June 1, 2017
Issue 185  |  View Past Issues
CoalWire

Editor's Note

This week has it all: some wins against coal projects, some setbacks and growing controversy over coal-linked scandals.

In Indonesia community concern has, for now, stalled the construction of an illegal coal railway and associated port. In Australia, a decade-long struggle against a major coal mine expansion has been vindicated with a court recommending against the project. In Taiwan, a major coal importer, is looking to embrace a significant expansion of wind power. There have been setbacks too, such as Kenya signing an agreement for the Lamu coal project even though a court challenge has yet to be finalised.

The coal-linked scandals keep rolling on: two former Australian politicians are set to face charges over a coal allocation deal and there have been arrests over a massive bribery scandal in the Dominican Republic. In South Africa, a tranche of leaked emails has added more fuel to the ongoing controversy over decisions by President Jacob Zuma and Eskom in favour of companies linked to the Gupta family. In India residents have accused a utility proposing a new coal plant of using inaccurate data in their environmental impact statement.

Bob Burton

Features

Japan, South Korea, and Taiwan set to disrupt seaborne coal trade

Dramatic policy and political changes in Japan, South Korea and Taiwan are set to drive further structural decline in global seaborne coal markets, writes Tim Buckley from the Institute for Energy Economics & Financial Analysis.

Time to end environmental assessment exemption for Indian industry

The latest decision of India’s Ministry of Environment, Forests and Climate Change to allow major companies a six-month extension in which to seek retrospective approval for major development projects – including coal projects – without holding public hearings undermines environmental safeguards and jeopardises the rights of the communities, writes B Karthik Navayan from Amnesty International India.

The Petra Nova plant shows how financially hopeless CCS is

NRG Energy’s Petra Nova Carbon Capture and Storage plant in Texas is technically interesting but economically it is hopeless, writes Simon Holmes a Court in Quora.

Campaigns

Court recommends against Queensland mine expansion

The Queensland Land Court has ruled in favour of a coalition of farmers and residents and urged the rejection of New Hope Corporation’s proposed 12-year expansion of the Acland mine. The court case revealed the risk to farmers’ vital groundwater supplies from faulty groundwater modelling, overblown claims of economic benefits and the lack of company and government response to complaints over coal dust and noise pollution. While the Oakey Coal Action Alliance welcomed the court ruling, the final decision on the mine expansion lies with the Queensland Department of Environment and Heritage Protection and the Minister for Mines, Anthony Lynham. (Queensland Environmental Defenders Office)

Top News

Indonesian governor suspends illegal coal railway: The Central Kalimantan governor has ordered the suspension of construction work on a coal railway between Katingan and Gunung Mas and associated port after revelations the project did not have the required permits. Two kilometres of railway track had been built through forest for PT Sinar Usaha Sejati (SUS) even though the company had no mining permit, only an exploration licence. Villagers oppose the construction of the port while environmentalists are alarmed at the prospect of the further fragmentation of forest ecosystems. (Mongabay)

Two ex-NSW politicians committed to trial over coal deal: The former NSW Minister for Resources, Ian Macdonald, and former Minister, Eddie Obeid, have been committed to stand trial on charges of conspiracy to commit misconduct in public office. Obeid’s son, Moses Obeid, has also been charged. The Independent Commission Against Corruption found the Obeid family made US$22 million from the allocation of a coal exploration licence over a farm in NSW owned by the family. (ABC News, Sydney Morning Herald)

Leaked Gupta emails fuel South African coal controversy:  Leaked emails from the controversial Gupta family and business associates reveal significant influence exerted on cabinet ministers and the board members and CEOs of government-owned companies – including Eskom. The revelations add to a growing crisis over Eskom, with Treasury insisting on a forensic audit of a favourable deal the utility provided a Gupta subsidiary. (Sunday Times, Business Live)

Dominican Republic officials arrested in bribe scandal: A cabinet member and senior government officials are among 12 people arrested over US$92 million in bribes paid since 2001 by Brazilian construction company Odebrecht to win government contracts. Among those arrested are two directors of an unnamed energy agency. In 2013 Odebrecht won the US$2 billion construction contract for the 720 megawatt (MW) Punta Catalina plant despite the company’s bid being the highest and costing over US$500 million more than authorised by the country’s Congress. (Seattle Times)

Land protests stall coal mines in Indian state: According to an anonymous source Mahanadi Coalfields Ltd’s official production from the company’s eight mines in the Talcher coalfield has been cut by 35 to 40 per cent due to community protests over villagers’ displacement by the mines and inadequate land for appropriate resettlement. Coal from the Talcher coalfield is supplied to six nearby states, with reduced production hitting major power producers. There is widespread community opposition to mine expansions. (New Indian Express, CoalSwarm)

Proposed Indian coal plant used inaccurate pollution data: The Tamil Nadu Generation and Distribution Corporation (TANGEDCO) has been accused of submitting false data in support of its proposal to build a new 660 MW unit to replace an old 450 MW plant at Ennore. In its Environmental Impact Assessment report TANGEDCO claimed all 216 samples of PM 2.5 air pollution taken in 2015 were below the legal limit of 40 milligrams per cubic meter (ug/m3). Samples taken by the Coastal Resource Centre, a local NGO, and the Central Pollution Control Board showed pollution at levels of up to 115 ug/m3. The proposed plant is also opposed by local fishermen. (The News Minute, The Indian Express)

Kenyan government signs up for Chinese-backed Lamu plant: Kenya’s energy secretary has signed an agreement for the Chinese-backed 1000 MW US$1.9 billion Lamu power project during the “Belt and Road” meeting in Beijing. The Kenyan government’s backing of the project occurred despite hearings on a legal challenge against the project continuing before the National Environment Tribunal. The plant is proposed to be built near Lamu Old Town which is on the World Heritage List. (Climate Home, Global Construction Review)

“Coal is dead. That's not to say all the coal plants are going to shut tomorrow. But anyone who's looking to take beyond a 10-year view on coal is gambling very significantly,”

said [paywall] Jim Barry, the global head of BlackRock’s infrastructure investment group. (BlackRock is a global investment fund manager with US$5.4 trillion in investments, including in coal.)

News

Australia: Queensland inquiry into black lung urges health monitoring be expanded beyond mine workers to include coal dust exposure of port, rail and ship workers.

Bangladesh: Ex-Prime Minister to face court over Barapukuria mine contract awarded to a Chinese company.

Bangladesh: Global consortium wins mining feasibility study contract for Dighipara coal field.

Canada: Greens back New Democratic Party to form minority government in British Colombia with agreement on US$3.70 carbon tax; but silent on coal exports.

India: Government backtracks on 18 per cent GST on solar panels; cuts it to 5 per cent.

Indonesia: Central Java government investigates three coal barge operators over damage to a coral reef in Karimunjawa National Park.

South Africa: Water Minister lifts suspension of water licence for Coal of Africa’s Makhado project.

“[Coal] doesn’t really make that much sense anymore as a feedstock,”

said Gary Cohn, US President Donald Trump’s chief economic adviser, who went on to extol gas, wind and solar as better alternatives.

Companies + Markets

Adani posts huge losses, flags switch to domestic coal: Adani Enterprises, the parent company of Adani Power, has posted a full year financial loss of US$954 million following a Supreme Court of India decision. The decision overturned payment of a compensatory tariff for its Mundra plant due to increased Indonesian coal costs. In its quarterly report, Adani Enterprises stated the Indian government’s new policy of auctioning coal for private power producers “will allow us to access domestic coal, and do away with the need for compensatory tariffs for our power plants going forward.” However, the rationale for the proposed Carmichael coal mine is to supply Adani’s own power plants. The mine was not mentioned in its report. (Economic Times, Business Standard)

Adani cuts Carmichael subsidy deal, project teeters: After a series of stop-start negotiations the Queensland Government has buckled to lobbying pressure from Adani and agreed to a cut-price royalties deal for the Carmichael mine. However, controversy has erupted over potential conflicts of interest of two board members of the Northern Australian Infrastructure Facility, which is considering a US$672 million loan for the railway needed to connect the mine to the port. (Guardian,  Guardian)

Coal India profit slumps as NTPC slashes imports: Coal India’s profitability fell by over 38 per cent in the March quarter, in large part due to the downgrading of coal quality affecting almost one-third of its mines. Lower grade coal is sold at discounted prices. Higher wage costs were another factor. NTPC, which generates almost one-quarter of the country’s electricity, reported in the 2017 financial year the company imported only 1.03 million tonnes of thermal coal, down 89 per cent on the year before. The Indian Government is seeking to end coal imports as soon as possible. (Nikkei Asian Review, Financial Express)

South Korean utility faces big switch: Korea Electric Power (Kepco), South Korea’s largest power producer, is being pushed to rapidly shift from its heavy reliance on nuclear and coal power to “big renewable energy projects,” increased efficiency and better management of decentralised generation. This is according to an adviser of newly-elected President Moon Jae-in. The new President promised in the campaign to block any of the 10 proposed new coal plants which were less than 10 per cent built from being completed. However, a new coalition of residents’ groups which want all the plants blocked fears companies are rushing to accelerate construction. (Nikkei Asian Review, Korea Times)

Botswana’s troubled coal plant spurs solar switch: The Botswana Power Corporation (BPC) is seeking a joint venture partner to develop a 100 MW solar project with the aim of constructing it within two years. Botswana is seeking to diversify its power supply after the recently-commissioned 600 MW Morupule B coal plant built by China National Electric Equipment Corporation proved to be unreliable. Botswana is developing a renewable energy strategy in conjunction with the German Agency for International Cooperation (GIZ). (PV Magazine)

Poland, Czech Republic ploys to cripple EU transition: Poland is seeking to block the implementation of the European Union’s (EU) proposed limit of new coal plants not exceeding 550 grams of carbon dioxide per kilowatt hour of electricity, by enlisting the support of up to one-third of member states. The Czech Republic is also seeking to almost halve the EU’s annual energy efficiency target, which would further slow the transition away from coal power. (Climate Home, WBJ)

Resources

NTPC as a Force in India’s Electricity Transition: Leading the Way Toward a New Energy Economy, Institute for Energy Economics and Financial Analysis, May 2017. (Pdf)

This 44-page report outlines the role NTPC, which generates one-quarter of India’s electricity, could play in India’s transition away from coal generation to renewables. The report also includes a brief comparison of six other energy utilities – NextEra, Enel, Engie, RWE, E.On and Eskom – which are grappling with the rapid change in the energy landscape.