Editor's Note
An interesting article this week raises the question of whether coal plant funding under China’s Belt and Road Initiative will end with a big announcement or a whimper, with the latter considered the most likely option. Coal’s demise might happen more suddenly elsewhere. This week a report emerged that Bulgaria has proposed a plan to the European Commission to shut its huge Maritsa lignite complex in 2025. In Turkey, which is currently being ravaged by wildfires, a new report notes that in the last six months, six proposed coal plants have been scrapped and two other big projects have been dramatically scaled back.
As Germany’s September general election draws closer, another conservative party leader has flagged the prospect of an end date for coal power earlier than 2038. In the US, new data indicates a significant reduction in the number of operating coal mines, especially in Appalachia. In Italy, Intesa Sanpaolo, one of the country’s largest banks, has announced a tightening of its coal lending policy, albeit one that still leaves it well behind leaders in the sector. For its part, HSBC, which is a major shareholder in a wide range of companies with proposals for 70 new coal plants, is playing both sides of the climate street. It is part of consortium of financial services companies pitching a proposal to finance the early closure of Asian coal plants.
Finally, next week Global Energy Monitor will launch a new free monthly email digest on the gas industry. You can sign up for the GasWire email list here.
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How China’s support for Belt and Road coal power projects will end
Investments in coal power projects as part of China’s Belt and Road Initiative are waning but a trickle of contracts on new projects may well be snapped up by Chinese companies, writes Tam Baxter in Panda Paw Dragon Claw.
The devastating cost of India’s push towards a coal-based economic recovery
Nearly a year after three coal blocks in Jharkhand were first listed for commercial auction, local community leaders and villagers affected by the plans have not received any official communication about the projects, writes Sushmita in Caravan.
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Australian coal company drops plan for mine expansion
Centennial Coal, a subsidiary of the Thailand-based Banpu Group, has withdrawn a plan to reopen and expand the Angus Place colliery near Lithgow. The proposal stirred strong opposition from residents and environmental groups concerned about the impacts on 350 hectares of endangered and nationally significant wetlands. The company originally proposed that the expansion of the mothballed colliery would supply 135 million tonnes of thermal coal to the 1400 megawatt (MW) Mount Piper Power Station owned by EnergyAustralia. Instead, Centennial Coal is proposing to submit plans for a new mine, Angus Place West, to produce 12 million tonnes over eight years with the original Angus Place Extension Project “relegated for future consideration”. The Nature Conservation Council has welcomed the announcement but flagged the proposed new project is yet to be subject to environmental assessment. (Sydney Morning Herald, Nature Conservation Council)
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Turkish coal plant pipeline collapsing: The latest six-monthly update of the Coal Exit Tracker published by Europe Beyond Coal reports that six proposed coal plants in Tukey have been cancelled since the end of 2020. The proposed projects – Etyemez (135 MW), Cırpılar (200 MW), DETES 1 (160 MW), Vize (660 MW), Orta Anadolu (135 MW) and Kınık (700 MW) power plants – had a combined capacity of 1990 MW. The proposed capacity of the Dinar Ulukoy plant has been slashed from 3500 MW to 500 MW and the Konya Karapınar plant from 5000 MW to 1000 MW. As massive wildfires sweep parts of the country, the mayor of the city of Milas reported a fire was threatening the 630 MW Kermerkoy lignite power plant near Turkevleri. (Europe Beyond Coal, Deutsche Welle)
Indications Bulgaria may end coal power in 2025: Bulgaria’s caretaker cabinet has submitted a plan to the European Commission proposing the closure of the 1602 MW Maritsa East 2 lignite plant by the second quarter of 2025. The National Recovery and Resilience Plan also proposes the termination of two power purchase agreements with two private US companies that operate the 670 MW Maritsa East 1 and the 908 MW Maritsa East 3 plants. The Maritsa complex, with a combined capacity of 3180 MW, is the largest coal plant in south-east Europe. As the plants are all operating well under their rated capacity, the plan proposes replacing them with a 1000 MW gas plant by mid-2025. The state-owned mining company, Mini Maritsa Iztok, is the sole supplier to the plants. (Balkan Green Energy News)
German Minister says coal end date will be earlier than 2038: Germany’s Minister for Economic Affairs, Peter Altmaier, has flagged that with the rise in the European carbon price he expects the phase-out of coal power will occur earlier than the 2038 legislated end date. Despite growing pressure on parties to outline their climate plans ahead of the September general election, Altmaier did not suggest a specific end date. Altmaier is a member of the conservative (CDU) party which is an alliance with the Christian Social Union (CSU) in Bavaria. The Premier of Bavaria, Markus Soder from the CSU, has called for the renegotiation of Germany’s 2038 coal phase-out after the September 2021 federal election. Shortly after Soder’s comments his former rival and CDU Premier of North-Rhine Westphalia, Armin Laschet, backed away from his support for a delayed coal exit. Laschet is the CDU/CSU’s candidate to succeed Angela Merkel as Chancellor. (Clean Energy News)
Number of US coal mines dropped by almost 20 per cent in 2020: The US Energy Information Administration (EIA) reports the number of producing coal mines in the US declined by 18 per cent in 2020. The EIA announced 151 coal mines were closed or idled in 2020 with 40 opened or restarted. As of the end of 2020 the EIA reports there were 410 operating mines in the US, with most in Appalachia even though the region produces just over 28 per cent of the country’s coal. The western region, which includes the Powder River Basin, has 45 operating mines and produced 57 per cent of US coal production in 2020. The EIA estimates coal production in 2021 may increase by 15 per cent or 78 million short tons (62 million tonnes) over 2020 levels to 617 short tons (560 million tonnes) due to an uptick in coal generation. (US Energy Information Administration)
China moves to boost domestic coal production: Pressure from the National Development and Reform Commission (NDRC) to increase domestic coal production has resulted in the government of Inner Mongolia granting land-use rights to allow 38 mines to resume production. The mines have a combined production capacity of over 66 million tonnes a year. The NDRC has also relaxed the requirement for mining companies to identify which old and inefficient mines they would close before being allowed to increase production. The central government is promoting increased domestic production in a bid to lower thermal coal prices and ease pressure on electricity costs ahead of the August summertime peak in electricity demand. (Argus)
Ohio energy regulator secretly proposed changes to nobble renewables: Documents released to two media outlets reveal the former Public Utilities Commission of Ohio (PUCO) Chairman, Sam Randazzo, drafted proposed amendments to the controversial HB6 nuclear and coal bailout bill. Randazzo’s proposed amendments were aimed at limiting the ability of wind farm projects to gain an exemption from “setback” rules and to undercut the state’s renewable portfolio standard. Prior to his appointment to PUCO in January 2019 by Governor Mike DeWine Randazzo negotiated a US$4.3 million contract termination payment by FirstEnergy, which owned two nuclear plants. While the Federal Bureau of Investigation raided Randazzo’s home in late 2020 he has not been charged with any offences. However, in a settlement agreement with federal prosecutors, FirstEnergy admitted the US$4.3 million payment to Randazzo was a bribe and stated he promoted changes including lobbying for HB6 and dropping a 2024 electricity price review. The agreement stated the changes were worth hundreds of millions of dollars to the utility. Federal investigators have issued subpoenas for PUCO’s records relating to Randazzo’s work there. (Cleveland.com, Cleveland.com)
Chinese coal and power utility fined for financial fraud: The China Securities Regulatory Commission has fined the state-owned Yongcheng Coal and Electricity Holding Group and six executives for financial violations after the company overstated its financial position by 86.1 billion renminbi (US$13.3 billion). A July 27 filing with Shanghai Clearing House revealed the company had been fined 3 million renminbi (US$460,000). Six company executives were fined a total of 2.3 million renminbi (US$360,000). The company’s default on a loan last year dented confidence in China’s bond market for state-owned companies. (Caixin, China Economic Review)
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Australia: Origin Energy slashes the value of its 2280 MW Eraring coal plant as cheap renewables drive prices lower.
Australia: CLP Group estimates the cost of flood damage to its Yallourn brown coal mine in Victoria at A$65 million (US$48 million).
Colombia: Union says the three day blockade of the railway from Cerrejon mine by former workers was violently broken up by the notorious riot squad of Colombian police.
China: Study finds use of coal and wood for cooking increases the risk of serious eye diseases that can lead to blindness.
Sri Lanka: Bishop Valence Mendis said pollution from the 900 MW Lakvijaya coal plant poses a risk to the health of residents.
New Zealand: Forest & Bird is seeking a judicial review of Southland District Council’s decision to allow Bathurst Resources to explore for a new coal mine on council land.
South Africa: Report reveals Eskom’s coal fleet average energy availability factor (EAF) fell to 61.3 per cent in the first half of 2021. In 2018 the coal fleet’s EAF was 71.9 per cent.
US: Over 1000 striking mine workers protested outside BlackRock’s New York headquarters over pay and conditions at the Brookwood Mine in Alabama. BlackRock is the largest shareholder in Warrior Met Coal.
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Italian bank tightens coal lending restrictions but loopholes remain: The updated climate policy of Intesa Sanpaolo, one of Italy's largest banks, states it will phase out support for coal mining companies by 2025 and immediately end financial support for companies planning or building new coal-fired power plants. However, the bank does not propose ending financial support for companies with existing coal plants. The bank will only exclude support for power utilities which do not have a plan to limit coal generating capacity to a maximum of 35 per cent of their power plant fleet by 2030. Greenpeace and ReCommon criticised the plan as inadequate and falling well short of other major banks. (BankTrack, Intesa Sanpaolo [Pdf])
Indonesian utility considering creating separate entity for coal plants: Internal PLN correspondence leaked to unions reveals the publicly owned utility is undertaking a study on “monetising” its thermal power plants in “which would involve shifting 11 coal plants into a new company. The May 4 letter sought details of permits, certificates and data on the plants, all of which are located in Java and Bali. Unions have expressed concern the study is aimed at privatising the plants as part of a Ministry of State-Owned Enterprises plan to list 14 state-owned holding companies on the Indonesia Stock Exchange. PLN currently has almost 500 trillion rupiah (US$34.8 billion) in debt, much of which has been incurred in funding President Jokowi’s plan for 35,000 MW of new power plants, many of which are coal projects. (Jakarta Post)
ADB in discussions over a ‘dirty’ bank to retire Asian coal plants: The Asian Development Bank (ADB) is negotiating with Prudential, Citi, HSBC and BlackRock Real Assets on a proposal to create a public–private partnership to buy out coal plants in Asia. It is intended the plan, which suggest plants be closed within 15 years of purchase, will be finalised ahead of the COP26 climate summit in November. ADB Vice President, Ahmed M. Saeed, said the plan would rely on a mix of equity, debt and concessional finance with a separate facility to finance the deployment of renewables to fill the power generation gap caused by coal plant closures. Saeed said the ADB will undertake feasibility studies on the costs of the program in Indonesia, Philippines and Vietnam with the aim of purchasing an initial plant in 2022. Market Forces said unless HSBC is committed to ending its support for new coal and other fossil fuel plants it is just “trying to make money from both ends of the climate catastrophe.” (Reuters, Guardian)
Eskom pitches funding plan to gradually phase out coal: In a presentation to the Presidential Climate Commission, Eskom’s new Chief Executive Officer, Andre de Ruyter, outlined the utility’s proposal for a loan facility from development finance institutions to fund the construction of new power projects alongside the retirement of coal plants. Eskom is considering up to 8017 MW of projects including 600 MW of wind, 1566 MW of solar, 390 MW of pumped hydro and 4000 MW gas plants. De Ruyter said the World Bank and institutions from the US, UK, France and Germany had expressed interest in the plan. Eskom has proposed that the retirement of the 1000 MW Komati coal plant, which was built between 1961 and 1964, would be treated as a pilot project of the utility’s approach. (BizNews, Reuters)
Colombia says collapse of European thermal market requires Asian pivot: The President of the Colombian Mining Association (ACM), Juan Camilo Narino, has conceded Colombian thermal coal exports to the European power market are coming to an end. “We were used to selling all the production from Colombian mines to Europe, which is no longer going to buy it,” he said. While suggesting Colombian exporters would have to reorient to supplying the Asia and other markets, there are significant challenges. Colombia’s thermal coal export terminals are on the Caribbean Sea but to access the Asian market, exporters will either have to send cargoes on the time-consuming trip south around Cape Horn or through the Panama Canal, which would incur additional charges. (BNAmericas)
Bangladesh hit with capacity payment bill due to transmission delay: Bangladesh is paying 1.3 billion taka (US$15.2 million) a month as a capacity payment for the 1320 MW Payra coal plant even though it can’t use the power due to delays in constructing a transmission line. The construction of the 164.6 km transmission line from Mongla to Dhaka was originally scheduled to be completed by December 2020. However, it may not be completed until the end of 2022. The transmission line is to connect the Payra plant and the under-construction 1320 MW Rampal plant to the national grid. A Power Grid Company of Bangladesh official said the cost of the capacity payment could double if the first 660 MW unit of the Rampal plant is commissioned in December this year. (Dhaka Tribune)
Moody’s downgrades ratings outlook for Adani’s Australian port: Moody’s, an international financial services firm, has downgraded the outlook of Adani’s Abbot Point Coal Terminal in North Queensland to negative due to environmental, social and governance (ESG) factors. Moody’s said the change to the outlook was particularly due to the “rising refinancing risk” associated with the coal terminal’s US$500 million bond which matures in December 2022. “Refinance risk is being heightened by reduced appetite from creditors for coal investments due to ESG considerations,” it stated. The downgrade comes as the State Bank of India’s chairman has confirmed a proposed 50 billion rupee (US$672 million) loan to fund Adani’s Carmichael coal project remains stalled over concerns about the deal. (International Financing Review, Fortune India, Moody’s [registration req’d])
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Getting to Net Zero: China Report, California-China Climate Institute, University of California Berkeley, July 2021. (Pdf)
This 37-page report provides a comparative assessment of 10 pathways towards China’s 2060 net carbon neutrality with a particular emphasis on power sector decarbonisation.
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