November 12, 2020
Issue 347  |  View Past Issues
CoalWire

Editor's Note

The defeat of President Trump in the US election offers the prospect of renewed global momentum on climate and the reversal of some of his policies such as the weakening of coal plant pollution control standards. In Ohio the former MP at the centre of the coal and nuclear bailout scandal, Larry Householder, has been re-elected despite facing federal racketeering charges. But the pronounced shift away from coal among utilities, banks and insurance companies illustrates global action is not reliant on waiting for the US to move.

Two major companies involved in new coal plant construction — Siemens and Toshiba — have announced they won’t take on new orders, albeit with caveats. In Asia, moves away from support for new coal plants continues to gather momentum. In the Philippines, the joint venture behind the proposed 700 megawatt (MW) expansion of the Calaca coal plant has been scrapped. In South Africa, the proposed Thabametsi coal plant — which was recently jettisoned by South Korean utility KEPCO — has now lost support of two more former backers and had its environmental authorisation set aside. In Canada, the accelerated closure of the Keephills plant in Alberta has the knock-on effect of closing the Highvale thermal coal mine. In Pakistan, the World Bank is urging the government to slash its projected 2030 coal capacity and instead boost renewables.

As northern India and Pakistan are once more gripped by extreme air pollution, dubbed as the ‘airpocalypse’, media coverage is tending to focus on short-term solutions. However, a new report reveals the greatest flaw in various plans by the Indian Government to improve air quality is the inability and unwillingness of under-resourced state pollution control agencies to enforce standards. This comes as many Indian media outlets report the auctioning off of 19 more coal blocks without the faintest suggestion of the connection between coal burning and worsening air pollution.

It’s not often there is a humorous story like the rebranding move by Adani’s Australian subsidiary to adopt the faux Latin name Bravus which scholars insist translates not as “courageous” as the company claimed but as “crooked” and “mercenary or assassin”.

Bob Burton

Features

Asia’s retreat from coal power gathers momentum

This year has seen 56 global banks, insurers, pension funds and asset managers boost coal exit policies, writes Tim Buckley from Institute for Energy Economics and Financial Analysis in Asia Times.

How to retire the global coal fleet now — with coal phase-out mechanisms

Coal phase-out mechanisms can help accelerate the retirement of coal power and spur a just transition toward a clean energy future, write Steven Herz from the Sierra Club and Caroline Ott from the Rocky Mountain Institute.

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Biden presidency may hasten global switch from coal to renewables

The International Energy Agency estimates renewables could overtake coal as the largest source of electricity as early as 2022 if President-elect Joe Biden implements his plan to decarbonise US power generation by 2035, write Nathalie Thomas in Edinburgh and Derek Brower in the Financial Times.

Campaigns

Proposed Philippines coal plant expansion scrapped

The proposed 700 MW expansion of the existing Calaca power station in Batangas province has been scrapped after community opposition and the government’s recent announcement of a moratorium for new greenfield coal power plants. In a statement to the Philippines stock exchange, Semirara Mining and Power, Meralco Powergen and St. Raphael Power Generation announced they were terminating a 2016 joint venture agreement for the plant expansion. The proposed Calaca plant faced sustained community opposition and in May 2019 the Supreme Court of the Philippines invalidated the plant's power supply agreement because it had not gone through a competitive selection process. (Manila Standard, Global Energy Monitor)

US utility announces closure of three plants by 2025

Talen Energy has announced it will close three coal plants by the end of 2025: the 1758 MW Montour plant in Pennsylvania and the 1370 MW Brandon Shores plant and the 359 MW Wagner plant in Maryland. The company said it plans to establish a 100 MW solar plant next to the Montour plant as part of a 1000 MW portfolio of new solar and electricity storage projects. Talen Energy had previously announced its plan to close the 1616 MW Brunner Island plant in Pennsylvania by the end of 2028. The company said it is negotiating an agreement with the Sierra Club to “avoid future litigation or permit disputes related to coal at Talen's transitioning sites.” Both the company and Sierra Club called on Pennsylvania and Maryland decision-makers to ensure transition support for affected workers and communities and to invest in clean energy. (Talen Energy, Sierra Club)

Top News

Siemens and Toshiba rule out new coal plant projects: Siemens Energy has announced it will no longer participate in “new tenders for pure coal energy plants”. However, the company said it will honour “existing commitments for coal-fired power plant projects, including binding offers” and will continue to be involved in coal-fired combined heat and power projects. Toshiba, which is estimated to have 11 per cent of the global thermal power generation market outside China, said it would cease accepting orders for new coal plants. However, it said it will complete orders for about 10 coal plants in Japan, Vietnam and other countries. (Reuters, Siemens Energy, Nikkei Asia)

Study finds Indian pollution regulators failing: As extreme air pollution grips northern India and Pakistan once again, a study has found India’s Central Pollution Control Board and many of the 27 state pollution control boards are chronically understaffed and underfunded. It also found many view their role as being confined to providing technical advice rather than regulatory bodies responsible for enforcing standards. In January 2019, the Indian Government launched a plan to slash air pollution by 20–30 per cent by 2024. However, the study by the Centre for Chronic Disease Control argues that the pollution control boards lack the capacity to ensure pollution reduction goals are achieved. (IndiaSpend, Centre for Chronic Disease Control)

South African coal plant loses permit and backers: The environmental authorisation for the proposed 630 MW Thabametsi coal plant has been set aside after legal action by environmental justice groups Earthlife Africa and groundWork. The groups had argued  former Environment Minister Molewa had disregarded the climate impacts of the plant in granting the authorisation. Two South African government finance agencies have also backed away from support for the plant after KEPCO’s withdrawal from involvement in further overseas coal projects. KEPCO originally held a 50 per cent stake in the project and offered to contribute US$2.1 billion in funding. The Industrial Development Corporation said it wouldn’t support the project “in its current form” and the Public Investment Corporation has ruled out support for the proposed plant. The proposed plant was included in the South African Government’s latest energy plan to appease pro-coal lobby groups even though it was not ranked as a ‘least cost’ option. The project has also been the subject of legal action by civil society groups. (Center for Environmental Rights, Reuters)

US election rekindles hopes of a greener transition for the US: President-elect Joe Biden has stated that one of his first acts after being sworn in on January 20, 2021 will be re-joining the Paris Agreement and pursuing action on domestic climate policy. However, Biden faces potentially significant hurdles. The Republicans are likely to hold a 50-48 majority in the Senate with run-off elections to be held on January 5 for the two seats in Georgia. Both seats were previously held by Republicans but Georgia narrowly leant Democratic in the presidential vote. Biden’s nominations for key executive positions in his administration require Senate confirmation. However, even if faced with a hostile Senate, Biden can reverse some Trump policies under existing laws or through executive actions. The Biden–Harris transition plan states the new administration will move “ambitiously … to achieve a carbon pollution-free power sector by 2035.” (Financial Times, Boston Globe, New York Times  Biden-Harris Transition)

US utility flags possible criminal charges over bailout scandal: First Energy, which was known as FirstEnergy Solutions prior to emerging from bankruptcy, has flagged in a stock exchange filing that the company may be subject to “potential criminal or civil liabilities” as a result of current investigations and lawsuits flowing from the scandal over the Ohio House Bill 6 (HB 6). FirstEnergy has also announced its top in-house lawyer and its chief ethics officer had “separated from” the company but gave no reasons. Larry Householder, the former Speaker of the Ohio House of Representatives who was charged over his role in the HB 6 scandal, was re-elected to his seat comfortably, defeating write-in candidates. The Republican member who assisted the Federal Bureau of Investigation in its investigation and who voted against the bailout has lost his seat. (Cleveland.com, Cleveland.com, Highland Country Press)

Adani Mining’s name change became an embarrassment within hours: The CEO of Adani’s Australian mining subsidiary, David Bossof, announced the company would be renamed as Bravus Mining & Resources claiming that in medieval Latin the word “bravus” means “courageous.” However, academics said the Latin word “bravus” did not mean courageous but is more accurately translated as “crooked”, “deformed” and “mercenary or assassin”. Professor Tim Parkin from the University of Melbourne said “bravus” in a medieval Latin dictionary indicated it “tends to be used of someone who is villainous … A crook, or a bandit, or a cut-throat.” Stop Adani said the rebranding was acknowledgement the Adani name was “toxic” with 85 companies having ruled out working on the Carmichael coal project. (Guardian, Adani Mining, Stop Adani)

“It is becoming harder to sell stakes in coal power plants as coal has run into a lot of flak,”

said Masumi Kakinoki, Marubeni Corporation’s Chief Executive Officer.

News

Australia: Rockhampton Mayor resigns after refusing to update her register of interests to include costs of Adani hospitality in India.

Australia: Sumitomo Corporation writes down $US241 million on its 50 per cent stake in the Bluewaters coal power station in Western Australia.

China: Coal imports halved in October compared to 2019 as government seeks to bolster domestic producers.

Indonesia: Mitsui resumes construction work on 2000 MW Batang plant despite having lost 150 billion yen (US$1.45 billion) on the project.

US: A coal train hauling two dozen coal wagons derailed near Panama in Pennsylvania.

Companies + Markets

Canadian power transition triggers Alberta mine closure: TransAlta, a power utility with operations in Canada, the US and Australia, will end coal-fired power generation at its 403 MW Keephills Unit 1 by the end of 2021. The unit, which was previously flagged for closure in 2023, will be converted to run as a 70 MW gas unit. The company has announced the closure of the Highvale thermal coal mine by the end of 2021 as it switches to natural gas at all of its coal-fired plants in Canada. The company’s CEO, Dawn Farrell, said following closure 40 to 50 people will be employed to rehabilitate the mine over a 20 year period. (CBC, Transalta)

Peabody heads for bankruptcy, again: Peabody Energy, the largest US coal producer and the fifth largest in Australia, has warned investors there is “substantial doubt” about whether it will be able to continue as a going concern if it can’t renegotiate its debt obligations. In its latest quarterly report Peabody reported a net loss of US$67.2 million and warned the COVID-19 pandemic has “accelerated a multi-year decline in coal demand” in the US. It said US coal generation declined by 24 per cent in the nine months to the end of September compared to the year before and now provides just 19 per cent of the country’s electricity. Peabody noted coal markets have also been hit by reduced imports by China, India and Japan and increased competition from gas and renewables. Metallurgical coal restrictions in China and reduced steel demand in the European auto sector have also affected metallurgical coal demand. Peabody Energy emerged from bankruptcy in 2017 after shedding $5.2 billion in debt. (Financial Times, Peabody Energy)

US utility proposes just transition strategy for First Nations communities: Arizona Public Service is seeking Arizona Corporation Commission approval for a US$144 million 10-year just transition plan for three Navajo communities affected by the closure of two coal plants and an associated mine. The plan proposes US$144 million be paid over 10 years for projects including electrification of housing and businesses, economic development projects and support for the Navajo gaining rights for cooling water allocated to the Four Corners Power Plant and San Juan Generating Station. The package also includes support for issuing a request for proposals for 250 MW in renewable projects on Navajo land and a further 350 MW within a year of the closure of the 1636 MW Four Corners plant which is due to close by 2031. The Four Corners plant employs 321 people, mostly Navajo, with a similar number at the nearby mine owned by the Navajo Transitions Energy Company. (AZCentral)

BHP pursues CCS path for steel sector: BHP, the world’s largest exporter of metallurgical coal, has announced it has entered into an MOU with Chinese steel producer China Baowu under which it will spend US$35 million over five years to reduce the emissions intensity of the company’s blast furnaces. While the Swedish steel producer SSAB is working on decarbonising steel production by establishing a hydrogen-fuelled furnace, BHP’s emphasis is on investigating the use of carbon capture and storage at one of China Baowu steel plants. BHP said the companies will also investigate co-firing blast furnaces with hydrogen. (Financial Times, BHP)

Queensland Government entity invests in coal port: The Queensland Investment Corporation, a government agency that manages public sector employees’ superannuation funds, has spent A$150 million to buy a 9.9 per cent stake in the Dalrymple Bay Coal Terminal from the Canadian asset company, Brookfield. The port, which was originally owned by the Queensland Government, was privatised in 2001. (InQueensland, Australian Financial Review [paywall])

Indian coal auction completed: The Ministry of Coal has completed the auction of 18 coal blocks out of the 38 originally on offer. The auction was based on the percentage of revenue above a reserve price offered by bidders to the state government. Fifteen of the coal blocks originally open for bids attracted no offers and another four elicited only one bid and were thereby excluded from the process. The 19 blocks auctioned off, with a nominal capacity of 51 million tonnes a year, were distributed among a range of companies with Aurobindo, EMIL Mines and Mineral Resources and JMS Mining each winning two blocks. Adani Enterprises was the winning bidder for the Gondulpara coal block in Jharkhand. The Minister for Coal, Pralhad Joshi, said the four blocks that attracted only a single bid are likely to be offered in the next auction process. (Livemint, The Hindu, Ministry of Coal [Pdf])

Indonesian coal gasification plant would burn money: The Institute for Energy Economics and Financial Analysis (IEEFA) has warned that state-owned Tambang Batubara Bukit Asam’s proposed US$2 billion coal gasification plant in Sumatra could lose US$377 million a year. IEEFA estimates the losses would exceed the value of reduced imports by US$19 million a year. Recent legislation abolished the 13.5 per cent royalty on coal for projects that process coal. President Joko Widodo has endorsed the concept of coal gasification to produce methanol and subsequently dimethyl ether as a substitute for imported liquefied petroleum gas. (Institute for Energy Economics and Financial Analysis)

World Bank urges Pakistan to slash 2030 coal power target: The lead author on a World Bank study on the renewable energy potential in Pakistan has urged the government to slash the share of coal power in 2030 from the current target of 29 per cent to 13 per cent. Karsten Schmit, the lead author of the report, said power plants based on imported coal or domestic Thar province lignite are not competitive with renewable generation even without considering the environmental impacts. The World Bank has urged the Pakistan Government to add 6700 MW of wind and 17,500 MW of solar capacity by 2030. “Domestic coal is not economical when external costs of greenhouse gas emissions emissions are considered. Other risks, such as water scarcity and security of supply due to concentration in one area, may further reduce the feasibility of domestic coal,” said Najy Benhassine, the World Bank Country Director for Pakistan. (The Express Tribune, World Bank)