October 17, 2019
Issue 295  |  View Past Issues

Editor's Note

Faced with an ongoing financial crisis gripping debt-laden utility Eskom, the South African Government faced the choice between endorsing a new integrated electricity resource plan based on least-cost power from renewables or a mix that shoe-horned some more expensive coal and nuclear plants into the plan. Cabinet, backed by some powerful unions, has opted for the latter.

The choice comes at a time when Eskom has suspended support for a forensic investigation into suspected corruption associated with the construction of the new Medupi and Kusile coal plants, continues to routinely breach pollution standards at its plants and is appealing against the decision of the energy regulator to limit power price increases. President Cyril Ramaphosa has also indicated he would only support the sale of older coal plants as a way of extending their life, raising doubts about a proposed plan to retire Eskom’s debt by selling the plants to a company financed by climate change mitigation funding which would retire the old plants to make way for new renewables capacity. Meanwhile, two proposed coal power projects stagger on even though they have lost key supporters.

In India, a new study has confirmed that since 2010 air pollution has slashed the productivity of the country’s wheat crop by about 30 per cent. In Poland, the pro-coal government has been narrowly re-elected but lost its majority in the Senate and dropped a plan to strip local authorities of a role in reviewing proposals for new coal mines.

Bob Burton


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South Africa’s new power plan risks more blackouts

South Africa is sleepwalking into further periods of power cuts after the government endorsed a new electricity plan which punts on new nuclear and coal plants as part of a misguided political strategy that will backfire, writes Anton Eberhard in the Daily Maverick.

Eskom's date for decommissioning coal-fired stations must consider people's health

The South African Government is more than three months late in responding to a legal challenge against Eskom’s continued failure to comply with new pollution standards, writes Robyn Hugo from the Center for Environmental Rights in the Mail & Guardian.

Two South African power plant zombies just won’t die

Two proposed coal plants in South Africa — the 557 megawatt (MW) Thabametsi and 300 MW Khanyisa plants — are zombie projects from a bygone era that just won’t die, writes Kevin Davie in the Mail & Guardian.

Top News

Eskom ends corruption investigation into new coal plants: Eskom has suspended a special investigation into potential corruption associated with the construction of the new Kusile and Medupi coal plants. An Eskom spokesperson confirmed that the suspension of an investigation by the legal firm Bowmans was “a result of a lack of funds.” Bowmans stated that it had been requested to assist the Directorate for Priority Crime Investigation and the Special Investigating Unit as they lacked the technical and other capacity for the investigation. (My BroadBand)

Polish Government narrowly re-elected but loses Senate as coal power faces headwinds: The pro-coal Polish Government led by Jarosław Kaczynski from the Law and Justice party has been narrowly re-elected in its own right, winning 235 seats in the 460-seat lower house. However, the government lost control of the 100-seat Senate with opposition groups claiming 51 seats. After the election a committee of the existing parliament abandoned a plan to push through legislation that would allow the national government to develop coal mines without the approval of local authorities. While coal power dominates Polish electricity generation, increasing power imports of cheaper and cleaner generation from Germany and Sweden are undercutting domestic generation. In the first half of 2019, PGE, the country’s largest power utility, reported a 12 per cent and 19 per cent decline in lignite and hard coal generation respectively. (Guardian, Reuters)

Decision delayed on European bank exits from fossil fuels funding: European Union finance ministers have delayed making a decision on the proposal that the European Investment Bank (EIB) cease support for oil, coal and gas projects by the end of 2020. Germany, Italy, Poland and Latvia are opposing the proposal and reportedly want provisions to support gas projects as part of a transition away from coal and nuclear capacity. Decision on the proposal to end EIB’s support for fossil fuel projects and ramp up support for clean energy has been delayed until the November board meeting. (Reuters, Guardian)

Research reveals air pollution cuts India’s wheat yield by 30 per cent: A paper in the journal Outlook on Agriculture estimates that since 2010 air pollution in India has reduced the country’s wheat crop by about 40 million tonnes a year, a 30 per cent reduction. In 2018–19 India produced about 100 million tonnes of wheat. The study estimated increased ozone levels caused about two-thirds of the lost productivity and reduced solar radiation from aerosols caused the other third. Ozone is mainly formed by nitrogen oxide emissions from burning fossil fuels reacting with sunlight. Tony Fischer, the author of the study, estimates that the wheat yield loss “far exceeds” reductions due to climate change. He argues reductions in pollution from crop burning and other sources including coal power plants would benefit wheat producers and the broader agricultural sector as well as improving public health. (Devex, International Food Policy Research Institute, Outlook on Agriculture)

Sample letters from US coal lobby group used by regulators: A consultant with the American Coalition for Clean Coal Electricity (ACCCE), a pro-coal lobby group, succeeded in getting public service commissioners in Alabama, Kentucky, Montana, Tennessee, West Virginia and Wyoming to write to the Federal Energy Regulatory Commission requesting it quickly decide whether coal plants should be subsidised to remain online. Public records obtained by the Energy and Policy Institute reveal that the letters from the six public service commissioners were wholly or largely modelled on a sample letter supplied by ACCCE’s consultant, Jon McKinney. McKinney, who is a former Chairman of the West Virginia Public Service Commission, told Bloomberg he “didn’t do anything out of the ordinary.” ACCCE represents coal mining companies such as Peabody Energy, Drummond and Murray Energy and power generators including American Electric Power and Southern Company. (Bloomberg, Energy and Policy Institute)


Australia: NSW Department of Planning recommends 5 million tonne expansion of Eraring Power Station's 35 million tonne coal-ash dam.

Australia: WaterNSW argues South32’s proposed Dendrobium mine expansion would cause the loss of 3.3 billion litres of water per year from Sydney’s water supply and could harm 26 endangered coastal upland swamps.

Bangladesh: Arrest warrants issued against seven former mine managing directors and 16 others over alleged theft of coal from Barapukuria coal mine.

Colombia: Failed assassination attempt on Ricardo Rojas, a union leader who works at Drummond Coal’s El Descanso mine.

Egypt: Prime Minister Madbouly discussed boosting “clean coal technology” with US Secretary of Energy Rick Perry.

Germany: NGOs warn a delay until November in legislating for the coal phase-out will make it impossible to complete the tendering and decommissioning of 15,000 MW of coal plants by 2021.

Mongolia: The completion of the feasibility study on Aspire Mining’s Oovot metallurgical coal mine has been delayed until May 2020.

Myanmar: Villagers blame coal-powered military-owned cement plant for pollution of water supply.

Pakistan: Opponents of new coal plants undertook a one-week long  march from Karachi to Hyderabad.

US: Bankruptcy court approves sale of three Cloud Peak Energy mines to Navajo Nation company but the tribe would accept hundreds of millions in rehabilitation liabilities.

Vietnam: A coalition of NGOs has urged DBS Bank not to fund the proposed 1200 MW Vung Ang 2 power station.

Companies + Markets

South African President backs away from sale of plants: South African President Cyril Ramaphosa told a meeting of provincial leaders that “we are not in the business of selling power stations” and emphatically ruled out the sale of the new Medupi and Kusile plants. Ramaphosa also said he would only be open to selling off old power stations if a buyer could keep them running and “breathe new life into them.” His comments raise doubts about the proposal by Finance Minister Tito Mboweni to sell the coal plants to a new company that would use climate mitigation funding to reduce borrowing costs, relieve Eskom of its debt and progressively decommission old plants to make way for renewables capacity. In a separate development, Eskom has lodged a legal challenge against the decision of National Energy Regulator to only approve tariff increases of 9.4 per cent, 8.1 per cent and 5.2 per cent over the next three years. The approved increases are far lower than Eskom sought, with the utility claiming it would create a revenue shortfall of about 100 billion rand (US$6.7 billion dollars). (Fin24, EWN)

NGOs warn that Lao coal power deal comes at a high cost: Environmental groups have warned that Cambodia is at risk of paying far more for power imported from proposed coal plants in Laos than if it developed domestic renewable capacity. The Director General of Cambodia’s Department of Energy, Victor Jona, defended the decision of the state-owned utility Electricite du Cambodge, which recently signed a 30-year power purchase agreement for coal power from two proposed coal plants in Laos. The two plants have a combined capacity of 2400 MW. Jona said Cambodia was offered power at 7.7 US cents per kilowatt-hour compared to 10 US cents per kilowatt-hour from Vietnam and Thailand. However, the Australian NGO Market Forces argues that a solar power tender in Cambodia yielded a price of 3.877 US cents per kilowatt-hour from a 60 MW solar power park and that renewables were already cheaper than the economic and social costs of coal power. (Phnom Penh Post)

Green hydrogen-fuelled steel production a decade or more away, analysts warn: While the prospect of ‘green steel’ using hydrogen instead of metallurgical coal has gained much attention recently, some analysts argue the shift is likely to be one or more decades away. ArcelorMittal, the world’s largest steelmaker, which is building a €65 million (US$72 million) demonstration plant in Germany, estimates steel produced with clean hydrogen would currently be between 60 and 90 per cent more expensive than conventionally produced steel. The main barrier is that hydrogen produced with renewable energy currently costs about US$5 per kilogram but would need to fall to US$2 per kilogram to become competitive without subsidies. (Financial Times)

After Indian coal auction flounders, regulator wants rules relaxed: Only 12 of 42 blocks put out for tender or direct allocation by India’s Ministry of Coal attracted sufficient interest to finalise the sale of the blocks, according to an anonymous ministry official. Currently, the Ministry of Coal requires a minimum of three bidders for each coal block to complete auctioning the blocks. Of the 27 blocks initially put out for tender, just six attracted sufficient bidders to complete the auction. A further six blocks out of 15 open for direct allocation attracted interest from government-owned entities. With sufficient interest on just 12 blocks, the Ministry of Coal has proposed the requirement for a minimum of three bidders for each coal block be abandoned so it can complete auctioning all 42 coal blocks put up for bids. (The Hindu, The Hindu)

Adani lobby group rejects Indian coal benchmark price proposal: An Indian Government panel has proposed establishing a coal price index linked to global prices such as the Indonesian and Australian benchmark prices. The move would end the role of government-owned Coal India in setting the price of domestically produced coal and, in a bid to make foreign investment in Indian coal mining blocks more attractive, increase the sale price of domestic coal. However, the Federation of Indian Mineral Industries (FIMI), which includes Adani Enterprises as a member, opposes the proposal arguing that the “Indian coal market has not matured enough to be linked with such indexes”. However, FIMI supports the establishment of an index for coking coal, which is almost entirely imported. (Reuters)

Russian bank warns domestic coal power producers are vulnerable to divestment: The Russian bank VTB Capital has flagged that coal-reliant domestic power generators are already “uninvestable” by European funds which require divestment from companies that earn between 10 and 50 per cent of their revenue from coal activities. VTB Capital estimates that subsidiaries of the government-owned utility Gazprom, such as OGK2 and Unipro, earned over one-third of total revenue from coal activities while InterRao, which is owned by Rosneft and other state companies, earns one-fifth of its cash from coal operations. Gazprom attempts to sell its loss-making coal plants have been blocked by the Russian Government. A reduced pool of international investors is likely to undercut the company’s share prices in the medium to longer term. (The Moscow Times)