May 14, 2020
Issue 322  |  View Past Issues

Editor's Note

A decade ago over 40 per cent of Great Britain’s power generation came from coal plants. This week, it clocked up its first full month of coal-free generation since the advent of the power grid in 1882. In the US, in 2019 coal generation fell to a 42-year low with the utilisation of the remaining plants falling to record low levels. The latest official US Government estimate is that coal generation will fall a further 25 per cent in 2020 while renewable generation increases.

The coal to renewables switch is gathering pace elsewhere too. In South Korea, a high-level committee has proposed a dramatic increase in renewable generation and the closure of half the country’s coal units by 2034. In Germany, reduced power demand has undermined power prices to the point that a leading power sector analyst argues old lignite plants “are clearly in the death zone”.

While COVID-19 restrictions are contributing factors in some of these developments, the transition to renewables is hampered, such as in India, by high-level political support for the development of new coal mines and public lending agencies’ willingness to finance new coal plants despite the risk of stranded assets.

Even so, other thermal coal incumbents are struggling. Anglo American has flagged that it wants to exit its thermal coal mines, coal exporters have been hit by the slump in coal prices and Vale is pondering a costly revamp of its mine in Mozambique in the hope it may be able to sell it off or at least attract a joint venture partner.

Bob Burton


India’s CO2 emissions fall for first time in four decades amid coronavirus

India’s carbon dioxide emissions have declined for the first time in 40 years, in part due to a decline in coal consumption, write Lauri Myllyvirta and Sunil Dahiya in Carbon Brief.

COVID-19 will not slow Southeast Asia's shift from coal to renewables

The early signs are that volatility in the fossil fuel sector is further driving the case for Asia to embrace the security of domestic renewable energy and, if anything, hasten the clean transition, writes Sara Jane Ahmed from the Institute for Energy Economics and Financial Analysis in Nikkei Asian Review.

The outlook for thermal coal in Southeast Asia and South Asia

There are major factors that should give investors pause about accepting the idea that Southeast and South Asia will underpin strong growth in thermal coal demand, writes Tim Buckley from the Institute for Energy Economics and Financial Analysis.

Top News

UK’s first coal-free month of power generation since industrial revolution: The power grid of Great Britain has run coal-free for over a month, signalling the dramatic acceleration from reliance on coal plants since the grid was established in 1882. The first coal-free generation runs were for four hours in May 2016 and for a full day in April 2017. In May 2019, Great Britain set new coal-free generation records in quick succession with both its first coal-free week and a separate coal-free fortnight. In 2012 coal generation supplied some 43 per cent of Great Britain’s electricity. The UK Government has set a target for an end of coal generation by October 1, 2025 but earlier this year proposed bringing this forward by a year. (INews, Carbon Brief)

South Korea could shut half its coal units by 2030: A working group advising the Ministry of Trade, Industry and Energy has proposed lifting the renewable energy target from 20 per cent by 2030 to 40 per cent by 2034. The group has also proposed cutting coal generation from the current 27.1 per cent of generation to 14.9 per cent by retiring about 30 of the country’s 60 coal units at the end of their 30-year life. It has proposed 24 of these units be converted to run on gas. The proposal comes after the resounding election victory of President Moon Jae-in’s Democratic Party, which has backed a Green New Deal, and as the ministry is drafting a new long-term electricity plan. South Korea is estimated to have imported 99 million tonnes of thermal coal in 2019, making it the fourth largest importer of the fuel in the Asian market. (Bloomberg, Yonhap)

US utility proposes closure of 1100 MW Great River plant: Great River Energy has proposed the closure of the 1151 megawatt (MW) Coal Creek Station in North Dakota in late 2022 and its replacement with electricity purchased from 1100 MW of wind generation by the end of 2023. The Coal Creek Station, which was first commissioned in 1979, consumes the bulk of the lignite from the nearby Falkirk mine operated by a subsidiary of North American Coal. Great River Energy has also announced it will convert the 99 MW lignite unit at the Spiritwood Industrial Park to run on gas and install a 1 MW demonstration battery. Republican North Dakota Governor, Doug Burgum, is opposed to closing the plant. (Utility Dive, Great River Energy)

New study identifies carbon capture water constraints: A new study published in Nature Sustainability has found that water availability would be a major constraint on the use of carbon capture and storage (CCS) on existing coal plants. The energy demands of running CCS equipment  can increase water consumption by 30 per cent or more. A study of 1093 coal plants with a capacity of over 100 MW that were commissioned after 2000 found 43 per cent would experience water scarcity at least one month per year. The study also found that 32 per cent of the plants studied, with a combined capacity of 625,000 MW, would experience water scarcity for five or more months per year if CCS technology was retrofitted. Of these plants, 56 per cent are in China, 15 per cent in India and 11 per cent in the US. (Platts, Nature Sustainability)

US demands data from Canada over Teck pollution: The US Environmental Protection Agency (EPA) has written to the Environment Minister of British Columbia requesting access to pollution data from Teck Resources’ Elk Valley metallurgical coal mines to allow independent modelling of the company’s proposed pollution management plan. The EPA wrote that it “finds it unacceptable that the province has accepted [a treatment plan] that will allow seasonal exceedances of water quality objectives into the future.” Pollution from the mines, which contains selenium at four times the permissible British Columbia level for drinking water, flows across the border and along a 200-kilometre-long stretch of the Kootenai River in Montana and Idaho before the river crosses back into Canada. Research by the US Geological Service has found selenium in the water coming from the Canadian side of the border but not in US tributaries of the river. (CBC)

Indian Government sets up group to accelerate coal mine approvals: The Indian Government has appointed the global accountancy firm KPMG to assist coal companies “in obtaining timely approval/permissions” for environmental permits and land acquisition for new coal mines. In a conference call with companies allocated new coal blocks, the Secretary of Coal, Anil Kumar Jain, urged the companies to use the services of KPMG “in sorting out their issues so that the coal production may begin at the earliest.” The Indian Government has stated that it hopes demonstrating support for companies will assist in attracting private bidders for new blocks to be auctioned later this year. (Argus, Ministry of Coal)

South Korean utility bans Australian lab company from coal compliance work: Two tenders issued by Korea South-East Power for the supply of thermal coal have banned the use of the Australian laboratory services company ALS for certifying the quality of its coal shipments. In April ALS announced that an investigation it commissioned estimated that ALS’s Australian Coal Superintending and Certification Unit had “manually amended without justification” about 45–50 per cent of the certificates of analysis from the company’s laboratories in Newcastle, Mackay, Gladstone and Emerald since 2007. (Reuters)


Australia: Centennial Coal underestimated by a factor of 30 the carbon dioxide emissions from burning coal from a proposed mine expansion.

Australia: NSW Supreme Court rules orders former Gujarat NRE Coking Coal Managing Director, Arun Jagatramka, to pay Wollongong Coal A$12 million (US$7.9 million) for the house paid for by the company.

China: Coal transport lobby group calls for restrictions on metallurgical coal imports to support domestic producers.

India: Assam forest department fines Coal India subsidiary 432 million rupees (US$5.7 million) for illegally mining in a forest area since 2003.

Ireland: Coal generation declined by over 70 per cent in 2019 as wind generation and power imports rose.

Poland: Up to 1000 people a day to be tested in Silesia as the coal mining region recorded the most COVID-19 cases in the country.

Russia: Dimitriy Bosov, the billionaire owner of Siberian Anthracite, which controlled a major slice of Russian coal production, has died, reportedly by suicide.

US: The number of Powder River Basin coal workers stood down increases as Decker Coal Company furloughs 98 employees until the end of May.

Companies + Markets

US coal generation fell to a 42-year low in 2019 with trend accelerating in 2020: New data from the US Energy Information Administration (EIA) notes that US coal generation declined by 16 per cent in 2019 due to a combination of reduced demand and increased wind and gas generation. While the US fleet of coal plants had a combined capacity of 229,000 MW, their utilisation rate has plummeted from 67 per cent in 2010 to 48 per cent in 2019. In its latest short-term energy outlook the EIA projects that US coal consumption will decrease by 23 per cent in 2020 to 453 million short tons (410 million tonnes) due to an estimated five per cent decline in electricity demand and increased renewables generation. (US Energy Information Administration, US Energy Information Administration)

Analyst says old German lignite plants are entering the “death zone”: The head of energy and climate research at the Institute for Applied Ecology, Felix Matthes, estimates that old German lignite plants “are clearly in the death zone.” He estimates the combination of reduced demand, depressed power prices and carbon costs have combined to cut margins for old lignite plants to less than €9 per megawatt hour (MWh) (US$9.7 per MWh). Matthes estimates German power prices have declined by 18 per cent in 2020 to about €36.50/MWh (US$39.4/MWh), a level he estimates is insufficient to cover staff and maintenance costs. If these prices persist, Matthes estimates plant owners will look to close units before major maintenance overhauls are due and when labour agreements allow. Matthes said the proposed coal closure law, which will be subject to a public hearing on May 25, should be designed to avoid providing incentives to keep unprofitable plants online. (Montel)

WoodMac estimates most thermal coal exporters losing money: Wood Mackenzie, a major consulting company, estimates the prevailing seaborne thermal coal price is so low that about 58 per cent of current coal production is loss-making. Wood Mackenzie's Rory Simington said about 23 per cent of global coking coal exports and about 10 per cent of Australian exports were losing money at the prevailing hard coking coal price of $US113 per tonne. While most coal production is sold based on long-term contract prices, sustained low spot prices will flow through to the next 3- or 12-month long contracts. JP Morgan analyst Lyndon Fagan estimates seaborne thermal coal demand in 2020 could decline by 60 million tonnes or 6 per cent. (Australian Financial Review [paywall])

Anglo American aims to spin off thermal assets in two to three years: In response to increasing pressure from investors, Anglo American has announced that it is likely to spin off its thermal coal assets into a separately listed company on the Johannesburg Stock Exchange within two to three years. Anglo American operates three thermal coal mines in South Africa, which produce about 19 million tonnes for the export market and a further 10 million tonnes for local customers. Anglo American also owns a one-third stake in the Cerrejon mine In Colombia, with its share of production 8.5 million tonnes in 2019. Anglo American also produced 22.8 million tonnes of metallurgical coal in 2019, making it the world’s third largest exporter. (Mining Weekly, Anglo American)

Australian think tank pitches green steel as transition measure: The Grattan Institute, an Australian think tank, has proposed that government support the development of a green-hydrogen-fuelled steel export industry as a transition measure to offset declining employment in key coal-producing regions such as central Queensland and the Hunter Valley in New South Wales. The report cautioned that a strategy reliant on exporting green hydrogen for overseas steel producers could only be competitive if production costs from solar and wind generation were significantly cheaper than competitors. Australia is the world’s second largest exporter of thermal coal and the largest exporter of metallurgical coal and iron ore. (Guardian, Grattan Institute)

Risks grow as Indian government bank keeps backing coal plants: A report by the Institute for Energy Economics and Financial Analysis (IEEFA) has found the government-owned Power Finance Corporation (PFC) holds US$6.8 billion in non-performing power sector loans as of December 2019. Despite this, the PFC was a lender to four new coal projects with a combined capacity of 8800 MW, which commenced construction in 2019. IEEFA argue that PFC, which bought the Rural Electric Corporation in 2019, is exposed to US$40–60 billion of projects that could become stranded assets as renewables undercut coal generation. (Institute for Energy and Economics Finance)

Vale’s Mozambique mine revamp delayed due to COVID-19: The Brazilian mining company Vale has delayed plans to redevelop its Moatize mine in Mozambique to focus on producing metallurgical coal. In late 2019 the company proposed a three-month shutdown to change the mine design but COVID-19 lockdowns in South Africa and Mozambique have resulted in delays to the work. The shutdown in India has undercut demand for stockpiled coal while Chinese demand is for a higher grade coal. Vale has flagged increasing production to 15 million tonnes a year before considering whether to sell the project or seek a joint venture partner. (Vale [Pdf])


Start with steel: A practical plan to support carbon workers and cut emissions, Grattan Institute, May 2020.

This 57-page report argues that the development of a green-hydrogen-based steel export industry could provide thousands of jobs in Australian regions currently reliant on coal.

Can the Indonesian Coal Industry Survive COVID‑19?, Institute for Energy Economics and Financial Analysis, May 2020. (Pdf)

This 10-page briefing paper examines the financial viability of 11 Indonesian stock exchange-listed coal producers as COVID-19 pandemic restrictions have undercut thermal coal prices.