This rather wordy post is the text of a lecture Guy Pearse gave earlier this year. I have a link to a 'pdf' of the lecture in my previous post. It seemed to me that the topic is so important and the contents are so informative that I should post it fully. The scariest part of the lecture is that Pearse has since claimed that the numbers he used in this speech 'were woefully conservative'.
"Australia may well treble rather than double its coal exports by 2020. Factor in the “carbon light” CO2 from coal seam gas projects in the East (and other LNG expansion in the north and west) and you’re talking about Australia’s fossil fuel emission exports equating to TWO Saudi Arabias by 2020, not one as I’ve been saying to many disbelieving ears.Here are some more figures highlighting just what the Gillard government really stands for in respect of climate policy. They can be found in a post comment by Dr Gideon Polya from Latrobe University on a New Matilda article entitled 'We've got Climate Cred - now what?'.
This would mean that by 2020 the 159mtpa CO2-e saved by the Gillard CEF (with heavy reliance on imported offsets, many of which I expect to be very dodgy for reasons I won’t get started on here) would be erased more around 10 times over, not 4 times as I said in that speech…"
Success in “tackling climate change” is surely measured in terms of GHG pollution reduction but Australia’s Domestic plus Exported GHG pollution increased from 1,077 Mt CO2-e (CO2 equivalent) in 2000 to 1,415 million tonnes CO2-e in 2009 and is expected to reach about 1,799 Mt CO2-e by 2020 and 4,490b Mt CO2-e in 2050.Perhaps my new best friend from COALPORTAL.COM would like to comment?
However Treasury ABARE and US EIA data show the following Australian Domestic and Exported GHG pollution (in millions of tonnes of CO2-equivalent, Mt CO2-e) for Australia under the proposed Carbon Price plan:
2000: 555 (Domestic) + 505 (coal exports) + 17 (LNG exports) = 1,077.
2009: 600 (Domestic) + 784 (coal exports) + 31 (LNG exports) = 1,415.
2010: 578 (Domestic) + 803 (coal exports) + 34 (LNG exports) = 1,415.
2020: 621 (Domestic) + 1,039 (black coal exports) + 80 (LNG exports) + 59 (brown coal exports) = 1,799.
2050: 527 (Domestic) + 2902 (coal exports) + 1,061 (LNG exports) = 4,490.
Treasury analysis in its key July 2011 report “Strong Growth, Low Pollution - Modelling a Carbon Price” (see: http://cache.treasury.gov.au/treasury/carbonpricemodelling/content/repor… ) shows (above) that Australia’s Domestic GHG pollution was 578 Mt CO2-e in 2010 but INCREASES to 621 MT CO2-e by 2020, an INCREASE of +11.9% over the 2000 value i.e. NOT a “5% decrease of 2000 Domestic GHG pollution by 2020” as promised by Labor .
Doug Evans
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“If we don’t export it someone else will” etc: debunking the excuses for Australia’s precious place in the coal industry’s world’
Speech by
Guy Pearse
Research Fellow, Global Change Institute
University of Queensland
At: School of Political Science and International Studies University of Queensland 5 August 2011 | Lock the Gate Alliance Forum, University of Southern Queensland Toowoomba 7 August 2011 |
I’d like to give yet another heretical speech today – essentially an updated version of the one I gave at climate camp in the Hunter Valley last December. I’m giving it again because as the debate over whether a largely inconsequential carbon price package rages, the topic of my talk: Australia’s precious place in the coal industry’s world---by which I’m referring to our dominance of the global coal trade—seems more neglected than ever. It’s not that I don’t care about the emissions that occur inside Australia, but coal exports are this country’s biggest contribution to climate change by far, and the more I watch our coal export emissions grow, the more absurd it seems to me that they’re not considered ‘our problem’. Australia now exports over 270 million tonnes of coal annually which equates to around 730 million tonnes of CO2. That’s about a fifth more greenhouse pollution than is currently emitted within Australia’s borders.
The 5 million tonnes of coal we export weekly produces the roughly the same amount of CO2 as a million Australian households do yearly.i Coal exports are set to double over the next 10 years with enthusiastic bipartisan political support. On average, that involves increasing coal exports by another million tonnes every fortnight—the CO2 equivalent of adding nearly 50,000 cars every single day.ii We often hear about China building a new coal fired power station every week or so, but few of us realize Australian coal exports effectively add a new coal fired power station or steel mill somewhere in the world every 3 or 4 weeks.iii
That statistic is worth dwelling on for a moment, given the attention that is paid on the domestic front to ‘plans” for a dozen new coal fired power stations within Australia. Those projects may be ‘on the books’ but between strong environmental opposition and a very modest carbon pricing scheme, few if any will be built over the next decade. Yet, over the next year, against almost no public opposition more than a dozen new coal-fuelled facilities will most definitely be built on the back of Australian coal exports.
The domestic emission reduction programs to which so much attention is devoted are similarly dwarfed by coal exports. To give you an idea, the Gillard government says that by pricing carbon it will achieve a 5% emission cut by 2020 that amounts to a 159 million tonne reduction in greenhouse pollution.iv According to the government this is equivalent to removing 45 million cars from the road. Much of that emission saving won’t happen in Australia, since from 2015 up to half the reductions can be met with imported carbon credits. That issue aside, however, by 2020 our coal exports are likely to have doubled, adding something like another 700 million tonnes of CO2 to the atmosphere each year, which is equivalent to adding 200 million cars. In other words, our growing coal exports erase the benefit of the so-called Clean Energy Package more than 4 times over.
One of the mines being proposed in Queensland – by Indian company, Adani – will eventually add as much CO2 on its own as is saved by the Gillard package.v Factor in existing coal exports and a growing LNG export industry, increasingly reliant on coal seam gas under prime agricultural land, and Australia could by 2020 be exporting more CO2 annually in fossil fuels than Saudi Arabia does today.vi Thanks to the expansion in fossil fuel exports – by 2020 renewable energy will account for less than 2 per cent of Australian energy production—so it’s hardly a ‘Clean Energy Future’. Yet, somehow, the debate remains fixated with domestic emissions.
It’s as if no-one even paid attention to all those television and billboard ads that ran nationally reminding us that our coal exports are indeed ‘something big’. People seem convinced that a domestic carbon price and a ‘no new coal fired power’ campaign ‘tackles’ climate change in Australia, hurts the coal industry and coal addicted governments. It’s as if they don’t notice that governments are getting by pretty well expanding existing coal fired power stations and refurbishing mothballed ones, and that their coal export royalty revenue is hardly affected by domestic measures. It’s as if no-one realizes the coal industry’s main game is exporting to developing nations, that the industry views sluggish domestic demand here and in other developed country markets as a fact of life.
There’s so much wool over so many eyes, and so many convenient excuses to ignore coal exports. There’s the accounting argument – that the international community has agreed that emissions should count where they occur. So, responsibility lies with the country burning the fossil fuels, not the country supplying them. Next comes the argument that coal isn’t a big contributor to climate change – only ••• of global emissions.vii We’re told Australia is a relatively small coal producer—accounting for just 5.6% of global production.viii Then there’s the line that our coal exports are essential for steelmaking, as if the comparable CO2 from that process are magically benign for the climate. We’re assured that carbon capture and storage and other ‘clean coal’ technologies will come to the rescue. And, anyway, we’re told: if we didn’t export the coal we do, someone else would. Last but not least, we’re told the coal industry is our economic backbone—that messing with it is to ‘taking the back of the axe to the Australian economy’ as the Climate Change minister puts it.ix Lump all these arguments together and you have a seemingly unassailable case that interfering with the coal rush is economic vandalism of no environment benefit.
There’s so much wool over so many eyes, and so many convenient excuses to ignore coal exports. There’s the accounting argument – that the international community has agreed that emissions should count where they occur. So, responsibility lies with the country burning the fossil fuels, not the country supplying them. Next comes the argument that coal isn’t a big contributor to climate change – only ••• of global emissions.vii We’re told Australia is a relatively small coal producer—accounting for just 5.6% of global production.viii Then there’s the line that our coal exports are essential for steelmaking, as if the comparable CO2 from that process are magically benign for the climate. We’re assured that carbon capture and storage and other ‘clean coal’ technologies will come to the rescue. And, anyway, we’re told: if we didn’t export the coal we do, someone else would. Last but not least, we’re told the coal industry is our economic backbone—that messing with it is to ‘taking the back of the axe to the Australian economy’ as the Climate Change minister puts it.ix Lump all these arguments together and you have a seemingly unassailable case that interfering with the coal rush is economic vandalism of no environment benefit.
A depressingly broad cross-section of Australia has unfortunately bought into this logic—including most ‘big brand’ environment groups. Some with limited resources consider coal export emissions too big, and a few of the excuses plausible enough to leave it in the ‘too hard basket.’ Until now, for those with an interest in keeping coal exports off the table in the debate, the list of excuses has been a sweet recipe for success. But, as the carbon price issue mercifully comes off the table and our coal export emissions spiral, becoming more conspicuous internationally, they’ll come out of the too-hard-basket. So, today let’s chip away at the seemingly unassailable case, ask why the excuses are unsustainable, and consider why phasing down coal exports can have a much bigger environmental benefit internationally than we think, without wrecking our economy.
Let’s begin with the accounting argument. Under the current internationally agreed framework, countries only count emissions occurring inside their borders. Fair as that may sound, it means that large exporters of fossil fuels like coal don’t have to worry about the emissions generated when their product is eventually used offshore. In a world where all countries had to reduce their total emissions, this wouldn’t present a problem. Even if there was a global deal that collectively required large emission reductions you might have an argument for standing back and allowing the ‘invisible hand’ of a global carbon market to either clean up or cut fossil fuel use worldwide. The world we live in, though, is different. Almost all the growth in fossil fuel demand is in developing countries that don’t have to worry about absolute emission reduction targets any time soon. And because there’s little pressure for them to constrain emissions, they’re importing much more fossil fuel, and more crucially, the overall use of fossil fuels globally is spiraling along with emissions.
When you look where the emissions path we’re on is rapidly heading, it’s clearly unsustainable to keep ignoring fossil fuel export emissions. If China and India import potentially 1-1.5 billion tonnes of coal annually by 2020, as is projected, with much of it coming from developed countries like Australia and the US, the chance of returning the climate to safe territory evaporates, even if developed countries cut their own coal use to zero. For Australia, to double its coal exports over the next 10 years is to brazenly gamble that in 2025 the global community will still turn a blind eye.
Next we come to the argument that coal shouldn’t be singled out. The industry argues quite correctly that global warming has many causes—there are many emission sources, various fossil fuels, and deforestation is a major contributor. Yet, among these factors, coal is pre-eminent. Around 50% of fossil fuel emissions have come from coal; in the last few years it’s overtaken oil as the most significant fossil fuel emission source; and, as the industry brags, coal has been the fastest growing fuel source over most of the past decade.x The reason why scientists like James Hansen say that eliminating coal emissions is 80% of the solution to the global warming crisis is that if the world’s coal reserves are used without carbon capture and storage, the probability of keeping temperature increases under 2 degrees falls to less than 30%, even if we cut all other emissions to zero.xi In other words, there can’t be an effective climate change response unless coal is singled out.
One of the favourite excuses used to ignore our coal export emissions is to argue that much of our coal is used for steelmaking world rather than power generation. The Queensland government routinely argues that most of its coal exports are for steel, and shrugs its shoulders, as if the emissions are unavoidable. Perhaps terms like ‘carbon-steel’ lead people to imagine that where coal is used for steel there are no CO2 emissions. In fact, the amount of carbon retained in steel is minimal and steel production produces roughly the same amount of CO2 per tonne of coal as coal-fired power.xii Moreover, when someone says ‘but our coal is for steel’, it implies that steel is sacrosanct—that you can’t make steel without coking coal, and that there are no practical alternatives to steel.
It’s an increasingly flimsy argument. Because the most emission intensive way to make steel is the cheapest, iron ore, coking coal and a blast furnace are what you mostly see. But it’s not the only way to make steel, which was produced with charcoal for centuries before we started using coal instead. Brazil still produces millions of tonnes of steel annually using charcoal, and they’ll be producing a great deal more in years to come – and no, the extra charcoal is not to come from Amazon rainforests, but from eucalyptus plantations. The explicit aim is to cut emissions, cut coking coal imports, and use greener steel production to differentiate Brazilian steel.xiii Beyond Brazil, there’s increasing interest in biomass as a replacement for a large amounts of coal used in blast-furnaces.xiv
Much of the world’s steel today is made in electric arc furnaces rather than blast furnaces. Here, scrap metal is the main feedstock and the process can be powered with renewable energy. Over 300 million tonnes of steel are produced annually in electric arc furnaces – about a third of global supply. There is a lot more recyclable scrap steel out there than you might imagine too--what’s called the world steel reservoir is around 11 billion tonnesxv—roughly enough to coat the state of Tasmania with steel nearly an inch thick.xvi And for ever tonne of steel recycled, we save a tonne of iron ore and two-thirds of a tonne of coking coal.xviiixvii Along with recycling scrap steel, it’s possible to feed electric arc furnaces with ‘direct reduced iron’, nearly 50 million tonnes of which is now being produced annually with natural gas rather than coal. Direct reduced iron can be produced with gasified biomass too—from things like forestry and agricultural waste.xix So, contrary to what’s widely assumed, it’s possible to make steel without coal—it’s already happening—but perhaps more importantly, steel isn’t the only way to make many things for which it is currently used.
Much of the world’s steel today is made in electric arc furnaces rather than blast furnaces. Here, scrap metal is the main feedstock and the process can be powered with renewable energy. Over 300 million tonnes of steel are produced annually in electric arc furnaces – about a third of global supply. There is a lot more recyclable scrap steel out there than you might imagine too--what’s called the world steel reservoir is around 11 billion tonnesxv—roughly enough to coat the state of Tasmania with steel nearly an inch thick.xvi And for ever tonne of steel recycled, we save a tonne of iron ore and two-thirds of a tonne of coking coal.xviiixvii Along with recycling scrap steel, it’s possible to feed electric arc furnaces with ‘direct reduced iron’, nearly 50 million tonnes of which is now being produced annually with natural gas rather than coal. Direct reduced iron can be produced with gasified biomass too—from things like forestry and agricultural waste.xix So, contrary to what’s widely assumed, it’s possible to make steel without coal—it’s already happening—but perhaps more importantly, steel isn’t the only way to make many things for which it is currently used.
In many applications – most notably in transport – aluminum and other lightweight metals are replacing steel, and they can be made without coal.xx Just look at the rush to produce aluminum from hydro and geothermal power in Iceland. Even more significantly, composite materials – mostly thermoplastics – actually perform better than steel in many applications—in transport, aviation, and construction--including some types of reinforced concrete.xxi As the steel price rises, composite materials are increasingly cost-competitive. So, if the world takes the CO2 in coking coal seriously, civilization won’t rush back to the caves—it’ll see a rapid switch to green steel production and alternatives to steel. At the moment we’re not seeing that. Instead of seeing lots more direct reduced iron being produced without coal, and much greater use of that enormous pile of recyclable steel out there, we’re seeing electric arc furnaces losing market share against blast furnaces fed with coal. Most of those blast furnaces are being build in developing countries with no CO2 caps, and who do you suppose is the biggest exporter of the cheap iron ore and coking coal making that happen--you guessed it – Australia.xxii
The next great excuse for ignoring Australia’s coal exports is that they’re not so significant and that if we stopped, someone else would step in and take our place. This suggests that countries are lining up to replace Australia—that the biggest coal users have lots of options, and that the biggest producers can rapidly up production. The truth is different. While Australia accounts for only 5.6% of total world coal production, some 70% of the world’s coal is consumed by the three countries mining it—China, India and the US.xxiii What makes Australia so important is how integral we are to enabling India and China to turbo-charge their coal addictions in the next decade, and to hooking up other developing nations to the habit.
Australia is the undisputed king of the global seaborne coal trade, providing just under 30% of the world’s exports, including more than half of coking coal exports.xxiv But we’re more important than that suggests because our companies are at the heart of coal mining in the other big coal exporting nations. Indonesia, for example, is our nearest rival as a coal trader, and Australian companies mine at least 1/3rd of their exports.xxv It’s a similar story in other fast-growing export nations like Mongolia and Mozambique. Even excluding companies that many people consider Australian – like Rio Tinto and Xstrata, Australian firms will within the next 5 years be mining close to 350mt of coal annually in other countries—more than we currently export. So when the industry says – ‘if Australia didn’t export coal someone else would' what they really mean is that 'if Aussies couldn't mine coal here, Aussies would go off and mine someone else's coal.
Other coal exporters, however, can’t dramatically up production with the flick of a switch. In South Africa, rail infrastructure obstacles make it very hard to increase exports at anything like the same pace as we’re seeing in Australia. In Indonesia, there’s growing pressure to use coal domestically, and there, as in Mozambique, the need to ferry huge quantities of coal down rivers is a major obstacle to ramping up exports quickly.xxviixxvi In Russia and in Mongolia, freezing temperatures are among a host of problems. The US is enthusiastically diverting large amounts of coal production to the export market, partly driven by recession and rising opposition to coal. And it’s conceivable that the US could quadruple coal exports this decade. Even so, the US would take a decade to match Australia as a coal exporter. So, sure, there are coal rushes elsewhere, but the coal trade depends on our coal rush more than any other.
That’s mainly because, in spite of all the ‘China is going green’ stories you may have read, Chinese coal demand is projected by UBS to go from 3 billion tonnes a year to 5.5 billion tonnes a year in 2020. If China can’t grow its own coal production by the 6% a year needed to meet that demand, it may need to import nearly all the coal that the seaborne trade currently provides.xxviii India also looks set to rely heavily on imports as its own annual coal use more than doubles to perhaps 1.4 billion tonnes by 2020.xxix To give you an idea of the pace of the expansion, 173 new coal fired power stations were approved in India last year.xxx The likely consequence of the growth in Chinese and Indian demand is a more than doubling of the global seaborne coal trade in the next 10 years.
That’s why the Australian coal industry is anticipating a bonanza irrespective of what happens domestically, and it’s why companies like Peabody are banking on a 53% increase in global coal demand by 2030.xxxi It hinges mainly on Chinese and Indian demand, and on Australian supply—not because Australia is such a big producer, but because it’s the crucial exporter. Take Australia out of the equation over the next decade and other countries cannot pick up the slack. They may pick up some, but there’s no filling the hole that Australia could leave in the global coal trade, not in the current Chinese and Indian demand timeframe anyway.
The final, and perhaps greatest bit of wool over our eyes is ‘clean coal’--the apparently permanent alibi that carbon capture and storage seems to have won the industry. The oil and gas industry has been capturing and storing CO2 for years—not with the aim of saving us from climate change mind you, but to ‘enhance’ oil and gas recovery. In the decades since CCS was first used, a grand total of around 50 million tonnes of CO2 has been captured and stored underground.xxxiixxxiii That sounds pretty impressive until you learn that that conventional coal use without CCS emits about that much CO2 every 24 hours. Nor is it so impressive when you discover that virtually none of the CO2 that has been captured CO2 has even come from coal.
Right now, there’s not one commercial scale coal fired power station capturing and storing its emissions anywhere in the world. As the World Coal Association recently lamented, ‘We’ve been talking about demonstration CCS plants for quite a long time…but when people actually say “does it apply to a full scale power plant?” at the moment we just don’t have the evidence to back that up.’xxxivxxxvixxxviixxxviii The industry cites the International Energy Agency to argue that you can’t deal with climate change without CCS—yet according to the IEA, perhaps 3000 CCS plants would need to be built between now and 2050 to clean up coal’s actxxxv – that’s more than one every 5 days for the next 40 years! More realistically, the G8 has targeted 20 commercial scale CCS plants by 2020 (some but not all of which would relate to coal use). That might save 150 million tonnes of CO2 a year by 2020 which again sounds impressive ‘til you realize that over 99% of coal fired power stations and steel mills would still not be using CCS a decade from now, and they would be generating at least 20 billion tonnes of CO2 annually.
But right as it’s becoming clear that carbon capture and storage isn’t happening on any meaningful scale or timeframe, there’s a new alibi – carbon capture and recycling—taking CO2 from coal fired power stations and pumping it into pools full of algae to turbo charge its growth, then producing everything from biofuels to stock-feed to omega 3 food supplements. There’s already been a pilot plant at Hazelwood power station, and within the next year there will be another three at coal fired power stations in Queensland, New South Wales and Victoria.xxxixxliii, even if algae was deployed en The same coal companies and politicians that sold us carbon capture and storage are about to sell us coal-fed algae.xl Once again though, it’s no solution. The process doesn’t work at night, which mainly is why the US Department of Energy says it can only save around 20-30% of emissions from a coal fired power stationxli, and many of the emissions saved are spent to feed the algae fertilizer and keep the water in which it grows moving.xlii
Moreover, there’s no reason to believe the coal industry is serious about doing algae on a major scale. And, even if they were, with coal use set to grow by over 50% by 2030-masse, it would result in no overall emission reduction relative to today—let alone the sort of deep cuts demanded by the science.xliv Once again, it is all about rationalizing expanded coal use, with Australia in the thick of the action.
In the time remaining, I want to speak briefly about the equation facing Australia. Having already decided on the path of doubling coal exports, it will take enormous political will to get back to the ‘fork in the road’ in order to take an alternative path. The Australian coal industry cannot be closed down overnight, but we can as a nation can decide now how to prepare for coal phase-down over a 10-15 year timeframe in the very likely event that coal emissions can’t be captured and stored safely, or recycled, on scale or on time. That sort of transition timeline gives coal-addicted governments and investors who have dived into coal knowing the risks, fair notice. It gives industries and communities in Australia, and coal export customers, time to prepare. As politically charged as that course would be, it’s realistic, affordable, and a whole lot more responsible than the current plan to allow our coal export emissions to double in size without any Plan B whatsoever.
Australian coal phase-down wouldn’t magically stop China, India and the US, continuing to use lots of coal. They wouldn’t suddenly follow our lead, and to the limited extent that they’re able, some countries may try to increase coal output to take advantage of the space left by Australia in the international trade. So, coal-based electricity and steel production wouldn’t vanish overnight, any more than developing countries would keep going without electricity. If Australia exited coal, therefore, it wouldn’t prevent economic development, let alone condemn millions of people in the developing world to poverty, as our coal industry would have us believe. That said, we shouldn’t underestimate the impact domestically, or the ripple effects around the world.
Rather than waiting for a climate agreement that may never arrive to constrain coal global demand, we would be placing a very significant constraint on supply. If Australia exited the coal trade over the next decade, it could result in the loss of over half a billion tonnes of anticipated annual export supply. That would substantially increase the traded coal price and make investment in coal a riskier proposition. Countries like the United States and Russia – both of which are currently looking to cash in on coal exports—would be more conspicuous. The current expansion of US coal exports might even become untenable without the political cover that Australia’s example provides. If, by phasing down coal exports, Australia and the United States were to become the world’s best mates instead of the world’s worst ‘coal mates’, it’s conceivable that a billion tonnes of coal use annually could be avoided annually by 2020. That’s equivalent to saving over 8 per cent of current global CO2 emissions--so it’s anything but a futile gesture.
By making coal less affordable and available, therefore, Australia and hopefully the US too, can help change the equation for countries deciding right now on the extent to which their industrialization will be coal-based or something different. China and India would be unable to import enough cheap coal to stay on their current course--in electricity production, steel manufacturing and all of the associated industries. The magnitude of economic development in these countries would hardly be effected, but many more coal-based investments would be less competitive against cleaner alternatives than they are today. That’s why I refer to Australia’s precious place in the coal industry’s world—it’s the jewel in King Coal’s crown, and coal phase down by Australia could be the biggest blow the industry has ever experienced.
The industry of course banks on us leaving this sort of scenario in the ‘unthinkable’ basket—believing as the Institute of Public Affairs puts it that replacing coal with renewables involves ‘returning the nation to some nineteenth century pastoralist past and hoping that we will all prosper in such an economy’.xlv When we stop swallowing that sort of nonsense, the really exciting thing is that Australia can deal with its biggest contribution to climate change and its domestic emissions without wrecking the economy.
When you look at the consequences of phasing down coal—which by extension means replacing all coal fired power stations in Australia with mostly renewable alternatives--it’s hard not to conclude we can transform the economy for the better. Staged over a 10 year period, even if we assume the worst--with almost no coal industry left and half of the most coal-dependent industry gone—by 2020 Australia’s GDP is nearly a third larger than today. Our export basket would recover from the loss of coal and other coal-dependent commodities—partly because the removal of coal reduces our exchange rate and makes other export industries that have suffered through the resources boom more competitive. Our economy doubles in size in around 2037 instead of 2034.xlvi
I don’t mean to suggest that coal phase down doesn’t cause economic and political pain—or that it’s not a very big deal for regional communities and people whose livelihoods are tied to coal’s fortunes. Clearly it is. But the question for communities, families and governments now hooked up to coal is this: how much harder will the transition be if in ten years time, in the face of climate change, the world won’t turn a blind eye, and our coal industry is twice its current size? Australia’s environmental movement faces a similar dilemma: if campaigning against Australia’s biggest contribution to climate change is ‘too hard’ now, how much harder will it be when the coal industry is twice its current size? And we face a similar question as a nation. Right now we export very little coal to China and India—most of our coal goes to Japan, South Korea and Taiwan. Consider the major political, diplomatic and strategic implications of trying to phase down coal exports once China and India are heavily reliant upon us.xlvii It’s clearly easier and more courteous to signal our intentions before we reach that point—to have the conversations sooner rather than later.
Once we grasp that coal phase down dramatically cuts our carbon footprint abroad and makes our domestic efforts really count, that it transforms the economy for the better, that it's affordable, and that it has a positive environmental benefit internationally right as the world is on the brink of leaving any chance for a safe climate behind, it's pretty clear that this is a window of opportunity that we must take seriously before it closes.
ii 74,246 tonnes of new coal exports are added daily to double coal exports by 2020. At that rate, a million tonnes of new coal exports would be added every 13.5 days. 74,246 tonnes of extra coal daily equates to 200,465t of CO2 being added. With the average car in Queensland emitting 4.13t of CO2 per year, a doubling of coal exports involves the CO2 equivalent of adding 48,538 cars every day between now and 2020.
iii At the rate it would take to double Australian coal exports by 2020, coal exports are rising by around 2.25mt per month. A 1GW power station might use 1-1.5t of coal annually. So this is a conservative estimate.
iv Clean Energy Future—Securing a clean energy future: the Australian government’s climate change plan, Commonwealth Government, July 2011, p.14
v The Carmichael Coal Project, proposed by Indian company, Adani would produce 60 million tonnes of coal annually by 2020; This will produce around 162 mt of CO2-e which is slightly more than the estimated ‘abatement task’ facing Australia under a 5% emissions reduction target for the year 2020. Clive Palmer’s Waratah Coal Project would produce another 40mt of coal annually or 108mt CO2-e. Sources: Carmichael Coal Mine and Rail Project, Factsheet, Queensland Government. http://www.dip.qld.gov.au/projects/mining-and-mineral-processing/coal/carmichael-coal-mine-and-rail-project.html; See: ‘Carmichael Coal Mine and Rail Project‘ Initial Advice Statement by Adani Mining Pty Ltd, 22 October 2010; http://www.dip.qld.gov.au/resources/project/carmichael/initial-advice-statement.pdf; ‘China First—Developing the Galilee Basin’, Bowen Business Information Forum Presentation by Peter Lynch, Waratah Coal, 8 October 2009; http://www.belyando.com.au/Portals/21/China%20first%20-%20Waratah%20Coal%20-%20Peter%20Lynch%2008-10-09.pdf See also: ‘Galillee Coal (Northern Export facility)’ Fact Sheet, Queensland Government, http://www.dip.qld.gov.au/projects/mining-and-mineral-processing/coal/galilee-coal-project-northern-export-facility.html and http://www.dme.qld.gov.au/media_centre.cfm?item=811.00.
vi Saudi net oil exports are currently around 8.7 million barrels a day (CIA World Factbook). This amounts to 3.175 billion barrels a year which equates to around 1.36 billion tonnes of CO2 exported annually. (Conversion factor: 430 kilograms of CO2 per barrel of crude oil; Source: USEPA). If Australia doubled its current coal exports between now and 2020—to 542mt annually, coal export emissions would rise to 1.46billion tonnes annually. Add in a 50mt a year coal seam gas export industry in Queensland generating another 140mt of CO2 and you have fossil fuel export emissions from Australia of over 1.6b tonnes annually (excluding other LNG sources in WA).
vii http://www.worldcoal.org/coal-the-environment/climate-change/
viii Total hard coal production in 2008-9 is estimated by the World Coal Institute as 5.99 billion tonnes. http://www.worldcoal.org/resources/coal-statistics/ Australia produced 334-5mt of salable black coal in that year, or 5.6 percent of global hard coal production. http://www.australiancoal.com.au/the-australian-coal-industry_coal-production.aspx nb this excludes brown coal which is less than a billion tonnes a year globally.
ix Coal industry is safe says Greg Combet, The Australian, 13 September 2010 http://www.theaustralian.com.au/national-affairs/coal-industry-is-safe-says-greg-combet/story-fn59niix-1225919936683
x As James Hansen notes “The amount of CO2 already emitted to the atmosphere...is about 50% from coal, 35% from oil and 15% from gas... On the long run, coal will be even much more important... The coal reservoir is larger than either oil or gas... there is enough CO2 in coal to take the Earth far into the ‘dangerous’ zone of climate change, to doubled atmospheric CO2 and even beyond.’ ‘Testimony of James E Hansen before the Iowa Utilities Board re: Interstate Power and Light Company’, November 2007, www.columbia.edu/~jeh1/2007/IowaCoal_20071105.pdf pp.25-6; The Global Carbon Project noted in 2009 that ‘Emissions from coal are now the dominant fossil fuel emission source, surpassing 40 years of oil emission prevalence.’ See: Fossil fuel CO2 emissions up by 29 per cent since 2000, Media Release by the University of East Anglia, 19 November 2009 http://www.globalcarbonproject.org/carbonbudget/08/files/UniversityEastAnglia_UK.pdf See also:
http://cdiac.ornl.gov/ftp/ndp030/global.1751_2007.ems For more on coal as fastest growing fuel source in the world, see: http://www.theage.com.au/national/old-king-coal-20091107-i2w7.html and See also: Green Coal: Limitless Energy for our Future, Presentation by Fred Palmer Senior Vice President of Government Relations--Peabody Energy, World Coal Conference, Amsterdam Oct. 18, 2010, p.9; and BP Statistical Review of World Energy, June 2009 http://www.bp.com/liveassets/bp_internet/globalbp/globalbp_uk_english/reports_and_publications/statistical_energy_review_2008/STAGING/local_assets/2009_downloads/statistical_review_of_world_energy_full_report_2009.pdf Hydro ousted coal in the BP report in 2010 for the first time since 2002. https://uctcriminology.wordpress.com/2010/06/10/hydropower-ousts-coal-as-fastest-growing-fuel-source/
xi See ‘Greenhouse-gas emission targets for limiting global warming to 2 degrees c’ Letters, Nature, Volume 458, Number 30, April 2009, p.1158-1162
xii Source: Energy Strategies Ltd – private correspondence with the Author.
xiii http://www.cop15brasil.gov.br/en-US/?page=noticias/green-steel-for-the-brazilian-steel-industry http://www.gwm-tv.com/news/article/brazil-turns-to-eucalyptus-for-green-steel-production-163692.html http://www.forestry-invest.com/2010/eucalyptus-charcoal-brazils-choice-for-the-steel-industry/268 http://sbbnews.wordpress.com/2010/08/23/arcelormittal%E2%80%99s-charcoal-production-to-double/
xiv See, for example, in Canada: ‘Biomass in Ironmaking Expected to Reduce Emissions’ Natural Elements, NRCan's Monthly Newsletter—Issue 31, Natural Resources Canada
http://www.nrcan-rncan.gc.ca/com/elements/issues/31/biomass-eng.php ’
xv http://www.aist.org/magazine/wsd/10_june_Ask_WSD.pdf
xvi A cubic metre of steel weighs around 77850kg or 7.85 tonnes. http://www.simetric.co.uk/si_metals.htm11bilion tonnes of steel equates to around 1.4 billion cubic metres, or about 1400square km to a depth of one metre. Tasmania is around 11
68km2, or around 48 times that area, so if it were covered in steel the depth would be roughly 1 48th of a metre or just over 2cm. A cubic metre of steel weighs around 7850kg or 7.85 tonnes. http://www.simetric.co.uk/si_metals.htm
xvii http://www.cleanup.org.au/PDF/au/scrap-metal-recycling-factsheet.pdf
xviii For more information on the more than 45 million or so tonnes of direct reduced iron (DRI) produced annually without coal from gas based processes, see ‘World Direct Reduction Statistics’, Presentation by Midrex, http://www.midrex.com/uploads/documents/MIDREXStatsBook2009rev4.pdf For more info on the alternative steelmaking processes, see: Steel and Energy Fact Sheet, World Steel Association, http://www.worldsteel.org/pictures/programfiles/Fact%20sheet_Energy.pdf See also: The scope for fuel rate reduction in iron-making, Technical Note 16, Cooperative Research Centre for Coal in Sustainable Development, January 2005
xix ‘Biomass gasification for DRI production’ paper by Thomas Buergler1 and Antonello Di Donato2, Proceedings of the 4th Ulcos seminar, 1-2 October 2008; See: http://www.ulcos.org/en/docs/seminars/Ref23%20-%20SP12_DiDonato.pdf
xx http://aluminumintransportation.org/main/growth/did-you-know ; http://www.csiro.au/science/ps1jb.html http://www.motorauthority.com/blog/1032636_aluminum-use-in-cars-hits-all-time-high http://www.aluminiumleader.com/en/around/transport/aircraft
xxi http://wardsauto.com/ar/composite_replace_steel_080922/ http://www.linearcomposites.com/ap_reinforce_soil.htm http://scienceblog.com/community/older/2001/D/200114560.html
xxii http://www.mbironoreindex.com/Article/2124630/Australia-dethrones-Brazil-as-biggest-iron-ore-exporter.html
xxiii http://www.worldcoal.org/coal/coal-mining/ & http://www.worldcoal.org/resources/coal-statistics/
xxiv 259-(270)/951mt (more recent figs) = at least 27.5% of total seaborne trade; 135/232mt of the trade in coking coal. http://www.worldcoal.org/resources/coal-statistics/
xxv As of mid 2010, Australian companies were involved in coal mining projects (either under way or planned in the next few years) that account for around 95mt of coal production annually. Include BHP Billiton’s Adaro (Murawi) project and the tally may rise to 110 mt. Almost all of the projects involve export coal, and total Indonesia exports are around 228 million short tons about 205 metric tonnes. So 1/3 is a conservative estimate. See also: ‘Land of the Long Black Cloud’ by Guy Pearse, The Monthly, September 2010
xxvi See for example, http://hello.news352.lu/edito-54866-mozambique-to-ship-coal-on-zambezi-minister.html
xxvii US coal exports have more than doubled since 2002 whereas Australia’s have increased by around •••. So US exports are increasing relatively much faster in percentage terms. However, they are about 1/3rd of Australia’s total exports. See: World Total Coal Exports (spreadsheet), US EIA. For an example of Appalachian coal going to China see: http://www.coaltransinternational.com/htm/w20100113.186336.htm Nations That Debate Coal Use Export It to Feed China’s Need, New York Times, 21/11/10 ; ‘Mining companies aim to export coal to China through Northwest ports’, The Oregonian, 9 September 2010.
xxviii ‘Enough coking coal for the next 30 years?’ Presentation by Peter Hickson, Head of Global Materials, Mining & Commodities Research—UBS Ltd, Coaltrans World Coal Conference, 18 October 2010, slide 6 & 8
xxix Overview - Long term prospects for Indian coal requirements, Presentation by Sudhir Nair -- Head, Energy & Infrastructure CRISIL Research, 10 March 2010 www.coaltrans.com/EventDocument.aspx?eventID=1130...2928...
; Facilitating Queensland’s Export Growth (2010 –2025), Presentation by Leo Zussino-- Chief Executive Officer Gladstone Ports Corporation, World Coal Conference, Amsterdam, October 2010, Slide 8 ; See also http://www.thejakartaglobe.com/business/indonesian-coal-mines-in-sumatra-kalimantan-draw-interest-from-indias-ntpc/393658
xxx http://www.grist.org/article/2011-07-01-the-struggle-against-indias-coal-rush
xxxi Green Coal: Limitless Energy for our Future, Presentation by Fred Palmer Senior Vice President of Government Relations--Peabody Energy, World Coal Conference, Amsterdam Oct. 18, 2010, p.17
xxxii http://www.worldcoal.org/ (Accessed 23/11/10)
xxxiii Globally, around 6 billion tonnes of hard coal is consumed annually. This excludes close to a billion tonnes of lignite. (http://www.worldcoal.org/coal/coal-mining/ & Coal Industry Advisory Board – International Coal Market and Policy Developments 2009, Feb 2010, pp.12,19). This equates to 16.2 billion tonnes of CO2 annually or 44.4 million tonnes of CO2 a day. Including lignite would take that figure closer to the 49m cited by the WCI CCS counter.
xxxiv Carbon capture and storage: Industry in the making –a coal perspective, Speech by Benjamin Sporton--Policy Manager, World Coal Institute, World Coal Conference, Amsterdam, 19 October 2010
xxxv http://www.iea.org/roadmaps/ccs_roadmap.asp
xxxvi Approximately 14,600 days between now and 2050 – 3000 CCS plants between now and then means one every 4.86 days. 12
xxxvii Assuming these facilities were large 1-gigawatt scale (which is very unlikely – they’d probably be smaller demonstration projects), and assuming that carbon capture and storage (CCS) saves 80–90 per cent of emissions, they might save around 6.5 metric tonnes of CO2 annually each, or about 130 metric tonnes in total. This is without incorporating the extra energy required by the CCS process – between a quarter and a third more than conventional coal-fired power generation.
xxxviii Current global hard coal consumption is around 6 billion tonnes per annum. Notwithstanding efficiency improvements (According to the World Coal Institute, 21st century coal fired plants emit 40% less than the 20th century average. http://www.worldcoal.org/), Peabody Energy projects global coal demand to increase by 53% to 11-12mt per annum by 2030, driven in large part by a doubling in demand for metallurgical (coking) coal. On that basis, by 2020, it is entirely conceivable that global coal demand may be over 8 billion tonnes per annum. Even if 150 million tonnes of CO2 were saved annually by 2020 should the G8 meet its CCS target through coal projects, emissions from coal burning would still be well over 20 billion tonnes of CO2 per annum. For Peabody’s projections, see (Slide 12) ‘Energizing the world one BTU at a time’ Presentation by Greg Boyce—Chairman and CEO of Peabody Energy, Barclays CEO Energy Power Conference, 15 September 2010. http://www.faqs.org/sec-filings/100915/PEABODY-ENERGY-CORP_8-K/c60242exv99w1.htm; and Green Coal: Limitless Energy for our Future, Presentation by Fred Palmer Senior Vice President of Government Relations--Peabody Energy, World Coal Conference, Amsterdam Oct. 18, 2010, p.17
xxxix ‘Capture and conversion of CO2 emissions for the sustainable production of fuel and other algae biomass products’, presentation by Tony St Clair (MBD Director), All Energy Australia 2010 conference, Melbourne (on file).
xl For more detail see: ‘Coal’s Next Alibi’ Comment by Guy Pearse, The Monthly, August 2011
xli According to a peer-reviewed report from the US DOE, ‘The CO2 generated by the power plant can only be effectively used by the algae during the photosynthetically active sunlight hours. As a result, the greenhouse gas emissions offset will be limited to an estimated 20% to 30% of the total power plant emissions due to CO2 off-gassing during non-sunlight hours and the unavoidable parasitic losses of algae production.’ See: National Algal Biofuels Technology Roadmap, US Department of Energy, May 2010, p.80
xlii http://www1.eere.energy.gov/biomass/pdfs/algal_biofuels_roadmap.pdf p.80-82 http://www.csiro.au/files/files/poit.pdf See also, ‘Coal’s Next Alibi’, Comment by Guy Pearse, The Monthly, August 2011
xliii http://www.worldcoal.org/coal-society/ Green Coal: Limitless Energy for our Future, Presentation by Fred Palmer Senior Vice President of Government Relations--Peabody Energy, World Coal Conference, Amsterdam Oct. 18, 2010, p.9; http://www.guypearse.com/docs/guypearse.com/Pearse%20Climate%20Camp%20Speech%20Final.pdf p.5-6; See also: ‘Enough coking coal for the next 30 years?’ Presentation by Peter Hickson, Head of Global Materials, Mining & Commodities Research—UBS Ltd, Coaltrans World Coal Conference, 18 October 2010, slide 6 & 8 ; http://www.scribd.com/doc/31940956/EIA-2010-International-Energy-Outlook-with-projections-to-2035
xliv Let’s assume algae can only capture 50% of coal CO2 emissions, and that is very optimistic—the US DOE thinks 20-30% is more realistic, saying ‘The CO2 generated by the power plant can only be effectively used by the algae during the photosynthetically active sunlight hours. As a result, the greenhouse gas emissions offset will be limited to an estimated 20% to 30% of the total power plant emissions due to CO2 off-gassing during non-sunlight hours and the unavoidable parasitic losses of algae production’ http://www1.eere.energy.gov/biomass/pdfs/algal_biofuels_roadmap.pdf p.80/ Even if algae captures 50% and it is applied at say 2/3rds of the world’s coal use, and that coal use increases 50%, even allowing for no process energy losses at all, the emissions saved through the displacement of other fossil fuels would be eroded entirely by the growth in coal use.
xlv ‘DCC briefing: a farrago of spin, obfuscation and exaggeration’, Opinion piece by Alan Moran Director, Deregulation at the Institute of Public Affairs ABC Online – The Drum, 4/11/10 http://www.abc.net.au/unleashed/40764.html
xlvi Sources: Australia’s Low Pollution Future: The Economics of Climate Change Mitigation (Canberra: Commonwealth Treasury, 2008), 145, 164; Australian Bureau of Agriculture and Research Economics (ABARE), Department of Innovation, Industry, Science and Research. This assumes a GDP of around $1.5 trillion by 2020 under business as usual. Losing coal would cost around 3 per cent of projected GDP; and the cost of losing half the steel, aluminium and other EITEs would be similar. Together, this cost would equate to about $100 billion a year, leaving a GDP of around $1.4 trillion or about 30 per cent more than today’s GDP of $1.1 trillion.
xlvii In 2008-09 Australia exported 25mt of coal to China and 24.7mt to India – 49.7mt combined which 18.8% of the 263.4mt of coal exported that year according to the Australian Coal Association. http://www.australiancoal.com.au/the-
australian-coal-industry_coal-exports_coal-export-details.aspx Our exports account for less than 1.25% of the combined coal use of China and India.
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