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  • Bioenergy
23 November 2018

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  • Philippines

MANILA — Metro Pacific Investments Corp said Tuesday it signed agreements to build P1 billion in biogas facilities for Dole Philippines,marking its first foray into bio-energy.

Metro Pacific said its unit, Metpower Ventures Power Holdings Inc, through Surallah Biogas Ventures Corp, finalized the deal with Dole Philippines.

“The project serves as MPI’s first foray in bio-energy and will serve as a catalyst for a highly scalable waste-to-energy platform it plans to build in the Philippines through MVPHI,” Metro Pacific told the stock exchange.

The facilities to be built by MVPHI will complement Dole’s existing facilities to process organic fruit waste in Surallah and Polomolok, South Cotabato, according to the disclosure.

The facilities will produce 50,000 megawatt-hours of clean energy annually, it said.

In a separate disclosure, Metro Pacific said it secured a P5 billion 10-year term loan from UnionBank to finance various projects. The debt will have fixed interest throughout its term.

  • Others
23 November 2018

 – 

  • Philippines

Victims of extreme weather events in the Philippines come forward in an investigation into how major carbon producers are violating human rights due to their role in driving climate change.

Survivors of devastating typhoons in the Philippines have appealed to major carbon producers to respect their human rights and act on climate change.

At an emotional hearing in London last week, the Philippines Commission on Human Rights heard personal testimonies from Filipinos who had suffered during recent extreme weather disasters. The commission also listened to expert testimony on climate change science, risk and law.

The inquiry is investigating whether the actions of 47 large coal, oil, mining and cement firms are breaching the human rights of Filipino citizens, including their rights to life, housing, health, food and self-determination, by extracting large volumes of fossil fuels or through carbon-intensive industrial processes.

It began in 2016 following a petition by Greenpeace South Asia and other local groups to investigate the issue. The commission held four sessions in the Philippines before expanding to New York and London because it wanted to hear evidence from a broader range of people and to raise the inquiry’s international profile.

Typhoon devastation

During the latest hearing at the London School of Economics, Veronica Cabe described how her Philippines home was devastated in 2009 by Typhoon Ketsana. Separated from her family, she had to wade waist-deep through floodwaters for seven hours to bring them dry clothes and pots of cooked rice and adobo. “When I finally saw them, I was happy because they were safe.”

The typhoon was devastating for the Philippines, leaving hundreds dead and causing billions of dollars worth of damage. Cabe spent the following months removing the mud that caked their home and trying to salvage anything that could still be useful. Her father caught leptospirosis and had to be treated in hospital. “I felt like part of our dignity was lost,” she said.

The panel also heard from a survivor of Typhoon Haiyan, the deadliest storm the country had ever seen. Marielle Bacason, who now works in London as a research nurse, described the emotional, social and physical impacts of the disaster on her family even five years later and said her priorities in life had changed. “Before, my worries were superficial but having that experience opened my mind.”

None of the 47 companies subject to the inquiry, which include Shell, Total, BP, ExxonMobil and Chevron, have appeared at the hearings despite being asked to present their views. However, several have challenged the inquiry’s jurisdiction over them in writing and argued that climate change is not a violation of human rights.

When asked if she had a message for respondents, Cabe said: “Maybe I can still appeal to the respondents: please listen to us. Consider our suffering.”

Holding companies accountable

The commission is an independent body tasked with investigating human rights violations in the Philippines. It does not have the power to hold the companies legally responsible or to fine them. But its report could inform the development of new laws in the Philippines, and it hopes that the body of evidence it develops will be used by policymakers, lawyers and climate campaigners around the world.

At its hearings, the commission was presented with attribution studies that calculate how much individual companies have contributed to global warming. Richard Heede of the Climate Accountability Institute explained how his landmark “Carbon Majors” projectshows the amount of carbon dioxide created by each of the world’s biggest coal, oil, gas and cement companies since the industrial revolution. The Philippines inquiry focuses on the publicly owned companies identified in this work, many of which operate in or have links to the country.

The commission was also shown expert evidence linking climate change with extreme weather events and information on the impact of fossil fuel industry lobbying and misinformation campaigns.

Dr Myles Allen, co-author of the IPCC’s Special Report on Global Warming of 1.5°C and head of the Climate Dynamics group at the University of Oxford’s department of atmospheric, oceanic and planetary physics, presented studies in London that showed human influence had increased the impact and intensity of Typhoon Haiyan.

He warned that even limiting climate change to 1.5 degrees Celsius would not be enough to completely avoid harm to people and property. Countries such as the Philippines are likely to suffer particularly badly.

Allen said fossil fuel companies had long been aware of the causes and impacts of climate change, but decided not to invest in mitigation technology decades ago. “In my view, there was an alternative course of action available to the industry,” he said.

The failure of fossil fuel companies to act has resulted in several high-profile climate liability cases. Dr Roda Verheyen, a lawyer who has represented such cases, explained how climate change litigation is growing around the world and courts are hearing cases involving human rights arguments. She talked in particular about two cases she is involved in. In one, a Peruvian farmer whose home is at risk from a melting glacier is suing German energy company RWE. The case was dismissed but is now under appeal. In another, called the “People’s Climate Case”, ten families from across the world are taking the EU to court for not having stronger targets to reduce carbon emissions.

“I represent real clients with real problems,” said Verheyen. “We’re not talking about future effects. We’re talking about historic emissions. We’re talking about already occurring damage or risk due to climate change today.”

Despite the evidence that burning fossil fuels is driving climate change, ending their use quickly will be a challenge. Dr Paul Ekins, co-director of the UK Energy Research Centre and professor of resources and environmental policy and director of the Institute for Sustainable Resources at University College London, said some investment in fossil fuels is necessary because the world is still dependent on them. But he was critical of investment in new exploration and discovery. “We know about plenty of reserves that we can’t afford to burn and discovering more of them will simply make those decisions more difficult.”

Any responsible business that is aware of its commitments to human rights and social welfare should be planning to exit from fossil fuels, added Ekins. “And we know from the recent 1.5C report it should be planning that pretty fast.”

Linking climate change and human rights

At an evening talk on human rights and climate change, held during the same week in London, Greenpeace lawyer Kristin Casper described the Philippines inquiry as a “microcosm of the global wave of action that is happening right now”.

Dr Annalisa Savaresi, law lecturer at the University of Stirling, said the commission has set an important precedent in investigating the global issue of climate change as a national human rights organisation.

She said there were several key challenges to doing this: showing that corporations have human rights obligations in general, that a specific corporation has contributed to climate change in a way that amounts to a human rights breach and allocating responsibility for such breaches.

Savaresi concluded that the Philippines commission had heard evidence that these could be demonstrated. “If the commission is to find that indeed corporate responsibility for human rights violations can be attributed to carbon majors that could be a primer, and who knows where we go from there.”

The commission’s final hearing will be held in Manila in December. It is expected to formally report on its findings by next summer.

Cabe, who is now a community anti-coal activist, remains hopeful that it will have a positive influence. “I have seen how poor communities have become ever more vulnerable to the impacts of climate change,” she said. “I believe that through this commission our stories and our voices can be heard. Governments and corporations can choose people over profit.”

  • Others
23 November 2018

 – 

  • Indonesia

Ahead of the legislative and presidential elections (scheduled for April 2019) the Indonesian government is unwilling to impose impopular measures. One of the side-effects is that subsidy spending has gone beyond the target that was set in the 2018 State Budget. Lets take a closer look at spending on energy subsidies in Indonesia so far this year.

Up to 31 October 2018, the Indonesian government spent IDR 117.4 trillion (approx. USD $8.0 billion) on energy subsidies. Considering the government targeted energy subsidy spending at IDR 94.4 trillion (approx. USD $6.5 billion) in the 2018 State Budget, energy subsidy spending realization has already reached 124.2 percent of the budget.

There are three factors behind this generous energy subsidy spending so far in 2018:

(1) global crude oil prices had been strengthening significantly up to October 2018;
(2) the rupiah has been weakening against the US dollar for most of the year;
(3) the government is reluctant to raise prices of subsidized fuels and electricity in order to avoid losing votes for next year’s elections.

Particularly higher prices of subsidized fuels tend to meet fierce resistance in Southeast Asia’s largest economy where many millions of people live in poverty or just above the poverty line. A price hike would push inflation higher, hence making life more costly.

Subsidy spending on subsidized fuels and subsidized 3-kilogram liquefied petroleum gas (LPG) canisters reached IDR 75.3 trillion (approx. USD $4.8 billion) in the first ten months of 2018, or achieving 160.7 percent of the targeted IDR 46.9 trillion that was set in the State Budget. Meanwhile, spending on electricity subsidies reached IDR 42.1 trillion (approx. USD $2.9 billion) in the same period, or 88.3 percent of the targeted IDR 47.7 trillion that was set in the state budget.

Therefore, it is clear that spending on subsidized fuels and subsidized 3-kg LPG canisters is the most problematic issue. Finance Minister Sri Mulyani Indrawati said the energy subsidy bill is particularly high this year because the government also still had to settle bills for 2016 and 2017. So far in 2018 the government paid debts of IDR 12.3 trillion to state-owned oil & gas company Pertamina and IDR 10 trillion to state-owned electricity company Perusahaan Listrik Negara (PLN). However, also without this additional burden, the government would significantly exceed the budget in terms of energy subsidy spending.

The Indonesia Crude (Oil) price (or ICP) touched USD $69.18 per barrel in October 2018, while the government had targeted the ICP at USD $48 per barrel in the 2018 State Budget. This is a problem for central authorities as it is estimated that for each USD $1 per barrel increase, public energy subsidy spending rises about IDR 1.2 trillion (approx. USD $82 million).

Meanwhile, the Indonesian rupiah was targeted at IDR 13,500 per US dollar in the 2018 State Budget, while in reality the currency had weakened to IDR 15,227 per US dollar by 31 October 2018. It is estimated that for each IDR 100 per US dollar rupiah depreciation, Indonesia’s central government spending – including subsidy spending – rises about IDR 1.8 trillion (approx. USD $123 million).

Mamit Setiawan, Executive Director at the Energy Watch, expects to see the government’s spending on subsidized fuels and subsidized 3-kg LPG canister to reach up to IDR 85 trillion (approx. USD $5.8 billion) by the year-end as demand will rise significantly ahead of Christmas and New Year celebrations.

Indonesia’s Energy Subsidy Spending & Indonesian Crude Price:

2012 2013 2014 2015 2016 2017 2018¹
Subsidy Spending
(in IDR trillion)
306.5 310.0 341.8 137.8 106.8  97.6  94.4
1. Fuel & LNG
(in IDR trillion)
211.9 210.0 240.0  64.7  43.7  47.0  46.9
2. Electricity
(in IDR trillion)
 94.6 100.0 101.8  73.1  63.1  50.6  47.7
ICP
(in USD/barrel)
112.7 105.8  96.5  49.2  40.2  50.0  48.0

¹ assumption set in revised state budget
Source: Finance Ministry of Indonesia

 

  • Bioenergy
  • Renewables
23 November 2018

 – 

  • Vietnam

AN GIANG — The Mekong Delta province of An Giang will offer preferential policies to investors in renewable energy plants as part of its strategy on sustainable development.

Investors whose projects are in production and trade, for instance, will be exempt from land lease fees for seven years and will receive other incentives, according to the province’s Department of Industry and Trade.

Investors will also be exempt from fees for infrastructure projects in industrial parks for 11 years, while loans equal to nearly 70 per cent of total investment capital will be offered.

Investors in economically difficult regions, such as districts Tri Tôn, Tịnh Biên and An Phú, will have a corporate tax rate of 10 per cent.

Nguyễn Minh Triết, deputy head of the department’s Energy Management Division, said at a conference on sustainable energy development held on Tuesday that four solar energy projects with 320 MWp capacity were being built in Tịnh Biên and Châu Thành districts.

Another five solar energy projects with capacity of 463 MWp in districts Tri Tôn and Tịnh Biên have been submitted for approval to the Ministry of Industry and Trade.

In March, a solar rooftop system with capacity of 3kWp will be installed at a facility of the industry and trade department, under an agreement between the province and Germany’s Mecklenburg-Vorpommern state.

This system will be the first in the province and serve as a model for solar energy generation.

Đoàn Minh Triết, the department’s deputy director, said the energy sector would focus on renewable energy to meet the increasing demand for power and to reduce greenhouse gas emissions.

Waste as energy source

The province also plans to use waste from agricultural production to generate energy under a biomass energy project awaiting approval from the Government.

Under the project, three plants will be built to generate energy from rice husks, with total capacity of 40 MW.

The plants will be built in areas where rice processing factories are located.

If the project is approved, the department will ask the Government to provide preferential policies on land, corporate tax and import tax for procurement of fixed assets.

Many investors want to invest in rice husk energy plants, but are worried about the price offered by the Government. They said the prices should be equal to or higher than prices offered for solar energy, according to the Công Thương (Industry and Trade) newspaper.

The provincial People’s Committee has also approved an action programme with investment of VNĐ500 billion (US$21.5 million) on effective management and use of biomass for energy generation in the context of climate change for the 2018-30 period.

Under the programme, areas of collected straw will include at least 40 per cent of the total straw discharged from rice production.  Of these areas, 15 per cent will be used for energy production.

In addition, at least 50 per cent of the total rice husks discharged from rice production will be used for renewable energy plants.

An Giang Province has huge potential for biomass energy as it has an annual output of paddy of more than 4 million tonnes, ranking second in the Mekong Delta region.

It also has 8 million tonnes of straw and 800,000 tonnes of rice husks, and a large amount of other kinds of biomass such as corn husks, sugarcane dregs, and others.

The total amount of biomass in the province is 10 million tonnes, which could generate 17 million MWh a year. — VNS

  • Energy Cooperation
23 November 2018

 – 

  • Vietnam

HANOI (Reuters) – Vietnam and Russia on Monday agreed to nearly triple bilateral trade to $10 billion (7.7 billion pounds) by 2020 from $3.55 billion last year, while expanding energy ties.

Russia is Vietnam’s biggest weapons supplier and Russian companies are involved in several Vietnamese energy projects.

Phuc said the two countries are looking to facilitate bilateral trade in farm produce and seafood and will have measures to support joint energy investment projects.

“Russian and Vietnamese energy companies are cooperating effectively and we want to strengthen these ties further with measures to facilitate joint energy investment projects in Russia, Vietnam and in third countries,” Medvedev said.

Vietnam was the fourth largest buyer of Russian wheat after Egypt, Turkey and Bangladesh in the previous marketing season. The Southeast Asian country has imported 1.2 million tonnes of Russian wheat since the start of the current 2018/19 marketing season on July 1.

Russia’s food safety watchdog beefed up quality controls on grain exports in mid-September citing complaints from Vietnam and some other major buyers about falling crop standards.

(Reporting by Khanh Vu and Polina Devitt; Editing by Shri Navaratnam)

  • Energy Efficiency
23 November 2018

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  • Singapore

Singapore government has earmarked S$14 million (US$10.19 million) over three years to fund the development of smart estates and modern technology, such as energy efficient applications.

Singapore has earmarked S$14 million (US$10.19 million) to drive the development of smart urban estates that can operate and consume energy more efficiently.

To be spread across three years, the investment would go towards helping technology companies build and pilot “innovative urban solutions” for smart estates, said Infocomm Media Development Authority (IMDA).

For a start, the industry regulator inked a partnership with Ascendas-Singbridge Group (ASB) and local industrial estate provider JTC to support trials at ASB’s Science Park 1 and 2 and JTC’s LaunchPad @ one-north, Fusionopolis One, and LaunchPad @ Jurong Innovation District.

IMDA said it planned to rope in more technology partners over time, adding that it hoped to facilitate the development of technology to support “hyper-connected smart estates of tomorrow”.

“This connectivity will enable innovative digital services to provide a seamless experience for the community and create new growth opportunities for enterprises,” it said. “Developers and facility owners can benefit from improvements such as energy efficiency and operational effectiveness, potentially reducing operating costs for buildings and estates.”

The Singapore government last year announced plans to set aside S$2.4 billion (US$1.75 billion) to fuel the country’s smart nation efforts and digital transformation. The funds were to go towards ICT tenders across various technology areas, including data analytics and Internet of Things (IoT) sensors, as well as enhancements to the necessary communications infrastructures.

A local consortium also was set up last year to develop and test smart mobility technologies, including smart traffic systems, automated video analysis, and environmental sensors. Led by the Nanyang Technological University and NXP Semiconductors, the consortium would tap wireless communication standard for vehicular use, vehicle-to-everything. The Singapore university’s campus would serve as testbed for technologies developed by the group, which also comprised industry partners Mitsui & Co.’s subsidiary Car Club, Red Hat, Panasonic, ST Engineering, and Shenzhen Genvict Technology.

  • Others
22 November 2018

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  • Indonesia

TEMPO.CO, Jakarta – State-owned mining holding company PT Inalum said it has succeeded in raising enough fund to acquire a majority 51 percent stake in PT Freeport Indonesia ending years of brain racking negotiations over control of one of the world largest copper and gold mines in Papua.

Indonesia`s state-owned miner Inalum hopes to wrap up the financial closure of a US$3.85 transaction for majority control of the local unit of U.S. mining giant Freeport McMoRan Inc.

The Indonesian government and Freeport have reached an agreement that Inalum will control a 51.23 percent stake in PT Freeport Indonesia, ending more than nine years of negotiations over control of Grasberg, the world`s second-biggest copper mine in Papua.

The Sales and Purchase Agreement (SPA) was signed in September, 2018 by Inalum CEO Budi Gunadi, Freeport McMoran Inc. CEO Richard Adkerson, and Rio Tinto Indonesia. Three ministers who witnessed the SPA signing were Energy and Mineral Resources (ESDM) Minister Ignasius Jonan, SOE Minister Rini Soemarno, and Finance Minister Sri Mulyani.

Inalum said it has raised US$4 billion (around Rp54.8 trillion) from the sales of government global bond to finance the deal.

The government has said the deal would be closed after Inalum made the payment.

“We have been ready for the final transaction with Freeport,” head of Corporate Communication and Government Relations of PT Inalum, Rendy Witoelar told Antara news agency on Friday.

Rendy said the bond fund would be used to finance the transaction and the rest to refinance debts.

The next steps are to settle documents related to mining business license (IUPK) with the energy and mineral resources Ministry and taxation and investment guarantee with the finance ministry.

“The global bond was the first issued by Inalum. There was no assets given as security. That indicated confidence of investors in Inalum and Indonesian economy,” Rendy said.

BNP Paribas, Citi, and MUFG were the Bank Joint Global Coordinators (JGC) for the bond and BNP Paribas, CIMB, Citi, Maybank, MUFG, SMBC Nikko, and Standard Chartered as Joint Book Runner (JBR).

The bond is given the rating of Baa2 by Moody`s and BBB by Fitch Ratings.

The signing of Sales and Purchase Agreement (SPA) followed the head of agreement (HoA) inked by Inalum and Freeport McMoRan Inc on July 7, 2018. At that time, all parties agreed on the total divestment value of Freeport Indonesia worth US$3.85 billion.

The figure divided from US$3.5 billion of Rio Tinto`s participating interest (PI) at 40 percent shares in Freeport Indonesia and US$350 million for the 5.6 percent stake of Indocopper Investama, which was owned by Freeport McMoran Inc.

  • Bioenergy
22 November 2018

 – 

  • Indonesia

Regulations mandating the use of palm oil in diesel fuel could help ease Indonesia’s dependence on energy imports and stabilise the local currency, while improving prospects for local palm oil producers.

In late August President Joko Widodo ratified a regulation mandating the compulsory use of 20 per cent blended biodiesel (B20), which uses palm oil as a feedstock, for all vehicles and heavy machinery.

To support greater use of the fuel, in early September the government also announced an amendment to regulations governing the Estate Crop Fund, allowing it greater scope to bridge the price gap between biodiesel – 7,600 rupiah (US$0.50) per litre – and standard diesel – 5,150 rupiah (US$0.34) per litre.

The fund, which generates capital from levies imposed on palm oil exporters and had an annual budget of around 14.2 trillion rupiah (US$972 million) in 2017, was previously limited to supporting sustainability projects, such as crop replanting and welfare support for small farmers.

It also provided subsidies for biodiesel, but was restricted to public service obligation sectors. Now the fund has the freedom to meet B20 demand in all sectors.

In addition to transport and industry, greater use of B20 could also be seen in the power sector.

In mid-September Ignasius Jonan, minister of energy and mineral resources, said he expects state electricity producer PLN to convert some of its fossil fuel power stations to use biodiesel as feedstock to encourage greater energy self-sufficiency.

The conversion of some PLN generational capacity, in particular its lower output 2000-MW power stations, could be undertaken within two years, according to Jonan.

The utility firm had already flagged its willingness to incorporate B20 into its feedstock mix, with PLN officials saying the company would buy up to 2.2 million kl of biodiesel to fire its existing diesel-fuelled power stations.

B20 initiatives to reduce energy imports, support palm oil industry

The drive to expand biodiesel use across sectors comes as the government looks to boost Indonesia’s energy self-sufficiency and reduce its reliance on energy imports that, due to the higher oil price environment, are taking a toll on the economy.

According to official estimates, biodiesel has the potential to reduce the energy import bill by around US$6 billion per year.

This would ease the current account deficit, which is projected to reach US$25 billion – approximately 2.7 per cent of GDP – this year and alleviate pressure on the rupiah, which is currently at levels not seen since the Asian economic crisis in 1997.

The measure is one of several steps the government has taken to stabilise the rupiah and reduce imports. In early September, for example, it imposed higher import tariffs – up to 10 per cent in some instances – on more than 1100 products, many of which are already manufactured locally.

In addition to rebalancing public finances, the B20 programme also aims to boost domestic consumption of palm oil, on the back of a decline in prices this year.

Crude palm oil (CPO) prices have fallen nearly 14 per cent since the start of 2018, according to a recent report from Moody’s, and could be further dampened in the short term if Indonesia and Malaysia, which together account for 85 per cent of the world’s CPO output, are unable to reduce current stockpiles.

Indonesian palm oil output hit four million tonnes in August, a four-year high, according to local media reports.

In the same month domestic palm oil consumption increased from 950,000 tonnes to 1.05 million tonnes, while exports dipped by two per cent to 2.8 million tonnes.

Although Moody’s expects demand for palm oil in key markets, including China and India, to drive CPO prices up over the medium term, Indonesia’s palm oil industry could face additional pressure from a proposal currently before the European Parliament that promises to phase out the use of palm oil in biofuels by 2030.

If ratified, Indonesia may need to seek new markets to soak up excess output.

This Indonesia economic update was produced by Oxford Business Group.

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