Fossil Fuel

Trouble behind the façade: India's stressed assets could face a steep challenge ahead just to stay afloat

FOSSIL FUELS: RBI’s directive may spell doom for stressed assets, BP’s plea for urgent carbon pricing policy, India blocks important shipping emissions reduction target

RBI’s scathing new regulations may spell nightmares for stressed assets owners

The RBI’s new regulations on stressed assets have scrapped all loan restructuring initiatives last month for the country’s 50GW worth of stressed assets (that are coal-fired). This could spell deep trouble for their owners as the power plants are already reeling under the lack of adequate power offtake arrangements (PPAs) with DISCOMS – and therefore declining PLFs – and precariously low coal supplies.

India’s power minister has also directed the Power Finance Corporation (PFC) and Rural Electrification Corporation (REC) – two of India’s largest power financiers – to stop doling out loans to DISCOMS with aggregate T&D losses above 15%. The two directives may snowball into DISCOMS, the stressed assets and Coal India Ltd. (CIL) blaming each other for non-compliance on contracts, further exacerbating the stressed assets conundrum.

BP bullish about coal’s future in India

Meanwhile, British Petroleum (BP) has stressed in its 2018 Energy Outlook report that coal will continue to be a central part of India’s energy mix in 2040, although its share is expected to fall from about 75% today to 66%. The statement comes despite the oil giant’s support for subsidizing renewables, its acknowledgement that the share of renewables will only strengthen from here on, and its suggestion for carbon pricing as an urgent policy intervention to cap global emissions.

Zimbabwe’s coal output to quadruple in 2018

Possibly keen to capitalize on renewed international demand for coal, Zimbabwe’s coal output is set to quadruple – from 2 million tonnes in 2017 to over 8 million tonnes this year – with help from nearly $300mn in investments from the world’s largest coal miners. The African nation is, however, also courting investments to develop its solar potential and its (fifth largest in the world) lithium deposits.

Czech tycoon bets against RE’s lack of baseload supply capacity

Eager to exploit the yet undeveloped capacity for solar and wind energy to supply baseload power in Europe, Czech billionaire Pavel Tykac is aiming to buy and operate old, carbon emissions heavy coal and natural gas plants across UK, Germany and Italy. The situation may persist for several years, especially on the back of Germany’s yet significant reliance on thermal power and its plan to phase out nuclear power by 2022.

Sharp rebukes to new US EPA and Dept. of Energy proposals

Environmentalists have severely criticized the US EPA’s proposal to weaken coal ash pond regulations – which would allow toxic chemicals and heavy metals from coal ash to leach into the groundwater and potentially wreak havoc on the health of nearby communities – including aggravating incidences of lung, bladder and skin cancers.

Also, the US Dept. of Energy (DOE) is reportedly exploring setting up smaller thermal power plants – about 200MW in capacity – that can be ramped up much faster than larger plants and counter gird fluctuations from the increasing share of renewables. However, even certain coal dependent utility executives are unconvinced of the new plants’ economic viability against falling RE and natural gas tariffs.

Arnold Schwarzenegger to sue Big Oil over “first degree murder”

Former California governor Arnold Schwarzenegger is planning to sue Big Oil over failing to act on their knowledge of the adverse impacts of burning fossil fuels for decades (including climate change), saying that it “knowingly killed people all over the world”.

Schwarzenegger likened Big Oil’s silence (such as by Exxon) to the tobacco industry’s deliberate ignorance of the potentially lethal consequences of smoking, and his lawsuit will follow legal challenges filed by The Philippines and several US cities against the oil and gas giants’ roles in accelerating climate change.

India blocks important emissions reduction target for international shipping

India – along with Argentina, Brazil and Saudi Arabia – has bizzarely blocked provisions for significant emissions reduction from international shipping by 2050, which were to be instituted at the International Maritime Organisation (IMO)’s Marine Environment Protection Committee (MEPC) meet in London next month.

The four countries have also replaced the proposed target of zero emissions shipping by 2075 with a vague, extended window of “no later than in the second half of the century”. The move appears to be regressive in terms of global emissions reduction, particularly when major sea-faring nations like Norway are already leading the way to emissions free shipping.

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