Global Coal Industry Enjoying Good Times While They Last

April 7th, 2019 by Tina Casey

This year began with some good news for global coal industry stakeholders as demand ticked up a notch. Nevertheless, signs of a deep, painful skid are growing. Last week South Africa’s powerful Nedbank officially gave the bum’s rush to new coal power plant investments. Meanwhile over here in the US, the hits just keep coming for coal producers.

Good Times For The Global Coal Industry — Or Not

Coal power plants are dropping like flies in some parts of the world. However, there are still some global hot spots for new coal power plant construction. That includes China and India, where the International Energy Agency anticipates that demand for coal will continue a sharp upward trajectory at least through 2023.

The US is definitely not one of those hot spots. Despite President* Trump’s oft-repeated promise to bring back coal jobs for US workers, cheap natural gas and low cost renewables are forcing the US coal industry out of the power generation sector.

The most recent slice of the bad news pie concerns access to overseas markets. The Pacific Northwest state of Washington, for example, recently put the kibosh on the proposed Gateway coal export terminal, with an assist from the US Army Corps of Engineers.

Washington has also been fighting to halt another export project, the proposed Millennium coal terminal. In 2017, Washington denied a construction permit for Millennium, based on concerns about water resources and other environmental impacts.

Millennium slapped back with a lawsuit claiming that federal policy was on its side. As reported by our friends over at the Institute for Energy Economics and Financial Analysis, they based the claim partly on “the general remarks of the president and the administration in favor of the coal.”

Apparently you can’t take those remarks to the bank. Last week a federal judge ruled that statements by the Commander-in-Chief do not meet the standard for a claim on the basis of foreign affairs doctrine.

Millennium stakeholders will probably appeal, so stay tuned for more on that score.

Some Sustainable Investors Are Not Hearting The Coal Industry Very Much Any More

Speaking of banks, the Nedbank decision is one among many signals that investors are losing interest in the coal industry.

A while back, Nedbank arranged financing for two new coal power projects in South Africa. They are — or were — a 557-megawatt project joining Japan’s Marubeni and South Korea’s Kepco, and a 306-megawatt venture supported mainly by the Saudi company ACWA Power.

All was going according to plan until January. Nedbank pulled the plug on both deals. The bank leveraged its “green” brand and its reputation for innovation to make a bottom line case for ditching the two coal investment opportunities.

That’s not just a one-off. Nedbank references the United Nations Sustainable Development Goals as a platform for its long term investment strategy:

…The SDGs represent a universal agreement on the economic, social and environmental priorities to be met by 2030. They offer a powerful lens through which to identify opportunities for business innovation and growth, and an objective mechanism through which Nedbank can assess and report delivery on our purpose.

[snip]

Of the 17 SDGs, we have prioritised nine goals that we believe represent the most exciting opportunities for Nedbank to develop innovative banking products and services that will deliver on unmet client needs.

[snip]

This will improve the alignment of purpose with culture, strategy and brand, as well as drive the innovation effort that will be required to capture winning positions in new markets highlighted by the SDGs.

Yikes!

What’s All This About Sustainable Development Goals?

The SDGs are a creature of the United Nations. They popped into being in 2015 and build on the success of the UN’s Millennium Development Goals.

The 17 goals enable governments to identify specific opportunities to set targets and measure progress. Think of the Green New Deal on a global scale and you’re on the right track.

The SDGs also have a lot in common with the reporting practices of socially responsible businesses. That probably explains why global corporations like Nedbank are discovering that SDGs are useful planning tools for business, too.

That’s super bad news for coal. To cite just one example, SDG # 7 — Clean and Affordable Energy — leaves a bit of wiggle room for thermal coal, but not much when you take into consideration SDG #6 (Clean Water and Sanitation) among other goal related directly to public health and the environment.

That’s also the tip of the iceberg as far as Nedbank is concerned. Last week the bank publicly issued its latest Sustainable Development Review. In the document, Nedbank appears to have permanently disentangled itself from new coal power investments in South Africa. Anyways, that’s how climate activists are interpreting the report.

Here’s the take from 350.org (emphasis theirs):

It is now official that Nedbank has ‘undertaken not to provide project financing or other forms of asset-specific financing where proceeds would be used to develop new coal-fired power plants’. This is a momentous step in the right direction for South Africa makes Nedbank the first Africa based bank to use their financial might to cut ties with coal and prioritize their expertise on helping to deliver on the transition to a low carbon economy through scaling up on renewable energy investments.

Other A-list financial institutions have a lot of catching up to do (looking at you, JP Morgan and Wells Fargo). Nevertheless, the anti-coal movement is gathering steam among financial managers on the basis of bottom line survival, and you can take that to the bank.

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*Developing story.

Photo (cropped): Africa’s Nedbank opens first solar powered branch, via Solar Turtle.









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