March 9, 2017
Issue 173  |  View Past Issues
CoalWire

Editor's Note

The shift away from coal is accelerating – if the headlines of the past week are anything to go by. US coal plants previously thought to have years or decades to run are facing closure, while Cloud Peak Energy has taken a further step back from its Pacific Northwest coal export plans. The collapse in UK coal consumption in 2016 has prompted a newspaper owned by Rupert Murdoch to laud the rapid transformation as something “bigger polluters” should emulate.

In India the Central Electricity Authority has warned coal power utilities are at risk of financially crippling lower plant utilisation levels as a power glut grows and renewables expand. Meanwhile the government-owned Coal India – which produces 80 per cent of the country’s coal – increased coal production, only to discover demand was so sluggish over one-tenth of it had to be diverted to stockpiles.

Elsewhere, a court has ruled in favour of environmentalists in a legal challenge against a coal plant in South Africa, a US railway company has agreed to clean up coal dust pollution and the discovery of 5000-year-old burial grounds raises a new hurdle for a proposed coal mine in Poland.

Bob Burton

Features

US coal company’s export retreat a sign of the times

Cloud Peak Energy’s announcement it has ditched its long-term coal export contract is the latest signal the US coal industry’s pipe dream of exporting coal to the Asian market continues to fade away, writes Clark Williams-Derry from the Sightline Institute.

China coal power plant approvals fall by 85 per cent

The Chinese Government slashed approvals for new coal plants in 2016 with a dramatic slowing in the latter half of the year as massive overcapacity continues to undermine utilisation levels of current plants, writes Lauri Myllyvirta in EnergyDesk.

Campaigns

Court directs Minister to consider climate impact of South African coal plant

The North Gauteng High Court has ruled in favour of Earthlife Africa and directed the Minister of Environmental Affairs consider the climate impacts when contemplating environmental authorisation for the proposed 630 megawatt Thabametsi power station. The Department of Environmental Affairs had previously approved the project even though no comprehensive assessment of the climate change impacts had been undertaken. The case was the first in South Africa challenging a project on climate change grounds. (Center for Environmental Rights, Mining Weekly)

Top News

Decline of UK coal delivers big cut in emissions: A 52 per cent drop in the use of coal for power generation in 2016 has resulted in a 5.8 per cent fall in national carbon dioxide emissions, putting UK emissions about 36 per cent below 1990 levels. Driving the change has been the growth in renewables and gas generation and a floor price on carbon, which has accelerated the retirement of old coal plants. UK coal consumption is now 12 times lower than the 1956 peak of 221 million tonnes. (Carbon Brief)

US railway company settles coal dust lawsuit: BNSF Railway has agreed to spend US$1 million to clean up coal and petroleum coke spilled from railcars in the Pacific Northwest. The agreement is part of a settlement of a Clean Water Act lawsuit brought by seven environmental groups. BNSF Railway has also committed to investigate the best available prototypes for covering wagons it uses to carry coal and petroleum coke from mines in Wyoming and Montana. (Portland Tribune)

Discovery of ancient Polish burial grounds poses hurdle for new mine plan: The discovery of burial grounds dating back 5000 years has bolstered hopes of local residents that the government will rejects plans by ZE PAK to build a new open-cut coal mine in Wielkopolska. Government officials are considering whether to designate the 15 recently discovered burial tombs with protected status. However, the Poznan regional environmental protection agency is considering issuing the environmental permit for the mine even though the company’s environmental assessment did not address the burial tombs. (Ancient Origins)

More coal companies dropped by Norway’s sovereign wealth fund: A further 10 companies – including CEZ from the Czech Republic, Huadian Energy from China, PGE from Poland and Korea Electric Power Corporation from South Korea – have been dropped as investments by Norway’s US$900 billion Government Pension Fund. A further two companies were put on watch with another 24 companies at risk of exclusion. A coalition of environmental groups argues the fund needs to go further as it still has over US$3 billion invested in 32 companies that own coal mines or coal-fired power plants, as well as smaller investments in another 15 companies which transport coal or build coal plants. (Reuters, Norges Bank Investment Management)

Peabody Energy ends self-bonding for US rehabilitation: Peabody Energy has announced it has obtained US$1.26 billion in commercial bonds and $14.5 million through the Indiana state bond pool to end its reliance on ‘self-bonding’ for mine rehabilitation liabilities. Previously Peabody Energy had argued providing commercial guarantees for its rehabilitation liabilities in Wyoming, Indiana, New Mexico and Illinois would adversely affect its ability to emerge as a viable company from bankruptcy. (Reuters)

“This [a 52 per cent cut in UK coal use in a year] should have an immediate and positive effect on illness and premature death from respiratory disease, but cutting carbon emissions so fast has global implications too. If bigger polluters can follow suit, policymakers will be able to start thinking about reversing the build-up of atmospheric carbon not just as an idea but as a realistic possibility,”

states [registration] an editorial in The Times, a publication owned by Rupert Murdoch’s News Corporation.

News

Australia: NSW agency announces draft approval for Korea Resources Corporation mine in Central Coast water catchment.

India: Tuticorin Thermal Power Station faces shutdown due to water shortage.

Pakistan: Government spending US$1.5 million exploring Badin coal discovery in Sindh province.

Ukraine: Nationalists blockade of coal imports from rebel controlled mines threatening power supply.

Vietnam: Public alarm at threat posed by coal plants and ports to marine protected areas.

Zimbabwe: Cash-strapped coal company slashes production, crunching domestic power generation.

“India is presently going through a defining shift in its energy mix from fossil fuels to renewable resources. In the coming decades, it is highly unlikely that the country will be a large consumer of coal for electricity generation or a major coal importer,”

writes Dr EAS Sarma, a former Secretary to the Government of India in the Ministries of Power and Finance.

Companies + Markets

Indian coal power utilisation set to fall: The Central Electricity Authority (CEA) has warned utilisation rates of India’s coal plants could fall as low as 48 per cent by 2022, lower than the 55 per cent it estimates as necessary for financial viability. The CEA has flagged that many coal plants could be idled by 2022. Utilisation rates are falling as coal overcapacity increases and growing renewables and hydro capacity displace coal generation. (Economic Times)

Coal India coal production growth slows: Coal production by the government-owned Coal India (CIL) to the end of February – 11 months into the current financial year – was 490 million tonnes, just under 50 million tonnes short of its year-to-date target. In February CIL sold only 47.7 million tonnes of the 54.3 million tonnes produced, suggesting mine-mouth and railhead stockpiles have grown even further as power demand growth remains lower than expected and many of the distribution utilities continue to be financially stressed. (Economic Times, Coal India)

Decline of US coal plants accelerates: Rapid changes in the US power market are forcing power plant owners to reassess the viability of existing coal plants. Despite twice having emerged from bankruptcy with new owners and less debt, the 1884 MW Homer City plant in Pennsylvania still requires costly plant upgrades to comply with the state’s pollution control standards and is once again facing fierce market competition. In Arizona, the Navajo Generating Station, which negotiated a deal with the US Environmental Protection Agency to continue operation until 2044, is now likely to close by 2019 after the consortium which owns it decided it was uneconomic. (Utility Dive, Fast Company)

Troubles at Kemper CCS plant triggers downgrade: The Moody’s ratings agency has downgraded the credit rating of Mississippi Power, a subsidiary of Southern Company, on concern about the economic viability of the 582 MW Kemper Carbon Capture and Storage plant. Moody’s described the plant as “increasingly uneconomic”, flagged doubts it would be able to win regulatory approval for cost recovery from ratepayers and noted the plant had substantially higher operating and maintenance costs than originally projected. Moody’s also noted the plant’s utilisation rate using coal-derived syngas is now projected to be 24 per cent lower in the first year than the original 59 per cent target and only reach 85 per cent in the fifth year of operation. (Mississippi Watchdog, Moody’s)

Vale racks up more losses on Mozambique operations: Vale’s Mozambique subsidiary lost US$105 million in 2016 on the 8.8 million tonnes of coal produced that year. The result was an improvement on the US$508 million loss in  2015, in part due to higher global metallurgical coal prices and lower shipping costs. Coal exports in 2016 were more than double 2015 levels. Volumes shipped via Vale's newly commissioned Nacala railway increased in 2016, while the company lost US$215 million that year on coal shipments via the Sena railway to the port of Beira. (Macauhub, Vale)

China looks to slash coal capacity: Premier Li Keqiang has vowed to eliminate more than 50,000 MW of new coal plant capacity in 2017 as China grapples with overcapacity and falling plant utilisation rates. The government also announced it plans to cut a further 150 million tonnes of coal mining capacity and slash steel plant capacity by 50 million tonnes this year. The government has allocated US$14.5 billion to cover relocation and other costs for an estimated 500,000 workers likely to be displaced this year by cuts to the coal and steel industries. (China Daily, Marketwatch, Bloomberg)

Resources

Getting it Right: a just transition strategy for Alberta’s coal workers, Alberta Federation of Labour, March 2017. (Pdf)

This 32-page report, which includes four case studies on closure policies, outlines a package of measures proposed to assist workers in transitioning to new jobs or retirement as the energy industry shifts away from coal plants.