October 19, 2017
Issue 204  |  View Past Issues
CoalWire

Editor's Note

A global coal power phase-out continues to gather momentum. A global survey reveals that of companies that had coal plants or plans in 2010, one-quarter have dumped coal projects altogether. The pace may well accelerate further with the UK and Canada announcing they intend to form a global coalition of countries committed to phasing out unabated coal power. Already, five national or lower levels of government have phased out coal power. Every week, new commitments to cut coal are being made. In Indonesia, the Minister for Energy has announced there will be no new coal plants in the main Java-Bali grid. In Texas, a private utility announced it wants to retire another two plants in early 2018, including one unit which was only commissioned in 2009.

As coal power fades, its greatest enthusiasts try to find more ways to prop it up. In Australia, the government has dropped a proposed clean energy target, announcing instead it will cap renewables and force retailers to meet a guaranteed level of fossil fuel generation. However, not all attempts to wind back the clock are going smoothly. In the US, a Trump Administration proposal for subsidies for coal and nuclear plants is encountering widespread opposition. In Poland, a US investor has begun a challenge against the termination of wind power contracts under investor-state provisions of a bilateral agreement. This sort of challenge is usually pursued by corporations against governments wanting to protect the environment, rather than those wanting to pollute it.

Bob Burton

Features

Which countries and companies are exiting coal?

Over one-quarter of 1675 companies that have owned coal-fired power plants or pursued development of coal-fired power capacity since 2010, have exited the coal power business entirely. A new CoalSwarm and Greenpeace survey reveals five national and lower tiers of government have already phased out coal power, with another 18 planning a phase-out by 2030 or sooner, writes Christine Shearer from CoalSwarm in EndCoal.

Heard the one about 621 coal plants being built around the world?

The claim peddled by some coal industry supporters that 621 plants are currently being built around the world is just plain wrong, writes Adam Morton in the Guardian.

Campaigns

Indonesian Minister for Energy vows no new coal plants in Java grid

Indonesia’s Minister for Energy and Mineral Resources, Ignasius Jonan, told a media conference “we will not approve any coal-fired power plants in Java … anymore.” The Java–Bali grid, which largely caters for the heavily populated island of Java, is the largest in Indonesia. Alarm has been expressed about the financial health of the publicly owned utility, PLN, and the risks of entering into new power purchase agreements for coal plants. Jonan said the government would push for Java to build new renewables, geothermal and gas generation capacity. (Reuters)

Top News

China investigates loss-making Australian coal deal: An investigation has been launched into how Guangdong Rising Assets Management — which is owned by the Guangdong provincial government — lost US$1.5 billion on four mining deals in Australia, including US$394 million spent on Caledon Coal. The former chairman of Guangdong Rising, Li Jinming, was arrested on October 12 as part of an investigation into alleged corruption. Liu Fucai, the former director of the Guangdong provincial State Asset Supervision and Administration Commission is also under investigation, along with his son, for their roles in facilitating the deals. The two have refused to return to China from Australia. (South China Morning Post, Caixin)

Rio Tinto and ex-executives charged over failed Mozambique coal deal: The US Securities and Exchange Commission (SEC) has charged Rio Tinto and two former senior executives with fraud over the overstatement of the value of its Benga and associated coal project in Mozambique. The SEC alleges the company and its then CEO, Tom Albanese, and Chief Financial Officer, Guy Elliot, failed to accurately inform the market that the coal assets it bought for US$3.7 billion in 2011 were worth far less due to rejection of a coal barging proposal and lower than expected metallurgical coal content. The SEC alleges Rio Tinto failed to disclose the reduced value of the project before it raised US$5.5 billion from US investors. Rio Tinto and the two former executives reject the SEC's claims and will contest the charges. (US Securities and Exchange Commission, Rio Tinto)

South African minister challenged over Eskom oil contracts: The Minister for Public Enterprises, Lynne Brown, is being challenged over Eskom awarding two transformer oil supply contracts worth US$90,000 to the company her lover was a director of until recently. Eskom is also facing widespread opposition to its request to increase power tariffs by 19.9 per cent, with half the amount sought to offset the costs of declining demand. (Fin24, Mail and Guardian)

Bloomberg pledges US$64 million for US anti-coal campaign: The businessman and philanthropist Michael Bloomberg will contribute a further US$64 million to the Beyond Coal campaign run by the Sierra Club and other organisations to close the remaining 261 coal power plants in the US. Bloomberg Philanthropies has previously contributed US$100 million to the campaign. Since 2010, 262 coal plants have either closed or their retirement dates have been announced. (Bloomberg Philanthropies, Sierra Club)

Australia axes renewables target to prop up coal: The Australian Government has dropped plans for a clean energy target, instead opting to require energy retailers to meet an as yet unspecified reliability standard aimed at keeping aging coal plants online. The current Renewable Energy Target will lapse in 2020. However, the proposed plan will rely on agreement with the states, many of which have embraced ambitious renewables targets. The new policy has been welcomed by the Minerals Council of Australia, the peak coal lobby group representing companies including BHP. (Sydney Morning Herald, RenewEconomy)

UK and Canada launch global coal phase-out alliance: Canada’s Minister of Environment and Climate Change, Catherine McKenna, and the UK’s Minister of State for Climate Change and Industry, Claire Perry, launched plans for a global alliance to promote the phase-out of unabated coal power in forthcoming climate talks. The UK plans to phase out coal power by 2025 and Canada by 2030. (Climate Change News, Environment Canada)

Japanese coal plant assessment frozen after data scandal: The environmental assessment of Kobe Steel’s proposed 1300 MW coal plant in Hyogo prefecture has been suspended in the wake of the company admitting to customers it had falsified data on some of its metal products. The project has been opposed by residents and environmental groups. “The credibility of the company is being questioned and its environmental assessment data has been put in doubt,” said Hiroo Iino, who has responsibility for the environmental assessment of the plant. (Reuters, Bloomberg)

News

Australia: Horse breeders decry bid to revive rejected Hunter Valley mine as an underground project.

Australia: Councils agree to provide US$30 million subsidy for Adani’s Carmichael project airstrip.

Germany: Chancellor Angela Merkel flags support for emissions reductions ahead of coalition negotiations with the Greens.

Indonesia: Italian utility Enel dumps 10 per cent stake in coal producer PT Bayan Resources in “decarbonisation” move.

Mongolia: Coal exports to China stall as border delays cause coal trucks to queue for 100 kilometres.

Myanmar: Over 1500 people express alarm at proposed coal plant in Kayin state.

New Zealand: High Court hears challenge to bid for coal mine in public reserve near Westport.

Norway: Two loss-making mines on Svalbard to be closed permanently and rehabilitated.

Pakistan: Port Qasim coal and cement terminal, part-funded by World Bank, opened by PM Abbasi.

Companies + Markets

Two more Texas plants to close as wind and gas crunch coal: Luminant plans to close its 1182 megawatt (MW) Sandow plant in mid-January 2018, after Alcoa paid out the remainder of its power purchase agreement. The plant originally supplied electricity for Alcoa’s Rockdale aluminium smelter. After the closure of the plant in 2008, Alcoa sold power into the Texas market. However, falling wholesale prices have made onselling power unviable. Luminant will also close the 1187 MW Big Brown plant in mid-February if no buyer can be found. In early October, Luminant announced it planned to close the 1800 MW Monticello plant in early January 2018. (Luminant, Alcoa)

Interest in US coal leases keeps fading: In the six months since the Trump Administration lifted the moratorium on federal land coal leases, US coal companies have withdrawn five of 44 pending applications. A further eight applications have been put on hold indefinitely. Only one new lease application has been filed and this was for the extension of a Colorado mine supplying a nearby power plant. In correspondence with the Bureau of Land Management, coal companies have signalled the depressed coal market is the primary reason for dropping their applications. (Washington Post)

Poland lobbies against coal restrictions: A delegation of Polish power utility executives has lobbied members of the European Parliament and European Commission officials to drop restrictions on the use of government financial support for coal plants. In a separate meeting between all EU Environment Ministers, Poland agreed to cut greenhouse gas emissions in the transport, agriculture and construction sectors by seven per cent by 2020 in return for being granted allowances for 115 million tonnes of carbon dioxide. The final proposal has yet to be agreed with the European Parliament. (Radio Poland, Radio Poland)

Trade challenge to axing of Polish wind contract: The US-based Invenergy has filed a complaint with the pro-coal Polish Government alleging that the cancellation of long-term wind contracts by state-owned utilities violates the terms of the US–Poland Bilateral Investment Treaty. Invenergy, which has invested in 11 onshore Polish wind farms, alleges the Polish Government “took deliberate actions” to make renewable energy prices unsustainable. The company said it would seek international arbitration if a settlement with the Polish Government is not achieved within six months. (Financial Times, Invenergy)

Philippines coal plans pose risks to consumers: The proposed construction of up to 10,000 MW of new coal plants, at an estimated cost of US$21 billion, risks forcing consumers to carry excessively high costs, according to a new report from the Institute for Energy Economics and Financial Analysis (IEEFA). With renewables the lowest cost option in many areas, IEEFA argues coal plants reliant on imported coal will be exposed to falling utilisation rates and are likely to become stranded assets. IEEFA recommends that the Energy Regulatory Commission require any new fossil fuel plant agreements contain “carve out” clauses allowing utilities to cut power purchases if the capacity is not required. (Institute for Energy Economics and Financial Analysis)

Perry plan could subsidise up to 100 US power plants: The Sierra Club estimates up to 100 coal and nuclear plants, primarily in the Midwest and Mid-Atlantic wholesale markets, could be subsidised under a Trump Administration plan for increased payments to plants which have a 90-day fuel supply. The Rhodium Group, a consultancy firm, estimates only 0.00007 per cent of reported power outages between 2012 and 2016 were due to “fuel supply emergencies”, with nearly all of those at a coal plant in Minnesota. The proposal by the US Secretary of Energy, Rick Perry, has drawn opposition from the oil and gas industry, the renewable power sector, conservative think tanks and environmentalists. (Sierra Club)

Resources

Global Shift: countries and Subnational entities phasing out existing coal power plants and shrinking the proposed coal power plant pipeline, CoalSwarm and Greenpeace, October 2017. (Pdf)

This 27-page report documents the growing number of countries and local or regional governments that have already phased out coal power plants or plan to by 2030.

Time to Come Clean: How the World Bank Group and International Investors Can Stop the World’s Most Dangerous Coal Plant, Inclusive Development International, Bank Information Centre Europe and Center for Financial Accountability, October 2017. (Pdf)

This 14-page report details the likely impacts and financial risks if the proposed Rampal plant near the Sundarbans World Heritage area is built.

Carving out Coal in the Philippines: Stranded Coal Plant Assets and the Energy Transition, Institute for Energy Economics and Financial Analysis, October 2018. (Pdf)

This 82-page report finds a proposed coal plant boom would leave the Philippines’ banking sector heavily exposed to projects that are likely to become stranded assets.

Coal, Carbon and the Community: Investing in a just transition, Investor Group on Climate Change, October 2017. (Pdf)

This 48-page report, commissioned by two superannuation funds, reviews the risks associated with all Australian coal production sectors and potential sectors for investment in affected regions.