Airlines reject criticism of fares after oil price drop

February 16, 2016: Global airlines countered allegations of profiteering from low oil prices on Monday after renewed criticism that air fares have failed to come down in line with tumbling fuel costs. The head of the International Air Transport Association told an audience of airline chiefs and regulators in Singapore that industry profitability remained fragile despite a record $36 billion in airline industry profits forecast for 2016. “Certainly lower oil prices have helped, but that impact has been delayed and diluted in many parts of the world due to forward hedges at higher than market rates, as well as the rise of the U.S. dollar against local currencies,” IATA director general Tony Tyler said on the eve of the Singapore Airshow.

Politicians and consumer groups in the United States and Europe have called on airlines to cut air fares as Brent oil prices tumbled from $114 in mid-2014 to around $30 today. A year ago, as Brent hovered around $53 a barrel, UK Finance Minister George Osborne tweeted: “Vital this is passed on to families at petrol pumps, through utility bills and air fares”. On Sunday, Graham Stringer, a member of the UK parliament’s transport panel, told Britain’s Sunday Telegraph airlines were exploiting passengers by failing to pass on lower fuel costs. “It is nonsense…It is simply not the case that anyone is profiteering,” Tyler told Reuters, asked about the report.

“While fuel is still a big element of airline costs, there is still a huge chunk that is not affected, so to expect fares to tumble just because fuel has come down is wholly unrealistic,” he said.
“Look at the market in the UK and the number of airlines all competing. As costs come down so will fares, and the public is getting an extremely good deal from the industry right now.” Airlines argue they are only starting to develop a sustainable profit for their investors due to high capital costs, regulatory constraints and intense competition. But the industry is facing mounting consumer and political pressure as some airlines seem slow to unwind fuel surcharges.

The majority of this year’s industry profits, or $19.2 billion, will be generated in North America, IATA says. Tyler reiterated a warning over the profitability of carriers in Southeast Asia, home to cut-throat competition between low-cost carriers. While fuel has fallen, the dollar has risen by 20 percent against regional currencies in the last 18 months, he told a pre-air show conference.

(Source: Reuters, Indian Oil & gas, February 16th, 2016)

URL : http://www.indianoilandgas.com/viewnews.php?id=29226

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33 States Report Job Growth in Solar Industry

From Solar Industry Magazine:

The Solar Foundation, an independent nonprofit research and education organization, has released state-by-state data from its annual National Solar Jobs Census series via the State Solar Jobs Census Map.

The new numbers show that California not only maintained its No. 1 spot in 2015, but also created over 20,000 new solar jobs last year – a 38% increase – and became the first state to surpass the 75,000 solar jobs benchmark.

The California Solar Energy Industries Association (CALSEIA) has praised local policymakers for their continued support of this new clean energy market, pointing to recent decisions around net metering, extension of the federal investment tax credit, and the state’s 50% by 2030 renewable portfolio standard.

“Solar power is a bright spot in California’s economy, bringing jobs and economic development to every corner of the state,” says Bernadette Del Chiaro, executive director of the CALSEIA. “While conventional energy industries are losing jobs, we are seeing record growth and bringing clean air and climate solutions along the way.”

According to The Solar Foundation, Massachusetts solidified the No. 2 position in 2015 while becoming the second state to have more than 15,000 solar jobs. In addition to California and Massachusetts: Nevada, Florida, Maryland, Tennessee, Oregon, Michigan, and Utah are among the top 20 solar jobs states that grew by 30% or more.

“Solar power not only helps protect our environment and health – it helps accelerate our economic success,” says Colorado Gov. John Hickenlooper. “This is another example of how Colorado’s diverse energy economy contributes to our overall growth and stability. We are pleased that the solar industry continues to find Colorado a good state for business.”

“Massachusetts is home to a thriving clean energy economy with innovative companies, world-class research institutions and a skilled workforce, and we’re proud that the commonwealth continues to maintain its national clean energy leadership position,” adds Massachusetts Governor Charlie Baker.

The Solar Foundation says 33 states, including the District of Columbia, saw positive solar jobs growth in 2015 over the previous year, and many states experienced double-digit increases.

“Solar job creation is booming across the country. California’s 20,000 new jobs marks an industry milestone – but states like Utah, Colorado, Rhode Island, South Carolina and Virginia demonstrate the regional diversity of the industry’s growth,” says Andrea Luecke, president and executive director of The Solar Foundation. “Our data since 2012 show that half the states in the country have at least doubled their solar workforce.”

The Solar Foundation notes this is the first year it has tracked solar jobs by congressional district for all 50 states – providing information for nearly all 436 federal congressional districts and more than 6,000 state legislative districts. The organization says there are now 61 federal congressional districts with at least 1,000 solar jobs; 132 districts with more than 500; and 222 districts with 250 or more solar industry jobs.

Other key rankings from the State Solar Jobs Census include the following:

Most Solar Jobs: 1. California, 2. Massachusetts, 3. Nevada, 4. New York, 5. New Jersey.

Highest % Solar Jobs Growth: 1. Rhode Island, 2. South Carolina, 3. Nebraska, 4. Tennessee, 5. Louisiana.

Most Solar Jobs Per Capita: 1. Nevada 2. Vermont, 3. Hawaii, 4. California, 5. Massachusetts.

Highest % Solar Capacity Growth 2014-15 (estimated): 1. South Carolina, 2. Utah, 3. Georgia, 4. Oregon, 5. New Hampshire.

Source: IEEFA, February 15th, 2016

URL: http://ieefa.org/33-states-report-job-growth-in-solar-industry/?utm_source=Daily+IEEFA+Newsletter&utm_campaign=08ca1c33be-RSS_Commentary_News_Mix_campaign_Dec_2015&utm_medium=email&utm_term=0_e793f87bcc-08ca1c33be-115042313

As China Evolves Into a Service Economy, Its Coal Use Slows

The amount of coal that China is using is tumbling as its electricity consumption falls and that decline may help the country’s greenhouse gas emissions peak a decade earlier than expected, according to a new analysis.

China is the globe’s largest consumer of coal, burning more than three times that of the U.S., and it’s the world’s leading carbon dioxide emitter, the leading driver of climate change.

But after pledging last year to cut its emissions to tackle climate change, China is showing signs of reducing its reliance on fossil fuels: the country’s electricity demand grew by 0.5 percent in 2015 while its coal consumption fell 5 percent and its coal imports fell 35 percent, according the analysis by the Institute of Energy Economics and Financial Analysis, a nonprofit group focusing on global energy.

“Data from the China National Energy Agency confirms that the country is successfully diversifying away from thermal power generation at a far-faster-than-expected rate,” the report says. “Wind, solar, hydro and nuclear continue to gain share at coal’s expense, consistent with a trend established in 2011.”

Thermal power capacity — the amount of electricity China can produce from burning fossil fuels — fell by 9 percent last year, from 54.1 percent of its power supply in 2014 to 49.4 percent in 2015.

“The model for their economy is changing from a far more industrial one to a more service-oriented economy,” Tom Sanzillo, IEEFA director of finance, said. “As a function of that, you demand less electricity, you burn less coal.”

The implications of the changes are huge, the analysis says.

“China’s total emissions are on track to peak potentially a decade earlier than their official target of no later than 2030,” it says.

A Bloomberg New Energy Finance analysis shows that China’s emissions may have fallen by 2 percent in 2015 because of its declining use of coal. Bloomberg also reported that China’s investments in renewables and energy efficiency rose 17 percent in 2015 to $110 billion, doubling U.S. investments in renewables, which totaled $56 billion.

The U.S. is also seeing a decline in coal consumption, falling 10 percent last year as natural gas competes with coal as the leading fuel for electric power generation.

Beyond climate concerns, China’s notoriously bad urban air pollution is one of the biggest reasons the country’s coal use is falling, Sanzillo said.

“China is responding somewhat to the greenhouse gas issue, but they’re much more responding to an internal pollution problem,” he said. “If the people are choking, then the government is not doing its job. They need to reduce coal consumption for the people to be able to live in major cities.”

Source: IEEFA, February 15th 2016

URL : http://ieefa.org/as-china-evolves-into-a-service-economy-its-coal-use-slows/?utm_source=Daily+IEEFA+Newsletter&utm_campaign=08ca1c33be-RSS_Commentary_News_Mix_campaign_Dec_2015&utm_medium=email&utm_term=0_e793f87bcc-08ca1c33be-115042313

Record Wind and Solar Installation in China

Chinese wind energy installations rose to record highs in 2015, with 30.5 gigawatts (GW) of new project capacity installed during the year, according to recent reports. The country also appears to have surpassed its old record for new solar energy installations in a single year, with 16.5 GW of new solar photovoltaic (PV) capacity installed there in 2015.

“Following on from reports earlier this week that China’s coal consumption declined by 4–5% over 2015, this gives yet more confirmation that the global electricity markets are transforming so much faster than anyone anticipated,” stated Tim Buckley, Director of Energy Finance Studies at the Institute for Energy Economics and Financial Analysis (IEEFA).

The figures quoted above are, for the time being, preliminary estimates (via the Chinese Wind Energy Association/CWEA), but seem likely to be accurate. The official tally, coming via the National Energy Administration, is due for release shortly.

If the figures are correct, though, then that means that the country exceeded most analyst forecasts by 20% to 30% — possibly the result of a feed-in-tariff (FiT) revision that is set to affect wind projects completed after the 1st of the year.

The IEEFA provides more:

The total cumulative installed wind capacity across China is estimated to have reached 145 GW by end 2015. This is almost double the cumulative installs of 75 GW in the US, more than triple the estimated 43 GW of wind in Germany (#3 globally) and more than five time the 26 GW installed to-date in India (#4 globally).

China’s solar installs in 2015 are also thought to have set another world record for annual installs at an estimated 16.5 GW, as reported in Chinese PV industry news media this week. Germany in its best year ever commissioned a then record 7.6 GW of solar in 2012, while China installed a reported 12.9 GW in 2013 before a policy rejig to encourage more distributed rooftop solar saw a slowdown in installs in 2014.

IEEFA forecasts that China will install an additional 24 gigawatts (GW) of wind, 16 GW of new hydro, a record 6 GW of nuclear and another new record of 18-20 GW of solar (60% utility scale, 40% distributed rooftop solar) in 2016. With electricity demand forecast to grow by only 3-4% yoy (year-on-year) in 2016, this 65 GW of additional zero carbon electricity capacity will be more than sufficient to meet total demand growth, such that coal consumption is forecast to fall again in 2016.

According to Bloomberg New Energy Finance, China’s new renewable energy investment (+ energy efficiency) rose to $110 billion in 2015, up 17% year-on-year from 2014. That number represents nearly double the US’s renewables investment level for the year ($56 billion).

Source : IEEFA, February 5th 2016

URL: http://ieefa.org/record-wind-and-solar-installation-in-china/

 

Five Facts About Declining Coal Markets

I spend so much time immersed in the minutiae of coal markets that I forget that most people—the normal ones, I mean—pay almost no attention to trends in the global coal industry.

There’s no shame in that, obviously. Still, based on conversations I had with friends and family over the holidays, it’s clear that lots of people have some serious misconceptions about coal exports. The folks with whom I chatted were gob smacked to find out that global coal markets have been collapsing for five straight years, and that the prospects for US coal exports look gloomier than they’ve been in nearly a decade. For some reason, they had assumed that coal exports were still a thriving and lucrative business proposition.

Here are a few facts that bear repeating—and lots of links to evidence showing just how badly mistaken coal myths really are.

FACT #1: China’s coal consumption has been shrinking for years.

Many folks still believe that China has an unlimited appetite for coal, and that the country’s industries and power plants would be delighted to buy any and all coal we sent their way.

But in reality, China’s coal consumption peaked in 2013, fell by about 3 percent in 2014, and fell another 4 to 5 percent over the first 11 months of 2015. All told, China’s cutbacks have totaled some 300 million tons per year—the equivalent of one-third of total coal output in the U.S., the world’s second largest coal producer. So while China still has a huge appetite for coal, the country has slimmed down impressively.

The story behind China’s shrinking appetite for coal is complex and multifaceted: a slowing economy; a gradual economic shift away from energy-intensive industries and towards consumer goods and services; growth in energy efficiency and renewable energy; and an ongoing air-quality catastrophe that’s prompted aggressive policy reactions by the Chinese government. There’s no indication that any of these trends will reverse themselves any time soon.

These declines have precipitated a financial bloodbath for China’s coal industry. Amid sweeping layoffs and mine closures, some Chinese mine laborers have been forced to wait for months for their paychecks to arrive. But despite these cutbacks, the country still has far more coal than it needs and recently announced plans to close 1,000 additional coal mines this year, while imposing a 3-year moratorium on new coal mines.

Fact #2: Exports from the Powder River Basin to Asia have been unprofitable since 2013.

Many folks seemed to believe that U.S. coal companies can make money selling coal to Asia. But the truth is that most U.S. coal exports to Asia stopped being profitable years ago.

Consider the case of Cloud Peak Energy, the best-positioned U.S. coal exporter in the Powder River Basin, which stretches across vast swaths of southern Montana and northern Wyoming. As we’ve documented, Cloud Peak has been losing money on exports since the middle of 2013. Their only saving grace was that back when prices were high they used futures contracts to lock in profits. But as those futures contracts started to run out, the red ink started flowing faster and faster. Last fall the losses got so bad that Cloud Peak decided to halt all exports, even though it’s still contractually obligated to pay steep penalties to rail and port companies for not shipping coal.

For a brief period, starting in about 2010, coal prices were high enough that U.S. companies could make money on exports. But prices started dropping in 2011, and have collapsed for nearly 5 straight years. And despite the hopes of coal industry execs, there’s no price rebound in sight. The futures market currently predicts that a key international coal price benchmark will keep falling for the next several years.

Fact #3: The U.S. is in the same boat as everyone else.

Some folks I chatted with seemed to believe that if the U.S. cut its exports, other countries would simply pick up the slack. But in today’s international coal market, there are no winners, only losers: the entire seaborne coal market has seen shipments plummet and profits vanish. Australia’s coal mining sector is in a shambles, with massive job losses across the entire sector and coal boomtowns turning into ghost towns. Indonesia’s exports are slumping, with an anticipated 17 percent decline anticipated for 2016 alone. Exports from British Columbia’s Ridley coal terminal have been in free fall, with further declines in the offing for 2016.

The big reason, again, is China. With domestic consumption falling, China has taken aggressive steps to protect its own coal industry from imports, both by levying coal import tariffs and by imposing quality controls on imports. At the same time, the country is channeling some industries inland, away from smog-choked coastal cities (and also away from import markets). It’s also forcing cutbacks in coal consumption in the coastal provinces, where imports are most competitive. The result: Chinese customs data shows that imports last November were down more than 50 percent from January 2014.

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Those cutbacks came from everywhere, not just the US. It’s just not true that “our pain is Australia’s gain,” or that China is getting its coal “from somewhere else.” The real story is that every coal exporter is getting hit—and the places that had built expensive infrastructure to feed China’s allegedly “bottomless” appetite for coal are getting hit worst of all.

Fact #4: There’s absolutely nothing on the horizon that can replace the collapsing demand from China.

About a year ago, as Chinese imports faltered, US exporters began to talk about the bright prospects for exports to South Korea. But the Chinese declines absolutely dwarf any other other potential import gains in the rest of the Pacific Rim. Recall that China has nearly 1.4 billion residents; South Korea, just 50 million. In that context, the hopes that South Korean imports could counteract China’s decline seem preposterous.

For a while it looked as if rising demand from India might start to replace some of the Chinese import cutbacks. But after years of rising imports, India’s coal minister has pledged to make the country self-sufficient in coal, ceasing all coal imports by 2017. Analysts at Bloomberg New Energy Finance consider that timetable overambitious, but still believe that India’s imports will sink and likely vanish by 2023. But the Indian government’s efforts to trim imports have already yielded success: the subcontinent notched a 15 percent year-over-year coal import decline from April through December 2015, with declines accelerating towards the end of the year.

In short, there’s no realistic hope that some other country, or set of countries, will replace China’s lost demand. Instead, it’s likely that the seaborne coal market will sink even further as India’s coal imports ebb.

Fact #5: The odds are that U.S. coal producers will always be at a disadvantage to competitors in Asia and Australia.

This seems to be a hard one for people to grasp. But under typical market circumstances, the U.S. coal industry just can’t compete in Asian markets. Our coal is just too far away, and the transportation costs are too high.

And it isn’t just me who’s saying this. Back in June 2012, when the coal bubble still had some air in it, coal industry analysts at Wood Mackenzie warned Northwest shippers that “Indonesian Coal enjoys a significant cost advantage” over even the best Powder River Basin coal. They cautioned that for U.S. coal exporters, “Competition could be fierce, especially if Asian demand weakens and the market becomes periodically or permanently oversupplied.”

Well, that’s exactly what’s happened: Asian demand weakened, the seaborne coal market is now oversupplied, and any hopes for profitable exports have gone up in smoke.

The disappointing truth for U.S. coal executives is that U.S. coal exports to the Pacific Rim will only be profitable during those relatively rare periods when coal prices spike. And while prices have spiked from time to time, they’ve promptly come back down to earth, falling to a point where U.S. exports just can’t compete.

Coal executives mistook a temporary price bubble for the “the new normal,” and convinced themselves, along with a lot of investors, that the U.S. was well positioned to make money in Asia. They were dead wrong—demonstrating, perhaps, that coal executives don’t have to be smart or insightful to get rich.

Clark Williams-Derry is a senior researcher at Sightline Institute.

Source : IEEFA, January 14th, 2016

URL: http://ieefa.org/commentary-five-facts-about-declining-coal-markets/?utm_source=Daily+IEEFA+Newsletter&utm_campaign=6b4763b346-RSS_Commentary_News_Mix_campaign_Dec_2015&utm_medium=email&utm_term=0_e793f87bcc-6b4763b346-115042313

 

 

Eight Signs That Now Is the Time to Invest in the Global Energy Market Transformation

Evidence continues to mount that the world is beyond peak coal consumption and that its appetite for thermal coal is waning.

This trend has gathered remarkable momentum in 2015, as seen in sharp consumption declines in key coal markets. We’ve published a report today that explores recent developments around the world: “Carpe Diem: Eight Signs That Now is the Time to Invest in the Global Energy Market Transformation.”

2015-11-23 IEEFA COP21-3 India-China coal imports 11-11-2015 535

Our findings:

  • Coal’s share of electricity generation in key countries is declining. IEEFA sees it happening much more quickly than many analysts.
  • Demand for seaborne thermal coal is declining, and prices have collapsed. IEEFA sees internationally traded coal markets as having likely peaked in 2014 at an estimated 1,113 metric tons. We forecast a further 30 percent decline by 2021, to 762 metric tons. Our outlook is based on the likelihood that China, Western Europe and Japan have already passed peak import demand—all in in 2013-2014—and that India’s demand for thermal coal imports peaked in mid-2015.
  • The price of renewable energy is declining. Technology innovation and economies of scale are working together to drive the down the capital cost of renewable energy deployments. The cost of solar continues to decline at a double-digit rate annually, and solar is rapidly moving toward grid parity in an increasing number of markets. Rapid cost reductions in battery technology will compound the rate of deployment of distributed-energy solutions, further undermining the commercial returns of existing fossil-fuel assets.
  • Investment Capital is moving rapidly from coal into renewables. Investors over the past decade have put US$1.5 trillion into clean energy—mostly solar and wind, and 2014 was a record year. Renewable energy capacity, in the meantime, has grown even faster. These trends have triggered a considerable shift and growing acceptance in financial market of the structural decline of coal and the demand for raising capacity in low-emissions investments.
  • The coal-fired sector has been overbuilt. China has built more coal-fired plants than it can support, India is on a renewable-energy tear, and the U.S. is retiring coal-fired power plants.
  • Coal companies are in deep financial distress. Coal producers are in dire straits from a combination of energy-efficiency gains, eroding electricity demand, conversions to gas-fired power capacity, an expanding buildout of renewable energy projects, and the impact of pollution-control regulation.
  • Structural decline in coal demand is an increasingly consensus call. What was once an outlier point of view—that global coal markets are in decline—has become more mainstream.
  • Global banks are shifting their focus to renewables. An increasingly sizeable group of financial institutions see the inevitability of rising regulatory pressures, and hence the rising stranded-asset risks of fossil-fuel assets.

Much of the change we describe is being driven by technological innovation and rapidly falling costs across the renewable and energy-efficiency sectors. Much also is being driven by emerging policies and investment strategies rooted in the recognition that a transformation is under way and now is the time to seize the day.

Tim Buckley is IEEFA’s director of energy finance, Australia. Tom Sanzillo is IEEFA’s director of finance.

Source : IEEFA, November 27th, 2015

URL : http://ieefa.org/eight-signs-that-now-is-the-time-for-further-investment-in-the-global-energy-market-transformation/?utm_source=Weekly+IEEFA+Newsletter&utm_campaign=62ed6d2f3c-RSS_Feed_weekly_Campaign2_18_2015&utm_medium=email&utm_term=0_30c2b8506b-62ed6d2f3c-115042309

Fact-Checking the Claim That Australian Coal Is Clean

We’re seeing an increasing number of boastful assertions by Australian politicians that Australian coal is environmentally friendlier than other coal.

It’s not true—and we’ve published a fact sheet herethat gets into the weeds of it—but one illuminating comparison can be found when you stack Australian benchmark thermal coal up next to coal from Indonesia, the world’s largest exporter of thermal coal. Australian thermal coal is higher in energy content, true, but its ash content is double Indonesia’s export-coal average.

Further to this point, Australia has historically developed its best coal resources first, such that the average quality of coal from new mines being proposed is declining with time. As a result, the Australian benchmark for coal is gradually giving way to a lower-quality, secondary benchmark, one that produces 10 percent less energy and almost twice the ash.

Adani’s proposed Carmichael mine, which would purportedly supply India, would produce coal only about 10 percent better than the average quality of domestic Indian thermal coal in terms of energy content. This comparison doesn’t take into consideration the environmental costs of transporting Australian coal to Indian ports. And Carmichael coal if compared to Russian, Indonesian or South African export coal is relatively “low energy, high ash.”

For countries truly seeking to limit the harmful effects of coal-fired power generation pollution, tighter emissions limits are key, a truth that is being embraced by nations as disparate as the U.S. and China.

China has required all coal-fired power plants to be retrofitted with emissions reduction technologies over the past four years. The U.S. EPA this year established expanded new rules on coal-plant emissions.

Australia has studiously avoided similar initiatives—damaging its global standing and putting its own long-term economic health at risk. The fact is, Australia has the most emissions-intensive coal-fired power generation fleet in the world, worse even than India’s, and it’s nothing to brag about.

Tim Buckley is IEEFA’s director of energy finance studies, Australasia.

Source : IEEFA, November 25th, 2015

URL : http://ieefa.org/fact-checking-the-claim-that-australian-coal-is-clean/?utm_source=Weekly+IEEFA+Newsletter&utm_campaign=62ed6d2f3c-RSS_Feed_weekly_Campaign2_18_2015&utm_medium=email&utm_term=0_30c2b8506b-62ed6d2f3c-115042309

A Double ‘New Normal’ Hobbles the Natural Gas Industry: Low Prices and Public Opposition to Pipeline Expansion

The U.S. natural gas industry is facing a daunting set of “new normals” that in combination are presenting significant obstacles for infrastructure expansion.

These shifting dynamics, well documented in a new report by the global engineering firm Black & Veatch, are on especially sharp display today in New England, where several controversial new natural gas pipelines are on the drawing boards.

And Black & Veatch isn’t the only putting out reports that has the natural gas industry worried. Just last week, Massachusetts Attorney General Maura Healey issued a study concluding that additional pipeline capacity is not needed to preserve electric system reliability in that region. Healey’s report was praised by environmental advocates and criticized by pipeline development companies—one clear manifestation of a new normal that includes the importance of growing opposition to such project.

IEEFA-Buchanan-NG-10-years-11-24-2015-535x390-v1

TWO BOTTOM-LINE REALITIES ARE CRIMPING THE NATURAL GAS INDUSTRY TODAY:

  • First, prices are very low because of the shale-gas boom, and they’re probably going to stay that way. Natural gas futures prices through 2022—a measure of market expectations—for both the Henry Hub, the traditional national benchmark price for natural gas in Louisiana, and Dominion South, the hub for selling much of the gas from the Marcellus Shale in Appalachia, show this trend. Futures prices at the Henry Hub today are barely above $2; a few years ago they topped $10. While these low prices have had a profound effect on the electric generation industry the U.S.—moving the proportion of natural gas generation of electricity from 20 percent in 2005 to 32 percent today—they’re also squeezing profit margins for natural gas producers. The production industry, as a result, is consolidating, cutting costs, and striving for greater efficiencies. Some companies may even be facing bankruptcy.
  • Second, public opposition to proposed new natural gas pipelines presents the industry with a significant financial risk. As prices have stayed low, the industry has been counting for survival on shipping more and more gas to both current and proposed combined-cycle natural gas electric-generation plants, especially in the eastern U.S. The customer base that would support new natural gas pipelines has shifted, from the traditional large industrial users and local gas distribution companies to utilities, and potentially to new liquefied natural gas (LNG) export facilities (more on that below). What the industry didn’t expect—and has had to manage before —is the fierce and organized public opposition that has risen up against the large number of new pipelines that would cross New England, the Southeast, and the Midwest as a result of the industry’s strategy. Landowners, civic leaders, and environmental advocates are marshaling a movement reminiscent of the public outcry against the recently canceled Keystone XL pipeline for which public accountability became the decisive financial risk.

Back to the Black & Veatch report, in which survey respondents across the industry this summer ranked “delays from opposition groups” and “regulatory uncertainty” as the biggest hurdles facing industry expansion.

Here’s how Black & Veatch describes the manifestation of recent public opposition:

“Groups opposed to increased supply from shale gas production have tried to disrupt FERC [Federal Energy Regulatory Commission] pipeline proposal meetings through mounting protests and social media campaigns. This creates additional hurdles for maintaining project timelines and has the potential to derail pipeline projects because of rising development costs and missing key milestones in contract obligations.”

In other words, the industry knows that pipeline opponents are armed with knowledge about how the regulatory system works, that these opponents can and will use that knowledge, and that they are here to stay.

Although the survey showed also that many natural gas producers are still bullish about the prospects of building new LNG export terminals in the U.S., the report’s authors have a more clear-eyed view of the diminishing prospects for these projects. Here’s a key observation:

“The global LNG market is tipping into a state of structural oversupply as we move to 2020. Worldwide, according to the International Energy Agency, supply of LNG already exceeds demand. Global LNG production capacity stood at 14 trillion cubic feet in 2014, already higher than demand of nearly 12 trillion cubic feet.”

What this means, of course, is that opponents of the proposed LNG terminals have strong economic arguments to make against overbuilding, arguments that are buttressed by a global oversupply of LNG that is likely to continue, in part due to gas coming to market from Iran and the potential for Egypt to enter the market.

Source : IEEFA, November 24th, 2015

URL : http://ieefa.org/a-double-new-normal-hobbles-the-natural-gas-industry-low-prices-and-public-opposition-to-pipeline-expansion/?utm_source=Weekly+IEEFA+Newsletter&utm_campaign=62ed6d2f3c-RSS_Feed_weekly_Campaign2_18_2015&utm_medium=email&utm_term=0_30c2b8506b-62ed6d2f3c-115042309

 

Market Trends Are ‘Permanently Eroding’ Demand for Coal

Louise Watt for the Associated Press:

An analysis released Monday by the Institute for Energy Economics and Financial Analysis suggests coal consumption peaked globally in 2013 and is set to decline a further 2 to 4 percent in 2015 because of declining consumption by China and other big coal consumers.

The institute said China’s coal consumption had fallen 5.7 percent from January to September. In the U.S., domestic consumption was down 11 percent and coal’s share of the electricity market has fallen to 35 percent, from 50 percent a decade ago. Record-low U.S. gas prices, record expansion of renewable energy and a decoupling of electricity demand from economic growth are “permanently eroding” coal demand in the U.S., the Cleveland, Ohio-based IEEFA said.

Still, coal provides more than 40 percent of the world’s electricity and 29 percent of its energy supply, second only to oil at 31 percent, according to the Paris-based International Energy Agency. The agency projects coal consumption to continue growing somewhat in coming years, largely owing to increased coal demand in India and Southeast Asia.

Coal’s future is closely tied to China, the world’s biggest coal user, producer and importer. It burns 4 billion tons of coal a year, four times as much as the United States.

Coal accounts for nearly two-thirds of China’s energy, but in 2014 its coal consumption fell 2.9 percent year-on-year according to official statistics, or 2.6 percent according to the IEEFA report — the first annual decrease in 15 years. A revision to official Chinese data released earlier this year showed the country had greatly underestimated its coal consumption from 2000 to 2013, but still showed a dip last year.

Source : IEEFA, November 16th, 2015

URL : http://ieefa.org/market-trends-are-permanently-eroding-demand-for-coal/

Poll Shows Broad Support for Wind and Solar

The public prefers wind turbines and solar arrays over power plants that burn coal and oil — or even new natural-gas-fired plants.

Commissioned by the Sierra Club, and conducted last week, the survey of registered voters in Ohio, Illinois, Missouri, Iowa, Virginia and Maine also found that:

Despite the spotty awareness of the Clean Power Plan, whopping majorities in all six states — two thirds of Ohio voters for example — said they are in favor of the plan that would cut overall carbon dioxide emissions.

Voters would more likely favor a U.S. Senate candidate who is in favor of the clean power plan, a factor in four of the six states, including Ohio, where Republican incumbent Rob Portman is facing a challenge from former Democrat and former Gov. Ted Strickland.

Voters trust the U.S. Environmental Protection Agency over members of Congress on the question of setting limits on air and water pollution. About half of those surveyed think the United States should be doing more to combat climate change.

But at the same time, only about a third of voters think climate change is a serious problem.

Source : IEEFA, November 16th, 2015

URL : http://ieefa.org/poll-shows-broad-support-for-wind-and-solar/