October 24, 2019
Issue 296  |  View Past Issues

Editor's Note

A study estimating that the lifespan of all of the world’s coal plants would need to be restricted to just 20 years to meet the Paris Agreement goal of limiting global heating to an increase of 1.5 degrees powerfully puts the problem of coal in perspective. If more plants are built, the average lifespan would need to be even shorter. There are some hopeful signs. New coal plant construction in Southeast Asia has slowed dramatically since 2016. AXIS Capital, a US insurance company, has released a policy outlining restrictions on coal and other fossil fuel projects.

A new International Energy Agency (IEA) report estimates that the rapid growth in renewables could overtake coal power in five years. The plunging prices of renewables are also spurring optimism that green hydrogen could challenge the role of metallurgical coal in steel production within a decade. In Brazil, the right-wing government led by President Jair Bolsonaro may have opened the door for coal generation companies to bid for renewable power contracts, but they failed dismally. The decline of coal in Europe and the Mediterranean is having knock-on effects on coal exporters in Colombia and the US. The one-third fall in the price of thermal coal in the seaborne market is putting financial pressure on some major Indonesian coal producers.

Despite the great strides of renewables, the South African Government wants to press ahead with further new coal plants. China-watchers are also increasingly nervous about the recent pro-coal pronouncements of Premier Li Keqiang as drafting work gets underway on the country’s next Five Year Plan.

Bob Burton


Renewables could match coal power within 5 years, IEA reveals

Renewable sources of electricity are set for rapid growth over the next five years, which in the IEA’s most optimistic scenario could see them match the output of the world’s coal-fired power stations for the first time ever, writes Simon Evans in CarbonBrief.

What’s wrong with South Africa’s new energy blueprint?

South Africa’s new electricity plant invokes the lack of a just transition plan as the excuse for limiting new renewable energy capacity while proposing new coal plants, write Jesse Burton, Harro von Blottnitz, Jules Schers and Andrew Marquard from the University of Cape Town in Business Day.

A Myanmar coal-fired cement plant with a long and controversial history

A controversial Chinese-owned cement plant with two 60 megawatt (MW) units is not only polluting villagers’ land, air and water but is now expanding and threatening to force some off their land without compensation, writes Zin Mar Win in Radio Free Asia.


US insurer AXIS Capital to restrict insurance for coal

The decision by US the insurance company AXIS Capital to restrict insurance for both coal and tar sand projects and companies has been welcomed by a coalition of civil society groups. In its policy, AXIS Capital states that from January 1, 2020 it will not provide new insurance or a class of reinsurance for new thermal coal mines, oil sands projects or the infrastructure for those projects. The company also announced the policy will also apply to companies that generate 30 per cent or more revenue from thermal coal mining or thermal power and will exclude these companies from new investments. However, the policy includes a loophole that existing insurance policies will “be considered on a case by case basis” until January 1, 2023 with possible exceptions in countries “where sufficient access to alternative energy sources is not available” until January 1, 2025. (Insure Our Future, AXIS Capital)

Top News

New coal plant construction in SE Asia stalls: The commencement of construction of new coal plants in Southeast Asia has plummeted since 2016 with work on only 1500 MW of new capacity beginning in the first half of 2019. New data from Global Energy Monitor indicates that all new plant starts in the first half of 2019 were in Indonesia. New plant construction in the region peaked at 12,920 MW in 2016 and declined to 2744 MW in 2018. Using the same dataset the Swiss bank UBS estimates that, depending on China’s policy on new coal plant capacity, peak global coal plant capacity could be reached in 2024. (Bloomberg, Global Energy Monitor, Montel News)

Coal plant life must be cut to reach Paris Agreement goal, study finds: A study published in Nature Communications has found that to meet the Paris Agreement goal of limiting global heating to an increase of 1.5 degrees the life of the existing fleet of coal plants would need to be cut to 20 years or, in the scenario of limiting the temperature increase to well below a 2 degree increase, to 35 years. The paper estimates that if all the proposed coal plants were built, plant lives would have to be further reduced by to 10 years, or five years if the projects currently under construction are completed. (Nature Communications)

Rebuff for BHP as shareholders protest lobby groups’ climate policy obstruction: A shareholder resolution calling on BHP to resign its membership of any industry associations that since January 2018 had advocated climate policies which were “inconsistent” with the Paris climate change agreement won 22 per cent of the vote at the company’s London annual general meeting. The Australasian Centre for Corporate Responsibility, which moved the resolution, argued BHP should resign from the Minerals Council of Australia, Coal 21 and other industry groups that had promoted policies inconsistent with the goals of the Paris Agreement. InfluenceMap, a UK think tank, identified the Minerals Council of Australia as one of the world’s top ten most obstructive lobby groups on climate policy. The resolution will also be put to BHP’s Australian shareholders at its second annual general meeting in Sydney on November 7. (Guardian)

Chinese Premier promotes further coal development: In his biennial speech to the National Energy Commission, Chinese Premier Li Keqiang signalled his support for further development of coal power and coal bed methane extraction. “Given our country's bounty of coal resources... [we should] promote the safe, green extraction of coal and development of clean and efficient coal,” he said in his October 11 speech. Keqiang restated his support for the further development of renewable generation but this time omitted the suggestion that it should “accelerate.” The speech comes as China's state planners are preparing the next Five Year Plan which guides the country’s energy strategy. Domestic coal companies and power generators are promoting a further major expansion of coal capacity. (China Dialogue, Gxfin [Chinese])

South African plan relies on optimistic assumptions to shoe-horn coal into plan: The South African Government has released its new Integrated Resource Plan for the electricity sector for 2019–2030, endorsing two new 750 MW coal plants to be commissioned in 2023 and 2027. The inclusion of new coal capacity beyond the yet-to-be-completed units at the Kusile plant has been condemned by the Life After Coal campaign. Analysts have also warned that the provision for both new coal and possible new nuclear plants is based on unrealistic assumptions about economic and electricity-demand growth. Eskom has also reinstated load shedding over the last week after a seven-kilometre-long coal conveyor belt broke, forcing two generating units at the Medupi plant with a combined capacity of 1600 MW to go offline. (IOL, Moneyweb, Daily Maverick)

After failed big budget election campaign, new mine proposed: Waratah Coal, a company owned by Clive Palmer, has renewed its application for the proposed 40 million tonnes a year Galilee Coal project near Adani’s proposed Carmichael coal mine. The public notice announcing the revival of the project, which was initially proposed in 2011, was placed in a remote regional Queensland newspaper with public comment open until December 2. Palmer’s company spent an estimated A$60 million (US$41 million) in the May 2019 federal election campaign on behalf of the Palmer United Party. While the party failed to win any seats, its anti-Labor emphasis in the final weeks of the campaign is credited with helping the pro-coal Liberal National Party narrowly retain government and push the Queensland Labor Government to expedite new coal projects. (Guardian)


Australia: Tasmanian tourism industry leader doubts a proposed open cut coal mine is consistent with the state’s ‘clean and green’ brand.

Australia: Engineering company Worley rules out working on Adani’s Carmichael coal project.

Australia: Coal lobby’s success in having NSW Government inquiry launched into the NSW Planning Commission is a “recipe for corruption” argues former anti-corruption agency head.

Canada: Prime Minister Trudeau set to form minority government; his win will leave the carbon price and national coal phase-out policies in place.

Europe: Forty-one mayors from across Europe have backed a call for greater European Union support for transition for coal regions.

Switzerland: Buoyed by electoral boost, Swiss Greens warn banks to stop funding coal and other fossil fuel energy projects.

US: A coalition of NGOs has launched a legal challenge against the approval for the expansion of Arch Coal’s West Elk mine in Colorado.

US: As loan default nears, coal baron and Trump supporter Bob Murray has renewed calls for coal plant subsidies.

Companies + Markets

Coalition negotiations in German state agree on no new mines or mine expansions: Negotiations over the formation of a coalition government in the state of Brandenburg has resulted in the Christian Democrats, the Social Democrats and the Greens agreeing to ban the development of any further lignite mines, the expansion of any existing mines or further relocations of villages. Following the September 1 state election, the three parties decided a coalition was necessary if they wanted to sideline the far-right Alternative for Germany (AfD) party. AfD opposes action on global heating. (Rbb24 [German])

Brazilian coal loses out to wind in tender bid: Despite the new right-wing government of President Jair Bolsonaro allowing coal projects to bid for renewable power supply contracts from January 2025, none of the 940 MW of registered coal projects was successful in the tender. Instead, wind, gas, solar and hydro projects accounted for the bulk of the winning bids. Forty-four wind power projects, amounting to 1040 MW of capacity, won contracts at an average price of US$23.52 per megawatt hour. (Renewables Now, Recharge [paywall])

Green hydrogen costs set to challenge steel for coal by 2020, BNEF argues: Bloomberg New Energy Finance (BNEF) estimates that hydrogen produced in large-scale projects by renewable generation will begin to compete with fossil-fuel-derived hydrogen by 2030 and have lower costs by 2050. BNEF estimates hydrogen can currently be produced from fossil fuel projects for between US$1 and US$2 per kilogram, under half the cost of green hydrogen. However, by 2030 BNEF estimates steel production from hydrogen could be cost-competitive where metallurgical coal costs reached US$310 per tonne. In its latest report on the outlook for renewables, the IEA notes that the steel sector currently emits 2500 million tonnes of carbon dioxide a year. The IEA also notes that industrial sectors currently use about 70 million tonnes of hydrogen a year, which is mostly produced from fossil fuels and is responsible for two per cent of global greenhouse gas emissions. (Simon Evans [Twitter], International Energy Agency [subscription])

Indonesian coal exporters facing financial pressure: The one-third decline in global thermal coal prices this year is causing “severe stress” to some Indonesian coal mining companies, according to Bharat Shettigar from Standard Chartered. The bond prices of PT Bumi Resources, a major Indonesian coal company, have tumbled in the past six months. Another factor in the fall from favour of some Indonesian producers is the reduced number of financial institutions willing to support coal companies. Bumi Resources is pinning its hopes on coal import growth in India and stable demand in Asia. However, Paul Lukaszewski from Aberdeen Standard Investments warned that “investors are starting to ask questions about the long-term prospects for thermal coal miners.” (Bloomberg)

US coal exports set to collapse as oversupply persists: A UK-based based industry consultancy argues that the global seaborne thermal coal market is gradually “rebalancing” but still has a 19 million surplus of production over demand. Perret Associates estimates European Union thermal coal imports will fall by 25 per cent in 2019 compared to the year before. The consultancy estimates US exports will fall from 49 million tonnes in 2018 to 33 million tonnes this year and potentially as low as 20 million tonnes in 2020. It also estimates that Chinese imports will increase marginally while Vietnamese thermal coal imports will double to 38 million tonnes. It predicts Colombian exports will decline by 4.5 million tonnes in 2020 to 75 million tonnes. At a European coal industry conference an anonymous trader indicated that Russian cargoes were displacing Colombian coal with the growing prospect that Turkish buyers would also switch as contracts expire in 2020. (Platts, Platts)

Indian court hands Adani a win in tax fraud case: The Bombay High Court has ruled in favour of Adani Enterprises and set aside approvals for the Directorate of Revenue Intelligence (DRI) to request assistance from regulators in Singapore, the United Arab Emirates, Hong Kong and the British Virgin Islands in investigating allegations that Adani and other companies overvalued Indonesian coal imports between 2010 and 2016. The DRI alleged Adani and other companies over-invoiced the cost of coal sold to affiliated companies overseas, shifting funds offshore and underpaying customs duties on the real value of the coal. The future of the DRI investigation is uncertain. (Business Today, Bar and Bench)

Warning on Mongolian bank standards may hit Rio Tinto’s coal plant: The Financial Action Task Force (FATF), an intergovernmental agency, has placed Mongolia on the “grey list” of countries with financial system lacking sufficient safeguards against money laundering and the financing of terrorism. This may increase the difficulty of Rio Tinto’s plan to raise US$3.4 billion in debt and US$500 million in equity to expand the Oyu Tolgoi copper and gold mine and build a coal power plant to supply it. Banks from countries with strong anti-money-laundering provisions usually cease ties with banks on the “grey list” until weaknesses have been remedied to the satisfaction of the FATF. In December 2018 Rio Tinto announced that it had agreed with the Mongolian Government to proceed with the construction of a 300 MW coal plant near the Tavan Tolgoi coalfields to power the mine. (Australian Financial Review [paywall])


Renewables 2019, International Energy Agency, October 2019. (Pdf) (A copy of the media release for the report, which costs €80 is here and a copy of the presentation on the report here.)

This 204-page report estimates the growth of renewable capacity between 2019 and 2024 with a particular emphasis on the expected rapid increase on solar capacity.

Transformation experiences of coal regions: Recommendations for Ukraine and other European countries, Ecoaction, Luhansk Regional Human Rights Center and Germanwatch, October 2019. (Pdf)

This 118-page report assesses the approaches taken to coal mine closure management in Romania, Germany, Ukraine and the Czech Republic and identifies key actions for consideration elsewhere.

Playing With Other People’s Money: How Non-Economic Coal Operations Distort Energy Markets, Sierra Club, October 2019. (Pdf)

This 32-page report details how many US utilities are allowed by state regulators to keep uneconomic coal plants operating and pass the costs on to consumers.