March 21, 2019
Issue 268  |  View Past Issues

Editor's Note

The economics of coal power in big coal-consuming countries continues to erode. Eskom’s woes continue, with unreliable coal units causing rolling blackouts across the country for much of the last week. The South African Government is now considering freezing spending on new coal units under construction at the vast Medupi and Kusile plants. The government also confronts a decision on whether to allow Eskom to bypass new pollution control standards. In Japan, Marubeni has announced the axing of the proposed 1300 megawatt (MW) Akita coal plant, though it has yet to persuade its joint venture partner the project is dead. A UK energy company, encouraged by a favourable ruling late last year in another case, has launched a challenge against the European Commission’s approval of Poland’s capacity market. In Austria, the insurance company Uniqa has announced it will not insure new coal mines or power plants.

In the US, Cloud Peak Energy, one of the largest thermal coal producers in the Power River Basin, is sliding towards bankruptcy. In its new coal policy BNP Paribas’s asset management arm bluntly stated that achieving the below 2°C climate target requires getting out of coal power fast.

Public opposition to coal projects continues to grow. In Pakistan, a march against coal plants attracted hundreds of fisherfolk. In India, the National Green Tribunal has cancelled the environmental clearance for an Adani subsidiary’s planned 1600 MW expansion of the Udupi coal plant. In Europe, a European Parliament motion calling for tougher action on air pollution has backed a 2030 end date for coal power.

Bob Burton


Asia's coal addiction puts chokehold on its air-polluted cities

A legal action against President Joko Widodo and others over air pollution from coal plants in Indonesia is symptomatic of increasing pressure for Southeast Asian nations to move away from coal, writes Michael Taylor in Reuters.

Why China overinvested in coal power

The decision to decentralise decision-making on new coal power plants from the central government to local governments in late 2014 drove a massive over-expansion, especially in provinces with large coal industries, write Mengjia Ren and others in VoxEU.


Marubeni looks to axe 1300 MW coal plant proposal in Japan

Marubeni Corporation has reportedly decided to abandon the proposed 1300 MW Akita coal plant but has yet to persuade its joint venture partner Kansai Electric Power Company to drop the project. The project, which was first proposed in March 2015, has still not completed environmental assessment. In late 2015, the project was criticised by Japan’s then environment minister, Tamayo Marukawa, who argued that Japan needed to set a goal to cut its greenhouse gas emissions by 35 per cent by 2030. In 2018, Marubeni announced that it would no longer develop new coal projects and would halve its 3000 MW of existing coal plants. The announcement is the latest proposed coal plant cancellation following Tokyo Gas’s cancellation of the 2000 MW Chiba coal plant in January and JFE Steel and Chugoku Electric Power’s cancellation of the 1070 MW Soga plant near Tokyo in December 2018. (Australian Financial Review, Guardian, CoalSwarm)

Top News

Eskom blackouts prompt reconsideration of further Medupi units: South Africa has experienced rolling blackouts over the last week due to breakdowns at both its old coal power stations and the new Kusile and Medupi plants. Compounding Eskom’s problem, cyclone damage has caused the collapse of a transmission line which supplies 900 MW of hydro capacity from Mozambique. While Eskom has a nominal capacity of 45,000 MW, the breakdowns have meant it could not supply more than 27,000 MW. Eskom Chairman Jabu Mabuza confirmed the utility is considering whether to halt further work on the yet-to-be-commissioned units at the 4764 MW Medupi and 4800 MW Kusile plants. Blackouts are considered likely to continue for at least another week and perhaps longer. (Financial Times, Business Day, Reuters)

European Parliament urges coal shut-down by 2030: The European Parliament has overwhelmingly backed a “clean air for all” resolution motion on reducing air pollution. Part of the resolution called on European Union countries to stop burning coal for energy by 2030 “at the latest.” The resolution noted that 62 per cent of mercury emissions in the European Union (EU) came from coal power plants while the energy sector was responsible for over half of the region’s sulphur dioxide emissions. The non-binding resolution won the support of 446 members of the European Parliament, with 146 opposed and 79 abstentions. (Meta, European Parliament)

Indian court fines Adani and cancels power plant expansion: The National Green Tribunal (NGT) has cancelled the environmental clearance given to Adani Power for the 1600 MW expansion of its existing 1200 MW Udupi coal plant in Karnataka. The NGT also ordered Adani’s subsidiary, Udupi Power Corporation, to pay 50 million rupees (US$728,000) for “interim environmental compensation” to the Central Pollution Control Board and 100,000 rupees (US$1460) to the petitioner in the case. The tribunal found that the April 2002 environmental clearance for the existing plant, which was built by Lanco and sold to Adani in July 2014, was illegal and issued under “questionable circumstances at the request of the project proponent.” The court also ordered establishment of a committee to investigate pollution violations by the plant including the management of fly ash, problems with the ash pond, and air and other emissions. It is expected Adani will appeal the decision to the Supreme Court. (The News Minute)

Hundreds protest against Pakistan’s proposed coal plants: Hundreds of fisherpeople marched in the streets of Karachi in protest against the social and environmental impacts of proposed coal plants. The Chairman of the Pakistan FisherFolk Forum, Muhammad Ali Shah, warned that the increasing volume of imported coal was causing pollution along transport corridors. He called for an end to the use of public finance for new coal projects and the need to mobilise finance for renewable generation. Based on data from the January 2019 Global Coal Plant Tracker, Pakistan has the twelfth-largest number of new coal plants in the world, with 3300 MW of plants under construction and a further 6600 MW that have been permitted. (Daily Times, Global Coal Plant Tracker)

Chinese state-owned investment company exits coal: China’s state-owned State Development and Investment Corp (SDIC), has announced it will no longer invest in coal power plants. SDIC chairman Wang Huisheng told Chinese journalists that “we have totally quit the coal business and will no longer invest in thermal power plants in China.” In 2016, SDIC announced that it would exit coal by 2021 but completed the divestment three years early. The Institute of Energy Economics and Financial Analysis noted that SDIC was the first major Chinese company to divest from coal. Some analysts argue that SDIC, which has US$203 billion in assets under management, has moved its coal assets to Guoyuan, another state-owned company. (Australian Financial Review [paywall])

New report estimates Eskom’s pollution standards delays could kill 16,000: Greenpeace estimates that if Eskom’s application for a deferral of compliance with minimum emission standards on 16 of its 19 power plants is granted, pollution could result in an estimated 16,000 premature deaths. Greenpeace estimates that pollution from Eskom’s coal plants causes an estimated 2000 premature deaths a year. A review of pollution data from the last year has confirmed that Mpumalanga Province is the world’s worst hotspot for nitrogen oxides pollution from power plants and the world’s third-worst region for sulphur dioxide pollution. (Greenpeace, Greenpeace)

Montana governor vetoes legal fund for coal export challenges: Republican Wyoming Governor Mark Gordon has vetoed a bill which would have authorised the legislature to separately pursue legal action against the State of Washington over its refusal to allow new coal export ports to be established. Wyoming, Kansas, Montana, Nebraska, South Dakota and Utah have already filed friend-of-the-court briefs in support of a legal challenge by Lighthouse Resources against Washington State’s decision to refuse a key water permit for the US$680 million Longview export coal project on the Columbia River. Six states, including California and Oregon, have filed briefs in support of Washington State. Gordon supports the current challenge to the project but objected to launching a separate legal action. (Associated Press)

“Whether we have any chance of restricting [a temperature rise] to below 2°C really depends on how quickly we get out of coal,”

said Mark Lewis, the head of climate change research at BNP Paribas Asset Management.


Australia: Aurizon is suing five environmentalists and seeking A$375,000 (US$266,000) in compensation for coal railway protests.

Australia: Whitehaven Coal fined A$38,500 (US$27,220) over nitrogen oxides cloud after mine blast.

Australia: Two years after the closure of the 1600 MW Hazelwood plant, unemployment in the Latrobe Valley has fallen from eight per cent to 5.7 per cent.

Greece: Public Power Corporation reveals it has received six expressions of interest in sale of lignite plants as environmentalists step up pressure to block coal subsidies.

India: Court dismisses charges against Bajrang Ispat and two company officers over the 2006 allocation of the Dumri coal block in Jharkhand.

South Africa: Judgement reserved on legal challenge by coal transporters against independent power projects after shortened hearing.

Sri Lanka: Another breakdown at the Chinese-built Norochcholai coal plant triggers blackout.

UK: Cumbria Council unanimously approves new underground metallurgical coal mine.

US: Former Massey Energy CEO, Don Blankenship, has launched a US$12 billion lawsuit against Associated Press and others alleging defamatory reporting during his 2018 campaign to win a seat in the US Senate.

US: Judge rejects Rio Tinto bid to dismiss Securities and Exchange Commission charges over alleged fraud on overvalued Mozambique coal project.

Companies + Markets

Austrian insurance company backs away from new coal: The Uniqa Group, Austria’s largest insurer which is a major player in the insurance markets in Central and Eastern Europe, will no longer insure any new “coal related customer” or new coal construction projects such as mines and power plants. Uniqa announced that in 2025 it will decide on whether to renew existing coal-related contracts, a provision Unfriend Coal flagged needs to be clarified to align with a European coal phase-out by 2030. Uniqa’s exit from new coal mine and power insurance leaves Talanx Group subsidiaries Warta and Hannover Re as the only non-Polish insurers that could support the 7000 MW of new coal plants proposed. (Unfriend Coal, Uniqa)

BNP Paribas’s investment arm cuts thermal coal: BNP Paribas Asset Management (BNPP AM), which has $452.6 billion of financial investments under management, has announced that from January 1, 2020 it will not invest in companies that get more than 10 per cent of their revenue from thermal coal mining and/or are responsible for one per cent of global thermal coal production. Under the policy BNPP AM will also exclude from investment power generators that have carbon intensity over the 2017 global average of 491 grams per kilowatt hour. Subsequently BNPP AM will shift the threshold lower to align with the International Energy Agency’s Sustainable Development Scenario which the agency equates to the Paris Agreement targets. It is estimated that the new policy will result in the company selling about €1bn (US$1.1 billion) of stocks. The policy allows for companies to gain exemptions if they submit detailed decarbonisation plans, and exempts metallurgical coal projects from its scope. (Financial Times, Reuters, BNP Paribas Asset Management)

European Commission approval of Polish capacity market faces challenge: The UK-based Tempus Energy has filed a challenge against the European Commission’s (EC) February 2018 approval of Poland’s capacity market. Tempus argues that the flawed design of the capacity market effectively offers a 15-year subsidy for coal plants but prevents demand-side response providers from being able to effectively compete in the capacity auctions. Tempus is seeking a ruling from the EU’s General Court to set aside the EC’s decision and require it to open an investigation into other options for ensuring sufficient capacity in a cleaner and cheaper way. In November 2018, the EU General Court ruled in favour of Tempus Energy in a challenge against the design of the UK capacity market. In February 2019, the EC began an investigation into the UK capacity market. (Reuters, Tempus Energy, S & P Global)

African Development Bank boosts renewable funding as coal alternative: The African Development Bank (AfDB) will allocate US$25 billion over 2020–2025 for climate finance, double its previous commitment. The AfDB announced that the Sustainable Energy Fund for Africa will provide concessional finance and technical assistance for ‘green baseload’ renewable generation as an alternative to the expansion of coal generation. A range of international donors including Canada, Denmark, Germany, Norway, Italy, the UK and USAID have indicated their support for the initiative. Data from the January 2019 Global Coal Plant Tracker indicates that 43,110 MW of new coal plants have been approved across Africa and the Middle East with a further 10,940 MW under construction. (African Development Bank)

Report finds significant benefits of German coal closures: A new report by the German Institute for Economic Research and others argues that Germany will benefit from the phasing out of domestic coal power. They argue that an orderly retirement schedule can allow regions to adapt, with many of the 26,500 jobs lost in lignite and hard coal plants able to be accommodated though retirement support for affected workers. The report notes that coal plant retirements may also reduce grid management costs and ease transmission grid congestion. The report argues that new renewables capacity will be supplemented by demand management, additional storage capacity and increased deployment of efficiency technologies. Aside from reduced health costs, a coal plant phase-out would also reduce the relocation of residents from villages to cater for mine expansions. (Clean Energy Wire, German Institute for Economic Research)

Major US thermal coal producer slides towards bankruptcy: Financial statements filed by Cloud Peak Energy, which operates the Antelope Mine and Cordero Rojo Mine in Wyoming and the Spring Creek Mine in Montana, revealed the company lost US$718 million in 2018 and warned conditions are set to worsen in 2019. Cloud Peak Energy produces only thermal coal. The company warned of higher costs, declining demand, production problems at one of its mines and revealed that it has missed making a US$1.8 million interest payment which was due on March 15. A further US$17.4 million interest payment is due on May 1. Analysts argue the company’s deteriorating markets and finances indicate that it is likely to be forced to file for Chapter 11 bankruptcy protection to allow the company’s debt to be restructured, as Peabody Energy and Arch Coal did in 2016. (Caspar Star-Tribune, Bloomberg, Cloud Peak Energy)

Trump administration hand balls coal bailout to states: US Secretary of Energy, Rick Perry, has conceded that while the Trump administration is still broadly supportive of bailing out failing coal and nuclear plants, it is struggling to “find some solutions that we can all, or at least the majority of us, can get behind.” Analysts believe that any plan faces significant legal hurdles and difficulties in determining which plants would qualify and how bailout costs would be funded. State governments report being told by Department of Energy officials that any bailouts would have to be initiated at a state level. Illinois, New York, New Jersey and Pennsylvania have pursued bailouts for nuclear generators. However, so far only Wyoming has looked to support coal plants by requiring utilities to try to sell loss-making plants rather than retiring them. (Platts, Utility Dive)


Phasing out coal in the German energy sector, German Institute for Economic Research, the Ecologic Institute and the Wuppertal Institute, February 2019. (Pdf)

This 124-page report provides a detailed overview of the German coal sector and outlines how coal power can be successfully phased out.

Powder River Basin coal industry is in long-term decline, Institute for Energy Economics and Financial Analysis, March 2019. (Pdf) (The media release is here.)

This 41-page report argues that coal production from the large open-cut thermal coal mines in the Powder River Basin, which spans Montana and Wyoming, is in long-term decline. Just over 40 per cent of US thermal coal production comes from the Powder River Basin.