Greens Deny the Importance of Coal

A couple of weeks ago, the leader of the Greens, Senator Di Natale, gave a nationally televised address to the Press Club.

He said that one of Australia's most important wealth- and export-.generating industries, in his words, is 'on the way out'. No prize for guessing which industry he was talking about. It was the coal industry. Senator Di Natale said:

Thermal coal in Australia is in structural decline and no-one is more exposed than Australia.

…  …  …

… the Institute of Energy Economics and Financial Analysis reported that our major export markets for thermal coal are disappearing and there are no new growth markets appearing on the horizon.

The Institute for Energy Economics and Financial Analysis is not an independent research body. It is a renewable energy think tank that is funded by large trusts such as The Rockefeller Foundation that have a history of opposing fossil fuels. Their work is not independent and, in this instance at least, it clearly does not accord with the facts. Their story on coal is a fairytale. This is not a matter of hiding a decline. The figures are all out there for everyone to see that our coal sector is not in decline. Last year, in fact, we produced and exported a record volume of coal. When it comes to this record performance of the Australian coal industry, the Greens party are acting like a bunch of denialists.

Australian coal production was 491 million tonnes in 2014, an increase of almost five per cent on 2013 levels. Production volumes have been steadily rising over the past decade, with an increase in the average annual rate of more than three per cent over that period. Total volumes increased from 363 million tonnes in 2004 to 491 million tonnes in 2014, an average increase of around 13 million tonnes a year. If only the Greens' logic could be applied to my waistline! I have put on a few kilos in the last year, but according to the logic of the Greens I have actually lost weight—so happy days for me. Australia's coal export volumes are indeed expected to increase even further from this 400 million tonnes today to around 433 million tonnes over the next five years and will boost our national income by $200 billion. This growth means that Australia is forecast to overtake Indonesia as the world's largest coal exporter in 2017. But, of course, that does not mean that growth is always smooth or that prices will not fluctuate. Global coal prices have been at multiyear lows but they remain much higher than they were at the beginning of the century. That is the world of commodity prices. They are volatile.

Leading energy forecasters agree that the continued industrialisation and urbanisation of Asia will drive enduring growth in coal demand. The International Energy Agency estimates that the world will use one billion tonnes more coal in 2019 than today. It explicitly states that the danger of stranded assets for the coal industry is 'limited'. The IEA concludes that, even under its most stringent climate change policy scenarios, no oil or gas field currently in production would shut down prematurely, and only the oldest and least efficient coal mines would close. It also expects coal to continue to be the biggest single source of electricity generation. In 2030, coal is expected to fuel 10,200 terawatt hours of electricity, around 31 per cent of global generation and nearly twice as much as hydro, four times more than wind and eight times more than solar.

The conclusion of Australia's official energy forecaster is that China's energy and climate change policies are unlikely to result in a rapid shift away from coal. Australia's official energy forecaster said that it is unlikely that India will be able to cease thermal coal imports within the next three years as widely claimed. Certainly we have heard concerns about a short-term decline in coal demand but these are largely short-term issues. Growth estimates in Chinese coal use between 2012 and 2040 vary from 70 per cent in an MIT study done in 2014 to over 50 per cent in an International Energy Agency outlook study done a couple of years ago.

Even putting China aside, there is enormous potential for increased coal demand in other countries of Asia. I have here an audit that has been done of coal power stations either under construction or proposed for a selection of Asian countries. Those countries include India, Vietnam, South Korea, the Philippines and Taiwan. These are the plants that are under construction in Asia—more than 750 individual coal fired power units. Some of them are part of one station. They collectively amount to more than 500,000 megawatts of extra power capacity that is projected to be supplied from new suppliers of coal over the next few decades. All of these power stations. These are the facts that the Greens want to ignore. That increased amount of coal capacity—500,000 megawatts of extra coal fired power capacity in South East Asia—will mean that there will be an increased demand for coal of just under two billion tonnes per year to supply that capacity.

I go back to the figures I mentioned earlier. Currently in Australia we produce just shy of 500 million tonnes a year and we export just over 400 million tonnes a year. The increased demand swamps even our own total production of coal today. There will be an increased demand of two billion tonnes and that is not even including China. That is just South East Asia. We as a country only produce around 500 million tonnes today. We will not be able to meet that increased demand but we have an enormous opportunity to continue to increase coal production, as we have in the past 10 years, to help meet the burgeoning economies of South East Asia and to help them to deliver electricity to more of their peoples.

We also want to take that opportunity because we know that Australian coal is much more efficient than coal from other countries. 

Australian coal leads to lower carbon emissions for any given level of electricity generated. Australian black coal from Queensland is the most energy efficient in the world in terms of energy output per unit of coal burned. Therefore, the most efficient outcome for the world's environment is to use more of Queensland's coal and less coal from overseas countries. Australian thermal coal exports are of the highest quality coal found anywhere in the world, with an energy content above 5,500 kilocalories per kilogram, which compares favourably to Indonesian coal, which has an estimated range of between 4,200 and 5,200 kilocalories per kilogram. New mines in places like the Galilee Basin should be developed as quickly as possible. It would create jobs in Queensland and reduce emissions internationally.

So anti-coal activists trying to stop production in Australia are doing a disservice to the global environment. Even the international Intergovernmental Panel on Climate Change is on board with this view. It states that, without a clean coal solution, a global solution to climate change would be more than 130 per cent more expensive. It would push up mitigation costs and would likely lead to more people being in poverty. There will be lower economic growth and less opportunity to protect the natural environment. Last year, the Chair of the IPCC dismissed the idea that fossil fuels would become redundant. He said that new technologies will ensure that 'fossil fuels can continue to be used on a large scale'.

This ethical case for the use of fossil fuels is often overlooked. We should always remember that we are very lucky in this country. We are very lucky to all have access to cheap and affordable electricity, although it is a bit more expensive than it was in the past. According to the World Bank, over half of the world's population, around four billion people, have limited access to any energy at all, at any price. Rachel Kyte, who is the Vice President of the World Bank, said recently that over 1.2 billion people in the world are without access to any electricity, and most of them are concentrated in about a dozen countries in Africa and Asia. Another 2.8 billion rely on wood or other biomass for cooking and heating, resulting in indoor and outdoor pollution to which 4.3 million deaths a year are attributable. This energy poverty is contributing to these more than four million premature deaths, and we have a responsibility, as a country with great access to cheap, efficient and affordable forms of energy, to export those to those countries to help them prevent such deaths in the future. We should not deny the benefits to other nations that we have been able to benefit from, given our country's exploitation of fossil fuels.

As I said, we are a lucky country. We are a lucky country to have had these cheap and accessible energy sources close to our centres of population. They have helped drive the development of this country. They have helped put us where we are today. They have indeed given us the luxury of being able to better protect our environmental assets and have the resources and income to do so, and it is great that they have. The best solution to help improve the environment all around the world is to make sure that other countries have access to such energy in a cheap and affordable way. We have a choice. Either we can have cheap energy, or we will have cheaper wages for some of the poorest people in the world. I personally would choose cheap energy, high wages and coal.

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