AFP

A solid rebound in American manufacturing, especially vehicles, following two months of declines, help push overall industrial production up in July, the Federal Reserve said Tuesday.

A massive 6.6 percent surge in motor vehicle and parts production was a key driver the 0.7 percent rise in manufacturing, which was the biggest gain since March, the data showed. 

That boosted total industrial output by 0.6 percent last month, which was double the consensus forecast among economists.

The gain contrasted with the massive decline in a regional survey by the New York Fed for the first week of August, which briefly spooked investors on Monday.

“Manufacturing activity is cooling, but retains some momentum; no indications of a massive pullback,” said Gregory Daco, chief economist of EY Parthenon. 

“I’d downplay the huge drop in the Empire State survey & focus on the ISM readings pointing to cooling activity,” Daco said on Twitter, referring to a nationwide survey that showed a slowdown but continued growth last month.

Mining production also rose 0.7 percent, on “gains in coal mining and in oil and gas well drilling,” while utilities fell 0.8 percent, the Fed said.

Overall production was 3.9 percent higher compared to July 2021, while manufacturing has risen 3.2 percent, the report said.

Industrial capacity in use edged back over 80 percent, to 80.3 percent, after slipping below that threshold in June.

Chinese lithium hub Sichuan province will ration electricity supply to factories until Saturday, state media reported, as a heatwave sends power demands soaring and dries up reservoirs.

Temperatures in the province — home to nearly 84 million people — have hovered above 40-42 degrees Celsius (104-108 degrees Fahrenheit) since last week, according to data from China’s Meteorological Administration, increasing the demand for air conditioning.

The region relies on dams to generate 80 percent of its electricity, but rivers in the area have dried up this summer, Beijing’s Water Resources Ministry said. 

The province in China’s southwest produces half the nation’s lithium, used in batteries for electric vehicles, and its hydropower projects provide electricity to industrial hubs along the country’s east coast. 

But the local government has decided to prioritise residential power supply, ordering industrial users in 19 out of 21 cities in the province to suspend production until Saturday, according to a notice issued Sunday.

Several companies including aluminium producer Henan Zhongfu Industrial and fertiliser producers Sichuan Meifeng Chemical Industry said in stock exchange statements they were suspending production.

A plant operated by Taiwanese giant and Apple supplier Foxconn in the province has also suspended production, Taipei’s Central News Agency reported. 

Some companies will be permitted to operate at a limited capacity, depending on their production needs.

“Sources estimate at least 1,200 tonnes of lithium output will be cut due to the operations disruptions in these five days,” Susan Zou, an analyst at Rystad Energy, told AFP, adding the cost of lithium carbonate had jumped since Monday.

A summer of extreme weather in China has seen multiple major cities record their hottest days ever.

China’s national observatory reissued a red alert for high temperatures on Monday, state media reported, as the mercury soared past 40 degrees Celsius (104 Fahrenheit) across swathes of the country.

Provinces including Zhejiang, Jiangsu and Anhui that rely on power from western China have also issued electricity curbs for industrial users to ensure homes had enough power, according to local media reports. 

Scientists say extreme weather across the world has become more frequent due to climate change, and will likely grow more intense as global temperatures rise.

Kevin Kendall pulls up at the only green hydrogen refuelling station in Birmingham, Britain’s second-biggest city, and swiftly fills his sedan with clean gas.

Green hydrogen is in sharp focus as governments seek to slash carbon emissions amid record-high temperatures and to safeguard energy supplies hit by the invasion of Ukraine by oil and gas producer Russia.

But the “hydrogen economy” has not fully kicked into gear awaiting significant uptake from high-polluting sectors like steel and aviation.

For Kendall, being an early user of green hydrogen means he does not have to queue during his lunchtime trip to what resembles a petrol pump.

“There is very little green hydrogen being produced in Britain at the moment,” the professor of chemical engineering tells AFP. “It needs now to move forward.”

In Birmingham, central England, it costs about £50 ($60) to fill Kendall’s Toyota Mirai with the green hydrogen that is produced at a plant next to the refuelling station.

That is around half the bill for a similar-sized diesel car after the Ukraine war sent fossil fuel prices rocketing.

Despite the price benefit, Britain is home to around only a dozen hydrogen refuelling stations.

While hydrogen is the most abundant element on Earth, it is locked in water and hydrocarbons such as natural gas, meaning “it’s difficult to make”, according to Kendall’s daughter, Michaela Kendall.

Together they founded Adelan, a small-sized business producing box-shaped fuel cells similar to the metal-encased devices used to help power the Toyota Mirai.

Set up 26 years ago, Adelan is the longest-running maker of fuel cells in Britain — which work also with liquefied petroleum gas (LPG) — while the company also offers a leasing service for the Japanese automaker’s hydrogen cars.

– ‘Increasingly attractive’ –

“Since the Russian invasion of Ukraine, the economics of green hydrogen have become increasingly attractive,” Minh Khoi Le, head of hydrogen research at Rystad Energy, told AFP.

“Coupled with many incentives in the second half of 2022 globally, green hydrogen looks to satisfy the trilemma of the energy system: energy security, affordability, and sustainability.”

Fallout from the war has caused the European Union to bolster its gas reserves by slashing consumption 15 percent.

The bloc is also seeking to significantly increase supplies of green hydrogen, which is made from water via electrolysis and with renewable energy. 

This is in contrast to the more available blue hydrogen, which environmentalists oppose as it is produced from natural gas in a process that releases carbon dioxide into the atmosphere.

– £9-billion investment –

At Adelan’s Birmingham workshop, a quaint brick building surrounded by houses, staff are testing the company’s so-called solid oxide fuel cells that are replacing diesel generators.

Overseeing the work, company chief executive Michaela Kendall says she expects “hydrogen capacity to really increase but it will take time”.

“Hydrocarbons will still be used for the foreseeable future,” she predicts “because the hydrogen economy has not really evolved, it’s just at the early stage”.

Britain’s government says £9 billion of investment is needed “to make hydrogen a cornerstone of the UK’s greener future” as it targets net zero carbon emissions by mid-century.

In Birmingham, the plan is for about 10 hydrogen refuelling stations in the next few years following the arrival of 120 hydrogen buses to the city in 2023. Other UK cities, including Aberdeen in Scotland, are travelling the same road.

However, “only Los Angeles has been reasonably successful with something like 9,000 hydrogen vehicles and 40 hydrogen stations”, says Kevin. 

“That’s what we’d like Birmingham to be.”

– Electric surge –

The Toyota, resembling a standard vehicle inside and out, is powered by electricity. This has been produced by green hydrogen combining with oxygen in a fuel cell.

The only waste emitted from the vehicle, which has a range of 400 miles (640 kilometres), is water vapour.

Adelan’s solid oxide fuel cell, so-called because its electrolyte is ceramic, is described as “an electric device”, generating power for batteries.

“It’s hydrogen-ready, but we tend to use hydrocarbon fuels because they’re easier to get right now,” says Michaela.

“We use fuel that is sourced in a low-carbon way” such as BioLPG.

A lack of hydrogen infrastructure means motorists wanting a greener alternative to petrol or diesel are expected to continue purchasing electric vehicles.

Despite lengthy charge times for electric car batteries and big rises in electricity prices this year, Britons are fast ditching polluting automobiles ahead of a UK ban on sales of new diesel and petrol vehicles from 2030.

It comes as oil and gas giant BP recently unveiled plans for green hydrogen production facilities in the UK.