August 26, 2021
Issue 383  |  View Past Issues
CoalWire

Editor's Note

In a remarkable indication how the future of coal power has moved to centre stage of climate negotiations, the UK’s President of COP 26, Alok Sharma, blew up part of a decommissioned coal plant. In an accompanying video he argued why ending coal was central to protecting the global climate. This comes as the major shareholder in the company promoting the development of a new UK coal mine has laid off most of its staff to focus on a government-ordered inquiry into the project.

In the US, a government agency has begun the preliminary stage of a review into coal leases on federal lands. Nearly half of US coal is produced on federally leased land. On the US east coast the owner of three major coal plants suffered a major setback after two states rejected requests to pass the costs of environmental upgrades onto consumers. In Poland, two old coal units have been closed because the utility PGE opted not to invest in environmental upgrades.

A raft of studies have also been released over the last week. The Global Electricity Review by climate think tank Ember finds greenhouse gas emissions in the power sector rose significantly in the first half of the year as the growth in clean energy failed to exceed increased demand in key Asian countries. Another study argues China could retire its coal fleet by 2040 if, in the first instance, all new electricity demand growth is catered for by renewables. Another study suggests 60,000 megawatts (MW) of proposed Indian coal capacity would result in massive losses if built, with NTPC and Adani Power being the biggest losers.

Bob Burton

Features

Eskom and the vagaries of environmental law compliance in South Africa

The South African power utility Eskom has told Parliament that it doesn’t plan to fully comply with the government-mandated Minimum Emission Standards by 2025, which were developed after years of public consultation, because of the financial costs, writes Ethan van Diemen in Daily Maverick.

Campaigns

Polish utility announces closure of two coal units

PGE, a major Polish power utility, has announced two 225 MW units at its Rydnik coal plant power station were shut down on August 19. The closure of the units was required after new European Union environmental standards came into effect on August 17. PGE decided the old units, which were commissioned in 1972, would not merit upgrading. The plant has a further six coal units that were commissioned between 1973 and 1978, leaving 1350 MW of coal capacity online. PGE plans to build a new 800 MW gas unit at the site. (PGE [Polish],  Global Energy Monitor)

Top News

UK climate envoy blows up part of shuttered coal plant: The President of the COP26 climate talks, Alok Sharma, blew up two 200-metre chimney stacks and the boiler house at power company SSE’s decommissioned Ferrybridge C coal plant describing it as a “symbolic moment” in the country’s transition away from coal. Sharma, a Conservative Party Member of Parliament, said the world needs to shut coal plants and embrace jobs in a clean energy transition. The UK currently operates three remaining coal plants; all are slated for closure by October 2024 at the latest. (Business Green, Alok Sharma [Twitter])

Report finds 2021 electricity growth rebound skews dirty: The climate think tank Ember has found electricity demand increased by 5 per cent in the first half of 2021 compared to the same period in 2019. The six-monthly Global Electricity Review update examined data from the 63 countries that account for 87 per cent of global electricity demand. The review found 57 per cent of the increased electricity demand was met by wind and solar capacity but the remainder was covered by increased coal generation. Greenhouse gas emissions from the power sector increased by 5 per cent compared to the first half of 2019. The countries with increasing electricity demand and coal generation were mostly in Asia. Coal generation met most of increased demand in Mongolia, China and Bangladesh while clean generation met all of the increase in Vietnam but greenhouse gas emissions still rose there by four per cent due to a switch from gas to coal generation. (Ember)

US launches review of coal leasing on federal lands: In response to legal actions and lobbying by tribal and environmental groups the US Department of Interior has announced it will undertake a review of the federal coal leasing program. The department said it would also be conducting discussions with affected Indian tribes. About 224 million US short tonnes (203 million tonnes) or 42 per cent of US coal production comes from federal lands, predominantly from huge open-cut mines in the Powder River Basin in Montana and Wyoming. Federal coal leases cover over 435,000 acres (176,000 hectares) of public land. The agency is seeking public comment until September 20 on which issues the Bureau of Land Management should consider as part of the review. (Reuters, US Department of Interior [Pdf], Center for Biological Diversity)

Rejection of wastewater cost upgrades casts shadow over three US plants: Regulators in Virginia and Kentucky have rejected bids by Appalachian Power to pass the costs of upgrading wastewater treatment plants onto power consumers. The Virginia Corporation Commission rejected the utility’s application to pass through the costs of upgrades at the 2933 MW John Amos and 1300 MW Mountaineer plants in West Virginia. The upgrades would enable the plants, which were respectively commissioned in the early 1970s and 1980, to keep operating until 2040. West Virginia approved passing the costs on to customers but separate approval was required from Virgina because the plants also supply Virginia. In July the Kentucky Public Service Commission rejected Kentucky Power’s request to upgrade its 1633 MW Mitchell plant. American Electric Power, which owns all three plants, said it will consider its options. If the plants aren’t upgraded to meet US Environmental Protection Agency standards they will have to close by 2028. (West Virginia Public Broadcasting)

Study finds China could retire existing coal by 2040: A study estimates Chinese coal plants could be phased out by 2040 if all power demand growth is met by renewables and storage and existing coal capacity is retired when fully depreciated. The Ministry of Finance allows coal plants to be depreciated between 20 and 30 years, though the study notes more recent industry practice has been to depreciate plants over 20 years. The study estimates phasing out coal generation by 2040 would require the installation of between 100 and 150 gigawatts (GW) of solar and wind capacity and 15,000 MW of energy storage per year to 2025. From 2025 to 2040 the rate of installation would have to increase to 250 GW per year of renewables and 90,000 MW per year of storage. (IScience)

Canadian coal company lobbies US state to relax selenium pollution standard: Teck Resources, which operates major metallurgical coal mines in British Columbia’s Elk Valley, is pressing Montana’s Department of Environmental Quality (DEQ) to abandon new selenium emission levels adopted in December 2020. DEQ’s Board of Environmental Review approved a selenium limit of 3.1 micrograms per litre in the Kootenay River, which flows into Lake Koocanusa which extends across the British Columbia and Montana borders. DEQ also adopted a new limit of 0.8 micrograms of selenium per litre in the lake. Teck Resources argues the previous standard of 5 micrograms per litre, first adopted in 1987, should be retained. The new standard was adopted to protect fish species after six years of studies and public consultation. The DEQ said it intends to oppose Teck Resources’ petition. (Flathead Beacon)

NSW regulator finds six coal companies illegally dumped tyres in mining pits: The New South Wales Environment Protection Authority (EPA) has found long-haul vehicle tyres had been illegally buried at six open-cut coal mines in part of the state between 2014 and 2020. To the dismay of local residents and the recycling industry the EPA, which did not name the offending companies, said that it had issued official cautions to the mine operators. Residents expressed concern about the risk to water quality while the Australian Tyre Recyclers' Association said the failure to impose a harsher penalty indicated the broader community was expected to pay for waste disposal but mining companies aren’t. (ABC News, Environment Protection Authority)

“More than any other power source, coal emissions have a devastating impact on the climate. And so it's time for countries around the world to set out clear plans to consign coal power to the history books and safeguard our planet for future generations,”

said [Twitter] Alok Sharma, the UK President for the COP26 climate negotiations before he triggered the demolition of part of the Ferrybridge coal plant.

News

Australia: Solar generation exceeds coal output for the first time in Australia’s main electricity grid.

Germany: The Greens candidate for Chancellor, Annalena Baerbock, said [German] a coal exit by 2030 would be a condition of her party participating in a coalition government.

Greece: Utility PPC may convert the new 660 MW Ptolemaida V lignite plant, due to be commissioned in 2023, to gas by 2025 instead of 2028.

Indonesia: Ministry reinstates coal export licences of three companies, including a Bumi Resources subsidiary, after they met their domestic market obligations.

Russia: A subsidiary of the Global Ports group plans to end coal handling at its Vostochny port terminal in September to concentrate on container traffic.

South Africa: The Minister for Energy, Gwede Mantashe, says he does not share Eskom’s vision of shutting coal plants and replacing them with renewables.

UK: Glasgow council bans companies contributing to climate change from the use of public buildings during the COP26 conference in November.

US: Federal appeals court orders power company Ameren to install scrubbers on its 1242 MW Rush Island plant in Missouri.
 

Companies + Markets

UK coal mine proposal on shaky financial ground: West Cumbria Mining’s proposed Whitehaven underground metallurgical coal mine may collapse. The company’s principal shareholder, EMR Capital Investment, stated it may end its support for the project due to the UK Government decision in March 2021 to hold an inquiry into the project. Documents viewed by a media outlet stated “all expenditure” other than on the inquiry had been halted, with staff given notice and the project office vacated. The decision to hold an inquiry came after environmental groups and others criticised the UK Government’s support for the project when it was promoting a transition away from coal ahead of the COP26 climate negotiations in Glasgow in November. (Independent)

Report says proposed Indian coal plants pose financial risks to backers: Carbon Tracker, a climate policy think tank, estimates the 60,000 MW of coal capacity still proposed in India would result in almost US$40 billion in stranded assets even it was assumed the operation of the plants was not constrained by climate policy. The group estimates that in a climate-constrained scenario almost 93 per cent of the capacity would result in US$54 billion in lost value with coal plants being retired by 2040 at the latest. It estimates the state-owned NTPC, which supplies about one-quarter of India’s electricity, would incur a potential loss of US$16 billion in coal plant values even in a business-as-usual scenario. Adani Power is the utility with the second largest potential losses of US$2.4 billion. (Economic Times)

Coal costs climb for Bangladesh utility: Bangladesh’s Ministry of Power, Energy and Mineral Resources has proposed a 4.97 per cent coal price rise be accepted as part of a new six-year contract with the Barapukuria Coal Mine Company. The mine is operated by a Chinese consortium of Xuzhou Coal Mining Group Company (XMC) and China National Machinery Import and Export Corporation (CMC) with the bulk of the coal supplied to the 525 MW Barapukuria plant. XMC-CMC proposed an 11.4 per cent increase in the cost of coal arguing higher transport and quarantine costs due to the COVID-19 pandemic and the increased difficulty in attracting Chinese workers. If the price increase is approved by Cabinet, the Barapukuria plant could be paying up to US$150 per tonne for domestic coal. (Dhaka Tribune, Global Energy Monitor)

Australian coal producers confront high thermal export prices but low asset values: While Australian thermal coal exporters are currently benefitting from prices higher than at any time since 2008 they are confronted with declining medium-term demand and low asset values. BHP, which has been looking to sell its 20 million tonnes a year Mt Arthur mine in the Hunter Valley, recently slashed its valuation of the project from A$550 million (US$397 million) to being a A$275 million (US$198 million) liability. Other companies are looking at maximising production life of existing mines or upgrading coal quality such as by increased washing. Adani’s push to develop its US$4 billion Carmichael project was dubbed as “growth regardless of asset prices” with the project costing far more than if the company bought BHP’s Mt Arthur mine which produces higher quality coal. Australia is the world’s second largest thermal coal exporter after Indonesia. (Argus, Sydney Morning Herald)

Proposed US CCS project was thrown a funding lifeline by US agency: Enchant Energy, a company that has proposed to build a carbon capture and storage (CCS) project at the San Juan Generating Station in New Mexico, is seeking a US$906 million loan guarantee after failing to attract investors for the project. Documents released under the Freedom of Information Act reveal that in January 2021 the Department of Energy proposed taxpayers take on a larger share of the costs of a study for the proposal. Enchant Energy has also been lobbying New Mexico state to assume liabilities for captured carbon dioxide and Congress for increases in tax credits for CCS projects. First Nations and environment groups have urged the Secretary of Energy, Jennifer Granholm, to suspend funding for the project until an environmental impact assessment has been undertaken. (Energy and Policy Institute)

Australian Government pushes capacity payments scheme backed by coal generators: A proposal backed by the Australian Minister for Energy, Angus Taylor, for capacity payments to be paid based on the installed capacity of existing generators – mostly for coal and gas plants – could cost between A$2.9 billion (US$2.1 billion) and A$6.9 billion (US$5 billion) per year. A report by the Institute for Energy Economics and Financial Analysis and Green Energy Markets estimates the cost of capacity payments, based on the capacity payments scheme that operates in Western Australia, could be between A$182 (US$132) and A$430 (US$312) a year per household. While public details of the proposed Physical Retailer Reliability Obligation are limited, it has primarily been supported by the operators of existing coal plants that are under stress from low-cost renewables generation. (RenewEconomy, Institute for Energy Economics and Financial Analysis)

Resources

“German election primer – 2038 end date for coal under fire as climate forecasts worsen”, Clean Energy Wire, August 23, 2021.

This article provides a comprehensive overview of the debate over Germany’s 2038 coal exit policy ahead of the September 26 national election.

Unused Tools: How Central Banks are Fueling the Climate Crisis, Oil Change International, August 2021. (Pdf) (Media Release here.)

This 39-page report reviews a dozen central banks and finds they could — but largely aren’t — play a significant role in shifting financial flows away from coal, oil and fossil gas projects.