John Menadue–King Coal to be dethroned.

Jul 24, 2014

On May 1 last year I posted “A canary in the coal mine”. It focussed on the growing and wide concern about the damage to the climate caused by coal fired electricity generation. It also drew attention to the action of Jonathon Moylan who sent a hoax email concerning Whitehaven Coal to the ANZ Bank about the risk of investing in coal. The worthy and powerful tut tutted his action but I likened it to the canary in the coal mine warning of danger ahead.

In the Supreme Court a few days ago. Jonathon Moylan pleaded guilty but it seems unlikely that he will receive a custodial sentence. Good luck to him for acting out his concerns about our planet, the dangers of coal and that the banks should be careful in funding more coal projects

Only a few days earlier in Texas, Tony Abbott our apparent self-styled “ambassador for coal” said “for many decades at least, coal will continue to fuel human progress as an affordable energy source for wealthy and developed countries alike”

But the evidence is pointing in the other direction. At the recent midyear climate negotiations in Bonn, an unprecedented 60 countries including Germany called for a total phase out of fossil fuels by 2050 as part of a global agreement on climate change to be concluded in Paris in 2015. If the Paris conference next year is successful the future of coal will be even more bleak than it is now, particularly for steaming coal

The future of coking coal produced for steel making will be more secure, but not steaming coal. About 13 % of global coal is mined for coking and steel making. Coking coal is about 40% of our total coal exports. The remainder is steaming coal.

On a global basis 41 % of 0f the world’s electricity is generated by highly polluting steaming coal.

The International Energy Agency has advised that even if we aim to limit the world temperature rise to only 2 degrees – it could be more in practice – we would have to achieve a reduction of 50 % in the share of global energy from coal by 2035.

Coal may seem a cheap fuel now but it does not carry the cost of the ‘externalities’ it incurs, the damage it does to our environment and health. That is why proper pricing of coal is essential. As the real cost of steaming coal increases the cost of renewables is moving strongly downwards.

The signs are everywhere that steaming coal pollution must be reduced in favour of less polluting alternatives. Why in the world would Joe Hockey tell us that the wind farms around Canberra are ‘utterly offensive…I think they are blight on the landscape’? Does he prefer dirty and polluting smoke stacks?

President Obama has taken executive action to mandate a 30 % reduction in carbon emissions from fossil burning power plants by 2030. As Japan restarts its nuclear power plants it will buy less Australian coal. China is committed to reducing power generation from coal. It is a national imperative. European consumption of coal continues to fall with new air pollution requirements from 2016.

There are reports that Deutsche Bank, HSBC, Credit Agricole and the Bank of Scotland have withdrawn their support for the Abbott Point Coal loader in Queensland. The Bendigo and Adelaide Bank have said that they would not fund coal projects.

We are also hearing of new coal projects being deferred and many existing mines losing money. Some of this may be short term but the longer term prospects for steaming coal are bleak. In May the Queensland Resources Council said that 10% of coal mines are “in a very precarious state”

Or as John Hewson has put it “The days of fossil fuels being burnt unabated are over. Investing in these projects is a losing bet” (AFR 11 June 2014)

More and more pain is coming for steaming coal.

Minister Greg Hunt told us a few days ago that clean coal is just around the corner with new technology. But we have been hearing that for over 20 years. It is politics designed to try and prop up a declining industry and shows the risk of Direct Action in handing out money to industrial friends and political supporters.

Tony Abbott says that action on carbon must not be allowed that damages our economy.  He thinks that the planet and our economy are separate.  Just as there will be no jobs in the Murray Darling Basin if we pollute the river so our economy and jobs will be at risk if we do not safeguard our climate and planet. If our planet is severely damaged, as is in prospect, so will our economy and lot more as well.

Interestingly the Mining Division of the CFMEU whose members jobs at risk is far more constructive about addressing climate than Tony Abbott. The union has consistently supported a price on carbon with appropriate safeguards and compensation.

We need to stop shoring up industries that are carbon polluting. As Ian McAuley has put it capitalism thrives on change and the opportunity for countries like Australia to modernise the energy sector can be a major driver of change. There are jobs in de commissoning coal fired plants, in building solar and wind plants and the accompanying infrastructure in energy research and development and in making domestic buildings and industrial plants energy efficient. If this isn’t economic activity, what is?

King coal is not the energy source of the future regardless of what Tony Abbott says. The canary in the coal mine is screeching louder and louder and we had better take notice.

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