Coal is in the press this week and it is a sign the climate change debate is advancing.
It is a really difficult problem for Australia to face. The debate has now moved to the stage of starting to analyse all the reasons why it would be really hard for Australia to change.
Some of these are excuses but some are hard fact. They all add up to tough stuff to work through.
Here are some of the issues:
Australia earns most of its income from exporting black and red stuff – coal and iron ore. When we say Australia what we mean is: We (you and I) earn most of our income from exporting coal and iron ore.
How is that you ask? Let’s think about it. Where does the money come from to pay public servants? Where does the money come from that ends up being spent in shops? Where does the money come from for pensions? Where does the profit come from on shares and superannuation?
Work it all back through the layers and a big proportion of it starts off as money that Australia earns from its mineral exports. Coal and iron.
So there is the problem. None of us like it but we’re all starting to get the message that coal is one of the worst ‘baddies’ for our planet’s climate stability. When people talk about our grandchildren’s future what they are meaning is: How can we give our grandkids a future when we’re so dependent on coal for national income but the carbon emissions from burning coal are one of the main drivers that are threatening the future? No easy answers but we’re starting to grapple with it as a nation.
What would you and I do with less income from coal exports?
I for one wouldn’t mind at all if our power supplies were produced by sustainable methods like solar power if that is possible. And I think lots of people are now looking at how that might be done and how far it might be achieved.
But that is a different thing from what we do for an income source. What would it be like to live without the income from coal?
One of the things that happens is that countries sign reciprocal agreements: We buy your coal. You buy our consumer products. They don’t like it to be a one-way deal. Because they are buying so much coal from us they are keen to flood our markets with consumer goods.
If we didn’t sell so much coal we’d be looking at a lot fewer imported goods for a start.
Australia is the biggest exporter of coal in the world with about a 50-50 split between coking coal which is used as a raw material in steel mills and thermal coal which is burned in power stations.
Our best quality black coking coal goes to steel mills in Asia. 140 million tonnes a year of black thermal coal is exported from Queensland and Newcastle. It is close to the world’s best coal because of its high energy content and low impurities.
There is no alternative to using coking coal to make steel.
We even wonder if our big customer countries would let us cut exports at all. Unlikely. There are certainly no plans in that direction.
In fact exports of coking coal are forecast to increase by 70% by 2015-16 to 242 million tonnes. This will mean a big increase in revenue to $24.4billion from $12billion.
What these figures actually mean for us is probably a two-state economy and a high Australian dollar making it hard to do business in other sectors than mining.
Thermal coal is another matter. While it isn’t irreplaceable for steel-making if Australia was to wind down exports of thermal coal at all the arguments are that China would look t other countries for substitutes – Indonesia Mongolia Russia. The quality of their thermal coal is poorer and it would drive up global coal prices. The question of whether it is possible to achieve any decreases in carbon emissions this way is what is being argued about.
These are certainly hard issues but it is encouraging that they are being considered.