February 20, 2020
Issue 310  |  View Past Issues
CoalWire

Editor's Note

Some of the world’s biggest coal laggards are now grappling with the consequences of their foot-dragging. In Poland, two utilities have put plans for a controversial new coal plant on ice for now. In South Africa, a government regulator has ruled that a key permit for a proposed coal plant expired in 2018. In Australia, a new survey has revealed that support for new coal mines has slumped dramatically in the wake of the devastating bushfires. In Japan, global investors are stepping up the pressure on Prime Minister Abe to adopt more ambitious decarbonisation goals. In the US, a major bank has warned that about 42,000 megawatts (MW) of coal capacity owned by 13 major utilities will be uncompetitive by 2024.

One of the drivers away from coal is increasing public opposition to air pollution. A recent report estimated that the burning of fossil fuels caused the premature deaths of 4.3 million people in 2018. One example is the role of coal pollution in causing Mongolia’s notoriously poor air quality. Even so, Rio Tinto, which exited from coal mining in 2018, has announced a plan to build a 300 MW coal plant in Mongolia to power a copper and gold mine it owns and operates.

Elsewhere, major utilities and companies are just getting on with the transition. In Greece, the publicly owned utility is looking to build 2500 MW of solar capacity at the sites of former lignite mines. In Germany, Volkswagen has announced the closure of two captive coal plants at one of its car plants and spoken out against commissioning the near-complete Datteln 4 plant.
 

Bob Burton

Features

The casualties of Mongolia's doomed love affair with coal

Coal has helped the Mongolian economy to boom but at great cost to ordinary people's lives, especially those of children, writes Klas Lundstrom in Al Jazeera.

Coal power not the answer for Mozambique’s power woes

Mozambique is at risk of locking itself into expensive, inflexible and obsolete coal power, writes Simon Nicholas from Institute for Energy Economics and Financial Analysis.

Top News

Polish utilities suspend funding for troubled new coal plant: Energa and Enea, two Polish utilities backing the proposed 1000 MW Ostroleka C coal plant, have suspended funding for the project pending a new financial analysis of the project. In December 2018, Energa gave GE Power and Alstom Power Systems the green light to proceed with the plant but has have been unable to win financial backing for the project. Kuba Gogolewski, from the Polish NGO Fundacja Rozwoj TAK – Odkrywki NIE, has called on banks including Santander and BNP Paribas and the Polish insurance company PZU to rule out support for the utilities until the Ostroleka C project has been cancelled. In 2019, Enea lost two court cases over the project with the court ruling in the most recent case that the company would be required to publicly detail how the project would be profitable. (Platts, Emerging Europe, ClientEarth)

South African agency rules proposed coal plant permit is invalid: The South African Department of Environment, Fisheries and Forestry (DEFF) has ruled that the environmental authorisation for the proposed 300 MW Khanyisa coal plant lapsed on 31 October 2018. The project, which has been promoted by Saudi Arabia's ACWA Power, has been subject to a legal challenge before the Pretoria High Court by the NGO groundWork. In early February, groundWork amended its legal case to uphold DEFF’s ruling on the invalidity of the permit. Without the permit, ACWA cannot achieve financial close on the project. (Center for Environmental Rights, Global Energy Monitor)

Survey reveals collapse of support for new Australian coal mines after bushfires: A survey of 3249 Australians undertaken by Australian National University researchers has found support for new coal mines has collapsed in the aftermath of the devastating bushfires. Support for opening new coal mines fell from 45.3 per cent in June 2019 to 37 per cent in January 2020. The survey also found that support for new coal mines amongst those who voted for the pro-coal Liberal and National parties in the May 2019 election fell from 72 per cent in June 2019 to 57 per cent in January 2020. The survey also noted that “a disproportionate amount of the swing” occurred in regional areas that are likely to be key electorates at the next election. (Guardian, Australian National University [pdf])

Investor groups step up pressure on Japan over coal: A coalition of global investor groups that manage US$37 trillion in assets has written to Prime Minister Shinzo Abe urging Japan to adopt more ambitious decarbonisation goals. Japan is the only OECD country building new coal plants. It is also subsidising the construction of numerous coal plants in Asia. Increasing international pressure on Abe to act on climate change follows a recent Reuters poll indicating strong support by major Japanese companies for a shift away from coal power. A separate poll has also found that support for Abe slumped by 8.5 per cent to 41 per cent since January as his government has been embroiled in domestic scandals. (Reuters, International Investor Group letter, Japan Times)

Tennessee grand jury supports coal ash investigation: A grand jury in Tennessee has proposed the Tennessee Bureau of Investigation investigate Jacobs Engineering over evidence presented to the court of serious failures to protect worker safety during the coal ash clean-up at the Kingston Fossil Plant. The coal ash dam at the Tennessee Valley Authority plant collapsed in December 2008, spilling an estimated 1 billion gallons (4.2 million cubic metres) of coal ash over about 300 acres (1.2 km2) of land. Over 200 former clean-up workers are suing Jacobs Engineering over illnesses and deaths which they attribute to exposure to the coal ash. The grand jury also suggested the district attorney pursue any possible state claims under the US Clean Water Act. (Associated Press)

Indian tribunal directs coal power generators to comply with coal ash law: The Indian National Green Tribunal has directed that coal generators must comply with the Environment Protection Act requirement that 100 per cent of coal ash from their plants be disposed of or reused. While the legislation allows for the use of coal ash in construction material it also permits its reuse in road construction, reclaiming low-lying land and backfilling mine pits. The tribunal also directed the Central Pollution Control Board (CPCB) to submit a report to the court on the costs to be paid by each plant for lack of compliance since December 31, 2017. The tribunal also directed the CPCB to assess environmental damage from coal ash pollution at NTPC’s Vidhyanchal plant and Essar’s 1200 MW Mahan coal plant, both of which are near Singrauli in the state of Madhya Pradesh. (Economic Times)

Study estimates 4.5 million death toll from fossil fuel pollution: A study by the Centre for Research on Energy and Clean Air estimates that in 2018 exposure to air pollution from fossil fuels caused 4.5 million premature deaths. The report estimates the economic cost in 2018 was US$2.9 trillion or 3.3 per cent of global gross domestic product. The study used ground level measurements of PM2.5 fine particle pollution, ozone and nitrous oxides. The study estimated that each death was associated with a loss of 19 years of life and suggested “tens of millions” of people suffer from health problems such as diabetes, strokes and chronic respiratory diseases due to fossil fuel air pollution. (Guardian, Centre for Research on Energy and Clean Air)

“Unfortunately, as far as the European Union’s climate policy is concerned we need to face up the facts … Breaking the green trend is practically impossible anymore and we need to adjust,”

said Tomasz Rogala, the CEO of the Polish state-owned utility Polska Grupa Górnicza.

News

India: Government proposes two 25,000 MW in solar parks in Gujarat and Rajasthan.

Ireland: Coal imports plummeted by 77 per cent in 2019 with reduced generation at the Moneypoint power station.

Mozambique: Outgoing Japanese ambassador pledges continued support for coal export projects.

Poland: Pledging to end coal use by 2050 a Greenpeace activist has applied to be the CEO of Poland's biggest utility PGE.

Serbia: The state-owned utility EPS plans to build a 97 MW solar farm on a Kostolac coal ash dump.

Companies + Markets

India’s power demand falls for first time in a decade: Central Electricity Authority data indicates that power generation from India’s fleet of coal plants fell by 2.5 per cent in 2019. Generation from lignite and gas plants also fell. The decline is attributed to slowing economic growth and increased generation from hydro and other renewable projects. Solar and wind generation increased to 8.8 per cent of generation, over double the share the sector had in 2015. In 2019 renewable capacity, including hydro, increased to 85,900 MW while coal capacity increased by 3.9 per cent to 198,500 MW. (Economic Times)

Push to halve Polish just transition funding unless it backs carbon target: The President of the European Council, Charles Michel, has proposed that funding from the from the €7.5 billion (US$8.1 billion) Just Transition Fund be halved for any country that has not agreed to support the European Union’s 2050 goal of carbon neutrality. Poland is the only country that has not supported the goal and is currently entitled to €2 billion (US$2.2 billion). Opposition to Poland’s recalcitrance comes as coal miners are planning a February 28 protest in Warsaw to demand support for the coal industry and pressing for higher wages. However, the pro-coal government has warned that coal companies are already losing money. (Euractiv, BloombergQuint)

Greek utility plans to build 2500 MW of solar at former lignite mines: Greece’s Minister for Environment and Energy, Kostis Hatzidakis, has announced that the publicly owned utility PPC plans to build over 2500 MW of solar capacity near two former lining mining sites. PPC CEO, George Stassis, said that the utility submitted an application to the energy regulator for a 1500 MW solar park near Ptolemaida, a city adjoining lignite mines and the 600 MW Amyntaio lignite plant. PPC is also reportedly planning to build a 1000 MW solar park near Megalopoli, a town which hosts the 600 MW Megalopoli lignite plant scheduled to close in 2022–23. (PV Magazine)

Volkswagen to axe two coal units at car plant: The Chairman of the Board of Volkswagen, Herbert Diess, has announced the company will switch two coal-fired units at its Wolfsburg plant in Germany to operate on gas from 2022. Deiss pointedly wrote in a blog post that while Volkswagen is investing €400 million (US$434 million) to exit coal generation at the Wolfsburg plant, Uniper has invested €1.5 billion (US$1.6 billion) to build the near-complete 1000 MW Datteln 4 plant. Deiss stated that he had “declined offers from several interested parties who wanted to buy our old Wolfsburg coal plants and rebuild them elsewhere in the world.” (Reuters, Financial Times, Herbert Diess [in German])

Analyst says coronavirus will hit Chinese coal demand: A coal analyst with Noble Resources, Rodrigo Echeverri, estimates that due to the coronavirus crisis Chinese thermal coal demand will fall by about 180 million tonnes in 2020 and that domestic production will be reduced by about 200 million tonnes. Even so, Echeverri estimates that falling European and North and South American consumption will result in a dip in seaborne thermal coal demand. (Reuters)

Rio Tinto subsidiary unveils plan for Mongolian coal plant: Turquoise Hill Resources, a subsidiary of Rio Tinto, has submitted a proposal to the Mongolian Government for a 300 MW coal plant at Tavan Tolgoi. The feasibility study proposes the plant, comprising two 150 MW units, could be built by June 2024 at a cost of US$924 million. The company also stated that an engineering, procurement and construction contract is ready to be signed. Rio Tinto owns 50.8 per cent of Turquoise Hill Resources which in turn owns 66 per cent of the Oyu Tolgoi copper and gold mine located in the South Gobi desert. The remainder of the mine is owned by the Mongolian Government. (Turquoise Hill Resources)
 

Glencore’s annual results underscore shaky future for thermal coal: Glencore, the world’s largest thermal coal exporter, has reported a writedown of US$514 million on its Prodeco thermal coal mine and US$435 million in reduced income from its Cerrejon mine. Both its Colombian mines have been hit by declining demand and prices in the European market. Glencore also flagged that total greenhouse gas emissions from coal it produced would fall by 30 per cent over the next 15 years, largely as mines in Colombia and South Africa were exhausted. The company, which produces about 140 million tonnes of coal a year, is the only major mining company not to signal its intention to move away from thermal coal. An analyst from JPMorgan speculated that Glencore could sell its coal division to a private equity company or a sovereign wealth fund but may get as little as US$9 billion for assets estimated to be worth US$17 billion. (Bloomberg, Financial Times, Glencore)

Indian gas company seeks to switch steel mills from metallurgical coal: Gail India, an Indian Government-owned gas company, is seeking to offset its declining sales to the power sector by persuading domestic steel companies to switch away from coal. India’s steel and sponge iron plants consumed 30 million tonnes of domestic coal in the year to March 2019 and 52 million tonnes of imported metallurgical coal. “If gas becomes available at an affordable price, the plants will be willing to make that switch,” said A. C. R. Das, a former adviser to the Ministry of Steel. (Bloomberg)

Morgan Stanley forecasts more US retirements to be brought forward: A new report by Morgan Stanley estimates that 42,000 MW of US coal plant capacity owned by 13 utilities will be uneconomic compared to the cost of renewables by 2024. The bank identified Ameren, American Electric Power (AEP), Duke Energy and Pinnacle West Capital as the companies best positioned to accelerate coal plant retirements due to the changing economics of renewables in their key markets. The report estimated that 11,700 MW of AEP’s 12,400 MW of regulated coal capacity would be uneconomic compared to renewables by 2024. The bank noted that the increasing competitiveness of wind generation in Indiana, Ohio, Texas and West Virginia would undermine the viability of AEP’s coal plants. The bank reports that AEP currently has no plans to retire any of the capacity in the short to medium term. (S & P Global)

Resources

Clean energy technologies in coal regions: Opportunities for jobs and growth, The European Commission’s Joint Research Centre, February 2020. (Pdf)

This 201-page report finds that between 107,000 and 314,000 jobs could be created in the European Union’s 42 coal regions by 2030 and up to 460,000 jobs by 2050 from the deployment of clean energy technologies.

How to create a profitable Polish electricity system, Institute for Energy Economics & Financial Analysis, February 2020. (Pdf)

This 20-page report argues that in the 2020s the Polish state-owned utility PGE must urgently shift away from its increasingly unprofitable coal plants and instead invest in low-carbon alternatives.