June 4, 2020
Issue 325  |  View Past Issues

Editor's Note

After years of pressure from climate advocates the global asset manager BlackRock is finally starting to pressure at least some of the companies it has invested in. A recent BlackRock report reveals that it has put the South Korean utility KEPCO on notice about its plans to pursue involvement in new coal projects in Indonesia and Vietnam.

It is just the latest sign that the transition away from coal may be accelerating. In Chile, a subsidiary of the Italian utility Enel has announced it will accelerate its transition away from coal, including shutting by 2022 one unit that it previously said would run until 2040. In Poland, the utility PGE has floated the prospect that it will spin off its coal arm so it can access cheaper financing for its renewables plans. In China, draft standards for green bonds have been welcomed by international investment groups for ruling out support for new coal plants. In the US, Moody's has warned that coal consumption "will be crushed in 2020." In India, the government is pushing to accelerate plans to reduce the volume of expensive imported thermal coal as part of its response to the COVID-19 crisis. Faced with the economic shock of COVID-19, other countries now have an opportunity to reassess their ambitious new coal plant plans. A new report on the pollution risk from a raft of new coal projects proposed in Pakistan estimates up to 29,000 people could die prematurely over the lifetime of the projects.

Metallurgical coal producers have long thought they could be shielded from scrutiny over pollution and damage from mining by emphasising society’s reliance on steel production. That is slowly changing as proposals such as the HYBRIT plan for a hydrogen-fuelled demonstration steel plant in Sweden emerge indicating that alternatives to a reliance on metallurgical coal are emerging faster than previously thought likely.

Bob Burton


Question time for KEPCO’s board

The directors of the South Korean electric utility KEPCO are under growing pressure to rule out further involvement in overseas coal projects, writes Melissa Brown from the Institute for Energy Economics and Financial Analysis.


Enel accelerates coal plant closures

Chilean and Italian environmental groups have welcomed the announcement by Enel Generacion Chile, a subsidiary of the Italian utility Enel, that it will close the 127 megawatt (MW) coal unit at its Bocamina plant by the end of December 2020. Enel also announced it will close the remaining 370 MW unit, which was only commissioned in 2012, by May 2022. The units were previously slated for retirement by December 2023 and 2040 respectively. For over a decade local groups have sought the closure of the plant, winning legal cases and forcing regulators to prosecute the company for breaching environmental standards. The announcement comes after Engie’s Chilean subsidiary announced in late 2019 that it would close units 14 and 15 at its Tocopilla plant in January 2022 and units 1 and 2 in Mejillones plant by 2024. Between them, the two utilities have announced plans to build about 3000 MW of renewables capacity with roughly equal shares of solar and wind and some geothermal. The credit ratings agency Fitch Ratings stated that the “early decommissioning of coal-based power units is credit positive over the long term for both companies.” (Reuters, Global Energy Monitor, Fitch Ratings)

Top News

International Energy Agency pushed to embrace Paris Agreement 1.5 degree goal: A coalition of major investor groups and NGOs has written to the Executive Director of the International Energy Agency (IEA), Fatih Birol, urging that the special update of the agency’s flagship World Energy Outlook (WEO) report due in June should embrace the Paris Agreement goal of limiting the global temperature increase to 1.5 degrees centigrade. The IEA has faced increasing criticism that its annual WEO report fails to present the 1.5C target as its central scenario. (Reuters)

US county fines steel plant over pollution breaches: US Steel has been fined US$361,400 by the Allegheny County Health Department for over 300 air pollution and permit violations at the Clairton Coke Works since October 2019. The fines relate to pollution from the company’s ovens used to convert coal to coke for use in steel production. In January 2020 the company was fined US$743,625 for 400 air pollution violations between April and September 2019. The clean air advocacy group Breathe criticised regulators for relying solely on fining the company as a way of changing its behaviour rather than requiring the company to upgrade its old coke ovens to eliminate excessive emissions. (Pittsburgh Post-Gazette)

US EPA moves to curb ability of states to reject coal and other energy infrastructure: The US Environmental Protection Agency (EPA) has issued a rule amending section 401 of the Clean Water Act to limit the ability of state governments and authorised tribes to block energy infrastructure such as coal and gas terminals and pipelines. The change, which was endorsed by the peak coal lobby group the National Mining Association, sets a one-year timetable for decisions and limits consideration of projects only to the “point source” impacts on water quality, not broader impacts. In 2017 Washington State refused a water permit for Millennium Bulk Terminals proposed Longview coal export facility on grounds including that it would involve the destruction of wetlands and damage to tribal fishing rights. Legal analysts have suggested the EPA’s change is likely to be vulnerable to legal challenge. (Financial Times, New York Times, Environmental Protection Agency)

US court upholds coal port developer’s appeal: Two of three Ninth Circuit Court of Appeals judges have upheld a lower court ruling that Oakland City Council breached its 2013 contract with Oakland Bulk and Oversized Terminal which wanted to facilitate coal exports. The revelation in 2015 that a Utah coal company aimed to export coal through the proposed port led to the council banning the storage and transport of coal within the city. The dissenting appeal court judge found that it was reasonable that that city council decided that coal and petroleum coke exports constituted “a substantially dangerous threat to the health and safety to community members.” In a separate case, the Sierra Club and San Francisco Baykeeper have applied to intervene in a lawsuit seeking to defend the City of Richmond’s ordinance phasing out coal and petroleum coke storage and handling in the city. (East Bay Times, Sierra Club)

Australian scientists plea for moratorium on mining in water catchment areas: Twenty scientists and academics have called on the New South Wales Government to institute a moratorium on coal mining under key parts of Sydney’s water catchment until possible impacts are known with a high degree of certainty. WaterNSW has estimated that it may already be losing up to 25 million litres of water per day because of coal mining underneath the streams flowing into the reservoirs. The NSW Department of Planning recently approved the expansion of Peabody Energy’s Metropolitan mine under the Woronora reservoir and is currently considering expansions for Wollongong Coal’s Russell Vale mine and South32’s Dendrobium mine. (Brisbane Times, Open Letter to the Premier of NSW [pdf])

Finnish-owned utility opens 1100 MW coal plant in Germany: The Finnish-owned utility, Uniper, has commissioned the 1100 MW Datteln 4 plant in Germany nine years after it was originally scheduled to be commissioned. On the day it was commissioned 500 people attended a protest in front of the plant calling for it to be closed. The German Government has committed to the closure of all coal plants by 2038; hard coal plants such as Datteln will be ineligible for compensation payments after 2026. (Deutsche Welle, Global Energy Monitor)

Study estimates 29,000 premature deaths in Pakistan’s Thar region if coal plants proceed: A study by the Centre for Research on Energy and Clean Air estimates that air pollution from the construction of the nine proposed nine coal power plants in the Thar region in Pakistan could cause up to 29,000 premature deaths. The report argues that the proposed coal plants, with a capacity of 3700 MW, would also cause 19,900 new cases of asthma in children, 32,000 preterm births and up to 57,000 years lived with disability related to chronic obstructive pulmonary disease, diabetes and stroke. To date only one 660 MW unit has been commissioned in the Thar region. The report notes that the Sindh Environmental Protection Agency set its PM2.5 limit for 24-hour mean at 75 micrograms per cubic meter (µg/m3) while the national standard is 35 µg/m3. (Dawn, Centre for Research on Energy and Clean Air)

“The crisis triggered by the coronavirus pandemic will cost huge amounts of money. From the point of view of public finances, we cannot afford further financing of coal mining,”

said a Polish government source to Reuters, speaking on condition of anonymity.

Polish Government source, speaking on condition of anonymity, told Reuters that given the economic costs of #COVID-19 "we cannot afford further financing of #coal #mining" #Poland #lignite https://www.reuters.com/article/us-health-coronavirus-poland-coal-exclus/exclusive-covid-19-pushes-poland-to-accelerate-exit-from-ailing-coal-sources-idUSKBN2392K9


Europe: Coal power generation in May across Germany, Spain, the UK and France fell by 57 per cent compared to 2019.

Italy: Enel has permission to close the 605 MW unit 2 at the Brindisi plant from 1 January 2021.

Russia: Collapse of a railway bridge over the Kola River is preventing coal shipments from reaching Murmansk port.

South Korea: After revelations of faked coal quality results, a second Korean utility has banned lab services company ALS from certifying coal cargoes.

UK: Great Britain’s power gird has operated for over 50 days without any coal generation.

“We’re very mindful of the fact that sitting on assets that other people will not want to buy in the future, or will not want to pay very much for, or very simply fewer people are going to give you a bid – that’s a pretty bad place to be,”

said Gary Brader, the Chief Investment Officer of the Australian insurance company QBE on the company’s divestment from major thermal coal producers.

Companies + Markets

Swedish ‘green steel’ consortium moves to site selection process: A consortium comprising the steel company SSAB, iron ore pellet producer LKAB and the power utility Vattenfall has announced a site selection process for their proposed HYBRIT hydrogen-fuelled ‘green steel’ demonstration plant in Sweden. The consortium has stated they are aiming to build a demonstration plant with a capacity of one million tonnes a year by 2026. In 2019 the consortium argued they would need guarantees on cost-competitive energy, public investment, revisions to the European Union’s emissions trading scheme and expedited environmental permitting for associated energy projects. Steel produced via conventional blast furnaces relies on metallurgical coal. In the proposed HYBRIT plant hydrogen will replace coal. Metallurgical coal currently accounts for a little over 10 per cent of global coal production. (SSAB, S & P Global)

Indian utilities flag switch away from coal imports: Seventeen private Indian power utilities including Adani Power and Vedanta have applied to substitute a total of 17.9 million tonnes of imported coal for domestic supplies from the government-owned Coal India. As part of its response to the coronavirus crisis the Indian Government is pushing to reduce imports of expensive thermal coal in part to preserve the country’s foreign exchange reserves. The substitution push would also reduce the growing stockpiles at Coal India’s mines. Government data indicates that coal generation was down by 32.3 per cent in April while solar generation grew by 16.9 per cent. The latest data indicates that coal imports from South Africa collapsed to 695,000 tonnes from 2.44 million tonnes in April and just over five million tonnes in May 2019. (Business Standard [part-paywalled], Reuters)

Chinese central bank’s draft green bond standards excludes coal: Draft green financing guideline issued by China’s central bank, the People’s Bank of China, no longer include the “clean use of coal” as eligible for funding. The 2015 standards allowed for funding of projects including coal washeries and the installation of pollution control equipment on coal plants. The new guidelines include provision for replacing coal for winter heating with cleaner energy, carbon capture projects and pollution control upgrades at steel mills. Sean Kidney, chief executive of the London-based Climate Bonds Initiative, welcomed the new draft standards as a change that would be welcomed by international investors. The draft standards are open for public comment until June 12. (Reuters)

BlackRock warns KEPCO over coal projects in Vietnam and Indonesia: The South Korean utility KEPCO has confirmed that BlackRock, the world’s largest asset manager, requested details of its proposed involvement in the 1200 MW Vung Ang 2 project in Vietnam. KEPCO is also seeking involvement in the proposed Java 9 and 10 coal plants, each with 1000 MW capacity, in Indonesia. In its recently released Global Quarterly Stewardship Report, BlackRock stated that it had “conducted multiple engagements” with an unnamed South Korean utility over the utility’s “potential involvement with several controversial coal projects.” While KEPCO sought to reassure BlackRock the projects would be assessed internally, the asset manager chose to write to the utility’s CEO flagging their concern that the projects were inconsistent with a transition away from coal and that banks in the region were moving away from support for projects the utility was pursuing. (Bloomberg, BlackRock)

Moody’s forecasts rapid decline of US coal industry: The ratings agency Moody’s estimates that earnings of US coal mining companies could fall by over 50 per cent this year with coal demand to be “crushed” in 2020 by declining over 25 per cent. Moody’s states it disagrees with the US Energy Information Administration’s assessment that thermal coal demand will decline to 411 million tons (373 million tonnes) and rebound in 2021. Instead, Moody’s estimates thermal coal demand will fall below 400 million tons (363 million tonnes) in 2020 and “continue to fall in the 2020s” with suppressed electricity demand “accelerating the early retirement of some coal-fired generation capacity.” Moody’s also expects declining world metallurgical coal demand and prices to result in US exports of the commodity to fall by half in 2020. In 2019 the US exported about 55.2 million tons (50 million tonnes). (Moody’s [registration required, Pdf])

US study finds dispatch of uneconomic coal plants cost consumers hundreds of millions: A study by the Union of Concerned Scientists has found that the dispatch of uneconomic coal plants in 2018 by vertically integrated utilities cost consumers in the Midcontinent Independent System Operator (MISO) region US$350 million. The study estimates the coal fleet across MISO, which services 15 states and the Canadian province of Manitoba, would run 19 percent less if market operators clamped down on practices such as utilities ‘self-committing’ to sell loss-making power from their own coal plants rather than buying cheaper and cleaner energy sources. The study found that the Louisiana utility Cleco Power ran its Dolet Hills and Brame Energy Center coal plants at a $123.3 million loss in 2018. In Michigan DTE Electric Company racked up generation losses of $94.7 million in 2018 on its fleet of five coal plants. (S & P Global, Union of Concerned Scientists)

Major Polish utility seeks to spin off its coal generating arm: Wojciech Dabrowski, the president of the major Polish power utility PGE, has floated the idea of spinning off the utility’s coal and lignite arm into a separate company to make it easier to win access to “available cheap money” for investment in renewables. PGE has proposed up to 3500 MW of offshore wind farms in the Baltic Sea. However, spinning off the coal arm would require the approval pf the European Commission and the Polish Government. Poland’s Minister for State Assets, Jacek Sasin, recently flagged the potential to consolidate government-owned coal companies. In its 2019 annual report, which was released in April, PGE reported that in 2019 its lignite and hard coal generation were down by 17 per cent and 11 per cent respectively. PGE have also flagged it may close all its coal and lignite plants by 2040 to 2045. (Argus, S & P Global)

Adani challenged over Mundra coal claim: The Gujarat state distribution utility, Gujarat Urja Vikas Nigam Limited (GUVNL) said that it will require more time to calculate the amount of compensation owed to Adani Power due to “data gaps” on the cost of coal purchased for the Mundra plant. In July 2019 the Supreme Court ordered GUVNL to pay Adani Power compensation on power from a 1000 MW power purchase agreement due to increased cost of sourcing Indonesian coal. The dispute comes as the Adani family is also seeking to make the loss-making Adani Power a private unlisted company by buying out the 25 per cent of shares held by other parties. A subsidiary of Adani Power has also succeeded in gaining a 25-year power purchase agreement with the state electricity board of Madhya Pradesh at a cost of 4.79 rupees per kilowatt hour (kWh) from a new 1320 MW coal plant in the state. A recent 2000 MW solar tender by the Solar Energy Corporation of India resulted in a winning bid of 2.55 rupees per kWh which, even allowing for firming costs, would be cheaper than power from the new Madhya Pradesh project. (Financial Express, Business Standard, Financial Express)


Used, But How Useful? How Electric Utilities Exploit Loopholes, Forcing Customers to Bail Out Uneconomic Coal-Fired Power Plants, Union of Concerned Scientists, May 2020. (Pdf)

This 50-page report investigates the financial impact on consumers in the Midcontinent Independent System Operator of practices such as utilities ‘self-committing’ to buy power from their own loss-making coal plants.

Air quality, health and toxics impacts of the proposed coal mining and power cluster in Thar, Pakistan, Centre for Research on Energy and Clean Air, May 2020. (Pdf) (A presentation based on the report is available here.)

This 24-page report estimates the health impacts from a cluster of coal projects proposed in the Thar region in Sindh province in Pakistan.

Renewable Power Generation Costs in 2019, International Renewable Energy Agency, May 2020. (Pdf) (The key findings are available in Arabic here, Chinese here, French here, German here, Japanese here and Spanish here.)

This 144-page report documents the declining costs of wind and solar generation and finds new solar and wind projects are undercutting the cheapest of existing coal-fired plants.

COVID-19 cases on the rise in coal mines, Global Energy Monitor, June 2020. (Pdf)

This 3-page paper provides an overview of known COVID-19 outbreaks associated with coal mines in Poland, Czech Republic and the US. Restrictions to prevent COVID-19 outbreaks have also been imposed some coal mining centres in Turkey and India.