Subsidising coal

I was going to post on the Newman government’s announcement of subsidies to development of new coal mines in the Galilee Basin, but this piece by Michael West says it all. Key observation

The very day after the G20 concluded, with its recommendations about ending government subsidies to fossil fuels, it appears the Queensland government is poised to ramp up its subsidies for the humungous Galilee Basin coal project.

Read more: http://www.smh.com.au/business/mining-and-resources/wise-investment-or-fossil-fools-queensland-backs-coal-as-g20-moves-the-game-on-20141117-11odkq.html#ixzz3JM8yeHsw

41 thoughts on “Subsidising coal

  1. The current scam on the people of Queensland, Australia, and the world, is for the mining companies involved to talk up the economic benefits of opening a new coal basin so the Queensland government will pay billions in infrastructure costs which will allow the mining companies to make huge profits if the price of coal increases and which will enable them to abandon the project at much less cost to themselves if the price of coal falls. A “Heads I win, tails you lose,” situation. Shame on Queensland politicians and the federal government for believing this crock of effluent.

  2. @Donald Oats

    Abbot’s lies are so blatant one would think everyone could see them. However, the public has to realise that switching back to Labor will solve nothing. Labor are equally neoconservative, equally economically illiterate and equally inhumane to the poor, aboriginals, refugees and other vulnerable groups. Real change for the better can only occur if the voters reject neoconservatism and both major parties. Voters must move to the only other signficant party with good environmental and humane values and a passable though not great understanding of economics. That party is the Greens.

    BTW, I am not involved with the Greens or with any party politics but I do vote Green or Socialist at every election now. I still struggle with what to do with my preferences. I don’t give them where I can avoid it and still register a valid vote.

    LNP are beyond the pale of course but Labor are also totally irredeemable. LNP and Labor must be destroyed at the ballot box for us to have any hope of a viable envirionment and a passable economy. The current major parties are destroying both.

  3. Footnote: The Green’s “passable” understanding of economics is far better than the abysmal lack of understanding of economics rampant in the LNP and Labor.

  4. Uhhh, i could just repeat my other comment here -_-. The world is a strange place. Sometimes, when it comes to some topics, i think people are from a different universe in other nations and sometimes its all the same all the same….

  5. I”m also not sure Ronald that one can either believe or disbelieve ‘a crock of effluent’ or even the more usual variant, though this latter has the advantage of distracting the listener from the proximal verb and having a sufficiently well-established metaphoric usage to get away with it even if it fails.

    ‘I am scandalised that they’re peddling this nonsense’ might have worked better and probably would have been closer to the sentiment that moved you. Then again, that too would have sounded quite old …

    ‘Sucks that they’re pushing this crap’ is more concise and contemporary and may have been a good option.

    😉

  6. Hermit :
    I wonder if Newman used to smoke cigarettes behind the shed on school sports day to be a smart aleck. Now Andrew Robb is saying US/China are only making promises but we have Direct Action and it’s happening now. Er, not really. We should think of Galilee Basin not as a coal deposit so much as a pre-sequestered carbon reserve. It’s doing a good job just keeping that carbon out of the atmosphere. Burning coal was a major energy source in the time of Charles Dickens and you’d think two centuries later we’d have moved on.

    US has direction action and China is directly building nuclear reactors 🙂

  7. Ken Fabian :
    Here in NSW, for the past few years our power bills have contained the partisan political message that Federal Carbon Tax and “Green schemes” (subsidies) cost households $300+ per year. These messages, very pointedly, make no mention of costs from non-green related Federal or State policies – like subsidies to coal!
    My very rough calculation (1.5 million households, $666M per year) is that coal subsidies have cost Qld households more than that at about $450 per year . With coal’s health impacts it would be more. With climate consequences, more again. Are there any quality cost estimates along these lines to link to?
    Seems to me there are some compelling arguments for determined advocates of a low emissions transition to exploit right there. I would love to see billboards done in the same style as those familiar red inked messages on every NSW power bills, to turn that appalling use of power bills as an exclusive and very pointed partisan messaging media right around.

    Not sure it would come out as much as you think, you need to understand the size of the power industries.

  8. Hermit :
    I think government supplied infrastructure such as port and rail is intrinsically different to concessions like the diesel fuel rebate. All miners get the diesel rebate only some get capital help. There are various levelised energy cost calculators (like that of the NREL) that ask you to put in a cost of capital percentage in the range say 6% to 12%. If half the capital cost of a private project is paid by taxpayers then instead of 10% private cost of capital it’s effectively 5%.
    It should be pointed out that the dead-agency-walking ARENA gives generous capital grants to renewables http://arena.gov.au/
    If Australia were to build a big nuclear power station for say $10 bn it seems inconceivable that the government wouldn’t chip in. Even to replace a big coal station a decade from now would cost billions.

    The government has a role to seed industries, if we want to go Nuclear (which we should) then sure a subsidy would more than likely happen. FYI $10 billion is big number for one plant, but yes the ROI on such makes coal still look very very cheap by comparison.

  9. Right, with point of use solar and wind power cheaper than new coal capacity, why would we want or need nuclear power? The only reason I can think of is if we wanted to delibrately waste money.

  10. Right

    if we want to go Nuclear (which we should) then sure a subsidy would more than likely happen.

    It’s unnecessary if you price emissions aptly. The problem is that we don’t. We ought to be pricing CO2 at around $AUD150 — maybe as high as $200tCO2e …

    There should also be sharges for other toxic emissions (Hg, SO2. actinides etc …)

    If we did that, no subsidies at all would be needed.

  11. @Fran Barlow
    Fran, since we can remove carbon dioxide from the atmosphere and sequester it for around $100 a tonne, and probably less in practice, that will put an upper lid on the carbon price. At that price it would be cheaper to burn natural gas or even coal in exisitng power plants and then capture and sequester the CO2 released than to pay Hinkley C prices for nuclear power. (And I’ll mention that very little of our electricity would be generated that way at that carbon price.) But whatever the price we put on carbon it should definitely be higher than the current one of $0 a tonnne.

  12. @Ronald Brak

    I disagree. The cost of CO2 should include pollution of waterways as well as the Charney forcing. The cost of coal (as distinct from natural gas) includes all of its VOCS/particulates as well.

    Also, it is improbable that much more than a fraction of CO2 could be sequestered in aquifers for $100 per tonne. Those aquifers are themselves a scarce resource. At industrial scale, all the cheap aquifers would be saturated within a very short time, and let’s not forget that unlike actinides, CO2.is forever. We might be able to use algae of course for a lot cheaper than that, but that would only deal with CO2. I’d prefer these were used for emissions that really are too technically difficult to abate.

    As you say, at $100tCO2e, thermal coal is finished anyway so the point is probably moot. Everything else, including nuclear power, would be in front.

  13. Fran, the cost of emitting a tonne of CO2 into the atmosphere is very high, but the carbon price doesn’t need to be as high as that cost to prevent CO2 being emitted into the atmosphere. CO2 might cause $300+ worth of damage per tonne, but a price of $100 a tonne should be more than sufficient for society to go carbon neutral. And I can’t see us sequestering CO2 in aquifers for $100 a tonne. That method would probably be more pricey. You also mention they’d soon be saturated, but I don’t think there would be very much CO2 emitted with a $100 a tonne carbon price, for as you wrote, thermal coal would be finished anyway. And so would natural gas and oil except for critical purposes.

    Now one could argue that we should have a higher carbon price to draw down CO2 from the atmosphere, and in the future that is something we certainly should do, but first we need to stop smashing our hand with a hammer: http://www.angryflower.com/smashi.html

  14. @Ronald Brak

    Now one could argue that we should have a higher carbon price to draw down CO2 from the atmosphere, and in the future that is something we certainly should do, but first we need to stop smashing our hand with a hammer.

    I do argue it. We should begin doing it right now. That would underline the scale of the damage already done and the burden our generation and those before are by dissonance inflicting on future humanity.

    If you’re tied to a railroad track, as in one of those early 20th century melodramas, slowing the approach of the train is good. Sawing through the ropes is also good, if you can manage it. But if you can’t stop the train or get off the tracks in time you will be crushed, sooner or later.

    Slowing emissions puts off catastrophe, but still does huge damage. As these lines are being composed we are doing harm, and would continue to do harm even if all emissions stopped right now. Silicate weathering will remove lead to falling concentrations over the next 100,000 years, but in the interim, it is what it is with all of the perturbation. We need to be drawing down to 280ppm — probably lower — ASAP, and probably doing some geoengineering to subvert the forcing while we get there.

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