POWER Digest

Australia’s First ERF Carbon Abatement Auction Results Surpass Expectations. Australia held its first Emissions Reduction Fund (ERF) auction under the Abbott government’s Direct Action plan on April 15 and 16, and figures released by the Clean Energy Regulator indicate that the mechanism that replaced a controversial carbon tax and cap-and-trade program could result in four times the carbon reductions. The ERF is essentially an A$2.55 billion fund that pays Australian emitters (via voluntary bids at reverse auctions) to slash carbon emissions. The government pays for the lowest-cost abatement, and the Clean Energy Regulator sets a benchmark price and buys 80% of abatements offered below that price.

The mechanism seeks to achieve Australia’s emissions reduction target of 5% below 2000 levels by 2020. The results of the first auction indicate that the government is on track to buy about 180 million metric tons of carbon dioxide equivalent by 2020 if the current price of A$13.95 per metric ton holds. About A$660 million in carbon abatement contracts were awarded in April to 43 contractors covering 144 projects—mostly relating to sequestration, landfill gas capture, and waste treatment. Contract lengths range between three and 10 years, with the majority being for seven years.

Ontario Joins Carbon-Curbing Initiative. The eastern Canadian province of Ontario on April 13 announced it would set limits on greenhouse gas emissions in each sector of its economy by joining a cap-and-trade system under the Western Climate Initiative. The initiative, originally established in 2007 by the governors of five U.S. states, now consists of California, British Columbia, Manitoba, Ontario, and Quebec. Ontario’s government said it would reinvest funds raised through cap and trade in “a transparent way back into projects that reduce greenhouse gas pollution and help businesses remain competitive.” Per its long-term energy policy, Ontario has shuttered all its coal-fired power plants or converted them to burn biomass. Ontario Power Generation on Feb. 9 converted the last coal-fired plant in the province, the Thunder Bay Generating Station, to combust biomass pellets made from lumber mill sawdust.

URENCO Gets License to Expand Eunice Plant. The Nuclear Regulatory Commission (NRC) in March granted URENCO USA a license to increase enrichment production capacity to 10 million separative work units (SWU) from the current 3.7 million SWU at its Eunice, N.M., uranium enrichment plant. According to the World Nuclear Association, the expansion means the facility could be able to supply about 60% of U.S. needs in the 2020s, boosting competition for AREVA, Centrus (formerly USEC), and Global Laser Enrichment. The NRC also amended the company’s license to allow it to use high-assay depleted uranium (DU) tails from early military enrichment as feed for the new improved centrifuges it has been using since 2012. URENCO subsidiary Louisiana Energy Services (LES) intends to add three new separation building modules to the facility over the next several years. Last year LES asked the NRC to increase its licensed limit to possess up to 2.2 million kilograms of enriched uranium and up to 251 million kilograms of uranium in all forms.

U.S. and South Korea Renew Commercial Nuclear Trade Pact. After four years of negotiations, the U.S. and South Korea on April 22 reached a provisional 20-year deal that will revise a 40-year-old civil nuclear pact allowing South Korea to produce nuclear plant fuel for its 23 reactors but which still curbs its ability to reprocess spent fuel. For the U.S., the economic benefits include exports to South Korea, U.S. exports to third countries to supply South Korean projects and joint ventures, and imports of materials from South Korea to supply projects to the U.S., said the industry group the Nuclear Energy Institute.

E.ON Spins Off Conventional Generation Assets to New Company: Uniper. German utility E.ON will spin off its coal, oil, gas, and nuclear assets to a new company, Uniper, while retaining its renewable business at E.ON, the company announced on April 28. The new company will start operations on January 1, 2016, and have its headquarters in Dusseldorf, while E.ON will move to Essen. E.ON’s current finance chief, Klaus Schaefer, will be Uniper’s future CEO, while E.ON CEO Johannes Teyssen will continue to head the company that intends to focus on renewables, energy networks, and customer solutions. Forced to compete with subsidized renewables, E.ON’s conventional business activities have proven difficult in Germany. This March, it informed the Federal Network Agency of plans to shutter the 2010-built high-efficiency gas plants Irsching 4 and 5 effective April 1, 2016, as they are no longer profitable. However, the company has also reported losses from business in the UK, Sweden, and Italy. ■

—Sonal Patel, associate editor