Climate Change, Natural Gas and coal gasification.

The apparent shift in the global energy market from coal to natural gas has shaken fossil fuel markets. As Australian resource exporters are keenly aware, this tilt has pushed seaborne coal prices down and improved the prospects for ocean-shipped LNG.
This change of fortunes for coal and gas has led to some unexpected and unwelcome arbitrage opportunities.
Some gas-fired utilities in Europe have switched back to burning coal, some of it displaced from the US by even cheaper shale gas there. And while Europe will in the longer term pay up for renewables and Russian gas in order to steer away from coal (which is dirtier than gas in terms of pollution and emissions), developing countries will embrace coal as a cheap energy source.
Nowhere is the reign of Old King Coal more resplendent than in China. In Global Exhaustion, the analyst Andy Lees remarks that 'it was the demand for coal that drove China's growth in the last twenty years, not the other way around.' Ultimately, he argues, China's boom is underpinned by resource exploitation. China will surely lower its energy intensity over time, but Jevon's Paradox (or 'rebound effect') predicts that improving efficiency won't lower overall energy use. In fact, it has the opposite effect.
The undesirable effects of burning coal are all too obvious. China's cities need gas. But coal now has become irresistibly cheap, especially from the landlocked mines in western China, which must freight a long way to port. Whence lies the perverse course now being pursued by some Chinese energy companies: to transform coal into gas, at the mine, and then to pipe the gas to coastal cities as a 'clean' fuel. The term 'synthetic natural gas' (SNG or syngas) was invented for this product, and it is as oxymoronic as it is cynical.

The origins of SNG are revealing. During World War II, with the Allies advancing on its oilfields in the Caucasus region, Nazi Germany developed a process of gasifying Ruhr coal as a wartime substitute for oil. The technology was further advanced by apartheid-era South Africa in response to oil embargoes. Strategically speaking, this is a technology pursued by besieged states.
Gasification of coal to SNG is a high temperature process that guzzles water and emits CO2 in alarming quantities. One thousand cubic meters of SNG (equivalent to about 6 barrels of oil) uses 2-3 tonnes of coal and thrice that weight in water.

China has plans for 30 billion cubic meters (bcm) of SNG annually by 2015. To put this in context, China today imports about 30bcm of piped natural gas annually from Turkmenistan and another 30bcm via LNG. Tallying up all 28 SNG projects on the drawing board, capacity could reach 100bcm by 2018. At this upper range, SNG would gobble up 20% of industrial water in Xinjiang and Inner Mongolia.
SNG is bad economics, bad science and an environmental catastrophe.
The economics work today only because coal is cheap and gas prices are high; but it's highly vulnerable to longer-term price shifts. Also, SNG makers assume water is abundant and virtually free, at only 2% of total cost. That is a blatant mispricing. China is already in disagreements with its neighbours over its capture of water. In theory, some process water can be recycled, but coal is a notorious source of carcinogens known as BTX volatiles, which are expensive to remove.
The science is dubious too, because the SNG process converts a relatively high-quality energy source (coal) to a lower quality state (gas), and consumes a lot of energy in doing so. Thus the efficiency of conversion is low.
Finally, from an environmental perspective, the CO2 emissions from SNG production are much higher than conventional natural gas, and even worse than burning coal for power directly.
In effect, SNG is trading off global CO2 emissions and local water consumption for cleaner air in China's biggest cities. This is a classic 'externality', where one community benefits while outsiders suffer the costs. Chinese policymakers are well aware of this dilemma, which makes the SNG boom all the more puzzling. What is striking is the ambition of Chinese plans versus the widespread scepticism of SNG worldwide and inside China itself.
I do not hold the view that China has a special responsibility to contain its per capita carbon consumption below that of developed nations; that request would be unreasonable and probably futile. But the wanton resource abuse of SNG is the wrong path to growth.

Breen Buildings

Say what you will about the benefits of clean energy or the costs of pollution, the jury has returned an unambiguous verdict on the greening of the commercial real-estate market.  The niche has become mainstream. Anyone who says green buildings, which are certified by third-party verifiers as demonstrating superior environmental performance and resource efficiency, are “boutique” has not been paying attention.

The commercial buildings sector boasts the most explosive growth in green building. In 2010, a third of all new commercial construction was green, amounting to a $54 billion market for commercial green buildings. By 2015, green buildings in the commercial sector are expected to triple, accounting for $120 billion to $145 billion in new construction and $14 billion to $18 billion in major retrofit and renovation projects.
But not all commercial buildings are the same. For all practical purposes, there are three classes of commercial buildings – Class A, Class B and Class C. These classifications are commonly used as a proxy for a building’s ability to attract high-value tenants.

While there is no standard definition for what qualifies as Class A, Class B and Class C commercial buildings, the Building Owners and Managers Association suggests considering the following criteria when classifying commercial buildings:
Class A: Most prestigious buildings competing for premier office users with rents above average for the area. Buildings have high quality standard finishes, state of the art systems, exceptional accessibility and a definite market presence.
Class B: Buildings competing for a wide range of users with rents in the average range for the area. Building finishes are fair to good for the area. Building finishes are fair to good for the area and systems are adequate, but the building does not compete with Class A at the same price.
Class C: Buildings competing for tenants requiring functional space at rents below the average for the area.
In other words, Class A buildings are the most desirable and Class C buildings are the least desirable from the typical tenant’s perspective. Greater desirability means more money. It turns out Class A is where the green paradigm has achieved the deepest penetration.

“Green building is fundamentally altering real estate market dynamics – the nature of the product demanded by tenants, constructed by developers, required by governments and favored by capital providers,” according to RREEF Research. “The upshot will be a redefinition of what constitutes Class A properties and even institutional-quality real estate.”

The predicted “upshot” is rapidly becoming a reality in Manhattan‘s commercial real-estate markets, which is dominated by Class A properties. In Manhattan, Class A office buildings account for 61% of the total market. Class B buildings make up 26% of the market and Class C accounts for the remaining 13%, according to Cushman & Wakefield.

While stricter government regulation may ultimately make green buildings the de-facto standard for new and renovated buildings in the future, tenant demand is the primary reason why green buildings are becoming mainstream in today’s Class A commercial real-estate market.

“At Hines, we specialize in Class A space, and we’ve reached the point where clients don’t think it’s Class A unless it’s green,” said Jerry Lea, the Executive Vice President of the real-estate investment and management firm.

Many tenants are willing to pay a premium for space in green buildings because of the lower operating costs, higher worker productivity and reputational benefits associated with the superior environmental performance of green buildings.

If the past presages the future, today’s green buildings market is chump change compared to the opportunity likely to come down the pike over the next decade. To put the scale in perspective, in 1995, the total floorspace of U.S. commercial buildings – 58.8 billion square feet of floorspace – exceeded the total area of the State of Delaware and amounted to more than 200 square feet for every U.S. resident.

Talk about a sea of green.

Forbes

Climate Change: Evidence Is Overwhelming.

Perhaps now the deniers will cease their attacks on the science of climate change, and the American public will, at last, fully accept that global warming is a danger now and an even graver threat to future generations.

On Monday, the Intergovernmental Panel on Climate Change, a United Nations group that since 1990 has been issuing increasingly grim warnings about the consequences of a warming planet, released its most powerful and sobering assessment so far. Even now, it said, ice caps are melting, droughts and floods are getting worse, coral reefs are dying. And without swift and decisive action to limit greenhouse gas emissions from fossil fuels and other sources, the world will almost surely face centuries of climbing temperatures, rising seas, species loss and dwindling agricultural yields. The damage will be particularly acute in coastal communities and in low-lying poor countries — like Bangladesh — that are least able to protect themselves.

The report’s conclusions mirrored those of a much shorter but no less disturbing report issued two weeks ago by the American Association for the Advancement of Science, the world’s largest scientific society. Like the panel, the association declared that the world is already feeling the effects of global warming, that the ultimate consequences could be catastrophic, and that the window for effective action is swiftly closing.

The intergovernmental panel’s report (a companion report later this month will discuss what governments should do) could carry considerable weight with delegates to next year’s climate change summit meeting in Paris, at which the members of the United Nations will again try, after years of futility, to fashion a new global climate treaty. And together, the two reports could build public support for President Obama’s efforts to use his executive authority to limit greenhouse gases, most recently with a plan issued on Friday to reduce methane emissions from landfills, agricultural operations and oil and gas production and distribution.

The methane strategy is one of several weapons in Mr. Obama’s broader Climate Action Plan, announced last year, that seeks to reduce emissions by circumventing an obstructionist Congress by aggressively using his executive authority under the Clean Air Act and other statutes. The most important of these are two rules from the Environmental Protection Agency — one already proposed, another in the works — that would regulate emissions from new and existing coal-fired power plants, the largest source of industrial carbon pollution. He has also promised to increase energy efficiency in appliances and buildings, and double renewable energy capacity on public lands by 2020.

The methane abatement plan is a welcome addition to that arsenal. Methane, a product of animal wastes and of decomposing material in landfills, and the main component in natural gas, contributes only about 9 percent of America’s greenhouse gas emissions. And natural gas, as a fuel, is much cleaner than coal.

But methane is a powerful atmospheric pollutant, 20 times more potent than carbon dioxide, and thus a major driver of global warming.

The burden for fulfilling the president’s promise will fall on the E.P.A., which is charged with developing regulations to plug methane leaks in pipelines and in oil and gas production systems. Given everything we now know, public and congressional acceptance of these initiatives should be close to automatic. But, of course, it is not. Senator Mitch McConnell, the leader of the Senate Republicans, seeks to block the coal regulations. Industry groups are complaining in advance about methane regulations.

Some of this may be attributable to public misunderstanding. A poll last year found that one-third of Americans believed that scientists disagreed on whether global warming was happening. These studies suggest virtually no disagreement. The hope among advocates is that the latest show of scientific solidarity will clear up any confusion about the causes and consequences of climate change and the need for action.
(NYT Editorial March 31, 2014)