Russian energy giant looks to shed coal assets, reports say

bellona.org General,  International 2019-12-05 14:06:43

In a grudgingly climate-friendly gesture, IrkutskEnergo, a major Siberian energy company, is moving to shed its coal assets – a sign that even Russian power producers are feeling the West's nascent backlash against fossil fuels.


The company, which is part of Russia's larger En+Group, a conglomerate that includes the aluminum giant Rusal, is reportedly in talks sell both its coal-fired power plants and its open pit mines, according to the Russian business daily Kommersant.


After the sale, valued at some $388 million, IrkutskEnergo's portfolio will be concentrated almost exclusively on its hydroelectric power holdings. While the coal sell-off will do little to stem Russia's carbon emissions overall, it nonetheless represents that the Siberian energy colossus has bowed to the increasingly poor economics of coal.


According to its most recent public financial filings, IrkutskEnergo is undertaking the asset sell-off as "part of an obligation to minimize carbon dioxide emissions," Kommersant said.


Among the coal holdings that the company is seeking to get off its books are six open-pit mines in western Siberia, which together produced some 15.5 million tonnes of coal.


Still, by dumping its coal assets, IrkutskEnergo isn't expected to experience much immediate pain. According to company sources that spoke to the paper, sale of IrkutskEnergo's coal-fired plants would account for only about 1.7% of the group's income.


But the move is the latest in a handful of Western-driven shifts meant to lessen the Russian market's dependence coal, which produces almost half of the world's energy-related carbon dioxide emissions. The Finnish energy concern Fortum, which sells electricity on Russia's wholesale market, is said to swap its Siberian fossil fuel holdings for hydroelectric assets in the same area, the Kommersant reported.


Enel Russia, a subsidiary of Italy's Enel, is likewise looking to sell off the Reftinskaya power plant in the Sverdlovsk region, which is Russia's largest coal fired energy station, Kommersant noted. That sale is part of a broader scheme by Enel to shed its fossil fuel burning assets while building out its renewable energy holdings. Indeed, Enel Green Energy, one of the company's subsidiaries, has begun construction on a 57-turbine wind farm near Murmansk.


While Moscow's future economic and energy plans overwhelmingly favor oil, gas and coal, it will be interesting to see how much the Western retreat from coal effects Russian energy markets.


The most recent shock to the global coal ecosystem came with the bankruptcy of Murray Energy, the one-time symbol of American coal mining industry. It was the eighth major coal company to close this year – despite the Trump administration's declared goal of saving the US coal industry.


Added to this was a declaration in February by 100 global banks, which combined managed some $6 trillion in assets, to offload coal from their portfolios. Entire governments are following suit. In 2015, Norway's sovereign wealth fund began to shed its coal stocks. The UK, France, Canada and New Zealand have all committed to stop using coal power altogether by 2030. Germany plans to follow by 2038.


And just this week, 35 world insurance companies, which control $8.6 trillion – or 37% of the insurance industry's global assets – have begun pulling out of coal investments.


In that sense, IrkutskEnergo's newfound distaste for coal is a reflection of these trends. But it also offers some small encouragement that Russia's monolithic fossil fuel industry is feeling the anti-coal pinch.


Still, such divestment strategies are unlikely to become government policy for the world's fourth largest emitter of greenhouse gases, at least if President Vladimir Putin has anything to say about it.


(Writing by Wenxin Wu  Editing by Alex Guo)
For any questions, please contact us by inquiry@fwenergy.com or +86-351-7219322.

Share this article
Connect with us

Editors Recommendations

1 Qinhuangdao coal stocks rebound above 5Mt amid recovered supply 2020-02-21

Coal inventories at Qinhuangdao, key transshipment port in northern China, have recovered to above 5 million tonnes for the first time since early January, due to accelerated inbound arrivals followin

2 NW China city restores 75% of coal capacity, yet worries linger 2020-02-21

Yulin city, a major coal production city in northwestern China's Shaanxi province, had restored 75% of its total coal production capacity as of February 18, according to a news briefing on the same da

3 China Coal Daily Track (Feb 21) 2020-02-21

Thermal coal Production area Purchases were active in Shaanxi from coking plants and chemical factories in local and surrounded areas, worsening supply woes. Labor shortages made most coal min

4 Expectations diverge on Chinese thermal coal market 2020-02-21

Market participants held different opinions about the direction of Chinese domestic thermal coal market from late February to early March, mainly focusing on the debate over whether recovery in the su

5 Chinese seaborne import thermal coal suffers poor liquidity, prospect unclear 2020-02-21

Chinese seaborne import thermal coal market still suffered poor liquidity near late this week, marking sluggish transactions for over a week. Near-term prospects remained murky due to uncertain Chines

6 Active buying pushes up thermal coal prices in Shaanxi 2020-02-21

Thermal coal prices continued edging up in Shaanxi, the third-largest coal production base in China, as end buyers were scrambling to buy the material in an undersupplied market. In Yulin

7 China Coal Daily Track (Feb 20) 2020-02-20

Thermal coal Production area Coal production in northern areas is expected to fully return to normal in early March. As of February 17, over 70.2% of capacity, or 2.915 billion tonnes per a

8 S Africa thermal coal exports hit 3-yr low in 2019 2020-02-20

Thermal coal exports from South Africa, a major coal production nation worldwide, nosedived to a three-year low in full-year of 2019, showed customs data. The country supplied a total 75.

9 France to close oldest nuclear power plant in Jun 2020-02-20

France will shut down the Fessenheim nuclear reactor, the country's oldest nuclear power plant, at the end of June, with one of its reactors to be closed this weekend, Prime Minister Edouard Philippe'

10 China Shenhua Jan commercial coal output up 14.2% on yr 2020-02-20

China Shenhua Energy Co., Ltd., a listed arm of China Energy Investment Corp., registered a 14.2% year-on-year rise in its commercial coal output in January, the company said in a statement on Februar

Most Read Articles

1 China's import thermal coal trading in a standoff amid uncertainty 2020-02-18

Trading activity entered a lull in Chinese import thermal coal market at the beginning of this week, as Chinese end buyers temporarily stoppedseeking cargoesfrom import market amid growing uncertainti

2 Thermal coal supply remains tight at N China ports despite quickened mining resumption 2020-02-19

Thermal coal shipments to China's northern transfer ports remained low although more mines resumed work in response to the government's call. The National Energy Administration said on Fe

3 Indonesian thermal coal holds support from rains despite China's curtailed demand 2020-02-19

Indonesian thermal coal held steady for sessions despite a marked decrease in Chinese demand, as the material remained supported by local heavy rains that have caused prolonged supply woes.

4 Chinese thermal coal prices keep sideways as supply shortage eases 2020-02-18

Spot thermal coal prices were little changed at China's northern transfer ports on the first trading day this week, as the sentiment turned weaker after domestic supply showed a sign of recovery.

5 China coking coal supply recovery speeds up; Mongolia to reopen coal exports borders 2020-02-21

Coking coal supply has been on the fast track to approach a full-scale recovery in China's main production areas recently, as a majority of miners gradually resumed operation after finishing approval

6 Weekly China thermal coal market analysis and forecast 2020-02-18

China's spot thermal coal prices grew at a moderated pace in the past week, with upward momentum capped by accelerated production recovery at mines in production bases. Import coal market gradually co

7 S Africa thermal coal exports hit 3-yr low in 2019 2020-02-20

Thermal coal exports from South Africa, a major coal production nation worldwide, nosedived to a three-year low in full-year of 2019, showed customs data. The country supplied a total 75.

8 Weekly China coking coal market analysis and forecast 2020-02-18

Coking coal market further gained strength at China's main production areas during the past week, as coal supply still far fell short of demand due to slower-than-expected resumption at mines and inte

9 Russia Dec coal exports decline 1.53% YoY, customs data 2020-02-19

Russia posted a year-on-year decline of 1.53% in coal exports in December 2019, according to customs data, mainly dragged down by decreased buys from China. The country shipped a total 18

10 China thermal coal market faces 2-3 mth short squeeze due to coronavirus: Noble 2020-02-18

China's domestic thermal coal market faces a 2-3 month short squeeze as a rapidly spreading coronavirus outbreak curtails production more than demand, Noble Resources' chief coal analyst said on Febru

Scan to download sxcoal.com mobile APP

X