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Thursday, 14 October 21
SPIKING COAL PRICES: DON’T BLAME THE ENERGY TRANSITION - IEEFA
 Volatility highlights urgency for renewables-based energy solutions
“Energy crisis.” The phrase evokes nearly-forgotten images of gasoline queues in the 1970s, but increasingly describes the spike in global fossil fuel prices. A handful of commenters eagerly lay the blame on renewable energy, which they claim has distracted the world’s attention from investments in oil, gas, and coal production that could have calmed markets.
But a sober analysis suggests that today’s energy price crunch has nothing to do with renewables. After all, price spikes aren’t unique to energy. Computer chips, lumber, copper, and iron ore are among the many commodities and products that have seen global price spikes and shortages this year. As the COVID-19 pandemic raged and then eased—alternately slamming the brakes and flooring the accelerator of the global economy—volatility became the rule rather than the exception.
A close look at the surge in global coal prices is instructive. Prices for some low-grade thermal coals have quadrupled on international markets since last year’s lows. COVID-induced volatility bears much of the blame. But price spike also has its roots in the world’s largest coal market, China, which produces (and consumes) half the world’s coal and meets 60 percent of its energy needs from the mineral.
Over the past year, China has experienced domestic coal shortfalls and shrinking stockpiles that forced the country to boost its imports. Given the country’s outsized appetite for coal, even a modest boost in imports quickly sent seaborne coal prices skyrocketing. The recipe for China’s coal shortages had at least five key ingredients, none related to the country’s renewables policies:
A mine safety crackdown. The Chinese coal mining sector has been a risky business. The state-run Xinhua News Agency reported that 225 coal miners died in China during 2020 in 122 accidents. But in the wake of a cluster of fatalities, federal authorities launched a major safety inspection effort in November 2020. The heightened scrutiny was blamed for a slowdown in production that began in April, a month after China boosted penalties for mine accidents. The prospect of jail time made mining executives reluctant to boost output even as supplies tightened.
Curbs on overproduction. China’s coal mining sector had struggled over much of the past decade with overcapacity that flooded markets with cheap coal—making it hard for many firms to find profits. Last November, just as China’s government was cracking down on coal mine safety, it also stepped up inspections for quota violations—once again making it risky for mining companies to boost supplies.
An anti-corruption campaign in Inner Mongolia. One of China’s most sparsely populated provinces, Inner Mongolia produces roughly one-quarter of the nation’s coal. President Xi Jinping announced in March that the government would investigate coal industry corruption in the region in a campaign that would “never end.” (The campaign focused, in part, on companies producing more coal than their quotas.) Top officials in the regional government have been sent to jail for more than a decade, with one given a suspended death sentence. In early 2021, the government was investigating almost 700 corruption cases involving about 1,000 people. The campaign, which was expanded across the country, also encouraged coal mining firms to curb their production to avoid becoming entangled in an investigation.
A halt to Australian coal imports. Tensions between Australia and its largest trading partner heated up last year, largely due to China’s territorial claims in the Pacific Ocean and the Australian government’s call for a “weapons inspector”-type investigation of the origins of the COVID-19 virus. China responded by blocking Australian coal imports in November 2020. The squabble led Beijing to seek out other markets for coal imports from Indonesia, Russia, the United States and South Africa. The shift contributed to a tripling in the price of lower-grade Indonesia coal over the summer.
Weather: Too cold, too hot, and too wet. An unusually cold 2020-21 winter in North Asia prompted blackouts in some regions. At least nine grid systems in northern provinces recorded record demand in early January. Summer heat waves continued to pressure the coal supply. Now winter approaches, and major power plants reported having about a 10-day stockpile of coal, roughly half of last year’s total. The country, desperate to boost coal consumption, faces a new weather-related obstacle: Record-breaking floods have shut down 60 mines in Shanxi province, a region that produces 30 percent of China’s coal.
These factors, together with COVID, helped precipitate a domestic coal crunch in China that quickly spread around the planet. Those who would blame the growth of renewables for China’s coal shortages are grasping at straws. If anything, ramping up investments in renewables would ease the country’s reliance on volatile, unpredictable fossil fuel supplies.
As for China, so for the world. Until the planet completes its transition to a renewable energy-based economy, supply and demand shocks—such as the ones currently traveling around the globe—will be a fact of life.
By Clark Williams-Derry
Energy Policy Analyst
IEEFA
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Monday, 27 September 21
CHINESE COAL FIRMS MEET TO ADDRESS WINTER SUPPLY CHALLENGES - CNBC
Major Chinese coal producers are trying to resolve supply shortages and curb price rises as the country’s winter consumption peak approaches, ...
Saturday, 25 September 21
HIGH STAKES FOR ASIAN DEVELOPMENT BANK’S AMBITIOUS COAL POWER RETIREMENT PLAN - IEEFA
Implementation challenges could block funding for other equally important high impact clean energy funding strategies
In the lead up ...
Thursday, 23 September 21
LONGER COAL CONTRACTS MAY REIN IN PRICES - ECNS
In China’s coal sector that has been marred recently by price surges, regional authorities and related enterprises should ensure the fuel con ...
Thursday, 23 September 21
BALTIC INDEX HITS 12-YEAR PEAK ON FIRMER VESSELS RATES - REUTERS
The Baltic Exchange’s main dry bulk sea freight index rose for a fourth straight session on Wednesday to a 12-year high, buoyed by higher rat ...
Thursday, 23 September 21
RECORD-HIGH GAS PRICES AFFECT MANY EUROPEAN CORPORATE SECTORS - FITCH RATINGS
Record-high natural gas prices are putting pressure on supply chains of many European corporate sectors, including non-integrated energy suppliers, ...
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- Siam City Cement - Thailand
- Mercator Lines Limited - India
- Semirara Mining and Power Corporation, Philippines
- Alfred C Toepfer International GmbH - Germany
- Gujarat Sidhee Cement - India
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Kideco Jaya Agung - Indonesia
- Anglo American - United Kingdom
- Deloitte Consulting - India
- Kepco SPC Power Corporation, Philippines
- Bank of Tokyo Mitsubishi UFJ Ltd
- New Zealand Coal & Carbon
- Videocon Industries ltd - India
- Miang Besar Coal Terminal - Indonesia
- Maharashtra Electricity Regulatory Commission - India
- Rashtriya Ispat Nigam Limited - India
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Bukit Asam (Persero) Tbk - Indonesia
- Borneo Indobara - Indonesia
- Cigading International Bulk Terminal - Indonesia
- Aditya Birla Group - India
- PNOC Exploration Corporation - Philippines
- Vijayanagar Sugar Pvt Ltd - India
- Maheswari Brothers Coal Limited - India
- Bangladesh Power Developement Board
- Indian Oil Corporation Limited
- Malabar Cements Ltd - India
- GVK Power & Infra Limited - India
- Siam City Cement PLC, Thailand
- Simpson Spence & Young - Indonesia
- Kapuas Tunggal Persada - Indonesia
- Tata Chemicals Ltd - India
- Rio Tinto Coal - Australia
- Chettinad Cement Corporation Ltd - India
- Georgia Ports Authority, United States
- VISA Power Limited - India
- Gujarat Electricity Regulatory Commission - India
- Intertek Mineral Services - Indonesia
- Toyota Tsusho Corporation, Japan
- Posco Energy - South Korea
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Australian Coal Association
- Directorate General of MIneral and Coal - Indonesia
- Sical Logistics Limited - India
- Marubeni Corporation - India
- Carbofer General Trading SA - India
- Aboitiz Power Corporation - Philippines
- Coastal Gujarat Power Limited - India
- Sojitz Corporation - Japan
- India Bulls Power Limited - India
- Dalmia Cement Bharat India
- SMC Global Power, Philippines
- Indika Energy - Indonesia
- Attock Cement Pakistan Limited
- Manunggal Multi Energi - Indonesia
- Bharathi Cement Corporation - India
- Indian Energy Exchange, India
- Sinarmas Energy and Mining - Indonesia
- Larsen & Toubro Limited - India
- Romanian Commodities Exchange
- Planning Commission, India
- Edison Trading Spa - Italy
- Metalloyd Limited - United Kingdom
- Ministry of Finance - Indonesia
- IHS Mccloskey Coal Group - USA
- TNB Fuel Sdn Bhd - Malaysia
- Kohat Cement Company Ltd. - Pakistan
- The State Trading Corporation of India Ltd
- Vedanta Resources Plc - India
- Timah Investasi Mineral - Indoneisa
- Parliament of New Zealand
- Bukit Baiduri Energy - Indonesia
- Karaikal Port Pvt Ltd - India
- Independent Power Producers Association of India
- Indonesian Coal Mining Association
- Global Business Power Corporation, Philippines
- Sindya Power Generating Company Private Ltd
- Eastern Coal Council - USA
- SN Aboitiz Power Inc, Philippines
- Latin American Coal - Colombia
- Kaltim Prima Coal - Indonesia
- Altura Mining Limited, Indonesia
- Meenaskhi Energy Private Limited - India
- Mintek Dendrill Indonesia
- Medco Energi Mining Internasional
- CNBM International Corporation - China
- Bukit Makmur.PT - Indonesia
- Jorong Barutama Greston.PT - Indonesia
- Electricity Generating Authority of Thailand
- Wilmar Investment Holdings
- Kartika Selabumi Mining - Indonesia
- Standard Chartered Bank - UAE
- Ambuja Cements Ltd - India
- Renaissance Capital - South Africa
- Ceylon Electricity Board - Sri Lanka
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Bhushan Steel Limited - India
- Grasim Industreis Ltd - India
- Thiess Contractors Indonesia
- Cement Manufacturers Association - India
- Gujarat Mineral Development Corp Ltd - India
- Wood Mackenzie - Singapore
- San Jose City I Power Corp, Philippines
- Bhoruka Overseas - Indonesia
- Australian Commodity Traders Exchange
- Thai Mozambique Logistica
- Indo Tambangraya Megah - Indonesia
- MS Steel International - UAE
- Straits Asia Resources Limited - Singapore
- Karbindo Abesyapradhi - Indoneisa
- LBH Netherlands Bv - Netherlands
- Therma Luzon, Inc, Philippines
- International Coal Ventures Pvt Ltd - India
- White Energy Company Limited
- Orica Mining Services - Indonesia
- Parry Sugars Refinery, India
- PetroVietnam Power Coal Import and Supply Company
- GAC Shipping (India) Pvt Ltd
- Meralco Power Generation, Philippines
- Oldendorff Carriers - Singapore
- Iligan Light & Power Inc, Philippines
- Baramulti Group, Indonesia
- GMR Energy Limited - India
- IEA Clean Coal Centre - UK
- AsiaOL BioFuels Corp., Philippines
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Africa Commodities Group - South Africa
- Bayan Resources Tbk. - Indonesia
- Star Paper Mills Limited - India
- Price Waterhouse Coopers - Russia
- Uttam Galva Steels Limited - India
- PowerSource Philippines DevCo
- London Commodity Brokers - England
- Pipit Mutiara Jaya. PT, Indonesia
- Savvy Resources Ltd - HongKong
- Ministry of Transport, Egypt
- Leighton Contractors Pty Ltd - Australia
- Agrawal Coal Company - India
- McConnell Dowell - Australia
- Petron Corporation, Philippines
- Coalindo Energy - Indonesia
- Offshore Bulk Terminal Pte Ltd, Singapore
- The Treasury - Australian Government
- Sree Jayajothi Cements Limited - India
- PTC India Limited - India
- Holcim Trading Pte Ltd - Singapore
- Bahari Cakrawala Sebuku - Indonesia
- Central Java Power - Indonesia
- Kalimantan Lumbung Energi - Indonesia
- Merrill Lynch Commodities Europe
- Central Electricity Authority - India
- Essar Steel Hazira Ltd - India
- Heidelberg Cement - Germany
- Ind-Barath Power Infra Limited - India
- Bulk Trading Sa - Switzerland
- Orica Australia Pty. Ltd.
- Jaiprakash Power Ventures ltd
- Bhatia International Limited - India
- Global Green Power PLC Corporation, Philippines
- ASAPP Information Group - India
- Billiton Holdings Pty Ltd - Australia
- Lanco Infratech Ltd - India
- Eastern Energy - Thailand
- European Bulk Services B.V. - Netherlands
- Directorate Of Revenue Intelligence - India
- Neyveli Lignite Corporation Ltd, - India
- GN Power Mariveles Coal Plant, Philippines
- ICICI Bank Limited - India
- Formosa Plastics Group - Taiwan
- Vizag Seaport Private Limited - India
- Mercuria Energy - Indonesia
- Xindia Steels Limited - India
- Banpu Public Company Limited - Thailand
- Electricity Authority, New Zealand
- Kobexindo Tractors - Indoneisa
- The University of Queensland
- Barasentosa Lestari - Indonesia
- Port Waratah Coal Services - Australia
- Power Finance Corporation Ltd., India
- Pendopo Energi Batubara - Indonesia
- TeaM Sual Corporation - Philippines
- Binh Thuan Hamico - Vietnam
- Ministry of Mines - Canada
- Salva Resources Pvt Ltd - India
- Madhucon Powers Ltd - India
- Antam Resourcindo - Indonesia
- Mjunction Services Limited - India
- Economic Council, Georgia
- Minerals Council of Australia
- Energy Link Ltd, New Zealand
- Commonwealth Bank - Australia
- OPG Power Generation Pvt Ltd - India
- Chamber of Mines of South Africa
- Semirara Mining Corp, Philippines
- Makarim & Taira - Indonesia
- Sakthi Sugars Limited - India
- Singapore Mercantile Exchange
- Global Coal Blending Company Limited - Australia
- Coal and Oil Company - UAE
- Petrochimia International Co. Ltd.- Taiwan
- Tamil Nadu electricity Board
- Globalindo Alam Lestari - Indonesia
- Riau Bara Harum - Indonesia
- SMG Consultants - Indonesia
- Energy Development Corp, Philippines
- Kumho Petrochemical, South Korea
- South Luzon Thermal Energy Corporation
- Indogreen Group - Indonesia
- CIMB Investment Bank - Malaysia
- Interocean Group of Companies - India
- Samtan Co., Ltd - South Korea
- Jindal Steel & Power Ltd - India
- Sarangani Energy Corporation, Philippines
- Krishnapatnam Port Company Ltd. - India
- Goldman Sachs - Singapore
- Asmin Koalindo Tuhup - Indonesia
- Trasteel International SA, Italy
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