March 22, 2018
Issue 221  |  View Past Issues
CoalWire

Editor's Note

The release of the latest survey of global coal power plant projects has encouraging news: new coal projects continue to decline rapidly and, on current trends, the closure of old plants may exceed the capacity of newly commissioned plants in 2022. It is also notable that the coal plant boom is narrowing with new coal plant construction commencing at more than one location in just seven countries: Bangladesh, China, India, Indonesia, Japan, Pakistan and South Korea. While the trend is encouraging, the shift away from new coal projects needs to accelerate to have any chance of staying within the 1.5 °C to 2 °C temperature increase range agreed to in the Paris Agreement.

There are some indications this week that the pace may well pick up further. In China, the government has flagged it will develop tougher air emission reduction goals for the period to 2020. In India, the Reserve Bank of India is requiring banks to take a stricter line in declaring loans as non-performing once a payment has been missed. The thermal power industry is one of the most heavily exposed sectors in the country. In Indonesia, more coal plants have been dropped from the latest iteration of the country’s power development plan with civil society groups pushing for another nine projects to be dropped to avoid financially ruinous overcapacity.

Bob Burton

Features

Global new coal plant pipeline keeps shrinking

The rapid decline in the number of coal plants being proposed, built and commissioned in 2017 offers a glimmer of hope of achieving the 2015 Paris Agreement goal of limiting global warming to between a 1.5 °C and 2 °C temperature increase, writes Bob Burton in EndCoal.

Bail out coal communities, not coal executives

The problem is not that the coal industry isn’t sufficiently subsidised, it’s that our elected leaders refuse to invest in alternatives, writes Gabriel Hunt, in High Country News. Hunt was a fourth generation miner in Utah’s coal mines until he recently quit.

Top News

Study argues a rapid shift away from fossil fuels could save 153 million lives: Duke University researchers estimate 153 million premature deaths could be avoided this century if governments reduce carbon emissions and limit global temperature rise to 1.5 °C in the near future. The study estimated the effect of rapid decarbonisation policies on reducing air pollution on a city by city basis and found that the greatest reduction in premature deaths would occur in Asia and Africa. (Science Daily, Nature Climate Change)

China to set tougher air quality targets: China’s Minister for the Environment, Li Ganjie, has foreshadowed the adoption of a tougher new PM2.5 fine particle emission reduction target for the remainder of the current five-year plan to 2020. At the end of 2017 it was estimated average PM2.5 levels in cities had fallen by 15.8 per cent compared to the 2020 emissions reduction target of 18 per cent. At the recent National People’s Congress Ganjie announced the Ministry of Environmental Protection would become the Ministry of Ecological Environment and be expanded to include responsibility for climate change and other pollution management. (Reuters, New York Times)

Villagers remain at risk from Thai mine despite court order: Following a major landslide at the Mae Moh lignite mine residents have condemned the Electricity Generating Authority of Thailand (EGAT) for failing to relocate an estimated 2000 families living in areas at risk of further landslides. In 2014 the Supreme Administrative Court directed EGAT to relocate the at-risk residents in four communities as a safety precaution, back fill the mine pit and remediate abandoned mine workings. Residents argue the committee established to oversee the work has achieved little to date. The mine supplies lignite to EGAT’s 2400 megawatt (MW) Mae Moh plant. (The Nation, Bangkok Post)

Rio Tinto blocks UK vote on shareholder resolution: In a bid to defuse the debate on a shareholder resolution challenging its membership of the Minerals Council of Australia (MCA), Rio Tinto has sought to highlight minor changes to the lobby group’s energy policy. While Rio Tinto, the MCA’s second largest funder, is near completing the sale of its remaining coal assets, the company has refused to submit the resolution by the Australasian Centre for Corporate Responsibility to UK shareholders. Instead, it will only allow it to be voted on by Australian shareholders in the dual-listed company, drawing criticism from the Church of England Pensions Board. (Sydney Morning Herald, Financial Times)

Australian investigator warns of NSW coal allocation corruption risk: In 2013, Hong Kong-based Ridgelands Resources was granted a five-year coal exploration licence in the NSW Hunter Valley on condition it establish a A$5 million (US$3.8 million) community fund. However, it failed to act on this condition until just days before its licence expired in February this year. While the NSW Government’s Resources Regulator is investigating the failure to comply with the condition, another agency is simultaneously considering a five-year extension of the licence. A former judge who headed inquiries into other coal deals for the NSW Independent Commission Against Corruption has described the process in the Ridgelands Resources case as a “recipe for corruption”. (Newcastle Herald)

South African utility seeks further exemption from pollution standards for old plant: South Africa’s publicly owned utility Eskom is seeking an exemption until at least 2024 from pollution standards for its 3654 MW Tutuka power plant. The plant, which is located in the heavily polluted Highveld Priority Area in Mpumalanga province, has been estimated to cause the premature deaths of 192 people a year and an economic loss of 2.4 billion rand (US$200 million) a year from health costs. Eskom is currently allowed to emit up to three and a half times more in particulate emissions than allowed under the minimum emission standards adopted in 2015. (Mining Review)

“When a government goes to the trouble of creating an elaborate procedure for the granting of mining tenements and doesn’t respect its own laws it’s a recipe for corruption,”

said David Ipp QC, a former judge who headed inquiries for the NSW Independent Commission Against Corruption.

News

Australia: Media adviser to Queensland Premier joins the coal lobby group, the Queensland Resources Council.

Germany: Volkswagen plans to convert two coal plants, with combined 446 MW capacity, to burn gas.

India: Ministry of Finance tells court it intends to pursue coal and other over-invoicing cases.

Kenya: While Lamu coal plant plan is stalled by court challenge, the transmission line is set to proceed.

Philippines: Faced with coal plant uncertainty, consortium cancels order for two generators.

Russia: Coal ship destined for the Netherlands runs aground near Mudyug Island in the White Sea.

South Africa: Civil society groups to challenge applications for generation licences for two new coal plants.

Taiwan: Protests follow approval of 1200 MW coal plant on the site of the demolished Shenao Power Plant.

Companies + Markets

Reserve Bank of India pushes for crackdown on bad loans: India’s private power generators are lobbying the Modi Government to relax the Reserve Bank of India’s guideline requiring banks to class loans as in default as soon as a debt payment has been missed. The Association of Power Producers (AAP) wants the guideline amended so that loans are only classed as “non-performing” 180 days after a scheduled payment is missed. The AAP claims 75,000 MW of power projects, including 20,000 MW of operating plants which have both power purchase agreements and coal supply, are currently financially stressed. (Economic Times, Financial Express)

Indonesia cuts planned capacity and domestic coal price: Indonesia’s government-owned utility PLN has cut 5000 MW of proposed coal plants from its 2018–2017 Electricity Supply Business Plan (RUPTL) due to slowing electricity demand growth. PLN has also shelved plans for 10,000 MW of gas plants and 6600 MW of geothermal and hydro projects proposed in the April 2017 version of the plan. The RUPTL assumes power demand will grow at 6.86 per cent a year, a rate that is likely to only further add to massive overcapacity in the Java–Bali grid. In a bid to prevent electricity price rises ahead of the 2019 election the Ministry of Energy and Mineral Resources has also instituted a thermal coal price cap of US$70 per tonne on sales to PLN, which is about 30 per cent lower than the current market price. (Power Magazine, Nikkei Asian Review)

European utilities rationalise structure, again: A complex asset and shares deal between two European power giants will result in RWE, which has a portfolio of gas and coal plants, gaining 8000 MW of renewable generating capacity and another 5000 MW in proposed projects from E.ON. In return, E.ON will gain RWE’s transmission assets to make it Europe’s largest network operator and expand its retail customer base from 31 million to 50 million. Two years ago both companies, hit by rapidly falling wholesale power costs due to renewables, took massive write-downs and adopted plans to operate as diversified generators and retailers. E.ON has flagged 5000 jobs are likely to be cut. (Reuters, Guardian)

Australian coal terminal struggles to stay afloat: A coalition of 20 banks and hedge funds has agreed to extend the September deadline for the repayment of A$3.5 billion (US$2.7 billion) from the Wiggins Island Coal Export Terminal (WICET) consortium. WICET, which is owned by five coal companies including Glencore, had proposed a five-year extension with interest rates capped below 5 per cent a year. However, the lenders reportedly baulked at this proposal though the terms of the new agreement have yet to be disclosed. The coal terminal in north Queensland, which is operating well under its 27 million tonnes a year capacity after three original coal company partners went broke, was commissioned in April 2015. (Australian Financial Review [paywall], Australian Financial Review [paywall])

RWE rues German court ruling on new plant contract: A German court has ruled that RWE did not have the right to unilaterally cancel a contract it entered into in 2005 to purchase 450 MW of power from Uniper’s part-built 1055 MW Datteln 4 plant. The commissioning of the plant has been delayed from 2011 until later this year or possibly even early next year. The court ruling means that RWE is bound to purchase power from the plant, even though the growth in renewables has pushed the current wholesale market price lower than the price stipulated in its contract with RWE. (Reuters, CoalSwarm)

South African coal union seeks to block renewables: South Africa’s Department of Energy has suspended the signing of new power purchase agreements with renewable power developers after the National Union of Metalworkers of South Africa (NUMSA) applied to the North Gauteng High Court to block the agreements. Department officials have dismissed any connection between new renewable power agreements and the closure of old coal plants. The court will hear the case on March 27. (PV Magazine, Fin24)

Resources

Boom and Bust 2018: Tracking the Global Coal Plant Pipeline, CoalSwarm, Sierra Club and Greenpeace, March 2018. (Pdf) (The report is also available in Chinese, Hindi, Indonesian, Japanese, Korean, Turkish, Thai and Vietnamese.)

This 16-page report reveals that for the second year in a row, the number of coal-fired power plants under development worldwide dropped steeply in 2017, led by major declines in China and India.