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COAL BOOSTED BY ENERGY PRICE HIKES: Power generators across the globe have turned to coal this fall and winter to fuel their plants as high natural gas prices, and the intermittency of renewable energy in some places, have driven demand for a commodity whose use many governments are committed to phasing out.
That boost in global demand is helping to bring prices right along with it. In the United States, spot prices have been rising significantly across all regional coal commodities.
For the week ending Sept. 17, the spot price for a short ton of Central Appalachian coal stood at $71.05. That price rose to $92.50 last week, a more than 30% increase. Spot prices for other thermal coal products from Northern Appalachia, Powder River Basin, and the Uinta Basin are up, too.
The same supply chain factors driving up the cost of virtually everything in the economy are partly responsible for the sailing coal prices, said Michelle Bloodworth, president and CEO of coal trade group America’s Power. But the doubling of natural gas prices also plays a premier role, she said.
“A lot of coal generators buy coal based on historic consumption, but because natural gas increased pretty quickly and dramatically, we saw full demand for the first nine months of 2021, compared to 2020, go up by about 25%,” she told Jeremy.
Bloodworth assessed the tight coal supply to be a “short-term issue” but said it could be prevented going forward if the nation’s remaining coal plants maintain their ranks, thereby communicating demand signals to producers.
“The best way to avoid this problem in the future is to prevent premature coal retirements, because if you keep sending the signal to the market, and as you have less and less coal, then obviously it becomes challenging to keep the coal supply chain healthy,” she said.
Coal and resilience: The boost in demand would seem to add weight to arguments favoring maintenance of coal’s presence within the grid, but per Bloodworth’s assessment of things, the recent FERC report on the Texas grid failures last winter have done much more toward that end.
“Natural gas was mentioned about a thousand times [in the report] and coal was only mentioned about 10,” she said.
The report did make note of frozen coal equipment but emphasized that the majority of outages were natural gas-powered units and were related to fuel issues.
Those data demonstrate why coal deserves a footprint in the grid, said Bloodworth, whose group has urged FERC to more clearly define grid resilience and establish criteria for operators that illustrate the value fuel assurance — which she says coal provides.
“There’s got to be some certainty as the grid transition takes place and some recognition that we are going to need … the remaining coal fleet,” Bloodworth said.
“We believe that it’s the wrong direction to eliminate any fuel,” she went on, adding, “We’re not against the grid transition. We all know what’s occurring, but we think it needs to be gradual and deliberate so we don’t have grid emergencies.”
On the contrary: Environmental groups and a number Democratic officials, climate envoy John Kerry perhaps chief among them, have been especially hawkish on the necessity to cut emissions-heavy coal, remaining unconvinced of arguments favoring an all-of-the-above approach.
Kerry notably predicted last month that the U.S. “won’t have coal” by 2030, and indeed, the thrust of the document agreed to at COP26 was to “phase down” the fuel. The Energy Information Administration estimates that the share of U.S. energy-related CO2 emissions for which coal is responsible will increase from 19% to 21% from 2020 through 2022.
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GRANHOLM: EXPORT BAN OFF THE TABLE: Energy Secretary Jennifer Granholm said this morning that the Biden administration will not institute a ban on crude oil exports, something a number of congressional Democrats have urged, to try and bring down gasoline prices.
“We are not considering reinstating the ban on exports,” Granholm told a meeting of the National Petroleum Council. “I’ve heard you loud and clear, and so has the White House, and we wanted to put that rumor to rest.”
The comments were part of a broader attempt by Granholm to tame frustrations the oil and gas industry have over the administration’s policies and to urge council members, which include oil, gas, and servicing companies across the sector, to boost production to meet demand.
“By and large, the issues around current production do not stem from decisions made by the Biden administration,” she said, adding, “While I understand that you may disagree with some of our policies, it doesn’t mean that the Biden administration is standing in the way of your efforts to help meet current demand.”
“Please take advantage of the leases that you have. Hire workers, get your rig count up,” she said.
IEA SEES A LOOSENING OIL MARKET: Global oil production will soon begin to loosen the market as omicron coronavirus variant blunts air travel and jet fuel demand, the International Energy Agency projects.
Global oil supplies were pushed up in November by 970,000 barrels per day, with the U.S. leading with the single biggest production increase, IEA says in its new oil market report.
The report also lowers its average global oil demand projections over last month’s by 100,000 barrels per day to account for international travel restrictions, but overall maintains that the market is in a healthy place going into the new year.
“As 2021 draws to a close, the oil market appears to stand on a better footing than it has for some time. Much needed relief for tight markets is on the way, with world oil supply set to overtake demand starting this month,” the report says.
SAUDI ENERGY HEAD WARNS OF FALLING OIL INVESTMENT: Saudi Arabia’s oil minister is projecting that global oil production could fall by 30% — or 30 million barrels per day — and warned of an ensuring “energy crisis” if that were to occur, Bloomberg reports.
“We’re heading toward a phase that could be dangerous if there’s not enough spending on energy,” energy minister Abdulaziz bin Salman said. He also urged the market to ignore “scary messages” about oil and gas.
Oil leaders from the leading crude exporter are maintaining message discipline on this issue, with Saudi Aramco CEO Amin Nasser last week cautioning the globe against too aggressive an energy transition. Nasser predicted “social unrest” if oil and gas prices skyrocket due to renewable-focused energy policies.
HOUSE GOP WANTS MORE INFO ON NEW HHS CLIMATE OFFICE: Leading Republicans on the House Energy and Commerce Committee are calling on Health and Human Services Secretary Xavier Becerra to brief them on the meaning of the department’s novel Office of Climate Change and Health Equity, telling him it may be part of a “duplicative” effort by President Joe Biden to enact his energy and environmental policies.
Committee ranking member Rep. Cathy McMorris Rodgers and Morgan Griffith, the top Republican on the Oversight & Investigations Subcommittee, wrote Becerra today and asked him for a briefing by Dec. 28 on the office’s statutory authority, how it helps the federal government manage climate change risks, and whether the office has plans to address hospital building emissions, among other things.
“President Biden continues to demand hundreds of billions of dollars for clean energy and climate provisions through the budget reconciliation process,” the lawmakers write in a letter exclusively reviewed by the Washington Examiner. “We are concerned that unmoored politics — rather than congressional enactments — are leading President Biden’s agenda, which may result in inefficient and duplicative efforts across multiple divisions of the department as well as other federal agencies.”
The new office was announced in August in conjunction with Biden’s climate-related January executive order and helping “to reduce greenhouse gas emissions and criteria air pollution throughout the health care sector” will be among its tasks.
Other GOP lawmakers have questioned the institution of the new office. Twelve House Republicans told Becerra in September that it “poses a threat to healthcare providers’ ability to provide care” and that it has “has absolutely nothing to do with the stated mission of HHS.”
HIGH PRICES BLUNTING SOLAR DEPLOYMENT: Global supply chain issues are raising the costs of solar projects, leading forecasters to lower projections for total new deployment in 2022.
A new report by the Solar Energy Industries Association and Wood Mackenzie blames logistical issues and “price increases in the solar supply chain” for interrupting deployment, estimating they will depress next year’s solar deployment by 25%, or 7.4 gigawatts, relative to what had previously been projected.
The high prices are especially affecting the utility-scale solar market, the report said, finding that while prices there dropped 12% between Q1 2019 and Q1 2021, increases over the last six months have wiped out all those gains.
UNITED AIRLINES TO PURCHASE UP TO 100 HYDROGEN-ELECTRIC ENGINES: United Airlines said yesterday that it had completed a deal with ZeroAvia that involves buying up to 100 of its zero-emission, 100% hydrogen-electric engines. United said that it could retrofit planes, namely regional aircraft, with the engines as soon as 2028.
“Hydrogen-electric engines are one of the most promising paths to zero-emission air travel for smaller aircraft, and this investment will keep United out in front on this important emerging technology,” United CEO Scott Kirby said.
Kirby recently said that big airplanes won’t be running on batteries or hydrogen in the “foreseeable future.” He, and others in the industry, have been making the case for government support for sustainable aviation fuel as an alternative.
The Rundown
E&E News Coal interests press Supreme Court to limit EPA reach
Wall Street Journal Heating your home is expensive and carbon heavy. Will heat pumps help?
Calendar
WEDNESDAY | DEC. 15
10 a.m. The Bipartisan Policy Center will host a webinar entitled, “What Is Europe Doing on ESG? What Does It Mean for the U.S.?”
