November 14, 2019
Issue 299  |  View Past Issues

Editor's Note

The International Energy Agency’s latest World Energy Outlook points out that the transition away from fossil fuels, especially in the power sector, is accelerating but that it is currently nowhere near fast enough to hit Paris Agreement targets. Both trends have been on display over the last week.

In the US, a court has rejected, in part on climate protection grounds, a proposal for an expansion of an existing coal mine. The latest estimate of new power generation costs in the US by Lazard put the cheapest unsubsidised new solar generation as cheaper than existing coal power, a crossover point which is likely to see the acceleration of the retirement of existing coal units. Anglo American, a major coal exporter, has hinted that next year it will decide to exit the thermal coal sector. In Europe, finance ministers have backed an end to financial support for all coal projects. In Australia, BHP, a major exporter of coal from Colombia and Australia, suffered a 30 per cent vote in support of a resolution opposed by directors that the company should leave lobby groups promoting policies at odds with the Paris Agreement.

In India, the slowing economy has resulted in dramatic declines in power demand in heavily industrialised states, adding further stress on the power sector and undermining coal imports. In the Indian state of Assam, power from a new coal plant is so expensive compared to the power pool price that the state government is calling for a bailout.

But there are worrying signs too. In Germany, the ruling government is backsliding on commitments in the recommendations of the coal exit commission. In China, there are indications the government doesn’t want to face up to the problems of dealing with its huge coal plant overcapacity and the need to accelerate a shift to clean energy. While most exporters have been struggling to adjust to the rapidly changing global market, the Russian Government is pushing ahead to increase the capacity of transport infrastructure to boost exports into the Asian market.

Bob Burton


The problem with China’s ‘clean coal’ push is that there is no such thing as ‘clean coal’

Chinese Premier Li Keqiang’s recent embrace of ‘clean coal’ obscures the reality that the country has huge overcapacity of coal plants at a time that when it needs to accelerate the integration of more renewable power, write Melissa Brown and Ghee Peh from the Institute for Energy Economics and Financial Analysis in the South China Morning Post.

International Energy Agency’s World Energy Outlook warns of unsustainable emissions

The latest edition of the International Energy Agency’s (IEA) World Energy Outlook estimates in its base case scenario that global consumption of coal won’t fall fast enough to offset the increased use of oil and gas in the period to 2040, writes Simon Evans in Carbon Brief.

The IEA and the World Energy Outlook 2019: still working for fossil fuels, not global climate goals

The IEA is continuing to provide cover for fossil fuel investments that add up to climate disaster,  writes Kelly Trout from Oil Change International.

Top News

US court rules proposed Colorado mine expansion be reconsidered: A US federal court judge has ruled against Arch Coal’s proposed expansion of the West Elk mine in western Colorado’s Gunnison National Forest. In March the Department of Interior (DOI) approved Arch Coal’s proposed 2000 acre (809 hectare) expansion to produce an extra 18 million tons (16 million tonnes) over three years. The proposed expansion included the construction of new roads and 43 wells to vent an estimated 12 million tonnes of methane. US District Judge R. Brooke Jackson ruled that the DOI violated federal law by failing to consider alternatives to venting the methane or assessing new information on potential impacts on water and fish in the project area. The agency has been directed to reconsider the mine expansion and the company prevented from undertaking further road construction or well drilling until the agency has completed its evaluation. (Wild Earth Guardians)

European Union finance ministers press for end to support for fossil fuels: In a significant toughening of their position, European Union (EU) finance ministers for the first time agreed that the European Investment Bank (EIB), the World Bank and other financial institutions should end support for all fossil fuel funding. Previously, EU finance ministers had only backed calls for lending restrictions on new coal plants. However, Hungary is pushing for an exemption to allow support for gas projects in countries including the Ukraine and Croatia as an alternative to reliance on Russian gas supply. The finance ministers’ announcement came just days after France announced that it would ban export guarantees for coal projects. The EIB’s next board meeting is on November 14 when the issue will be considered again. (Reuters, Reuters)

Pressure builds on BHP to dump lobby groups: Of the shares voted at BHP’s Australian annual general meeting, 29.58 per cent were cast in favour of a resolution put forward by the Australasian Centre for Corporate Responsibility (ACCR) proposing the company suspend its membership of industry associations advocating policies which are inconsistent with the Paris Agreement. ACCR has identified advocacy by the Minerals Council of Australia, the Business Council of Australia, the Queensland Resources Council, the NSW Minerals Council and others as promoting policies at odds with the Paris Agreement. ACCR argues BHP is aware their advocacy is contrary to the company’s support for the Paris Agreement but it is “unable or unwilling to resolve it.” In 2017 a similar resolution gained support from 10 per cent of the votes cast. (Guardian, Australasian Centre for Corporate Responsibility)

Draft German law retreats on coal-exit commitments: A leaked draft of the German Government’s proposed coal exit legislation has shocked environmental groups by imposing set-back limits on onshore wind farms, opted for voluntary rather than mandatory closures of the country’s 40 hard coal plants and rejected the need to set a carbon floor price to drive closures rather than rely on compensation from taxpayers. The absence of a mandatory shut down of hard coal plants may also see the commissioning of Uniper’s almost completed 1100 megawatt (MW) Datteln 4 plant. The bill proposes no specific measures for the closure of lignite plants beyond concluding agreement with utilities on initial closures and compensation agreements. Where the coal exit commission proposed that progress towards the 2038 exit target be reviewed every three years from 2023 and adjusted as required, the draft bill proposes a review only by 2032 at the earliest. (Reuters, Clean Energy Wire, ClientEarth)

Indian coal plants delay pollution upgrades despite Delhi pollution: Despite public alarm at sustained extreme air pollution levels in New Delhi, India’s capital city, ten coal plants in the surrounding area will not meet the December 2019 deadline to comply with new coal plant emission standards. According to the Indian Government’s Central Electricity Authority, the owners of eight of the plants have not ordered the flue-gas desulfurization (FGD) units required to meet the new standards. FGD units can take up to three years to retrofit to existing plants. The new standards were first introduced in December 2015 with a compliance deadline of December 2017. However, power industry lobby groups persuaded the government to grant a five-year extension until December 2022. It has been estimated that the failure to enforce the new standards nationwide could result in up to 300,000 premature deaths by 2030. (Business Standard)

New South Wales delays bill to limit climate scrutiny of new coal mines: In the midst of a bushfire emergency, the NSW Government has deferred until 2020 consideration of a bill aimed at limiting the ability of the state’s planning agencies from considering greenhouse gas emissions emitted by overseas customers of proposed new coal mines. The deferral followed a public protest on the day the bill was due to be considered. The bill follows lobbying by the New South Wales Minerals Council — a lobby group representing companies including Glencore and BHP — aimed at reversing the precedents set in recent court cases. In April the NSW Land and Environment Court rejected the proposed Rocky Hill mine in part on the impact on the global climate, while in August the expansion of the United Wambo project was approved but on condition that exported coal was only sold to countries that have signed the Paris Agreement. In September the Independent Planning Commission rejected the proposed Bylong coal mine, in part because of its impact on climate change. (Sydney Morning Herald, NSW Environmental Defenders Office)


Australia: NSW Government has deferred decisions on further coal mining under Sydney's drinking water catchment until early 2020.

Montenegro: A consortium led by China’s Dongfang Electric International Corporation has been selected to refurbish the 210 MW Pljevlja lignite plant.

Pakistan: China agrees to fund feasibility study on converting Thar lignite into diesel.

US: Coal baron Bob Murray has dropped his defamation suit against broadcaster John Oliver.

US: McKinsey facing criminal investigation reportedly over its role in the bankruptcy proceedings of the coal company Alpha Natural Resources.

US: The Navajo Nation has terminated indemnity agreements used to assist the Navajo Transitional Energy Company’s purchase of three coal mines in Montana and Wyoming.

Companies + Markets

Anglo American hints at coal exit: Investor presentations published ahead of a tour of Anglo American’s projects in Australia have omitted including the company’s thermal coal projects from those considered to have long-term potential. A spokesperson for Anglo Australian said the company was gradually moving away from thermal coal. RBC Capital Markets, an investment bank, stated that in the next year Anglo American would determine whether it would retain its thermal coal projects or sell them off. The company produces coal from mines in Australia, Colombia and South Africa and expects to sell 26 million tonnes of thermal coal and 22–24 million tonnes of metallurgical coal in 2019–2020. (Bloomberg)

Latest US data reveals renewables challenge to existing coal plants: In its 2019 analysis of US power generation costs Lazard, a financial advisory firm, estimates that onshore wind and solar power have recorded further cost declines and are increasingly competitive with existing coal plants. Lazard estimates the unsubsidised levelised cost of energy from onshore wind in the US is now US$28–52 per megawatt hour (MWh) and US$32–44 per MWh for utility-scale solar. It estimates the average cost of power from existing coal plants is US$33 per MWh. In 2018 Lazard estimated the cheapest new unsubsidised solar was on a par with existing coal generation. Lazard estimates a new coal plant with carbon capture and storage technology designed to catch 90 per cent of carbon dioxide (CO2) emissions would cost US$152 per MWh, excluding the cost of transporting the compressed CO2 and storing it. Lazard also estimate that power from subsidised onshore wind farms now costs US$11 per MWh. (Lazards)

Indian power demand slumps: An economic slowdown in India has had the dramatic knock-on effect of causing 13 per cent slump in electricity demand in October compared to the same period in 2018. Power demand has fallen in each of the last three months. Data from the Central Electricity Authority reveals that in October power demand declined by 26 per cent in Madhya Pradesh, 22.4 per cent in Maharashtra, 18.8 per cent in Gujarat, and 8.3 per cent in Uttar Pradesh. Aside from four small states, electricity demand fell in all regions. Peak electricity demand was also down 5.5 per cent year on year. While analysts caution against reading too much into short-term data, the significant reduction is likely to have a big impact on the already stressed distribution utilities. Coal imports have also declined for each of the last three months, with volumes in October 16.9 per cent lower than the same time in 2018. (Economic Times, Reuters)

Indian state government wants bailout for expensive coal plant: In 2006 the government of Assam state successfully lobbied NTPC to build the 750 MW Bongaigaon coal plant to replace an old state-owned plant. Assam contracted to take 430 MW from the plant with the remainder taken by five other north-eastern states. While the last of the three units was commissioned in March 2019, Assam now regrets contracting to buy power from the plant. At present it is paying a fixed cost of 2.41 rupees (about three US cents) per kilowatt hour (kWh) without taking delivery of any power. It is doing this to avoid having to pay 3.2–3.4 rupees (about five US cents) per kWh for fuel costs because it can buy power from the open market for 3 rupees (about four US cents) per kWh. Assam is now lobbying the central government to provide a US$139 million to NTPC to reduce the capital cost of the plant. (Hindu Business Line)

Moody’s flags rising risks for Indonesian coal miners needing to refinance debts: Moody’s, a leading ratings agency, estimates that seven Indonesian coal mining companies will face increasing refinancing risks ahead of a “large debt maturity wall” in 2022. Moody’s estimates seven Indonesian mining companies will need to refinance US$2.9 billion of bonds and bank debt in 2022 compared to about US$800 million in 2020 and US$700 million in 2021. Moody’s assessed that companies such as ABM Investama and Geo Energy Resources will have a weak credit profile due to depleting coal reserves. Moody’s also flagged that Adaro, Indika and Bumi Resources are currently covered under old contract of work mining titles which will expire and need to be renegotiated. However, they argue Adaro and Indika are better placed to manage their refinancing risk. However, they caution that refinancing risks “is further exacerbated by rising creditor concerns over environmental risk, which could materially limit sources of capital.” Indonesia is the world’s largest exporter of thermal coal. (Moody’s)

Russian port and rail upgrades target Asian market: The Russian state development bank VEB has announced that it and the government-owned VTB bank will provide US$532.4 million for the construction of a 12 million tonnes a year coal terminal in Vanino port. The new terminal is expected to be commissioned in 2020 with capacity to increase to 24 million tonnes a year. In a separate development the Sibanthracite Group is proposing a new US$1 billion railway tunnel to increase coal capacity on the Taishet to Vanino railway line from 16 million tonnes a year to eventually 100 million tonnes a year. Work on the proposed railway upgrade is planned to start in 2020 and be commissioned in 2024.The Russian Government is promoting an expansion of coal exports into the Asian market to offset the declining European market and to take advantage of a shorter sailing time to major north Asian markets compared to exporters form Australia and Indonesia. (Reuters, Platts)

Poland’s revised energy strategy keeps coal longer but reinstates onshore wind: In a revised version of its energy policy to 2040, the Polish Government has reinstated onshore wind generation but provides for only 264 MW in additional capacity in 2040 beyond the 9497 MW estimated to be online in 2020. In the draft energy plan the Polish Government proposed that onshore wind generation would effectively be phased out, declining from an estimated 7000 MW in 2025 to just 800 MW in 2040. The latest version of the policy also slows the decline of coal with the current 8640 MW of lignite plants estimated to decline to 3400 MW in 2040 compared to the previous estimate of 1500 MW. The policy also estimates hard coal plants will decline from 15,600 MW in 2020 to 7630 MW in 2040. The previous draft proposed 6700 MW of hard coal capacity in 2040. (Platts)

Zimbabwean scandal prompts China to suspend support for Hwange plant: Chinese banks have indefinitely suspended US$1.1 billion in financial support for the upgrading of two units at the Hwange coal plant. The suspension followed a decision by the Zimbabwe Government to divert US$10 million from an escrow account for a Chinese backed airport project. It has been reported that despite protests from the contractor on the airport project and Chinese Embassy officials, the Zimbabwean Government has not repaid the funds. China Eximbank had also flagged that it was considering withdrawing support from the Hwange project after funds had been moved out of the escrow account for the project. The upgrading of Units 7 and 8 at the plant, which have a combined capacity of 600 MW, is almost one-quarter complete. (Zimbabwe Independent)


Hydrogen: High hurdles, huge potential, Bloomberg New Energy Finance, October 2019.

This 18-minute long video outlines the potential and challenges of hydrogen in displacing coal and gas in power generation and other end uses such as steel production.

World Energy Outlook 2019, International Energy Agency, November 2019. (The pdf of this report sells for €120.) (The Executive Summary is here, the Introduction here and a brief summary on key coal findings is here.)

This 810-page report provides a detailed overview of global energy trends.