BlackRock’s first target is thermal coal divestment
BlockRock’s initial targeting of only the largest coal producers is likely to be followed by power producers and other restrictions, write Tim Buckley and Tom Sanzillo from the Institute for Energy Economics & Financial Analysis.
BlackRock’s climate activism has a passive problem
While BlackRock’s announcement on its new climate policy is welcome, the broader issue of how passively managed money can participate in the climate fight remains unresolved, writes Mark Gilbert in Bloomberg.
How to end generation capacity constraints and load shedding in South Africa
There is an urgent need for constructive efforts to end generation capacity shortages and load shedding in South Africa, writes Chris Yelland in the Daily Maverick.
China’s risky gamble on coal conversion
China’s support for converting coal to gas, oil and chemicals means gambling on an economically uncertain and environmentally destructive business, write Richard Liu, Zhou Yang and Xinzhou Qian in New Security Beat.
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Greek court cancels permit for proposed coal plant
Greece’s Supreme Administrative Court, the Greek Council of State, has cancelled the environmental permits for the Public Power Corporation’s (PPC) proposed 450 megawatt (MW) Meliti II unit and the existing 330 MW Meliti plant. The environmental permits for the lignite-fired plants were challenged by ClientEarth, WWF Greece and Greenpeace Greece which argued that the 2018 decision to issue a ten-year permit for the units without undertaking an environment impact assessment was in breach of both Greek and European Union law. The ruling has been welcomed by environmental groups but the written judgement is not expected to be issued for several weeks. The ruling means that Meliti II will not proceed while the existing unit will require a fresh permit to continue operating. In December, PPC announced that existing lignite units would be phased out by 2023. (ClientEarth)
BlackRock bows to pressure and begins exit from coal investments
The CEO of BlackRock, has responded to intense pressure from NGO’s, investors and commentators and announced the US$7 trillion asset management company will begin “exiting investments that present a high sustainability-related risk, such as thermal coal producers.” BlackRock’s letter to clients announced that by the middle of 2020 it will exclude investments in companies that generate more than 25 per cent of their revenues from thermal coal production. However, the policy only applies to the $US1.8 trillion portfolios where BlackRock has the option of selecting investments for clients and not to its passive investment portfolios which account for the majority of the funds it manages. The new policy will affect an estimated US$401 million invested in major thermal coal producers in Australia, India, Indonesia, China and the US. The policy also states that the company will “closely scrutinize” other businesses such as the power sector companies which are heavily reliant on thermal coal. The new policy has been greeted by NGOs as a welcome first step which will increase pressure on other funds management companies which have not yet adopted fossil fuel exit policies. (Guardian, Australian Financial Review [paywall], Sierra Club, BlackRock’s Big Problem, Larry Fink, BlackRock)
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Another legal win for Washington State over proposed coal export terminal: The Supreme Court of Washington State has upheld the validity of a 2017 decision by Washington State’s Department of Natural Resources’ (DNR) to refuse to grant a sublease to Millennium Bulk Terminals for its proposed 44 million tonnes a year Longview coal export terminal. Northwest Alloys unsuccessfully sought a review of a Court of Appeals ruling that the DNR’s decision to deny the company’s sublease to Millenium Bulk Terminals was legal. Millenium currently also has a federal court challenge against the Washington State Department of Ecology’s rejection of a shorelines permit for the proposed terminal. In April 2019 a federal judge rejected Millennium Bulk Terminals’ claim that the refusal of Washington State to issue a water permit for the proposed terminal violated the foreign commerce clause of the US Constitution. (TDN.com)
Enforcement action launched over one of Eskom’s polluting coal plants: In late December 2019 the South African Department of Environmental Affairs’ Environmental Management Inspectorate, also referred to as the Green Scorpions, issued a compliance notice to Eskom requiring it to submit a maintenance plan by January 12 to “improve its compliance with the minimum air quality standards” for its 4116 MW Kendal coal plant. In July 2019 Eskom acknowledged that poor maintenance at its plants during 2018 had resulted in increased pollution and that bag filters had failed on four units at the plant. While the department said the timing of the compliance plan rests with Eskom, the government-owned utility is under pressure to close its two most polluting units, with a combined capacity of 1200 MW, and detail what it will do about the other four polluting units. In June 2019 the Centre for Environmental Rights, representing groundWork and the Vukani Justice Movement in Action, launched legal action against the South African Government over pollution in Mpumalanga region from Eskom’s 12 coal plants, including Kendal, and Sasol’s Secunda coal-to-liquids plant. (Mail & Guardian, Department of Environment, Forestry and Fisheries)
Indian court reopens door for Adani coal imports investigation: India’s Supreme Court has overturned a Bombay High Court order from October 2019 which effectively suspended a Directorate of Revenue Intelligence (DRI) investigation into alleged over-invoicing of coal imports by companies including the Adani Group, Essar and Reliance Infrastructure. In early 2018 the DRI had issued ‘letter rogatory’ requests seeking assistance from courts in countries including Singapore, Dubai, Hong Kong, Switzerland and Indonesia in accessing records relating to its investigation. However, the Adani Group challenged the DRI’s authority to issue the requests on the grounds that DRI should have first filed an initial case under the criminal code. In its appeal the DRI successfully argued that it was within its rights to issue the requests to gather information before filing a case. The investigation commenced in 2014 over allegation major coal importers invoiced an offshore subsidiary for an inflated coal price and in doing so shifted funds overseas while passing the higher costs on to Indian power consumers. (Livemint, The Wire)
Lawyers for bankrupt US coal company request scrutiny of ex-CEO’s finances: Lawyers acting for the bankrupt coal company, Blackjewel, have requested permission to scrutinise the finances of the company’s former CEO Jeff Hoops. Backjewel’s lawyers alleged that before the company filed for bankruptcy in July 2019 the company was “woefully insolvent” due to Hoops transferring “tens of millions of dollars” of company assets to his family and other “Hoops-related entities.” On legal advice, Hoops did not respond to the allegations. Following Blackjewel filing for bankruptcy the company shut down its 32 coal mines in Kentucky, Virginia, West Virginia, and Wyoming owing over $146 million in unpaid taxes and employees’ wages and entitlements. A hearing on the case is scheduled for January 22. (Casper Star-Tribune)
Siemens rejects plea to cancel contract for Adani’s Carmichael project: Joe Kaeser, the CEO of the global engineering company Siemens, has rejected pleas for the company to cancel its contract to supply railway signalling equipment for Adani’s proposed Carmichael coal project in Australia. The contract is estimated to be worth about €18 million (US$20 million). Ahead of the extraordinary board meeting, thousands of people protested at company offices across Germany and over 63,000 emails objected to its involvement with the project. Announcing his decision Kaeser claimed there was no way to cancel the contract with Adani “without neglecting fiduciary duties.” Kaeser cited Australian Government support for the project as one of the reasons for its decision. Siemens decision was condemned by NGO’s and spurred protests outside its offices in Germany. (Guardian, Deutsche Welle, Siemens)
Indian ministry of Power proposes yet another pollution deadline extension: India’s Ministry of Power has proposed extending the December 2019 deadline for compliance with new pollution standards for coal plants in the region around New Delhi. Only one of 11 utilities has met the December 2019 deadline for the installation of flue gas desulphurisation units. No enforcement action has been taken against the non-compliant plants, despite extreme pollution levels in the region. The Ministry of Power has proposed that the non-compliant plants should be required to meet the new pollution standards between July 2020 and December 2021. (Economic Times)
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Australia: AGL Energy pays A$100,000 for coal ash management breach at its Bayswater and Liddell Power Stations in New South Wales.
Bangladesh: Test generation commenced at the 1320 MW Payra plant, the first of a raft of new coal plants promoted by the Bangladesh Government.
Canada: Teck Resources enters into a six-year agreement to double metallurgical coal exports to six million tonnes a year from the Ridley Terminal in northern British Columbia.
France: EDF sets April 2021 as the closure date for the 580 MW Le Havre coal plant.
India: Central Electricity Authority data reveals power demand grew in 2019 by 1.1 per cent, the lowest level since 2013.
Poland: In 2019 power generation from coal fell by five per cent while lignite generation declined by 15 per cent.
UK: Church of England backs resolution calling on Barclays to phase out fossil fuel lending.
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German power utilities seek favourable deals in coal exit negotiations: According to media reports Germany’s Ministry of Energy has proposed that the utility RWE could be paid up to €2 billion (US$2.2 billion) to close its lignite plants as part of the country’s coal exit plan. Additional funding would be provided for workers affected by the closures. Another utility, Uniper has proposed that it shut all its existing coal plants or convert them to gas in return for being allowed to commission the near-complete 1000 MW Datteln 4 plant. The coal exit commission argued the plant should not be allowed to be brought online. One of Uniper’s coal plants is in eastern Germany, prompting states in the region to object to the company’s proposal. Climate activists have vowed to prevent Datteln 4, a hard coal plant which would be reliant on coal potentially imported from Colombia or Siberia, from being commissioned. (Clean Energy Wire, Climate Home News)
Indonesia aims for production cut and increased domestic consumption: Indonesia’s Minister for Energy and Mineral Resources, Arifin Tasrif, has announced a 2020 coal production target of 550 million tonnes, a 9.8 per cent reduction on the 610 million tonnes produced in 2019. Arifin said it was expected that domestic coal consumption would increase by 12 per cent to 155 million tonnes in part to cater for the expected commissioning of eight new mineral smelters. While past annual production targets have been breached, Arifin claimed the 2020 target would be enforced to avoid high levels of production undermining prices and government revenue. (Jakarta Globe, Bloomberg)
Vietnamese coalition of NGOs calls for scrapping of coal plants: A coalition of a dozen Vietnamese NGOs have called on Prime Minister Nguyen Xuan Phuc to stop 14 coal-fired plants due to their environmental and health impacts. The plants, which span eight provinces, have a combined capacity of 17,390 MW. The groups want the projects to be suspended, a comprehensive evaluation of the costs and impacts of all the projects undertaken, obstacles to the development of clean energy removed and public participation included in energy planning and development. The government-owned coal company, Vinacomin, has flagged that coal demand could increase to 50 million tonnes in 2020, up from 36 million tonnes in 2019. It has also foreshadowed that if all projected coal plants were commissioned, coal demand could reach 100 million tonnes a year by 2030. (VNExpress, VNExpress)
China introduces new power pricing regime: On January 1 the Chinese Government introduced a new power pricing regime, which may increase financial pressure on coal power generators, many of which are already struggling due to overcapacity. Previously, the government set a benchmark power price for coal generation in each region, based on generation costs including pollution control equipment. Under the new hybrid system, the coal power price will comprise a benchmark price but with the capacity for it to fluctuate by up to 10 per cent higher or 15 per cent lower as negotiated between the generators, distribution companies and consumers. Most analysts consider there are limited prospects for coal generators to increase prices due to overcapacity and competition with renewables, with the exception of some specific east coast markets. (China Dialogue)
Demand for coal in Europe set to slide further: S&P Global Platts and Capital Economics estimate that demand for coal from generators in Europe will fall further and could prompt prices to fall to US$50 a tonne, down from a 2019 high of US$100 a tonne. Factors undermining coal generation include carbon prices which have increased fivefold since 2017 and a glut of gas including from Russia and LNG shipments. The growth in renewables is also undermining coal and lignite generation in key markets. (Bloomberg)
India investigates option of importing Mongolian and Russian metallurgical coal: India’s Minister for Steel, Dharmendra Pradhan, has confirmed that Coal India and the Steel Authority of India Limited (SAIL) are investigating the option of importing Mongolian metallurgical coal shipped via Vostochny Port in Russia. Pradhan said that India was looking to Mongolian metallurgical coal as an alternative to reliance on expensive imports from Australia. Late last year the Indian Government also entered into discussions with Russia over possible investment in metallurgical coal projects and ports to service Indian demand. While India has large domestic thermal coal mines, it is heavily reliant on imports of metallurgical coal for its growing steel sector. (Financial Express)
Tata Power demands price rise for stranded Mundra plant: Tata Power has demanded that the five states which purchase power from the 4000 MW Mundra plant need to decide by January 15 whether or not they will agree to increase the price paid under their power purchase agreements. While the rights to the plant were originally awarded to Tata Power via competitive tender, the company failed to anticipate that Indonesia, where it sourced its coal from, would introduce a minimum price for coal exports. Tata Power claims that unless the states of Gujarat, Haryana, Rajasthan, Punjab and Maharashtra agree to pay an increased price, reportedly about 3.10 rupees per kilowatt hour (four US cents per kw/h), then the plant could be closed by the end of February. The plant has had a devastating impact on local communities and fisheries, which was developed with financial backing of the World Bank’s International Finance Corporation and the Asian Development Bank. (Economic Times, Center for Financial Accountability)
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Correction: Last week’s edition incorrectly stated that Engie’s Maasvlakte Power Station was one of the plants affected by a Netherlands court ruling on the need for deeper emissions cuts. In April 2019 Engie announced an agreement to sell the plant to Riverstone Holdings, an investment firm.
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