CONTENTS 12 Climate change and India
6 | COVER STORY
20 Hydrogen to play a crucial role in India’s energy transition
Coal in Net Zero era
26 Seaborne thermal coal offers rise in June
Emission cut roadmap puts coal in a spot.
27 Seaborne coking coal firm up in June 28 India’s April coal imports up 30% y-o-y 30 SCCL’s coal production up 69% in May
14 | FEATURE
31 Commercial coal block auction second tranche to take place in August
IEA sees $1 trillion Net Zero funding for emerging countries
29 CIL’s coal production up 1.7% in May
33 Strong recovery seen in power demand 39 No power capacity addition in April
India needs better clean energy investment norms.
41 India’s cement production at 28 mt in April 43 Adani strikes coal in Australia
18 | FEATURE
44 Replacing coal with RE promises EU energy independence: Report
Zero Emission target achievable: IESR
48 US coal production estimated at 600 MMst in 2021 49 Traffic handled by major ports up 31% till May 50 Indian Railways’ coal handling up 50% till May 55 NTPC doubles up on renewable target 57 Power demand recovery to drive Global Coal & Mining’s washery utilisation 58 Corporate update
Indonesia to exit thermal energy
46 | INTERNATIONAL
New South Wales sees end of thermal power by 2040 Drop in revenues from coal royalty, rise in power tariff expected.
51 | CORPORATE
60 Government update
Coal India may raise prices
62 E-auction data
Revision of 1-billion ton target by FY24 likely.
64 Port Data
4 Coal Insights, June 2021
COVER STORY
Coal in Net Zero era Sumit Maitra
6 Coal Insights, June 2021
COVER STORY
Y
ear 2020, despite all its nightmarish devastations, provided a vision of a future where there would be much less emission. The skies were clearer and distant mountain tops could be seen. Global carbon emissions fell 7 percent last year due as the economies were shut driving the fall in global energy demand. While oil and coal consumption dropped, renewables were less affected by the pandemic. Installed renewable energy reached almost 200 gigawatts (GW) globally. The world is now moving towards the reality of Net Zero by 2050 with countries around the world pledging carbon and climate neutrality. Developed economies like the US, the European Union, China, Japan, South Korea and also developing countries such as Chile, Brazil, and South Africa have disclosed their Net Zero goal in their Nationally Determined Contributions (NDCs) updates. China targets to become carbon neutral by 2060. Awareness among political players is growing with more political actors in India now committed to climate actions. As a signatory to the Paris accord, India is on its way to adopt a low-carbon future, and has set a 450 GW of Renewable Energy (RE) capacity target by 2030. Hence, in India, incremental power demand is expected to be largely met by addition of RE capacity in the country. Energy transitions are underway and inevitable, even amid the pandemic. Current market trends show the energy landscape is in transition towards more flexible energy systems with a rapidly increasing share of renewable energy, declining inflexible baseload generation and wider applications of storage technology. “The declining costs of renewables have begun to reduce new investments into coal and other inflexible baseload technologies; a transition which will eventually cause renewables to become the new baseload,” says a recent report by Wartsila, a technology company that works with energy transition. In 2017 itself, 14 percent of electricity
generation worldwide was attributed to wind and solar. Energy, as Power Secretary Alok Kumar puts it, is at the centre of all deliberations, discussions and negotiations in the development agendas in most countries. In it, the issue of energy transition, inevitably, becomes the main agenda. “Energy transition is the need of the hour. How we manage our transition is going to affect all the countries, all the communities, all the households and each and every human being. Almost all major countries have committed to themselves through their nationally determined contributions that they plan to do for a better planet,” Kumar said while addressing the BRICS Green Hydrogen Summit recently hosted by NTPC. “When we talk of energy transition, the technological aspect becomes the key. This decade will see the best use of available technologies including electric mobility, which we will implement with full force. Then there is floating solar power plants, offshore wind energy. Energy efficiency is another key area which will drive the transition in a large way. International Energy Agency, in its Roadmap for Net Zero by 2050, says Renewable Energy technologies like solar and wind are the key to reducing emissions in the electricity sector, which is today the single largest source of CO2 emissions. “In our pathway to Net Zero, almost 90 percent of global electricity generation in 2050 comes from renewable sources, with solar PV and wind together accounting for nearly 70 percent,” IEA said. For IEA, Net Zero implies a rapid shift away from fossil fuels, which signifies significant fall in the use of coal, oil and gas. “This requires phasing out all unabated coal and oil power plants by 2040 and steps such as halting sales of new internal combustion engine passenger cars by 2035,” the roadmap suggests. G7 endorses Net Zero by 2050 roadmap
The Group of Seven (G7) leaders showed
“Energy transition is the need of the hour. How we manage our transition is going to affect all the countries, all the communities, all the households and each and every human being.” Alok Kumar, Secretary, Ministry of Power strong commitment to reach Net Zero by mid-century when they met earlier this month and endorsed IEA’s 2050 roadmap. During the meeting in south-west England, the leaders of the world’s largest market economies called on all countries, in particular major emitting economies, to join them to make that goal a reality. The IEA’s Roadmap to Net Zero by 2050 was released in May and is considered to be the world’s first comprehensive study of how to transition to a net zero energy system globally by 2050 while maintaining robust economic growth and ensuring stable, affordable and universal energy supplies. Reaching net zero means using energy more efficiently
The deployment of new solar, wind and battery technology may get more attention, but a key pillar for reaching net-zero emissions is simply using energy more efficiently. In the pathway set out in the roadmap,
Coal Insights, June 2021
7
COVER STORY
IEA sees $1 trillion funding for Net Zero target for emerging countries Coal Insights Bureau
A
nnual clean energy investment in emerging markets and developing economies (EMDEs) needs to increase by more than seven times – from less than $150 billion in 2020 to over $1 trillion by 2030 to put the world on track to reach Net-Zero emissions by 2050, according to a recent report by International Energy Agency. Compared with recent years, energy investment as a share of GDP would need to accelerate in India to over 4.5 percent, by 2030, the report, titled, ‘Financing transitions in fuels and emissions-intensive sectors’, said. “In markets where the role of international sources in energy investment is relatively muted, such as India, improving investment conditions for clean energy would likely
have the effect of attracting higher levels of international capital,” it said. Unless much stronger action is taken, energy-related carbon dioxide emissions from these economies – which are mostly in Asia, Africa and Latin America – are set to grow by 5 billion tons over the next two decades, the report said. “In many emerging and developing economies, emissions are heading upwards while clean energy investments are faltering, creating a dangerous fault line in global efforts to reach climate and sustainable energy goals,’’ said Fatih Birol, Executive Director of IEA. “Countries are not starting on this journey from the same place – many do not have access to the funds they need to rapidly transition to a healthier and more prosperous energy future – and the damaging effects of the Covid-19 crisis are lasting longer in many parts of the developing world.”
Average annual net income and import costs of oil, natural gas and coal in EMDEs, 2016-2020
14 Coal Insights, June 2021
“World’s energy and climate future increasingly hinges on decisions made in Emerging Markets and developing economies spanning countries in Africa, Asia, Europe, Latin America and the Middle East including emerging giants of global demand such as India and Indonesia” Climate’s future hinges on plans of EMs
The world’s energy and climate future increasingly hinges on decisions made in Emerging Markets and developing economies spanning countries in Africa, Asia, Europe, Latin America and the Middle East including “emerging giants of global demand such as India and Indonesia”, says IEA. On a per capita basis, energy consumption in these countries is generally low, but expanding economies and rising incomes create vast potential for future growth. The challenge is to find development models that meet the aspirations of their citizens while avoiding the high-carbon choices that other economies have pursued in the past. “The falling cost of key clean energy technologies offer a tremendous opportunity to chart a new, lower-emissions pathway for growth and prosperity. If this opportunity is not taken, and clean energy transitions falter in these countries, this will become the major fault line in global efforts to address climate
COVER STORY
Indonesia to exit thermal energy Zero Emission target achievable: IESR Coal Insights Bureau
I
ndonesian state utility Perusahaan Listrik Negara (PLN) is aiming to retire its coal-fired power as part of its plan to reach carbon neutrality by 2060. The strategy, announced recently, is part of Indonesia’s new net zero emission goal for which the country’s energy ministry is currently working on a separate programme. The development carries much importance as Indonesia is a major producer and exporter of coal, which is also a cheap fuel for the country’s power sector. In line with the policy, the government will stop approving new coal-fired power plant projects except those which have been contracted with PLN or have already secured financial close with lenders. PLN would retire three coal and gasifiedcoal power plants, with a combined capacity of 1.1 gigawatts, by 2030 in the first stage of
the retirement programme and then, from 2030 to 2055, 49 GW of coal power plants will be retired. “What is also important is how we meet the energy demand that is believed will increase, while on the other hand reduce the operation of coal plants and then replace them,” Rida Mulyana, energy ministry’s Director General of Electricity, said in a statement Zero emission possible
Achieving zero carbon emissions in the Indonesian energy system by 2050 is technically and economically feasible as local renewable resources, particularly solar PV, are sufficient to meet energy demand in the country, says Institute for Essential Services Reform (IESR), a think-tank that focuses on renewable energy and environmental issues in Indonesia. IESR recently launched its latest study in collaboration with Germany’s Agora
Energiewende, and Finland’s Lappeenranta University of Technology (LUT). “It is technically possible and economically viable to achieve zero emissions in its energy system by 2050. Indonesia should be able to meet the Paris target of limiting global temperature rise to below 1.5 degrees and achieving carbon neutrality by 2050. This study is quite different from government modeling which states that Indonesia will only reach carbon neutral in 2070,” said Fabby Tumiwa, Executive Director of IESR. Philip Godron, Senior Associate Global Energy Transition emphasized that transition to renewable energy will open up more space for innovation and will also increase global competitiveness. The results of this modeling are in line with the latest report by International Energy Agency which states that solar and wind power will dominate the energy mix by 2050, because of the cost of generating renewable energy in Indonesia, especially from solar energy, will be cheaper. Advantages of going Zero emission for energy systems
In the long term, there are several advantages of achieving zero emissions in the energy system by 2050, among others, system costs and Levelized Cost of Electricity (LCOE) which are cheaper than if Indonesia continues to do business as usual.
Installed capacity of coal fired power plants
18 Coal Insights, June 2021
INTERNATIONAL
Adani strikes coal in Australia Coal Insights Bureau
B
ravus Mining and Resources, Australian mining arm of Adani Group, has struck coal in the Carmichael Mine in Queensland. “Bravus has now struck coal and exposed the first of the coal seams at our Carmichael project, almost two years to the day since we received our final approvals. This coal will help provide affordable base load energy in India to complement Adani’s renewable portfolio,” the company said. The Carmichael Mine consists of thermal coal deposits in Queensland’s North Galilee Basin, approximately 160 kilometres northwest of the town of Clermont. The mine will produce 10 million tons per annum (mtpa) of high quality coal targeting India and South-East Asia. Coal from the mine will be railed more than 300 kilometres for export through the North Queensland Export Terminal, which is approximately 25 kilometres north of Bowen. “Proud of my tenacious team who mined Carmichael’s ‘first coal’ in the face of heavy odds. There couldn’t be a better birthday gift than being able to strengthen our nation’s energy security and provide affordable power to India’s millions,” the company and group chairman Gautam Adani said on June 24. According to Bravus CEO David Boshoff, the Carmichael mine project is on track to export the first coal this year with India being the foundation customer where the company has already secured 10 mtpa of supplies. “The coal will be sold at index pricing and we will not be engaging in transfer pricing practices, which means that all of our taxes and royalties will be paid here in Australia. India gets the energy they need and Australia
gets the jobs and economic benefits in the process,” Boshoff said. “Throughout the last two years of construction and during the many years when we fought to secure our approvals, our people have put their hearts and souls into this project - it is wonderful that we have now struck coal,” he said. Carmichael coal will contribute to Adani Group’s burgeoning energy portfolio that is designed to create a sustainable energy mix, incorporating, thermal power, solar power, wind power and gas. Adani group is also present in the Renewable Energy space in Australia with a 65 MW capacity at Adani’s solar farm at Rugby Run in central Queensland is part of a portfolio of 24.3 GW of Adani Green Energy Ltd (AGEL) which recently acquired SB Energy Holdings Ltd. “As a global company we are walking the talk when it comes to delivering a sustainable energy mix,” Boshoff said. Coal Handling Plant (CHP) and Coal Preparation Plant (CPP)
In January, DRA Global (DRA) was awarded a contract for the Carmichael Project to deliver a $140 million coal preparation plant, where the coal is processed and prepared for transport. “DRA will carry out the design, engineering and construction of our Coal Preparation Plant, in addition to the Coal Handling Plant that they are already delivering. We expect to see more than 250 people working on these combined projects onsite, ensuring regional Queensland cities like Mackay see the benefits going back into their local economies,” Boshoff said. The Coal Handling Plant and the Coal Preparation Plant work together to prepare and process the coal to meet market specifications.
“The Carmichael mine project is on track to export the first coal this year with India being the foundation customer where the company has already secured 10 mtpa of supplies.” David Boshoff, CEO, Bravus Mining and Resources Rail infra project
The Carmichael Rail Network (CRN) is a 200 km narrow gauge railway connecting Queensland’s Galilee Basin to existing rail infrastructure and the North Queensland Export Terminal – Australia’s most northerly coal export port. The completion of the railway in 2021 will open up the Galilee Basin for further development, creating new jobs and business opportunities for Queenslanders. The project requires 400 km of rail line using 26,417 tons of steel. Community development
As part of its effort to help local communities in Queensland and the livelihood of the people, the project has created more than 2,500 jobs and signed more than $1.5 billion in contracts. Queensland contributes to than 90 percent of the project contracts spread across all corners of the state to give as many regions as possible the opportunity to benefit from the project, while also tapping into the highly-skilled construction and resources industry workforce that Queensland possesses.
Coal Insights, June 2021
43
CORPORATE
Coal India may raise prices, revise production targets Coal Insights Bureau
C
oal India is seriously looking at raising prices and a decision would be taken soon. “This is the right time to raise prices, we are discussing it seriously. Unfortunately, the Covid pandemic was there. Perhaps we will take some decision soon,” Pramod Agrawal, CMD, Coal India told financial analysts but added that it is difficult to say now when the price rise will happen. The CMD’s reaction was in response to questions from analysts who pointed out that rise in costs, muted growth in e-auction prices, aggressive capex plans and expected rise in wage costs effective July of about 5-7 percent as per their expectations call for a revision in prices. Likely to revise 1-billion ton target for FY24
Covid pandemic and its impact on the economy over 2020 and 2021 might force
Coal India to revisit its production targets both for the current year as well as the 1-billion ton mark set for FY24. The 1-billion ton target was set in 2019, before the pandemic unfolded, following which the economy has lost two years - 20202021 - which might force Coal India to push back the target by two years to FY26, Agrawal told analysts during a conference call post the announcements of the results of the company. FY22 target may be revisited
Coal India might also revise its production target of 670 million tons (mt) for FY22 and dispatch target of 740 mt. “For FY22, we have kept an ambitious target. While fixing the target we never thought that in April, May and June there will be the second wave or there could be a third wave in the later part of the year. Considering that in the last three months we have suffered a lot, perhaps it would be a difficult target and we have to revise it as the months go by,” CIL CMD said.
Operational highlights of FY21
FY21 coal production was 596 mt while offtake was 574 mt. Assuming that power demand will revive significantly and that there will also be import substitution, CIL had fixed the FY22 targets for production and despatches. Dispatches would depend on how power demand and a likely third Covid wave pans out. On a normalised level, CIL expects its dispatches to increase by 40-50 mt annually. Ongoing projects
CIL has 114 major ongoing projects with peak capacity of 836.48 mtpa. Operating large projects include Kusmunda Opencast (50 mtpa), Gevra Expansion Project (70 mtpa), Dipka OC (40 mtpa), Bhubaneswari OC (40 mtpa), Jayant (20 mtpa), Dhadhichua (20 mtpa). Future projects
CIL has 36 mining cleared by its board and its subsidiaries in FY21 with a rated capacity of 332 mtpa and sanctioned capital of `59227 crore. In addition to this, 5 non-mining projects having a capital of `6843 crores have also been cleared by CIL. Operations
Coal demand has been improving, with 38 percent year-on-year increase in dispatches for the first two months of FY22. During 2020-21, the total income was `93,818 crore. Its revenue from operations also saw a decline of 6.3 percent year-on-year and was `90,026 crore during FY21. Revenue in Q4 came in 3.1 percent lower y-o-y at `26,700 crore, supported by higher offtake but affected by decline in average realisation by 4.9 percent y-o-y to `1,484/ ton, according to a ICICI Securities report. “EBITDA at `6,380 crore was better than estimates due to lower OBR adjustment (-43 percent y-o-y),” the report said. FSA realisation (`1,392/ton) was lower due to higher sale of low grade coal. E-auction premiums increased by 20 percent quarter-on-quarter (q-o-q) to `1,752/ton.
Coal Insights, June 2021
51
CORPORATE
NTPC doubles up on renewable target
are under construction and expected to be commissioned over the next two years,” a report by Motilal Oswal said. NTPC has emerged as the lowest bidder for 1.4 GW of competitively bid out renewable projects and has 3 GW of renewable capacities under construction.
Plans 60 GW capacity by 2032
Capacity touches 64,490 MW
NTPC’s standalone capacity has touched 51,721MW and 64,490 MW for the group as on March 31. After running for 54 years, operation of 460 MW Talcher plant was discontinued with effect from March 31. Target for FY22
The company plans to commission 4.6 GW of thermal (2.4GW in standalone) in FY22 with another 5.2 GW to be commissioned in FY23. In the January-March quarter, NTPC commercialised 2 GW of plants led by Gadarwara (800 MW), Meja (660 MW), and Kameng (300 MW). Additionally, a 250 MW unit at Barauni is set to be commissioned soon following a full load trial run recently. Capex plans
Coal Insights Bureau
N
TPC has ramped up its long term Renewable Energy capacity target to 60GW by 2032 from earlier
32GW. NTPC plans to set up 15GW of RE capacity by FY24 and could also look at plans for potential acquisition of RE assets. “NTPC has strong commitment to Renewable Energy and would be targeting 60 GW by 2032. The board has already approved a business plan in this regard,” Finance Director A K Gautam told analysts during a conference call. The group has already commissioned 1,350 MW of RE project under EPC mode while 2,883 MW of solar projects of NTPC are presently under implementation.
Additionally, 3,290 MW are at various stages of tendering, Gautam said. NTPC is at an advantageous position in executing RE projects as it can arrange lowcost finances, Gautam said. From 1 GW in FY21, NTPC’s RE capacity would touch 3 GW in the current year, which will go up to 8 GW in FY23 and then to 15 GW in FY24, Gautam said. Also, NTPC expects to get some priority when tenders are called, he said. NTPC is looking at tender opportunities for RE projects worth about 5,000 MW in coming days. “While this may seem ambitious (implying 5-5.5 GW per year of RE additions over the next 11 years), NTPC has taken steps to improve its renewables footprint with 3GW of renewable capacities
Capex plan for FY22 has been estimated at `23,736 crore on a standalone basis. The capex plan takes into account any probable acquisition that NTPC might do in the RE space, Gautam said. NTPC incurred a capex of `20,338 crore in FY21 on a standalone basis and 33,981 crore on the group level. Coal production and consumption
NTPC’s captive coal production went up by more than a million ton in the January-March quarter reaching 3.708 million tons (mt), up from 2.595 mt mined in the corresponding quarter of FY20. Its coal consumption during the quarter dropped to 45.68 mt from 47.86 mt. Domestic coal consumption dropped to 45.37 mt from 47.01 mt while imports fell to 0.31 mt from 0.85 mt.
Coal Insights, June 2021
55
66 Coal Insights, June 2021
Tear along the dotted line
Tear along the dotted line
