Category Archives: Environment
China Daily today reported that there is to be a new tax on coal beginning December 1 this year. The newspaper did not report a tax rate, but said that the new tax would be on sales of the coal, rather than on production as is the case now. The existing tax is to be scrapped.
Analysts quoted by the newspaper suggested that the tax would cause a rise in coal prices of some 3%-5%.
Interestingly, the newspaper says that to the end of August, China had produced 2.52 billion tonnes of coal, for a 1.4% reduction over 2013, but sales of coal were registered at 2.4 billion tonnes. This suggests that coal inventories across plants, hubs and power stations has risen by 120 million tonnes this year. In the meantime, coal imports this year have dropped by about 5% year-on-year, so there is a definite slowdown in coal consumption. Whether this translates into a slowdown in the economy is a moot point, because China is also building the use of clean energy sources including hydroelectricity, nuclear and others.
A rise in cost of 3-5% is not likely to cause much of a change in demand patterns, especially since demand and prices are both in decline. But what’s also interesting is that the announcement from the government also talks about a 2-tier pricing system for coal. There were no details on this, but it would be interesting to see if coal for power stations for aluminium consumption are adversely affected or not.
We will keep you posted as more details emerge.
China’s National People’s Congress last month adopted a revised Environment Protection Law which is set to go into force January 1st, 2015.
The new law includes 23 new clauses and becomes much stricter than the previous edition. The new law authorises the Environmental Protection department various legal rights to protect the environment, by sealing up or detaining illegal sewage directly. It also constrains local government’s right on approving new projects, by allocating emissions quotas. Another key clause is about punishments for violating this law, with violators to be fined on a daily basis until the problem is fixed, with no ceiling on the number of days that can accumulate.
Even though this Environment Protection Law doesn’t clarify the details on implementation approach, it is signaling that China becomes more serious on environment protection. Therefore, let’s look at how it will impact China’s aluminium and carbon industry.
First, new aluminium smelters, being power intensive enterprises, will seldom be approved, especially under a market glut as of today.
Second, more clean energy will be applied, which means China will rely less on coal and crude oil with natural gas, nuclear and other alternative energy sources taking a bigger role. If this transition occurs, sweeter and lighter crude oil will become more popular , so although we will still see some very good cokes, the volume will fall. The increased use of hydro treating will make this worse.
Third, along with China’s energy structure reforming, coal will lose its position gradually. An import tariff on coal will very possibly be levied which will also includes an increase on import petcoke tariff. Since then, we would see a decline of imported petcoke from North America or somewhere else which may drive petcoke prices down.
Perhaps the law itself, doesn’t impact the industry directly, but after linking with energy restructure, metal industry consolidation, trade barrier together, I would say it does impact severely.
In order to control and manage the deteriorating environment, China’s government has revised emissions standards as of last week. As one of the highest polluting industries, aluminium emission standards now include atmospheric pollutant emission limits. The previous rules (GB25465-2010) did not specify the particulate air pollutant emission limits before, which will now apply for special areas only (i.e. regions of high -density land development, fragile ecological environment, areas prone to serious air pollution problems etc). They have also added methods for measuring the concentration of nitrogen oxide emissions. As seen below, there are some big changes between the new limits for special regions and the previous standard which will continue to be applied to non-special regions (no change to the previous limits on fluoride or asphalt fumes so although the previous limits are still active, the details have been left out of the chart).
Atmospheric pollutant emission limits (Unit: mg/m3)
| Production systems and equipment | New limits for special regions | Regular Standard | New limits for special regions | Regular Standard | New limits for special regions | Emissions monitoring location | |
| Particulate matter | Sulphur dioxide | Nitrogen oxide (NO2) | |||||
| Mine | Crushing, screening , transit | 10 | 50 | - | - | - | Plant or facility exhaust |
| Alumina Plant | Clinker kiln | 10 | 100 | 100 | 400 | 100 | Plant or facility exhaust |
| Alumina Plant | Aluminium hydroxide roaster , lime furnace | 10 | 50 | 100 | 400 | 100 | Plant or facility exhaust |
| Alumina Plant | Processing of raw materials , transportation | 10 | 50 | - | - | - | Plant or facility exhaust |
| Alumina Plant | Alumina Storage | 10 | 30 | - | - | - | Plant or facility exhaust |
| Alumina Plant | Others | 10 | 50 | 100 | 400 | 100 | Plant or facility exhaust |
| Aluminium plant | Electrolyser flue gas purification | 10 | 20 | 100 | 200 | - | Plant or facility exhaust |
| Aluminium plant | Aluminium fluoride salt storage | 10 | 30 | - | - | - | Plant or facility exhaust |
| Aluminium plant | Electrolyte broken | 10 | 30 | - | - | - | Plant or facility exhaust |
| Aluminium plant | Others | 10 | 50 | 100 | 400 | - | Plant or facility exhaust |
| Aluminium Carbon Plant | Anode Baking Furnace | 10 | 30 | 100 | 400 | 100 | Plant or facility exhaust |
| Aluminium Carbon Plant | Cathode roaster | 10 | - | 100 | 400 | 100 | Plant or facility exhaust |
| Aluminium Carbon Plant | Petroleum coke calciners ( kiln ) | 10 | 100 | 100 | 400 | 100 | Plant or facility exhaust |
| Aluminium Carbon Plant | Bitumen Melt | 10 | - | - | - | - | Plant or facility exhaust |
| Aluminium Carbon Plant | Prebaked anode manufacture | 10 | 50 | - | - | - | Plant or facility exhaust |
| Aluminium Carbon Plant | Anode assembly and residual fragmentation | 10 | 50 | - | - | - | Plant or facility exhaust |
| Aluminium Carbon Plant | Others | 10 | 50 | 100 | 400 | 100 | Plant or facility exhaust |
The standard limits specified different air pollutant emission limits based on whether they were existing facilities or new projects. But the new rules for special regions, adding particulate air pollutant emission limits, will be applied only according to where they are located.
The new limits for special regions are not only for the aluminium industry, but also all other high-polluting industries in China. Until now, we are not sure whether the particulate limits will force existing plants to meet the regulations or not. We will issue an update once the detailed implementation schedule has been released.
Some news emerging from the Nanjing area this morning should cause some concern for buyers of calcined coke. There’s a separate bit of news that I will put in a second post shortly.
The Nanjing Environment Protection Agency has issued a directive calling on 7 calcination plants in the area to close. The 7 plants are:
1. Nanjing Bianmin Carbon Products Factory
2. Nanjing Saida Carbon Products Factory
3. Nanjing Aixin Carbon Products Factory
4. Nanjing Zhaisai Carbon Products Factory
5. Nanjing Guangming Carbon
6. Nanjing Derong Carbon Product Co., Ltd.
7. Nanjing Sheshan Carbon production Co., Ltd.
Under the announcement, the 7 plants are required to close by the end of July. Together they account for 28,000t per month of calcined coke, and consume about 36,000t of green coke.
The two biggest calciners in the area are not listed. ZCP and ZCGG (now called Surun) seem to have escaped this order.
However, it is worth remembering how things work in China. The local EPA has no teeth to enforce their ruling. They will rely on their political masters in Nanjing to see to it that the directive is carried out. Most likely, the 7 plants in question will simply apply to the local government for an exemption from the edict. That, or they will simply ignore it, though that might have longer-term implications for their relations with the local government.
We will monitor the 7 plants to see if they continue operating past the end of this month.
But a second directive will certainly apply, and most likely will include ZCP and ZCGG/Surun. Check the next post.
This article comes from Reuters.
China will launch domestic carbon trading during the next five years, the China Daily reported, citing a closed-door meeting of officials from ministries, enterprises and think tanks.
Officials have reached consensus on the need for carbon trading as a way to help China meet its target to improve energy efficiency by 2020, but there is still no agreement on the mechanism that should be used, the paper said.
China is still struggling to achieve a target to cut energy intensity - defined as the amount of energy used to generate one unit of gross domestic product - by 20 percent between 2006 and the end of 2010.
Efforts to hit that target have focused on administrative tools, such as contracts in which the top 1,000 energy consumers promised the government to improve their energy efficiency, but the meeting agreed such measures would be too expensive in future, the paper said.
It quoted one participant, Tang Renhu from the low-carbon centre at China Datang Corp, a major power generator, as saying there were differences over whether pilot projects should start from one industry or a certain area.
Possible sectors for pilot carbon trading schemes were carbon-intensive industries such as coal-fired power generation, he said.
China already has some voluntary carbon trading. The plan to introduce wider carbon trading would be strictly separated from ongoing international negotiations for a successor to the Kyoto Protocol, an unnamed participant at the meeting told the paper.
China has surpassed the United States as the world’s top emitter of greenhouse gases and is struggling to reduce emissions and pollution because of its reliance on coal, a cheap but dirty fossil fuel.
It is also expected to become the world’s top energy user, although the precise moment of reaching that milestone is debated. China’s National Energy Administration this week rejected an assessment by the International Energy Agency that China was already using more energy than the United States.
China’s government has set a new target of cutting carbon emissions per unit of GDP to 40-45 per cent of the 2005 level by 2020, committing the country to doing more with less.
The five-year plan for energy, due to be unveiled within months, will push for wider use of energy sources with lower emissions, such as hydropower, wind, nuclear and gas. Coal will be expected to account for 63 per cent of energy use by 2015, down from 70 per cent now.
China will need to invest 5 trillion yuan ($834 billion) to achieve its plans for clean energy by 2020, Jiang Bing, head of the development and planning department of the National Energy Administration, said earlier this week.
The following article appeared in “The Idependent on Sunday” today.
China “systematically wrecked” the Copenhagen climate summit because it feared being presented with a legally binding target to cut the country’s soaring carbon emissions, a senior official from an EU country, present during the negotiations, told The Independent on Sunday yesterday.
The accusation, backed up by a separate eye-witness account from the heart of the talks of obstructive Chinese behaviour, reflected widespread anger among many delegations about the nation’s actions at the conference.
The concluding agreement about tackling global climate change was widely criticised yesterday for being too weak, and was seen as a dashing the hopes of many concerned about the warming threat. The lack of teeth in the “Copenhagen accord” – which, it is accepted on all sides, is inadequate for fighting climate change – was widely blamed by environmentalists on President Barack Obama for not making bigger US commitments to cut carbon emissions.
Yet the key element of the agreement, a timetable for making its commitments legally binding by this time next year, was taken out at the last minute at the insistence of the Chinese, who otherwise would have refused to agree to the deal.
Also removed, at Chinese insistence, was a statement of a global goal to cut carbon emissions by 50 per cent by 2050, and for the developed world to cut its emissions by 80 per cent by the same date. The latter is regarded as essential if the world is to stay below the danger threshold of a two-degree Centigrade temperature rise.
The “50-50″ and “50-80″ goals have already been accepted by the G20 group of nations and world leaders who were negotiating the agreement, including Gordon Brown, Angela Merkel of Germany, Nicolas Sarkozy of France and Kevin Rudd of Australia. They were said to be amazed at the Chinese demands, especially over the developed nations’ goal. The European official said: “China thinks that by 2050 it will be a developed country and they do not want to constrain their growth.”
China, with its rapidly expanding economy, has now overtaken the US as the world’s biggest CO2 emitter, and although at the meeting it agreed for first time to a target to constrain its emissions growth in an international instrument, it is desperate not to have that made legally binding, the official said. He added: “This conference has been systematically wrecked by the Chinese government, which has adopted tactics that were inexplicable at first as we had been led to believe they wanted an agreement.”
Even more pointed allegations about Chinese behaviour came last night from another source at the heart of the negotiations.
The source was present as heads of state and government drafted the final document, and gave the IoS an astonishing eyewitness account. He said: “There were 25 heads of state in the room; this was about six o’clock on Friday night. To my right there was President Obama in the corner, with Gordon Brown on one side, the Ethiopian President on the other, the President of Mexico, the Prime Minister of Papua New Guinea…
“If China had not been in that room you would have had a deal which would have had everyone popping champagne corks. But this was the first sign that China is emerging as a superpower, which is not interested in global government, is not interested in multilateral governance that affects its own sovereignty or growth. You could tell this lack of engagement through the process; they play a much cleverer game than anyone else. They were running rings around the Americans.
“It’s always easier to block than to try and get something. The Americans will probably be given some of the blame because that’s the conventional narrative all the pressure groups have – that the rich countries are bad, they didn’t give enough money or they would not create enough mitigation targets.”
The source went on: “But the truth is, I was in that meeting and the ‘Annex 1′, rich countries had mitigation targets of 80 per cent by 2050 which everyone supported, and it was taken out by the Chinese. The deal was watered down because the Chinese wouldn’t accept any targets of any sort, for anybody. Not themselves or anybody else. Legally binding stuff was taken out by the Chinese as well and there was a lot of anger in the room. It was controlled but it was very, very clear what the feelings were.
“The Chinese were happy as they’d win either way. If the process collapsed they’d win because they don’t have to do anything and they know the rich countries will get the blame.
“If the deal doesn’t collapse because everyone is so desperate to accommodate them that they water it down to something completely meaningless, they get their way again. Either way they win. I think all the other world leaders knew that by that stage and were just furious that they couldn’t do anything about it.
“It was extraordinary to see, and incredibly worrying for what it bodes for the future of our planet in this century. China is not going to get less powerful, and if this is the way that it’s going to behave, then we have problems.”
Ed Miliband, the Secretary of State for Energy and Climate Change who led the negotiations for Britain, said last night: “It’s disappointing that the Chinese insisted we should not commit to a global 50 per cent emissions cut, and it’s disappointing that they didn’t support a legally binding treaty. I think both of these are necessary.”
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