Two China steelmakers announce merger
JetBlue makes biofuels deal to help curtail greenhouse gases
JETBLUE, seeking to get ahead of looming restrictions on airliners’ greenhouse gas pollution, has agreed to buy more than 330 million gallons of renewable fuel over 10 years, the company said on Monday.
It is one of the largest such purchase agreements yet.
Under the agreement with the bioenergy company SG Preston, JetBlue would cover about 20 percent of its annual fuel use at Kennedy International Airport in New York, its home base, with a biofuel blend. That is equivalent to 4 percent of the fuel used throughout its network, the airline said.
“It’s thinking long term about our biggest cost, but its primary motivation is to reduce our greenhouse gases,” said Sophia Mendelsohn, JetBlue’s head of sustainability. “What we really want to do is jumpstart the industry and quite frankly enable all airlines, very much ourselves included, to diversify our fuel supply.”
Biofuels, made from various sorts of organic matter – whether from agriculture, wood scraps or even municipal waste – have long been considered important to reducing greenhouse gas emissions in transportation. US rules for gasoline, for example, require at least 10 percent ethanol, which typically comes from corn.
Airlines represent potentially easy-to-serve customers for biofuels, given the carriers’ concentration around airports and their voracious energy needs. But with heavy pres- sure on the companies’ bottom lines, the advent of more efficient planes and a period of low oil prices, the airlines – with a few exceptions – have been slow to adopt the novel and more expensive fuels.
“At the end of the day, the vibe that we’ve heard from the industry is, ‘We’ll use it once it’s cost-competitive, we’ll use it once there’s enough volume’,” said Yuan-Sheng Yu, who leads alternative fuels research at Lux Research. “This is not an industry with the amounts of cash on hand to invest in these emerging, nonproven technologies.”
But there are signs that may be changing. Last year, United began using a biofuel blend on some of its flights from Los Angeles. In recent weeks, Lufthansa said it would buy as many as 8 million gallons of fuel a year over five years from Gevo, a Colorado-based biofuel developer. And Virgin Atlantic announced a successful test of a jet fuel from LanzaTech derived from waste gases from steel mills.
Given the industry’s global reach, devising rules to control greenhouse gas emissions has proved contentious and given rise to a regulatory patchwork that companies say could be costly, lead to safety risks and create disadvantages for airlines from different jurisdictions. An effort by the European Union to require US planes landing in European airports to reduce emissions or pay a fee, for example, encountered so much resistance that regulators ap- proved a partial exemption that expires next year.
In recent months, the International Civil Aviation Organization, the aviation agency of the United Nations, approved one set of standards while the Obama administration began the process of writing its own last year. Environmentalists say the international restrictions, written with strong industry input, are too weak, and are pushing for more stringent standards from the Environmental Protection Agency.
At the same time, the aviation industry has been looking to reduce its greenhouse gas emissions though a number of approaches, including building more efficient aircraft and supporting the development and approval of new fuels.
That has been challenging, said Sean Newsum, director of environmental strategy at Boeing Commercial Airplanes, which is active around the world in helping to develop and certify biofuels for commercial use. In one of the projects this summer, with South African Airways and its Mango affiliate, 300 passengers flew from Johannesburg to Cape Town on fuel derived from tobacco grown for the purpose.
“There’s many different moving pieces to get this into real commercial use, all the way from the growing of the feedstock to the processing of the fuel to delivering that fuel to the airplane,” Newsum said. “It takes a while for all of those processes to become stitched together in a standard way,” he added, and to bring down their costs.
A long-term customer agreement like JetBlue’s, energy experts say, is an important step for a developer to attract financing to build a new facility – much as energy-purchase agreements by companies like Amazon, Apple and Google have allowed for the construction of solar or wind farms to help meet their electricity needs.
“Brands like JetBlue have recognized that sustainability and the environment need to be part of the overall brand story,” said Randy Delbert LeTang, chief executive of SG Preston, which is based in Philadelphia. “JetBlue and contracts like JetBlue’s offer us a completion to our overall credit profile for building these facilities.” TWO of China’s top steelmakers announced plans yesterday to merge,creating the world’s second-largest manufacturer of the commodity as markets struggle with a glut caused by Chinese overcapacity.
The world’s second-largest economy is trying to overhaul its lumbering state sector and especially its steel industry, by using mergers and restructuring to cut chronic overproduction and create world-beating mills.
Baosteel Group, China’s second-largest steelmaker, will issue new stock to existing shareholders ofWuhan Iron and Steel Group to absorb the other company, the state-owned companies said in separate statements to the Shanghai bourse, where they are listed. They did not give details. The two firms rank fifth and 11th respectively in world production capacity.
The merger will form a new firm called China Baowu Iron and Steel Group, China Business News reported late on Monday, adding the state asset watchdog had already okayed the plan and submitted it to the State Council – China’s cabinet – for final approval.
The combined production capacity of the two firms reached 60.7 million tonnes last year, data from the World Steel Association showed, which would make the new entity the world’s second-biggest producer by capacity – behind ArcelorMittal.
Chinese steel demand has slumped as economic growth slows and the global steel industry is assailed by overcapacity. The crisis has seen manufacturers in Asia, Europe and the US suffer huge losses and led to political rows and accusations of dumping.
Shanghai-based Baosteel’s net profit plummeted 83 percent to 1.0 billion yuan ($150 million) last year, while Wuhan Steel lost 7.5 billion yuan, compared with a 1.3 billion yuan net profit in 2014.
An analyst said the merger between Baosteel and WISG was “merely the beginning” of more such moves in China’s steel industry.
“Restructuring in China’s steel industry is the trend and it’s an unstoppable one,” Chen Bingkun, an analyst at Minmetals and Jingyi Futures said.
The listed arms of the two groups suspended trading in Shenzhen on yesterday pending statements on the report.
I nvestor s i n Hong Kong c he e r e d t he ne w s , w it h Angang Steel (Ansteel) shares jumping 2.81 percent yesterday afternoon.