Antinuclear

The imminent decline of Australia’s coal export industry

CLP Holdings, the Hong Kong based company that is one of the largest power companies in Asia, said it wouldn’t invest any more money in coal-fired generation in India following the disastrous results of its latest 1,200MW investment……  It will focus entirely, it says, on renewables such as wind and solar from now on in India. 

Fossil fuels put on notice – the party is about to end REneweconomy, By Giles Parkinson  4 March 2013  The Australian and the global fossil fuel industry have been given stark warnings by two heavyweights of the international finance sector that their future will not just be constrained by political decisions to limit emissions, but by the lack of, or the high cost, of finance.

The first warning comes from Deutsche Bank, which says that China’s use of thermal coal is likely to peak within a few years, and by 2017 it could become a net exporter of thermal coal rather than a large importer.  This, says Deutsche Bank, is likely to have a significant impact on coal prices.

The implications for the Australian coal sector, and its massive expansion plans in ports, mines and rail infrastructure in Queensland and NSW – led by the likes of Gina Rinehart and Clive Palmer – is that the long term price of thermal coal will not be sufficient to make these investments profitable. They could, in fact, become the acts of the greatest futility if they go ahead.

The second warning comes from leading credit ratings agency Standard & Poor’s, which in a report released on Monday predicts credit downgrades and negative outlooks in the oil sector because of the potential carbon constraints driven by global climate change policies.

S&P says future carbon constraints need to be factored into credit assessments for the oil sector – along with uncertain future oil prices and rising operational costs – and financial models that rely on past financial performance are no longer adequate.

“By analysing the potential impact of future carbon constraints driven by global climate change policies, our study shows a deterioration in the financial risk profiles for smaller oil companies that could lead to negative outlooks and downgrades,” said Michael Wilkins, head of environmental finance at Standard & Poor’s. He says these downgrades could occur in the next three years…….

The S&P report should not be seen is isolation. In January, HSBC said in its “unburnable carbon” report the market value of oil majors such as Shell, BP and Statoil were at risk because they could be forced to leave much of their resources in the ground. This message of risk, and its effect on financing, was taken up by Bloomberg New Energy Finance, whose recent conclusions that wind farms and solar farms were already cheaper than new build coal and gas-fired generation  in Australia were largely based around the rising cost of finance for fossil fuel generators, influenced primarily by carbon risk.

And in the past few weeks, investment banks such as UBS, along with Macquarie Group and Deutsche Bank have all noted how the solar industry is reframing energy markets in Europe, and beyond, and turning once profitable coal and gas fired generators into marginal businesses, and forcing many to close or to embrace amore rapid change to renewables and distributed generation.

Just last week, Duke Energy, the largest utility in the US, said the plunging cost of solar would redefine the traditional utility business. The second biggest, NRG, has already stated that solar will cause a revolution in the energy industry.

And to those miners who believe that India will remain a beacon in the fog, CLP Holdings, the Hong Kong based company that is one of the largest power companies in Asia, said it wouldn’t invest any more money in coal-fired generation in India following the disastrous results of its latest 1,200MW investment, which is losing money from lack of access to coal and poor quality supplies. It will focus entirely, it says, on renewables such as wind and solar from now on in India. http://reneweconomy.com.au/2013/fossil-fuels-put-on-notice-the-party-is-about-to-end-55039

March 4, 2013 - Posted by Christina Macpherson | AUSTRALIA - NATIONAL, business