Real climate action requires cutting coal exports

December 10, 2019
Climate strikers in Sydney, November 29. Photo: Peter Boyle

On December 9, Labor leader Anthony Albanese reaffirmed his party’s support for ongoing coal exports which make this country the Saudi Arabia of coal exports. Absurdly, Labor's supposed “climate action” wing, the Labor Environment Action Network (LEAN), backed Albanese and attacked the Greens for questioning Labor's climate credentials.

LEAN spokeswoman Felicity Wade told the Sydney Morning Herald: “This is just more cheap point scoring while Australia burns.

“[Greens deputy leader Adam] Bandt and [federal Minister for Resources Senator Matt] Canavan seem to work in lockstep, equal and opposite sides of a destructive culture war, ensuring the national cohesion needed to progress this challenge is rendered impossible.”

"We all know the task is overwhelming and urgent, but smashing the globally agreed pathway and our chance for shared progress is politics at its most cynical and destructive.”

Wade's support for the Coalition government's “creative” accounting of its greenhouse gas emissions by counting carry-over credits from previous climate agreements is surprising. Australia is among the world's biggest fossil fuel exporters but because the Paris Agreement does not count export emissions, it can pretend to be on target.

But would “national cohesion” really be destroyed by moving away from coal? That is a serious misreading of the present mood.

And would a phase-out of coal exports as part of a just transition that includes a job guarantee for coal workers “smash the globally agreed pathway” as Wade suggests? It would not.

While achieving a just transition for workers in the industry would come down to unions organising with communities, a phase-out of coal would likely push the price up as happened when the world’s largest oil producer Saudi Arabia led a cut in oil production by some of the top oil producers in the 1970s. Then, the price per barrel quadrupled almost overnight raising fuel costs and adversely impacting jobs and communities.

It also led to a search for more efficient cars and research into alternative energy technologies, such as wind and solar. Big advances in renewables technology in the 1980s in Europe, Japan and the US were a direct response to the 1970s oil shocks.

Australia exports about one-third of the world’s metallurgical coal (used in steel production), the bulk of which comes from Queensland. It exports about 20% of the world’s thermal coal exports (used for electricity generation), the bulk of which is mined in the Hunter Valley and shipped out of Newcastle. The main buyers for both types of coal are Japan, South Korea, Taiwan, India and China.

Significantly, new coal mines in Queensland spearheaded by the Adani Carmichael project in the Galilee Basin would produce large amounts of thermal coal. The effect would be to keep the market flooded with coal, keep the price down and delay the shift to renewables.

No less demand for coal?

Albanese was quoted in the Sydney Morning Herald on December 9 as saying: “If Australia stopped exporting today there would not be less demand for coal — the coal would come from a different place.”

This is a misleading and dishonest statement.

Cutting coal production would have an impact on price: it would go up. This would have an impact on demand because, when prices go up, the effect is to make alternatives (such as renewable energy, steel recycling, or alternative non coal-based steel production methods) more attractive.

It is quicker and cheaper to build a new wind or solar farm with storage than it is to build a new coal mine. It is not unrealistic to expect long-term price rises, perhaps a doubling or a tripling of coal prices, if Australia embarked on a five or 10-year project to transition away from coal exports.

But, if that move were coupled with a government takeover of coal mining aimed at recycling rthe emaining coal revenue during a transition with job guarantees for coal workers, the economic impact, even as coal export tonnages reduce sharply, could be cushioned.

There is some truth to Albanese’s comments that any rise in the price of coal could drive investment in other coal exporting countries.Bu t approvals take time and it is a long road from that point to actually construct the mine and ship the first coal.

Part of the reason Australia already exports more coal than other countries is that there are barriers to extracting more coal from those places. Sometimes, the coal is physically harder to access and shipping costs can be higher depending on the distances. There may be growing domestic opposition to new coal mines, as in Australia, or a lack of infrastructure to move the coal.

There is also the increasingly evident fact that we are in a climate emergency.

For all these reasons, the prospect of sinking billions of dollars into new coal mines and associated infrastructure is a financially risky proposition — as the slew of banks that have backed away from financing Adani's coal mine attests.

If Australia is forced to cut its coal exports and the price goes up, buyers of seaborne coal may boost their investment in cheap renewable generation quite substantially rather than scramble to get expensive new streams of coal online.

The biggest impact of Australia announcing it will phase out coal exports would be political. This is because, to get to this point, the climate emergency movement would have had to exert sustained pressure through ongoing climate strikes, bringing cities to a standstill. There would be no business as usual, despite the hysteria from the right-wing media, politicians and coal corporations.

As NSW burns, water becomes a commodity that is sold to the highest bidder and the drought bites deep, now is the time to double down on efforts to cut greenhouse gas emissions.

Albanese and LEAN are wrong to argue that cutting this country's massive coal exports would, in some way, undermine existing — and extremely modest — global climate agreements. Rather, it would demonstrate a conviction that Australia can and must demonstrate leadership in a climate emergency.

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