Chinese & Japanese banks account for 50% of global coal finance

A new report by Bloomberg says banks from China and Japan together account for 50% of the world’s continued support to coal mining and coal-fired power. The aggressive consumption of the fuel in Indonesia and Vietnam and the cash flow from Australia’s coal exports are among the factors pulling financiers in, says the report, and the sector has now evinced interest even from private equity firms.

Some of the biggest names to enter the fray are the Industrial and Commercial Bank of China and Japan’s Sumitomo Mitsui, apart from JP Morgan and Caterpillar Financial. 

Carbon Tracker: 2030 to be the tipping point for renewables against coal in all markets

Carbon Tracker’s new report says that cheaper renewables are putting $640 billion worth of financing to new coal power at risk, and that power tariffs for 60% of the global coal capacity are higher than what could be achieved through clean energy. The report further goes on to predict 2030 as the tipping point for coal power, beyond which power from renewables will be cheaper across all markets.

That would imperil the 499GW of coal power plants currently in the pipeline globally, as it typically takes 10-15 years to recover their capital investments. The worst affected are likely to be China and India, with investments worth $158 billion and $80 billion, respectively, towards a cumulative pipeline of 272GW (planned, or already under construction). 

Global CO2 emissions from power sector dropped 2% in 2019

Research by independent think-tank Ember has shown that global CO2 emissions from the power sector dropped by 2% in 2019 (over 2018) as the world used less coal power. Also, the majority of the drop in coal-fired power output — which fell by 3% in the same period — came from Europe, which used 24% less of the fuel in its transition to renewables. Coal’s share has also been shrinking in the US, as more of its utilities switch to natural gas.

However, even though power from renewables surged by 15% last year, the trend would have to hold year after year, and coal power needs to lose ground by 11% each year, if global warming is to be capped at 1.5°C.

Oil prices plummet over OPEC-Russia standoff, Brent Crude currently at $30/barrel

A stand-off between OPEC and Russia over the issue of cutting oil supplies in response to falling market demand led to the price of Brent Crude plummeting to below $30/barrel this past fortnight. Demand has been falling due to the coronavirus throttling economic activity, but Saudi Arabia-led OPEC has been adamant over cutting supplies, to keep its prices and revenues from being affected too much.

However, Russia — itself a major oil producer — says that it is happy with prices as low as $25/barrel, and has refused to lower its share of supplies. As a result, Brent Crude is currently trading at just over $30/barrel — a far cry from its usual range of $50-$60/barrel. 

Unless the Covid-19 situation is resolved soon, demand could shrink even further and drive down prices down to as low as $20/barrel. That would hurt OPEC as well as Russia, but barring a mutual agreement, neither is likely to concede its position. 

Yet, on a positive note, shrinking activity — especially in the emissions-heavy sectors of aviation, road transport and power generation — will lower CO2 emissions worldwide.

European Commission axes rule on “ghost flights” to rein in emissions

The European Commission has axed the rule for airlines to fly “ghost flights” — flights that are flown nearly empty, only for the airlines to retain their airport slots — after reports questioned the climate impact of the practice. The Covid-19 crisis has severely lowered regional and international travel, but it also forced airlines to dispatch ‘ghost flights’, as agreements on slots with airports meant they had to use at least 80% of them within a calendar year, or lose them to their competitors.

However, the Commission is yet undecided on whether the ruling is a temporary suspension, or if the relaxation will be allowed after the coronavirus pandemic has subsided.

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