China aims for carbon neutrality by 2060, puts world on notice

Newsletter - October 1, 2020

U-turn ahead: China will have to shift its manufacturing-heavy economy away from coal as it chases a 2060 timeline for carbon neutrality | Photo:

China aims for carbon neutrality by 2060, puts world on notice

Details on Beijing’s plans are still sparse but China’s carbon neutrality target might lead to acceleration of efforts to cut carbon emissions worldwide if politics allow it

After years of keeping cards close to its chest, China has finally put an end to the ‘will it-won’t it’ suspense over the decarbonisation of its economy. Last week, the world’s largest emitter announced plans to go carbon neutral within four decades. This essentially means that by 2060, the world’s largest coal consumer will stop emitting more carbon than it sucks out of the atmosphere. The declaration by President Xi Jinping is being seen by many as more of a political move than an economic or environmental one, considering that elections in the US, the world’s second-largest emitter, are just around the corner.

The announcement, made during a virtual meeting of the United Nations General Assembly, follows several months of efforts by UN Secretary General Antonio Guterres to raise climate ambitions among member countries. While the move places China at the top of the international climate change mitigation efforts pyramid, its success hinges on the formidable task of decarbonising its manufacturing-heavy economy and rapid expansion in carbon capture capacity. The rewards though are sizable. According to Climate Action Tracker’s assessment, achieving carbon neutrality before 2060 would shave off 0.2-0.3°C from global warming projections.

The hurdles

The first hurdle in decarbonising China’s economy would be moving the country’s energy sector away from coal. Plans laid out by Tsinghua University’s Institute of Energy, Environment and Economy (one of China’s most prominent climate institutes) days after the  announcement detail a gradual transition until 2035, followed by rapid acceleration. China’s peak emissions, now likely to be achieved closer to 2025, will stabilise over the next decade and start declining by 2035, says Zhang Xiliang, the director of the institute.

According to the plan, coal power would be completely eliminated by 2050 despite energy demand projected to more than double over the next four decades. Instead of coal, China’s energy demand growth would have to be fuelled by wind, solar and nuclear power, which would occupy over 60% of the country’s energy mix.

This would imply a sharp reversal of the coal-heavy growth the country has pursued till date. A recent study by the Centre for Research on Energy and Clean Air (CREA) in Helsinki found that China’s coal power capacity grew by about 40 gigawatts (GW) in 2019, to about 1,050 GW. Another 100 GW is under construction and another 150 GW is being planned. Even stimulus packages meant for post-COVID economic recovery have been found to be heavily skewed towards fossil fuels.

“To achieve the vision would imply massive re-arrangement of the Chinese economy. The country would need to rapidly shift from a manufacturing and industry based economy to one that emphasizes more on technology and innovation. China’s energy and transportation sectors will also need to be completely re-designed. Our addiction to coal needs to be urgently phased out,” says Li Shuo, senior energy and climate officer at Greenpeace China.

Incidentally, coal power has also been critical in ramping up manufacturing capacities of green technology such as renewable power equipment and battery storage. China already hosts the world’s largest installed capacity of renewables, but the share of non-fossil energy in the mix is still only around 15%. For China’s 2060 target, this would have to grow to 20% by 2025 – five years earlier than planned.

The transition in China’s energy systems is likely to cost around $15 trillion over the next 30 years. Earlier estimates by its Energy Transitions Commission found that solar investments will need to double per annum, while wind will require three to four times the current investment levels over the next three decades to achieve the nearly 5,000 GW of wind and solar energy needed to drive the country’s net-zero economy.

Ground realities

While this may seem like a gargantuan task, the groundwork for a redirection of the country’s GDP already seems to have been laid out. With its population stabilising, investments in construction and infrastructure development are likely to decrease beyond 2035, freeing up funds to finance the energy transition.

Similarly, a move towards recycling and reusing carbon-intensive products also seems to be afoot as the Chinese economy climbs towards its peak. The recycling industries for both waste steel and plastic have been rapidly growing year-on-year and with energy and cost savings of up to 60%, China’s plans over the next four decades would likely involve further minimising carbon-intensive industries.

The way forward

With little information on what pathway it plans to pursue for its carbon neutrality goal, all eyes are now on Beijing’s critical 14th five-year plan. There is now renewed interest in the top-level policy blueprint for 2021-25, which will likely be central to future decarbonisation pathways.

Another piece of regulation that is eagerly awaited is the national energy law that is currently in the drafting stage, especially for potential implications on carbon-intensive projects included in China’s international Belt and Road Initiative (BRI). China is the largest public financer of fossil fuels according to a recent report on G20 financing, pumping $20.2 billion a year into oil and gas and $4.4 billion into coal. However, its investments in several BRI projects have come under heavy criticism as environmentalists have levelled allegations of exporting emissions on the Asian giant. 

According to a study published last year, which looked into emissions from BRI projects, fossil fuel projects funded by the initiative are likely to increase global GHG emissions and put the objectives of the Paris Agreement at risk. While the draft bill attempts to regulate the import and export of energy, it falls short of screening technologies meant for export and fails to address “carbon leakages” from the BRI’s fossil fuel projects. The new energy law is now likely to come under the scanner for the perceived lack of alignment with Beijing’s newly stated ambitions.

Could India become the largest “developing” emitter?

India is much poorer, but China’s announcement will bring the country under strategic pressure because it will make India the largest developing-country emitter sooner or later, says Thomas Spencer of TERI.

China, with its heavy industry and infrastructure has already carbonised, and now faces a de-carbonisation challenge like the developed countries are facing. For China, it is the time to clean up. But India is yet to fully urbanise and industrialise. The challenge for India is to achieve urbanisation without carbonising.

India’s GDP at purchasing power parity (PPP) is 57% below that of China and energy consumption per capita is 70% below that of China. Even at PPP, China’s final energy intensity of GDP is 30% higher than India’s. 

Spencer points out that India can face the challenge of ‘non-carbonisation’, by making a transparent long-term strategy and adopting policy of sectoral peaking, as opposed to aggregate peaking.

Experts say India’s power and public transport sectors can easily get to net zero by 2050. Top power companies, including NTPC, Tata Power, Adani and JSW, are already shifting gears to renewables. Solar tariffs and renewable energy are already competitive and cheaper than coal power.

Similarly, in the public transport sector, experts say two-wheelers and three-wheelers are likely to replace their petrol engines with greener alternatives by 2030. Technological innovation in hydrogen engines in the decades beyond 2030 may help clean up transport, and ride-hailing services (such as Uber, Ola) will possibly follow suit.

But experts also point out that India, at this stage, can’t commit to net-zero emissions in carbon-heavy sectors such as trucking, aviation and cement production given its vast room to grow in terms of population, energy access and economic development. However, the announcement from China might factor into any enhancement India decides to make to its updated Nationally Determined Contributions (NDCs) it will send to the UN this year.

Moving the needle on global climate action

The politics of Beijing’s announcement might have ramifications in geographies far removed from Asia. While the EU has already ramped up its climate ambition to aim for climate neutrality by 2050, the rest of the developed world has been slow to follow. Only seven countries have submitted their updated NDCs so far and 40 have submitted long term strategies despite repeated calls to do so by UN Chief Antonio Guterres. And despite all criticism, the US is due to formally leave the Paris Agreement on November 4. 

“If the ‘factory of the world’ is willing to consider zero carbon, there is no reason other places in the world can’t do the same,” says Li Shuo.

China’s announcement now shifts the spotlight squarely on to the US where a victory for Democratic nominee Joe Biden could see the US re-enter the agreement. While this would undoubtedly add to the momentum on global climate action, a re-election for Donald Trump would almost certainly see the world miss global warming targets. China has thus re-kindled optimism amongst observers, but the opacity regarding the specifics and the many moving parts of world politics could yet be the undoing of the climate movement.

Climate Science

'Largest singular disaster': More than 1,000 deaths have been caused by monsoon flooding this year reports a Red Cross report | Photo: Free Press Journal

Monsoon set to retreat in India; flooding affecting 17 million people, says Red Cross report

After an above-average run, India’s monsoon season is set to retreat from North India this week. Official data suggested the country received 9% more rainfall than it would normally as of September 26. Nine states recorded excess rainfall, while 20 states received normal rainfall, according to data. Rainfall patterns were erratic across the monsoon months of June to September. While the season began with a bang recording 17% excess rainfall in June, it receded into a lull in July with a 10% deficit, only to come back with a vengeance in August, which recorded a 27% excess rainfall. 

A new Red Cross report, meanwhile, termed monsoon flooding in India as the ‘largest singular disaster’ this year, affecting 17 million people and killing more than 1,000. The report estimated almost 40 million people across India and Bangladesh were affected by both the COVID-19 pandemic and monsoon flooding. The report added that this number may be an underestimation because of limited reporting. A statement released by the South Asia Climate Outlook Forum has flagged the upcoming northeast monsoon as likely to also be more active than normal.

Climate Change imprint on wildfires “unequivocal and pervasive”: Scientific review

A scientific review of over 100 studies since 2013 has revealed a clear correlation between global warming and occurrence of wildfires. The review shows that extreme wildfires are caused by natural variability of climate interacting with increasingly warm and dry background conditions resulting from global warming. The study credits climate change in the increase in frequency and intensity of fire weather. The review has come amidst an extremely destructive wildfire season in the US. 

Melting Antarctica ice sheets will cause 2.5-m sea-level rise even if Paris goals are met: Study

While the world struggles to meet its Paris agreement goals, a new study revealed that melting ice sheets in the Antarctic will cause a sea level rise of 2.5 metres regardless of whether these targets are met. The study, published in the journal Nature, states that according to a new model, the melting is likely to continue beyond the end of this century, and will mostly be irreversible. Even if warming is limited to 2°C, as per the Paris agreement, any subsequent fall in temperature is unlikely to stabilise the loss of ice or will not help it to regrow, the study stated.

US$ 700 billion per year funding gap hindering biodiversity restoration

In the run up to the UN Convention on Biological Diversity (CBD), a pledging conference by UN agencies has highlighted that the world would need to mobilise an additional US$600-824 billion per year in order to halt biodiversity destruction worldwide. Even as the pledging conference stressed on the need for additional funds, a separate study analysing satellite images has flagged large scale ecosystem degradation across 1.9 million over the last 13 years.

Nordic region will need to generate 75% more electricity when it becomes carbon neutral: Study

Nordic countries such as Denmark, Finland, Iceland, Norway and Sweden are aiming to become carbon neutral by 2050, but they will have to generate an additional 290 terawatt hours (TWh) of power to meet the additional demand for electricity. This is a 75% increase from the current levels that the countries are generating. 

In order to become carbon neutral, the region will have to replace fossil fuels with carbon-free alternatives for use in homes, transport and industry. Most of these alternatives will be electricity based, which means the countries will have to keep the existing hydro and nuclear power generation capacities and also add another 83 gigawatts of electricity by building more renewable energy sources, according to the study.

Climate Policy

Inadequate: Recent analyses of post-COVID stimulus packages has found that recovery spending could lead to an increase in greenhouse gas emissions | Photo: Republic World

Most countries failing to live up to green pledges: Analysis

Forget green recovery, most countries are on course to spend billions of dollars on COVID-19 recovery packages that are likely to increase greenhouse gas emissions, according to new research. The US, for example, is set to spend $3 trillion as part of its recovery package of which only $39 billion will be spent on green projects, the study titled the Greenness of Stimulus Index, by Vivid Economics as part of the Finance for Biodiversity initiative, stated. The country is also rolling back regulations that protect the environment. The EU, which has allocated 37% of its 750 billion euros package to green initiatives, is the only region that is planning a green recovery, according to the analysis. 

SC remarks that no govt has the right to mine coal in eco-sensitive zones

The Supreme Court yesterday observed that neither the Centre nor state governments had the right to open up areas falling under eco-sensitive zones for coal mining. The remark was made by a bench headed by Chief Justice S A Bobde while hearing the Jharkhand state government’s plea against the Centre’s decision to auction coal blocks for commercial mining.

Expect 35,000 crore for enhanced discom funding: PFC

After the Indian government recently allowed enhanced funding to discoms in a bid to clear outstanding debts, the Power Finance Corporation (PFC) said it expects additional funds ranging between ₹30,000 crore and ₹35,000 crore to meet the obligation. 

The Centre, meanwhile, has finalised the Standard Bidding Document (SBD) for discom privatisation. All stakeholders are expected to send in their comments by October 5 on the SBD, which is to serve as a guiding document for states interested in offering discoms to private companies. 

India to spend 3.6 lakh crore to provide tap water to every household

The Indian government announced a ₹3.6 lakh crore plan to expand the country’s water supply. The government hopes to supply tap water connections to 15 crore households in 4-5 years, UP Singh, Secretary, Ministry of Jal Shakti said. This is part of a larger initiative called Jal Jeevan mission, through which the government is aiming to supply safe and adequate drinking water to all the citizens.

India poorly prepared to deal with climate change: Study

A new study served as a grim reminder of India’s unpreparedness to tackle climate change. India wanted 89th among 181 countries on the 2020 World Risk Index (WRI), which found the country to be ‘poorly prepared’ to deal with climate change. It is the fourth-most at-risk country in South Asia, just behind Bangladesh, Afghanistan and Pakistan. Sri Lanka, Maldives and Bhutan were better prepared to deal with climate disasters than India, according to the index. Another report published by the Climate policy Initiative and Shakti Foundation found that India’s climate financing levels stood at a pitiable 10% of the required US$170 billion each year.

EU right in proposing carbon tariffs on imports: IMF chief

The EU’s proposal to impose carbon levies on imports received a major fillip from the International Monetary Fund (IMF) this past fortnight. IMF president Kristalina Georgieva endorsed the plan and asked major emitters to cooperate. Georgieva agreed to the EU’s stand that a carbon border tax would provide EU companies a chance to compete on a level playing field with major polluters US and China.  

South Africa plans net zero emissions by 2050, but with coal power still in play

The South African cabinet has approved plans to reach net zero emissions by 2050. But there is a catch. The plan it has drawn up gives coal a continuous role. It envisions a ‘just transition’ from coal to renewable energy, but forecasts 5,000 MW of coal power capacity in 2050.

The country currently gets 90% of its energy from coal. The government is aiming to reduce this to 45% by 2030 by shutting down old power plants. But experts said that with new power plants currently under construction in Kusile and Medupi, reality was not consistent with the government’s targeting to achieve net zero emissions. Australian Prime Minister Scott Morrison, on the other hand, refused to commit to net zero emissions by 2050.

France puts plans to levy environmental tax on airlines on hold 

France put plans to levy an environmental tax on the aviation sector on ice for now. Despite tremendous pressure to work towards a green recovery, the government believes that levying taxes on a sector that is already floundering because of COVID-19 losses would push it in deeper.  The new taxes proposal was one among 150 that had been put forth by the Citizens’ Climate Council.

New petrol and diesel cars could be banned within a decade

The UK is planning to ban the sale of new diesel and petrol engine cars by 2030. Free parking and a VAT cut on electric cars are being considered. A report commissioned by the Department for Transport said that a series of “upfront incentives” were needed to drive up the sales of new electric vehicles.

The study said additional financial support to buy a battery-powered car was “one of the most effective and popular levers” the government could adopt. It suggested that cutting the VAT rate for electric cars and, in turn, penalising those who buy petrol or diesel models was popular with potential buyers. It said that other incentives, including free use of public car parking spaces, could have a “positive impact”.

Air Pollution

We did start the fire: Punjab & Haryana farmers burn stubble prompting High Court to send notice to Centre; CMs of 5 states in a huddle as North India braces for deadly cocktail of winter pollution and COVID-19 | Photo: Research Matters

Crop burning already: ‘‘Early varieties’ of crops being harvested

Crop residue burning, one of the main causes of air pollution in Delhi and north India has already started in Punjab and Haryana. The fires were caught by satellite images from NASA. They started in Amritsar on September 13 with a couple of fires, which jumped to 62 fires on September 20. The farm fires shroud much of the region, including Delhi, into a pollution crisis in the run up to the winter and reach their peak in mid-October. 

Last year, fires started early on September 25. A senior official of the Punjab Pollution Control Board (PPCB) said that these fires were signs of ‘early varieties’ of crops being harvested. 

The Delhi High Court sought the Centre’s reply over a plea that said smoke from crop residue burning would worsen the COVID-19 crisis in the national Capital. The plea sought the centre to be directed to hold a meeting between chief secretaries of Delhi, Punjab, Haryana and Uttar Pradesh to address the issue. 

The Centre told the court the states were warned not to allow farmers to burn crop stubble, but despite threats of legal action and penalties, farmers were burning the residue. Amidst farmer agitations over the farm bills, farmer leaders said farm fires may continue this year, too, in the absence of adequate monetary support to small farmers to use straw management machinery.

The air in Indo-Gangetic plains has already started deteriorating. According to the Central Pollution Control Board (CPCB), some areas have entered the ‘poor’ category of air quality, especially in Delhi.

Five CMs meet to review implementation of air pollution plan

Ahead of the dreaded season of winter pollution that descends upon north India mid-October, the chief ministers of Delhi, Haryana, Punjab, Rajasthan and Uttar Pradesh will meet on October 1 to review the performance of the air pollution control plan that was launched four years ago in 2016. 

Union environment minister Prakash Javdekar said the meeting was to assess preparedness for this winter and review implementation of the short-term, medium-term and long-term plans launched in 2016. State pollution control boards, municipal corporations and various urban bodies, like Delhi Development Authority and New Delhi Municipal Council, will attend the virtual meeting.

CSE report: 65% coal plants ‘lax and laid back’ about green deadline 

Around 65% of India’s coal plants will miss the 2022 deadline to meet environmental norms. A new assessment by the Centre for Science and Environment (CSE) states that a very large number of coal-fired power plants in India continue to be completely ‘lax and laid back’ when it comes to getting ready to meet the deadline.

Power plants account for over 60% of the total PM emissions from all industry, as well as 45% of the SO2, 30% of NOx and over 80% of the mercury emissions. The latest CSE assessment, which has noted the progress till August 2020, said only 56% of the total capacity complies with the new PM norms and a mere 35% are in compliance with the SO2 norms.

Canada launches anti-air pollution fund with VW fine money 

Money paid by Volkswagen as a fine has been put to best community use by Canada. The country has launched a Climate Action and Awareness Fund that will back projects to curb emissions with the bulk of the money. The fund will create jobs for Canadians in science and technology, academia, and at the grassroots community level.

The $157 million fund is part of the government’s new Climate Action and Awareness Fund, which seeks to boost climate science research by empowering youth and communities. Canada approved a C$196.5 million fine against Volkswagen after the company pleaded guilty to dozens of counts of diesel emissions violations. The fine was by far the largest environmental penalty in Canadian history, prosecutors said. The minister also announced a C$50 million investment over three years towards a number of priorities such as supporting additional research to bring down the country’s emission to net-zero.


Shifting tracks: Indian Railways commissions 4.7 Mega Watt (MW) land-based solar plants on its land along the tracks as part of 20 GW target by 2030 | Photo: The Weather Channel

Solar power plants along railway tracks

India Railways is setting up solar plants on the vacant land along its tracks. Railway minister Piyush Goyal told Rajya Sabha that  4.7 Mega Watt (MW) land-based solar plants have already been commissioned under the plan, including 50 MW at Bhilai in Chhattisgarh and 2 MW at Diwana in Haryana.

The Indian Railways wants to install solar plants of 20 Giga Watt (GW) capacity by the year 2030 on vacant land. Bids for 3 GW solar plants have already been invited, the ministry said.

Resilient Renewables: IEEFA says plenty of appetite among RE investors despite policy issues, COVID-19 

A new IEEFA report revealed that although renewable projects are facing a slowdown because of policy issues and a collapse in electricity demand due to the COVID-19 crisis, recent auctions suggest there remains plenty of appetite among domestic and foreign investors to build renewable infrastructure.

Analysing seven renewable energy capacity and storage auctions held to-date in 2020, IEEFA found that together they attracted some $10-20 billion of investment commitments, despite the pandemic. The note highlighted the Solar Energy Corporation of India’s (SECI) 2 GW solar auction in June. It delivered India’s lowest-yet renewable energy tariff at Rs2.36/kWh ($31/MWh) with zero indexation for 25 years.

International players won the bids, including Solarpack (Spain), Enel (Italy), Amp Energy (Canada), Eden Renewables (France), IB Vogt (Germany), Ayana (UK), ReNew Power (Indian, but backed by Abu Dhabi’s ADIA), CPPIB (Canada), JERA (Japan) and Goldman Sachs (US). 

Tata needs more incentives for domestic manufacturing to beat China imports

Government incentives for domestic solar products manufacturing are not enough to match the scale and supply of Chinese imports, said Tata Power Renewables’s Ashish Khanna. Indian domestic manufacturing needs government support to set up plants to manufacture newer technology products to beat the scale of existing imports, he said, adding Tata has no plans to set up new manufacturing plants because they are waiting for long-term policy incentives. 

Mega RE park not on “wasteland”, may damage environment

The Gujarat government’s plan to develop a 41,500-megawatt (MW) hybrid renewable energy park in Kutch for which it has cleared the proposal for allotment of 60,000 hectares of land has raised concerns about the impact on ecology and wildlife in the region, Mongabay reported.

The RE park is expected to attract an investment of about ₹1.35 trillion and the Prime Minister had given 2022 as the deadline for its completion. The Gujarat government has already approved land allocation for several government-owned and private companies. 

Report suggests the government considers the territory finalised for the Kutch project to be wasteland, but that may not be the case for the local people. Recently, acting upon a plea by locals, the Rajasthan high court stayed work at an Adani solar energy park after Rajasthan termed its land as a barren or wasteland.

’Great success’: Sweden, Norway to end joint green subsidy scheme in 2035

Norway and Sweden will close down its joint green power support scheme in 2031, 10 years earlier than proposed. According to Norwegian energy minister Tina Bru, technological and market advancements had resulted in a faster and bigger build out of renewable electricity than the electricity certificates system was designed to support, Reuters reported. 

Both countries called the joint venture great success. It was introduced in 2012 with a target to expand renewable power generation by 24.4 TWh by 2020, with Norway to finance 13.2 TWh and Sweden 15.2 TWh, irrespective of the location of the assets. Sweden later said it would fund another 18 TWh until 2030, to be built domestically.

Electric Vehicles

The urge to be self-reliant: Niti Aayog's latest proposal on battery manufacturing may prove to be the impetus needed to wean India's auto sector off of Chinese battery imports | Photo: Wired

Niti Aayog proposes $4.6 billion in subsidies to spur domestic battery manufacturing

India’s top planning body, Niti Aayog, has drafted a proposal that would earmark $4.6 billion in subsidies over 10 years to spur battery manufacturing in the country and cut its dependence on Chinese imports. The proposal, if cleared by the Centre, would release $122 million in FY21 and the amount will be progressively increased every year thereafter. India’s domestic battery market size is also expected to grow from around the current 5GWh to 230GWh by 2030, and the draft proposes to hike the import duties on Chinese li-ion batteries from the current 5% to 15% after 2022 to help local manufacturers gain market share. 

EVs cost half as much as ICE vehicles to maintain and repair: Study

A new study by Consumer Reports, a non-profit organisation known for its unbiased reviews, says that EVs cost half as much in maintenance and repair costs as gasoline vehicles. The study analysed the two types of vehicles, and plug-in hybrids, over 200,000 miles in the US and found their lifetime costs per mile on maintenance and repair to be $0.031 for EVs, $0.030 for PHEVs and $0.061 for gasoline vehicles. The report does specify that EVs’ repairs may not be cheap, but the cars also need much less of it over their lifetimes and thus save their owners’ money. 

A separate study by the organisation also says that on average, EVs emit 60% less emissions than gasoline vehicles. 

Tesla announces tabless batteries with major power capacity upgrade 

Tesla Motors has announced that it has achieved a new breakthrough in battery technology with its new “tabless batteries”, that the automaker claims would increase the range of its current generation of li-ion cells by 16%. The tabless battery, which gets rid of the metal connection between the battery and the load it powers and cuts the path an electron has to travel from 250mm to 50mm, would store 5X more energy and would also lower Tesla’s cost per kWh by an impressive 14% — which would make its cars significantly more competitive with petrol and diesel vehicles. 

California bans sale of new ICE vehicles by 2035 

The governor of California has announced that the state will ban the sale of new petrol and diesel vehicles starting 2035, purportedly to promote ‘sustainable’ vehicles, such as battery electric vehicles. California has been leading the US states in EV adoption and already requires automakers to sell cars that comply with its strict fuel efficiency norms. The state has also been ravaged by record wildfires this summer and its governor, Gavin Newsom, has openly talked about the necessity of tackling climate change. 

The sentiment behind the ban is echoed by the EU, which is now considering slashing its limit for ICE cars’ per km carbon emissions from 95 grams to 47.5g by 2030. The target, if approved into law, would require the EU’s new car sales to go from EVs accounting for 4% of the market at the moment to more than 60%.

Fossil Fuels

Heavyweight steps in: IFC's new investment policy on other banks may throttle global coal financing as it specifically demands they exit the fuel by 2030 | Photo:

New IFC rules to limit investments in commercial banks without coal exit plan

In a major step forward, the International Financial Corporation (IFC) has published new rules for its investments in commercial banks around the world, under which it will “encourage” them to exit all coal investments in Africa and Asia by 2030. The IFC is hugely influential in global banking policy as its practices are widely adopted by commercial and private sector banks, and its latest stance will see it step away from investing in any financial institution that does not have a plan to phase out support for coal. 

The decision could trigger a shift in the financial sector’s support to the fuel and weaken its prospects even further.

Shell’s to slash 7,000-9,000 jobs in transition plan

Oil and gas major Royal Dutch Shell announced yesterday that shifting to low-carbon energy could result in about a 10% reduction in its 83,000 strong workforce. The plans come a month after Shell launched a board review of its business to find ways of deeply cutting costs of shifting operations to low-carbon energy. The company has announced that the move is expected to cut between 7,000 and 9,000 jobs including around 1,500 people who have agreed to take voluntary redundancy this year.

Poland agrees to shut down coal mining, but only by 2049

The Polish government has signed a deal with the country’s coal mining sector to permanently shut down its hard coal mines by 2049, and has also agreed to support the workers who will be affected. The deal is a landmark development in the country’s history as it is Europe’s largest coal power consumer, and home to some of the strongest supporters of the fuel, despite its falling demand amidst cheaper alternatives like wind energy. 

However, critics have been quick to point out that 2049 is a long time away, and that coal needs to be phased out well before the date to meet the EU’s 2050 target of climate neutrality. Poland has repeatedly opposed the target on the grounds of the cost implications it would have on its economy. Neighbouring Germany is on track to phase out coal mining by 2038 at the latest, but may reach the target sooner. 

Coal power giant GE to stop building new plants

Struggling coal power giant GE (General Electric) has announced it will stop building any new coal plants after being battered by the fuel’s declining financial returns. GE is one of the world’s largest coal power producers, but with competition from renewables and natural gas bruising coal’s economic competitiveness and market demand, GE has decided to exit new capacity builds. The decision comes just five years after its mammoth, $9.5 billion acquisition of Alstom’s power and grid business in 2015, which GE purchased to further expand its exposure to coal. 

The firm’s stock price has already fallen by 42% in the last year and it has so far laid off thousands of workers and fired two CEOs as it attempts to plug its monumental losses.  

Australia: BHP stops thermal coal sales, Queensland approves new coal mine worth $1 billion 

Mining behemoth BHP’s thermal coal will no longer be burned to produce power in Australia as the group is dismantling its 10km-long conveyor belt that feeds medium quality coal from its Mt. Arthur mine to AGL’s Liddel and Bayswater power stations. The move is a part of BHP’s plan to fully exit coal mining by the end of 2022, but it may continue to export higher quality coal to Japan and Korea over persistent demand from the two countries. 

However, the new Queensland government has approved a new coal mine — for coking coal this time — worth $1 billion as part of its COVID-19 recovery plan for the state. The government has been keen to show its support for coal mining after the previous Labour government failed to win the election, in part due to its lack of support for the Adani Carmichael mine. The new mine, if it goes into operation in 2022, would produce 15 million tonnes of coal a year (vs. 10 million tonnes a year from Carmichael).