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.
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.
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.
MANILA, Feb 10 (Reuters) – Citicore Renewable Energy Corp, one of the Philippines’ biggest solar power producers, is planning to go public this year to fund a $4 billion investment in new solar projects over the next five years, its CEO said on Friday.
“For a country such as ours with limited oil and coal but have abundant sun, wind and water, it is imperative we deploy capital investment into renewable energy,” Citicore President and CEO Oliver Tan told reporters.
Citicore will file documents for an initial public offering in the second quarter and complete its listing within the year, Tan said, adding it will be large enough to attract foreign investors for an international tranche.
Fresh capital from the listing will allow Citicore, which has an installed capacity of 241 megawatts via solar panels, to invest $800 million this year to increase output to 1 gigawatt (GW), and around $4 billion to reach 5 GW within five years, Tan said.
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The Philippines, an archipelagic country among the most vulnerable to climate change, aims to increase renewables in its power mix to 35% by 2030, from 21% in 2020, and to 50% by 2040. Coal accounted for nearly 60% in 2020.
Citicore is also pursuing seven offshore wind projects with a total capacity of 3 GW.
Citicore REIT on Friday listed its maiden ASEAN Green Bond in the Philippines’ fixed income trading platform. It raised 4.5 billion pesos ($82.6 million) from its bond sale to fund acquisition of land for its renewable energy portfolio.
($1 = 54.50 Philippine pesos)
Reporting by Neil Jerome Morales
Our Standards: The Thomson Reuters Trust Principles.
- Perovskite developers are bringing rapid efficiency improvements and tandem concepts into the commercial space, boosted by rising solar targets and new funding mechanisms.
February 2 – A rapid expansion of solar capacity in the coming years will help launch commercial perovskite solar technologies.
The U.S. and Europe are expanding solar manufacturing capacity to meet ambitious renewable energy targets and bolster energy security. Financial support in the U.S. Inflation Reduction Act and a new package of measures pledged by the European Union last month should help perovskite developers move from pilot to commercial-scale factories.
CHART: Forecast annual solar installs in the European Union
Global module supply is currently dominated by established monocrystalline silicon wafer technology but the performance of silicon-based cells is approaching its theoretical limit and perovskite technologies have rapidly improved.
Perovskite materials have a crystal structure and offer strong light absorption and electric charge properties. As solar developers seek higher efficiencies and lower cost of energy, tandem cells combining silicon with perovskite are widely considered to be the next step.
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Tandem cells combine a solar cell that is particularly efficient in the infrared part of the solar spectrum with another that is optimised in the blue and ultraviolet (UV) range. The theoretical conversion limit for silicon cells is around 29% and tandem silicon-perovskite cells could increase this to 43%.
Oxford PV plans the commercial launch of its perovskite-on-silicon tandem cell this year, predicting a conversion efficiency of 27% and an energy yield of 24%, compared with a yield of around 20%-22% for most of the silicon panels currently on the market.
The company plans to expand its pilot factory near Berlin, Germany and scale up production to 10 GW by the end of the decade.
In France, the IPVF solar institute has partnered with French manufacturer Voltec Solar to build a solar panel factory that will produce Tandem 4T Perovskite/Silicon cells. The partners aim to start production in 2025 and ramp up capacity to 5 GW by 2030.
The project aims to lower the cost of energy by 15% compared with current silicon panels, Gregory Marque, IPVF Programs Director, told Reuters Events. The institute predicts energy yields of 30% as well as lower energy consumption and materials requirements.
“Tandem technology will be the dominant photovoltaic technology of the next decade,” Lucas Weiss, CEO of Voltec Solar said in a statement. “It is likely to change the competitive landscape.”
The main advantages of incorporating perovskite technology are higher energy yields, greater transportability, and a lower carbon footprint, manufacturers say.
Higher cell efficiencies increase the nominal module power, lowering the number of modules required for the same plant capacity and reducing installation and balance of system costs.
The perovskite layers are also far thinner than silicon designs and use around 100 times less materials, Marque said.
In addition, the material can be processed at a lower temperature and in a liquid state, allowing “energy and emissions savings as well as easier coating of surfaces,” according to Shankar G. Sridhara, Chief Technology Officer at panel manufacturer REC Group.
Perovskite concepts will result in more flexible, lightweight panels that can be installed more easily on roofs and other services, he said.
Germany is Europe’s largest solar market and the government has identified rooftop solar as a key growth segment in its bid to quadruple solar capacity by 2030. Meanwhile, the EU’s RePowerEU plan, provisionally agreed by legislators in December, requires all new residential, public and commercial buildings of a certain size to install rooftop solar panels. Developers of larger solar farms are also looking to alternative sites such as disused mines, where uneven services can prove challenging.
More work needs to be done to resolve degradation issues, Sridhara noted.
Component lifespans impact project economics and perovskite degradation is caused by moisture, oxygen, UV irradiance and high temperatures.
Oxford PV has targeted degradation levels less than or equal to silicon so its module customers can offer industry-standard warranties, the company said.
Perovskite developers have increased efficiency rates faster than other new cell concepts but they still face the risks associated with emerging technologies.
The cost of finance is higher for less proven technologies and companies often struggle to raise finance to step up from pilot projects to commercial-scale facilities. Oxford PV’s commercial launch has slipped from earlier targets as the company tackled supply chain challenges and economic headwinds during the Covid pandemic.
“We have secured most of our funds from private sources,” Oxford PV CEO Frank Averdung told Reuters Events. “Some of our support has come from local German ministries and this has given us the right conditions to expand our pilot factory outside Berlin.”
In Europe, the EU has provided funding for research activities but there has been a lack of funding available to scale up activities, mainly due to EU state aid rules. The new support package for clean technology pledged by European Commission President Ursula von der Leyen on January 17 could change this. The EU is planning to mobilize state aid and channel EU funding towards renewable energy companies and will “focus investment on strategic projects along the entire supply chain,” Von der Leyen told the Davos economic summit in Switzerland. The EU has also reopened bids for its Innovation Fund mechanism that will provide 25 billion euros ($27.2 billion) of support over 2020-2030 for innovative low-carbon technologies and has launched a Solar PV Industry Alliance to identify investment needs and coordinate funding.
IVPF and Voltec plan to access both private and public funding to build their factory in France. For example, the partners are looking to access French government funding for a pilot line through a national tender for innovative energy solutions.
Perovskite developers must back up ongoing technology improvements with manufacturing gains that will reduce risks and drive down costs. Silicon solar cells have benefited from years of manufacturing learnings to build out industrial-scale facilities.
Developers will also be wary of advances in other solar technologies, but tandem capabilities should mean perovskite concepts benefit from progress in areas such as higher performance HJT (Heterojunction) cells that combine crystalline silicon and amorphous thin silicon film in three layers. REC Group expects a compound annual growth rate for HJT manufacturing of 70% over 2021-2026 and plans to build a 2 GW HJT module factory in France that in future could produce tandem HJT-perovskite solutions.
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. Reuters Events, a part of Reuters Professional, is owned by Thomson Reuters and operates independently of Reuters News.