Today’s Key Takeaways: Ambler ready to submit application for wetlands permit. U.S. fossil fuel revenue gap won’t be easy to fill. Solving transportation puzzle for carbon capture – LNG carriers filled with liquefied CO2 on backhaul routes. Bipartisan bill to force defense contractors to sop buying rare earths from China. If oil production stopped today, system would collapse.
NEWS OF THE DAY:
Ambler Metals says it’s nearly ready to apply for permit to mine in NW Alaska
High North News, January 18, 2022
Ambler Metals expects to submit an application early this year to the Army Corps of Engineers for a federal wetlands permit, according to APM.
The application would be for extraction from what’s known as the Arctic Deposit, in Northwest Alaska. Copper is the prime target.
Trilogy says its budget for this year’s fieldwork is $28.5 million, a slight increase over last year.
The mine will no doubt rely on the proposed 200-mile Ambler Road, which won federal approval during the Trump administration. Environmental groups, Alaska Native tribes and the Tanana Chiefs Conference have filed lawsuits challenging the adequacy of the federal review of the road.
Plugging the U.S. fossil fuel revenue gap won’t be easy
Ben Geman, Axios, January 18, 2022
Fossil fuel-related government revenues are slated to plummet if the U.S. deeply cuts greenhouse gas emissions, and policy tools to make up the shortfall face hurdles, a new paper finds.
Why it matters: The analysis from the nonpartisan Resources for the Future is a rare holistic look at revenue flows across levels of government — federal, state, tribal and local.
How it works: Oil, gas and coal provided an average of $138 billion annually in 2015-2020.
Fuel excise taxes are the biggest source (at $48b for states and $40b for the federal government annually), while others include production royalties, pipelines, local property taxes, and corporate taxes.
Zoom in: It projects revenues in scenarios consistent with holding temperature rise to 2°C or 1.5°C above preindustrial levels — benchmarks for avoiding some of the worst harm.
In the 1.5°C case, revenues decline 18% by 2030 and 80% by 2050. The drop is also significant under 2°C scenario, at 6% and 56%, respectively.
There’s still some decline even absent any new policies, largely thanks to vehicles becoming more efficient and electric, the power market’s move away from coal and other forces.
The big picture: The declines are not a reason to delay efforts to cut emissions, the authors say, citing the steeper costs of failure to rein in warming.
The broad mix of policy options to address revenue losses include carbon pricing, changing motor fuel taxes to a system based on miles traveled, ending fossil fuel subsidies and higher marginal rates.
Yes, but: None of this is easy, with the paper noting that “each option faces considerable political hurdles in the immediate future.”
Study: “Dual-Use” LNG Shipping Could Transform Carbon Capture
The Maritime Executive, January 16, 2022
Carbon capture is one of the key technologies proposed as a potential strategy in decarbonization, and carbon-intensive industries see it as their most viable carbon management approach. But carbon capture faces multiple developmental challenges, including the need to transport the CO2 from the source to the site of its usage or long-term isolation. Pipelines are a possibility for short runs, but the high capital cost for distances over about 100 miles make this approach too expensive to scale.
In an attempt to solve the transportation puzzle for carbon capture technologies, two researchers at the University of Houston, Texas have proposed filling up LNG carriers with liquefied CO2 on their backhaul routes.
In a recent article, Ramanan Krishnamoorti, Chief Energy Officer at the University of Houston, and others highlight a new business opportunity for LNG carrier operators. The specialized cryogenic tanks used in transport of LNG can also be used to transport captured carbon, an idea they refer to as “dual-use shipping.”
Fundamentally, their concept explores how dual-use shipping can utilize vessels that transport LNG one way and carry captured CO2 on their return journey. The CO2 be later injected into an oil reservoir for enhanced oil recovery (EOR) at a location near to an LNG loading terminal.
The researchers looked into the case of trading carbon as a physical commodity between South Korea or Japan and areas with high sequestration capacity, such as the US Gulf of Mexico. South Korea and Japan lack a comparable capacity to sequester carbon emissions, yet they are the largest importers of LNG from Gulf of Mexico.
“Consider this: It takes about 25 days for LNG shipped from the U.S Gulf Coast to reach South Korea or Japan. The ship then returns cargo-free, taking another 25 days and incurring the same fixed crew, maintenance, and hull costs as the laden ship, while the fuel cost for sailing the empty ship are only about 20 percent lower. Forgoing this cost-saving, the returning ship can be laden with carbon dioxide captured at power plants or refineries close to LNG import terminals in Asia and then sequestered offshore in the Gulf of Mexico as the ship returns to the LNG-exporting facilities,” proposed Dr. Krishnamoorti and Aparajita Datta in an article published by the Houston Chronicle.
There are already patents and designs to build ships with the exact specifications for dual-use shipping of LNG and carbon, though it is only approved for smaller ships at present.
Ships listed as LPG (Liquefied Petroleum Gas) tankers are used in the Baltic region to transport CO2 for industrial applications. Another six Norwegian ships have dual-use capabilities. Thus, with capital investment, the authors say that there is no scientific reason why dual-use shipping cannot be up-scaled to larger vessels.
US bill would block defense contractors from using Chinese rare earths
Reuters/Mining.Com, January 17, 2022
A bipartisan piece of legislation introduced in the U.S. Senate on Friday would force defense contractors to stop buying rare earths from China by 2026 and use the Pentagon to create a permanent stockpile of the strategic minerals.
The bill, sponsored by Senators Tom Cotton, an Arkansas Republican, and Mark Kelly, an Arizona Democrat, is the latest in a string of U.S. legislation seeking to thwart China’s near control over the sector.
It essentially uses the Pentagon’s purchase of billions of dollars worth of fighter jets, missiles, and other weapons as leverage to require contractors to stop relying on China and, by extension, support the revival of U.S. rare earths production.
Rare earths are a group of 17 metals that, after processing, are used to make magnets found in electric vehicles, weaponry, and electronics. While the United States created the industry in World War Two and U.S. military scientists developed the most widely-used type of rare earth magnet, China has slowly grown to control the entire sector the past 30 years.
The United States has only one rare earths mine and has no capability to process rare earth minerals.
“Ending American dependence on China for rare earths extraction and processing is critical to building up the U.S. defense and technology sectors,” Cotton told Reuters.
The senator, who sits on the Senate’s Armed Forces and Intelligence committees, described China’s evolution into the global rare earths leader as “simply a policy choice that the United States made,” adding that he hoped fresh policies would loosen Beijing’s grip.
Known as the Restoring Essential Energy and Security Holdings Onshore for Rare Earths Act of 2022, the bill would codify and make permanent the Pentagon’s ongoing stockpiling of the materials. China temporarily blocked rare earth exports to Japan in 2010 and has issued vague threats it could do the same to the United States.
To build that reserve, though, the Pentagon buys supply in part from China, a paradox that Senate staffers hope will abate in time.
The rare earths production process can be highly pollutive, part of the reason why it grew unpopular in the United States. Ongoing research is attempting to make the process cleaner.
Cotton said he has talked to various U.S. executive agencies about the bill but declined to say if he had talked with President Joe Biden or the White House.
“This is an area in which Congress will lead, because many members have been concerned about this very topic, regardless of party,” he said.
Encourage domestic output
Most members of the nascent U.S. rare earths sector praised the bill, though some worried defense contractors could continue to ask for waivers to buy Chinese rare earths even after 2026.
The Aerospace Industries Association, a trade group for Northrop Grumman Corp, Lockheed Martin Corp and other U.S. aerospace and defense companies, declined to comment on the bill.
“Well placed policies such as this one get us closer to the target of onshoring this critical supply chain,” said Marty Weems, North American president of Australia-based American Rare Earths Ltd, which is developing three U.S. rare earth projects.
MP Materials Corp, which operates the only U.S. rare earths mine and relies on Chinese processors, said it appreciates “ongoing efforts by the Department of Defense and broader U.S. government to secure the domestic rare earth supply chain and promote free and fair competition.”
The bill, which the sponsors expect could be folded into Pentagon funding legislation later this year, offers no direct support for U.S. rare earths miners or processors.
Instead, it requires Pentagon contractors to stop using Chinese rare earths within four years, allowing waivers only in rare situations. Defense contractors would be required to immediately say where they source the minerals.
Those requirements “should encourage more domestic (rare earths) development in our country,” Cotton said.
The Pentagon has in the past two years given grants to companies trying to resume U.S. rare earth processing and magnet production, including MP Materials, Australia’s Lynas Rare Earth Ltd, TDA Magnetics Inc and Urban Mining Co.
Kelly, a former astronaut and a member of the Senate’s Armed Services and Energy committees, said the bill should “strengthen America’s position as a global leader in technology by reducing our country’s reliance on adversaries like China for rare earth elements.”
The bill only applies to weapons, not other equipment the U.S. military purchases.
Additionally, the U.S. trade representative would be required to investigate whether China is distorting the rare earths market and recommend whether trade sanctions are needed.
When asked if such a step could be seen as antagonistic by Beijing, Cotton said: “I don’t think the answer to Chinese aggression or Chinese threats is to continue to subject ourselves to Chinese threats.”
As Alaska’s legislative session begins, masks stay required at the state Capitol
James Brooks, Anchorage Daily News, January 17, 2022
Face masks are required in the Alaska State Capitol as state lawmakers begin the 2022 legislative session.
A vote to make masking optional failed in a 3-10 vote of the Legislative Council on Monday. The council, which includes members of the state House and Senate, controls the operations of the Capitol complex in Juneau.
The opening day of the 121-day regular session is Tuesday.
The council has required masks in the Capitol complex since the start of the COVID-19 pandemic in 2020. It voted to remove the masking requirement in May 2021 but reinstated the requirement in October.
Most of Alaska’s other public buildings, which operate under rules set by the administration of Gov. Mike Dunleavy, do not have a mask requirement.
Members of the public were prohibited from visiting the Capitol in the regular 2020 and 2021 legislative sessions, but the building reopened in June and remains open for visitors.
State lawmakers and legislative staff must be tested for COVID-19 every four days, but there is no testing requirement for members of the public. A proposal to make testing optional failed 4-9 in the council on Monday.
In keeping the masking and testing policies, lawmakers cited the threat posed by the fast-spreading omicron variant of COVID-19. Sen. Gary Stevens, R-Kodiak, said even mild cases could keep legislators away from debates and votes, disrupting work in the Capitol.
Sen. Lora Reinbold, R-Eagle River, was the lawmaker who proposed amending the Capitol’s COVID-19 policies to make masking and testing optional. Reinbold has been a reliable critic of COVID-19 masking and vaccination requirements and was banned by Alaska Airlines over the issue.
Voting in support of Reinbold’s proposals were Sen. Peter Micciche, R-Soldotna and Rep. Cathy Tilton, R-Wasilla. Rep. Chris Tuck, D-Anchorage, joined them in voting against the mandatory testing policy.
Voting to keep both mandates were Reps. Matt Claman, D-Anchorage; Bryce Edgmon, I-Dillingham; Neal Foster, D-Nome; Sara Hannan, D-Juneau; Louise Stutes, R-Kodiak; and Sens. Click Bishop, R-Fairbanks; Lyman Hoffman, D-Bethel; Bert Stedman, R-Sitka; and Gary Stevens, R-Kodiak. Tuck voted to keep the mandatory masking policy.
During debates over the COVID-19 protocols for lawmakers, some members of the council objected to the inconvenience caused by mandatory testing and masking.
“Sometimes you just have to put your big-boy pants on and deal with these issues,” Stedman said.
From the Washington Examiner, Daily on Energy:
DALIO’S WARNING ON GREEN ENERGY: Bridgewater Associates founder Ray Dalio praised oil producers for keeping supply steady during the current inflationary period and said that to “cram” too much into a transition to green energy threatens to worsen inflation, Bloomberg reported
“Thank God for the oil producers,” the hedge fund tycoon said yesterday during a panel at the Abu Dhabi Sustainability Week summit.
Consumer prices increased 7% between November 2021 and the year before, with the cost of energy playing an integral role.
Proponents of green policies maintain that rapidly expanding renewable energy would reduce costs for energy and is necessary due to climate change, but there have been warnings that such transition must be measured and, as Dalio said, “smart.”
“If I stopped all oil production today, our system would collapse,” Amos Hochstein, senior adviser for energy security at the State Department, said in October. “We’re not there yet.”