Wind and Coal Replace Texas Gas // Nuclear Revival Around the Globe // China: Coal's Last Bastion

Wind and Coal Replace Texas Gas

Gas burn is down in Texas despite low temperatures. How could that be? In previous years, the colder the state got, the more gas it used. What changed?

SPG reports, Beginning last September, as spot gas prices in Texas tested new highs in the $5/MMBtu area, generators across the state began switching away from the fuel." And what did that switch to? Coal and wind.

"Over the past six weeks, blustery conditions across ERCOT have propelled wind generation to record highs with the fuel capturing daily market share as high as 50% to 60% of total generation in the primary Texas power market," they report.

This matches a recent trend in Europe. Earlier in the year, climate group EMBER released a report that said the same thing. When gas became expensive, coal stepped in to fill the gaps. 

Texas is lucky that it's having a windy season. If it wasn't, then coal would likely be ERCOT's king--hard times for ERCOT's emissions.

This brings me to my last point: though far more data points are needed, these trends imply something shocking: "green" renewables might only decarbonize when natural gas is cheap. If true, it undermines the foundations of the renewables-only dream.

Nuclear Revival Around the Globe

Recent news from Canada, France, and South Korea indicates they are all now taking further steps toward reviving nuclear.

Here's where each country is at:

• Canada: Canada's federal budget is moving toward investing more money in nuclear. The budget last week earmarked $120.6 million for SMRs, $69.9 million for waste research, and $50.7 million for the nuclear safety commission to be able to regulate new reactor designs. Dr. Christopher Keefer, president of Canadians for Nuclear Energy, said, “We’re seeing baby steps. I’m very optimistic because in my discussions with Conservative caucus members, Liberal caucus and cabinet ministers, there is a huge openness to nuclear in there."

• France: Nuclear enjoys strong support after decades of ambivalence. Macron requested EDF to build six new EPRs by 2050 after the 1.6 GW Flamanville 3 unit is commissioned once its construction ends. Marine Le Pen, Macron's main opponent in the second round of elections, also supports nuclear. Regardless, hurdles like whether or not nuclear gets included in the EU's green taxonomy, or the neglect of the current fleet remain. SPG reports, "EDF might struggle to maintain 61 GW of existing capacity while also pursuing an ambitious new build program, even with the backing from the French state."

• South Korea: As we covered yesterday, South Korea's president-elect Yoon Suk-yeol is halting their nuclear phaseout for climate, security, and economic reasons. In addition, the country's SK Group is contemplating investments in SMRs from TerraPower, Bill Gates's advanced nuclear company.

Is an atomic renaissance underway?

China: Coal's Last Bastion

Yesterday, we covered coal's temporary comeback in the states. Today, we're looking at coal's last true champion: China.

Chinese banks are coal's biggest backers, according to a new piece from Bloomberg. "Chinese lenders have helped coal companies raise about $10 billion selling bonds so far this year," they write. "That’s more than double the $3.8 billion raised in the same period of 2021 and marks one of the busiest starts to a year since the Paris climate accord was struck in 2015."

Currently, China has around 260 GW of coal planned or already under construction. 

China's coal investments will set back whatever emissions and pollution goals they've set for themselves. China is already twice the polluter America is and the word leader in carbon emissions. 

Conversation Starters

• China is slated to surpass the US as the world's top refiner. The country's refining capacity is slated to reach 937 million mt/year, or 18.81 million b/d, though a headwind on feedstock prices from the Ukraine war and depressed demand from COVID lockdowns is hitting the sector.

• The EU is now drafting a ban on Russian oil. Though it's unclear when the ban will take effect, it seems like it will take the phase-in structure of the coal bans, which allowed for a four-month transition period.

• John Kerry has called for a swifter transition to wind and solar because Putin "cannot control the power of the wind or the sun." Wind turbines can use 4.4 thousand pounds of nickel, and Russia boasts one of the world's largest nickel mines. China also provides 85% of the world's rare earth metals, which go into solar panels.

Nuclear Barbarians: Fire to Fission Pt. I ft. Mark Hinaman

Mark Hinaman, who grew up in an oil and gas family and found great success in fracking, is now turning towards nuclear for a vision of the future. He joined me to talk about his background, energy transitions, what nuclear can learn from O&G, and more!

Crom's Blessing

Zeppelin construction.