The folly of Galilee basin coal

In Climate clippings 115 I cited an article from The Conversation which suggested that Australia’s coal and gas exports are being left stranded.

Just four countries account for 80% of Australia’s fossil fuel exports – China, Japan, Korea and India.

China is on the verge of “peak coal”, rebalancing the economy away from energy intensive industry and introducing a national emissions trading scheme.

Japan is on an energy efficiency drive to reduce its fuel import bill.

Korea has introduced a tax on coal of AU$18 per tonne and is finalising an emissions trading scheme.

India has doubled its tax on coal which funds renewable energy projects and has signalled its intention to stop importing coal within 2-3 years.

Yet the Queensland Government has signed off on a $16 billion development of a huge Galilee Basin mine and is prepared to chip in with a few hundred million to enable the infrastructure to be built.

Premier Campbell Newman said that “the State Government would work with resource companies to make strategic investments that could create up to 28,000 new Queensland jobs.”

At the same time the Queensland Government has introduced water reform legislation which seems squarely targeted at providing unlimited water to the Galilee Basin mining operation. This is being done in a reckless manner at the possible expense of graziers and towns in the area. Indeed careless disregard is being shown for the integrity of the Great Artesian Basin itself.

Tristan Edis at Climate Spectator has taken a look at the folly of official of the official Bureau of Resource and Energy Economics forecasts on fossil fuel energy production. Edis looks at the Australian Energy White Paper, a paper from BZE (Beyond Zero Emissions) entitled A fossil economy in a changing world and the IEA World Energy Outlook 2014. I recommend reading Edis’s article in full but two graphs tell much of the story. First the Australian Energy White Paper fossil energy production projection:


That is the glorious future envisioned by our Tea Party governments in Canberra and Brisbane. Here they are being mugged by reality. The dotted line represents the improved cost of coal production. The continuous line represents the price trajectory:


I would just point out that the author of the BZE report and the article from The Conversation linked at the top of the post is Stephen Bygrave, who is CEO of Beyond Zero Emissions and Adjunct Professor in the Faculty of Science at UNSW Australia.

Finally John Quiggin at The Conversation takes a look at the economic case for fossil fuel divestment. As he says at his blog, the bottom line is:

Leaving aside the ethics of divestment and pursuing a purely rational economic analysis, the cold hard numbers of putting money into fossil fuels don’t look good.

Unless universities are willing to bet on the destruction of the planet they have committed themselves to understanding and preserving, divestment from fossil fuels is the only choice they can make. Forward-thinking investors of all kinds would be wise to follow suit.

In blunt terms we are dealing with stranded assets here. Beyond that Abbott, Newman and their acolytes should be arrested for treason. Or something!

I’m wondering too whether Clive Palmer’s Galilee Basin holdings will prick his financial bubble.