricity generation in India fell for the second straight year in 2020, marking a departure from decades of growth in coal-fired power. Still, the fuel accounts for nearly three-fourths of India’s annual power output. NTPC Ltd, India’s top electricity producer will not acquire land for new coal-fired projects. Private firms and many run by states across the country have not invested in new coal-fired plants for years saying they were not economically viable. Coal-fired power plants will be the primary driver of infrastructure investment in India’s power sector over the next decade according to Fitch Solutions. The country hosts 40 coal-fired power plant projects currently under construction involving a combined investment of US $40.2 billion and accounting for 61 Gigawatts (GW) of capacity. Additionally, the country is home to 73 coal-fired power plant projects currently in planning involving over US $80 billion in investment and adding up to 124 GW of capacity. Coal-fired power development in India will also benefit from a supportive policy environment with the government having advanced a number of policies in recent years to support the continued development of thermal capacity and coal-fired power plants in particular in the market. Among these moves, Fitch highlighted India’s 2020 proposal to waive carbon taxes on coal in a bid to alleviate debt levels in the coal sector.
Coal’s share in India’s electricity generation rose to the highest level in at least nine quarters during the first three months of 2021, government data showed, reversing a trend of renewable energy gaining at coal’s expense. The share of coal and lignite rose to 78.9 percent during the quarter ending 31 March, compared with 75.9 percent in the same period last year, the federal grid regulator POSOCO data showed. Coal’s contribution to India’s annual electricity generation fell for the second straight year in 2020, the data shows, marking a departure from decades of growth in coal-fired power. Recovery in coal-fired generation coincided with India’s overall electricity demand returning to growth: The country’s power demand and share of coal-fired power rose for seven straight months starting September, data showed. India’s annual electricity demand fell for the first time in at least 35 years in the fiscal year to March, with electricity consumption declining for six straight months ending August.
CIL (Coal India Ltd) arm NCL (Northern Coalfields Ltd) has supplied 87 percent of its total coal to electricity producers in the last fiscal year, thereby, fulfilling the power aspiration of the country in these unprecedented times. NCL, the Singrauli-based Miniratna company, surpassed its fiscal production milestone of 113 MT and produced 115.05 MT in 2020-21 with 6.47 percent year-on-year growth. The company has also surpassed its annual overburden removal (OBR) target of 370 million cubic meters (MCM), and removed a whopping 374.17 MCM of overburden with a year-on-year growth of 15.76 percent in the last fiscal year. Overburden is the material above coal seam that is required to be removed above coal layer for ready exposure. Also, 2.3 percent growth was observed in Merry-Go-Round (MGR) mode of coal transportation. NCL supplies about 52 MT of coal through dedicated MGR transportation mode which is directly linked to thermal power plants. In a crucial pro-environmental step, a remarkable decline of 24 percent was seen in coal transportation through road mode in spite of year-on-year growth in the company’s coal dispatch. NCL operates with 10 highly mechanised opencast coal mines spread in Singrauli and Sonbhadra districts of Madhya Pradesh and Uttar Pradesh, respectively. NCL is eyeing 130 MT coal production by 2023-24.
As many as 14 coal blocks from Odisha are set to go under the hammer with the Centre launching its second tranche of auction of 67 coal blocks for commercial mining. The Machhakata, Mahanadi, Nuagaon Telisahi, Ramchandi promotion block, the Alaknanda, Bartap, Burapahar, Dip extension of Belpahar, the Dip side of Chatabar, Kardabahal-Brahmanbil, Kosala West, Phuljhari east and west, the Saradhapur north, and Tentuloi are the 14 blocks from Odisha, which have been picked by the Centre for auction. These blocks are located in the Talcher and Ib valley of the state. The Centre had listed nine blocks from Odisha for commercial mining in the first phase, while two blocks—Radhikapur East and Radhikapur West—were successfully auctioned by the Centre in November last. While Aditya Birla Group’s EMIL Mines and Mineral Resources Ltd had bagged the Radhikapur East block, Vedanta Ltd had bagged the Radhikapur West block. The decision to allow commercial coal mining was announced by the Centre in June last year as part of its Atmanirbhar Bharat Abhiyaan, which aims to make India self-reliant in the energy sector and to boost industrial development. The move also aims to end the monopoly of CIL. Commercial coal mining allows anyone, including the foreign players, to bid for coal blocks, explore coal, and sell it in the open market as the concept of end-use has been scrapped by the government.
India has proposed to adopt a ‘rolling auction’ mechanism for conducting coal auctions under which a pool of coal blocks will always remain available for auctions. Coal is the first mineral resource where rolling auction mechanism is being implemented. The country launched second tranche of auction for commercial coal mining offering 67 mines for sale of coal. The coal mines on offer are a mix of mines with small and large reserves, coking and non-coking mines and fully and partially explored mines spread across six states Chhattisgarh, Jharkhand, Odisha, Madhya Pradesh, Maharashtra, and Andhra Pradesh. The government is also looking at reforming the existing e-auction mechanism of CIL and considering clubbing different e-auction windows of CIL into one.
Adani Enterprises Ltd along with its wholly-owned subsidiary Gare Palma II Collieries Pvt Ltd (GPIICPL) has signed a pact with Maharashtra State Power Generation Co Ltd (MAHAGENCO) for development and operation of Gare Palma Sector II coal mine. The coal ministry had allocated the coal mine in Raigarh district of Chhattisgarh to MAHAGENCO in 2015. The coal block was allotted for development, operation and captive consumption of coal to its end use thermal power plants located at Koradi, Chandrapur 8- Parli. As per the approved mining plan, the peak rated capacity of mine is 23.6 MTPA with total mineable reserve of 553.177 MT for opencast mine. MAHAGENCO had floated a tender for selection of mine developer and operator for development and operation of Gare Palma II coal mine in March 2016. After a reverse auction, Adani Enterprises Ltd emerged as L-1 bidder. The contract period will be for 34 years, including for mine development and final mine closure.
CIL allocated 37.21 MT of coal during the April-February period of FY20-21 under the spot e-auction scheme, registering a year-on-year increase of 36.3 percent. CIL had allocated 27.30 MT of coal in the April-February period of FY19-20, according to government data. Fuel allocation by CIL under the scheme also increased to 4.41 MT in February, from over 3.31 MT in the corresponding month of 2019-20. Coal distribution through e-auction was introduced with a view to providing access to coal for such buyers who are not able to source the dry fuel through the available institutional mechanism, according to CIL. The purpose of e-auction is to provide equal opportunity to all intending buyers for purchasing coal through single window service. CIL accounts for over 80 percent of domestic coal output. The company is eyeing one billion tonnes of coal output by 2023-24.
In a bid to give a fillip to the Centre’s Aatmanirbhar Bharat programme, CIL has drafted plans to ramp up domestic coal evacuation facilities at a cost of INR 400 billion. The miner will execute 35 projects to improve first-mile connectivity and coal handling plants as well as create more rail lines and sidings. Coal handling capacity of these 35 projects is estimated to be close to 405 MTPA (million tonnes per annum) by FY24. Each of the mining projects would have production capacity of 4 MTPA and above. Under the Aatmanirbhar Bharat Abhiyan, in June last year package of INR 20 trillion — allocated INR 500 billion for creating coal evacuation infrastructure. It included INR180 billion for mechanised coal transport. The move was in line with the Centre’s efforts to bring down coal imports. Under phase-I of the first-mile connectivity or transport of coal from mine’s end to dispatch points, CIL will increase rail connectivity projects to 24. They are 11 currently. These points would also have coal handling plants at mines with rapid loading systems. In the second phase, CIL will set up 14 more first-mile connectivity projects. Mahanadi Coalfields, one of the subsidiaries of CIL, inaugurated its 10th railway siding at Talcher Coalfields in Odisha. The company will enhance the despatch capacity of the mine to 4 MTPA. CIL is currently increasing the capacity of two key rail lines—Jharsuguda-Sardega in Odisha and Tori-Shivpur in Jharkhand. Along with this, it is also planning to construct the Shivpur-Kathautia rail link through a joint venture for transporting coal through the Kathautia-Koderma circuit in Jharkhand.
CIL loaded 372.5 rakes on 19 March, the highest single day loading this fiscal. Of this, power sector accounted for 90 percent at 335 rakes. It said that till 26 March, CIL loaded an average of 312 rakes per day recording 24.6 percent growth compared to the same date of March last year when the loading was 250.3. The average loading for the power sector also clocked 22.7 percent growth in March with 269.2 rakes compared to 219.4 rakes in the same period last year. CIL’s supplies in terms of volume shrunk marginally compared to last year, primarily due to less lifting of committed quantity by power sector and reduced despatch through road mode during the pandemic lockdown resulting in a fall of around 32 percent. Non-regulated sector customers have lifted 38.2 MT of coal in the current financial year till 26 March as against 28.6 MT lifted in the same period last fiscal.
India’s coal imports are to remain tapered over the fourth quarter of 2020-21 on the back of elevated import prices leading the players to resort to higher domestic coal consumption over imported coal, especially for non-coking coal, according to India Ratings and Research. It said overall coal imports were lower by 19 percent year-on-year (yoy) in February 2021 to 56.5 MT driven by 5.2 percent month-on-month (mom) reduction in domestic power demand. The share of imports in the total domestic consumption was 23.7 percent over April-December 2020. While domestic coal production improved marginally in February 2021 to 67.5 MT, it was lower 6.1 percent yoy. Overall, coal production and offtake were 2.9 percent and 5.0 percent lower yoy, respectively, over April 2020–February 2021. The average import prices for thermal coal continued to rise in March this year, especially South African coal, which increased 8-9 percent month-on-month.
The Department of Steel and Mines of Odisha government granted the mining lease of Utkal-E coal block to National Aluminium Company Ltd (NALCO) through a notification issued on 12 April. NALCO is a leading producer of alumina and aluminium in the country. As per the notification, the mining lease of the Utkal-E coal block is over an area of 523.73 hectares in villages Nandichhod, Gopinathpur Jungle, Kundajhari Jungle, Kosala, and Korada under Chendipada Tahasil of Angul District. The scarcity of coal and a dwindling market affected more than 120 coking coal factories of Dhanbad, Giridih, and Ramgarh in the last few years. Recently, with the revival of the steel industry and import of cheaper coal from Australia, the industry has made an upturn including generating over 50 thousand jobs for local labourers. Australian coal besides being good quality is also available at comparatively cheaper rates compared with the locally available coal provided by different CIL subsidiaries like Bharat Coking Coal Ltd (BCCL); Eastern Coalfields Ltd (ECL) and Central Coalfields Ltd (CCL). Around 50 of the 120 factories have completely shifted to Australian coal being provided to them by the pig iron industry and blast furnace industry. The remaining are using a combination of both. The trade war between China and Australia led to increased import of coal to India at cheaper rates. The coal is imported by ships through Haldia and Paradip ports.
China was the only G20 country that saw a large increase in coal generation in the pandemic year, according to research published by energy think tank, Ember. India, on the other hand, saw a decline of five percent. Globally there was a record fall in coal generation in 2020, which was mirrored in India and other top coal power countries. China is now responsible for more than half (53 percent) of the world’s coal-fired electricity. China bucked this trend, standing out as the only G20 country that saw a large increase in both electricity demand and coal power in 2020. The four largest coal-generating countries after China all saw coal power decline in 2020: India (minus five percent), the United States (minus 20 percent), Japan (minus one percent) and South Korea (minus 13 percent). Coal remained the world’s single largest power source in 2020. Global coal generation was only 0.8 percent lower in 2020 than in 2015 and gas generation was 11 percent higher.
A steep increase in coal plant development in China offset a retreat from coal in the rest of the world in 2020, resulting in the first increase in global coal capacity development since 2015 according to a new report led by Global Energy Monitor (GEM). In India, coal power capacity rose by just 0.7 GW in 2020, with 2 GW commissioned and 1.3 GW retired. In total, China was home to 85 percent of the 87.4 GW of proposed new coal plants in 2020. A record-tying 37.8 GW of coal plants were retired in 2020, led by the US (United States) with 11.3 GW and the European Union with 10.1 GW. China commissioned 38.4 GW of new coal plants in 2020, comprising 76 percent of the global total (50.3 GW). Outside China, 11.9 GW was commissioned and, taking into account closures, the global coal fleet outside China declined by 17.2 GW in 2020—the third year in a row that coal power capacity outside China shrank. Outside China, the coal plant development pipeline is collapsing in Asia, as Bangladesh, the Philippines, Vietnam, and Indonesia have announced plans to cut up to 62.0 GW of planned coal power. GEM estimates the policies will leave 25.2 GW of coal power capacity remaining in pre-construction planning in the four countries — an 80 percent decline from the 125.5 GW planned there just five years ago in 2015.
Australia’s superannuation funds should be free to support the coal industry’s expansion plans as a battle heats up over new mines in the key Hunter Valley mining region of New South Wales. The coal industry in New South Wales is currently proposing 23 new coal mines and mine extensions with a combined additional annual production of more than 155 MT a report by progressive think tank The Australia Institute found. In a separate development, Former Prime Minister Malcolm Turnbull was dropped from chairing a board that would oversee New South Wales’ energy transition after he supported a moratorium on new coal mines in the Hunter Valley.
South Africa will begin operating Unit three at the Kusile coal-fired power station, according to state-owned utility Eskom marking the halfway point in a long delayed 118.5 billion rand (US $8 billion) project which began in 2008. Eskom provides more 90 percent of the electricity needed by Africa’s most industrialised nation, but has had to implement cost nationwide blackouts due to repeated faults at its ailing coal-fired power stations, severely constraining economic growth.
Coal has to be scrapped as a power source according to the Polish group which owns the EU (European Union)’s biggest carbon-emitting power plant underscoring a policy shift in a country until recently wedded to coal to generate electricity. Poland produces most of its electricity from coal but has made a series of policy shifts in recent months and now plans investment in offshore wind, nuclear power and solar energy to help decarbonise its economy. Poland’s biggest coal producer PGG plans to close its last coal mine in 2049 but this is still being discussed with labour unions. PGE has not yet set a date for the closure of its coal-fired power plants but Poland will give up on coal in 30 years, which environmentalists say is too long.
German utility Uniper is studying the conversion of its coal-fired power plant site at Wilhelmshaven on Germany’s North Sea coast into an import and electrolysis hub to tap into emerging demand for “green” hydrogen. Policymakers in Europe aim to produce green hydrogen from renewable power through electrolysis, to replace coal and gas-based hydrogen and open up new areas of usage to substitute oil products across manufacturing industries, heating, and transport. Wilhelmshaven was retired last December under an agreed exit from carbon-emitting coal, while Germany will accelerate the build-up of renewable electricity and low-carbon hydrogen to reach climate goals. According to Uniper, which under the steer of majority-owner Fortum has committed itself to a more eco-friendly course Wilhelmshaven’s transformation could provide 10 percent of German hydrogen demand by 2030.
Anglo American plc will spin off its South African thermal coal business into a new company listed in Johannesburg and London, as it moves to transition out of assets that mine the most polluting fossil fuel. The transaction would be subject to shareholder approval in May. The anticipated move comes as mining companies are under pressure to stop mining coal from investors and governments keen to switch to cleaner fuels. Anglo American plc is also looking to exit its Cerrejon thermal coal mine in Colombia within one and a half to two years.
24 April: India’s deadly second COVID-19 wave has brought an abrupt halt to its nascent recovery from the pandemic, with the resurgence expected to drag on fuel demand for weeks in a setback for the global oil market. The combined consumption of diesel and petrol in April is poised to plunge by as much as 20 percent from a month earlier due to renewed restrictions, including a week-long lockdown in the capital New Delhi, according to officials from top refiners and fuel retailers. While major oil processors were still buying crude recently, there are signs starting to emerge that refining operations will likely need to be scaled back to adjust for plummeting demand. India so far has instituted localized lockdowns, with the government seeking to avoid repeating the nationwide shutdown seen last year that drove demand to the lowest in more than a decade in April 2020. The South Asian nation is the world’s third-biggest oil importer, which means an extended impact will likely ripple through the global market, even as China and the US (United States) rebound strongly. Restrictions are also hobbling the India’s trucking industry—considered the backbone of its economy and oil demand—which was slowly clawing its way back from the worst of 2020.
Source: The Economic Times
24 April: The Bharat Petroleum Corp Ltd (BPCL) has “re-routed” its critical 252-km-long 18-inch diameter oil pipeline connecting Mumbai and Nashik. Constructed over two decades ago, the pipeline was linked with Nashik’s important railway junction Manmad, joining the BPCL Fuel Installation facility there with the BPCL Refinery in Mumbai. It was the veritable ‘oil lifeline’ for BPCL as more than 80 percent of the diesel and petrol produced at the Mumbai refinery was evacuated through the pipeline. However, since then, a lot of infrastructural developments, residential or other buildings have sprung up around its route, making it inaccessible for repairs or maintenance and posing risks to people in the vicinity. Later, the Mumbai-Manmad Pipeline was extended till Delhi, passing through Maharashtra, Madhya Pradesh, Rajasthan, Uttar Pradesh, and Haryana to supply petrol, diesel, kerosene, etc. to the interiors of the country.
Source: The Economic Times
22 April: Oil and gas producer Oil and Natural Gas Corp (ONGC) spent about one-fifth less than its budget Capex in 2020-21 fiscal after COVID-19 related restrictions delayed projects but fuel marketers such as (IOC) Indian Oil Corp exceeded targeted capital spending, a government report showed. ONGC had budgeted INR 325.02 billion of capital spending in the fiscal from April 2020 to March 2021 but ended up spending only INR 264.41 billion, according to the report of the oil ministry’s Petroleum Planning and Analysis Cell (PPAC). Oil and gas exploration and production projects typically involve the supply of equipment from overseas suppliers. Also, some facilities like rigs are operated by foreign crews. Lockdowns in several parts of the world, including India, restricted the movement of labour as well as disrupted supply chains. ONGC’s overseas arm OVL too had a lower capital spending of INR 53.51 billion in 2020-21 fiscal as compared to the targeted INR 72.35 billion. But, other downstream companies exceeded their capital spending targets by a wide margin. The government had banked on capital spending of the public sector companies for economic recovery post disruptions caused by the pandemic. Such spending drives economic activity by creating demand for different sectors such as steel and creating employment.
Source: The Economic Times
23 April: Indian Oil Corp Ltd (IOC)’s refineries are operating at about 95 percent of their capacity, down from 100 percent at the same time last month. Coronavirus cases have surged in India, leading to curbs on movement across the country, a move analysts say could hit fuel demand in the world’s third-largest oil importer and consumer. Consultancy FGE said it estimates gasoline demand will drop by 100,000 barrels per day (bpd) in April and by more than 170,000 bpd in May if further restrictions are imposed. India’s total gasoline sales came to nearly 747,000 bpd in March. Diesel demand is expected to contract by 220,000 bpd in April and by another 400,000 bpd in May, according to FGE. India’s diesel consumption, a key indicator linked to economic growth and which accounts for about 40 percent of overall refined fuel sales in India, was 1.75 million bpd in April. While curbs to restrict movement are in place in many parts of India, it has not imposed a total shutdown as it did in March last year. Most businesses are still operating normally. Gasoline and diesel sales by India’s state fuel retailers in the first 21 days of April were higher than in 2020, industry data showed, mainly because of lower demand last year during the complete lockdown. Diesel demand was lower compared with the same period of 2019, while gasoline demand was up two percent, the data showed. FGE said it had cut its liquefied petroleum gas (LPG) consumption estimates for April and May marginally, with the delivery of LPG cylinders to households likely to be hit in the coming weeks, with more lockdown announcements and travel curbs.
Source: The Economic Times
21 April: The Indian Gas Exchange (IGX) said it has commenced gas trade from two new hubs at Dabhol and Jaigarh in Maharashtra. Currently, IGX operates three gas hubs—Dahej and Hazira in Gujarat and KG Basin in Andhra Pradesh. The introduction of the two new hubs in Maharashtra will allow the exchange to operate from five physical gas hubs. All the existing contracts offered by IGX—monthly, fortnightly, weekday, weekly, and daily—will be made available at the new gas hubs with effect from 20 April 2021. The move is aimed at increasing the availability of natural gas from additional sources on the exchange platform for the benefit of end-consumers. The Dabhol terminal is owned by GAIL (India) Ltd and has an operational capacity of 5 million metric tonnes per annum (MMTPA). The exit point of the terminal has been declared as the Dabhol Hub. The terminal’s current supplies are largely to the western and southern states through two pipelines—Dabhol-Uran-Dahej-Panvel Pipeline (DUDPL) and Dabhol-Bengaluru Pipeline, connecting the terminal to the National Gas Grid. Energy through its wholly-owned subsidiary, Western Concessions Pvt Ltd will shortly commence operations of India’s first Floating Storage and Re-Gasification Unit-based LNG terminal project at the Jaigarh Port. The Jaigarh Gas Hub is at the interconnection point of the tie-in connectivity Jaigarh-Dabhol pipeline to DUDPL located in Dabhol. Despite being closer to each other, the two new gas hubs would operate independently which will help avoid layering up of the transportation tariff. Additionally, with the implementation of unified tariff, the customers will be able to avoid multiple tariffs for transportation of gas, further adding to gas-to-gas competition in the country. More recently, IGX introduced open auction mechanism on its platform allowing buyers to compare gas prices across the hubs, enabling them make bidding decision basis the most competitive gas price for the required duration.
Source: The Economic Times
26 April: Reliance Industries Ltd (RIL) and BP announced the start of production from the Satellite Cluster gas field in KG-D6 block off the east coast. The two companies have been developing three deep-water gas developments in block KG D6—R Cluster, Satellite Cluster and MJ—which together are expected to produce around 30 million metric standard cubic meter per day (mmscmd) of natural gas by 2023, meeting up to 15 percent of India’s gas demand. The Satellite Cluster is the second of the three developments to come onstream, following the start-up of R Cluster in December 2020. It had originally been scheduled to start production in mid-2021, the companies said. The field is located about 60 km from the existing onshore terminal at Kakinada on the east coast of India in water depths of up to 1850 meters. The field will produce gas from four reservoirs utili’ing a total of five wells and is expected to reach gas production of up to 6 mmscmd. Together, the R Cluster and Satellite Cluster are expected to contribute to about 20 percent of India’s current gas production. The third KG D6 development, MJ, is expected to come onstream towards the latter half of 2022. The gas developments will each utilize the existing hub infrastructure in the KG D6 block. RIL is the operator of the block with a 66.67 percent participating interest and BP holds a 33.33 percent participating interest.
Source: The Economic Times
26 April. The Centre will meet prospective bidders for 67 mines offered for sale in the second tranche of the commercial coal mining auction. This is the highest number of mines on offer in a particular tranche after the commencement of the auction regime in 2014. As the country is grappling with a raging second wave of COVID-19 cases, a final call on the number of coal blocks that may go under the hammer may be taken during the meeting. 19 mines were auctioned in the first-ever tranche of commercial coal mining auction held last year with the premium quoted by the successful bidders in the range of 9.5-66.75 percent. The agreements between the coal ministry and the successful bidders were signed in January this year. Of the 67 mines offered by the ministry, 23 are under Coal Mines (Special Provisions) Act and 44 under Mines and Minerals (Development and Regulation) Act. The blocks on offer are a mix of mines with small and large reserves, coking and non-coking mines spread across six states—Chhattisgarh, Jharkhand, Odisha, Madhya Pradesh, Maharashtra, and Andhra Pradesh. The coal ministry had said the government was moving towards adopting a “rolling auction” mechanism. Coal is the first mineral resource, where this mechanism is being implemented in which a pool of blocks will always remain available for auctions. The government expects that commercial coal mining will bring in new investments, create huge employment opportunities and boost socio-economic development in coal-bearing states, and a market-based coal economy will help the nation become ‘Aatmanirbhar’ in the availability of the resource.
Source: The Economic Times
24 April: In its maiden venture into solar power, Coal India Ltd (CIL) announced it had signed a first-of-its-kind power purchase agreement for the sale of 100 MW solar power with Gujarat Urja Vikas Nigam Ltd (GUVNL). The company had won a 100 MW solar power project in March in a reverse auction conducted by GUVNL. The tenure of the agreement period is for 25 years. CIL said it is serious in its intent to pursue solar power as an alternative green energy source and for that it has rolled out a plan for 3,000 MW of solar power generation by 2024.
Source: The Economic Times
24 April: French energy group EDF took a key step towards helping to build the world’s biggest nuclear power plant in India, a project blocked for years by nuclear events and local opposition. The company said it had filed a binding offer to supply engineering studies and equipment to build six, third-generation EPR reactors in Jaitapur, western India. Once finished, the facility would provide 10 GW of electricity, roughly enough for 70 million households. Construction is expected to take 15 years, but the site should be able to start generating electricity before its completion. At present, there are 22 functioning nuclear reactors in India, most of them pressurised heavy water reactors, providing about three percent of the country’s power.
Source: The Economic Times
22 April: The Central Electricity Authority (CEA) and CEEW’s Centre for Energy Finance (CEEW-CEF) launched the India Renewables Dashboard. The dashboard is a joint effort to provide detailed operational information on renewable energy (RE) projects in India. The dashboard, supported by the Shakti Sustainable Energy Foundation, captures daily generation data at the state, regional and national levels for the aggregate 93 GW of installed RE capacity in India. Previously, such data required manual aggregation and was not easily accessible. The India Renewables Dashboard addresses this challenge by automating the process of updating daily RE generation. According to the India Renewables Dashboard, India’s solar power generation on 20 April 2021, was 172.3 million kilowatt hour (kWh) and its total wind power generation on the same day was 168.3 million kWh. The highest daily generation figures recorded in the past 12 months for solar and wind are 216.5 million kWh and 444.5 million kWh, respectively.
Source: The Economic Times
22 April: Torrent Power Ltd said it will set up a 300 MW capacity solar power plant in Gujarat at an estimated cost of INR 12.50 billion. In a statement, the firm said it has signed an agreement to sell electricity generated at INR 2.22 per unit for a period of 25 years. The project shall be commissioned within 18 months from the date of execution of the power purchase agreement (PPA). Torrent Power is a INR 136.41 billion integrated power utility of the INR215 billion Torrent Group. It has presence across the entire power value chain—generation, transmission, and distribution. The company has an aggregate installed generation capacity of 3,879 MW comprising 2,730 MW of gas-based capacity, 787 MW renewable, and 362 MW of coal-based capacity. It distributes nearly 16.66 billion units to over 3.65 million customers in the cities of Ahmedabad, Gandhinagar, Surat, Dahej Special Economic Zone (SEZ), and Dholera Special Investment Region (SIR) in Gujarat; Bhiwandi, Shil, Mumbra, and Kalwa in Maharashtra and Agra in Uttar Pradesh.
Source: The Economic Times
22 April: India’s Prime Minister (PM) Narendra Modi said India’s per capita carbon footprint is 60 percent lower than the global average as he addressed the leaders’ climate summit. Modi pitched for concrete action at a “high speed” and on a large scale to combat climate change, and asserted that India was doing its part to deal with the challenge. Addressing a US (United States)-hosted virtual summit of 40 global leaders, Modi also said sustainable lifestyles and guiding philosophy of “back to basics” must be important pillars of the economic strategy for the post-COVID era. Modi said India has taken “many bold steps” on clean energy, energy efficiency, afforestation, and bio-diversity despite its development challenges. Modi said humanity is battling a global pandemic right now and the summit is a timely reminder that the grave threat of climate change has not disappeared.
Source: Business Standard
21 April: 10 years ago, solar power barely existed in India. Now the country is adding more generation capacity from solar than coal. It’s showing other sun-soaked developing countries how to rapidly deploy cleaner energy even in the face of corruption, red tape, and weak finances. That focus and determination helped ReNew dominate the market, even as the competition grew.
Source: The Economic Times
27 April: The OPEC+ joint technical committee (JTC) has kept its forecast for growth in global oil demand this year, but is concerned about surging COVID-19 cases in India and elsewhere. In its most recent monthly oil market report, the Organisation of the Petroleum Exporting Countries (OPEC) raised its forecast for global oil demand growth by 70,000 barrels per day (bpd) to 5.95 million bpd. The JTC usually reviews market fundamentals and monitors compliance with the group’s oil production cuts.
Source: The Economic Times
22 April. China’s national offshore oil and gas producer CNOOC Ltd reported its first quarter (Q1) revenue surged 21 percent on year on recovering oil and gas prices and higher sales. Realised oil prices rose 20.5 percent to US $59.07 per barrel, while gas prices were up five percent on year at US $6.71 per thousand cubic feet. Total net production during the period reached 137.7 million barrels of oil equivalent (boe), up by 4.7 percent from the same period last year, with domestic output nearly nine percent higher than the year earlier. Production from overseas oilfields dropped 3.2 percent over the period, owing to lower output at the Egina project in Nigeria, Eagle Ford in the United States (US) and Buzzard in Britain. The firm estimated a loss of up to 600,000 barrels of output, representing 0.1 percent of annual production scheduled in 2021. CNOOC aims to raise production to 545-555 million boe this year from 528 million boe in 2020.
Source: The Economic Times
22 April: The rapid adoption of electric vehicles (EV) around the world will probably cause global oil demand to peak two years earlier than previously expected, Norway’s biggest independent energy consultancy Rystad said. World demand is now seen peaking at 101.6 million barrels of oil per day (bpd) in 2026, down from a forecast made in November of a peak in 2028 at 102.2 million bpd, Rystad Energy said. Before the outbreak of the COVID-19 pandemic in early 2020, Rystad had anticipated that peak oil demand would be reached in 2030 at 106 million bpd.
Source: The Economic Times
27 April: One of Israel’s biggest energy companies plans to sell its share of a large offshore gas field to a firm based in the United Arab Emirates (UAE) for an estimated US $1.1 billion, the biggest such deal since the two countries normalised ties last year. Delek Drilling, owned by the Israeli billionaire Yitzhak Tshuva, said that it signed a Memorandum of Understanding (MoU) with Mubadala Petroleum, part of a conglomerate owned by the government of Abu Dhabi. Delek Drilling is required to sell its 22 percent share of the offshore Tamar gas field by the end of this year as part of a 2015 gas framework agreement, aimed at introducing more competition to the Israeli gas sector, which has grown in recent years with the discovery of large offshore reserves. The Tamar field, which went online in 2013, is believed to hold more than 300 billion cubic meters of gas. Chevron and the Israeli-American company Isramco each own around a third of Tamar, with the remainder held by smaller firms.
Source: The Economic Times
27 April: Oil and gas supplier Enterprise Products Partners sued CPS Energy, a San Antonio gas and power utility, alleging failure to pay nearly US $100 million for natural gas delivered during a February winter storm. The lawsuit is the latest to emerge from a severe cold snap that drove prices and demand for natural gas and electricity to hundreds of times their pre-storm levels. Enterprise is suing CPS Energy, a long-time customer, over payment disputes for sales during the freeze. The suit, filed in a state court in Harris County, Texas, claims CPS owes US $99.7 million for gas after paying US $36.5 million towards the month’s fuel bill.
Source: The Economic Times
26 April: The French energy firm Total announced that it has halted all operations on its US $20 billion investment in a Liquified Natural Gas (LNG) project in northern Mozambique as a result of the extremist rebel insurgency there. Total’s declaration of force majeure casts doubt on the future of the gas project, which had been expected to bring large and sustained economic growth to Mozambique’s struggling economy.
Source: The Economic Times
26 April: South Korean steelmaker POSCO said it does not believe its unit POSCO International’s gas projects in Myanmar have a direct link to the military which seized power there in February. The unit’s gas business had existed for about 20 years, persisting through regime change, and related payments were paid to the Myanmar finance ministry, POSCO said. About 20 percent of the Myanmar gas business was used for local consumption including electricity production, contributing to the lives of ordinary people, it said.
Source: The Economic Times
22 April. The US (United States) Interior Department is cancelling oil and gas lease sales from public lands through June amid an ongoing review of how the program contributes to climate change. The petroleum industry and its Republican allies in Congress have said the oil and gas moratorium will harm the economies of Western states without putting a significant dent in climate change. The federal government took in about US $5 billion last year in royalties and other payments on oil and gas from federal lands, according to the Office of Natural Resources Revenue.
Source: The Economic Times
27 April: The Australian state commission approves extension of Glencore’s Mangoola coal mine—an Australian state Planning Commission approved an extension to Glencore Plc’s Mangoola coal mine in the Upper Hunter Valley of New South Wales. The commission’s decision comes ahead of a byelection on 22 May for the Upper Hunter seat in the New South Wales state Parliament, in which the future of coal mining in the region is likely to be a key issue. An additional 52 million tonnes (mt) of run-of-mine coal would be extracted over the course of eight years, with operations to cease at the site in December 2030, it said.
Source: The Economic Times
23 April. South Korea will stop funding coal-powered plants overseas, President Moon Jae-in told a US (United States)-led summit, as he vowed a larger role in fighting climate change. The progressive president said he was expanding a decision at home to phase out coal, the dirtiest form of energy. Moon said that Asia’s fourth largest economy was committed to going carbon neutral by 2050 and would “aim to enhance” its goals by 2030.
Source: The Economic Times
23 April. China aims to cut its coal use to below 56 percent of energy consumption in 2021, the National Energy Administration (NEA) said, but said the fuel would still play a vital role in ensuring the nation’s energy security. China, the world’s biggest coal consumer, lowered the share of coal use in its primary energy mix to 56.8 percent in 2020, from around 68 percent at the beginning of the previous decade. The NEA also plans to raise electricity use to 28 percent of end-use energy consumption in China, up from the 2020 goal of 27 percent, the document said.
Source: The Economic Times
27 April: The White House hopes to capitalise on growing support from US (United States) utilities, unions and green groups for a national clean energy mandate by pushing Congress to pass a law requiring the US grid to get 80 percent of its power from emissions-free sources by 2030. Requiring utilities to move away from coal and natural gas is a cornerstone of US President Joe Biden’s plan to slash greenhouse gas emissions in half across the US economy in the next decade.
Source: The Economic Times
27 April: Global energy-related carbon dioxide emissions are on course to surge by 1.5 billion tonnes (bt) in 2021—the second-largest increase in history—reversing most of last year’s decline caused by the COVID-19 pandemic, a new International Energy Agency (IEA) report shows. This will be the biggest annual rise in emissions since 2010 during the carbon-intensive recovery from the global financial crisis. The IEA’s Global Energy Review 2021 estimates that CO2 (carbon dioxide) emissions will increase by almost fivepercent this year to 33 bt, based on the latest national data from around the world as well as real-time analysis of economic growth trends and new energy projects that are set to come online.
Source: The Economic Times
23 April. Germany will expand the energy capacity tendered in renewable power project auctions to help decarbonise electricity, and will relieve the burden on consumers by reducing a fee charged to support wind and solar operators, the government said. The coalition government, made up of Chancellor Angela Merkel’s conservatives and Social Democrats, agreed on both measures to help achieve a 65 percent share of renewable sources within the power mix by 2030, versus just under 50 percent in 2020. Permitted new onshore wind power capacity will be raised to 4 GW from 2.9 GW in 2022 tenders, and solar capacity to 6 GW from 2 GW, according to the agreement.
Source: The Economic Times
22 April. Wind farm developer, Orsted, plans to submit a joint bid with Danish pension fund ATP to finance and build the world’s first energy island in the North Sea. The artificial island, which will produce and store enough green energy to cover the electricity needs of 3 million European households, was approved by Danish lawmakers in February as part of the country’s ambitious climate targets. The energy island, which will cost about 210 billion Danish crowns (US $34 billion), will be located 80 kilometres (50 miles) off Denmark’s west coast. Its surrounding wind turbines will have initial capacity of 3 GW and is expected to be operational around 2033.
Source: The Economic Times
23 April. Taiwan has begun to assess how it can reach zero emissions by 2050, President Tsai Ing-wen said, after green groups criticised the government for not doing enough to fight climate change. Taiwan, though excluded from most international bodies and treaties due to pressure from Beijing, which considers the island its own territory, is keen to show it is a responsible member of the international community. The European Union clinched a deal on a landmark climate change law that puts new, tougher targets on greenhouse gas emissions at the heart of its policymaking, to steer it towards net-zero emissions by 2050. China has also said it aims for a 2030 peak of carbon emissions, on the way to becoming carbon-neutral by 2060. The government, under the coordination of the cabinet, had begun to assess and plan a possible path to reach a net-zero emissions target by 2050, Tsai said.
Source: The Economic Times
22 April. Japan raised its target for cutting carbon emissions to 46 percent by 2030, responding to pressure from the United States (US) and domestic companies and environmentalists who criticised its previous goal of 26 percent as unambitious. Prime Minister Yoshihide Suga announced the new target, compared with 2013 emissions levels, hours before the start of a virtual summit on climate change called by US President Joe Biden. The Japanese government also is reviewing energy policy this year and has indicated it will aim for lower use of carbon-emitting fossil fuels in the electricity mix.
Source: The Economic Times
21 April: Australia’s Prime Minister (PM) Scott Morrison has proposed spending an extra 539 million Australian dollars (US $417 million) on hydrogen and carbon sequestration projects, seeking to burnish his government’s green credentials ahead of a climate summit to be hosted by President Joe Biden. PM Scott Morrison said the money to be spent on building new hydrogen-producing hubs and carbon capture technologies would create more than 2,500 jobs while reducing Australia’s greenhouse gas emissions.
Source: The Economic Times
21 April. Power utilities and developers are rushing to register solar projects in Brazil, one of the most promising markets for renewables, as it prepares to cut subsidies for new solar installations and wind farms, according to a report by consultancy ePowerBay. Spain’s Iberdrola, France’s Voltalia, EDF, Italy’s Enel, and Portugal’s EDP Renewables are among the main players developing solar projects in Brazil, as well as Atlas Energia, controlled by the British private equity firm Actis, ePowerBay said. Oil majors are also betting on the Brazilian renewables market, the consultancy said, with Royal Dutch Shell registering solar projects totalling 1.5 GW, while Total Eren, owned by France’s Total, has already obtained approval for 49 MW in solar projects.
Source: The Economic Times
This is a weekly publication of the Observer Research Foundation (ORF). It covers current national and international information on energy categorised systematically to add value. The year 2020 is the seventeenth continuous year of publication of the newsletter. The newsletter is registered with the Registrar of News Paper for India under No. DELENG / 2004 / 13485.
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