October 22, 2020
Issue 344  |  View Past Issues

Editor's Note

The decision by the South Korean utility to rule out further involvement in more overseas coal plants beyond the proposed Vung Ang 2 project in Vietnam will leave plans for plants in South Africa and the Philippines floundering. While state-owned KEPCO has decided to press ahead with the Vietnamese plant it is facing increasing pressure from investors and the prospect of the South Korean parliament voting to end support or all new coal projects. In response to extreme air pollution in Delhi, the Indian Government has flagged that up to 70 coal units could be closed in the next two years.

The upheaval in the Polish coal sector continues. State-owned PGE has proposed to tap into international funding by morphing into a cleaner company with a greater emphasis on renewables while dumping its unwanted coal plants into the government’s lap to sort out. A proposed expansion of the Turow lignite mine is also facing opposition from a German town just across the border which will suffer the effects of water drawdown and pollution. In both cases the European Union may be the final arbiter of what happens to the plans.

The latest cost of power generation analysis by the consultancy Lazard points to solar and wind costs lower than new coal and much of the existing fleet. The consultancy says new coal plants with carbon capture and storage would be prohibitively expensive. As the cost of renewables falls, banks that have so far resisted ending new coal lending are taking some initial steps. This week Mitsubishi UFJ Financial Group, Japan’s largest financial services company, flagged it will halve coal lending by 2030.

Bob Burton


The International Energy Agency’s World Energy Outlook is still rose-tinted

In response to past criticisms, the International Energy Agency’s World Energy Outlook scenarios have been modified but they remain far from perfect, writes Sven Teske from the University of Technology Sydney in Reuters.

China’s coal import ban has more bark than bite

The latest reports of China imposing a ban on Australian coal imports is an early warning of what’s to come as China’s leadership starts putting its decarbonisation words into action, writes David Fickling in Bloomberg.

Top News

Korean utility abandons projects in South Africa and Philippines: Korea Electric Power Corporation (KEPCO), a state-owned South Korean utility, has ruled out further involvement in the 1000 megawatt (MW) Sual 2 project in the Philippines and the 630 MW Thabametsi plant in South Africa. KEPCO’s chief executive, Kim Jong-gap, told a Korean National Assembly committee hearing KEPCO would only consider further involvement in the plants if they were converted to gas. The Thabametsi plant was proposed to be based on domestic coal. KEPCO also insisted it would press ahead with plans to invest US$230 million in the Vung Ang 2 coal project in Vietnam and the Jawa 9 and 10 units in Indonesia. (Mining Weekly, Global Construction Review)

German city joins Czech Republic in opposing Polish mine expansion: A report by hydrogeologist Ralf E. Krupp and commissioned by Greenpeace Germany estimates PGE’s proposed expansion of the Turow lignite mine in Poland could lower the water table by a further 20 metres resulting in subsidence of up to 1 metre in the urban area of the German town of Zittau. The report also warns of ongoing water pollution problems. The Mayor of Zittau has joined with representatives of Liberec in the Czech Republic in calling on the European Commission to declare that Poland’s approval of the mine expansion is in breach of European Union standards including the Water Framework Directive and Environmental Liability Directive. (Greenpeace Germany [Pdf], (European Environment Bureau)

India flags possible closure of up to 70 coal units: India's Minister for  Environment, Forests and Climate Change Minister, Prakash Javadekar, has flagged that up to 70 coal units could be closed in the next two years to curb pollution. The statement followed the Minister of Environment in the Government of Delhi, Gopal Rai, urging the Central Pollution Control Board and a Supreme Court-appointed panel to order the closure of 11 coal plants within a 300 kilometre radius of Delhi. The call came as Delhi’s fine particle air pollution reached extreme levels. The plants the Delhi government wants closed have failed to install flue gas desulphurisation units to slash sulphur dioxide emissions along with other pollution controls. The pollution control standards were first announced in November 2015 with a compliance deadline of December 2017. The deadline was extended to December 2019 after lobbying by power utilities. (Economic Times, The Hindu)

Report calls for tougher NSW coal-ash standards: A report by the Hunter Community Environment Centre (HCEC) estimates 100 tonnes of heavy metals leach into New South Wales waterways a year from the estimated 216 million tonnes of coal-ash waste. Currently the owners of NSW power stations currently pay only A$150,000 (US$106,000) a year in fees for water pollution. HCEC argues a levy of A$20 (US$14) per tonne of coal ash should be imposed to help drive an increase in the reuse of coal ash, which could avoid the accumulation of a further 45 million tonnes of waste. The NSW Environment Protection Authority acknowledged the report and told a parliamentary inquiry it would undertake a study of coal ash on water systems and the environment. (ABC News, Hunter Community Environment Centre)

Ohio MP at centre of scandal runs for re-election as repeal of bailout bill gathers support: Federal prosecutors have subpoenaed records of Energy Harbor Corporation executives as part of an investigation into the scandal over a US$60 million campaign to support a bailout of nuclear and coal plants in Ohio and Indiana. Energy Harbor was one of the companies that provided part of the funding used to support election campaigns of political supporters of the bailouts and defeat opposition of public interest groups. One of those arrested by federal prosecutors, former Speaker of the Ohio House of Representatives, Larry Householder, is running for re-election with the support of the Republican Party, but is being opposed by four write-in candidates. (Wall Street Journal [paywall], The Courier, The Columbus Dispatch)

Russia approves new Arctic coal mine and export terminal: The General Board of State Expert Review (Glavgosexpertiza) has approved plans by a subsidiary of AEON for the construction of the Yugo-Zapadny metallurgical coal mine on the Taimyr Peninsula in the Russian Arctic. Severnaya Zvezda, a subsidiary of AEON, proposed the construction of a mine producing five million tonnes a year with a proposed mine life of 28 years. The project also includes a new seaport and terminal on the coast of the Kara Sea. Sberbank, a state-owned Russian banking and financial services company, is a key backer of the project. President Putin has promoted resources projects in the Arctic and development of the Northern Sea Route through the Arctic Passage to access the Asia Pacific region. (Barents Observer, Glavgosexpertiza [Russian])

“Coal is under bone-crushing pressure or is fundamentally dead,”

said George Bilicic from the consultancy Lazard on the release of its latest assessment of current energy generation costs.

“#Coal is under bone-crushing pressure or is fundamentally dead,” said George Bilicic, Lazard’s vice chairman of investment banking and head of global power, #energy and infrastructure. https://t.co/lCdK036ZaQ?amp=1


Australia: Federal Energy Minister awarded a A$3.6 million (US$2.5 million) grant for a feasibility study on a 1000 MW coal plant before a study on the energy needs of North Queensland had been completed.

Bangladesh: GCM Resources and China’s NFC agree to establish a joint venture company for the development of the controversial Phulbari coal project.

Bulgaria: Government calls for European Union support to cut Bulgaria’s coal generation to meet 55 per cent emissions reduction target by 2030.

Czech Republic: Greenpeace warns government consideration of coal plant end dates of up to 2043 would be out of step with European Union climate goals.

India: Ministry of Coal seeks to buy 1760 hectares of the Hasdeo Arand protected forest for Coal India.

India: Hundreds protest plans for Goa as a major coal handling port.

Japan: Minister plans to relax planning restrictions on wind and solar power developments.

North Macedonia: State utility ESM plans to convert to gas a 233 MW lignite unit at the Bitola plant within five years but to run the other two units for another decade.

Pakistan: Government reveals discussions with Chinese companies to establish a coal-to-oil plant and a coal-to-gas plant based on lignite from the Thar coalfields.

US: Coalition of NGOs launches legal action to ensure the cleanup of coal mines in Kentucky, West Virginia and Virginia formerly operated by the now-bankrupt company Blackjewel.

Companies + Markets

European investors criticise companies backing Vietnamese coal plant: A coalition of 18 European investors with US$3.4 trillion in combined assets have warned Japanese banks and South Korean companies over their support for the proposed 1320 MW Vung Ang 2 coal plant in Vietnam. The project is being backed by Japanese banks including the Japan Bank for International Cooperation, Nippon Export and Investment Insurance, Mizuho Financial, Mitsubishi UFJ Financial and Sumitomo Mitsui Financial. The project has the involvement of KEPCO, Doosan Heavy Industries and Samsung C&T. (Financial Times)

Major Japanese and South Korean banks set to cut coal lending: Mitsubishi UFJ Financial Group (MUFG), Japan’s largest financial services company, is reportedly set to announce it will halve coal lending by March 2031 and eliminate it by 2040. In March this year MUFG is estimated to have about US$3.58 billion of coal loans. Shinhan Financial Group, one of South Korea’s banks, has flagged it will unveil a plan to achieve carbon neutrality with it likely to rule out new coal financing but honour existing contracts. A spokesperson insisted emissions from its continued support for coal would be offset by its financial support for new renewables projects. (BloombergLaw, Eco-Business [reg. required])

Declining cost of renewables further undermines US coal: The annual analysis of power generation costs by the consultancy Lazard estimates that unsubsidised US utility-scale solar generates electricity at US$31–42 per megawatt hour (MWh) and wind generation at US$26–54 per MWh. Lazard estimates generation from a new coal plant in the US would cost over US$65 per MWh with the midpoint marginal cost of operating fully depreciated existing coal plants at US$41 per MWh. The consultancy estimates a coal plant with a plant to capture and store 90 per cent of greenhouse gas emissions would cost US$159 per MWh without a carbon price. (Lazard)

Polish utility looks to offload coal assets to government: In a bid to facilitate access to international finance for new renewables investments, PGE, Poland’s largest power utility, has unveiled a plan to shift its lignite power stations and mines to another state-owned company by the end of 2021. PGE currently produces 43 million tonnes of lignite a year and, according to the Global Coal Plant Tracker, has 14,249 MW of coal plant capacity. Greenpeace Poland energy analyst Piotr Wojcik described the proposed change as “just a transfer of dirty assets from one pocket to another.” The proposal also requires the support of the Polish Government and the European Commission. (Reuters, Climate Home News, PGE)

Private equity investors look to offload Australian coal terminal: Brookfield Asset Management is seeking to sell between 60 and 80 per cent of its stake in the Dalrymple Bay Coal Terminal, which has the capacity to export 85 million tonnes of coal a year. The privately equity owned Brookfield Asset Management has appointed Bank of America, Citi and Credit Suisse to assist with the stock exchange float of the company. The Institute for Energy Economics and Financial Analysis warns that the proposed new company — to be renamed Dalrymple Bay Infrastructure — has limited growth potential, capped revenues, heavy debt obligations, and increasingly concerning refinance risk. (Australian Financial Review [Paywall], IEEFA)

Chinese power demand rebounds while coal imports fall: New economic data reveals China’s economy has rebounded after the COVID-19 lockdown, growing by 4.9 per cent in the July to September quarter. Imports of thermal and metallurgical coal have fallen by 4.4 per cent to 239 million tonnes in the first nine months of 2020, with falling demand hitting Indonesian and Australian exporters. With the decline in demand during the COVID-19 shutdown, China has sought to boost reliance on domestic resources where possible to support local mining companies, though in the latest quarter coal production was down by two per cent. In late 2019 a 200 million tonne per year coal railway was commissioned to connect mines in Inner Mongolia to Jiangxi province near the east coast. With China’s reduced imports and the COVID-19 downturn the benchmark Newcastle thermal coal price has fallen by 26 per cent since January to US$51.29 a tonne and metallurgical coal on the Singapore exchange is down 20 per cent since March to US$129 a tonne. (Reuters)

Australian exporter confirms Chinese coal cancellations: BHP, the world’s largest metallurgical coal exporter and a major thermal coal producer, has confirmed Chinese customers have requested shipments be deferred. This follows verbal requests to Chinese coal importers to suspend Australian cargoes in the wake of diplomatic tensions over trade and other issues. In its latest quarterly results report BHP states it is “monitoring” the impacts of the Chinese Government restrictions but is on track to produce between 71 and 77 million tonnes of metallurgical coal and is reviewing its likely thermal coal production given the strike at Cerrejon mine in Colombia. The president of the Construction, Forestry, Mining and Energy Union’s Mining and Energy Division, Tony Maher, has warned thousands of coal workers are at risk of losing their jobs before Christmas due to “reckless undermining of our trade relationship with China” from comments by government backbenchers. (ABC News, BHP, Australian Financial Review [paywall])

US owner open to closing five year old Dutch plant: Riverstone Holdings is considering closing its 800 MW Maasvlakte coal plant, which was commissioned in 2015, if it can negotiate an acceptable compensation offer with the Dutch Government. Riverstone bought the plant in 2019 from Engie. A media report suggests Riverstone is seeking 240 million (US$285 million) in compensation to close the plant. The Dutch Government is seeking to close a coal plant as part of its plan to comply with a court decision requiring reductions in greenhouse gas emissions. The Netherlands plans to close all three of its coal plants by 2030. (NOS [Dutch])


Out of the Ashes: NSW water pollution and our aging coal-fired power stations, Hunter Community Environment Centre, October 2020. (Pdf) (Executive Summary here [Pdf])

This 228-page report details the water pollution from coal-ash waste dumps associated with NSW power stations and how current regulations permit heavy metal pollution of the state’s waterways.

China’s Long-term Low-Carbon Development Strategy and Pathway, China Energy Portal, October 2020. (Pdf)

These slides are from the presentation by Professor HE Jiankun, the Vice Chairperson of the China’s National Expert Committee on Climate Change, summarising the findings of key think tanks on China’s possible pathway to carbon neutrality.