June 27, 2019
Issue 280  |  View Past Issues

Editor's Note

Restrictions on financing for both new coal plants and mines are having an impact, according to major Indonesian companies. In Pakistan, an energy policy adviser to Prime Minister Imran Khan noted that only China was prepared to back proposed coal plants while it was far easier to attract financial support for wind, solar and other renewables. When Coal India sought tenders for investment banks to advise it on investing in some metallurgical coal projects in Australia, some declined. In the UK, the ethical investment fund has dumped its investment in a South Korean coal utility. While private banks are increasingly wary of supporting coal, a new report has found that support from G20 countries has been increasing dramatically.

In Kenya, the National Environment Tribunal has overturned the permit issued for the proposed coal plant near the World Heritage listed town of Lamu. Public opposition to coal projects is also building in some of the key coal-consuming countries. In Germany, the last week saw mass protests against contained coal mining for domestic power stations. In Poland, a court recently ruled out a proposed 1600 megawatt (MW) plant. Coal plant scandals are also contributing to the coal industry’s poor public standing. In the last week anti-corruption agencies have been involved in action in Indonesia, Malaysia and Mongolia. In India, a government agency has complained that Adani is seeking to frustrate its investigation into over-invoicing for coal imported from Indonesia. As controversy over air pollution in India grows, the government has announced the aim to build a further 275,000 MW of new renewables capacity by 2030 beyond the 225,000 already proposed by 2022. As it stands, the government’s own utility NTPC is already experiencing declining coal plant use.

Bob Burton


Pakistan pursues new coal plants in spite of their poor economics

Pakistan is pursuing a raft of new coal power plants for reasons that have little to do with economics, writes Zofeen T. Ebrahim in The Third Pole.

Call for European Union to block Greece’s subsidy bid for coal power

Greek consumers could end up footing the bill for new coal plants well beyond 2050 under a proposed government capacity payments scheme that the European Union should reject, write Joanna Flisowska and Nikos Mantzaris in Euractiv.

Japan, China and South Korea must end support for coal

If Japan, China and South Korea decided together to end their support for new coal power projects and instead pursue a race to the clean energy future, everyone would benefit, including them, writes Christiana Figueres in the Financial Times.


Kenyan court cancels permit for Lamu coal plant

Kenya’s National Environment Tribunal (NET) has cancelled the license issued by the National Environment Management Authority (NEMA) approving the environmental impact assessment for the proposed Lamu Coal Power Plant. The 1050 MW coal plant has been promoted by Amu Power, a consortium of local and Chinese companies, which proposed the plant be built near the World Heritage listed town of Lamu. In a damning judgement the court ruled that NEMA had breached its own procedures, did not properly examine the proposed engineering systems and failed to take account of Kenya’s Climate Change Act. The court also found there was no proper process of public participation on the project to the extent of being “contemptuous of the people of Lamu.”  The NET stated that “there was a casual approach by NEMA in such a serious project, they, therefore, failed to carry out their mandate as required by law.” The consortium has 30 days in which it can file an appeal against the decision.  If Amu Power decides not to appeal the decision, it will be required to undertake a fresh environmental assessment. (The Star, Daily Nation)

Polish court rules new coal plant out

Local residents and landowners are celebrating a ruling by Poland’s Supreme Administrative Court that Polenergia’s proposed 1600 MW coal plant may not be built. The ruling brings to an end an eight-year-long campaign to block the construction of the plant, which was the largest proposed new coal plant in Europe. The plant was first proposed in 2011 aiming to be commissioned by 2016. However, residents and landowners launched a legal challenge against the building permits arguing that the regional government had not followed proper public consultation procedures. In 2013 a court agreed that the permit for the plant was partially invalid and the following year Poland’s environmental regulator found the coal plant’s environmental impact assessment was also invalid. In late 2015 the Pomeranian Governor revoked the permit for the plant, a decision upheld by a court in Gdansk. However, Polenergia appealed the lower court decision to the Supreme Administrative Court which rejected it. (ClientEarth, Global Energy Monitor)

Top News

Chinese think tank pushes for new power plant construction: In its annual report the China Electric Power Planning and Engineering Institute, a think tank which is a subsidiary of China Energy Engineering Group, has argued for increased construction of new power generation capacity to avoid what it claims will be shortages over the next three years. However, in a column in China Energy News, the former head of the National Energy Administration, Zhang Guobao, warned that building new plants would only worsen China’s overcapacity problem. He argues growing demand can be met by better use of existing generating capacity. Earlier this year the China Electricity Council, a power industry lobby group, proposed lifting the current cap on coal capacity to allow for the construction of up to 290,000 MW of new plants by 2030. (China Dialogue)

Tens of thousands protest against Germany’s coal projects: Mining operations at the vast Garzweiler lignite mine were shut down for three days due to protests against the continued operation of RWE’s coal power plants. Hundreds of protesters occupied the mine, which supplies about 35 million tonnes of lignite a year to RWE’s Neurath and Niederaussem coal plants, despite police attempts to block access to the mine and associated railway line. An estimated 40,000 people rallied in the nearby city of Auchen demanding the German Government accelerate its planned 2038 coal phase-out. In a separate protest, 8000 people visisted Keyenberg, the next village slated for demolition to cater for the expansion of the Garzweiler mine. The public protests came days after European Union leaders failed to agree on a 2050 deadline to become carbon neutral after countries including Poland and Hungary refused to back the proposal. (Deutsche Welle, Washington Post)

Former Mongolian PM arrested over coalfield corruption claims: Former Prime Minister, Mendsaikhan Enkhsaikhan, has been arrested by Mongolia's anti-corruption agency, the Independent Agency Against Corruption (IAAC), over allegations of corruption and misuse of his position while he had responsibility for major projects between 2014 and 2016. One of the major projects subject to negotiations during this time was the huge Tavan Tolgoi coking coal mine. Enkhsaikhan was released the same day because IAAC did not have a court order for his arrest. Enkhsaikhan is not the first MP to be arrested over corruption allegations; Bayartsogt Sangajav, who was Minister for Finance in 2009, is being held in prison pending hearings over allegations relating to the 2009 agreement for the Oyu Tolgoi copper-gold project. Oyu Tolgoi was subsequently bought by Rio Tinto which is proposing the construction of a new 300 MW coal plant in the Tavan Tolgoi coal field to power the mine and processing plant. (Xinhua, Xinhua)

Malaysian Government covering cost of failed Mongolian mine loan: During the trial of former Prime Minister Najib Razak for criminal breach of trust, money laundering and abuse of power relating to SRC International, it has been revealed that the Malaysian Government is currently repaying a 4.15 billion ringgit (US$1.36 billion) loan from the country’s pension fund, Kumpulan Wang Persaraan (KWAP), which was supposedly for investment in proposed coal mines in Mongolia. The loan was approved by KWAP based on two letters of guarantee, including one submitted by Razak who was both Prime Minister and Minister for Finance at the time. Last week the court was told that about 2 billion ringgit (US$653 million) of the KWAP loan was diverted to a secret bank account. (The Straits Times)

Indonesia’s anti-corruption agency prosecutes power company head: At a preliminary hearing Indonesia’s Corruption Eradication Commission (KPK) has formally accused Sofyan Basir, the suspended president director of state-owned electricity company PLN, of facilitating meetings aimed at expediting the approval of the 600 MW Riau 1 coal plant. KPK’s prosecutor alleged Sofyan “facilitated” multiple meetings between 2016 and 2018 including with Golkar Party politicians Idrus Marham and Eni Maulani Saragih “even though he knew” they “would accept illicit money” from Johannes Budisutrisno Kotjo, a shareholder in the coal mining company Blackgold Resources. Johannes, Idrus and Eni have all been convicted of offences and are serving prison sentences. Sofyan has denied the accusations and his lawyers argued there was no evidence before the court he knew of any bribes. The hearing has been adjourned until July 1. (Jakarta Post, Tempo, Jakarta Post)

US unveils coal-friendly replacement for Obama’s Clean Power Plan: The US Environmental Protection Agency has released its Affordable Clean Energy (ACE) plan which may reduce power sector emissions only by 0.7 to 1.5 per cent by 2030. The ACE rule focuses solely on increasing the efficiency of coal power plants while the Obama administration’s Clean Power Plan it replaces sought to price carbon and promote a switch to cleaner fuels or the deployment of carbon capture and storage. Despite the aim of the latest plan to support coal plants, further closures continue to be approved. The Illinois Pollution Control Board has sided with environmental groups and ordered Vistra to retire 2000 MW of coal generation by the end of the year. However, environment groups warned the most polluting plants should be closed first rather than units which are more expensive to run simply because they have been fitted with pollution control equipment. (Vox, Union of Concerned Scientists, Utility Dive)

Sri Lankan Cabinet backs new coal plants and seeks to limit regulator’s role: Sri Lanka’s Cabinet has approved a proposal to amend the Sri Lanka Electricity Act to strip the Public Utilities Commission of Sri Lanka (PUCSL) of its role in regulating the economics of new power projects. Instead, Cabinet wants PUCSL’s role limited to only “consumer protection” and regulating safety standards. The Cabinet decision specifically stated that the proposed change is designed “to resolve” the conflict between the Ceylon Electricity Board (CEB) and the PUCSL. In 2017 PUCSL rejected CEB’s proposal to include new coal plants in the country’s power development plan, a decision that angered CEB. Now Cabinet has approved the change which would allow new power development projects to be decided by the Cabinet and the Minister for Power and Energy Minister, Ravi Karunanayake. Cabinet has decided to approve four new coal units: two further 300 MW units at the troubled Norochcholai coal plant and two 300 MW units at a new plant at Foul Point near Trincomalee. (The news report cited in CoalWire 278 referred to a Cabinet proposal for three new 300 MW units, not the four reportedly supported.) (Sunday Times)

“Finding international financing for coal had been difficult, with China the only country willing to invest. For solar and wind or other renewables we can get financing from anywhere,”

said Shahzad Qasim, the special assistant on the power sector for Pakistan’s Prime Minister, Imran Khan.

“Finding international financing for #coal had been difficult, with China the only country willing to invest. For #solar and #wind or other #renewables we can get financing from anywhere,” says Shahzad Qasim, adviser to #Pakistan’s Prime Minister https://t.co/3vqBgIMgOw


Australia: NSW Government grants mining licence in Gosford water catchment to subsidiary of Korea Resources Corporation.

Australia: Queensland Government to spend A$31 million (US$22 million) to clean up failed Linc Energy underground coal gasification site.

Europe: Documents reveal European Commission fund spending about €40 million (US$45 million) per year promoting coal.

Indonesia: Bayan Resources enters agreement to supply coal to 1320 MW Payra coal plant in Bangladesh which is currently under construction.

Japan: Japan International Cooperation Agency agrees to provide US$1.3 billion long-term very low interest-rate loan for the proposed 1200 MW Matarbari coal plant in Bangladesh.

Pakistan: Mughal Energy plans to establish a 55 MW captive coal plant in Lahore for use by Mughal Steel operations.

South Africa: Push by little-known Manzolwandle Investments for coal mine near Kruger National Park alarms residents.

UK: Energy company SSE aims to close the remaining three units at the Fiddler’s Ferry plant, with a combined capacity of 1510 MW, in March 2020 due to “significant losses” from continued operation.

US: Legal woes mount for Jim Justice, coal baron and Governor of West Virginia.

“Coal power plant financing is very challenging. European banks have said they don’t want to finance coal projects for a while, Japanese followed and now Singapore. About 85 per cent of the market now doesn’t want to finance coal power plants,”

said Dharma Djojonegoro, the Deputy Chief Executive Officer of PT Adaro Power, a subsidiary of Indonesia’s second-largest coal miner PT Adaro Energy.

Companies + Markets

India flags extra 275,000 MW of renewables by 2030: India’s Secretary of the Ministry of New and Renewable Energy, Anand Kumar, announced at an international renewables conference that by 2030 the country plans to have 500,000 MW of renewable energy capacity. India’s current goal is to have 175,000 MW of wind and solar capacity and a further 50,000 MW from large hydro projects by 2022. However, no details are yet available of the split between solar, wind and large hydro for the additional 275,000 MW Kumar said India aims to build. (Livemint)

Asian coal power developers and mining companies struggle to find finance: At a coal industry conference in Indonesia coal power plant developers have complained that obtaining finance for new projects is rapidly becoming very difficult. Dharma Djojonegoro, Deputy Chief Executive Officer of PT Adaro Power, a subsidiary of Indonesia’s second-largest coal miner PT Adaro Energy said “coal power plant financing is very challenging.” Sacha Winzenried, a partner with PricewaterhouseCoopers in Jakarta, said that while banks in Europe, the US and Australia have deserted the coal power sector “there still seems to be some interest from Asian banks, China, Japan and Korea to a certain extent, although I believe they are going to start to pull back as well.” Dileep Srivastava, a director of Indonesia’s largest coal mining company Bumi Resources, said the shift in the finance sector is also affecting the funding of new thermal coal mines. (Reuters)

Report reveals G20 subsidies for coal power more than doubles over the last five years: Ahead of the G20 group of nations meeting in Japan a new report by the Overseas Development Institute (ODI) has revealed that a decade after pledging to phase out fossil fuel subsidies they are in fact increasing rapidly. The ODI estimates that between 2014 and 2017, G20 nations more than doubled their financial support for coal power plants from US$17 billion to US$47 billion. However, subsidies for coal mining declined from US$22 billion a year to US$10 billion a year. (Guardian, Business Green)

Seaborne coal market gets China chill as oversupply hits prices: Thermal coal prices in the Asian seaborne market have fallen to just over US$70 per tonne, the lowest level since September 2016. Slowing Chinese coal imports due to the trade war with the US is one factor but Helen Lau from the Hong Kong office of the stockbroking firm Argonaut argues increased hydro and clean energy generation is also undermining coal generation. According to a Commonwealth Bank of Australia report, Chinese wind and hydro generation grew by 5.6 per cent and 112.8 per cent respectively in the first five months of 2019 while coal and LNG generation grew by 0.2 per cent. One analyst said increased US gas exports to Europe have pushed South Africa and Colombian coal exports into the Asian market at a time that Russia is also boosting exports through its Pacific ports. (Reuters)

Some banks shun Coal India tender for advisers on metallurgical coal investments: Goldman Sachs and Merrill Lynch have reportedly shunned a tender by Coal India seeking to select a merchant bank to advise the company on potential investments in metallurgical coal projects in Australia. However, it has been reported that ANZ, BNP Paribas, JP Morgan and others have indicated their interest. Last week Coal India’s Chairman, A K Jha, met Russia’s Prime Minister Yury Trutnev to discuss the company’s interest in acquiring stakes in metallurgical coal projects there. Coal India is looking at investing in projects through its subsidiary, Coal Videsh. Another Indian government-owned company, the National Mineral Development Corporation, is also looking at buying a coking coal mine in Zimbabwe. (Economic Times, The Hindu, New Indian Express)

Indian analysts warn of falling plant utilisation rates: Analysts at the financial services firm SBICAP Securities have warned that coal plants owned by the National Thermal Power Corporation (NTPC), are suffering from declining utilisation despite strong growth in overall power demand. NTPC is a government-owned utility which generates about one-quarter of India’s electricity. The analysts note that the plant load factors at NTPC’s coal plants have fallen from 85 per cent in 2012 to 77 per cent in 2019. They also note that some of NTPC’s large coal plants that are not next to coal mines, such as the Kudgi, Solapur, Dadri, and Mauda plants, have utilisation levels below 60 per cent. NTPC’s declining utilisation rates have been attributed to rising renewables generation. Recent auctions of renewable capacity have resulted in electricity prices for wholesale buyers of 2.43–3.00 rupees per hour, which is lower than the fuel charge for existing NTPC plants. (Financial Express)

UK ethical fund dumps Korean power company stocks: A £5 billion (US$6.3 billion) ethical fund managed by Legal and General Investment Management (LGIM) has dumped shares in five companies including the coal and nuclear power generator Korean Electric Power Corporation. LGIM said that it decided to dump the shares from its ethical fund after the companies failed to properly respond to requests they disclose their climate exposure and set emission reduction targets. LGIM’s other funds retain shareholdings in the five companies. However, LGIM said it will use those funds to vote against board appointments at the five companies. (Guardian)

South Korea likely to boost renewables role: Seok Kwang-hoon, an adviser to the NGO Green Korea, said there is a “shared understanding” among members of a government working group on power supply that it will not be cost-effective to refurbish 20 of the country’s 60 coal units to extend their life. Government-owned power utilities have reportedly been advised by the Ministry of Energy to suspend plans to retrofit old coal units. South Korea’s coal imports fell by nine per cent in the first four months of 2019 as restrictions took effect to cut coal power’s contribution to high air pollution levels. Following extreme air pollution earlier this year the government said that it would aim for renewables to provide 35 per cent of generation by 2040. Renewables currently provide about five per cent of power generation with the current energy plan setting a target of 20 per cent by 2030. (Reuters)

Adani resists Indian transfer pricing investigation: In a June 13 affidavit to the Bombay High Court the Directorate of Revenue Intelligence (DRI) accused Adani of seeking to frustrate its requests to foreign countries for assistance with its investigation into Indian companies’ alleged overvaluation of coal imports from Indonesia. Adani is one of the companies subject to investigation. DRI has also encountered resistance by some Indian banks to provide documents relating to the companies at the centre of its investigation. The Indian government-owned State Bank of India and the Bank of Baroda both declined to assist the DRI with their inquiries, citing client confidentiality. The Reserve Bank of India rebuffed DRI’s request for support, saying it had no power to request the banks to assist the inquiries. However, ICICI Bank and Axis Bank have provided documentation to DRI arguing that the national interest overrides client confidentiality. (Scroll)


G20 coal subsidies: tracking government support to a fading industry, Overseas Development Institute, June 2019. (Pdf) (The Executive Summary is here and a media release here. There are also country profiles of Japan, South Korea, Indonesia and the United Kingdom.)

This 52-page report finds support from G20 countries for coal power production is rising rapidly.

“Discursive resistance to phasing out coal-fired electricity: Narratives in Japan's coal regime”, Energy Policy, June 2019.

This 75-page paper investigates the key reasons major players in Japanese utilities, government agencies and industry associations continue to promote the expansion of coal power at home and abroad despite the Paris Agreement targets.