2014-11-17
Sophie Trevitt
Over the course of the weekend, the US and China struck a deal committing the US to cutting emissions by 26-28% by 2025 (on 2005 levels) and China to peaking its emissions no later than 2030 and raising the proportion of renewables in its energy system to 20%.
So what's the real story? Is coal good for humanity and essential for our future as Prime Minister Abbott claims or should we be looking to cut coal consumption and production and move in the direction of the US and China? Bob Burton, co-author of Big Coal: Australia's Dirtiest Habit and researcher for Coal Swarm, a global 'beyond coal' clearinghouse, joined the Green Institute to talk about the future of coal here in Australia and around the world.
Over the last few weeks, Mr Abbott has insisted that coal is essential for improving the living standards of people here in Australia and around the world. He has insisted that coal is essential for a modern lifestyle, a modern economy and prosperity. From what Mr Abbott has been saying, it would be easy to believe that Australia's consumption of coal is increasing as we seek higher standards of living. Bob Burton explains that this is in fact not the case, and that power demand in Australia is already falling.
About one third of the coal mined in Australia is used domestically — overwhelmingly for power generation. Historically, power generators have planned for perpetual growth of 2–3 per cent every year, but over the last four years coal consumption in Australia has dramatically changed. We have seen a decline of approximately 6 per cent due to increased electricity efficiency (better lighting, more efficient appliances, better insulation for our houses and increased solar PV and hot water), restructuring of the aluminum sector, increases in renewable energy production and a decline in energy use due to the carbon price. Burton explains that ironically, thanks in part to Big Coal's scare campaigns about electricity prices rising if the carbon price was introduced, people actually cut their energy consumption, or installed household solar PV, to try and save money on their electricity bills. Similarly, power generators were wary of price increases and so cut back on coal in favor of buying wind.
But even more significant than our domestic use is Australia's role as a major coal exporter. Australia exports 375 million tonnes of coal mostly from the Hunter Valley, NSW, and Queensland every year. And according to Burton, that number is only going to grow if we don't stop new mines, like those in the Galilee Basin, from becoming fully operational. There are plenty of mines that have been proposed and are at various stages in the approvals system, but the biggest and most dangerous currently is in the Galilee Basin. There are three big projects underway in that region — the Adani Carmichael mine which could produce 60 million tonnes of coal every year, Clive Palmer's China First mine which could produce 40 million tonnes of coal and Gina Rinehart's Alpha Coal Project which is expected to produce about 30 million tonnes of coal each year. That's 130 million additional tonnes of coal every year if those three projects go ahead.
What about other countries around the world? Demand for coal is falling in the US, much of Europe and the world's older economies because coal plants are getting old and being shut down. Established economies are using less power as they become more efficient and renewable energy production and use is rapidly growing. Coal is all but gone in the UK, it's a substantial but diminishing market in the US and in places like Poland the government is losing money trying to prop up the coal industry. According to Burton, just a couple of years ago no one would have thought it possible that solar and wind could be viable without substantial subsidies. Now, we're watching a renewable energy revolution transform the world — and in some places, renewables are already winning. For example, in Texas, wind is beating coal by a substantial margin.
China and India are the world's two major emerging economies. China, in particular, used to be a net exporter of coal to the world, but is now importing over 200 million tonnes a year, with a large share of imports coming from Australia.
In a global export market of 1 billion tonnes of coal annually, Australia exporting over 375 million tonnes makes it a major player in the global market and in China's coal consumption. But, as we saw over the weekend, things have changed dramatically. Since 2013 there has been immense public pressure in China for the government to take strong steps to improve air quality. Burton elaborates that something like 675,000 people die prematurely every year in China because of poor air quality. In response, the government has started closing coal plants, banning the development of new plants, reducing coal burn and increasing plant efficiency.
The landscape is also rapidly changing in India. Whilst air quality has not yet been as big an issue as in China, there have been major conflicts over water, land and forest allocation. Renewable energy is starting to take off in a big way in India and a recent Market Forces poll shows that there is popular demand for clean renewable energy over traditional coal power.
So, is there any weight to Abbott's (and Big Coal's) claims that coal is essential to alleviating poverty? Burton says no. India produces its own coal very cheaply for less than US$30 a tonne. Australian coal which lands in India is roughly double the price at over US$60 per tonne. Traditional coal power generation is also unfeasible for many currently without electricity — in India, the cost of extending the power grid is so high that it will never be possible to build traditional, centralised grids like we have in Australia. It will be cheaper to power remote villages and communities through decentralised solar-powered mini-grids or household solar production. So, in Burton's words, the idea that selling more coal will solve energy inequality is bit nonsensical. For countries that do not produce their own coal domestically, importing coal sends money out of an already poor country into the coffers of big coal companies at a time when it's quite plausible for wind and solar generation to be a cheaper energy source. Promoting the idea of coal-fired power in countries without domestic coal is likely to create poverty, not solve it.
How do we move beyond coal? According to Burton, it's already happening. Demand is falling, coal-fired plants are being made redundant, substitution with renewables is already taking place. The Australian Electricity Market Organisation found that there are 7–8,000 megawatts of installed capacity in Australia that is surplus to requirements, so have scope to substantially cut back on our coal-fire generation in the coming years.
However, with Mr Abbott's commitment to coal and proposals for the Galilee Basin on the table, we could potentially be exporting anything up to 1 billion tonnes of coal a year if all the projects the coal industry wants to build actually go ahead. That's huge — and makes local and national campaigning critical if we're going to play a role in preventing runaway climate change.
The challenge ahead
New coal mines are controversial. They are expensive, markets are uncertain and it is hard for them to secure finance. A critical issue over the next year is whether new coal mines in Australia will be financed by any Australian or international banks. The renewable revolution is already underway, but if Big Coal is successful in getting countries like Australia to lock in new coal production, then that would be a massive roadblock for renewables before they even get off the ground. Burton argues that if we can stop new coal mines from being opened then we could see the end of coal in a matter of years. But, if countries like Australia open new coal mines we could be producing coal for decades to come. It's never been more important to stand up to Tony Abbott's government and fight for a safe and liveable climate for future generations.
Find out more about Bob Burton's work and what people are doing all over the world to address the impacts of coal by checking out Coal Swarm. Image of Fingal Valley in Tasmania supplied by Bob Burton.