Australia's coal industry needs to prepare for global climate action

Australia's coal industry needs to prepare for global climate action

By Ian McGregor

If the world agrees to reduce fossil fuel use, China and India are likely to be able to meet most or all of their needs for steam coal domestically in coming decades and not rely on imports from Australia.

In the coming decades, efforts to address climate change will likely dramatically reduce the use of coal for electricity.

But Mr Abbott’s “coal forever” scenario is only likely if we fail to develop a global agreement to tackle climate change, which could come as soon as the end of next year in Paris.

Such global action would dramatically reduce the use of fossil fuels over the coming decades, particularly coal for electricity production.

Exports make up a large proportion of Australia’s coal production – 80 per cent of our coal for electricity, and 96 per cent of our coal for steel-making.

But renewable energy substitutes are already available and increasing becoming competitive with coal, even before significant policy measures to address climate change are introduced.

Recycling iron and steel – using electricity from renewable sources – may also play a part in cutting carbon emissions from coking coal.

To keep warming to less than 2 degrees, more than 80 per cent of the vast proven global coal reserves, including those in Australia, will need to remain in the ground.

Coal is also used for steel-making – 13 per cent of global coal production is used to produce 70 per cent of the world’s steel.

Most of the world’s coal production goes to electricity generation – and 41 per cent of the world’s electricity comes from coal.

The lack of immediate substitutes for coking coal will likely mean that demand for coking coal will not fall away so rapidly as demand for coal for electricity generation, which is already weakening.

Any scenario that seriously addresses climate change will lead to reduced use of coal, particularly thermal/steam coal used to generate electricity.

The only good news for Australia is that 40 per cent of our current coal exports are coking coal for steel-making.

China produces over 90 per cent of the coal is uses for electricity and 88 per cent of its coking coal.

Meanwhile, on tour in North America, Prime Minister Tony Abbott declared that: "For many decades at least, coal will continue to fuel human progress as an affordable, dependable energy source for wealthy and developing countries alike.

The healthiest scenario for the planet is a very unhealthy scenario for Australia’s coal – particularly coal for electricity generation.

Instead of repealing the carbon price this week, our newly elected senators should be working out additional policies and measures to further reduce Australia’s reliance on coal mining both domestically and for exports.

Read more here: Business Spectator

    

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