Four astonishing signs of coal’s declining economic viability
Coal power stumbles on because, though it has completely lost its economic advantage, it still retains considerable social and political power, writes David Roberts in Vox.
Could coronavirus forever alter the fossil fuel era?
The profound economic fallout from the coronavirus crisis may have created a once-in-a-lifetime opportunity to fundamentally alter the energy landscape, writes Justin Guay in Medium.
COVID-19 another hit on already-reeling coal industry
Coal producers in the Powder River Basin in the US will struggle to survive the combined effects of the shift away from coal power and the coronavirus-induced recession, writes Greg Johnston in the Gillette News Record.
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Sumitomo announces suspension of loans for new coal plants
Sumitomo Mitsui Banking Corporation, one of the four largest Japanese backers of new coal plants, has announced “in principle” it will suspend new loans for coal power projects. In line with the Abe Government’s policy, the bank has previously supported ‘high efficiency’ coal plants, which Japanese manufacturers have been promoting as better technology than rival suppliers from China and South Korea. NGOs have estimated that Sumitomo, MUFG and Mizuho Bank have provided about 40 per cent of the total lending for coal plants by the world’s top 30 banks. (The Japan News)
Bangladesh coal plant developer wants to drop project after protest
Bangladesh’s Ministry of Power, Energy and Mineral Resources has proposed that Rural Power Company’s (RPCL) proposed 350 MW Gazaria coal plant be dropped from the country’s 2016 memorandum of understanding with the Chinese Government on power projects. RPCL told the government that it wanted to drop the coal plant because of public backlash against the plan. In 2016 RPCL entered into an agreement with PowerChina and Hubei Hongyuan Power Engineering to build the plant at a cost of US$433 million. However, by early 2019 RPCL indicated that it had gone cold on its coal plant plan because it was not feasible to barge coal to the site on the Meghna River. RCPL is not proposing the project as a gas plant. (Financial Express, Global Energy Monitor)
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Coronavirus impacts on coal industry spread: Major coal-producing countries and companies are paring back coal production and instituting policies that will affect coal mining sector. In Colombia, a 19-day lockdown until April 13 will curtail coal production and exports as workers return to their home towns. In Mozambique, Vale has flown out 250 Brazilian staff from its Moatize coal project. The Australian coal company Coronado Resources has shuttered four Appalachian mines while Consol has shut a mine in Pennsylvania for two weeks after two employees tested positive for the virus. In Queensland, interstate fly-in fly-out workers at remote mines have all but been banned with a limited exemption for those deemed “critical” for the operation. (Argus Media, AllAfrica.com, Argus Media, Queensland Government)
Under pressure, Barclays unveils new policy but with big coal loopholes: In an update to its climate policy, Barclays announced it would continue to finance thermal coal companies that generate up to 50 per cent of revenue until 2025, then reduce the threshold to 10 per cent by 2030. While excluding financing new thermal coal mines, it leaves open the option of financing existing mines, and will continue to provide corporate financing except where it is specified as being for new coal mines or plants. Barclays is the largest European bank financing fossil fuel projects. Europe Beyond Coal said Barclays’ policy was so weak that all of Europe’s major coal power utilities would continue to be eligible for support as would 211 coal plant developers responsible for 309,000 megawatts (MW) of new coal plant capacity. (Guardian, Europe Beyond Coal, Barclays[Pdf])
Myanmar police arrest 10 protesting against coal-fired cement plant: Myanmar police have arrested 10 villagers, five of them children, for their role in a May 2019 protest against a Chinese coal-fired cement plant in Mandalay region. The protest followed the construction of a road on villagers’ land without compensation and alarm over pollution from the expansion of the plant. On March 20, five other villagers were sentenced to five years in prison for their role in the protest. A sixth villager died while in custody awaiting trial. Thirty-three other villagers are wanted for arrest and have been declared fugitives. In December 2019 a local village administrator was sentenced to one year in prison with hard labour for “defaming the state”, a provision in Myanmar’s penal code previously used by the military regime against activists and journalists. Myanmar’s Myint Investment Group and China’s Anhui Conch Cement Company are joint venturers in the cement plant. (Radio Free Asia, Radio Free Asia, UN News)
South Africa doubles sulphur emission limits for coal plants: South Africa’s Department of Environmental Affairs has announced that from April 1 the sulphur dioxide emissions from combustion units would be weakened from the proposed 500 milligrams per cubic metre (mg/m³) to 1000 mg/m³. The new 1000 mg/m³ standard is 28 times higher than would be allowed in China and 10 times higher than permitted in India. The Minister for Environment, Barbara Creecy, said Sasol had committed to meet the revised standards by 2025 but that a submission from Eskom was “still awaited.” In 2010 the government set a sulphur dioxide emissions limit of 3500 mg/m³ to be met by April 1, 2015 with operators of coal boilers given a further five years to achieve the 500 mg/m³ standard. The largest sulphur dioxide emitters in South Africa are Eskom’s coal plants and Sasol’s coal-to-liquids operations. The Centre for Environmental Rights, which estimates the lax pollution standards will cost thousands of lives, has flagged that if Creecy fails to provide satisfactory reasons the Life After Coal Campaign will seek to have the High Court set the decision aside. (Bloomberg, Center for Environmental Rights, Minister for Environment)
Poland extends life of mine despite protests from villagers and Czech Republic: The Polish Ministry of Climate has approved the expansion of PGE’s Turow lignite despite objections from the Czech Republic and villagers. The expansion of the mine to within 150 metres of the border will result in extensive water drawdown potentially affecting tens of thousands of villagers. The ministry has granted PGE approval for the mine to continue for a further six years claiming that the adjoining 1305 MW Turow coal plant is “indispensable” to the country’s electricity needs. PGE is set to commission a new 450 MW unit at the plant by mid-2020. (Reuters)
NSW Government approves mine expansion under Sydney water catchment: The NSW Department of Planning has approved Peabody Energy’s plan for three new longwall underground panels at its Metropolitan mine, two of which extend under the Woronora water catchment which supplies drinking water to Sydney. The proposal has been widely opposed due to likely loss of water caused by subsidence, which can continue for up to 25 years after the removal of a coal seam. In December the department also approved a new longwall panel at South32's Dendrobium mine which will also be under part of Sydney’s water catchment. Both mines produce metallurgical coal for the domestic and export markets. (Sydney Morning Herald, Guardian)
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Cambodia: Parliament approves financial guarantees for investors in two new coal plants with a combined capacity of 965 MW.
Canada: Donkin mine in Nova Scotia, which opened in 2017, closes after repeated roof collapses.
China: Huaneng Shanyin Power Generation Company begins [in Chinese] assessment work on proposed 4000 MW coal plant at North Jinbei in Shanxi province.
Germany: Coal barge broke in half and sank while being loaded at Dillingen on the Saar River.
Taiwan: A former judge and his son receive suspended sentences for smuggling North Korean coal to Vietnam in breach of international sanctions.
UK: The 2000 MW Fiddler’s Ferry and the 1725 MW Aberthaw power stations have closed.
US: Coal and power utility members of the US Chamber of Commerce have declined to comment on lobby group’s opposition to the use of Defense Production Act to ensure coronavirus medical supplies.
US: Environmental Protection Agency suspends enforcement of environmental laws during coronavirus outbreak.
US: Kentucky, South Dakota and West Virginia passed new laws criminalising protests against fossil fuel projects.
Vietnam: The Ministry of Industry and Trade has proposed [Vietnamese] 45,000 MW of wind capacity be added to the country’s next power development plan to make up for the shortfall due to stalled coal plants.
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Moody’s expects more US coal mine closures: Moody's Investor Services estimates that within the next year or two the decline in US coal generation, “challenging capital market conditions” and increased concern about environmental and social policies “will likely push a significant amount of coal capacity into bankruptcies.” Moody’s states that before the coronavirus crisis it had estimated US coal production would decline to 550–600 million short tons (499–544 million tonnes) in 2020 but the pandemic was suppressing power demand and industrial markets. Moody’s warned that the coronavirus crisis and declining export markets add to the uncertainty about the future of the industry. Australian-headquartered Coronado Coal has announced it is closing its three mines in Virginia and West Virginia due to the coronavirus crisis. A report by the Institute for Energy Economics and Financial Analysis estimates US coal generation could collapse from 23.4 per cent of electricity in 2019 to single digits by 2025. (Platts, Argus Media, S & P Global Market Intelligence)
Japanese companies slash steel capacity: JFE and Nippon Steel, two of Japan’s largest steel producers, have announced plans to close plants amounting to about 20 per cent of the country’s steel mill capacity. JFE announced that by 2023 it will close its Keihin plant outside Tokyo, which can produce about four million tonnes of steel a year, representing about 13 per cent of the company’s steel capacity. In February Nippon Steel announced that it would close a steelworks near Hiroshima and a blast furnace at its Wakayama plant. These closures account for about 10 per cent of Nippon Steel’s capacity. With some analysts estimating the Japanese steel industry overcapacity running at about 30 per cent due to increasing Chinese production and the US–China trade war, more closures may follow. Japanese steel producers are entirely reliant on imported metallurgical coal; most originates from Australia, with smaller quantities from Canada and more recently Russia. (Nikkei Asian Review, JFE)
Indonesian coal miners reel from falling prices, coronavirus: Indonesia’s largest coal mining company, PT Bumi Resources, has recorded a 97 per cent fall in profits to US$6.84 million in 2019 due to the combined effect of a 13 per cent fall in the price of thermal coal and rising fuel costs. In 2019 Bumi Resources produced 87.7 million tonnes of coal and forecast 2020 production of 90 million tonnes, subject to the impact of the coronavirus crisis. The Indonesian mining sector, including coal companies, is bracing for a downturn in demand for thermal coal. In 2019 Indonesia exported an estimated 466 million tonnes of thermal coal in the seaborne market. (Jakarta Post, Mongabay)
Report argues government support needed to make hydrogen viable: A report by Bloomberg New Energy Finance argues that hydrogen from wind and solar power could substitute for 34 per cent of emissions from fossil-fuel-dependent sectors of the economy, such as steel and cement. The report argues the delivered cost of renewable hydrogen in China, India and Western Europe could fall to around $US2 per kilogram (kg) in 2030 and $US1/kg by 2050. The costs of electrolysers, used to separate water into hydrogen and oxygen, have fallen by 40 per cent in the last five years. The report argues that up to US$150 billion in government support will be required over the next decade to drive down the costs of hydrogen. The report finds that a carbon price of $US50 per tonne of carbon dioxide would be enough to ensure a switch of steelmaking from coal to clean hydrogen by 2050. (Bloomberg New Energy Finance)
Moody’s downgrades South Africa’s financial rating and outlook: Moody’s Investor Services has downgraded South Africa’s credit rating in part because its “unreliable electricity supply” is undermining business confidence and slowing economic growth. Moody’s estimates that while Eskom’s power supply will become more reliable “the restoration of full capacity will take some years to complete.” Moody’s also notes that the strategy to restructure Eskom “has been slow to emerge and has yet to prove its effectiveness.” For the first time in 25 years South Africa does not have an investment grade rating, which is likely to trigger capital outflows and increase borrowing costs. (BizNews, Moody’s [registration required], BizNews)
South Korea bails out coal plant manufacturer as demand falls: South Korea’s anti-pollution restrictions on coal generation are likely to result in thermal coal imports falling by 19.2 per cent in the first quarter of 2020. Ahead of the April 15 general election President Moon Jae-in’s Democratic Party proposing a Green New Deal and a shift to renewables. One of the losers from the domestic shift to renewables is South Korea’s Doosan Heavy Industries. The Korea Development Bank and the Export and Import Bank of Korea will provide 1 trillion won (US$817 million) in financial support to bail out the struggling company. Doosan’s CEO, Jung Yeonin, recently claimed the company had lost major orders due to South Korea’s cancellation of coal and nuclear projects. (Reuters, PV Magazine, Korea Herald, Yonhap News)
Indian utilities slash coal capacity, coal stockpiles grow: With Indian power demand falling by 31 per cent due in large part to India’s 21-day coronavirus shutdown, power utilities have resorted to shuttering coal plants. Of the 117,000 MW of thermal generation capacity, 41,037 MW was shut on March 27 due to “low demand/reserve shutdown”. Over the last 28 days commercial and industrial demand in Gujarat and Maharashtra, two of the more industrialised states, has fallen by 44 per cent and 30 per cent respectively. In response to low power demand, distribution utilities have cut the purchase power from the most expensive government-run coal plants. The central government has also allowed state distribution utilities to defer payment to power generators. Reduced coal demand has also resulted in coal buyers declaring force majeure on cargoes of imported coal. (Business Standard, Argus)
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