February 28, 2019
Issue 265  |  View Past Issues

Editor's Note

The tide is running against coal. In Turkey a 13-year-long campaign to stop a big new coal plant has finally come to an end after a court rejected the permit for the project. In Austria, another insurance company has unveiled a policy to rule out supporting new coal mines and plant, though with loopholes for existing projects. A new report reveals that since 2013, over 100 major financial institutions have unveiled restrictions on their support for coal mines and power plants. Last week’s announcement by Glencore that they would cap coal production, combined with delays at a Chinese port for Autralian coal,  spooked some industry supporters. As one analyst argues, coal exporting nations had better get used to the fact that they are in for a rough ride.

The wreckage of the South African Government’s utility Eskom has been on display for all to see this week. The government has been forced to announce a US$3 billion bailout for the near-bankrupt utility. Meanwhile, a government agency is investigating the potential embezzlement of as much as US$12.1 billion by contractors on the Medupi and Kusile coal plants and a hydro project. Greenpeace argues that the yet-to-be-built units at the Kusile plant should be scrapped. Meanwhile, Eskom has told a government inquiry of charges against former staff and board members over a coal supply deal with a company owned by the Gupta family.

Bob Burton


German utility’s compensation claims defy market prices

While the giant German utility RWE has bandied about huge compensation figures for coal plant closures, recent deals indicate that Germany’s coal and lignite power plants and mines have little value, writes Gerard Wynn from the Institute for Energy Economics and Financial Analysis.

It’s time to cancel the Kusile coal plant
The case for the South African Government to cancel the last units of Kusile plant and shift that money to investments in renewable energy is overwhelming, writes Melissa Steele from Greenpeace Africa in News24.

Australia really should be panicked about coal

There’s far too much magical thinking in big producer countries such as Australia about the long-term future of coal exports, writes Mihir Sharma in Bloomberg.


Turkish court overturns approval for coal plant

The Supreme Administrative Court has overturned the Ministry of Environment and Urbanization’s approval for the proposed 1320 megawatt (MW) Hema Thermal Power Plant near the small Black Sea port town of Amasra. Residents and environmental groups welcomed the court’s decision to reject the project, which was first mooted in 2005. In 2013, Amasra was included as a potential Turkish candidate for inclusion on UNESCO’s World Heritage list. Opposition to the plant proposed by the Turkish company Hattat Holdings has spanned the last 13 years and included 40,000 people signing a petition opposing the project. In 2018, a legal challenge against the environmental assessment of the proposed plant was unsuccessful. However, the latest court win adds to recent successes of Turkish civil society groups in challenging pollution from existing and proposed coal plants. (350.org, CoalSwarm)

Top News

Former Eskom executives to face charges over Gupta coal deals: The Chair of Eskom’s board, Jabu Mabuza, has told a South African Government inquiry into ‘state capture’ that charges have been laid against former staff and board members over a coal supply agreement with the Gupta family-owned Tegeta Resources. He said Eskom has now handed the matters over to the Hawks, an anti-corruption agency, and the Special Investigating Unit (SIU), which investigates public sector maladministration. In 2016, Eskom agreed to pre-pay 659 million rand (US$47 million) to Tegeta Resources to enable the company to buy the Optimum Coal Mine from Glencore. According to Eskom, the subsequent supply of sub-standard coal from the Optimum mines was one of the causes of load-shedding in 2015. Mabuza, who was appointed to the board in January 2018, told the Zondo Inquiry that an internal investigation found that Matshela Koko, Eskom’s former head of generation, had allegedly leaked confidential documents to Salim Essa, a business associate of the Gupta family company. (Business Day, Eyewitness News, Mail & Guardian)

Investigation probes rorting on Medupi and Kusile construction contracts: South Africa’s SIU, a government agency tasked with probing maladministration, is investigating the potential embezzlement of up to 170 billion rand (US$12.1 billion) from Eskom by construction contractors working on the Medupi and Kusile coal plants and the Ingula hydro plant. The three projects have cost 334 billion rand (US$24 billion) to date. Of the 170 billion rand in potentially misappropriated funds under investigation, the SIU estimate that 139 billion rand (US$10 billion) was attributable to 11 contractors. An anonymous source estimates that the total amount of funds misappropriated since 2005 could be as high as 500 billion rand (US$36 billion). (TimesLive)

David Attenborough speaks out against proposed UK coal mine: The high-profile naturalist David Attenborough has joined with other scientists in opposing the Druridge Bay coal mine proposed by Banks Mining. The company has proposed to mine three million tonnes of coal from the site over seven years. In November 2018, a High Court judge overturned the decision by former Communities Secretary, Sajid Javid, rejecting the mine. The new Communities Secretary, James Brokenshire, is due to decide on the Banks Mining application within the next few months. (Telegraph)

Indian court overturns freeze on Greenpeace accounts: The Karnataka High Court has overturned the Enforcement Directorate’s October 2018 freeze on Greenpeace India’s bank accounts. The Enforcement Directorate froze the accounts after alleging violations of the Foreign Exchange Management Act. Since the May 2014 election of Narendra Modi, Indian Government agencies have frozen the environmental group’s bank accounts, blocked international funding and prevented Greenpeace activists travelling to and from India. Opposition to coal power plants and mines in forested tribal lands were among the triggers for the Indian Government crackdown. In February 2019, Greenpeace India laid off about one-third of its staff and closed two offices due to the freeze on its bank accounts. In a letter to Modi, three United National Special Rapporteurs have objected to what they described as a “smear campaign” aimed at Greenpeace and Amnesty International. (India Today, Deccan Herald)

Adani’s law firm may face investigation over “attack dog” strategy: Adani’s law firm, A J & Co, may face investigation by Queensland Legal Services Commission over an aggressive legal strategy it outlined to defend Adani’s proposed Carmichael coal mine. The firm referred to itself as a “trained attack dog” in its draft strategy with sections titled “Taking the Gloves Off” and “Play the Man.” The Australian Solicitors Conduct Rules states lawyers “must not act as the mere mouthpiece of the client” and avoid compromising their professional independence. A provision of the code also requires lawyers to avoid conduct that is likely to bring the profession into disrepute. Acting Legal Services Commissioner, Robert Brittan, confirmed that the commission was examining the matter and was yet to decide whether to proceed with an investigation. (ABC News)

Indian and Chinese mid-life plants high priorities for closure: A research paper by Nada Maamoun from the University of Hamburg estimates that if coal plant closures were selected based on a mix of age, carbon dioxide emission and health impacts, then the highest priority plants are located in China, India and South Korea. Data indicates that using these criteria the top 20 plants have a combined capacity of 87,000 MW with an average age of just 12–13 years. The paper argues assessing coal closure schedules based on age alone would miss important opportunities to dramatically reduce the health burden associated with coal plant pollution. Even when the analysis was extended to the top 10 per cent of all coal plants, most capacity was in China and India followed by the US, South Africa and South Korea. (Initiative for Sustainable Energy Policy)

Indonesian Minister confirms he owns East Kalimantan coal mine: In the midst of the national election campaign Indonesia’s Coordinating Maritime Affairs Minister, Luhut Pandjaita, has admitted he owns a 6000 hectare coal mine in East Kalimantan province. A report on Indonesian mining by a coalition of NGOs, including Greenpeace Indonesia and the Mining Advocacy Network, argued that subsidiaries of PT Toba Bara Sejahtra had abandoned coal pits without backfilling them as required under the national mining law. Luhut had originally claimed he had sold his interest in Toba Bora but has now confirmed that he hasn’t. In December 2018, Toba Bara spent US$54 million to buy PT Batu Hitam Perkasa, which has a 5 per cent stake in PT Paiton Energy, a company that operates three coal units with a combined capacity of 2045 MW at the Paiton plant in East Java. (Jakarta Post)

“Investors who continue to finance new coal projects need to be asking themselves an important question; which is going to end up being burnt first — their coal, or their money?”

said Nick Stansbury, from Legal & General Investment Management.


Australia: Nine years after the coal ship Shen Neng 1 damaged part of the Great Barrier Reef Marine Park, remediation work is set to begin.

Australia: Court overturns convictions of former NSW Mines Minister and mining company director over allocation of Doyles Creek mining licence without tender. The case is set for a retrial.

Bangladesh: Court summons former Prime Minister over 2008 charges alleging bribery over allocation of Barapukuria coal mine.

Bosnia and Herzegovina: Despite European state aid investigation, government seeks to approve €615 million (US$701 million) Chinese loan for new 450 MW Tuzla unit.

China: The National Development and Reform Commission has approved four new coal mines with a combined production capacity of 26 million tonnes a year.

Germany: RWE agrees to avoid any further clearing of Hambach forest until at least late 2020.

“Pouring money directly into Eskom in its current form is like pouring water into a sieve,”

said Tito Mboweni, South Africa’s Minster of Finance.

Companies + Markets

Financial shift away from coal becoming a stampede, argues new report: A new report argues that since 2013, over 100 major global financial institutions, each of which have at least US$10 billion in funds under management, have announced policies restricting coal funding. Since the start of 2018, there have been 34 new or upgraded policy announcements, which the Institute for Energy Economics and Financial Analysis argues is indicative of an accelerating move by major financial institutions away from supporting coal power. The report estimates that the financial institutions with announced coal restrictions account for 40 per cent of the top 40 global banks. The more than 20 large insurance companies that have announced restrictions on coal account for about 20 per cent of the industry’s global assets. (Institute for Energy Economics and Financial Analysis)

South Africa unveils conditional bailout of Eskom: In his 2019 Budget speech, South Africa’s Minister of Finance, Tito Mboweni, committed to provide a 69 billion rand (US$3 billion) bailout over three years for Eskom. However, the bailout is conditional on Treasury appointing a “chief reorganisation officer” for the troubled utility and the splitting of the utility into three arms with private investors allowed to buy part of the proposed transmission company. A Treasury official confirmed that Eskom may need 150 billion rand (US$10.8 billion) in support over the next decade. Moody’s, which will announce its credit rating on South Africa’s debt on March 29, has called for more detail on the government’s plan to address Eskom’s finances. (Financial Times, Eyewitness News, Business Live)

Vienna Insurance’s partial retreat from coal: The Austrian-headquartered Vienna Insurance Group (VIG) has become the eighth insurance company to release a climate policy ruling out insuring new coal plants and mines. However, VIG only proposes not renewing insurance for coal mines and plants in countries with plans to phase-out coal. Unfriend Coal described VIG’s commitment as being “of little value” since its major markets are in Central and Eastern Europe and do not have coal exit plans. VIG also ruled out new direct investments in companies that generate over 50 per cent of their revenue from coal mining or coal power, a far higher threshold than most other insurance companies that have moved to divest from coal. (Unfriend Coal)

NGO urge DBS to exit Indonesian coal project: A coalition of non-government organisations has called on DBS Bank to withdraw from its involvement in the proposed 2000 MW expansion of the Banten Suralaya plant in Indonesia. DBS is acting as advisor to the Indonesian Government-owned utility PLN. The NGOs argue the expansion will add to existing grid overcapacity and worsen air pollution. The expansion is being funded by a coalition of South Korean banks: the Export–Import Bank of Korea, the Korea Development Bank and the Korea Trade Insurance Corporation. In February 2018, DBS announced a climate policy in which it committed to exclude funding new coal plants in OECD countries where it has little presence. (Business Green)

Even with favourable deals, India’s stressed coal projects face big odds: Analysts expect that most of the estimated 45,000 MW of financially stressed coal plants in India would struggle even if an extra 125 million tonnes a year of domestic coal was produced. Many of the projects would need banks to accept substantial losses on past loans and for the projects to gain favourable power purchase agreements. Even then, the projects would only be feasible if the costs of new renewables projects turn out to be higher than tendered prices. Rupesh Sankhe from Reliance Securities estimates that even if the plants were commissioned, “unless industrial and commercial demand improves, the stressed plants would take at least 3–4 years to take their utilisation levels beyond 40 per cent.” Most new plants aim for utilisation rates of well over 80 per cent. (Financial Express)

UK analyst estimates end of European coal power within three years: Per Lekander, the manager of the US$1.1 billion Lansdowne Partners hedge fund, estimates that the European Union carbon price could reach €50 (US$57) per tonne and drive the collapse of coal power in Europe. “My projection for coal becoming less than 5 per cent [of European power supply] is three to four years because once you get a €50 carbon price it shuts down,” Mr Lekander said. The current EU carbon price is currently around €20 per tonne, down from late 2018 peak of over €25 per tonne in part due to a warmer winter supressing gas demand. Lansdowne Partners reaped significant benefits from tipping that EU carbon prices would rise but has recently performed poorly due to the price slump. (Financial Times)

Chinese restrictions on Australian coal spook exporter: A new report by Reuters that the northern Chinese coal port of Dalian had banned Australian coal imports caused a short-term one cent drop in the value of the Australian dollar. China subsequently insisted that there was no ban but only delays caused by quality control testing. However, analysts suggest the absence of delays for Russian and Indonesian cargoes suggests that the move was at least in part a result of trade and diplomatic tensions. While shipments through Dalian are predominantly metallurgical coal and form a small part of the overall coal trade, the possibility that restrictions could spread alarmed coal exporters and the Australian Government. (ABC, Reuters)


Over 100 Global Financial Institutions Are Exiting Coal, With More to Come, Institute for Energy Economics and Financial Analysis, February 2019. (Pdf)

This 36-page report provides a detailed overview of the shift away from coal power by major financial institutions.

Identifying coal-fired plants for early retirement, Issue 1, 2019, Initiative for Sustainable Energy Policy.

This 6-page paper proposes that rather than just focusing on retiring coal plants based on age and carbon intensity, the number of people affected by pollution from plants should be considered.

The coal break-up: how financial institutions are phasing-out support to European coal utilities, Europe Beyond Coal, February 2019. (Pdf)

This 22-page report documents the growth of coal policies of financial institutions and their impact on the most polluting European utilities including RWE, PGE, Uniper and CEZ.