April 30, 2020
Issue 320  |  View Past Issues

Editor's Note

The energy industry shakeout from the coronavirus crisis continues, with reduced coal generation resulting in record coal stockpiles accumulating in some countries. Reduced demand is causing huge financial stress for utilities in countries such as Indonesia, where the publicly owned utility PLN flirted with delaying debt payments due this year. Prices in the export markets have fallen and reduced demand is forcing mining cutbacks.

In Turkey, after a long campaign by local residents, a court has overturned a permit for a 200 megawatt (MW) coal plant. In the Netherlands, the government has agreed to a large reduction in coal generation this year and is reportedly in negotiations for the closure of at least one plant. However, in China the current is running in the opposite direction, with at least six major new coal plants approved in the first quarter and more proposed by other power utilities. This comes as new Bloomberg New Energy Finance data reveals that solar and wind are now the cheapest source of new generation in most of the world, with recent cost declines challenging existing coal plants.

Whether due to the coronavirus crisis or long-running campaigns of NGOs, divestment announcements by major financial institutions have accelerated. HSBC has announced it has eliminated a loophole it created in 2018 to cater for funding of projects in Bangladesh, Indonesia and Vietnam. The head of the Japan Bank of International Cooperation has also signalled it will no longer entertain support for new coal plants. In Germany, two major financial institutions have announced new coal lending policies, increasing pressure on Deutsche Bank’s asset manager DWS and Allianz Global Investors to tighten their policies.

Bob Burton


In global electricity slump, coal is the big loser

As silent factories and deserted offices hobble demand for electricity worldwide, the biggest loser is coal, write Will Wade, Chris Martin and Mathew Carr in Bloomberg.

On the brink of a coal boom, Papuans ask who will benefit

As Indonesian Government officials work on identifying areas in West Papua to be opened up for coal exploration, local landowners and activists fear the social and environmental consequences of a coal boom, writes Febriana Firdaus in Mongabay.


Netherlands government directs coal plant reductions

The Netherlands Government has agreed on a package of measures, including a significant reduction in coal generation by 2020, to comply with a court-ordered plan to cut greenhouse gas emissions. In December 2018 the Dutch Supreme Court upheld a lower court ruling requiring the government to reduce greenhouse gas emissions by at least 25 per cent by 2020 compared to 1990 to meet its obligations under the European Convention on Human Rights. The case was brought by the NGO Urgenda on behalf of 886 Dutch citizens. The government is understood to be negotiating for the closure of at least one of the country’s three coal plants which include RWE’s 1600 MW Eemshaven Power Station and Onyx Power’s 800 MW Maasvlakte Power Station, both of which were commissioned in 2015. (Guardian, Argus, Urgenda)

Top News

Court cancels permit for Turkish plant: A Turkish court has ruled that the environmental impact assessment (EIA) for the proposed 200 MW Cırpılar lignite plant and associated mine was inadequate. A coalition of NGOs headed by the TEMA Foundation filed a legal challenge against the EIA in 2018 arguing that it should be ruled invalid due to inadequate consideration of the impacts of the project on human health and valuable agricultural land. The company backing the project, a subsidiary of the Tasyapı Grup, also proposed that the coal storage site for the proposed project be at the foot of the Ida Mountain, an area of high environmental significance. Local groups are hopeful the company will not revive the project. (Yesil Gazette [Turkish], Global Energy Monitor)

Executive of key Japanese bank rules out new coal plants: The CEO of the Japan Bank for International Cooperation (JBIC), Tadashi Maeda, told Diamond Online magazine that “we will no longer accept loan applications for coal-fired power generation projects.” Japanese banks are the second largest financers of new coal projects, resulting in increasing international criticism of  the government and JBIC for failing to end support for new coal projects. JBIC has also been singled out for criticism for its involvement in the proposed 1200 MW Vung Ang 2 project in Vietnam. Julien Vincent from Market Forces said to be taken seriously Maeda’s comments need to be incorporated into JBIC’s policy. (Straits Times, Eco-Business, Diamond Online [Japanese])

South African department accuses Eskom of distorting pollution data: A December 2019 compliance notice issued by the Department of Environment, Forestry and Fisheries (DEFF) against Eskom over pollution reveals the department accused the utility of a “gross misrepresentation of the facts” of pollution from the 600 MW Unit 5 at the Kendal coal plant. DEFF had sought the closure of two 600 MW units at the 4116 MW plant, including Unit 5, by January 30 but this has been suspended by the Minister at the request of Eskom. Eskom had claimed that after a four-month maintenance overhaul of units 1 and 2 they met compliance standards for particulate emissions of 100 milligrams per cubic metre (mg/m3). However, DEFF states that Eskom deliberately used the wrong methodology and that none of the six units at the plant meet the standard. (Moneyweb)

Coal India subsidiary fined US$20 million for mine violations: India’s National Green Tribunal has fined Jindal Power and a Coal India subsidiary 1.6 billion rupees (US$20.9 million) for breaches of environment and health standards at the Gare IV-2/3 coal mines in Chhattisgarh. Jindal owned and operated the mine between 2004 and 2015 before South Eastern Coalfields subsequently took the mine over. The order came after residents from the villages of Kosampalli and Sarasmal launched legal action seeking compensation and rehabilitation works to address the depletion of ground water and impacts on community health from air pollution caused by the mine. (People First Collective India)

Concern that Australian coal quality testing scandal runs far deeper: A previously unreported 2019 court case involved allegations that a 2 million tonne shipment of coal from the New Hope Corporation’s New Acland mine involved falsified certificates on the hardness of the product. Earlier this year, major laboratory services company ALS estimated that between 45 and 50 per cent of coal certificates issued after 2007 were changed without justification. Industry insiders attribute the falsification to a willingness to keep coal producers happy in order to retain their business. While the Queensland Resources Council, a coal industry lobby group, supports an independent investigation into the allegations, the Minerals Council of Australia, Peabody Energy, Whitehaven Coal and Glencore have declined to comment. (Australian Financial Review)

China approved six new coal projects in 2020: A Chinese business news service reports that six major new coal plants with a combined capacity of 9960 MW have been approved in the first quarter of 2020. Four of the projects are in Shanxi province, one in Guangdong province and another in Inner Mongolia. In a separate development, the State Development & Investment Corporation (SDIC), which two years ago announced it was moving away from coal power projects, has proposed two new coal plants. One SDIC subsidiary has proposed a new 1600 MW coal plant to replace an existing plant of the same capacity with another subsidiary proposing a new 1320 MW plant. The new project proposals are seen as further evidence that major companies and provinces aim to push ahead with new coal projects despite high levels of underutilisation. (Caixin, Bjx)


Australia: Court upholds Adani request to ban indigenous leaders from site of proposed Carmichael coal mine.

Australia: Whitehaven Coal fined A$120,000 (US$78,000) for dumping equipment classed as hazardous waste at the local tip.

India: Electricity demand slump keeps 26 coal and gas units in Gujurat, with a combined capacity of 5500 MW, offline.

New Zealand: Court orders Bathurst Resources to pay US$40 million (NZ$60m) for mine mothballed since 2016.

New Zealand: Court orders Bathurst Resources to pay US$40 million (NZ$60m) for mine mothballed since 2016.

US: Department of Energy allocates US$116 million for five carbon capture and storage demonstration projects.

Zimbabwe: RioZim subsidiary touts building 2100 MW Sengwa coal plant with Chinese company backing.

Companies + Markets

HSBC dumps new coal projects: In a major revision to its energy policy HSBC has ruled out financing new coal plants anywhere in the world. In April 2018, HSBC announced that its new energy policy excluded support for new coal plants except in three of the biggest growth markets in Asia: Bangladesh, Indonesia and Vietnam. The removal of the loophole was revealed in response to shareholder questions at the company’s annual general meeting. HSBC stated that since its 2018 policy it had not funded any new coal projects in the three exempt countries. In January, HSBC withdrew from its role as financial advisor for the 1980 MW Vinh Tan 3 coal power plant in Vietnam and will now be required to drop its support for the part-built 1200 MW Long Phu 1 project. (Eco-Business, HSBC [pdf])

German banks unveil coal policies: The major German financial services company, Deka Invest has announced that from May 1 it and Deka Bank will no longer invest in companies that earn over 40 per cent of their revenue from coal power or over 30 per cent from coal mining. A Deka spokesperson said “coal is not an energy source of the future.” In mid-February, Union Investment announced that it will divest from all coal mining companies that earn over five per cent of revenue and will exit from all coal investments by 2025. Union Investment’s previous policy had a revenue threshold of 30 per cent. The policies of the two companies will increase pressure on Deutsche Bank’s asset manager, DWS, and Allianz Global Investors to tighten their policies. (Handelsblatt [German], (Deka [German])

New York pension fund manager steps up divestment pressure on insurance companies: The New York City Comptroller, Scott M. Stringer, who oversees three major New York City public employees’ pension funds, has urged Berkshire Hathaway, AIG, and Liberty Mutual Insurance to immediately end “all business ties with the coal industry, including ceasing to underwrite any coal projects and divesting any holdings in companies that extract or distribute thermal coal.” Stringer pointed out that in 2017 the three companies held US$6.7 billion in coal investments. Stringer noted that while Liberty Mutual has committed to phasing out future coal investments it has not sold off current investments. (New York Comptroller)

Indonesian utility retracts comments on need to defer loan repayments: Zulkifli Zaini, the Chief Executive of the state-owned power utility PLN, has told parliament that Indonesian power demand has declined by 9.7 per cent leading it to downgrade its estimated revenue for 2020 revenue by 57 trillion rupiah ($US16.7 billion), a 14.6 per cent decline. Zaini also said that projects that had not received funding would be deferred and that the utility would seek to delay some debt payments due in 2020 until 2021. However, the following day PLN insisted that it would not seek to delay payments on commercial loans or bonds after the earlier comments were reported to have alarmed investors. (Reuters, Reuters)

Seaborne thermal coal market oversupplied by 40 million tonnes: The commodities trading company Noble Resources estimates that the seaborne thermal coal market is oversupplied by about 40 million tonnes and that the glut is likely to persist for the rest of 2020 due to the impact of the coronavirus crisis. India and China, which have substantial domestic stockpiles and supplies, have cut shipments while gas generation is increasingly competitive with coal in Taiwan, South Korea and Japan. Indonesian thermal coal export prices have hit record lows since the Argus price index started in 2008. However, coal exporters in South Africa, Australia, Indonesia, Russia and Colombia have not yet made any significant cuts to production. “I do not think the coal industry has seen the worst of it,” said Rodrigo Echeverri from Noble Resources. The metallurgical coal market has also been hit by the economic downturn with seaborne prices falling to four-year lows and an estimated 20 million tonnes of production cuts in Canada and the US. (Argus, Reuters, Argus)

US slowdown hits coal mining companies as stockpiles grow: The Rhodium Group, an economic research consultancy, estimates that coal accounted for just 16.4 per cent of US power generation between mid-March and mid-April, compared with 22.5 per cent for the same period in 2019. With coal generation dramatically down, stockpiles at plants are about double the size they were in 2019. Data from January indicates that coal stockpiles were growing rapidly before the coronavirus restrictions took effect. Analysts at S & P Global Platts disagree on how utilities will respond, with one suggesting that at the end of summer companies may run coal plants at a loss to reduce stockpiles. However, another Platts analyst thinks utilities may decide to cut their losses and just retire more coal plants. Production at US coal mines has fallen by 21 per cent over the three weeks to late April. (NPR, Platts, Bloomberg)

Mongolia cancels private funding plan for Tavan Tolgoi mine: The Mongolian Government has abandoned a plan to conduct an initial public offering to help finance the development of the Tavan Tolgoi metallurgical coal project. While the Tavan Tolgoi coalfield is estimated to have billions of tonnes of metallurgical coal, it lacks railway infrastructure to access the Chinese export market. The government-owned Erdenes-Tavan Tolgoi has aimed to finance the development of the rail connection and other infrastructure from a share float to enable up to 30 million tonnes of coal to be supplied to China by 2021. The government attributed the scrapping of the plan to “political distortions.” (Mining Weekly)

New Bloomberg New Energy Finance data reveals coal losing ground fast: Analysis of new renewables projects has revealed that in the second half of 2019 the levelised cost of electricity for onshore wind and utility-scale solar fell by 9 per cent and 4 per cent to US$44 per megawatt hour (MWh) and US$50/MWh respectively. Bloomberg New Energy Finance (BNEF) estimates that solar and wind are now the cheapest source of new generation in countries accounting for two-thirds of the world’s population and 85 per cent of global electricity generation. The decline in wind generation costs is attributed to the increased capacity of wind turbines. Solar costs have decreased due to increased capacity of utility-scale solar farms and the effect of auctions in driving cost reductions. However, BNEF’s chief economist, Seb Henbest, flagged that if the recent decline in the price of imported coal led to sustained low prices this could “help shield fossil fuel generation for a while from the cost onslaught from renewables.” (Bloomberg New Energy Finance)