Teesside Collective has issued a tender to design a carbon capture pilot project. The £90,000 contract has two parts. The first is to design a carbon capture unit for one of its members and put together a business case to sell the captured CO2. The second is to design a demonstration centre which other companies can use to scale up carbon utilisation technologies. Teesside Collective is a joint venture between a number of industrial businesses in the Tees Valley in the north east of England and Tees Valley Unlimited – a Local Enterprise Partnership. Their aim is to create Europe’s first capture and storage (CCS) equipped industrial zone. The carbon capture unit will be designed for use by Lotte Chemicals, a member of the Teesside Collective which makes PET for the production of soft drink bottles. “It produces about 55,000 tonnes of CO2 [annually] and we’d look to capture about 90 per cent of that,” said Low Carbon Manager for Tees Valley Unlimited Sarah Tennison. “At the moment there’s nowhere to put the CO2, no capture network, so we would be looking to find people to buy the CO2. People who use the CO2 to produce products.” She continued: “This is literally a concept at the moment. It’s not a guarantee that Lotte will do this at all. There needs to be quite a clear business case for Lotte …  We’re just investigating the possibility.” The demonstration centre will enable companies to scale up “near to market technologies”, mostly like for heavy industrial processes such as the manufacturing of aggregates, fertilisers and other chemicals. “There is a need to develop technology which not just uses CO2 but uses it captures it so it stored,” said Tennison. “With a lot of uses at the moment – within the food industry, within the drinks industry – it isn’t actually stored but released.”   She noted that carbon utilisation is on a “different scale” to carbon capture and storage (CCS): “Carbon capture and storage can deal with millions of tonnes of CO2. Carbon utilisation deals with much, much smaller amounts of CO2.” The tender follows on from a blueprint for industrial CCS in the UK published by Teesside Collective last summer, using £1 million of funding from what was then the Department of Energy and Climate Change. Since then it has received a further £300,000 of funding to continue developing its plans to use carbon capture technologies. The government’s cancellation of a £1 billion competition to commercialise CCS for the power sector in November, means industrial ventures such as the Teesside Collective have become the main hope to develop the technology in the UK in the near future. Tennison reiterated calls made by others – including former shadow energy secretary Alan Whitehead – to develop a national CCS strategy: “There is a need for a national strategy because we need to move forward following the cancellation of the competition. CCS is still needed; I think everybody agrees from the Committee on Climate Change to the International Energy Agency.” In February former energy secretary Amber Rudd dismissed such a strategy as unnecessary.  Tennison also welcomed the merging of the business and energy departments into the new Department of Business, Energy and Industrial Strategy: “I think it’s very good thing for industrial CCS. Previously we always straddled two departments.” The collective’s members include Sembcorp Utilities which operates biomass and energy from waste plants in the Tees Valley. Yesterday the Teesside Collective announced it was working with Edinburgh University to test the flue gases from Sembcorps’ biomass plant at the Wilton International site to find the best way to capture carbon dioxide from its emissions. Source link

From a nondescript office block close to London’s Victoria station, EDF, the French utility company, has quietly built one of the world’s largest and most profitable commodity trading businesses. Over nearly two decades EDF Trading has made billions of euros of profit from trading coal, gas and electricity — markets in which it has grown to rival some of the industry’s biggest names including Glencore and Vitol. But now EDF, keen to promote its low-carbon credentials and strengthen its balance sheet, is looking to sell the trading division’s huge coal operation to a joint venture involving Tokyo Electric Power and Chubu Electric Power, two Japanese utilities. Rivals say the move raises questions about whether state-controlled EDF will retain the remainder of its trading business. EDF and the two Japanese utilities declined to comment, but people familiar with the talks about the coal trading business say they are progressing towards a sale. A deal could be concluded before Christmas. The expected disposal by EDF has shone a light on its little-known trading business, which has morphed from supplying the utility’s fleet of coal-fired power stations into a much larger concern with a record of profitability that compares favourably to competitors. Over the past five years, EDF Trading’s annual net income has averaged €324m per annum. By comparison Gunvor, the world’s fourth-largest independent oil trader, has recorded post-tax profits closer to $300m per annum over the same period. EDF Trading has paid €2.8bn of dividends since 2005 to the parent company. Last year EDF, which is 85 per cent owned by the French government, flagged a possible sale of its coal-trading operations when it launched a strategic review of its “fossil fuel production and marketing activities”. “They are de-fossilising their brand like Eon,” said a rival coal trader, referring to the German utility company that is planning to spin off its conventional power generation assets and energy trading business. Industry executives say there has been a renewed push in France for its state energy champion to go low-carbon after an international accord was reached last December in Paris to limit greenhouse gas emissions. With net debt of €37.4bn and negative cash flow, EDF is also scrambling to shore up its balance sheet. It has pledged to sell as much as €10bn of assets by 2020, as it prepares to start the expensive and contentious process of building a nuclear power station at Hinkley Point in the UK. EDF Trading has attracted less scrutiny than its rivals, mainly because it has largely shunned oil trading, the most closely watched commodity. But last year it traded 845m tonnes of coal and related derivatives — a volume equivalent to the annual US consumption of the fossil fuel. Staff numbers at the business have increased from about 265 a decade ago to more than 650 today. EDF Trading has grown under the leadership of a hard-charging American executive called John Rittenhouse, 58, who was a champion swimmer, holding British and European records. Mr Rittenhouse last year described the trading business as an “intermediary” with the “balance sheet capability” to “make sense of global flows in commodities”. Under his guidance, EDF Trading’s shareholder equity has grown from €530m in 2004 to almost €2.3bn in 2015. In 2008 the company generated net income of €700m and posted a return on equity of more than 40 per cent for the year. That figure is higher than even the most aggressive Wall Street banks in the pre-financial crisis days. But EDF Trading has faced challenges in recent times. Its return on equity fell to 13 per cent last year — a still impressive number but far shy of its peak. This, say former executives, reflects tough market conditions and greater transparency in commodity markets. EDF Trading has also been declaring progressively higher dividends, suggesting it may be under pressure from the parent company to return as much money as possible ahead of a sale. In 2015 EDF Trading announced a dividend of €554m — double the average of the previous five years after bringing forward a payment due to be made in 2016, say people close to the company. Net income fell 25 per cent to €292.5m last year, which the company blamed on “depressed market conditions”. It is unclear how much cash a sale of the coal trading operation will generate for EDF. But rivals say a deal with Jera, a joint venture between Tokyo Electric Power and Chubu Electric, makes sense. EDF Trading is an established supplier of coal to Jera. EDF Trading’s rivals also question what the future holds for the remainder of EDF’s trading business. These competitors speculate about whether the parent company could decide to sell more of the business, but one insider plays down that idea. EDF did not respond to a request for comment.

Lixil, the once-acquisitive Japanese building materials conglomerate, is exploring the sale of its Italian construction and design group Permasteelisa, in what was expected to be the first of several major divestments by the company, people familiar with the matter said. Global private equity managers said many of the deals struck by Japanese corporations since the start of Prime Minister Shinzo Abe’s “Abenomics” policies, under which borrowing costs have fallen, were beginning to come under pressure. “Private equity is swarming around Lixil because they think that the new chief executive is going to be doing some big divestments,” said one senior Asia-based private equity executive. Bankers familiar with the company said they were aware that it had mooted the idea of selling Permasteelisa, and had been in touch with at least one private equity group. One Tokyo-based private equity investor said that the possibility of asset sales by Lixil arose from a distinct change in the character of the company since Yoshiaki Fujimori stood down as chief executive last year in the wake of a scandal concerning a German acquisition. His emphasis had been on building the company via debt-fuelled acquisition, said the investor, while his successor, Kinya Seto, is more focused on consolidation and strengthening the balance sheet. As part of an asset review, Lixil said on Wednesday that it would sell off its wooden building material subsidiary Hivic, with annual sales of $190m, to a Japanese private equity fund Polaris Capital for an undisclosed price. Lixil turned Hivic into a fully owned subsidiary in 2011. Lixil refused to comment on market rumours regarding the potential sale of Permasteelisa, which it bought for €573m in 2011. The Italian company was best known for making the façades of London’s Shard skyscraper. Lixil was formed in 2011 by the merger of five Japanese companies ranging from plumbing and carport specialists to the makers of bathroom fixtures and building materials. Shortly after the conglomerate was formed under the leadership of Mr Fujimori, a 25-year veteran of General Electric in Asia and the US, it went on an outbound acquisition spree, racking up nearly €3.9bn in buyouts over a three-year period. Between June and September 2015 it announced the buyouts of American Standard bathroom products for $342m and a similar German group, Grohe, for €3.06bn. However, Lixil’s global expansion plans soon ran into difficulties. In mid-2015, a Chinese subsidiary of Grohe, Frankfurt-listed Joyou, dragged Lixil into a scandal involving China’s sprawling shadow banking industry. Joyou had collateralised its Chinese factories several times and lent some of that money into a shadow lending pyramid in southeastern China that eventually collapsed. In June last year, Lixil warned investors it faced ¥66bn ($560m) in losses. Mr Fujimori stepped down in December. A possible sale of Permasteelisa sale would back up the view of at least three global private equity firms that Japan’s elevated run of overseas acquisitions under Abenomics was now creating opportunities as the deals start to sour. Last year, Japan set a record for outbound M&A denominated in yen, following a steady increase in activity since 2011 as companies sought growth away from a domestic market constrained by population decline. But a large number of deals have proven difficult to integrate, prompting the Japan head of one private equity firm to say that it was “not surprising” that many of the deals signed during the overseas M&A spree had not been successful.