From hydrocarbons to renewables to falling economies — Issue #14
📰 News of the Week
After a long gap, news headlines again announced fresh Capex on coal.
NTPC is setting up a new coal plant. Even as it sticks to its long-term goals of expanding renewables capacity and investing in new technologies like green hydrogen, the state-owned power producer told Bloomberg, rising demand for power compels it to build new plants.
NTPC isn’t the only firm directing fresh Capex into coal. Last week also netted an announcement from Vedanta. The firm will bring two of its captive coal blocks into production next year.
These decisions are part of a larger trend. As this newsletter has said in the past, other parts of the world, spooked by high energy prices, are falling back on domestic sources of energy. Poland is amping coal production up. Japan is reviewing its outlook on nuclear power. NTPC is eyeing coal.
Even so, NTPC’s decision is begging to be questioned. The new plant was conceived when India’s solar tariffs are lower than those for thermal. By 2030, global investments in battery storage technologies should be paying off well before the project recovers its investments.
Does NTPC find the 2030 projections implausible? Alternatively, given that NTPC told Bloomberg it is merely replacing an older powerplant with a newer one is that lowered cost of land acquisition enough to keep the project competitive?
In other coal news, Coal India has cancelled the short-term contract it handed Adani Enterprises for coal imports. The PSU will instead buy Coal from Indonesia’s Bara Dayi Energi (which has a tie-up with Mumbai’s GHV Group). The differences in prices are worth noting. “The Indonesian company quoted Rs 4,331 crore for the eastern coast tender and Rs 4,497 crore for the west coast,” reported Business Standard. Adani, on the other hand, quoted Rs 5,035 crore and Rs 5080 crore for the west and east coast.
Despite having his own ports, why was Adani costlier? Was he shipping coal from Australia?
From Coal To Gas. Last week came the news that Russia has defaulted on the supply of at least 5 shiploads of LNG to India. Retaliatory sanctions are affecting the firms Russia uses for LNG supply. Economic Times reported, “Gazprom has told GAIL that it will from hereon supply LNG on a best endeavour basis.” The Indian company is now scouting for alternative supplies.
This, again, is a part of a larger trend. Russia’s diversion of crude oil to Asia is faltering. The country’s shipments to India and China are down 30% from their post-invasion peak – and call to mind an article by Nicholas Trickett. In June, the oil and gas analyst had said Russia’s pivot from Europe to Asian markets would quickly run into “the logistical limits of what existing infrastructure can sustain”. Is that what we are seeing here?
In other news, the war continues to ravage economies. The latest country to start load-shedding to save energy and money is Bangladesh. The government also said filling stations would be shut one day a week.
From hydrocarbons to renewables.
Battery storage, first. Hindalco has tied up with Israel-based Phinergy to develop aluminium-air batteries for electric vehicles. This is interesting news. China has cornered most of the supply chain (and market) for lithium-ion batteries. Countries seeking energy independence need alternative technologies.
This is one reason India’s PLI schemes are critical. They are the government’s gambit for securing India’s pole position in the industries of the future, so to say. Last week, however, came weird news. One of the four companies to win the PLI for advanced chemistry cells is Hyundai Global Motors – the others are Ola Electric, Rajesh Exports and Reliance. Last week, however, came a representation from both Hyundai Motor Co and its Indian subsidiary saying “they have no links with this company”.
Hyundai Motor Co. accused Hyundai Global Motors, reported Economic Times, of “wrongly utilising its trademark, tradename and logo, and making misrepresentations before authorities in the country”. Interestingly, however, this firm’s website suggests it hails from Korea.
At this time, puzzlement rules. A person who worked on the battery PLI told Energy Trends Weekly: “I was told by someone that apparently HGM has an agreement to use Hyundai name under some other agreement, just that there may be some restriction on using the logo.”
Which begs the question. Has the government handed a battery PLI to a firm which has merely licensed the Hyundai brand? What else does the firm do?
More news on electric mobility. State-owned Convergence Energy Services is planning a Rs 80,000 crore tender for 50,000 electric buses. Trucks, however, might see a different trajectory. Daimler India, the truck-maker, is hedging its bets across hydrogen, cleaner fuels and electricity. “We believe that industry will move away from diesel to biodiesel, gas, electric and hydrogen fuel cell and at a certain point of time, all three of them will co-exist,” the company told ET.
Elsewhere in the country: NHPC and Damodar Valley Corporation have tied up. They will jointly develop pumped storage and hydel projects.
☕️ The Big Read
On the energy/climate front, the chasm between Europe and the USA is widening further.
In a week, when Europe said it will announce “demand reduction” targets, Joe Manchin killed Joe Biden’s climate plans.
As The Guardian wrote, Manchin, a centrist Democrat, is a crucial swing vote in a US Senate split 50-50 between Democrats and Republicans. “For nearly two years, the White House and fellow Democrats have tried to prod Manchin to support a sweeping package of support for renewable energy and electric vehicles. Manchin has now indicated he won’t do so – at least not yet – further jeopardizing Democrats’ agenda before the midterm elections in November, which are likely to result in the party losing control of Congress to the Republicans.”
The fallout is incredible. Biden had wanted to support clean energy and curb fossil fuel production. Between the US Supreme Court prohibiting “the EPA from crafting broad regulations to drive the US power industry away from coal and towards cleaner energy sources, such as wind and solar” in June and Manchin, the outlook for that plan now looks hazy.
Here is historian Adam Tooze on why Build Back Better is Dead.
📖 Climate Long Reads
Land banks in Jharkhand may become a recipe for conflicts (Mongabay)
A new study from Karnataka evidences the impact of windfarms on biodiversity (Mongabay)
📚 Book of the Week
It has been an eventful week.
Europe went through an unprecedented heat wave. The rains pulled back from northern India. Fearing nothing despite these spiralling environmental costs, the country has exempted highways in border areas from the environmental clearance process. Our discussion of climate change continues to be dismal as well. And so, our book of the week. A Life on Our Planet: My Witness Statement and a Vision for the Future
, by David Attenborough.
The book, published in 2020, joins the great pantheon of books about the great crisis facing biodiversity on earth. All species have an equal claim to this planet. And so, read this book to know what is (also) at stake in case we fail to keep the earth inhabitable for our (overrated) species.