October 8, 2020
Issue 342  |  View Past Issues

Editor's Note

The upheaval in the Polish coal industry continues to gather pace with Ze Pak, the largest private energy utility, announcing further closures of lignite mines and coal power units. While the company has set a 2030 end date for its newest coal unit, it is under pressure to bring the closure forward. Another Polish coal mine owned by PGE is likely to face a legal challenge from the Czech Republic.

The lesson from Poland is that the transition to clean energy, even in the most coal-reliant countries, will occur far faster and sooner than industry promoters would like to believe. A New York Times feature illustrates how several communities that believed President Trump’s coal revival hype have now been left stranded with no Plan B as coal power in the US has rapidly receded.

Meanwhile, more utilities and banks are seeking to distance themselves from coal. JPMorgan Chase has announced its support for aligning its financing with the Paris Agreement, albeit with significant details still to be announced. Malaysia’s publicly owned power utility TNB has ruled out the development of any further coal plants, while Canada’s largest bank has announced some limited restrictions on coal finance. In Indonesia, the Minister of State-Owned Enterprises has expressed concern over PLN’s growing power overcapacity. Following the backlash against the decision of KEPCO's board to invest in a plant in Vietnam, a South Korean minister has said the company has no plans for more coal plants.

Bob Burton


Sri Lanka at risk of expensive overcapacity

Sri Lanka is at risk of repeating the mistakes made by other Asian countries now suffering from overcapacity and unsustainably high power subsidies, writes Simon Nicholas from the Institute for Energy Economics and Financial Analysis.

‘The coal industry is back,’ Trump proclaimed. It wasn’t.

Coal communities in the US have been left to pick up the pieces after the closure of old coal plants despite President Trump’s support for weakening regulations, writes Eric Lipton in the New York Times.


Polish utility announces coal closures

Ze Pak, Poland’s largest privately owned energy utility, has announced plans to close its lignite power plants by 2030 with the closure of the remaining 200 megawatt (MW) units at the Patnow 1 plant by 2024 and the 474 MW Patnow 2 unit by 2030. The company also announced three of its lignite mines will also close: the Adamow mine will close this year and its two Konin mines will close in 2023. A date has not yet been set for the closure of the Tomislawice mine. Earlier this year Ze Pak announced the two units at the Konin plant would close by 2022 and recently indicated it had abandoned its proposed Oscislowo lignite mine. (Europe Beyond Coal, Ze Pak [Polish])

Top News

Czech Republic set to take legal action over Polish mine expansion: The Czech Republic has filed a complaint with the European Commission arguing Poland’s approval of PGE’s plan to expand the Turow lignite mine breaches four European Union directives covering water resources, environmental assessment and management. As a result of water drawdown associated with the mine, which adjoins the Polish borders with Czech Republic and Germany, Czech villages have been left without access to water. The European Commission has three months to respond to the complaint after which the Czech Republic can initiate legal action against Poland. Lignite from the mine supplies the 1305 MW Turow lignite plant. (European Environment Bureau)

Malaysian utility rules out further coal plants: Malaysia’s publicly owned power utility, TNB, has ruled out the construction of further coal plants as it plans to increase its focus on renewable generation. TNB currently has 7100 MW of operating coal plant capacity, with the 2000 MW Jimah East plant commissioned in 2019. (New Straits Times)

UK Government hits pause on approval for new coal mine: The Secretary of State for Housing, Communities and Local Government, Robert Jenrick, has suspended the approval for West Cumbria Mining’s proposed Woodhouse colliery pending a decision on whether to review the approval. Jenrick has the power to require an investigation into the project by a planning inspector and make the final decision on the project himself. Last week the planning committee of Cumbria County Council voted 12-3 in favour of the project. The company proposes to produce about 2.8 million tonnes of metallurgical coal a year from an undersea mine with production slated for sale to steel and other industrial plants in the UK and for export to Europe. As a result of earlier legal action the mine will be required to close by 2049. NGO groups have called on the government to block the project. (Financial Times [metered paywall], Guardian, Coal Action Network)

Former Indian Minister of Coal convicted over coal allocation: Former Indian Minister for Coal, Dilip Ray, has been convicted of criminal conspiracy and other offences over irregularities in the allocation in 1999 of the Brahmadiha coal block in Jharkhand to Castron Technologies. Special Judge Bharat Parashar also convicted two Ministry of Coal officials and Castron Technologies director, Mahendra Kumar Agarwalla. The court will determine the sentence at a hearing on October 14. (Outlook India)

Former US coal mine executive sentenced to prison over US$20 million fraud: A former executive of Signal Peak Energy, Larry Wayne Price, Jr., has been sentenced to five years in prison for his role in defrauding the coal company. Earlier this year Price told the court he and Signal Peak Energy’s then CEO Brad Hanson defrauded the company of US$20 million. Price also estimated he had defrauded other companies and investors of a further $20 million. Hanson died earlier this year while Price’s employment with the company was terminated in 2018. Another man, James Howard Boothe Jr., has also been sentenced to serve three years in prison for his role with Price in falsely billing Signal Peak Energy for equipment and services, with the proceeds routed to companies controlled by Price. Signal Peak Energy — which is jointly owned by a Swiss commodities company, a subsidiary of First Energy and a Boich Companies entity — operates the Bull Mountain mine in Montana. Both Boich Companies and First Energy are embroiled in the controversy over Ohio legislation bailing out coal and nuclear plants. (US Department of Justice, Montana Standard, Cincinnati.com)

Wyoming’s pro-coal ‘dark money’ group: The Wyoming state government has pledged to provide US$250,000 to the Energy Policy Network (EPN), a group which has campaigned in up to nine states since 2016 to keep coal plants that burn fuel from the state operating. While the funding from the Wyoming state government has not been a secret, the non-profit group has been established under the US tax code in such a way that it does not have to disclose the donors who make up the other half of its budget. In 2017, Cloud Peak Energy contributed US$150,000 to EPN; a further $60,000 was contributed by Campbell County in Wyoming. With the funding EPN has had mixed success in campaigning to keep coal plants open but ethics advisers argue state governments should not be spending public funds to run campaigns in other states. Wyoming hosts part of the Powder River Basin, a coalfield that provides about 40 per cent of the coal used in US power plants. (WyoFile)


Australia: BHP suspends membership of Queensland Resources Council over anti-Greens election advertising.

Australia: National budget allocates unspecified amount of funding for the upgrading of the Vales Point coal plant which is co-owned by Liberal Party donor, Trevor St Baker.

Germany: In the first nine months of 2020 lignite generation has fallen by 28 per cent and black coal generation by over 36 per cent.

Romania: Government plans grants of 110 million Romanian leu (US$24.5 million) for the closure of CE Hunedoara’s Lonea and Lupeni coal mines in the Jiu Valley.

South Korea: Solar companies file legal challenge against the use of wood pellets in coal plants being eligible for renewable energy certificates.

South Korea: Keb Hana Bank agrees [Vietnamese] to provide US$50 million to finance coal mining projects for Vietnam’s state-owned Vinacomin.

US: Virginia received US$500,000 grant to study coal dust pollution on communities near Norfolk Southern’s Lamberts Point coal terminal.

US: Investors launch class action alleging Peabody Energy failed to prevent the fire at the North Goonyella mine in Queensland and did not inform investors of delays and costs in restarting the mine.

Companies + Markets

Indonesian Minister seeks revision of power projections as glut bites: Indonesia’s Minister of State-Owned Enterprises, Erick Thohir, has written to the Minister of Energy and Mineral Resources, Arifin Tastif, expressing concern over PLN’s deteriorating finances and growing power overcapacity. Erick flagged that power sales by the state power utility PLN should be boosted by encouraging industrial users to purchase power from the utility rather than rely on self-generation. He also called for a revision of the power demand forecasts in the 2020–2029 Electricity Supply Business Plan and the capacity of the Indonesian state and PLN to fund the costs of the current construction program. This comes as major international investors have expressed concern that a bill badged as promoting the creation of jobs weakens environmental protection measures. (Kompas [Indonesian], Reuters)

JP Morgan Chase promises Paris Agreement alignment but details scarce: JPMorgan Chase, the world’s largest funder of fossil fuel projects, has announced it will align its financing with the Paris Agreement goals and will assist clients’ transition to a low-carbon world. However, the announcement made no new restrictions on its coal financing beyond committing to announcing in 2021 emissions targets for 2030 for the power sector. The Rainforest Action Network welcomed announcement as a welcome step but noted the company’s existing policy had big loopholes such as only restricting funding for companies that derive a majority of their revenue from coal mining but allowing continued funding of other coal projects and diversified mining companies. (Wall Street Journal, Rainforest Action Network, JPMorgan Chase)

Canada’s largest bank announces coal lending restrictions: The Royal Bank of Canada, Canada’s largest bank, has unveiled a new climate policy which excludes lending to new clients who derive more than 60 per cent of their revenue from thermal coal or coal-fired power generation. However, the bank says it will lend to new clients who obtain some revenue from thermal coal or coal generation if they outline a plan for reducing emissions or their reliance on coal. (Global News)

Queensland Government agrees to defer Adani royalties: The Queensland Government and Adani Australia have entered into a secret agreement to defer the payment of royalties on coal from the Carmichael coal project. In 2017 the government announced a policy that would allow Adani to opt for deferred payment of royalties on the proviso of interest being paid. However, the government has refused to release details of the agreement claiming it is commercial-in-confidence. The agreement was finalised just before the government went into caretaker mode ahead of the October 31 state election. The deal has been criticised by NGOs as a subsidy that allows Adani to artificially boost its early cash flow with taxpayers carrying the risk that no payment will be received. Market Forces executive director Julien Vincent said Adani’s need for the agreement was an indication how unviable the project is. (Guardian, ABC News)

Global companies ignore Indian coal auction: India’s Ministry of Coal has revealed it did not receive any bids on 15 coal blocks the national government offered up for auction to private companies. The auction process has been cancelled on a further four coal blocks as only one bid had been received for them. The Ministry said 82 bids from 46 companies had been received on 23 of the coal blocks with Adani Group and Jindal Steel and Power confirmed as among the bidders. Four of the six metallurgical coal blocks on offer failed to attract bids from any companies in the steel sector. In a hearing before the National Green Tribunal on Jharkhand state’s objection to the auction of coal blocks, the court directed the national government to submit an affidavit on whether the coal blocks are within environmentally sensitive zones or not. The judges stated that if coal blocks are “eco-sensitive then no one either the Centre or the state government have the right to mine”. (Reuters, Business Standard, FirstPost)

South Korean minister says no more overseas projects after KEPCO’s Vietnamese plant: South Korea’s Minister of Trade, Industry and Energy, Yoonmo Sung, has told a parliamentary committee “there is no intention to actively pursue overseas coal power projects, and there are no projects [in the pipeline]” beyond Korea Power Corporation’s (KEPCO) proposed role in the 1200 MW Vung Ang 2 coal plant in Vietnam. The comments follow the decision by board of government-owned KEPCO to buy a 40 per cent stake worth 220 billion won ($189 million) in the Vung Ang 2 plant. The centre-left Democratic Party comfortably won the April election with a platform supporting a ban on financial support for new coal projects. Despite this policy, KEPCO’s bid to buy a stake in the Vung Ang 2 project gained support from the economic and trade ministries. Joojin Kim from the Korean NGO Solutions for Our Climate criticised the decision but said he still sees “a lot of opportunities for the project to go down.” (Joongang Daily [Korean], Korea Herald, Climate Change News)

Investors criticise Samsung over financial support for coal: Two subsidiaries of the South Korean conglomerate Samsung, Samsung Fire and Marine and Samsung Life, have provided an estimated 16 trillion won (US$13.8 billion) in support to a range of coal projects since 2009. The data collated by an MP from South Korea’s ruling Democratic Party and the Korea Sustainability Investing Forum, an NGO, comes as Samsung faces growing pressure from a range of international investors to end its support for coal projects. Samsung’s construction arm, Samsung C&T, is considering involvement in building the Vung Ang 2 coal power project in Vietnam, in which KEPCO is set to become a major shareholder. (Financial Times)

World’s largest steel producer pitches 2050 carbon neutral pledge: ArcelorMittal, the world’s largest steel producer, has announced it will aim to be carbon neutral by 2050. Its primary focus before 2030 is using wood as a coal substitute or deploying carbon capture and use or storage with its existing fleet of blast furnaces. ArcelorMittal described the prospect of hydrogen-fuelled iron production as “unlikely to be significant before 2030 due to the current high costs”. The company plans to commission a hydrogen demonstration project at its Hamburg electric arc furnace in Hamburg in 2023. In 2019 ArcelorMittal produced almost 90 million tonnes of steel from 46 operations in 18 countries. It also owns coal mines in Kazakhstan and the US. Environmental NGO Mighty Earth welcomed the company’s 2050 goal but expressed concern about its planned reliance on reliance on wood and carbon capture rather than hydrogen. (Accelor Mittal, Mighty Earth)

Coal power dominates power supply for aluminium industry: An analysis of International Aluminium Institute data reveals six per cent of global coal-fired electricity in 2019 was consumed by aluminium smelters. Ember, a climate think tank, estimates aluminium produced by coal-based generation increased from 49 per cent in 2006 to 64 per cent 2009. The increase was driven by the growth in captive coal plants, especially in China, to cater for the expansion of new smelting capacity. Ember estimates Chinese smelters, which produced 56 per cent of the world’s aluminium, consumed 72 per cent of the coal generation used in the aluminium industry. Global Energy Monitor data indicates there is 84,000 MW of captive coal plants dedicated to supply aluminium smelters with 82,000 MW of that in China and India. (Ember)