Newsletter - August 20, 2019
This past fortnight, while the Andhra Pradesh (AP) government proceeded with plans to review and cancel power-purchase agreements signed with RE generators by the previous government, the Central Electricity Authority (CEA) revealed that discoms around the country owe dues totalling ₹3,012 crore (US $420 million) to renewable energy projects aggregating 5,982 MW of capacity. It seems likelier with each passing week that the slowdown in India’s power sector that saw finance for thermal power fall by 90% last year will extend to renewables in the coming months.
While the steep increase in discom losses over the past year has earned closer scrutiny from the CEA, the situation seems just as bleak on the manufacturing front. According to The Energy and Resources Institute (TERI), India needs to set up a solar manufacturing capacity of at least 15GW to meet its 175GW-by-2022 target. Currently, India’s manufacturing capacity stands at 3GW, less than 15% of the annual demand with the rest being met by imports. Last year, the Centre imposed safeguard duties on imported solar cells and modules to kindle domestic manufacturing. A year later, despite little sign of success, the Centre has announced intentions to double down on the strategy and hike the safeguard duties over coming years.
But while the cost of cells and modules have increased, loss-making discoms have continued to slash rates offered to generators to well below ₹3 per unit- from up to ₹7 per unit a few years ago. The resulting double squeeze is now threatening to pop India’s renewables bubble. With wafer-thin operating margins that look to crumble further, investors are staying away from renewables. The latest evidence of the slowdown comes from Gujarat where bids for only 150MW could be finalised against a target of 950MW in the August round of bidding.
The situation on the wind energy front, on edge from happenings in AP, has been jolted further by falling profits and the bankruptcy of Pune-based Suzlon Energy Ltd., one of India’s largest wind energy turbine manufacturers.
The Centre has stuck to repeating ambitious targets to increase installed RE capacity, but achieving them would involve adding almost 35GW of installed RE capacity each year. Considering that even during the heights of investor confidence, between 2014 and 2017, India managed to add just 33.3GW, the current slowdown could soon sound the death knell for the sector if a turnaround isn’t in the offing. The government too will undoubtedly find itself in an uncomfortable position, especially at international negotiating forums, where it has time and again pitched its RE ambitions to posture itself as a leader of climate action. After all, tall claims breed fat expectations.
Western India continued to face the wrath of the Indian monsoon this fortnight. Floods triggered by heavy rainfall and reservoir overflows persisted across Kerala, Karnataka, Goa and Maharashtra, while Gujarat, Rajasthan, Madhya Pradesh, Punjab, Haryana and the lower Himalayan region were also hit by rainfall that was much above normal. Thus far, 1,058 deaths across nine states in the country have been attributed to floods and other rain-related causes this monsoon season, according to the Indian home ministry. With rainfall shifting northwards, several rivers in the Indo-Gangetic plains, including Ganga, Yamuna and their tributaries, have breached the danger mark and have set off fresh fears of flooding in north and northwest India.
India’s flood woes have also been marked by severely anomalous distribution that saw severe deficits in June followed by large excesses in the rainfall received since mid-July. Spatially, this has culminated in a surprising situation where 138 districts or 20% of the country, mostly situated in the west, have registered excess rains while almost 35% of the country is suffering deficits. The anomalous temporal and spatial distribution is being seen as further evidence of a shifting monsoon and increasing extreme rain days being brought on by climate change. Although the IMD is slated to reflect these changes in future definitions of monsoon, environment minister Prakash Javadekar has remained reluctant to recognise links between climate change and India’s increasing flooding.
Floods cut Bangladesh’s rice harvest by 400,000 tonnes
It’s not just India. Neighbouring Bangladesh has also been severely affected by rain-induced floods. Crops that would have yielded nearly 400,000 tonnes of rice were washed away, as per estimates from the country’s agriculture ministry. Officials, however, are not too worried about the impact on overall rice stocks citing the country’s ample reserves. Heavy rain and flooding have so far claimed at least 108 lives and affected 6 million people in Bangladesh.
Greenhouse gas levels broke records in 2018, says study
In 2018, greenhouse gases reached levels higher than ever before, according to a report published by the American Meteorological Society and compiled by the US government. According to the study, which collected data from 470 scientists in 60 countries, the warming influence of C02 and other gases is nearly 43% stronger than in 1990.
The year 2018 also broke other disturbing records. The study found sea levels to be at their highest ever in 2018, as were sea surface temperatures. The National Oceanic and Atmospheric Administration said the report “found that the major indicators of climate change continued to reflect trends consistent with a warming planet”.
Alaska’s waters now ice-free, say scientists; likely to become norm every summer
Alaska’s waters are now completely ice-free, scientists said. The nearest ice shelf is now 240km away. This news follows reports of the region experiencing its warmest July on record. Just to compare, Professor Peter Wadhams from the University of Cambridge said that around 30 years ago, sea ice would be found in southern and northern Alaska waters, with just a narrow strip between ice and land through which ships would attempt to travel to the northwest. This drastic shrinkage will most likely lead to ice-free summers in the Arctic every year, scientists warned.
Dams, over-exploitation led to 88% decline in population of freshwater animals: Study
Hydroelectric dams in the world’s greatest river basins, such as the Mekong, Congo, Amazon and Ganges are increasingly hampering the movements of freshwater animals, resulting in a drastic decline in their populations, a new study has revealed. The study, published in the journal Global Change Biology, quantified the global decline of freshwater animals and the results are shocking – between 1970 and 2012, the populations of freshwater megafauna declined by 88%, which is twice the loss of vertebrate populations on land or in the ocean. The most affected are large fish species, such as river dolphins, crocodiles, giant turtles, which declined by more than 94% in the time period, according to the study.
The study, which compiled available time series data for 126 freshwater megafauna species worldwide and historical and contemporary geographic distribution data of 44 species in Europe and the USA, also identified another threat to freshwater animals – overexploitation as megafauna is often targeted for meat, skin and eggs.
Days after a toxic ash leak at an Essar thermal power plant in Madhya Pradesh damaged crops around a 4-km area, the Madhya Pradesh Pollution Control Board (MPPCB) has asked Essar Power MP Limited in Singrauli to deposit ₹10 crore as interim environmental compensation. Earlier, the region’s district collector ordered the company to pay the impacted farmers ₹50 lakh as compensation. The actual compensation amount will be known once the environmental damage has been assessed. Officials said 490 farmers have reported crop loss so far.
A night of rain on the intervening night of August 6 and 7 caused a breach in Essar’s ash pond. The fly ash, which contains toxins such as arsenic, turned into a mud-slide and flooded people’s homes. Such leaks, say scientists can severely contaminate the groundwater, leading to severe health repercussions.
A plea, meanwhile, has been filed India’s green court, National Green Tribunal, which sought direction to the company to remove the fly ash, bottom ash, and other toxic wastes from the houses, wells and any other water bodies and farm lands surrounding the area.
Media framing of climate change news correlated to socio-economic factors of nations, policy-driven discourse largely absent: Global study
A new study on how media around the world frames climate change news has thrown up interesting correlations between nations’ socio-economic indicators and the framing of the subject in national media. While authors have noted that media coverage of the topic differs from one nation to the next, none of the 45 nations whose media was analysed were found framing it as an immediate problem requiring national policies to address the issue. The study, which encompassed 37,000 articles across 30 years of coverage, shows that poorer nations tend to frame discourse on climate change as an international relations issue, prioritising pressure on richer countries and vulnerabilities to climate change impacts. By contrast, in richer countries climate change discourse is framed as a partisan political matter which reflects greater prominence of climate change skeptics and high-levels of lobbying influence in news media in these nations. Interestingly, the most consistent predictor of how the issue was framed was a nation’s gross domestic product per capita, according to the study.
BASIC nations call on richer countries to shoulder more of the climate burden with more finance
Developing economies, including Brazil, South Africa, India and China (BASIC) have urged rich countries to meet their pre-2020 climate targets and increase climate finance. In a letter to UN chief António Guterres, ahead of the climate summit that he is hosting in New York, the BASIC nations wrote that the meeting should “be fully respectful of the principles and provisions of the [UN climate convention]”. What this means is that richer countries, like the US, who also have higher emissions, must shoulder more responsibility for action. Meanwhile, India’s Prime Minister Narendra Modi will attend the G-7 summit in France’s seaside town of Biarritz at the end of the month and is expected to talk on environment, climate, oceans and digital transformations.
Australia announces $339 million climate change package for Pacific islands, but its leaders are unimpressed
Australia’s announcement of giving $339 million to Pacific island nations for renewable projects and climate and disaster resilience was met with anger and criticism from its leaders. At the Pacific Islands Forum meeting held last week, Tuvalu prime minister Enele Sopoaga, who is also chair of the meeting, told reporters. “No matter how much money you put on the table, it doesn’t give you the excuse to not to do the right thing, which is to cut down on your emissions, including not opening your coal mines.” Australia’s move to water down the Pacific islands’ climate crisis plea, and remove references to coal at the forum meeting only escalated tensions.
Caught between Australia and the Pacific islands, New Zealand’s stance seems a bit wobbly. While deputy prime minister Winston Peters came to Australia’s defence, asking Pacific nations to account for the ‘coal-powered loans’ they were receiving from China, the country’s prime minister Jacinda Arden declared that “Australia has to answer to the Pacific” on climate change.
Indonesian president issues permanent moratorium on forest clearance; Greenpeace calls move inadequate
Indonesia’s president Joko Widodo ordered a permanent moratorium on new forest clearances for palm plantations and logging, among other activities. This moratorium covers 66 million hectares of peatlands and primary forests and is aimed at reducing the country’s emissions from forest fires.
Greenpeace, however, dismissed the move and said it did not provide adequate protection in the long run pointing to loopholes in regulations and lack of strict punishment. It said Indonesia leads the list of countries with a high deforestation rate, with more than 74 million hectares of rainforest logged, burned or degraded in the last half century.
Singapore may have to spend $72 billion to protect itself from rising sea levels: PM
Protection from rising sea levels is likely to cost Singapore S$100 billion ($72 billion) or more over the next 100 years, its prime minister Lee Hsien Loong said this week. He said the low-lying state’s future options will include building polders, reclaiming land or reclaiming offshore islands and connecting them with barrages. The government had previously announced a $400-million plan to upgrade Singapore’s drains and improve flood resiliency.
India’s toxic air flashed on NASA’s radar recently, highlighting the country as the world’s largest emitter of sulphur dioxide (SO2), a toxic gas mostly emitted from burning of fossil fuels in power plants and other industrial facilities. The latest Greenpeace analysis says over 15% of the global SO2 hotspots detected by the NASA satellite were found in India. China and Russia ranked second and third respectively in the Greenpeace 2018 SO2 emissions report.
India introduced pollution control norms for coal power plants way back in 2015, which, for the first time, included limits for SO2 emissions as well. The initial 2017 deadline to retrofit technology to control SO2 emissions has been postponed by five years through a Supreme Court order.
India adds 20 Indian cities to ‘polluted’ list, green court says increase 2024 target
Widening the scope of cleaning toxic air, the Central Pollution Control Board (CPCB) has added 20 more cities to the list of 102 cities that require immediate action to meet the National Ambient Air Quality Standards. The new cities include eight from Andhra Pradesh and six from West Bengal, bringing the total to 122 cities.
The country’s green court, the National Green Tribunal (NGT), recently ordered the CPCB to modify the National Clean Air Programme’s (NACP) weak target of cutting air pollution by 30% by 2024. Experts say the cities will remain polluted even if the target of reducing 20-30% of PM10 and PM2.5 concentrations is realised. The NGT, on August 6, issued 15-point directions for different agencies and asked the environment ministry to modify its NCAP target.
After extending deadlines, Centre to dilute air pollution norms for thermal plants?
Has the Indian government overruled its own scientists to allow coal power plants to continue polluting? Business Standard reported that the Centre has decided to dilute air pollution standards for thermal power plants, almost four years after they were notified. In a shocking development, the report says that to dilute norms, the power ministry rejected the pollution data of the much-praised online pollution monitoring system set up by India’s apex pollution control body, the Central Pollution Control Board (CPCB). The power ministry rejected the environment ministry’s real-time monitored data of thermal power plants as ‘faulty’, by saying that the existing NOx pollution levels are much higher than what the CPCB has shown on online automated monitoring systems. This is the same monitoring system the Centre showcased as India’s pledge to protect the environment. The new norms have already been postponed by the government by five years, to 2022.
“You are not a kindergarten”: CPCB rapped, gets 3 months to set up 1,500 AQ monitors
India’s green court rapped India’s Central Pollution Control Board (CPCB) for failing to take action against polluters, while stating that it was a scientific body and ‘not a kindergarten’. The NGT said: “You have prepared an action plan to curb air pollution. You say you need time to bring it into force, but what about those who are causing pollution in this time period. You are a scientific body and not a kindergarten.”
While giving the CPCB three months to install 1,500 air quality monitoring stations across the country, the green court said that no action had been taken by the states to curb vehicles in areas where the pollution level was found to be high.
Industrial hubs outside city limits directly worsening Mumbai’s air quality: Study
A new satellite study of India’s financial capital has revealed that Mumbai’s toxic air is more than particulate matter (PM) emitted from cars and construction activity. The study by UrbanEmissions says the city’s air is a hazardous mix of emissions from thermal, metal, wire industries, stone quarries, movement of freight trucks and garbage burning across 12 locations in the Mumbai Metropolitan Region (MMR), reported HT.
UrbanEmissions said that activities across the industrial hubs outside the city limits directly impact Mumbai’s air quality, increasing concentration of PM2.5 – fine toxic particles that stay in the air longer and cause serious respiratory ailments.
Sonbhadra mining permissions revoked by NGT
In a small victory for the inhabitants of the highly polluted coal district of Sonbhadra in Uttar Pradesh, the National Green Tribunal (NGT) has cancelled environmental clearance to four mining units — Maihar Stone, Jai Maa Bhandari Stone, Jyoti Stone, Vaishono Stone and Guru Kripa — operating in the region. The stone-crushing units were also asked to prepare an appropriate action plan to restore the damage done to the environment within a month.
Ukraine ArcelorMittal promises investments after pollution charges
Steel giant ArcelorMittal has declared it will invest $1.8 billion over the next five years to curb air pollution by 55% at its plant in Ukraine’s Kryvyi Rih, which is also its President Volodymyr Zelenskiy’s hometown. The steel plant was found to be violating green norms. Officials had discovered a source of radiation exceeding safe levels in a new piece of equipment at the plant and had banned the company from using it. The company feared losing $1 million after authorities seized the equipment. The steel giant invested over $9 billion in the country’s biggest steel plant.
Indonesia curbs private cars to stall rising air pollution
The Indonesian government has decided to extend the odd-even traffic rule on private cars to stall spiralling air pollution in its capital Jakarta. Last week, Jakarta governor Anies Baswedan ordered to levy congestion charges for cars from 2020, set an age limit of 10 years on vehicles on the road by 2025, and adopt tough emission tests and crackdown on pollution by industries. Experts said this generic policy will not eventually help reduce pollution because the country needs a strategic plan to cut pollution based on an inventory of emissions. Jakarta lacks monitoring devices to pinpoint the cause of the pollution spikes, experts pointed out.
Power developers will know in advance who are the high-risk clients (discoms) when it comes to payments. The Central Electricity Authority (CEA) will maintain a record of dues discoms owe to companies. The CEA will share the data with power developers to alert them on likely defaulters. According to the latest CEA data, discoms owe over ₹3,012 crore (US$420 million) to renewable energy projects totalling around 6GW. Experts say payment delays and unilateral attempts to redraw power purchase agreements, like in the case of Andhra Pradesh, have threatened billions of dollars in investments. To make the process transparent and insure that defaulters don’t get power, CEA has launched an online portal, PRAAPTI, short for Payment Ratification And Analysis in Power Procurement, to keep power generators informed.
The non-payment of dues impact developers’ ratings. Ratings agency CARE recently downgraded 11 solar firms with a combined capacity of 574 MW to negative because of the ‘weakening liquidity’ resulting from payment delays from Telangana discoms. CARE said Telangana’s severely cash-strapped state power firms survive on subsidies.
Saga to end well? Andhra Pradesh will review only corrupt contracts, not all PPAs
Pressured from the Centre, high court, energy firms and even the Japanese ambassador, the new Andhra Pradesh government will not review all contracts between the previous government and power companies, to get them to lower tariffs. ET quoted official sources saying the government will target only corrupt projects. Earlier, power companies got a stay on re-writing of contracts from the Andhra Pradesh high court till August 22. But the state government hit back by curtailing wind power.
Andhra Pradesh has already met its Renewable Purchase Obligation (RPO) and an addition of more wind and solar power will depend on the tariff, a top official told ET. Meanwhile, the high court has ordered Andhra Pradesh to stop curtailing renewable power. The Japanese ambassador to India Kenji Hiramatsu has warned CM Reddy that investors are watching the situation closely.
Coal vs Renewables: Renewables won 80% of bank finance, coal lost 90% of lending in 2018
Coal finance lost big time to renewables in 2018. Firstly, coal power plants lost 90% of its finance in 2018 compared to 2017, receiving only ₹6,081 crore. While lending to renewables grew by ₹1,529 crore to Rs22,442 crore. Secondly, most of the money coal plants got was state capital, while 80% of the private bank finance went to renewables. These are the conclusions of “Coal versus Renewables Finance Analysis” by Delhi-based think tank, the Centre for Financial Accountability (CFA). The CFA assessment of lendings to 54 energy projects revealed that of total ₹30,524 crore, 80% lendings, were siphoned off by renewable energy projects, the rest went to coal-fired power plants.
India needs $700 billion to achieve 523GW by 2030 target: IEEFA
The latest research by the Institute for Energy Economics and Financial Analysis (IEEFA) says India will require around $500-700 billion in renewables investments in the next 10 years to meet its ambitious renewable energy targets. According to IEEFA, India has set targets of 144 GW by 2022, and 523 GW by 2030, which are highly “achievable with the right policy”. The report cites the survey by Singapore-based EDHEC Infrastructure Institute (EDHECinfra) and Global Infrastructure Hub (GI Hub) that said at least 130 global asset owners with a total of $10 trillion of assets saw India as the best market for infrastructure growth potential among the growing economies.
In 2019, renewables surge of 2018 missing, developers give solar auctions a miss
The 2018 surge in renewables is not catching up in 2019 as much. Latest auctions in Gujarat witnessed mostly a no-show by project developers. Against the tendered capacity of 950MW, the Gujarat Urja Vikas Nigam Limited (GUVNL) finalised bids for only 150 MW. The industry is blaming the current uncertainty triggered by the central government’s plans to hike up import duty on solar power equipment and the extension of safeguard duty on solar imports to boost domestic manufacturing of solar equipment. Experts also say the tariffs to be quoted in solar auctions are capped too low to be financially viable.
US challenges WTO decision that favoured India in solar subsidy case
The US has challenged World Trade Organisation’s (WTO) decision favouring India in the solar energy case. The WTO panel had ruled against the US saying its domestic policy and solar subsidies provided by eight of its states violate global trade norms. The US has now moved WTO’s higher Appellate Body against the decision. India had dragged the US to the WTO over the issue in 2016. Washington, California, Montana, Massachusetts, Connecticut, Michigan, Delaware and Minnesota were the eight states providing subsidies, which India said were against global trade norms. The Geneva-based appellate body can uphold, modify or reverse the WTO panel’s decision. If the body’s ruling goes against India, the country will have to comply with the order in six-seven months.
In China, solar power is now cheaper than grid-supplied fossil fuel power
Is China’s solar energy approaching grid parity decades ahead of expectation? The latest study published in British journal Nature Energy says the price of solar power has become cheaper than grid-supplied power in nearly 350 cities across China, marking a crucial “inflection point” in the world’s biggest emitter’s use of renewable energy. This means that Chinese cities can now offer lower electricity prices from solar photovoltaics than from the grid, without relying on government subsidies.
Australian watchdog sues 4 wind farm firms over 2016 blackout
Australia has dragged to court four wind farm operators – AGL Energy and France’s Neoen SA, New Zealand’s Tilt Renewables Ltd and Chinese state-owned Pacific Hydro – over a state-wide blackout in South Australia in 2016. The regulators have alleged that several power-generating units of the accused companies contravened regulations over a period of several months, not just on stormy September 28, 2016, the day of the blackout. South Australia is the country’s most wind power-reliant state. The regulator is targeting penalties of up to $67,220 per contravention. The companies failed to ensure their plants met requirements to be able to ride through system disturbances, the regulator said.
India’s prime minister has assured the country’s beleaguered IC engine automakers that there was space for both traditional and electric vehicles to post stronger sales volumes. The surprise remark comes when India’s sales for traditional cars has fallen for nine straight months, and could raise questions about the government’s 2030 target of 100% EV sales, allowing for which will necessitate a steady scale down in the sales of petrol and diesel vehicles.
The government had also recently said that it would ban the sales of IC-engined three-wheelers by 2023 and two-wheelers by 2025 in a bid to make their manufacturers switch to EVs.
China’s EV sales drop 4.7% over subsidy withdrawals
EV sales in China have dropped 4.7% last month (over July 2018) — the first such contraction in two years — after the withdrawal of subsidies for EVs. The country sold 80,000 units in July and the falling numbers have even forced French automaker Peugeot to shut a plant and trim its workforce. Nevertheless, China still remains the key market for global EV sales and Beijing plans to convert 90% of its light trucks to “new energy vehicles” by 2020. Its installed charging facilities have also jumped 71.9% year-on-year.
GM, VW to shun hybrids & focus solely on EVs, Toyota & Ford non-committal
General Motors and Volkswagen AG will both move away from hybrids and focus solely on all-electric cars for their US lineups. The two giant automakers together sold around 3.2 million cars in the US in 2018 and their decision highlights the growing recognition of EVs as the future of transportation.
However, Ford and Toyota are yet to abandon hybrids, despite also developing all-electric cars. Instead, they will continue to offer the option to customers that are reluctant to switch to EVs due to concerns over driving range and charging facilities.
The Trump Administration has weakened the US’ Endangered Species Act to make it easier to lower protection for threatened species, and open up their pristine habitats for “economic assessments” — which implies licences for oil and gas exploration. The administration had previously opened the Alaskan National Wildlife Refuge (ANWR) to oil & gas drilling despite vehement protests by locals and environmentalists, and more such protected regions could now be brought under commercial fossil fuel exploration.
Similarly, Niger in Africa has downgraded protection for certain sections of the 100,000 sq. km Termit and Tin-Toumma nature reserve — one of the last known habitats for the critically endangered Addax (white antelope). The sections were awarded as oil blocks to China National Petroleum Corporation (CNPC), and the decision was based on the premise that the sections encroached upon the oil blocks, instead of the other way around.
Shale gas behind global methane spike, says study
A Cornell University study has found that the methane spike in the atmosphere over the past decade can be attributed to shale gas produced through ‘fracking’, rather than the usual fossil fuel suspects such as conventionally produced natural gas.
While previous studies have glossed over the methane emissions from shale gas production, this study found that “unlike the 20th century, when the rise in atmospheric methane was accompanied by an enrichment in the heavier carbon stable isotope (Carbon-13) of methane”, the greenhouse gas in recent years has depleted levels of this isotope. According to the study, this points to a biogenic source for the increased methane. This ties in with the scientific fact that Carbon-13 levels in shale gas is somewhat depleted compared to conventional natural gas. Hence, the study’s conclusion.
It also says that about two-thirds of all new gas production over the last decade has been shale gas produced in Canada and the US.
Canada: Insurers urged to drop cover for Trans Mountain pipeline
Thirty-two indigenous and environmental groups have urged top insurers like Zurich, Munich Re and Talanx to cancel insurance for Canada’s Trans Mountain (Kinder Morgan) pipeline before August 31. The move is aimed at putting pressure on Canada into reducing its use of fossil fuels like crude oil, which is a major source of revenue, and the imports of which alone have topped $34 billion a year.
If the insurers agree to drop coverage, the government would have to part with a hefty $1.1 billion of tax-payers’ money on self-insuring the project, which is likely to be opposed. The Zurich group, however, has pledged its support to the pipeline.
10.6 GW of coal plants face the axe in the US
Facing acute market competition, up to 10.6 GW of coal plants in the US may be retired or converted to gas this year. The year 2018 saw 13 GW worth of plants shut down, with the increasing share of cheap shale gas obtained through fracking as one of the factors driving shutdowns.