Editor's Note
As the scale of the humanitarian costs of the COVID-19 crisis becomes more apparent, government-mandated lockdowns are being extended. The insurance industry was one that knew of the possible impact of a pandemic but was ineffective in its advocacy for preparedness. As one commentator notes, there are strong parallels with its often muddled approach to global heating.
In the energy sector some of the knock-on impacts of the COVID-19 crisis, such as reduced power and coal demand, have been well established. Others, such as bankruptcies and the furloughing of employees, are starting to take form. In the US, the company behind one of the country’s most modern coal plants has filed for bankruptcy protection for the second time since the plant was commissioned in 2011. This week has also seen a few scattered instances of coal mine workers being infected by COVID-19, though coal companies seem unwilling to inform investors about their problems.
The shift to cleaner energy is also leading to some fascinating case studies of the health benefits of shifting away from coal power. In the US, a new study has documented the reduced hospitaladmissions and reliance on asthma medication when coal units were closed or sulphur dioxide emission controls installed. Other problems, such as poorly built coal ash dams remain a global problem. In India, a coal ash dam at one of the country’s huge coal plants collapsed, killing two people with a further four missing.
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Insurance, pandemics and climate change
The insurance industry knew the risks of a pandemic and, as with climate change, have been ineffective at persuading governments and businesses to urgently address the challenge, writes Peter Bosshard from the Sunrise Project in Unfriend Coal.
The stunning collapse of Doosan Heavy Industries
After years of mounting losses, South Korea’s publicly owned coal plant builder is teetering on the brink of insolvency, writes Ko Jun-Tae in Korea JoongAng Daily.
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Study finds closure of US coal plants resulted in fewer asthma hospitalisations: A study published in Nature Energy has found that there were 400 avoided hospitalisations and emergency department visits each year across Jefferson County in Kentucky after one coal unit switched to gas and sulphur dioxide emission control units were installed on three others. The study examined the total number of asthma-related emergency department visits and hospitalisations for each postcode in Jefferson County between 2013 and 2016. It also tracked the use of medication by 207 people via digital inhaler sensors. (Columbia University Mailman School of Public Health, Nature Energy)
Another Indian coal ash dam collapses: An eight-year-old boy and a 35-year-old man were killed after the collapse of the coal ash dam at Reliance Power’s 3960 megawatt (MW) Sasan coal plant in Madhya Pradash. Four others are missing, presumed dead. The coal ash slurry flowed an estimated six kilometres, smothering a large amount of agricultural land dismissed by Reliance Power as a “minor land parcel.” The power plant is continuing to operate. Villagers complained about the dam in 2019 but were told by the company and local officials there was no risk of it collapsing. This is the third coal ash dam collapse in a year with other disasters at Essar’s Mahan coal plant in August and another in October at NTPC’s Korba power station. (Reuters, NDTV)
South Korean NGOs seek injunction to block Doosan bailout: A group of NGOs has filed for an injunction to prevent the South Korean Government from providing a 1 trillion won (US$825 million) loan to bail out Doosan Heavy Industries (DHI). The group argues that the funding support is against the government’s climate and public health commitments. The legal action seeks to block additional funding to the loss-making company or at least make any funding conditional on the company turning away from its reliance on supplying equipment for new coal plant projects. The legal action comes at a delicate time for the government which is seeking re-election in the April 15 general election. DHI has submitted a restructuring plan to its creditors but declined to provide details until it has been confirmed. (Mongabay, Business Korea)
Last US coal plant proposal runs out of time: The proposed 850 MW Plant Washington in Georgia has been denied an extension of time to begin construction. The project, which was first proposed in January 2008 by Power4Georgians, a consortium of 10 power supply cooperatives, was dogged by controversies and legal actions. As the original consortium lost members, the project stalled. In March the Georgia Environmental Protection Division rejected a request from the plant’s promoter, Dean Alford, for more time to begin construction. Alford, who in late 2019 was charged with racketeering and other offences, did not appeal the decision. (Saporta Report, Georgia Department of Natural Resources, Global Energy Monitor)
Colombian coal exporters hit by protests: The US-headquartered Drummond has warned buyers it may curtail exports after mine production was affected by protests by landowners. In the meantime the company is fulfilling shipments from stockpiles at Puerto Drummond. Since March 25 indigenous groups have also blocked the railway used by Cerrejon, a joint venture of BHP, Glencore and Anglo American. Cerrejon’s Dublin-based marketing company, CMC, declared force majeure on March 30. The disruptions come as the Territorial Indigenous Council of Governors of the Sierra Nevada de Santa Marta has warned that the construction of coal port Las Brisas threatens a scared site. (Argus, Argus, Mongabay)
German utility to explore ‘green hydrogen’ option for retiring coal plants: The German energy utility Uniper has signed a cooperation agreement with Siemens to explore options for fuelling some of its gas units with hydrogen created from curtailed wind energy generation. Uniper, which has 9200 MW of coal plants and 14,000 MW of gas units, has been hit by rising carbon prices. The company, which plans to close or convert its coal plants by 2025, has flagged that it will consider what role ‘green hydrogen’ may play in the future of the plants. (Reuters, Uniper)
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Japan: Employees at TEPCO’s grid stability department have tested positive [Japanese] for coronavirus.
Poland: PGG, the largest coal producer in Poland, has asked workers to accept a 20 per cent reduction in hours and pay for three months due to 12 per cent reduction in power demand.
US: Indiana coal mine site proposed to be redeveloped as a distillery.
US: Virginia adopts clean energy law requiring all bar one remaining coal plants over 500 MW to close by the end of 2024.
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Seaborne coal market slides further on coronavirus restrictions: Platts Analytics has flagged that it expects China will limit seaborne thermal coal imports “for the remainder of 2020” in a bid to shore up domestic producers. Indonesian coal export prices, along with prices for cargoes of high-ash Australian coal, have been under pressure as the seaborne market remains oversupplied. A new coronavirus outbreak in the Chinese city of Suifenhe has resulted in a local lockdown but concerns remain of the possibility it could spread to the adjoining coal-producing province of Inner Mongolia. The global coal market will also be affected by the extension of coronavirus lockdowns in India (until May 3), South Africa (until April 30) and Colombia (until April 27). (S & P Global, Argus)
Indonesian coal sector hit by falling demand, coronavirus: Indonesia’s Ministry of Energy and Mineral Resources estimates domestic coal consumption could decline by five per cent in 2020 to 147.25 million tonnes if the coronavirus pandemic persists. The Indonesian Government has instituted a domestic market obligation that requires coal producers to sell one-fifth of their production to the local market at a maximum price of US$70 per tonne. There are fears the health impact of coronavirus among Indonesia’s 260 million people could escalate quickly after President Jokowi Widodo refused to prevent mass travel for Ramadan in May. It is estimated that at the end of Ramadan up to 75 million Indonesians may travel home from cities. (Jakarta Post, Reuters)
Coal companies coy with investors on coronavirus cases: At least five employees have tested positive at two Alabama metallurgical coal mines, one owned by Peabody Energy and the other by Warrior Met Coal. Peabody Energy did not respond to questions on whether there have been positive tests at its other mines. Neither company has issued a media release or informed the stock exchange of the infections. In Australia, a BHP employee who works at its Blackwater mine in Queensland has tested positive. BHP has not made a statement to the Australian Stock Exchange. (S & P Global Market Intelligence, Guardian)
Coal India slashes production as stockpiles grow: Coal India has cut production as there is now an estimated 125 million tonnes of coal stockpiled at mines and power plants, enough for 28 days consumption. A Coal India official anonymously stated that in the first 11 days of April the average daily production was 1.3 million tonnes, compared to the average daily production in March of 2.7 million tonnes. With a power demand down by as much as 21 per cent since the start of March due to the coronavirus lockdown, coal generators have absorbed an estimated 99 per cent of the reduction. In March imported coal declined by 27.5 per cent compared to the same month in 2019. An estimated 40 coal plants, with 30,000 MW in capacity, have been idled. In 2019/20 Coal India, which supplies about 80 per cent of India’s coal, produced 602 million tonnes of coal. It was targeting 710 million tonnes production in 2020/21. (The Week, S & P Global, Economic Times, Economic Times)
One of the newest US coal plants files for bankruptcy protection: Longview Power, which commissioned the 700 MW Longview coal plant in 2011, has filed for bankruptcy protection. The company, which only emerged from bankruptcy in 2015, has blamed depressed power prices in the PJM regional market, the impact of coronavirus restrictions on power demand and low gas prices for its financial problems. The Longview plant, which cost US$2.2 billion, survived a legal challenge from the Sierra Club in 2004 and the permit was issued in 2007. The plant will continue to operate during bankruptcy proceedings. (S & P Global, Global Energy Monitor)
Ukraine’s largest power producer seeks debt restructuring: DTEK, Ukraine’s largest power utility which has been hit by declining power sales, is seeking to restructure its debts. DTEK was due to make a payment on April 1 on US$1.3 billion in bonds it raised in 2016. On April 1 DTEK suspended the operation of some of its coal power units while its coal mining subsidiary has suspended work at ten of its mines from April 20. DTEK blames increased power imports from Russia and Belarus and declining power demand. DTEK had previously shuttered five mines. It estimates that a total of 18,700 employees are affected by the closures. (Reuters, 112.UA, DTEK [Ukrainian])
With new coal units part-built, coal miners demand 25 per cent price hike: With construction on two new units at the Hwange power station part completed, the 325 MW state-owned Zimbabwe Power Company has been hit by a demand from the Coal Producers Association (CPA) for a 25 per cent increase in the price paid for coal. The CPA represents coal companies including Makomo Resources and Hwange Colliery Company which supply the Hwange power station and are pressing for a base payment of US$33 per tonne. Two new 335 MW units at the Hwange power station are scheduled to be commissioned in 2022. (The Herald)
Adani plays pass the parcel with Australian coal port debt: An Adani-related entity has been forced to put over A$100 million (US$64.5 million) into the Australian-registered Adani Abbot Point Terminal (AAPT), which has a 99-year lease on the Abbott Point coal terminal in Queensland. The injection of funds was required after a failed attempt to refinance a loan due by May. While the transfer of funds solves the company’s short-term financial problem, AAPT has A$1.1 billion (US$700 million) in further debt repayments which fall due over the next 32 months. A further payment of A$170 million (US$109 million) is due in November. While Adani’s proposed Carmichael coal mine is being developed by a separate company, the project relies on the terminal to access to the export market. (Australian Financial Review [paywall])
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