LITTLETON, Colorado, Sept 19 (Reuters) – The deepening debt crisis in China’s construction sector – a key engine of economic growth, investment and employment – may trigger an unexpected climate benefit in the form of reduced emissions from the cement industry.
Cement output and construction are closely correlated, and as China is by far the world’s largest construction market it is also the top cement producer, churning out roughly 2 billion tonnes a year, or over half the world’s total, data from the World Cement Association shows.
The heavy use of coal-fired kilns during manufacturing makes the production of cement a dirty business. China’s cement sector discharged 853 million tonnes of carbon dioxide in 2021, according to the Global Carbon Atlas, nearly six times more than the next largest cement producer, India.
The cement sector accounts for roughly 12% of China’s total carbon emissions, according to Fidelity International, and along with steel is one of the largest greenhouse gas emitters.
But with the property sector grinding to a halt due to spiralling debt worries among major developers, the output and use of cement are likely to contract over the next few months, with commensurate implications for emissions.
HOUSING SLUMP
The property markets account for roughly a quarter of China’s economy, and for years Beijing has used the sector’s substantial heft to influence the direction of the rest of the economy by spurring lending to would-be home buyers and fostering large scale construction projects.
But the big property developers racked up record debt loads in recent years that have forced borrowing levels to slow, stoked concerns among investors, and slowed spending across the economy.
China Evergrande Group, once the second largest developer, defaulted on its debt in late 2021, while top developer Country Garden has drained cash reserves to meet a series of debt payment deadlines in recent months.
Fears of contagion throughout the property industry has spurred households to rein in consumer spending, which has in turn led to deteriorating retail sales and further economic headwinds.
Beijing has stepped in with a slew of measures designed to right the ship, including easing borrowing rules for banks and lowering loan standards for potential home buyers.
But property prices in key markets remain under pressure, which has served to stifle interest among buyers and add to the pressure on investors and owners.
CEMENT CUTS
With construction activity across China slowing, and several major building sites stopped completely while tussles over debt payments among developers continue, cement output is likely to shrink to multi-year lows by the end of 2023.
During the March to August period, the latest data available, total cement output was 11.36 million short tons, down 2 percent from the same period in 2022 and the lowest for that period in at least 10 years, China National Bureau of Statistics data shows.
In addition to curtailing output in response to the bleak domestic demand outlook in the property sector, cement plants may be forced to curb output rates over the winter months as part of annual efforts to cap emissions from industrial zones during the peak season for coal heating.
Some cement producers will likely look to boost exports in an effort to offset lower domestic sales, and in July China’s total cement exports hit their highest since late 2019.
But Chinese firms will face stiff competition from lower-cost counterparts in Vietnam, which are by far the top overall cement exporters and already lifted overall cement shipments by close to 3% in the first half of 2023, data from the Vietnam National Cement Association (VNCA) shows.
Some Chinese firms may be prepared to sell exports at a loss for a spell while they await greater clarity over the domestic demand outlook.
But given the weak state of global construction activity amid high interest rates in most countries, as well as the high level of cement exports from other key producers such as India, Turkey, United Arab Emirates and Indonesia, high-cost Chinese firms may be forced to quickly contract output to match the subdued construction sector.
And if that’s the case, the sector’s emissions will come down too, yielding a rare climate benefit to the ongoing property market disruption.
The opinions expressed here are those of the author, a columnist for Reuters.
Reporting By Gavin Maguire; Editing by Miral Fahmy
Our Standards: The Thomson Reuters Trust Principles.
Opinions expressed are those of the author. They do not reflect the views of Reuters News, which, under the Trust Principles, is committed to integrity, independence, and freedom from bias.
An Airbus A319 can be seen flying 500 feet above the ground while on final approach to land at LaGuardia Airport in New York City, New York, U.S., January 6, 2022. REUTERS/Bryan Woolston Acquire Licensing Rights
BRUSSELS, Sept 4 (Reuters Breakingviews) – Short flights within Europe are frequent flyers on wish lists of things to ban. In the name of cutting carbon dioxide emissions, countries from Germany to Spain are proposing to prevent brief air trips, and lobbyists like Greenpeace say governments should require travellers to choose trains or other ground transport for shorter journeys. But not all short flights are alike, and banning commercial hops makes less sense than targeting private jets.
In 2022 aviation emitted 800 million metric tons of CO2, around 10% of the world’s 8 billion tons of CO2 emitted annually by various means of transport, according to the International Energy Agency. In the same year European Union emissions were around 2.5 billion tons and in the recent past flying has contributed about 4%. But most of that is long-haul flights. A 2022 study of 31 European countries found that flights shorter than 500 km account for 28% of departures, but under 6% of fuel burnt.
Commercial jets do pollute more than ground transit, but they also have advantages that can’t be easily matched. To avoid a disproportionate impact on disabled passengers and others en route to more distant destinations, train services need to catch up first. Denying a short flight to connecting passengers could just send them to their cars, according to KLM CEO Marjan Rintel.
Limiting private jet travel would make a bigger difference, with fewer broad-based disruptions. Private jets have a far bigger impact per passenger on the environment than their flying-bus counterparts: as much as 45 times the amount of emissions per passenger, according to the Institute for Policy Studies. Greenpeace data shows that private jet flights in Europe put out 3.4 million tons of CO2 in 2022, twice 2021 levels, and mostly on flights with a range of less than 750 km.
Short-haul bans are especially beside the point when they look more like industrial policy than climate action. In France, where domestic connections are already prohibited for journeys of under two and a half hours, only three routes were actually banned, with projected savings of just 55,000 tons of carbon dioxide output per year. Shuttering unprofitable routes and prohibiting new competition on those legs acted more like a leg-up for Air France’s business plan, according to Davy transport analyst Stephen Furlong.
In any case, there’s a positive non-climate economic case for short-haul flights. They have allowed upstart carriers like Norwegian Air to challenge legacy airlines and rebuild after the pandemic. Connecting flights also make it possible for Brussels Airlines to serve as a hub for passengers in and out of Africa, a lifeline for countries whose livelihoods depend on travel routes.
There’s a case for phasing out shorter flights over time, and for surcharges like Belgium’s 10 euro tax on flights of less than 500 km. But banning brief mass-transit trips now is a hop too far.
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CONTEXT NEWS
Countries such as France, Spain, Belgium and Germany have enacted or are considering measures to reduce or ban short flights. The European Union’s long-term mobility plan calls for discouraging plane travel where lower-impact alternatives exist.
Direct emissions from aviation accounted for 3.8% of the EU’s total carbon dioxide emissions in 2017, according to the European Commission. Aviation is responsible for 14% of transportation-sector emissions.
Greenpeace research found that the number of European private jet flights jumped from 118,756 in 2020 to 572,806 in 2022, with carbon dioxide emissions going from about 355,000 metric tons to 3.4 million tons over the same period. More than half of 2022 private jet travel was for distances of less than 750 km.
Editing by George Hay and Oliver Taslic
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Opinions expressed are those of the author. They do not reflect the views of Reuters News, which, under the Trust Principles, is committed to integrity, independence, and freedom from bias.
A new research project looks to further define the parameters for CO2 shipping as they seek to scope out the elements needed for large-scale commercial shipping. While the shipping industry believes there is an emerging opportunity linked to the carbon capture and storage initiatives, the partnership highlights that the current design of liquified CO2 vessels has a limited storage capacity which is driving their research to develop solutions for industrial-scale shipping of CO2.
The partnership includes Mitsui O.S.K. Lines as well as some of Japan’s leading gas companies, including JX Nippon Oil & Gas Exploration Corporation and Osaka Gas Co. They will be joined by universities and researchers, including Future Energy Exports CRC Limited and Low Emission Technology Australia to launch the “LP Technology R&D Project.” They plan to conduct research and development to demonstrate the technical feasibility and operability of low-pressure and low-temperature solutions for the bulk transport of CO2 by ships.
They point out that the current design of liquefied CO2 vessels has a limited storage volume due to their operating pressure and temperature (18 bar, -26 °C). Low pressures and low temperatures (approximately 7 bar, -49 °C) they believe will be one of the best options to significantly reduce costs for CO2 vessel design. However, they note that there is no record of liquefied CO2 transportation by ship under low pressure and low temperature conditions making it necessary to address the operational risks. They believe the research and demonstration project will enhance the likelihood of technical feasibility.
“We will make collaborative efforts with our project partners to develop a feasible CO2 bulk transportation method,” commented Yasuto Ariga, Executive Officer, General Manager, Sustainable Business Unit of JX NOEX. “In addition, we are taking this opportunity to build a good relationship with industry, government, and academia in Australia for its large potential CO2 sequestration capacity, and also promote cooperation with project partners for the realization of an overseas CCS project.”
They plan to study the behavior and boil-off characteristics of liquid CO2 under dynamic operating conditions. They will conduct experiments using laboratory scale facilities (such as pressure cell and boil-off apparatus) to study the phase behavior and boil-off characteristics of liquid CO2 under dynamic operating conditions using the data to contribute to engineering models for CO2 boil-off and phase behavior calculations.
The information developed from this study they believe can also help to design pilot-scale Carbon Capture, Utilization, or Storage (CCUS) demonstration tests. All of this they believe can contribute to validating the engineering models that will be used for the large-scale shipment and storage of CO2 which plays a critical part in many countries’ plans to achieve net zero emissions.
SYDNEY, July 28 (Reuters) – The Australian state of Victoria will ban natural gas connections to new homes from next year as part of a plan to cut emissions and lower energy bills, the state climate action minister said on Friday.
Australia’s second-most populous state is the country’s largest consumer of natural gas with around 80% of homes connected but also has ambitious plans to reach net zero emissions by 2045, five years ahead of the federal government.
Minister for Climate Action Lily D’Ambrosio said on Friday that new homes requiring planning permits must connect to all-electric networks. The gas sector contributes 17% of the state’s emissions.
“Reducing our reliance on gas is critical to meeting our ambitious emission reduction target of net zero by 2045 and getting more Victorians on more efficient electric appliances which will save them money on their bills,” D’Ambrosio said in a statement.
The changes will apply to all new public buildings yet to reach the design stage, including housing, schools, and hospitals.
Victoria also launched several grant and training programmes to support electrification, including a A$10 million ($6.7 million) programme to lower prices for solar equipment and heat pumps and a A$3 million package to train tradespeople on new equipment.
The plan comes as southeastern Australia faces potential gas shortages from mid-decade as output falls from the offshore fields, operated by Exxon Mobil Corp (XOM.N), that have long supplied the region.
Rewiring Australia, a non-profit which advocates for electrification, backed the move and said “electrification is the fastest and most cost-effective way to shave thousands of dollars a year from energy bills and lower our emissions.”
Australia last month finalised a package of rules for the domestic gas market including a cap on wholesale prices that was first introduced in December.
($1 = 1.4932 Australian dollars)
Reporting by Lewis Jackson; Editing by Stephen Coates
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BRUSSELS, June 9 (Reuters) – The European Commission is working on plans to speed up investment in capturing and storing carbon dioxide emissions, it said on Friday, as the bloc prepares to slash its net greenhouse gas emissions to zero by 2050.
In a public consultation on the plans, the Commission said infrastructure to capture and store CO2 underground or use it in industries was not developing fast enough, hampered by factors including high costs to develop storage sites.
To try and boost the industry, the Commission said it will produce an EU strategy that could include 2040 and 2050 targets for CO2 storage infrastructure, or EU-wide standards on CO2 quality and access to carbon capture infrastructure.
Carbon capture and storage (CCS) projects are in their infancy in the EU and have a history of controversy in countries including Germany, where states blocked past efforts to launch projects. Some campaign groups have also opposed the technology on the grounds that it could be used to extend the life of coal power plants and polluting industries.
But plans to remove CO2 from the atmosphere have regained some traction as countries map out how to achieve net zero emissions – which will require some CO2 removals to balance out remaining emissions from industries that cannot reduce their CO2 output to zero, like aviation or agriculture.
“Emission reduction remains the highest priority of EU climate policies,” the Commission document said.
The EU already has targets in place requiring countries to expand forests and other natural ecosystems that can absorb and store CO2.
Brussels proposed a target in March for the EU to be able to store 50 million tonnes of CO2 per year by 2030, and has said this may need to reach 550 million tonnes by 2050 to hit the bloc’s net zero emissions goal.
For comparison, the EU’s total CO2 emissions from energy use were nearly 2.4 billion tonnes in 2022, according to Eurostat data.
Reporting by Kate Abnett;Editing by Elaine Hardcastle
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SYDNEY, March 28 (Reuters) – Brookfield Asset Management (BAM.TO) will spend about $13.3 billion over the next decade to replace Origin Energy’s (ORG.AX) Australian power generation infrastructure with new-build renewables and storage facilities, a senior executive said on Tuesday.
Origin Energy on Monday agreed to a A$15.35 billion ($10.21 billion) takeover offer from a consortium led by Canada’s Brookfield, nearing the conclusion of one of the country’s biggest private equity-backed buyouts.
Australia’s No. 2 power producer has been looking to speed up its transition to cleaner energy, accelerating the planned shutdown of the country’s biggest coal-fired power plant and selling its gas exploration assets.
“Our plan is to invest a further A$20 billion of capital to fully replace its power generation and its power purchases with green power that meets all of its customers requirements, and we propose to do that over a 10-year period well in advance of the 2050 goal,” Brookfield Asia Pacific CEO Stewart Upson told Reuters in an interview, referring to a target for net-zero direct and indirect emissions by 2050.
The Canadian firm enlisted Singaporean funds GIC and Temasek [RIC:RIC:TEM.UL] as co-investors in its bid, while MidOcean Energy will gain control of Origin’s 27.5% stake in Australia Pacific LNG (APLNG).
Upson said Brookfield currently has about $60 billion invested in Australia, but the Origin deal would represent a “step change”.
Argo Investments (ARG.AX) Senior Investment Officer Andy Forster said his firm, the ninth-biggest investor in Origin, was positive about the deal, even though it might take time to gain regulatory approvals from the Foreign Investment Review Board and the competition regulator.
“Brookfield seems very committed to making the deal happen,” he added.
Shares were trading 1% higher at A$8.255 on Tuesday morning, below the implied cash-and-scrip offer price of A$8.91 a share, as the deal is not expected to be finalised until early 2024.
The Brookfield-led consortium trimmed its offer for Origin by 1% last month after a government move to cap gas prices hit valuations in the sector.
“We had to take our time to assess all the different developments and make sure that we are comfortable it didn’t have an impact,” Upson said.
Banking industry volatility also slowed the deal, but the financing was fully committed and was not affected, he added.
($1 = 1.5031 Australian dollars)
Reporting by Praveen Menon and Scott Murdoch; Editing by Jamie Freed
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City asked to reconsider role in commercial developments
Recently, I responded to the City of Flagstaff (COF) appeal to residents regarding current budgeting priorities and objectives. Earlier this year I had the opportunity to attend the City of Flagstaff’s budgeting retreats. Over multiple days, I learnt a great deal regarding the anticipated spending on operations and capital projects for fiscal year 2023-2024. The days were filled with charts, tables and diagrams.
At the end of one day, a COF staff member presented the refurbishing and rebuilding of a commercial property owned by the COF. The property is located before the entrance to Buffalo Park and it is primarily leased to the USGS. He proceeded to tell the budget meeting attendees, City Council and City Staff primarily, that a new investment in the USGS buildings would cost over $50 million. This amount was higher than prior year estimate of over $35 million! But not to worry, USFS and the COF were close to agreeing to a five-year lease with a five-year renewal! Not one question from the audience! Not a peep! Not a graph, table or diagram! I was stunned! I do not believe any commercial developer would spend over $50 million with a potential five- or 10-year lease in the future.
Developing commercial property is NO WHERE to be found in the Flagstaff Key Community Priorities and Objectives used in the COF budgeting. The COF mission does not mention the COF developing commercial property.
If the COF remains in commercial building business, this presents numerous conflicts of interest for the COF. This situation today is like having the fox guarding the hen house given the COF enforces and creates the building codes!
The COF should divest all commercial property; the residents tax dollars can be better spent on actual COF’s Priorities and Objectives.
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