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Editor's Note

The renewables technology revolution continues to reshape the power industry and disrupt the global thermal coal markets. In India, the Chhattisgarh state power utility has flagged that after the commissioning of a partly built NTPC plant, no more coal plants will be built. This follows Gujarat’s announcement last week that no more plants would be built there. In Montenegro, the Premier has announced that the proposed expansion of the Pljevlja lignite plant has been abandoned. In Greece, change is coming faster than many thought possible. A court decision is likely to force the closure of one plant; others are likely to follow as the government finally recognises the financial folly of burning lignite and paying a high carbon price. In Australia, a thermal coal mine proposed by a subsidiary of Korea Electric Power Corporation has been rejected.

In South Korea, a clean air plan due to be presented to the President in the next few weeks is likely to recommend the summertime closure of a raft of coal units, and generation caps on the remainder. It would be a further shock to the coal export market. In Colombia, the world’s fourth largest seaborne thermal coal exporter, the mining industry lobby group is predicting a five per cent decline in production this year. In South Africa, a new report warns that heavy reliance on the Indian market is likely to lead to upheavals among exporters as imports are cut. Glencore, the world’s largest thermal coal exporter, is facing tough negotiations with a key Japanese customer over how much lower the benchmark price for Newcastle coal will be for the next year.

While the metallurgical coal industry has long been thought to be largely immune from the technological shift disrupting the thermal coal market, that may not be the case for too much longer. A Swedish fossil-fuel-free steel consortium, HYBRIT, has proposed bringing forward a demonstration plant to 2025 but only if they win policy concessions from government.

Bob Burton


Bangladesh may suspend new power plant approvals

Chinese firms investing in overseas coal projects, such as in Bangladesh, should take note of a potential power glut in Asian nations, writes Li Danqing and Wang Yan from Greenpeace East Asia in China Dialogue.

Uncovered coal barges are polluting North Sumatra’s waters

Coal transhipment operations for a coal plant in the Indonesian province of North Sumatra are polluting the marine environment, writes Ayat S. Karokaro in Mongabay.

Montenegro cancels new coal plant

Montenegro's Premier has announced that the Government is no longer pursuing the planned 254 megawatt (MW) expansion of the Pljevlja lignite power plant, making Montenegro the first Western Balkan country to officially cancel a new coal project, writes Diana Milev-Cavor from BankWatch.


Australian mine proposed by South Korean company rejected

The New South Wales Planning Commission has refused consent for the proposed Bylong coal mine promoted by a subsidiary of Korea Electric Power Corporation (KEPCO). The company proposed to produce 124 million tonnes of thermal coal over 25 years but the project was strongly opposed by local residents and farmers. In rejecting the project three commissioners stated that the impacts on groundwater resources and agricultural land were unacceptable, there were no greenhouse gas emission offsets and that it was “rational” to reject high-impact fossil-fuel proposals such as the Bylong project. The commission also found that while there would be short-term economic benefits from the project that would “accrue to the present generation” but the agricultural, heritage and environmental costs “are borne by future generations.” As a result, the commissioners argued, the project was “not in the public interest because it is contrary to the principles of ESD [ecologically sustainable development] — namely intergenerational equity.” The decision has been welcomed by Lock the Gate. (Lock the Gate, New South Wales Planning Commission [pdf])

Greek court axes permits for lignite units

The Greek Supreme Court has annulled the environmental permits of the Public Power Corporation’s (PPC) Megalopoli A & B lignite units. The two 300 megawatt (MW) units, which use lignite from nearby mines, emit higher levels of sulphur dioxide and nitrogen oxides than allowed by European Union standards. The legal challenge against the continued operation of the plant was filed in 2017 by WWF Greece and Greenpeace Greece and was represented by ClientEarth. The ruling comes as the Greek Government signals its intent to reduce lignite-fired generation, including the possible closure of the Megalopoli plant. Greece’s Minister for Energy, Kostis Hatzidakis, has directed the board of PPC to develop a plan by mid-November reviewing the cost of its existing 14 lignite units and how to comply with European Union regulations. (WWF Greece, Ekathimerini)

Top News

South Korean advisory body proposes extending summertime coal shutdown: To reduce fine dust pollution by 20 per cent, a body advising the government on its national climate strategy has supported closing 14 coal units between December and February and increasing to 22 units during March. The National Council on Climate Change and Air Quality (NCCA) is also set to propose that generation from the remaining 46 units be capped at 80 per cent of their capacity between December and February with the number of restricted units reducing to 38 during March. The NCCA is due to finalise its proposal on short-term pollution reduction measures for President Moon Jae-in by the end of September. It will also submit a further report on medium- to long-term measures, including a possible coal phase-out, by June 2020. South Korea is one of world’s largest importers of thermal coal from the seaborne market. (Khanh [Korean])

Another Indian state rules out more coal plants: The chairman of the state-owned Chhattisgarh State Power Distribution Company, Shailendra Kumar Shukla, has stated that Chhattisgarh will not build any new coal power plants after the commissioning of the second 800 MW coal unit at NTPC’s 1600 MW Lara plant in Raigarh. Shukla’s comments suggest the proposed 1600 MW expansion of the Lara plant is likely to be scrapped. Chhattisgarh has over 20,000 MW of installed generating capacity of which most is used for power exports to surrounding states. While there is no legislative restriction preventing new coal plants being approved, low coal plant utilisation rates make further plants unattractive and solar generation is now cost competitive with existing coal plants. (Quartz, Global Energy Monitor)

Cambodia approves Laos coal power deals: The Cambodian Government has granted approval for the state-owned power utility Electricite du Cambodge (EdC) to contract to buy the output of two proposed coal plants in Laos. Under the agreement, EdC will enter into a 30-year power purchase agreement for the projects, with a combined capacity of 2400 MW, and pay US$0.077 per kilowatt-hour. TSBP Sekong Power and Mineral Company has proposed a 600 MW project and Xekong Thermal Power Plant Company has proposed a 1800 MW plant. It is estimated the combined cost of the projects will be US$4.970 billion for the plants, associated mine infrastructure and transmission lines to the Cambodia–Laos border. The deal comes as the Electricity Generating Authority of Thailand concedes it can’t find buyers for power from proposed 2400 MW Koh Kong plant. (Phnom Penh Post, Khmer Times)

Bangladesh coal ship sinks: A ship carrying 1100 tonnes of coal has sunk in the Bay of Bengal when transhipping coal to Dhaka from a mothership anchored near Chittagong port. The crew of 12 from the vessel, the Hera Parbat-8, were rescued. In October 2015, February 2016 and January 2017 laden coal ships sank in and near the Sundarbans World Heritage site in Bangladesh. The number of coal ship accidents highlights the likely environmental impact of coal ship accidents as Bangladesh pursues the construction of new coal plants reliant on imported coal. (NewAge Bangladesh)

US insurer under pressure for helping Adani’s Carmichael project: The major US insurance company AIG has declined to confirm or deny that it is providing insurance coverage for Adani’s proposed Carmichael coal project until September 30. An email from a company employee revealed that AIG's head office in the US had directed AIG not to renew the coverage due to public pressure and concern that it could jeopardise its sponsorship deal with Rugby New Zealand (Rugby NZ). A coalition of New Zealand groups has called on Rugby NZ to end its sponsorship deal with AIG ahead of the upcoming Rugby World Cup unless the company confirms it is no longer insuring Adani’s Carmichael coal project. A spokesperson for AIG in the US declined to comment while Rugby NZ did not respond to questions.  (Australian Financial Review [paywall], Market Forces)

Eskom financial restructuring plan advances: Eskom has sought tender bids for financial services advisers to help guide the implementation of the government’s financial restructuring plan, which includes the splitting of the utility into generation, transmission and distribution. Eskom currently has about US$30 billion in debt and is reliant on South African Government bailouts for its continued viability. The tender documents state that bidders must have experience in restoring the viability of stressed companies in deals worth over US$1 billion. The tender comes as a plan is being developed by Meridian Economics, a think tank, for the establishment of a US$11 billion green energy facility to relieve Eskom’s financial stress by accelerating the transition to renewable generation. The plan is under consideration by Treasury. (Bloomberg, The Straits Times)


Australia: Study confirms underground mining is damaging endangered peat swamps and water catchments for Sydney and the Illawarra district.

India: Meghalaya-based Agnes Kharshiing awarded the Turkish Hrant Dink Award for her rights advocacy and exposing illegal coal mining in the East Jaintia Hills.

Pakistan: Government aims to resolve tariff disputes over China–Pakistan Energy Corridor projects, including the 300 MW Port Qasim plant.

Poland: Residents of Imielin protest against a coal mine proposed to be built under the town.

US: Vistra affiliate reaches agreement with environmental group to shutter 285 MW Edwards plant in Illinois in 2022.

US: Energy Information Administration cuts US coal production forecasts again as coal generation slides and exports decline.

Companies + Markets

Swedish consortium promotes fossil-fuel-free steel plant: HYBRIT, a Swedish consortium promoting fossil-fuel-free steelmaking, has proposed bringing the start of construction of a demonstration plant forward by three years to 2025 if key preconditions are met. The members of the consortium — Swedish steel making company SSAB, Europe’s largest iron ore mining company LKAB and European power utility Vattenfall — argue in an opinion column that the project needs guarantees on cost-competitive energy, public investment in the project, revisions to the European Union’s emission trading scheme and expedited environmental permitting for energy projects. In 2016 the consortium proposed the conversion of a blast furnace to trial steelmaking with hydrogen produced from renewable power. Steel produced via conventional blast furnaces relies on metallurgical coal which is converted to coke. Metallurgical coal currently accounts for a little over 10 per cent of global coal production. (SSAB)

Report warns South African exporters face market shocks: A report by the Institute for Energy Economics and Financial Analysis (IEEFA) reports that 60 per cent of SA’s coal was exported to India in the first half of 2019 and warns that the Indian market is likely to decline significantly in the medium term. IEEFA notes that with the Indian Government developing a plan to cut thermal coal imports by one-third by 2024, the South African Government urgently needs to develop a just transition strategy for the communities set to be affected by the downturn in coal exports. With the European market declining rapidly, South African exporters are likely to face growing competition from Indonesian, Russian and Australian exporters. IEEFA notes that the Richards Bay Coal Terminal is already operating with almost 20 per cent excess capacity. (Institute for Energy Economics and Financial Analysis)

Romanian coal utility drafts law to bail out its carbon liabilities: The CEO of CE Oltenia, a power utility that is majority owned by the Romanian Government, has proposed state aid be approved to cover the 1.60 billion Romanian leu (US$370 million) cost in 2019 of European Union carbon allowances for its coal plants. CE Oltenia’s CEO, Sorin Boza, suggested the utility could consider a loan to cover the cost of the carbon allowances, which account for 51 per cent of the utility’s turnover. The Romanian Government recently rejected a CE Oltenia proposal that it revive negotiations with China Huadian Engineering for the proposed 600 MW expansion of the Rovinari col plant. In 2010 CE Oltenia entered into an agreement with China Huadian Engineering for the plant, which was originally proposed to be completed by 2020. (Romania Insider, Romania Insider)

Colombian coal production set to fall: The Colombian Mining Association (CMA), a mining industry lobby group, forecasts that the country’s coal production will decline from just over 84 million tonnes in 2018 to about 80 million tonnes in 2019, a five per cent fall. The CMA estimates production will decline due to low export prices and water restrictions, which have limited production from some mines. Over the last few years the Cerrejon coal mine — which is jointly owned by BHP, Anglo Americana and Glencore — has cited water constraints as one of the factors behind lower production. (Reuters)

Japanese customer demands steep price cuts in Glencore contract talks: The Japanese utility Tohoku Electric Power Company is pressing Glencore, the world’s largest thermal coal exporter, to agree to significant price reductions for the supply of thermal coal for the October 2019 – September 2020 period. Anonymous sources have stated that Tohuku want the benchmark price for 6,322 kilocalories per kilogram Australian coal set at well under US$70 per tonne while Glencore have cut their initial offer from US$80 per tonne to US$72–74 per tonne. For 2018–19 the contract price for the same quality coal was agreed at US$109.77 tonne. This year coal exporters have been hit by collapsing demand in Europe, increased Russian exports and soft Asian demand as nuclear restarts, increasing renewable generation and efficiency gains crimp demand. The Tohoku–Glencore negotiations are seen by other Japanese utilities as an important price guide. (ArgusMedia)

German offshore wind industry pitches easing of capacity cap: A study commissioned by the Association of German Offshore Wind Farm Operators (BWO) argues that meeting Germany’s coal exit targets will require an increase of 300–400 MW of offshore wind generation for every 1000 MW of coal capacity that is closed. Germany’s coal exit commission proposed that to offset coal closures the country should set a target of 65 per cent renewables by 2030. At present, offshore wind generation capacity is capped at 15,000 MW while BWO has proposed this be lifted to at least 18,800 MW. Germany's economy and energy minister, Peter Altmaier, has flagged that he would be willing to increase the offshore wind cap to 20,000 MW and also raise the 52,000 MW limit on solar capacity. Solar and wind capacity installed in excess of the cap, which was legislated in 2012, are ineligible for renewable energy payments. A study published in Nature Energy argues that German voters prefer a coal phase-out by 2025 instead of 2038 as proposed by the coal exit commission. (Clean Energy Wire, Nature Energy)


South African Coal Exports Outlook: Approaching Long-Term Decline, Institute for Energy Economics and Financial Analysis, September 2019. (Pdf)

This 41-page report argues that South Africa’s thermal coal exports are set to decline and that the country needs to urgently develop a just transition strategy that covers the whole coal sector.

Thermal coal in Asia: the real risks for investors, Influence Map, September 2019. (Pdf; registration required.) The Executive Summary is here.

This 25-page report details how major Japanese banks, investors and operators are very vulnerable to the shift to renewables and away from coal power plants in Asia.

NTPC spearheads electricity sector transition in India, Institute for Energy Economics and Financial Analysis, September 2019. (Pdf)

This eight-page briefing provides an overview of NTPC’s drive to increase its renewables generation capacity and reduce imported thermal coal. NTPC generates about one-quarter of India’s electricity.