Eskom’s Medupi plant: a story of smoke and mirrors, debt and derangement
Eskom’s new plan to avoid the World Bank requirement to install pollution control equipment on the 4800 MW Medupi coal plant looks very much like the old deal, writes David Hallowes from groundWork in the Daily Maverick.
A damaging coal mine and power plant experts say India doesn’t need
Despite the economics of India’s power industry changing dramatically in the last few years, THDC India is pushing ahead with the construction of the damaging 1320 MW Khurja Super Thermal Power Plant and an associated mine 900 kilometres away, writes Tish Sanghera in IndiaSpend.
With new law, Indonesia gives miners more power and fewer obligations
Indonesia’s parliament has passed a controversial bill that effectively gives miners bigger concessions and longer contracts with fewer environmental obligations, writes Hans Nicholas Jong in Mongabay.
Proposed Polish 1000 MW coal plant scrapped
The Polish power utilities Enea and Energa have written off 1 billion zloty (US$240 million) on the part-built 1000 MW Ostroleka C coal-fired power project. The shift occurred after PKN Orlen, which controls 85 per cent of the voting shares in Energa, stated that it would only support the proposed plant if it ran on gas. It is unclear if the project will still proceed. In August 2019 the District Court in Poznan ruled in favour of ClientEarth, a shareholder in the company, that Enea’s resolution authorising the project was invalid. Subsequently, Orlen took over Energa and, in early 2020, the joint venture partners decided to suspend finance for the project. The cancellation of the coal project, which is about five per cent built, is also a setback for General Electric which had been appointed as one of the main construction contractors of the project. (Power Magazine, Client Earth, Orlen, Global Energy Monitor)
COVID-19 outbreaks at mines in Poland and the Czech Republic: Increased testing for coronavirus in the southern Polish coal region of Silesia has resulted in the confirmation of 3640 cases among the coal mining workforce. Coal miners account for over half the cases in the region. The major coal producer JSW confirmed on Twitter that 1648 of the cases are from its workforce. Across the border in the Czech Republic, OKD’s Darkov coal mine has been placed on a care-and-maintenance basis after a COVID-19 outbreak affecting its workforce. Public health officials reported 212 cases, mostly of mineworkers and their family members, were detected after 2400 people living near the mine were tested for coronavirus. (The First News, JSW [Tweet in Polish], Business Standard)
Slovenian prosecutors charge two companies over coal project: Slovenian prosecutors have added the names of two more individuals to the 10 already listed in criminal charges including money laundering over the 600 MW Sostanj 6 unit. The new lignite unit was commissioned in 2015. Prosecutors have also added the names of two companies to the case, reportedly including the French power company Alstom Power. The investigation into possible corruption and conflicts of interest first began in 2012 with a European Anti-Fraud Office inquiry. In October 2014, Slovenian police filed charges alleging electricity consumers had been defrauded of €284 million (US$309 million). (RTV Slovenija [Slovenian], CEE Bankwatch Network)
Finnish state-owned utility defends plan to sue Netherlands over coal closure plan: Uniper’s Chief Executive, Andreas Schierenbeck, has defended the utility’s push to sue the Netherlands Government over its plan to close the 1100 MW Maasvlakte 3 coal plant near Rotterdam by 2030 or convert it to run on another fuel. Schierenbeck told shareholders at the company’s virtual annual general meeting that the coal phase-out “in its current form is not appropriate.” Friends of the Earth argues that Uniper, which commissioned the plant in 2016, should carry the loss as they “knew it was a risky business to continue to bet on coal.” The Finnish Government-owned utility Fortum owns a 73.4 per cent stake in Uniper. (Climate Home News)
Indian utility fined for breaching pollution deadline: The Central Pollution Control Board will fine the Haryana Power Generation Cooperation Limited (HPGCL) 1.8 million rupees (US$23,780) per month for each of its 10 coal units that continue to operate in breach of pollution control standards first announced in December 2015. When the new standards for sulphur dioxide, oxides of nitrogen and mercury emissions were first announced the Ministry of Environment, Forest and Climate Change set the compliance deadline as December 2017. Despite the deadline being deferred after lobbying by utilities until December 2019, HPGCL has still not met it. HPGCL said it will appeal against the fine. (Hindustan Times)
India abandons coal washing as most plants to miss deadline for scrubbers: The Ministry of Environment, Forests and Climate Change has amended the Environment Protection Act to delete the requirement that any coal to be supplied to a customer over 500 kilometres away must be washed. The requirement to reduce the ash content of coal transported long distances was introduced in 2015. One of the justifications recently floated for the change was that new pollution control standards on power plants would reduce the need for coal washing. However, a new study by the Centre for Science and Environment finds that almost 70 per cent of the country’s coal plants will not comply with emission standards by the end of 2022. The compliance deadline for the new standards was first introduced in December 2015 with the initial compliance deadline set as December 2017, then extended to December 2019 and more recently many plants won a further extension until December 2022. (Business Standard, The Hindu, Centre for Science and Environment)
US coal company launches legal action to overturn mercury pollution limits: Westmoreland Mining has launched a legal challenge against the Environmental Protection Agency’s (EPA) Mercury and Air Toxics Standards (MATS) rule. In April the EPA Administrator, Andrew Wheeler, a former coal industry lobbyist, issued the final MATS rule but altered the cost-benefit analysis to state it would only result in a benefit of between US$4 million and US$6 million. Environmental groups warned at the time that the change to the cost-benefit analysis was aimed at opening the door to a legal challenge to the rule. Westmoreland Mining, which only emerged from bankruptcy protection in March 2019, operates six coal mines in the US, where demand for thermal coal is collapsing, and a further six mines in Canada. (The Hill)
Eskom bid to avoid pollution controls on Medupi hits legal hurdle: The South African Department of Environmental Affairs has stated that there is no legal process that would allow Eskom’s plan to avoid the installation of flue gas desulphurisation equipment on the six 800 MW units of its Medupi plant. Eskom originally agreed to install the equipment, which would cut deadly sulphur dioxide emissions, in return for a US$3.75 billion loan from the World Bank for the plant. (Fin24)
Australia: Coroner finds Anglo American’s “failure to keep adequate, accurate and up-to-date records” was a primary factor causing the death of an electrician in a May 2014 accident.
Australia: With falling demand and export prices, Peabody Energy will shut the Wambo underground mine in NSW for 59 days from 19 June.
Australia: Queensland Government extends industrial manslaughter laws to mining sector and launches an inquiry into 40 instances of unsafe gas levels in mines since mid-2019.
Canada: Alberta Government removes restrictions on open-cut coal mines on public lands at the foot of the Rockies.
Greece: Power demand fell in April by 13 per cent compared to 2019, with lignite contributing just 3.1 per cent.
US: Alliant Energy announces closure of 414 MW Edgewater Generation Station by the end of 2022.
Italy’s largest commercial bank unveils policy restricting coal financing: Italy's biggest commercial bank, Intesa Sanpaolo, will cease providing general purpose financing to OECD power utilities with coal plants accounting for more than 30 per cent of the capacity of their fleet. For utilities operating elsewhere in the world the threshold is 50 per cent of capacity. The bank’s policy also states that finance will not be provided for new thermal coal mines, mountain top mining projects, proposed coal power plants or for the acquisition of companies in the resources sector where the purchase would increase the volume of coal to over 50 per cent of production. Intesa Sanpaolo operates in 26 countries. (Argus, Intesa Sanpaolo [Pdf])
Moody’s downgrades rating of Adani’s Australian coal port: The ratings agency Moody’s has downgraded its outlook to stable for Adani Abbot Point Terminal (AAPT), an Adani subsidiary that operates a North Queensland coal port. The financial viability of the port is central to plans to develop the Carmichael mine. Moody’s notes that with the structural decline of thermal coal, which could be accelerated by COVID-19, there is a risk that companies that currently use the port “will not undertake sufficient investment to maintain their production over the medium to long term.” Moody’s notes that some coal exporters are contracting for shorter-term agreements, which could “challenge AAPT's ability to renew its take-or-pay contracts with these mines over time.” (Business Standard, Moody’s [registration required])
Fitch downgrades Polish utility: Financial analysts firm Fitch Ratings has downgraded the credit rating of Tauron, Poland’s second largest electricity generator, due to continued losses of its mining division and the economic downturn caused by restrictions imposed to counter COVID-19. Fitch Ratings also noted that commissioning of the 900 MW Jaworzno plant, in which Tauron has a half stake, has been delayed due to “damage to one of the boiler components while conducting the final tests in February 2020.” The firm rated the company’s move to buy five wind farms as a positive but noted that the coal power sector in Poland will face increasing challenges as capacity payments for old plants expire after 2026. The analysts also expect pressure for tighter emissions standards to grow and anticipates coal generators will face “more expensive financing” as a smaller pool of financial institutions are prepared to support coal companies. (Fitch Ratings)
Navajo coal company lays off workers: The Navajo Transitional Energy Company (NTEC), a company wholly owned by the Navajo Nation, has announced the axing of 101 jobs at its Antelope coal mine in Wyoming. In April NTEC retrenched 57 workers at the Antelope mine and 73 at its Spring Creek Mine in Montana. In 2019 NTEC bought three Powder River Basin coal mines, including the Antelope project, from the bankrupt Cloud Peak Energy. NTEC management controversially assumed that the Navajo Nation would go guarantor on an estimated US$400 million in rehabilitation liabilities but Navajo President Joseph Nez ruled this out. NTEC was first formed in 2013 to take over the Navajo Mine when BHP Billiton decided to exit the project. NTEC later opted to buy a seven per cent stake in the Four Corners Generating Station in New Mexico, which is solely supplied by the Navajo mine. However, the power plant is now slated for closure by 2031 at the latest. (Casper Star-Tribune)
Indonesia coal exports to drop due to fall in Indian imports: The consultancy IHS Markit estimates Indonesian coal exports could decline by 10 per cent in 2020 to 406 million tonnes this year, down from 451 million tonnes in 2019. A significant driver in the change is the decline in Indian coal imports to 149 million tonnes, a fall of 35 million tonnes compared to 2019. The fall in demand is likely to affect PT Adaro Energi, which exported 19 per cent of its first-quarter production to India. Another major coal exporter, the government-owned coal mining company, PT Bukit Asam, has also been affected by declining Indian demand, reporting a 19 per cent decline in profitability in the first quarter of 2020. (Jakarta Post)
German utilities pitch plan to keep coal plants open to 2038: Ahead of the parliamentary debate on Germany’s coal phase-out law a coalition of power utilities is lobbying to scrap the proposed 2033 end date for seven hard coal plants. Instead they are pushing for the creation of an “energy transition reserve” to allow the plants to operate until 2038 and be paid for by a levy on transmission fees. The utilities claim that allowing coal plants to stay in the grid longer and able to operate for a “few hundred hours” a year would reduce the need for new gas plants but concede it would add up to an extra one million tonnes of carbon dioxide emissions a year. At a public hearing on the proposed legislation, NGO groups warned that the government’s current bill would not have gathered sufficient support in the coal exit commission to be adopted. They also argued the viability of coal generation had deteriorated further so the proposed €4.3 billion (US$4.7 billion) in compensation to utilities will keep lignite generation online far longer than warranted. (Clean Energy Wire, Clean Energy Wire)
Green steel likely to hit high-cost exporters to Atlantic market first: The growing interest in ‘green steel’ is likely to hit high-cost metallurgical coal producers supplying the Atlantic market first, according to the resources analysis firm Wood Mackenzie. In the most optimistic scenario the consultancy argues the production of ‘green steel’ through substituting renewables-produced hydrogen for metallurgical coal in virgin iron production, along with a very high level of scrap recovery, could result in a 300 million tonne or 27 per cent fall in metallurgical coal demand by 2040. However, the consultancy argues that the cost of low-carbon hydrogen production will have to decrease dramatically before it can deliver substantial emissions reductions in the steel industry. (Wood Mackenzie)
Coal-Based Power Norms: Where Do We Stand?, Centre for Science and Environment, May 2020. (Pdf)
This 120-page report investigates the campaign by Indian power companies to obstruct and delay the implementation of new pollution control standards for coal power plants and finds about 70 per cent won’t meet even the December 2022 deadline.