Coal: the black cloud on Turnbull’s horizon

We can end the climate threat posed by coal by removing the public subsidies that underpin its profits. [Peter Boyer | 17 November 2015]

There’s a hint of a breeze blowing through Australia’s climate policy space in the wake of Malcolm Turnbull’s rise to the prime ministership.

Abbot Point coal terminal would be greatly enlarged if the Carmichael mine goes ahead. PHOTO ABC

Abbot Point coal terminal, inside the Great Barrier Reef, would be greatly enlarged if the Carmichael mine goes ahead. PHOTO ABC

Five new five-year appointments to the board of the Climate Change Authority suggest that embattled agency has a long-term future after all, along with the previously-threatened Clean Energy Finance Corporation and the Australian Renewable Energy Agency. So far so good.

Environment minister Greg Hunt sees another positive development in the “stunning” (his word) success of the second round of Emissions Reduction Fund carbon abatement purchases last week, with 45 million tonnes of abatement bought at a cost of $12.25 a tonne.

But the good news would seem to stop there. With nearly half its $2.55 billion kitty spent, the ERF will manage at most two more auctions for emissions up to 2020. If it survives beyond that, its spending capacity will be much more limited, about $200 million annually.

Market analyst Reputex has concluded that the ERF is at best a peripheral influence on emissions. Despite the abatement already bought, Reputex director Hugh Grossman points to a continuing rise in net emissions, citing projections that put them 15 per cent higher by 2030.

The main reason for rising greenhouse emissions is coal-fired electricity. According to Pitt & Sherry’s CEDEX analysis, emissions from Australia’s coal power stations have risen steadily since the end of the carbon tax in June 2014 and are now at their highest level since early 2013.

Around the world, the biggest, blackest cloud on the climate policy horizon is coal. Yet last month Turnbull said it was “the largest single part of the global energy mix and likely to remain that way for a very long time”.

The prime minister knows this is in conflict with his expressed support for limiting warming to less than 2C. Both he and Greg Hunt know that if we are to avoid dangerous warming, at least two-thirds of known fossil fuel reserves must remain in the ground.

Yet last month Hunt approved Australia’s biggest coal mine in Queensland’s Galilee Basin, which its Indian-based operator Adani says will on average produce 40 million tonnes of coal a year.

Adani reports that when burned in Indian power stations, greenhouse emissions from Carmichael coal will each year equate to 79 million tonnes of carbon dioxide. The Australia Institute pointed out last week that this will easily surpass annual average emissions for the city of New York.

If Carmichael is still viable, it’s only because of public subsidies supporting the mining, use and export of coal. This labyrinthine array of agreements – formal, informal and never uttered – has evolved since federation. Ending them would be to change the course of history.

Public subsidies for all Australian coal, oil and gas amount to multiple billions of dollars annually. Australian thermal coal exports, a relatively small subset of that total, are subsidised to the tune of $1.8 billion annually, a major international study published in September has found.

Subsidies identified in the study include tax breaks, underpayment for mining rights, collusive tendering practices, government-funded “clean coal” research, support for rail and port infrastructure, and miners’ repeated failure to fund mine site rehabilitation.

Not included is the public cost of air pollution and global warming resulting from burning the coal, which the International Monetary Fund has said more than doubles the cost to the public purse of fossil fuel production and use.

A successful climate policy demands that we break the government-coal nexus. An opening for this might come from an idea that originated in the G20: that public subsidies for exported coal be prohibited if power plants in recipient countries don’t meet the most stringent emissions standards.

The government has so far supported industry in opposing the idea, which is being promoted by the US, Japan, France and Germany. But allowing prohibition to go ahead is a ripe opportunity for Turnbull to begin the long task of breaking this unholy, outmoded alliance.

ELECTRIC CARS and renewable energy will feature in a double bill of public presentations, organised by the Tasmanian branch of the Australian Electric Vehicle Association and the Tasmanian Renewable Energy Alliance, this week: in Launceston (5pm tomorrow, Flight Deck, 107-119 Paterson Street) and Hobart (5pm Thursday, Hotel Soho, 124 Davey Street). Entry by gold coin donation.

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