October 14, 2021
Issue 390  |  View Past Issues

Editor's Note

The dominant story of the last week has been the energy crisis, especially in India and China, two countries with major domestic coal mining industries and power plant fleets experiencing blackouts as power generation fails to keep up with demand. The reasons in each case are complex but how they react to the current crisis is likely to have long-term implications for the prospects of limiting damage to the global climate. In the short term, both countries have responded to coal shortages by adopting measures to boost domestic production and, in China’s case, relax power price caps which led utilities to curtail unprofitable coal power generation.

How both countries will respond in the longer term is less clear. High seaborne coal prices will mean imported coal will continue to remain unattractive for India, which seeks cheap electricity. Plants reliant on imported coal can now only generate expensive power. So President Modi’s push to cut coal imports will remain. A former head of Coal India has explained how the current crisis reinforces the need to boost the role of renewables. This comes as Federal Bank has become the first Indian financial institution to rule out providing financial support for new coal mines and power plants or major expansions of either. In China, the medium- to longer-term response is less clear. Lauri Myllyvirta from the Centre for Research on Energy and Clean Air provides a good analysis of the key issues affecting the prospects for coal in China.

What the coal crisis in both countries illustrates is how supplies are vulnerable to more factors than popularised in the ‘reliable’ part of the coal industry’s sales pitch. In both China and India, supplies from some key coal-producing regions have been disrupted by major floods. In China, a crackdown on corruption in some key coal-producing regions added another shock to the system.

In contrast, the commissioning of a major solar project in Colorado will enable the Russian steel and mining giant Evraz to press ahead with the expansion of its steel mill. Previously the mill relied on power from the Comanche coal plant next door.

Bob Burton


The real reasons behind China’s energy crisis

Attempts to regulate low electricity prices – along with an over-reliance on coal generation, plant overcapacity and heavy-handed regulation – have all contributed to China’s current power sector crisis, writes Lauri Myllyvirta from the Centre for Research on Energy and Clean Air in Foreign Policy.

The Asian countries hit hardest by China’s overseas coal clampdown

China’s announcement that it will not support new overseas coal plants will most affect proposed projects in Vietnam, Indonesia, Pakistan, Bangladesh and Cambodia, writes Pei-Hua Yu in the South China Morning Post.

Big banks resist ending finance for coal exploration projects

Many of the 59 banks signed up to the Glasgow Financial Alliance for Net Zero launched by former Bank of England governor Mark Carney are resisting committing to ending financial support for coal and other fossil fuel projects, write [paywall] Owen Walker and Stephen Morris in the Financial Times.

Top News

Former head of Coal India says shortages show need to shift away from coal: Ms Zohra Chatterji, the former chair and managing director of government-owned Coal India, which produces about 80 per cent of India’s domestic coal production, said the current shortages crippling coal power plants was a “wake-up call for India”. Chatterji said the current shortages highlighted India’s over-dependence on coal generation and the need to expand renewable generation. Across India, state utilities have shut coal plants or curtailed generation due to coal shortages caused by reduced stockpiles, an increase in power demand and the impact of flooding on some mining operations. (The Correspondent, Guardian)

World Health Organization backs 2030 end for coal in OECD countries: Ahead of the COP26 climate conference in Glasgow the World Health Organization (WHO) has backed the need for a “complete phase-out of coal” by 2030 in OECD countries “at the very latest” and 2040 in non-OECD countries. The WHO called on the world’s leaders to “avert the impending health catastrophe by limiting global warming to 1.5°C” and warned in its Special Report on Climate Change and Health that “the burning of fossil fuels is killing us”. (World Health Organization)

Activist outs US coal company for using toxic foam on mine fire: Documents obtained by the Chicago Tribune have revealed Foresight Energy pumped 46,000 gallons (174,000 litres) of foam into part of its Sugar Camp underground mine in Illinois to extinguish a fire. An activist photographed foam emerging from the site and sent the images to state regulators. A lawyer for Foresight Energy told officials the foam was biodegradable but it was later discovered it was a foam containing PFAS, a chemical that is being phased out in Illinois and around the world because of health and environmental impacts. (Phys.org)

US coal company admits to environmental and health and safety offences: Signal Peak Energy, has agreed to pay a US$1 million fine as part of a proposed plea agreement over breaches to environmental and health and safety standards at its underground coal mine near Roundup, Montana. Court documents filed by the US Department of Justice alleged that in 2013 and in 2015 senior managers directed employees to pump mine waste, including wastewater, industrial chemicals and heavy-metal-contaminated soil, into abandoned sections of the mine without the approval of the Mine Health and Safety Administration and the Environmental Protection Agency. The department also alleged the company “habitually violated mandatory health and safety standards” and that this was done with the full knowledge of senior managers “including the president and CEO, the vice president of surface operations, the vice president of underground operations and the safety manager.” (US Department of Justice)

Indonesian Government to appeal air pollution court ruling: The Indonesian Government has filed an appeal against a Central Jakarta District Court ruling in September which ordered President Joko Widodo and the ministers of home affairs, health and environment to tighten national ambient air quality standards sufficient to protect human health and the environment. The court also ordered the Minister of Health to oversee efforts by the governors of Jakarta, Banten and West Java to cut pollution. A spokesperson for the government said the appeal would argue the court failed to consider a regulation that came into effect in February directing regional leaders to study the causes of air pollution in their areas and report to the national government. The Governor of Jakarta said he would not appeal the ruling. The Jakarta residents who brought the case said they hope the central government withdraws its appeal. (The Star)

NGO alarmed that Canadian province has approved the transfer of coal leases: The Canadian Parks and Wilderness Society (CPAWS) has expressed alarm that the mining regulator has approved the purchase by Cabin Ridge Project of 2000 hectares of coal exploration licences from Peace River Coal. The leases cover part of what are referred to Category 2 lands, areas with the highest environmental values which are currently being reviewed for possible exclusion from coal developments. In February 2021 the Alberta Government suspended coal exploration activity and ruled out the sale of new leases after a public backlash over opening previously protected areas in the Rocky Mountain foothills for coal mining. CPAWS spokesperson Katie Morrison said “they wouldn't be buying those lease applications if they didn't think they could do something with them down the road.” (CBC)

Survey reveals coal ash polluted water supplies in Puerto Rican communities: A survey by the Puerto Rico Chemists Association of tap water samples collected from five houses and a government well across different neighbourhoods detected manganese, cobalt, chrome, molybdenum, nickel, strontium and vanadium in the water. All the chemicals are contained in coal ash from energy retailer AES’s 510 megawatt (MW) coal plant in Guayama. While the association agreed with the company that the pollutants are within national safety limits, they argue studies showed that health impacts occur at low levels when the chemicals were combined. Puerto Rico is a territory of the US. (Miami Herald, Colegio de Quimicos de Puerto Rico [Spanish])

International Energy Agency outlines need to accelerate coal phase-out: In its latest World Energy Outlook, the International Energy Agency (IEA) notes coal generation provides only one-third of global electricity but is responsible for nearly three-quarters of power sector carbon dioxide emissions. In its Net Zero Emissions scenario the IEA estimates coal plant retirements will have to approach 100,000 MW a year to 2030, which is almost double the rate of retirements which have already been pledged by governments. The IEA estimates coal demand will decline by about 10 per cent by 2030 in line with announced government commitments but this would increase to a 55 per cent decline if governments implement measures to reach the target of net zero emissions by 2050. (International Energy Agency)


Australia: Federal Minister for Environment approves [Pdf] a 10-year expansion of GFG Aliiance’s Tahmoor Coal mine.

Mozambique: Despite only two potential buyers inspecting the Moatize coal mine, Vale hopes to sell the project by the end of the year.

Russia: Police arrest [Russian] critic of Kuzbass coal operations purportedly for possessing firearms but detained him without searching his house for weapons.

US: Part of the failed [Tweet] US$7.5 billion Kemper carbon capture and storage plant in Mississippi has been demolished.

US: Illinois utility retires 192 MW unit at the Dallman coal plant two years early due to high cost of unplanned repairs.

Zimbabwe: RioZim concedes its 2800 MW Sengwa project is struggling to gain finance as banks are taking “a conservative approach” to the project.

Companies + Markets

Indian bank rules out funding for new coal mines and power plants: In a first for an Indian financial institution the Federal Bank will not finance any new thermal coal mines or significant expansion of existing mines. It has also ruled out support for new coal power projects or the expansion of existing projects. The new policy follows the International Finance Corporation (IFC), the private sector arm of the World Bank, buying a 4.99 per cent stake in the bank for US$126 million in late July. As part of the deal the Federal Bank stated its support for the IFC’s greening equity approach to ensure clients cut their coal exposure to zero or near zero by 2030. The Centre for Financial Accountability and Recourse welcomed the policy shift but urged the removal of potential loopholes and clarification on how the bank will phase out current support for Indian coal projects by 2030. Current support for Indian coal projects includes loans to JSW Energy, MB Power and Adani Power. (Mercom India, Centre for Financial Accountability India)

China lifts power price cap, prioritises coal in bid to ease shortages: In a bid to boost short-term utilities generation, China’s State Council has approved allowing utilities to sell coal power up to 20 per cent above a regulated base price. For energy-intensive industries, the price can increase even higher. Faced with high domestic and imported coal prices, utilities with coal plants have curtailed generation rather than run at a loss catering for high demand. China’s shortage of coal has been compounded by widespread flooding in Shanxi province, a major coal-producing region, which has resulted in the suspension of operations at 60 of Shanxi province’s 682 coal mines. The mines are estimated to have produced about 30 per cent of China’s coal this year. (Reuters, Marketplace, Epoch Times)

US steel mill switches from coal power to solar: The commissioning of the 300 MW Bighorn Solar project near Pueblo in Colorado will provide 90 per cent of the electricity for the 140-years old Rocky Mountain Steel’s steel mill and electric arc furnace in the town. Evraz North America, a subsidiary of the Russian steel and mining company Evraz, has entered into a 20 year power purchase agreement with the utility Xcel Energy for power from the solar project which was built and is owned by Lightsource BP, a half-owned subsidiary of oil company BP. The switch from reliance on coal power to cheap power from the solar project underpins Evraz North America’s plan to expand the steel mill to manufacture longer length sections of rail tracks. Xcel Energy is gradually retiring units at the 1635 MW Comanche power station adjoining the steel mill. (Financial Times [paywall])

Ohio coal pant bailout could top US$1.8 billion by 2030: A briefing for the Ohio Manufacturers Association (OMA), an industry lobby group, estimates the subsidy for two coal plants could top US$1.8 billion by 2030. The subsidies for the 1086 MW Kyger Creek plant in Ohio and the 1304 MW Clifty Creek plant in Indiana, both of which were commissioned in 1955, were introduced as part of the scandal-tainted HB6 bill which was initially designed to subsidise two unprofitable FirstEnergy nuclear plants. While the nuclear subsidy has been repealed, the payments for the coal plants continue. The OMA argues the coal plants sell power at twice the market rate and provide no benefit to Ohioans; the benefit of the subsidy flows to AEP Ohio, Duke Energy Ohio, and AES Ohio, the shareholders in the Ohio Valley Electric Corporation which owns the plants. Attempts to repeal the coal subsidy have so far stalled in the Republican-dominated legislature. (Cleveland.com, Ohio Manufacturers Association [Pdf])

Bangladesh pitches to Japan for coal financing deal: The Government of Bangladesh is hoping to conclude an agreement with the Japan International Cooperation Agency (JICA) shortly for a US$1.05 billion loan for the 1200 MW Matarbari coal plant and an urban rail project. The coal plant, which is currently under construction, has been opposed by civil society groups. Earlier this year project sponsor, Coal Power Generation Company Bangladesh Limited, said the project was likely to experience a cost overrun of about US$2 billion and be completed by December 2026 instead of the commissioning date of June 2023. A further 1200 MW expansion of the project has also been mooted and has received initial support from JICA. (The Business Standard, Global Energy Monitor)

Report argues Vietnam risks energy insecurity with coal-based energy plan: A report by the Institute for Energy Economics and Financial Analysis (IEEFA) argues the Vietnamese Government’s latest draft of its 2021–2030 power development plan risks leaving the country facing an energy shortfall with the prospect that coal plants will not be financed. IEEFA analyst Thu Vu noted that between 2015 and 2021 of the 12 coal power projects which reached financial close 10 included backing by public finance institutions from Japan, South Korea and China. Vu estimated the retreat from support for coal plants by Japanese and South Korean export credit agencies and major banks puts 19,000 MW of proposed coal plants at risk. The World Bank has written to Prime Minister Pham Minh Chinh urging an end to new coal plants. US Special Presidential Envoy for Climate John Kerry also spoke with Chinh and offered support for renewable projects. (Institute for Energy Economics and Financial Analysis [Pdf], Cafef [Vietnamese],  VietnamPlus)

Report finds most coal mining and power utilities still planning to expand: The 2021 Global Coal Exit list published by Urgewald and 40 other NGOs estimates 503 of the 1030 companies that form the bulk of the global coal mining and power industry are still planning new mines, power plants or coal infrastructure. The report by the groups estimates the proposed projects represent up to 480 GW of new coal-fired power capacity and 1.8 billion tonnes of coal a year and 480,000 MW of new coal plant capacity. Of the companies on the list only 32 have announced coal exit dates consistent with achieving the goals of the Paris Agreement. However, they note that many major companies’ exit from coal amounts to selling assets to another company rather than closing the capacity and retiring them from production. (CoalExit.org)


World Energy Outlook 2021, International Energy Agency, October 2021. (Pdf)

This 386-page report outlines the gap between existing climate pledges and the pathway necessary to achieve liming the rise in global temperatures to 1.5 °C.