IEA: Coal Consumption Stays Stubborn // Coca-Cola et al. Want a Green Tariff // FERC and NERC to Investigate Christmas Blackouts

IEA: Coal Consumption Stays Stubborn

The Energy Agency's recent report on global coal consumption expects coal consumption to reach an all-time high in 2022 and remain stable through 2025 unless the transition to cleaner energy sources speeds up.

The IEA's report highlights the shortage and costliness of natural gas as a key factor contributing to the ongoing reliance on coal in Europe. Despite a drop in iron and steel production, coal use is increasing due to the lack of clean energy capacity to meet demand. This led to a 2% increase in the use of coal for electricity production in Europe in 2022.

“The world is close to a peak in fossil fuel use, with coal set to be the first to decline, but we are not there yet," Keisuke Sadamori, the IEA’s Director of Energy Markets and Security, said. 

The IEA's prediction of stable coal demand over the next three years is based on the anticipated increase in coal use in emerging economies in Asia. Russia's invasion of Ukraine in February has also disrupted traditional energy trade flows, leading to higher prices and increased demand for coal. 

Coca-Cola et al. Want a Green Tariff

A group of major retailers with operations in Indiana, including Coca-Cola, Cummins, Roche, Salesforce, and Walmart, have joined Indianapolis and Bloomington in requesting that Duke Energy and AES Indiana create a green tariff program in the state.

Green tariff programs allow larger commercial and industrial customers to purchase bundled renewable electricity through a special utility tariff rate. The retailers have requested that the utilities offer options for sourcing electricity from renewable resources. The retailers believe a green tariff would help them reduce energy costs and meet sustainability targets.

“As we continue to invest in Indiana, we’re hopeful the state’s utilities can offer electricity from more sustainable sources of energy, such as wind and solar,” Todd Marty, senior director of sustainability for bottler Coca-Cola Consolidated, said. “Working with utilities in this way would help us meet our sustainability targets and help us potentially stabilize our energy costs over the long term.”

 Indiana Advanced Energy Economy (AEE), a trade association, estimates that if 10% of commercial and industrial energy use in the state participated in a green tariff program, it could result in a $3.4 billion investment in renewable energy capacity.

"Duke Energy recently proposed new green tariff options in South Carolina to cater to commercial customers who want to build their own renewable energy packages that provide 24/7 access to clean energy," reports Utility Dive. 

FERC and NERC to Investigate Christmas Blackouts

The Federal Energy Regulatory Commission (FERC) and the North American Electric Reliability Corporation (NERC) will investigate the power outages that occurred in the Southeast during the winter storm in December, which left millions of customers without power. The investigation will focus on the behavior of the bulk power system.

The holiday storm prompted conservation calls and emergency alerts in the Eastern Interconnection, while ERCOT and SPP set new demand records. Duke Energy and the Tennessee Valley Authority were forced to cut power to customers due to insufficient generation during the storm.

NERC CEO Jim Robb noted that the storm was the fifth major winter event in the past 11 years, highlighting the increasing frequency of extreme weather events and the need for the electric sector to change its planning scenarios and preparations for such events. 

“In addition to the load shedding in Tennessee and the Carolinas, multiple energy emergencies were declared and new demand records were set across the continent. And this was in the early weeks of a projected ‘mild’ winter,” Robb said, as reported by RTO Insider. “This storm underscores the increasing frequency of significant extreme weather events ... and underscores the need for the electric sector to change its planning scenarios and preparations for extreme events.”

But are extreme cold events happening more frequently due to climate change? According to Patrick Brown, the Co-Director of the Climate and Energy Team at the Breakthrough Institute, "Common sense, historical observations, and physics-based climate modeling all tell us that extreme winter weather, especially extreme cold, should get less extreme as the climate warms. Despite this, the idea that climate change is making cold weather even colder is just too enticing for many media outlets to resist."

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Conversation Starters

1. President Biden has nominated Willie Phillips as the acting chairman of the Federal Energy Regulatory Commission in lieu of Chairman Glick's recent departure. “It is an honor to be chosen by President Biden to lead FERC at such a pivotal moment,” Acting Chairman Phillips said. “The work we do here at FERC is crucial to ensuring consumers have access to reliable, safe, secure and efficient energy services at reasonable cost. I look forward to continuing to work with my fellow Commissioners and the FERC staff, as well as to prioritize public engagement, in pursuit of our important mission.”

2. Tokyo Natural Gas is moving ahead on a $4.6 billion deal with an American natural gas producer. "A unit of Tokyo Gas Co Ltd is in advanced talks to buy U.S. natural gas producer Rockcliff Energy from private equity firm Quantum Energy Partners for about $4.6 billion, including debt, people familiar with the matter said on Tuesday," reports Reuters. "If consummated, the deal would be the latest move by a Japanese entity to secure gas in jurisdictions perceived as friendly, the importance of which has risen for the import-dependent Asian nation in the wake of supply markets for the commodity being roiled by Russia's invasion of Ukraine."

3. Crude prices jumped in the first half of 2022 and have declined since. "In the final trading day of 2022, the spot price of Brent crude oil, a global benchmark priced in Northwest Europe, closed at $85 per barrel (b), $7 higher than the price on January 3, 2022 ($78/b)," reports the Energy Information Administration. "The Brent price rose significantly in the first half of 2022 but generally declined in the second half of the year. The spot price for West Texas Intermediate (WTI), a benchmark price for U.S. crude oil, followed a similar pattern, finishing the 2022 trading year $4/b higher than on January 3. The Brent crude oil spot price averaged $100/b in 2022, and the WTI spot price averaged $95/b."

Crom's Blessing