Editor's Note
One of the most remarkable developments of the last week was the front cover and accompanying editorial in the renowned UK magazine The Economist. The cover was bluntly titled “Making coal history” with a simple illustration portraying the dying wisps of smoke from a stylised museum exhibit of coal with its lifespan dated as ending in the 21 st century. The editorial headline went even further and was titled “Time to make coal history: Coal is at the toxic heart of the fossil-fuel economy”.
If there is ever a major museum exhibit dedicated to chronicling the tipping point in the fall from grace of the fossil fuel industry, the cover of The Economist would be a good candidate. A few years ago few would have imagined it possible for that a mainstream, pro-market magazine such as The Economist would champion the end of the global coal industry. The cover reflects how concern about the role of coal in the climate crisis spans the political spectrum in the UK and, increasingly, elsewhere too.
As London has long been a key centre for accessing finance and insurance for global mining companies, the declaration by The Economist that there can be no long-term role for coal will undoubtedly have largely unseen ripple effects. For example, UK bankers and insurers are likely to feel a little more vulnerable when such a mainstream magazine effectively declares that support for the coal industry is no longer socially acceptable.
The strong position of The Economist also perhaps reflects the waning influence of the coal lobby as domestic mining and power generation has withered. It is hard to imagine an equivalent publication in coal-hooked countries such as Australia, Poland, Russia, South Africa and the US emulating The Economist’s editorial position just yet.
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German state awards hundreds of millions in compensation to close loss-making coal plants
An analysis of German Government compensation for the closure of seven coal plants reveals they ran at a combined loss of over €200 million (US$242 million) over the last two years, writes Sarah Brown from the European energy think tank, Ember.
Time to make coal history
Coal’s days are numbered. The sooner it is consigned to museums and history books, the better, states [paywalled] an editorial in The Economist.
Technology disruption in the global steel industry
A recent announcement by Europe’s largest iron ore producer, LKAB, to invest in carbon-free iron production could accelerate the transformation of the steel industry away from its reliance on coal, writes Thomas Koch Blank from the Rocky Mountains Institute.
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Czech Republic commission recommends 2038 coal phase-out: A coal commission established by the government of the Czech Republic has proposed coal power be phased out by 2038, an end date rejected as too late by environmental groups participating in the process. The majority government-owned utility, CEZ, owns all the coal plants, which generate about 40 per cent of the company’s electricity. (Reuters, Euractiv)
Investigation of illegal mining in Chinese province triggers production fall: An investigation into possible illegal coal production in Inner Mongolia, China's second largest coal-producing province, is believed to be one of the factors in a slump in production this year. Coal production in the province has fallen by 10.4 per cent to 801 million tonnes in the 10 months to the end of October. On December 4 the provincial government announced investigations into four government officials and a manager of the state-controlled Inner Mongolia Mining group. (Argus)
Alberta utility revises coal plant retirement plans to 2025: Capital Power Corporation (CPC) has announced it will convert its Genesee coal units 1 and 2 to run on gas in 2023 and 2024 respectively. In June 2019 CPC announced the units would be upgraded to enable them to run on coal or gas with work on 430 megawatt (MW) Unit 1 completed in 2021 and the 430 MW Unit 2 by mid-2020. In June 2019 the company announced plans to upgrade its 466 MW Genesee Unit 3 to a dual-fuel unit and operate it solely on gas by 2023. In conjunction with its decision to drop the dual-fuel option for the units, CPC is also increasing its renewables capacity. In November the company entered into a power purchase agreement for all the generation from the 40.5 MW Strathmore solar project and will proceed with its 75 MW Enchant solar project in late 2022. (Global News, Capitol Power)
Canadian report finds mine benefits overstated but caribou impacts real: A report by a Canadian Centre for Policy Alternatives argues the promised jobs, tax revenues and other economic benefits from the Willow Creek, Brule and Wolverine coal mines in British Colombia between 1999 and 2019 were “wildly” overstated and slow to materialise. While the economic benefits have been less than promised, the three mines are one of the factors behind the decline of the Central Mountain caribou which are listed under Canada’s endangered species legislation. (The Narwhal, Canadian Centre for Policy Alternatives)
Australian regulator rejects donation to mining group as legal remedy: The New South Wales Resources Regulator has rejected a Whitehaven Coal proposal to donate A$50,000 to the NSW Minerals Council as part of a legal undertaking to avoid prosecution over alleged breaches of licences conditions associated with the Narrabri Coal Mine. The company proposed the funds would be spent to develop exploration guidance material for the mining industry. On December 11 the company is due to face charges of illegally clearing access tracks in the Pilliga State Forest. The regulator stated it rejected the company’s proposal as its licence breaches were “at the higher end of the scale, and demonstrative of a comprehensive failure to meet fundamental regulatory obligations in relation to the approvals (and restrictions) obtained.” (Australian Financial Review [paywall], New South Wales Resources Regulator [Pdf])
Former utility lobbyist to help select new chair of Ohio utility regulator: Ohio Governor Mike DeWine has appointed a former FirstEnergy lobbyist, Michael Koren, to head a 12-member committee tasked with selecting a replacement for former Public Utilities Commission of Ohio (PUCO) chairman Sam Randazzo. Randazzo resigned after the FBI raided his home as part of its investigation into the scandal over the US$60 million campaign involving the Ohio energy bailout legislation. Days before the raid, FirstEnergy revealed it had paid Randazzo US$4 million to terminate “a purported consulting agreement” before he started his role at PUCO. The US Department of Justice has filed racketeering charges against former Ohio House Speaker Larry Householder and four former lobbyists involved in the campaign for the bailout legislation. (Cincinnati Inquirer)
Inquiry hears draft Eskom board submission went to Gupta advisers: Appearing before the Zondo Commission Inquiry into State Capture, former Eskom company secretary Suzanne Daniels said she “didn’t want to upset the applecart” by objecting to proposals to favour the Gupta family companies. In December 2015 Daniels sent a submission to the Eskom board proposing 1.68-billion rand (US$110 million) be pre-paid for coal from Optimum Coal. The pre-payment helped the politically well-connected Gupta family to buy the Optimum coal mine from a subsidiary of Glencore. A draft of the submission to the Eskom board had been sent to the Gupta-linked company, Regiments Capital. (Daily Maverick)
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Australia: Despite concern about the impact on Sydney’s water catchment, the NSW Independent Planning Commission has approved Wollongong Coal’s plan to expand its Russel Vale mine.
Australia: The price of shares in the Dalrymple Bay Coal Terminal on its first day of trading slumped by 16 per cent on concerns about future of coal and Chinese demand.
Canada: Ranchers apply for judicial review of Alberta Government’s decision to open up southern Rockies for coal mining.
China: Carbon monoxide leak kills 23 miners at the Diaoshuidong colliery in Chongqing.
Myanmar: Villagers demand protection of Nam Maw Nguen lake in southern Shan State as a wildlife reserve to protect community water supplies from coal mining plans.
New Zealand: Protest blocks rail shipment of coal from Bathurst Resources’ Takitimu mine to a milk processing plant owned by Fonterra.
US: Bluestone Coal Corporation, owned by West Virginia Governor Jim Justice, pays US$30,000 in new penalties and promises to meet selenium pollution standards within a year at its Red Fox Mine.
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Malaysian bank sets 2040 coal end date: CIMB, Malaysia’s fourth-largest bank, has released a coal policy that commits to phasing coal out of its portfolio by 2040. The policy states the bank will not fund new thermal coal mines and power plants or expansions with the exception of where there is an existing commitment. It does not detail what existing commitments it has. Market Forces estimates CIMB invested US$2.6bn in coal over the last decade and was heavily criticised for its July 2020 decision to finance the Jawa 9 and 10 plants in Indonesia. The Institute for Energy Economics and Financial Analysis has welcomed CIMB’s policy as likely to increase pressure on other Asian banks to also adopt policies excluding coal projects in order to align their lending with the goals of the Paris Agreement. (Climate Hone News, CIMB)
Report finds Polish plan to spin off coal shows no climate benefit: A report by the Polish think tank Instrat and ClientEarth argues a plan by PGE to merge with Tauron and Enea after offloading coal assets into a new government-owned entity would still allow coal generation to be at levels five times higher than allowed under the European Union’s new emissions reduction target. The report notes only 6800 MW of Polish coal plants will be profitable in 2021 and argues most of the rest should be decommissioned by 2024 instead of being allowed to operate through to 2037. Coal generation currently accounts for about 80 per cent of the country’s electricity. The report argues that the refusal to accelerate the retirement of coal plants will constrain investment in new renewables generation. (Instrat)
Blackrock and Storebrand warn State Bank of India over Adani loan: The US-based investment company BlackRock and the Norwegian financial services company Storebrand have warned the State Bank of India (SBI) of concerns over its consideration of a A$1 billion (US$686 million) loan to Adani for its Carmichael coal mine project in Australia. BlackRock, which is a shareholder in both Adani and SBI, flagged its concerns with the proposal. Storebrand also expressed its alarm that SBI would support the project. BNP Paribas Asset Management has also met with SBI but declined to provide details on the issues raised. Previously, the French financial services company Amundi said it has urged SBI to rule the project out otherwise it would divest its SBI green bonds. (Business Standard)
Glencore to shut three Australian coal mines and a fourth may close: Glencore, the world’s largest thermal coal exporter, has announced it will close three Australian coal mines by 2023 as reserves are depleted. A fourth, the Glendell mine in New South Wales, is operating at reduced capacity due to a slump in demand and may also close in 2023. In January 2020 Glencore applied for government approval to expand the capacity of the Glendell mine from 3.7 million tonnes a year to 10 million tonnes a year and extend its life by 20 years to 2044. The four mines produced 13.1 million tonnes of coal in 2019, with the Newlands mine in Queensland producing a mix of up to 5.5 million tonnes of metallurgical and thermal coal. Glencore has also cut its estimated production in 2021 to 112 million tonnes from its previous guidance of 140 million tonnes. Glencore also announced its former CEO Ivan Glasenberg will be replaced in the first half of 2021 by Gary Nagle, the head of the company’s global coal division. Nagle and was the company’s representative as a Director of the Minerals Councils of Australia and its counterpart in Colombia. (Argus, Glencore)
Damage to Newcastle coal terminal to cut export capacity into 2021: Damage caused to a shiploader by a storm in mid-November will cut capacity at the Newcastle Coal Infrastructure Group’s coal export terminal by about 30 per cent to an estimated 46 million tonnes a year. During the storm high winds derailed a shiploader. Over the last two years the port has exported about 55 million tonnes of coal a year. The official rated capacity of the terminal, which has two shiploaders, was recently increased from 66 million tonnes to 79 million tonnes. The terminal exports coal from the New South Wales Hunter Valley with the reduced export capacity likely to increase upwards pressure on Newcastle coal prices in the short term. (Australian Financial Review [Paywall])
Indian Ministry proposes extending life of polluting old plants: India’s Ministry of Power has proposed allowing coal plants to continue running after state distribution companies’ power purchase agreements with national government-owned utilities have expired. Distribution utilities in Punjab, Delhi, Andhra Pradesh and Odisha want to surrender power allocations of up to 5750 MW after they have expired at the end of 25 years. Some states are faced with power surpluses and can’t afford the high cost of power from the plants. The old plants, which do not comply with new pollution standards, have been earmarked by the Ministry of Environment, Forests and Climate Change for closure to help cut air pollution. In a separate development, new data reveals the volume of coal supplied between April and October to the power sector by Coal India declined by 6.6 per cent to 236.97 million tonnes, an indication of the impact of COVID-19 on power demand. (Reuters, The Hindu)
Vietnamese utility signs deal for Laos coal plant: EVN, Vietnam’s government-owned power utility, has signed a memorandum of understanding with Laos’ Phongsubthavy company to build a 300 MW coal power plant at Nam Phan. The details of the proposed power purchase agreement have yet to be resolved but the aim is for the plant to be commissioned in 2025. In the last few decades Laos has pursued major energy projects, overwhelmingly hydro schemes, to earn foreign exchange from export power sales to surrounding countries such as Thailand, Vietnam and Myanmar. (VNExpress)
More US coal bankruptcies: Two more US coal mining companies – White Stallion Energy and Lighthouse Resources – have filed for voluntary Chapter 11 bankruptcy protection in the hope of selling assets. Lighthouse Resources announced it cut a further 75 direct positions or almost half its workforce at the Decker mine in Wyoming, ahead of its bankruptcy filing. Lighthouse had promoted the construction of the Millennium Bulk Terminals in Washington State to open access to the Asian market but failed to win key permits. It now proposes attempting to sell its interest in the project. White Stallion produced an estimated 7 million US short tons (6.5 million tonnes) from six mines in the Illinois Basin but sacked all 260 of its employees ahead of the bankruptcy. It plans to rehire 24 staff to undertake the sale process and continue to supply coal to Duke Energy. (Casper Star-Tribune, S & P Global)
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Who Benefits from Caribou Decline? Canadian Centre for Policy Alternatives, December 2020. (Pdf)
This 48-page report finds the promises of financial and economic returns from three coal mines in British Columbia are not being met.
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