March 12, 2020
Issue 213  |  View Past Issues

Editor's Note

The economic uncertainty caused by the spread of the coronavirus sweeping the world has been compounded by the financial slump after both Russia and Saudi Arabia vowed to step up oil production. As yet the implications for the broader energy markets are unclear. While the uncertainty may pause private sector investments in some coal projects, it seems likely that a major public stimulus program in China may revive stalled coal construction projects.

A new report has revealed that in 2019 global coal power generation fell by 3 per cent, sufficient to see greenhouse gas emissions from the energy sector fall by 2 per cent. That’s the good news. The more daunting news is that to meet the Paris Agreement target of limiting global heating to a 1.5 degrees increase, coal generation needs to fall by 11 per cent a year. A new paper finds that Japanese investment in new coal plants and mines has slowed while South Korea’s Minister for the Environment has flagged his aim to push for tighter restrictions on international coal financing.

The push for green hydrogen to displace metallurgical coal in steel production continues to gather pace with the major Chinese steel company Baowu seeking to become a leader in the technology. In Canada, a the collapse of the trout population downstream from highly polluting metallurgical coal mines illustrates that environmental impacts from coal mining are pretty much the same no matter what the coal is used for.

Bob Burton


As investors and insurers back away, the economics of coal turn toxic

The mining and burning of coal is increasingly toxic economically as well as environmentally, writes Fred Pearce in Yale Environment 360.

Coal still has friends even as some of the world's biggest banks get out

Asian banks and export credit agencies, private equity firms and coal revenue are all keeping major mines well financed even as pressure mounts to put the industry out of business, writes Emily Cadman in Bloomberg.

Coronavirus: will China opt for massive infrastructure spending spree to save its economy?

At least seven of 31 Chinese provinces have published long lists of investment projects in the last two months, writes Frank Tang in the South China Morning Post.

Top News

Global coal generation slid in 2019: A global review of electricity generation has found coal power declined by 3 per cent in 2019 resulting in a 2 per cent decline in greenhouse gas emissions for the year. The report by Ember, previously known as Sandbag, found coal generation in Europe and the US declined by 24 per cent and 16 per cent respectively. However, Chinese coal generation increased by two per cent and now accounts for 50.2 per cent of global coal generation. While wind and solar generation grew by 15 per cent in 2019, the report cautions that this rapid rate of growth needs to be sustained and is being undermined by significant coal to gas power switching in the US and Europe. To meet the Paris Agreement goal of limiting global heating to 1.5 degrees Celsius, Ember estimates global coal generation needs to fall by 11 per cent per year. (Guardian, Ember)

New Zealand First Nations lawsuit reduced in scope but proceeding: A New Zealand High Court judge, Justice Edwin Wylie, has ruled that a climate damages case brought by Maori leader Mike Smith can proceed to trial but only on one out of its three claims. Smith, who has customary interests in land in Northland, has launched action against seven companies — including major coal consumers Fonterra, Genesis Energy, Dairy Holdings and the coal mining company BT Mining — and is seeking a ruling that they be required to cut greenhouse gas emissions by 50 per cent by 2030 and to zero by 2050. (Businessdesk)

NSW parliamentary committee rejects proposed mining bill: A New South Wales parliamentary committee investigation has determined that new planning laws should not go ahead as proposed. The proposed laws aimed at blocking mine approvals being subject to conditions requiring a reduction in emissions by coal buyers. The bill was initially promoted by the NSW Minerals Council, the state’s peak mining industry lobby group, after the NSW Land and Environment Court last year blocked approval of the proposed United Wambo coal project in part due to its downstream emissions. The Independent Planning Commission also rejected the proposed Bylong mine, in part because of greenhouse gas emissions from the project. (Sydney Morning Herald, Parliament of New South Wales [Pdf])

Indian Chief Justice’s comments on need for coal closure irks Minister: India’s Minister for Power and Renewable Energy, R K Singh, said that he would not shut down polluting coal plants as suggested by the Chief Justice of India, S A Bobde. In reviewing a case over a project in Uttarakhand state Bobde said that “all thermal plants must be shut” and complained that it was impossible to breathe in cities that have coal plants. While his comments have no legal force, state and national governments are under increasing pressure to act against power utilities which have failed to meet new pollution control standards. The Karnataka state government has announced it will fund the costs of flue gas desulphurisation units for Karnataka Power Corporation’s at the 1720 MW Raichur Thermal Power Station, 1600 MW Yermarus plant and the 1000 MW Bellary Thermal Power Station. (Economic Times, Times of India, Economic Times)

Trout population collapses downstream from Teck mines: A survey of cutthroat trout has found the population has collapsed over a 60-kilometre stretch of the Fording River downstream from Teck Resources coal mines. In 2017 a survey of the section of river estimated that there were 3700 cutthroat trout, but by October 2019 there were just 66, a decline of 93 per cent in the adult population. Monitoring stations downstream from Teck Resources’ four metallurgical coal mines in the Elk Valley have recorded levels of selenium at 50 times higher than consistent with aquatic health. (National Post)

Myanmar seeks to arrest civil society leader over coal and other advocacy: A court in Kayin State has issued a warrant for the arrest of Saw Thar Baw from Karen Rivers Watch Network to face charges of defaming the state. Saw Thar Baw has been critical of a coal-fired cement plant established in Hpa-an township, a 1280 MW coal plant proposed for the town, and hydro projects. Saw Thar Baw said that he has not been told specifically what the charges relate to. Section 505(b) of Myanmar’s Penal Code, which has been used by military-backed governments to stifle journalists and civil society leaders, provides for up to two years in prison for anyone who makes or publishes any statement “which is likely to cause fear or alarm to the public or to commit an offence against the State or against the public tranquillity.” Two cement plants in Hpa-an are run by Union of Myanmar Economic Holdings, a military business unit. (Myanmar Times, Global Energy Monitor)


Australia: Environmental lawyers seek pollution control records on EnergyAustralia’s Yallourn brown coal plant in Victoria’s Latrobe Valley.

Bosnia and Herzegovina: RiTE Gacko, which operates the 300 MW Gacko coal plant, has reported a loss in 2019 of 13.6 million marka (US$7.9 million) after a small profit in 2018.

Greece: German coal utility RWE signs a MOU with the Public Power Corporation for renewable energy projects in Greece, such as the proposed 2500 MW solar park at the Ptolemaida mine site.

Malaysia: CIMB Group Holdings, Malayan Banking and RHB Bank criticised for support for coal projects.

UK: Capacity auction for 2023/24 sees 1320 MW from Uniper's Ratcliffe-on-Soar coal plant win a contract, but Drax and EDF's West Burton A were excluded.

UK: GCM Resources, which faces public opposition for its plan for the Phulabri coal mine in Bangladesh, has deferred its annual general meeting for a second time.

US: Foresight Energy, which operates four underground thermal coal mines in the Illinois Basin, has filed for bankruptcy protection to allow its debts to be restructured.

Zimbabwe: Construction stalls on upgrading the 327 MW Hwange coal plant and 670 MW of new units because Chinese construction workers have been unable to leave home due to coronavirus restrictions.

Companies + Markets

US coal plant capacity factor collapses even as old coal plants close: Data released by the US Energy Information Administration has revealed that the capacity factor of remaining coal plants has fallen to just 47.5 per cent, down from 67 per cent in 2010. The decline has occurred even as old coal plants have continued to be shuttered. In most grids the closure of coal plants would be expected to result in increased capacity factors for remaining operating units. In the US there are about 310 remaining coal units. Coal plants are normally designed to operate and be most profitable when capacity factors are above 80 per cent. Low capacity factors also result in increased wear and tear on plants, increasing maintenance costs and further shortening their likely life span. (Inside Climate News, US Energy Information Administration)

South Korean Minister flags action on coal financing by June: South Korea's Minister of Environment, Cho Myung-rae, has told a National Assembly hearing that his ministry is hoping to secure a commitment on the country’s financing of overseas coal projects ahead of the Partnering for Green Growth and the Global Goals Summit to be held in Seoul in June 2020. Cho acknowledged that South Korea has not met its greenhouse gas emission reduction targets yet and said that “there is room to reconsider public coal finance for coal power projects.” However, obtaining a commitment will require the approval of other ministries. South Korea is the third largest provider of public financial support for international coal projects after China and Japan. (Newsis [Korean])

Chinese steel giant talks up green steel potential with hydrogen: China’s largest steel producer, Baowu, has reportedly established a hydrogen partnership with Linde, a global industrial gases company, with the aim of beating the Swedish steel maker SSAB to commercialising clean steel production. At present about 70 per cent of steel is produced using metallurgical coal to generate high temperatures to smelt iron ore in blast furnaces. SSAB is aiming to establish a carbon-free steel demonstration plant in Sweden by 2025 using hydrogen from renewables. The move comes as interest in hydrogen is accelerating for a range of industrial applications. Germany’s draft hydrogen strategy explicitly rules out providing incentives for hydrogen produced from gas. (Australian Financial review [paywall], Bloomberg)

South African Bank unveils thermal coal policy: Standard Bank has become the first South African bank to release a policy on thermal coal mining but, while supporting the Paris Agreement, states that it “expects to continue to” finance thermal coal projects in Africa but with reduced support over time. The policy states it will support projects that are in line with the host country’s nationally determined contribution submitted to the secretariat of the United National Framework Convention on Climate Change. The announcement follows a shareholder resolution at the bank’s May 2019 annual general meeting requiring the bank to produce a policy on lending to coal power projects and thermal coal mines. The responsible investor advocacy group Just Share rejects the tying of the bank’s lending policy for coal mines to national policies unless they are explicitly aligned with the Paris Agreement. (JustShare, Standard Bank [pdf])

Chinese insurance company announces coal support restriction, with limits: A new policy released by the Chinese-headquartered Ping An Insurance Group in its 2019 sustainability report stated “we won’t provide loans, insurance guarantee or other services for high pollution and high-energy consumption industries.” However, the company’s report detailed that finance would only be excluded from applying to any coal units of less than 300 MW in capacity, those consuming above a threshold of 300 or 305 grams of coal per kilowatt hour depending on the cooling technology and those employing unspecified “backward production technology.” How many projects would be excluded as a result of Ping An’s new policy is unclear but a preliminary analysis by Global Energy Monitor suggests that about two-thirds of the world’s existing coal fleet would be caught by the exclusions. (The Asset)

Japanese coal chain companies remain reluctant to retreat: A paper published in Renewable and Sustainable Energy Reviews, which surveyed major Japanese companies involved in the coal mining and power chain, argues government leadership will be crucial in steering the country’s heavy engineering expertise away from coal technology to growth areas such as renewables and hydrogen. The paper also flags that a shift away from financing new coal projects would most likely only occur with stricter OECD and Japanese government policies. While the paper finds that Japanese trading houses seem most flexible in shifting away from coal, power utilities that are involved in international coal plants are under little pressure to retreat as long as profitable long-term power purchase agreements and capacity payments remain in place in host countries. (Renewable and Sustainable Energy Reviews)

Coal plant fault causes load shedding as Sasol grapples with oil price collapse: A fault in an electrical system tripped four 600 MW coal units at Eskom’s 3600 MW Duvha power station causing load shedding. Due to this and other problems, Eskom has flagged there will be load shedding over most of the week. Eskom’s CEO, Jan Oberholzer, told a parliamentary committee that of the six 800 MW units proposed for the 4800 MW Kusile power station only one is in operation, two more units are gradually entering service this year while the last 800 MW unit of the Medupi plant is due to come online later this year. Oberholzer told the committee that problems with the fans of two other units at Kusile will delay their commissioning until 2023. The Kusile plant was originally planned to be completed by 2019. Eskom’s problems come as the global collapse of the oil price has seen a 45 billion rand (US$2.8 billion) collapse in the value of the coal-to-oil producer, Sasol. An analyst with Protea Capital Management, Richard Cheesman, estimates that if the low prices persist for long Sasol will breach its debt restrictions. (Fin24, Fin24)

Tata threatens to close Mundra plant unless tariff increased: Tata Power has threatened that it will close its 4150 MW Mundra power plant on March 11 unless state-owned power utilities from Maharashtra, Haryana, Rajasthan and Punjab increase the price paid under its power purchase agreement to offset losses it has incurred due to higher Indonesian coal prices than it originally estimated. To date, only Gujurat has agreed to Tata Power’s demand that the price paid be increased from 2.7 rupees per kilowatt hour (KWh) to about 3 rupees (US$0.04 cents) per KWh. While Tata Power is promoting its offer as cheaper than other coal generation available, many states are seeking to purchase increased renewables generation which is cheaper than coal generation. One Indian analyst has warned that if the states don’t agree to Tata Power’s demand “it may perhaps be better to shut the plant down during April–June 2020.” (Financial Express)


Lessons from History: Wyoming’s 30 Years of Failed Coal Upgrading Projects, Powder River Basin Resource Council, March 2020. (Pdf)

This 12-page report reviews 16 coal upgrading projects proposed in Wyoming since the 1980s and found that fifteen of them failed, wasting hundreds of millions of dollars of public and private funds.

Global Electricity Review 2020, Ember, March 2020. (Pdf) (A 13-page summary of the report is available here in Mandarin. The Excel data sheets for the report are available here and the charts used in the report are here.)

This 43-page report provides a detailed overview of global trends in electricity generation.

“Divestment Trends in Japan’s International Coal Businesses”, Renewable and Sustainable Energy Reviews, Volume 124, May 2020. (In press)

This 14-page article details an investment slowdown but not a cessation in new coal plants and mines by Japanese companies.