As a major supplier of coal to China, Australia has made a fortune helping China to meet its energy demands and in the process they have moved the world closer to irreversible climate change tipping points. China is the world’s larger consumer of coal accounting for half the world’s consumption. Australian Prime Minister Tony Abbott’s new government has bet on coal which now accounts for 16 percent of the total value of Australian exports. China imports almost one third (30 percent) of its annual needs from Australia.
However, Australia’s coal fired economy may be powering down due to declining demand from China. According to report titled Stranded Down Under, by the Smith School of Enterprise and the Environment (SSEE) at Oxford,
“Demand below expectations – and lower coal prices as a result – would increase the risk that coal mines, reserves and coal-related infrastructure could become mothballed or abandoned.”
Abbott’s new government ran on a platform of economic growth based largely on coal exports. China’s growing concern about air pollution and climate change may very well strand Australia’s massive investments in coal infrastructure assets. Australia’s federal Bureau of Resources and Energy Economics (BREE) says that Australia intends to invest AU$100bn (US$90bn) in 89 mining projects over the next 15 years.
With the support of the Abbott government, coal producers want to expand the amount of coal exported from Australia. Currently 440 million tons of coal are produced per year in Australia, producers would like to see an additional 110 million tons of coal per year by 2020. That would bring Australia’s coal production totals to 550 million.
In addition to declining demand Australia will also need to factor the costs of water as coal needs a lot of water for ‘washing’ and for driving steam turbines.
The combination of international pressure to reduce coal production, declining demand and growing water scarcity are destined to make it hard for the Abbott government to realize their dirty energy nightmare.
© 2014, Richard Matthews. All rights reserved.
Aussie, climate change, global warming, action, government, strategy, greenhouse gases, GHGs, extreme weather,
© 2014, Richard Matthews. All rights reserved.
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