Easwaran Kanason

Co - founder of NrgEdge
Last Updated: April 20, 2018
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Business Trends

Depends on who you ask, there are signs that the friction in the oil rich South China Sea may be abating. Tensions seem to be easing in the short term, with nothing resolved to the long-term problem of border demarcation. Two countries in particular have been China’s main thorn in their quest to claim the entire sweep of the South China Sea – Vietnam and the Philippines – and in its dealings with both of them, China is rewarding cooperation and punishing dissidence.

Last month, Vietnam ordered Spanish firm Repsol to halt work on its Ca Rong Do (Red Emperor), where commercial drilling was imminent, later asking it to declare ‘force majeure’ following pressure from China. It is the second major cancellation in the southern Nam Con Son basin – which skirts China’s nine-dashed line – and could cost Repsol and partners some US$200 million in sunk investment. Vietnam has been vocal about pursuing its own energy agenda, but in the end, ended up having to kowtow to China.

The Philippines has also loudly proclaimed sovereignty over its part of the South China Sea, going as far as to bring the case to UNCLOS, which ruled in favour of the Philippines in a 2016 verdict that China refuses to recognise. However, since then, President Duterte has made cordial overtures to joint developments. While both sides have reiterated that joint oil and gas exploration will not affect their legal positions. The Philippines announced last week that cooperation was moving ahead after both countries claimed to recognise and accept each other’s ‘firm red lines’. It by no means settles the issue in the long run – indeed, successive governments could reverse the position – but it paves way for resources to be developed like in the Thailand-Malaysia Joint Development Area, legally unsettled but commercially viable. In choosing to engage, China has seemingly rewarded the Philippines with a mutually beneficial arrangement, a stance that it has not taken with the more belligerent Vietnam.

That’s not the best outcome, though, as the issue of maritime borders is still unsettled. China has always favoured bilateral talks with each of the claimants to the South China Sea – Malaysia, Indonesia and Brunei included – a divide and conquer strategy that allows it to throw its weight around. But with the USA absent to exert pressure for encompassing solution, favoured by the Obama administration but ignored by Trump, the countries of the South China Sea rim are sitting ducks against the might of China. Either they capitulate – and are rewarded with some crumbs – like the Philippines; or they defy – and end up capitulating anyway with nothing to show – like Vietnam. The vibe in the South China Sea may be seemingly calmer right now, but there are still dangerous currents beneath the surface.

The Current Weather Forecast: China and the South China Sea Nations

VietnamChoppy. China has been pressuring Vietnam to halt fishing and upstream activity.

The PhilippinesCalmer. China has agreed to joint development of hydrocarbon resources

MalaysiaCalm. No clashes yet, but Malaysia controls part of the disputed Spratly islands.

BruneiCalm. No clashes yet, but Brunei claims part of the disputed Spratly islands.

IndonesiaChoppy. No clashes yet, but Indonesia claims the waters around the Natuna islands are its ‘traditional fishing grounds’, effectively re-naming it “North Natuna Sea”

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EIA analysis explores India’s projected energy consumption

In the U.S. Energy Information Administration’s (EIA) International Energy Outlook 2019 (IEO2019), India has the fastest-growing rate of energy consumption globally through 2050. By 2050, EIA projects in the IEO2019 Reference case that India will consume more energy than the United States by the mid-2040s, and its consumption will remain second only to China through 2050. EIA explored three alternative outcomes for India’s energy consumption in an Issue in Focus article released today and a corresponding webinar held at 9:00 a.m. Eastern Standard Time.

Long-term energy consumption projections in India are uncertain because of its rapid rate of change magnified by the size of its economy. The Issue in Focus article explores two aspects of uncertainty regarding India’s future energy consumption: economic composition by sector and industrial sector energy intensity. When these assumptions vary, it significantly increases estimates of future energy consumption.

In the IEO2019 Reference case, EIA projects the economy of India to surpass the economies of the European countries that are part of the Organization for Economic Cooperation and Development (OECD) and the United States by the late 2030s to become the second-largest economy in the world, behind only China. In EIA’s analysis, gross domestic product values for countries and regions are expressed in purchasing power parity terms.

The IEO2019 Reference case shows India’s gross domestic product (GDP) growing from $9 trillion in 2018 to $49 trillion in 2050, an average growth rate of more than 5% per year, which is higher than the global average annual growth rate of 3% in the IEO2019 Reference case.

gross domestic product of selected countries and regions

Source: U.S. Energy Information Administration, International Energy Outlook 2019

India’s economic growth will continue to drive India’s growing energy consumption. In the IEO2019 Reference case, India’s total energy consumption increases from 35 quadrillion British thermal units (Btu) in 2018 to 120 quadrillion Btu in 2050, growing from a 6% share of the world total to 13%. However, annually, the level of GDP in India has a lower energy consumption than some other countries and regions.

total energy consumption in selected countries and regions

Source: U.S. Energy Information Administration, International Energy Outlook 2019

In the Issue in Focus, three alternative cases explore different assumptions that affect India’s projected energy consumption:

  • Composition case: EIA assumes India’s economy shifts toward further growth in manufacturing, which increases energy consumption.
  • Technology case: EIA assumes India’s industrial technology does not advance as quickly as in the IEO2019 Reference case, resulting in greater energy use.
  • Combination case: EIA combines the assumptions in the Composition and Technology cases.

EIA’s analysis shows that the country's industrial activity has a greater effect on India’s energy consumption than technological improvements. In the IEO2019 Composition and Combination cases, where the assumption is that economic growth is more concentrated in manufacturing, energy use in India grows at a greater rate because those industries have higher energy intensities.

In the IEO2019 Combination case, India’s industrial energy consumption grows to 38 quadrillion Btu more in 2050 than in the Reference case. This difference is equal to a more than 4% increase in 2050 global energy use.

December, 13 2019
U.S. onshore wind capacity exceeds 100 gigawatts

Cumulative U.S. installed onshore wind capacity exceeded 100 gigawatts (GW) on a nameplate capacity basis as of the end of September 2019, according to the U.S. Energy Information Administration’s (EIA) Preliminary Monthly Electric Generator Inventory. More than half of that amount has been installed since the beginning of 2012. The oldest wind turbines still operating in the United States came online as early as 1975.

installed wind capacity by state

Source: U.S. Energy Information Administration, Preliminary Monthly Electric Generator Inventory

As of the third quarter of 2019, 41 states had at least one installed wind turbine. Texas had the most capacity installed, at 26.9 GW, followed by Iowa, Oklahoma, and Kansas. These four states accounted for half of the total U.S. installed wind capacity.

In the United States, wind turbines tend to come online late in the year. Based on information reported in the Preliminary Monthly Electric Generator Inventory, EIA expects that an additional 7.2 GW of capacity will come online in December 2019. EIA also expects that another 14.3 GW of wind capacity will come online in 2020. If realized, the United States would have about 122 GW of wind capacity by the end of next year.

December, 13 2019
U.S. coal production employment has fallen 42% since 2011

The U.S. Energy Information Administration’s (EIA) Annual Coal Report shows that coal mining employment has declined in the past decade as coal demand has decreased. Most U.S. coal is consumed in the electric power sector and has faced increased competition from electricity generation from natural gas and renewable technologies. U.S. coal mining employment fell from a high of 92,000 employees in 2011 to 54,000 employees in 2018, with the most dramatic decrease in the Appalachian region.

Annual U.S. coal production peaked in 2008, three years before coal mining employment reached its record high. In 2008, the United States produced 1.2 billion tons of coal from 1,458 mines. Since then, coal production has fallen and many mines have closed: in 2018, U.S. coal production was 756 million tons from 679 mines. As was the case with employment, much of coal’s production decline was concentrated in the Appalachian region. More than half of the region’s mines have closed since 2008, and production has fallen from 390 million tons in 2008 to 200 million tons in 2018.

U.S. coal production by region

Source: U.S. Energy Information Administration, Annual Coal Report

Appalachian mines tend to be smaller than mines in the Interior and Western regions and to use labor-intensive underground mining techniques, as opposed to machinery-intensive longwall mining and surface mining operations. A slight increase in coal mining employment in the Appalachia region from 2016 to 2018 corresponded to an increase in coal exports because this region is the dominant source of coal shipped overseas.

The decline in operating mines has been steeper than the changes in employment and production. EIA’s review of operating mines showed that smaller mines have had greater difficulty competing in the current market and have been the first to close.

U.S. coal mining labor productivity

Source: U.S. Energy Information Administration, Annual Coal Report

As smaller, less productive mines were idled or closed, overall coal labor productivity, measured in tons per labor hour, gradually increased from 5.2 tons per labor hour in 2011 to 6.2 tons per labor hour in 2018. The large surface mines in the Powder River Basin (PRB) in Wyoming and Montana have much higher productivity, but even PRB productivity has declined as the region’s producing coal seams become deeper and the amount of overburden, or top soil and rock above the coal seam, increases.

In contrast, the Appalachia and Interior regions both have shown improvements in labor productivity between 2011 and 2018, largely because they are increasingly relying on less labor-intensive longwall and highwall mining systems and closing or idling the least productive mines.

Data from EIA’s Annual Coal Report are available in EIA’s Coal Data Browser. In addition to data from the U.S. Mine Safety and Health Administration, EIA’s Annual Coal Report also includes mine-level data from EIA’s Survey of Coal Production and Preparation and coal exports data from the U.S. Department of Commerce.

December, 12 2019