Australian-based companies and state governments have made billions from the export coal industry. Australia, the world's biggest coal exporter, is set to double exports by 2020 as there are 89 new projects in the pipeline. The investment is not only in the mines because servicing this expansion requires development of major infrastructure in the form of rail lines and ports such as the new coal terminals at Abbot Point on the Barrier Reef coastline.
China's coal imports have grown
rapidly over the last decade and it now consumes half of the world's coal,
obtaining 30% of its needs from Australia.
Companies making coal investment
decisions expect this demand to continue to grow well into the future. State Governments are also looking to share
in the bonanza as the royalties derived from the industry are very important to
their tax base. Just how lucrative this
is for Queensland and NSW is shown by their coal royalty incomes for 2008-9 -
$1.3 billion for NSW and $3.1 billion for Queensland.
Given the impact that burning coal has in contributing to carbon emissions and thence to climate change, all Australian governments should be working towards phasing out the industry rather than encouraging its major expansion. It appears that all that the federal and state governments can see are the dollars to be made and the benefits to the state and the national economies. From those anxious to support the expansion of fossil fuel mining the term "the national interest" is frequently quoted as a reason to have as much develoment of coal reserves as possible and to expedite this development.
Downsides such as the impacts on lifestyles and health of those living in close proximity to the huge open cut mines and the devastating effects on natural biodiversity are of minor interest to the proponents and their government supporters as are the effects of coal use on climate change.
The interests of future generations (sometimes referred to as "intergenerational equity") simply are not relevant to most Australian politicians. Most of them obviously think in the short term - and some clearly still do not accept that climate change is real and that there is an urgent need to do something effective about it.
Downsides such as the impacts on lifestyles and health of those living in close proximity to the huge open cut mines and the devastating effects on natural biodiversity are of minor interest to the proponents and their government supporters as are the effects of coal use on climate change.
The interests of future generations (sometimes referred to as "intergenerational equity") simply are not relevant to most Australian politicians. Most of them obviously think in the short term - and some clearly still do not accept that climate change is real and that there is an urgent need to do something effective about it.
But aside from these major reasons
for re-assessing whether we should continue digging up coal, there is another significant
reason for re-assessment.
This has been clearly stated in a
recent report Stranded Down Under? Environment-related factors changing China's demand for coal and what this means for Australian coal assets
"It is clear that China's coal demand patterns are changing as a result of environment-related factors and consequently less coal will be consumed than is currently expected by many owners and operators of coal assets. Given China's current role as the price setter in global and regional coal markets, falling demand will, all things being equal, reduce coal prices. This would result in coal assets under development becoming stranded, or operating mines only covering their marginal costs and subsequently failing to provide a sufficient return on investment."
Obviously there are significant risks in going ahead
with future mines and the necessary expensive infrastructure.
Just how carefully have investors and governments considered this? It would appear that both the federal and various state governments do not see this as an issue. Obviously many mining developers hold similar views. Perhaps reality will finally hit when these mining proponents find it difficult to access capital to fund their ventures.
Just how carefully have investors and governments considered this? It would appear that both the federal and various state governments do not see this as an issue. Obviously many mining developers hold similar views. Perhaps reality will finally hit when these mining proponents find it difficult to access capital to fund their ventures.
