Editor's Note
Community resistance to plans by Indian coal companies and power utilities is widespread, but it is less common for a company proposing a project to give up. In West Bengal, most villagers refused to sell their land to the Damodar Valley Corporation (DVC) for a new mine to feed one of its coal plants. With the state government refusing to support the compulsory acquisition, DVC has given up. In the US, a federal court judge has reinstated a moratorium on new coal leases on federal lands until a government agency has revised its environmental assessment. In Germany, the government has insisted that a condition for a US$15 billion bailout for Uniper was that the utility had to drop its legal action against the Netherlands Government over its legislated coal phase-out. In the UK, the government has again deferred a decision on a proposed new coal mine in Cumbria.
According to the financial services firm Fitch Solutions, thermal coal prices will likely remain well above the long-term average for the next few years. The high prices, combined with the European Union’s ban on importing Russian coal and providing financial support or insurance for cargoes, are reshaping the seaborne coal trade. In the Philippines, which relies heavily on coal imports, a consumer group is pressing regulators to require electricity distributors to seek the least-cost supply rather than the current expensive coal-based contracts with private generators. In the latest example of some coal companies seeking to position themselves for a renewables future, the South African coal company Seriti Resources has bought a 51 per cent share in a wind and solar project development company.
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The coal industry's role in slowing the rollout of clean energy in Bosnia and Herzegovina
The mighty coal industry and bureaucracy are frustrating efforts to shift Bosnia and Herzegovina to be a clean energy production leader, writes Dragan Maksimovic in Deutsche Welle.
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Refusal of villagers to sell land pushed Indian utility to quit coal lease: The Damodar Valley Corporation (DVC) has abandoned plans to build the proposed Khagra-Joydev coal mine in West Bengal after villagers refused to sell most of the land required for the project. The mine was to supply coal for two 500 megawatt (MW) units at the Mejia coal plant commissioned over a decade ago. DVC is owned by the Indian Government’s Ministry of Power and operates coal and hydro projects in West Bengal and Jharkhand. According to an anonymous DVC official, the utility needed 3500 acres (1416 hectares) of villagers’ land but, despite increasing the proposed purchase price, “failed to make any progress”. DVC sought support from the West Bengal Government for compulsory land acquisition but was refused. (Economic Times)
US court reinstates ban on federal coal leasing: A federal judge has reinstated a moratorium on new coal leases on federal lands until the Bureau of Land Management (BLM) has completed a “sufficient” environmental analysis under the National Environmental Policy Act. The Obama administration initially imposed the moratorium in 2016, pending an assessment of the leasing program. The moratorium was overturned in 2017 by Ryan Zinke, the Secretary of Interior in the Trump administration, with the BLM’s review focussing only on the impacts of six coal leases. Zinke’s order was revoked in 2021 by the Biden administration, but it refused to reinstate the moratorium. (The Hill, Center for Biological Diversity, US District Court [Pdf])
German utility forced to drop lawsuit over Netherlands coal closures: A condition of the German Government providing a 15 billion euro (US$15.24 billion) bailout of Uniper was that the utility end its legal action against the Dutch Government over its legislation requiring coal plants to close by 2030. Uniper chief executive Klaus-Dieter Maubach said the utility only dropped the case because the German Government insisted on it. Four other companies have launched legal actions against four European governments over the impact of climate policies on coal, oil and gas projects under the Energy Charter Treaty. Critics have called for the end of the treaty, while others are promoting reforms that, if ratified, would protect fossil fuel investments from climate policy bans until 2033. Another German utility, RWE, is continuing with its case against the Netherlands. (Financial Times)
Drought hits German coal plants reliant on barged supplies: A draft decree by Germany’s transport and economy ministries is proposing the rail network prioritise coal and other supplies for power generators over passenger and other industrial services. The draft decree would require the approval of the German Cabinet. Drought conditions have led to the water level in the Rhine River steadily falling over the last six weeks resulting in limits on the capacity of barges to transport coal to GKM’s 2147 MW Mannheim coal plant and EnBW’s 1815 Karlsruhe coal and gas plant. The water level at Kaub on the Rhine is forecast to continue falling over the next week. (Reuters)
UK Government once again defers decision on Cumbrian coal mine: Friends of the Earth UK has been informed by the Department for Levelling Up, Housing and Communities that the new Secretary of State, Greg Clark, will not decide on West Cumbria Mining’s application for planning permission for the proposed Whitehaven mine in Cumbria until November 8. The proposed underground metallurgical coal mine is opposed by residents, environmental groups and the UK Government’s own climate advisory body. The previous secretary, Michael Gove, was sacked by then Prime Minister Boris Johnston on July 7, the day he was due to announce his decision on the mine. Clark initially stated he would make his decision on or before August 17. (Guardian, Friends of the Earth UK)
Taiwan regulator wary of utility push for high-ash Australian coal: Taiwan’s Environmental Protection Administration (EPA) has demanded further documentation from the Ho-Ping Power Company on the utility’s proposal to increase the use of Australian coal. The Ho-Ping Power Company wants the current 12 per cent coal ash limit to be lifted to 16 per cent to allow it to import more Australian coal for its 1320 MW Ho-Ping coal plant as an alternative to Russian supplies. However, the change would result in a one-third increase in the amount of fly and bottom ash created at the plant. An advisory committee to the EPA expressed concern about the possible levels of lead and cadmium in Australian coal. The committee has requested the utility detail its coal supply options and their comparative environmental impacts. (Taipei Times)
Records reveal Ohio Governor's contact with utility in bailout scandal: Recently released text messages have revealed Ohio’s Republican Governor, Mike DeWine, was in contact with the CEO of FirstEnergy over the possible appointment of Sam Randazzo as the head of the Public Utilities Commission of Ohio (PUCO). In 2019 DeWine appointed Randazzo to the position despite opposition from environmental groups. DeWine’s 2018 campaign for Governor benefitted from about $1 million in contributions from FirstEnergy to his campaign and groups that supported his campaign. FirstEnergy provided over US$60 million to a non-profit group controlled by the then Ohio House Speaker Larry Householder. The group successfully campaigned for a law approving a US$1.3 billion bailout for two nuclear plants and two coal plants, with FirstEnergy one of the beneficiaries. Randazzo resigned as the chairman of PUCO in November 2020 after the FBI raided his home and seized records in November 2020. Subsequently, FirstEnergy admitted to paying a US$4.3 million bribe to Randazzo, but he has not been charged with any offences and denies any wrongdoing. (Ohio Capitol Journal)
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Australia: Greens propose a bill to phase out Victoria’s three brown coal plants by 2030.
Sri Lanka: A breakdown means the 300 MW Unit 1 at the Norochcholai coal plant will be offline for two weeks.
South Korea: KEPCO – squeezed between rising fossil fuel costs, currency shift against the USD and a power price cap – has racked up a loss of 14 trillion won (US$10.7 billion) in the first half of 2022.
Ukraine: Russia now controls an estimated 63 per cent of Ukraine’s coal resources.
US: Federal judge approves consent decree requiring Drummon Company to clean up its abandoned Maxine Mine site in Alabama and pay US$2.65 million in litigation costs.
US: Energy Information Administration estimates a total of 8800 MW of coal capacity will close in 2022.
US: President Joe Biden signed the Inflation Reduction Act into law. The legislation includes various climate measures, including significant solar and wind capacity incentives.
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Russia’s largest coal producer seeks freeze on bond payments: Siberian Coal Energy Company (SUEK), Russia’s largest coal producer, has requested a freeze on bond interest payments on a US$500 million bond until the date of maturity in mid-September 2026. The bond was issued in September 2021 with an interest rate of 3.375 per cent by a coalition of nine banks, including Alfa-Bank, BofA Securities, Bank of China and Citigroup. SUEK bondholders have until September 5 to vote on the company’s proposal. SUEK stated it sought the freeze because of the impacts of international sanctions on Russian companies and Russia’s counter-sanctions and currency control measures. SUEK is Russia’s largest coal producer and, before the invasion of Ukraine, the world’s fourth largest coal exporter. In 2021 the company produced over 102 million tonnes of coal, with just under half exported. (Reuters, SUEK [Pdf])
EU clarifies that the ban on Russian coal includes insurance and finance: A European Commission spokesperson has emphasised that the ban on Russian coal extends beyond importing coal to include financial and insurance services for the “transfer” of cargoes. The European Union’s ban on importing Russian coal came into effect on August 11. The restrictions apply to the direct or indirect “transfer” of Russian coal “irrespective of the final destination of the goods”. Mike Salthouse from a UK-based protection and indemnity insurance association said, “if you’re an EU shipowner and you’ve loaded Russian coal going to a non-EU third country, it is now an unlawful trade.” (Insurance Journal, European Commission [Pdf])
Fitch estimates global thermal coal prices will remain high: Fitch Solutions, a part of the Fitch financial services firm, estimates the Asian seaborne thermal coal price could remain significantly higher than expected for the next four years. Previously the firm estimated that the Newcastle thermal coal price would average US$230 per tonne in 2022 but has increased its estimate to US$320 per tonne. For the 2022 to 2026 period, the firm has increased its estimate from US$159 per tonne to US$246 per tonne. The increased forecast assumes a significant realignment of the global market with increased European demand for thermal coal from Colombia, South Africa and Australia. A persistent high seaborne thermal coal price will significantly impact lower-income thermal coal importers such as India, Sri Lanka, Philippines, Vietnam and Bangladesh. (Bloomberg)
Philippines consumer group challenges coal plant rate hike: The Mindanao Coalition of Power Consumers (MCPC) has called on the Department of Energy and the Energy Regulatory Commission to nullify the contracts between coal-based private power producers and local electricity distributors. Mindanao, the second largest island in the Philippines, has a population of about 25 million, a quarter of the country’s total. The MCPC says power prices are surging because 90 per cent of Mindanao’s power is coal-based and there are onerous provisions in distributors’ contracts with private power generators. MCPC president David Tauli said distribution utilities had failed to put power supply agreements out for competitive tendering or other least-cost procurement as required under the Electric Power Industry Reform Act of 2001. (Rappler)
South African coal company buys wind company: The privately owned South African coal producer Seriti Resources has agreed to buy a 51 per cent stake in Windlab Africa for US$55 million. Windlab Africa is developing 23 solar and wind projects with a combined capacity of 3500 MW in South Africa and east Africa. Seriti Resources said that through its new subsidiary, Seriti Green, it plans to invest US$730 million in a 450 MW wind farm in Mpumalanga, the province in South Africa that produces about 80 per cent of the country’s coal and hosts most of the coal power plants. Seriti Resources operates six major coal mines and produced about 50 million tonnes of thermal coal in 2021, with the bulk supplied to Eskom’s Kriel, Tutuka, Lethabo, Kendal and Duhva coal plants. Eskom plans to cut coal capacity at most of the plants Seriti supplies in the 2030s. The utility’s financial crisis and the fragile state of the plants may result in accelerated retirement dates. (Reuters, Seriti Resources)
Korean pension fund under pressure on coal exit: South Korea’s National Pension Service (NPS), which manages US$700 billion in investments, is considering excluding investments in companies that generate over 50 per cent of their revenue from coal mining or coal power generation, a threshold far higher than the coal exclusion policies of others in the financial services sector. In a report to NPS, Deloitte outlined two options: adopting a threshold of 50 per cent which would result in coal-related assets declining from 3.8 trillion won (US$ 2.9 billion) in 2023 to 3 trillion won ($2.3 billion) in 2030. NPS has significant investments in Korea Electric Power and steel producer POSCO. Lee Jong-O from the Korea Sustainability Investing Forum criticised NPS’s lack of urgency in meeting the national climate goals of net zero emissions by 2050. (Mining Weekly)
Indonesian utility urges stricter enforcement of coal producers: PLN, the Indonesian government-owned power utility, has warned of the risk of a coal supply shortfall as its stockpiles have declined as power demand increases faster than expected. In January, Indonesia temporarily banned coal exports after mining companies failed to comply with the domestic market obligation (DMO) to supply one-quarter of production to local customers with the price capped at US$70 per tonne. Coal producers with expiring contracts with domestic customers are reluctant to enter into new agreements due to the wide gap between domestic and export market prices. Some producers have also opted to pay penalties for breaching the DMO. The Ministry of Energy and Mineral Resources is establishing a coal agency to collect a levy imposed on coal exporters to compensate PLN for the difference between the current $70 per tonne cap and a new system based on the export market price. (Reuters, Jakarta Post)
China formalises agreement with Mongolia on coal railway: China’s Minister for Foreign Affairs, Wang Yi, has signed “cooperation documents” with the Mongolian Government that promote the reopening of border crossing points “to the largest possible extent” and the development of railways and highways “to keep the industrial and supply chains stable and unimpeded.” Mongolian coal exports to China plummeted after the outbreak of COVID-19 led to the closure of truck crossings. Yi signed a memorandum of understanding on completing a coal railway connection between the two countries at Gants Mod, one of three links Mongolia aims to commission shortly. The two countries agreed to promote “in-depth synergy” between China’s Belt and Road Initiative and Mongolian development strategies. (South China Morning Post, Ministry of Foreign Affairs)
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