October 31, 2019
Issue 297  |  View Past Issues

Editor's Note

There have been some significant wins in the last week with a Romanian court rejecting a proposed lignite mine expansion and the South African Government rejecting a proposed new coal mine. In Portugal, the government has stated its intention to end coal power in 2023, well ahead of its previous 2030 deadline.

In its latest assessment of the costs of renewable generation, Bloomberg New Energy Finance estimates solar and wind are now the cheapest source of new generation in countries which account for two-thirds of the world’s population. The evidence of the impact of this shift continues to mount. A new report estimates that coal and lignite power plants in the European Union could lose €6.57 billion (US$7.29 billion) in 2019, with RWE racking up huge losses on its German plants. According to an assessment by the legal NGO ClientEarth, the loss-making nature of the plants makes it unlikely that the German Government can legally pay compensation for coal plant closures. In Japan, a new report considers new coal plant proposals a recipe for big financial losses.

As with the decline of German coal generation, the coal industry is waning in former key markets with major knock-on effects for the coal industry in countries such as the US and Australia. The bankruptcy of Murray Energy, the third largest US coal producer, is just the latest evidence of the trend. As demand in key countries eases, Russian exporters are looking to benefit at the expense of producers in South Africa, Colombia and Australia.

Bob Burton


Around the world, coal’s heartlands are in retreat

In major coal producing and consuming countries such as Germany, the US and Australia, a remarkable transition away from coal power generation is underway, writes David Fickling in Bloomberg.

An Adani mining operation in India is eating up a sacred forest grove

Adani’s mining operation for the Rajasthan’s government-owned utility RRVUNL is doing irreparable damage to the Hasdeo Arand forest and displacing a local tribal population, writes Kuwar Singh in Quartz.

Adani is expanding on all fronts but Australian coal need not be one of them

The Indian corporate conglomerate Adani keeps expending into new sectors such as airports and chemical plants in India but its international coal forays have proved costly and it has better options than pursuing its Carmichael coal project in Australia, writes Tim Buckley from the Institute for Energy Economics and Financial Analysis in The Wire.


South African coal mine rejected

South Africa’s Minister of Forestry, Fisheries and Environmental Affairs, Barbara Creecy, has rejected a proposal by Anglo Operations and Canyon Coal to establish the Palmietkuilen coal mine. The proposed mine was upstream of Blesbokspruit, a major wetland, and would have affected farmers and the local community. While the Department of Mineral Resources granted environmental approval for the mine in March 2019, the decision was opposed by the Grootvallei Blesbokspruit Trust, the Asthon Lake community, the Wildlife and Environment Society of South Africa and the agricultural company, Rossouw Pluimvee. The Department of Agriculture also raised concerns about the proposed project. Creecy agreed that the proposed mine should not take priority over existing agricultural operations. (Fin24)

Court blocks expansion of Romanian mine

A Romanian court has ruled in favour of the NGO Bankwatch Romania and rejected the proposed 280 hectare expansion of Complexul Energetic Oltenia’s (CEO) existing Rosia lignite mine. CEO’s mine currently occupies over 1400 hectares of land. In its 2017 appeal against the proposed expansion, Bankwatch argued the company had not properly assessed the cumulative environmental impacts of the proposed expansion along with the other seven mines in the area. Bankwatch also argued that the company had not properly consulted with local residents. (Bankwatch)

Portugal brings coal phase-out forward to 2023

Portugal’s Primer Minister, Antonio Costa, has announced the country will aim to close its two remaining coal plants by 2023, seven years earlier than its previous 2030 deadline. The closure of the 628 megawatt (MW) Pego coal plant is now scheduled for November 2021 and the 1256 MW Sines plant for September 2023. The announcement has been welcomed by the environmental group Zero as a “great victory for the environment and the climate” but cautioned that there is no need to pay compensation to the plant owners. (Publico [Portuguese])

Top News

Documents reveal lobbying campaign to overturn Oakland coal port ban: Internal documents disclosed to a bankruptcy court have revealed that investors in the proposed Oakland Bulk and Oversized Terminal have waged a behind-the-scenes lobbying campaign aimed at having Oakland City Council drop its legal appeal against the proposed coal terminal. In 2016 Oakland City Council instituted a ban on the storage and handling of coal within the city, a decision that was overturned by a federal court judge in 2018. The council is appealing the court decision with hearings scheduled for November. The documents reveal port investors sponsored events for local politicians and business leaders and paid an Oakland blogger US$5000 a month to promote the coal terminal. The documents also reveal project supporters paid a US$7500 a month retainer to an African American lobbyist and businessman to “target community activists” with the aim of enlisting them to help persuade council members to support the project. (Guardian)

Chinese official imprisoned over coal allocation and other deals: A court in the north-eastern province of Liaoning has sentenced the former vice-chairman of the Inner Mongolia Autonomous Region, Bai Xiangqun, to 16 years in prison for bribery, corruption and other offences. Some of the offences related to the allocation of coal resources to individuals and departments. China’s anti-corruption agency has announced that it is investigating Yun Gongmin, the former general manager of China Huadian Corporation, a major state-owned power and coal mining company. No details were provided on what the investigation relates to. In an earlier announcement the agency revealed that the former chairman of China Southern Power, Li Qingkui, was placed on two years probation within the Communist Party for “seriously violating discipline and law”. (AsiaOne, Ecns.con)

Study finds US CCS plant fails to reduce greenhouse gas emissions: A study has found that the carbon capture and storage (CCS) unit at the Petra Nova plant in Texas captured only 10.8 per cent of the plant’s carbon dioxide equivalent (CO2e) emissions over a 20 year period. Over a 100 year period it was estimated that that CO2e emissions would be reduced by 20 per cent. In January 2017 the CCS plant on the 240 MW Unit 8 at the Parish Generating Station was commissioned to capture about 33 per cent of the carbon dioxide emissions from the coal unit for reuse in an enhanced oil recovery project. However, to power the CCS unit, NRG built a new gas-fired power station on the site. The study notes that the low capture rate is due to accounting for the carbon dioxide emissions from the new gas plant, the emissions from Unit 8 that aren’t diverted to the CCS unit and other uncaptured upstream emissions. The study concluded that using wind generation to directly generate electricity for use and bypass the option retrofitting a CCS unit to a coal plant “reduces CO2e, air pollution, and total social cost substantially.” (Energy and Environmental Science)

NGO challenges German utilities compensation pitch: An analysis by ClientEarth, a European legal NGO, argues that demands by German utilities for compensation for the closure of coal and lignite plants is unlikely to be legal. RWE, a major German utility, has claimed that it should be paid up to €1.5 billion (US$1.7 billion) per 1000 MW of capacity closed. The German Government is currently negotiating with utilities over initial coal plant closures as part of its plan to close the country’s 47,000 MW of coal plants by 2038 at the latest. ClientEarth argues that while the German Constitution allows for compensation where a change in rights results in exceptional hardship or undue harm, most German coal plants are loss-making which means that there may be no or only very limited scope for compensation. ClientEarth warns that if compensation is not legally required, any payments are likely to be classed as state aid and require prior approval by the European Commission. (Client Earth, ClientEarth [pdf])

Researchers unveil new way of tracking exposure to US coal ash: In a paper published in Environmental Science & Technology Letters, researchers at Duke University and the University of North Carolina reveal that it is possible to identify unique lead isotopes from coals produced in three US coal basins and they can be used to detect coal fly ash in dust and soil. The researchers argue that the tracers can be used to allow better monitoring of the potential exposure of people living near coal ash sites or wherever the waste is being reused. The inhalation of fly ash particles has been linked to lung and heart diseases and other adverse health effects. (Science Daily, Environmental Science & Technology Letters)

Vietnamese utility struggles to manage coal ash: Vietnam’s state-owned power utility, EVN, is struggling to manage the volume of coal ash generated from its 12 coal plants. Between 2015 and 2018, EVN’s plants created an estimated 25 million tonnes of coal ash, with just 10 million tonnes sold for reuse and the remainder dumped in landfills. Pollution from coal ash has become a major source of controversy. In a report to the National Assembly, the Commission of Science, Technology and Environment noted that EVN was struggling to sell coal ash, especially in the country’s central and southern regions. The commission proposed that the cost of transporting coal ash to cement and other customers should be provided for by increasing the price of electricity. The commission also proposed allowing for the use of coal ash for the foundations of roads near the power plants. (Tuoi Tre Online [Vietnamese])

Myanmar villagers protest against coal plans as government expedites LNG plants: The Editor of Myanmar Energy News, Katie Patterson, argues that while the Government gave nominal support to a big increase in new coal plants in its 2015 energy plan, strong community opposition is likely to ensure that few, if any, are ever built. Last week villagers from Mong Kok in eastern Shan State organized a prayer service and protest against a coal mining project in the region. In southern Shan State an October 30 protest is planned in Pinlaung Town against the continued operation of the Tikyit coal-fired power plant and associated mine. Myanmar’s Ministry of Energy has announced five new emergency power projects — three liquefied natural gas plants and two gas projects — which it wants to be commissioned ahead of the 2020 elections with the aim of quelling public disquiet over blackouts and power price increases. (Mizzima, Myanmar Times, Bnionline, Nikkei Asian Review)


Australia: Trial of Hazelwood Power commences on 14 charges of failing to protect its workers and the community from pollution caused by the 45-day Hazelwood mine fire.

Kosovo: European Union provides a €76 million (US$84.2 million) grant to bring Kosovo B plant into line with European Union pollution standards by 2021.

Philippines: National Board of Revenue proposes cutting tax on imported coal from 15 to 5 per cent to lower generation costs.

Taiwan: Taipower fined $60 million New Taiwan dollars (US$1.96 million) by Taichung City Government over boron at over 20 times permitted levels in wastewater from the 5500 MW Taichung Power Plant.

UK: Three members of Extinction Rebellion convicted after blocking door to annual general meeting of Global Coal Management which is lobbying for approval of the Phulbari coal and power project in Bangladesh.

US: Kentucky coal baron Jim Booth owes Martin County US$2.3 million in overdue property taxes and penalties, as local school and other services struggle for funding.

“The great hope for coal now is not that it will be able to survive in the free market, but that government support will come in to bail out an industry that can’t survive on its own, in the process locking in pollution-related disease and climate emissions for future generations … Any industry that harms its consumers, pollutes the planet and depends for its survival on political support is living on borrowed time, though,”

writes David Fickling in Bloomberg.

Companies + Markets

New solar and wind cheapest option for two-thirds of world population, BNEF estimates: In its latest Levelized Cost of Electricity Update, Bloomberg New Energy Finance (BNEF) estimates that new solar and onshore wind power generation is cheaper than the average regulated price of coal power in China and on a par with average wholesale prices in California and parts of Europe. BNEF estimates the cost of electricity from onshore wind and solar projects financed in the last six months fell by six per cent and 11 per cent respectively to US$47 and $51 per megawatt hour (MWh) when compared to the first half of 2019. BNEF estimates that the best solar projects are in India, Chile and Australia with the best wind projects in Brazil, India, Mexico and Texas. Offshore wind generation costs are estimated to have fallen by 32 per cent over the last year to US$78/MWh with the best projects in Denmark and the Netherlands expected to cost US$53–64/MWh excluding transmission costs. (BusinessGreen)

Report finds most European Union coal plants are running at a loss: A report by the Carbon Tracker Initiative estimates that most coal and lignite plants in the European Union are not currently financially viable and could lose €6.57 billion (US$7.29 billion) in 2019. The report estimates that 79 per cent of coal generators in the EU are currently operating at a loss with the biggest corporate losers estimated to be RWE in Germany (€975 million; US$1.08 billion), EPH, which has most of its plants in Germany and the Czech Republic (€613 million; US$680 million) and PPC, the Greek utility (€596 million; US$661 million). (Carbon Tracker Initiative)

Third largest US coal company declares bankruptcy: Murray Energy Holdings and some of its subsidiaries have filed for Chapter 11 bankruptcy protection blaming its financial woes on the shuttering of 93,000 MW of coal plant capacity and the displacement of coal generation by wind, solar and gas generation. Chapter 11 bankruptcy proceedings allow companies, subject to the approval of the bankruptcy court, to restructure finances and cut liabilities including employee entitlements. Murray Energy was the largest privately owned US coal company and the third largest producer. In 2018 it produced 60.5 million US short tons (55 million tonnes). (S & P Global, Marketplace)

Report warns new Japanese coal plants likely to become stranded assets: A report by the Renewable Energy Institute (REI), a Japanese renewable energy think tank, estimates that new coal plants are likely to be uneconomic due to falling coal plant use and the declining cost of imported LNG, a major competitor for coal generation. REI also argues that any new coal plants will be vulnerable to declining renewable energy costs, falling wholesale electricity prices, fluctuations in the price of thermal coal and the prospect of regulations to address climate change. The Global Coal Plant Tracker estimates that, as of July 2019, Japan has 8893 MW of new coal plants under construction with a further 4412 MW proposed. (Renewable Energy Institute, Global Coal Plant Tracker)

South African Government unveils Eskom restructure: South Africa’s Minister of Public Enterprises, Pravin Gordhan, has announced that Eskom’s distribution, generation and transmission divisions will be “functionally” separate operations by June 2021 and put into separate subsidiaries of an Eskom holding company by the end of 2022. Eskom supplies about 95 per cent of South Africa’s electricity. Gordhan has also proposed that Eskom’s 16 coal plants be formed into three “clusters” to compete on price. However, he argued Eskom does not have the funds to meet the country’s minimum emissions standards but will only “incrementally” upgrade pollution controls on its plants. Finance Minister Tito Mboweni is scheduled to outline a plan to reduce Eskom's R450bn (US$31 billion) debt burden in a budget announcement on October 31. (TimesLive, The Citizen, South African Government [pdf])

Bank report estimates jobs impacts of Chilean coal exit would be minimal: A report by the Inter-American Bank on the employment impacts of a coal plant exit by 2030 or 2050 found there would be negligible difference between the two. While the closure of coal plants would cost about 4000 jobs the report notes that Chile’s economy “routinely” creates over 40,000 jobs a quarter. It also estimated that between 32,000 and 40,000 direct and indirect jobs would be created, mostly in the electricity sector. However, an unknown factor is whether the new jobs would match the skills of those affected by an exit from coal or the geographic distribution of the new energy sector jobs. Chile’s national coal production is minimal at just 2.3 million tonnes. In mid-2019 Chile’s conservative president Sebastian Pinera said the country’s coal plants would close by 2040 but on a schedule determined by the power utilities. Mining giant BHP recently announced that it had signed four contracts for renewable energy to replace coal power at its two copper mines in Chile and boasted that they would cut power costs by 20 per cent. (BNAmericas, Inter-American Development Bank [pdf], Guardian)

Russian producers look to benefit even as market contracts: Russian coal exporters may be well placed to ride through the turbulence in the global coal markets due low production costs and shorter transport links to the key European and Asian markets. With mining costs of Russian coal of between US$$7 to US$11 a tonne plus rail and Baltic port charges of another US$34 a tonne, European customers can obtain cargoes for between US$41 and US$45 a tonne. This makes Russian coal often cheaper than cargoes from Colombia, the US and South Africa. While it costs about US$28 a tonne to ship Russian coal to the eastern ports, the shipping time is only a few days to key Asian markets such as China and Japan compared to two weeks from Australia. The current Newcastle thermal coal benchmark price of almost US$66 a tonne is very profitable for Russian producers but marginal for some Australian exporters. (Reuters)


Risk Analysis of Coal-Fired Power Plant Investment in Japan, Exposure to Stranded Asset Risk in the Energy Transition Period, Renewable Energy Institute, October 2019. (Pdf) (The media release on the report is here.)

This 32-page report details why new coal plant projects in Japan have become very financially risky.

Apocoalypse Now, Carbon Tracker Initiative, October 2019. (Pdf) (Registration required)

This 20-page report details the losses most European power utilities are incurring on their lignite and coal plants and the countries that are most exposed to earlier-than-expected closures.