Australian coal’s race against time
Australian coal mining companies are sounding increasingly dire warnings about their ability to secure finance, writes Jacob Atkins in Global Trade Review.
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US utility accelerates closure date of Ohio coal plant
The US utility Vistra will close its 1300 megawatt (MW) Zimmer coal plant by the end of May 2022, five years earlier than it first flagged late last year. Vistra said the plant, which was commissioned in 1991, failed to win any capacity payments in the latest auction for the PJM Interconnection, a regional market that serves 13 US Atlantic east coast and Great Lakes states and the District of Columbia. A Vistra executive said that without capacity payments “the plant simply doesn't make money”. Vista said it will support the 150 workers affected by the decision but provided no details of the transition or funding commitments beyond stating it will evaluate the site for “potential investments” in renewables or grid-scale battery storage. (Platts, Vistra)
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US climate envoy puts coal at the centre of climate negotiations: President Joe Biden’s special climate envoy, John Kerry, has signalled that an end to new coal plant construction and a phase-out of existing coal plants will be key elements in the negotiations at the COP26 climate conference in Glasgow in November. “How alarming is it that as we race to Glasgow, some countries are currently still building new, carbon-polluting coal plants, and even planning to break ground on more in the future?” Kerry asked in a speech in the UK. (US Government)
New EU targets and deadly floods increase pressure on German coal: The release of the European Commission’s draft ‘Fit for 55’ package of climate measures – including targets for increased renewables and changes to the emissions trading scheme (ETS) – will increase pressure on Germany to bring forward its current 2038 end date for coal power. The energy think tank Agora Energiewende estimates carbon dioxide prices in the ETS are likely to range between the current price of over €50 per tonne (US$59 per tonne) and €80 per tonne (US$94 per tonne), rendering coal generation uneconomic across most of the EU. The devastating floods, which have resulted in the deaths of over 197 people with many still missing, resulted in Chancellor Angela Merkel committing to increased action on climate change. RWE's Tagebau Inden lignite mine in North Rhine-Westphalia was flooded with one worker reported missing. The mine supplies the 1958 MW Weisweiler coal plant which is now operating at reduced capacity. (Clean Energy Wire, Deutsche Welle, Bloomberg)
IEA warns of coal generation rebound: The International Energy Agency (IEA) estimates the global economic rebound could result in electricity demand growing by almost five per cent in 2021 and four per cent in 2022, with the bulk of the growth occurring in the Asia-Pacific region. The IEA estimates about half the increase will be in China with global carbon dioxide emissions increasing by 3.5 per cent in 2021 and 2.5 per cent in 2022. The IEA estimates that while combined hydropower, wind and solar generation will grow by about eight per cent in 2021 and six per cent in 2022, the growth will be outpaced by additional thermal power generation, particularly coal power. The agency estimates coal generation is set to increase by almost five per cent in 2021 and a further three per cent in 2022. Last year the IEA estimated coal generation would need to fall by over six per cent a year to reach the target of net zero emissions by 2050. (International Energy Agency)
Former Australian Minister and MP guilty of misconduct over coal licence: A former New South Wales MP, Eddie Obeid, and former Minister for Mineral Resources, Ian Macdonald, have been found guilty of conspiracy to wilfully commit misconduct in public office over the decision to allocate the Mount Penny coal exploration licence over Obeid’s family farm in the Upper Hunter River valley in 2008. Justice Elizabeth Fullerton also found Moses Obeid, Eddie’s son, was also involved in the deal. The allocation of the licence boosted the value of the farm, which the Obeids later sold for A$30 million (US$22 million). The three are yet to be sentenced. (Sydney Morning Herald, Guardian, NSW Supreme Court)
US utility resists disclosure of internal investigation documents: FirstEnergy is resisting a subpoena from Ohio Consumers’ Counsel seeking records relating to an internal investigation into potential improper spending including a US$4.3 million payment in April 2019 to former Public Utilities Commission of Ohio Chair Sam Randazzo. Randazzo resigned after the FBI raided his home and the payment became public. FirstEnergy has previously said it was committed to transparency about the scandal and told investors the payment “may have been for purposes other than those represented within the consulting agreement.” Federal investigators allege FirstEnergy and its affiliates paid US$61 million, including payments to former Ohio Speaker Larry Householder, to get a bill approved to bail out nuclear and coal plants. (Cleveland)
Investigation sought into Canadian officials failure to act on pollution: A report by the University of Victoria Environmental Law Centre has urged the federal Environment Commissioner, Jerry De Marco, to investigate the failure of government officials in Climate Change Canada and Fisheries and Oceans Canada to use their powers under environmental laws to protect waterways from pollution from Teck Resources’ metallurgical coal mines in the Elk Valley. The report, which was compiled on behalf of WildSight, an environmental group, notes a 2016 report by British Columbian Auditor General pointed out that despite provincial officials documenting 20 years of annual increases of selenium emissions in the Elk Valley, no substantive action was undertaken. (The Narwhal, University of Victoria Environmental Law Centre)
Indonesian Minister floats plan to keep coal plants beyond 2050: Zulkifli Zaini, the President Director of Indonesia’s state-owned utility PLN, has told an online forum the utility has decided not to phase out the country’s coal fleet any earlier than the 2056 end date included in its current power plan. This contradicts earlier suggestions PLN would bring forward the retirement of coal units. Zulkifli floated the prospect it could keep operating coal plants beyond 2050 by embracing carbon capture and storage (CCS) if the costs come down. “If at that time, for example in 2050, carbon capture technology is very cheap, then let's just operate coal power plants. It’s okay … We could operate [the power plants] at very low costs.” There is currently only one CCS unit operating on a coal unit but this has proven expensive and unreliable. (Jakarta Post)
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Australia: New Hope Corporation referred to corporate regulator over statements to investors omitting IEA scenario showing rapid decline in coal.
Bosnia and Herzegovina: Power utility EPBiH has rejected two Chinese subcontractors proposed to replace General Electric in the consortium seeking to build a 450 MW lignite unit in Tuzla.
Canada: Benga Mining, a company owned by Australian billionaire Gina Rinehart, has filed an appeal against the rejection of its proposed Grassy Mountain Coal Project in Alberta.
India: Hundreds of fisherpeople have blockaded the construction of a coal conveyor intruding into the tidal channel of the Kosasthalaiyar River.
India: The National Green Tribunal has directed Singareni Collieries Company to cease producing more coal than permitted from its Jalagam Vengal Rao opencast mine in Telangana state.
India: Parliament told the Securities and Exchange Board of India is investigating Adani reportedly over three Mauritius-based funds that invested most of their assets in Adani companies.
Philippines: Mayor says many of the COVID-19 cases in Mariveles are connected to construction workers on a coal power plant.
Philippines: Indonesian coal barge crew is in 14-day isolation after testing positive for COVID-19.
US: Bill backed by Duke Energy and Republicans in North Carolina lower house promotes closure of five coal plants but blocks state joining regional climate partnership.
US: Domestic coal production fell to lowest level since 1965, though a rebound is forecast for 2021.
US: Coal company that emerged from Murray Energy bankruptcy has not responded to questions on whether it is paying legal fees for appeal against Great Lakes wind power project.
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Support for carbon tariffs by US and EU poses: As part of its ‘Fit for 55’ package of climate measures the EU executive has proposed a “carbon border adjustment mechanism” which would result in a levy being imposed on imports such as steel and aluminium produced in countries that have not imposed a carbon price or other measures to cut emissions. Shortly after the announcement, the US Democrats proposed a “polluter import fee” in a broad legislative package to authorise infrastructure spending. Both proposals are likely to face opposition but aim to prevent domestic industry being undercut by more polluting producers in countries such as China. (Bloomberg, Guardian)
Indian utilities can exit power purchase agreements from old coal plants: India’s national utility regulator, the Central Electricity Regulatory Commission (CERC), has ruled in favour of BSES, Delhi’s largest power distribution company, which terminated its power purchase agreement (PPA) with utility NTPC’s 840 MW Dadri-I coal plant in Uttar Pradesh. BSES argued it could unilaterally exit from the PPA as the plant had operated for over 25 years since first commissioned. CERC ruled BSES should request the Ministry for Power to deallocate its share from Dadri-I plant, a request that has subsequently been approved. The decision has potentially wide ramifications as financially stressed distribution utilities seek to cut power costs from expensive coal plants in favour of cheaper suppliers especially from new renewables projects. (Indian Express, Indian Express)
Japan slashes 2030 demand forecast, boosts renewables: Japan’s latest draft energy plan estimates electricity demand will be about 10 per cent lower in 2030 than set out in the current 2018 plan. The lower demand estimate is a result of increased energy efficiency especially in factories and office buildings. With lower demand, the government estimates the share of electricity provided by renewables will increase from the current 22–24 per cent to 36–38 per cent by 2030. Coal generation will decline from a 26 per cent share of electricity to 19 per cent. The draft plan will be released on July 21 for public comment with a revised plan expected to be adopted by Cabinet later in the year. The Ministry of Economy, Trade and Industry estimates that onshore wind power and both utility and rooftop solar– excluding land costs – will be cheaper than coal generation by 2030. (Yomiuri Shimbun, Kyodo News, Reuters)
India signs deal with Russia for metallurgical coal supply: The Government of India has announced the Ministry of Steel has signed a memorandum of understanding (MOU) with the Ministry of Energy of the Russian Federation “for co-operation in the coking coal sector between India and Russia”. The Indian Government said the MOU is aimed at “diversifying” its source of coking coal and reducing the cost of imports for steel producers. India, which is the world’s second largest steel producer and second biggest metallurgical coal buyer, imported about 54 million tonnes in 2020 with about 37 million tonnes of that from Australia. India’s metallurgical coal imports are predicted to grow rapidly to over 70 million tonnes by 2023. The MOU is aimed at reducing India’s reliance on Australian coal exporters, which dominate the global seaborne market. Australian exports have also occasionally been disrupted by extreme weather events leading to price spikes. For its part, Russia is seeking to boost coal exports into the Asian market by supporting the expansion of coal export infrastructure. (Argus, Times of India, Government of India)
Draft Chinese steel plan flags cuts to overcapacity: The China Iron and Steel Association’s draft carbon reductions plan for the iron and steel sector proposes emissions will peak by 2025 with a 30 per cent reduction by 2030. Greenhouse gas emissions from the sector account for about 17 per cent of China’s total emissions. China’s steel sector has long been promoted by provincial governments resulting in overcapacity, low utilisation rates and high levels of pollution. A recent report by Global Energy Monitor estimated Chinese steel sector overcapacity at between 13 and 20 per cent. Mysteel, a consultancy company, estimates the mid-July capacity utilisation of 163 steel mills operating blast furnaces was almost 77 per cent, down from 86 per cent a year earlier. (Bloomberg, Economic Times)
Vietnam’s Prime Minister seeks to revive stalled coal plant: Vietnam’s Prime Minister, Pham Minh Chinh, has told a July 15 meeting of government agencies that the central government is willing to provide funding support to restart construction of the 1200 MW Thai Binh 2 coal plant proposed by state-owned PetroVietnam. Work on the project first began in 2011 but has been stalled due to financial difficulties since early 2020. Officials have reported that construction work on the plant is 86 per cent complete. (Thanh Nien Online [Vietnamese], Global Energy Monitor)
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Electricity Market Report, International Energy Agency, July 2021. (Pdf) (The Executive Summary is here.)
This 123-page report provides a detailed overview of key trends in global electricity markets.
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