Thanks to the efforts of Environmental Justice Australia (EJA) and the Environment Council of Central Queensland (EcoCeQ,), Environment Minister Tanya Plibersek reopened the environmental assessment process for 16 coal mines and two gas projects that had previously been approved. To take part, it was necessary to submit new information not available at the time of the original approvals.
I wrote the same comment for all of the coal projects*.
I wish to draw attention to the following information which was not available at the time this project was approved. This information implies that the climate damage caused by the project will be worse than seemed likely at the time, while any offsetting benefits will be smaller.
- International agreement on the necessity of phasing out, or phasing down, the use of coal by 2030 reached at COP26 in Glasgow. This agreement is inconsistent with an expansion in the global supply of coal. It follows that any new mine can operate only at the expense of existing mines, which will in any case be required to reduce their output. It is highly likely that the resulting job losses will be incurred in existing coal-reliant communities elsewhere in Australia
- The idea that coal-fired electricity generation could be rendered ‘clean’ through carbon capture and sequestration has now been abandoned. Most of the handful of projects that were put into operation have been closed down (Petra Nova) or scaled back (Boundary Dam). Other projects have been abandoned with large losses (Kemper). Hence any damage caused by additional use of coal cannot be prevented by CCS
- Rapid reductions in the cost of solar PV, wind and storage technology have rendered new coal fired power uneconomic everywhere, and have led to an accelerated closure of existing coal-fired power station. Although China continues construction of new coal-fired power stations, competition from clean energy means that many coal-fired plants will operate only seasonally, or as reserve capacity. This implies reduced demand for coal.
- At the time the project was evaluated, it seemed likely that coal would be replaced by gas, at least in the short term. This implied a smaller net benefit from eliminating coal than if the replacement is an immediate move to renewables+storage as now seems likely.
John Quiggin
Professor of Economics, University of Queensland
- I meant to write something on gas, but ran out of time. Submissions closed yesterday.
John Quiggin 
Per BP’s Statistical Review of World Energy 2022, the world’s top four coal importers in 2021 were:
#1 China: _ _ _ _ _ 6.54 EJ (19.5% global share)
#2 India: _ _ _ _ _ _4.90 EJ (14.6% global share)
#3 Japan: _ _ _ _ _4.86 EJ (14.5% global share)
#4 South Korea: _ 3.41 EJ (10.2% global share)
China’s thermal coal imports have been in decline, and Australia’s thermal coal exports to China were miniscule in 2021:
Chinese investment in domestic transport infrastructure will push out overseas thermal coal imports. Seaborne coking coal imports to China will fall with growing supply from Mongolia. So, it seems there’s a bleak outlook for Australian coal exports to China. ANU climate change economist Professor Frank Jotzo said:
https://www.anu.edu.au/news/all-news/bleak-outlook-for-australian-coal-exports-to-china
Thanks for doing this JQ.
I hear coal /tar sands and probably Piliga are a net energy consumer relative to output.
EROI ala CCS.
I note that Clive Palmer’s proposed Galilee Basin mine has been refused by the Queensland Land Court and climate harms are cited in the judgement as a reason – a step forward for Australian courts, which have tended to evade the climate issue and NOT counted such harms as within their scope.
I suppose the decision will be appealed but not necessarily by the Qld or Federal Governments, which pro-fossil fuel governments in the past might have been inclined to do – and might still (the current government being as pro-fossil fuels as the LNP) if it were not Clive Palmer. Or else pushed through legislation to make such a decision moot. But I admit to being very cynical.
That cynicism fully encompasses the Albanese government, including Tanya Plibersek and Madeleine King. I suspect the domestic fossil fuel industry has been given promises – that export mining will get their full support – in exchange for not throwing their wealth into opposing Labor or it’s modest ambitions on decarbonising domestic electricity production… which was happening anyway, and continuing to support CCS and other greenwashing. The promises given to the Australian people are subject to change but those to commerce and industry are promises governments tend to keep. If Australia’s global contributions to global warming do go down it won’t be because of the Albanese government.
Why the worry? Markets will sort out the viable coal producers if demand contracts. Investors seem unlikely to fund projects that look like inevitably being losers. The move to prevent losses in the industry by prohibiting production might save investors from possible folly by reducing the competition they face from new producers.
Harry, that kind of mindset, that first and foremost seeks to prevent losses in (or of) the export coal industry is deeply troubling. It seems to embody a knowing disregard for the climate implications – the ones that call into question the presumption of a net benefit to the people of the State and nation, which was a significant element of the court’s decision.
Mr Palmer’s project may never have gone ahead for other reasons but I think it is past time that Australian coal and gas mines don’t go ahead for climate reasons. Any honest reading of the science based expert advice on climate change makes it an imperative to leave as much coal underground – and unfracked – as possible.
We’ve actually managed to do a surprising lot about it and got ourselves to a point where it isn’t so intractable or unbeatable, especially given that we’ve never had an Australian government that has really tried, more given to empty gesture and appeasing than real commitment. I can only call down global gratitude to the scientists and engineers and entrepreneurs that are making the renewable energy options that are shaking the fossil fuel energy industry’s presumptions of essentialness.
But I think their own actions – the rampant profiteering at price levels no carbon tax could induce, the tax avoiding, the undue political influence and their disregard for their climate responsibility – are shaking the public’s faith in them as good faith participants that we can or should rely on for our enduring prosperity.
Yes Harry, and markets are comprised of many actors, including those who are directly involved but who are affected by the transaction.
Only in a highly regulated market are participants confined to buyer and seller.
Harry, as you say yourself, you are a conservative dinosaur. I almost feel your less nuanced comments fit the concern troll model.
HC: “Why the worry? Markets will sort out the viable coal producers if demand contracts.”. lmao!
In time!
Time. And coordination. And starting point. And acccess to capital. And being stuck on an island awaiting the next storm.
Harry, when will, as you say “Markets will sort out” – “Storm autocracies”… “The researchers found that on average an island nation’s Polity Score dropped by 3.46 per cent in the year following a significant storm event, and 10.1 per cent over the subsequent five years”
Oh, it is not mine or their problem and “Markets will sort out”.
“Significant storm events are corroding the democracy of island nations, leading to a newly discovered phenomena labelled ‘storm autocracies’, according to new research from Deakin University.
“Deakin Business School Professor of Economics Mehmet Ulubasoglu recently made the connection after analysing 60 years of data from 1950, finding strong links between the timing and frequency of storms affecting island nations and acts of government oppression.
“The researchers found that on average an island nation’s Polity Score dropped by 3.46 per cent in the year following a significant storm event, and 10.1 per cent over the subsequent five years.
“They also found that these governments increased their level of political oppression by around 2.5 per cent per year following storm events such as cyclones, typhoons, hurricanes and tornados.
“Professor Ulubasoglu said a comparative analysis showed neither of these effects were experienced by landlocked or coastal countries, while the effect was noticeably more pronounced in smaller island countries, compared to their larger counterparts.
“He said the research team had developed some theories about why this was the case, using an economic analysis tool called a ‘dynamic game-theory model’.
“”We believe that in the wake of disasters like storms, the government provides their citizens with post-disaster palliative relief, such as aid or financial assistance, and in this window of opportunity they are more able to take steps towards a more autocratic or authoritarian regime,” Professor Ulubasoglu said.
“”Citizens are less inclined to resort to an insurgency in these circumstances because of the disaster relief they are accepting as well as the perceived efficiency of more autocratic governments in decision-making during crises.
“”Essentially what we are seeing is a form of mutually-agreed political oppression brought about by a natural disaster.”
“Professor Ulubasoglu said the new research helped to explain why storm-prone small island countries around the globe, such as Haiti, Fiji or the Philippines, had remained autocratic over prolonged periods.
“”These are countries we’re now dubbing ‘storm autocracies’,” he said.
“”Using storms in island countries is a highly novel way of deciphering the autocratic turn we have seen in recent years, as it arguably offers rare causal evidence for a phenomenon that is otherwise a highly unique situation in countries caused by a range of historical, economic, cultural or other factors.
“”The United Nations has declared climate change as the defining issue of our time, and the effects of the changing climate are arguably threatening island nations most urgently and devastatingly.
“These effects are not just rising sea levels swallowing land or rising sea temperatures decimating marine biodiversity, but also the increasing frequency and severity of climactic events such as storms.”
“Professor Ulubasoglu leads Deakin’s Centre for Energy, the Environment and Natural Disasters, and oversees significant work squarely focussed on policies to better plan for the economic impact of such natural disasters, including floods, fires and storms.
He said the increasing effects of climate change would only make the research done in the centre even more relevant.
“This research on the effects of storms on political conditions is likely to illuminate the increasingly likely changes in the government-citizen relationship where storm autocracies may become even more prevalent than ever,” he said.
“It’s yet another unfortunate consequence of our inactivity on climate change that autocracies may continue to rise, thrive and endure.”
https://www.deakin.edu.au/about-deakin/news-and-media-releases/articles/climate-change-fuels-autocracy-in-island-nations-deakin-research
Centre for Energy, the Environment and Natural Disaster (CEEND) CEEND
https://www.deakin.edu.au/business/research/centre-for-energy-the-environment-and-natural-disasters
Journal of Development Economics
Volume 159,
November 2022, 102982
““Storm autocracies”: Islands as natural experiments”
Muhammad Habibur
Rahmanab et al
https://www.sciencedirect.com/science/article/abs/pii/S0304387822001249
KT2, Rog, Ken. None of you picked up the main point that I am questioning the need for an intervention. If the economics are dumb then new firms won’t go for it unless they believe they can outperform pre-existing firms in which case the low cost producers will win. Why then the need for a policy? I should have attached an “irony alert” on the last sentence since obviously none of you spotted it.
Sometimes commentators get so hot under the collar and so sanctimonious in their urge to denounce that they cannot see simple logic. Anger and heat clouds brain cells. “We wanna a policy. We wanna (others) do something”.
Harry Clarke: – “KT2, Rog, Ken. None of you picked up the main point that I am questioning the need for an intervention.”
Markets have failed to deal with the existential threat of climate change, thus effective policy intervention on a global scale is required to rapidly reduce further GHG emissions that would consequently lead to an increasingly more hostile and hotter Earth System for humanity in the coming decades, and which ultimately risks civilisation collapse before the end of this century.
From the Grantham Research Institute on Climate Change and the Environment (at the London School of Economics and Political Science), re-published 21 Mar 2014 (from The Guardian op-ed on 22 May 2012), was an explainer headlined Why do economists describe climate change as a market failure? It included:
https://www.lse.ac.uk/granthaminstitute/explainers/why-do-economists-describe-climate-change-as-a-market-failure/
Market failure has already ‘locked-in’ the Earth System breaching the +1.5 °C global mean surface temperature threshold. Per IPCC AR6 WG1 SPM, from Table SPM 1 (on page 14), even under the most drastic emission reduction scenario the IPCC assesses, the Earth System will still likely reach +1.6 °C warming threshold by mid-century.
Click to access IPCC_AR6_WGI_SPM.pdf
Climate scientists like James Hansen & colleagues suggest the +1.5 °C global mean surface temperature threshold could be breached temporarily as soon as 2024, if a strong El Niño emerges in 2023-24 – see:
Click to access AugustTemperatureUpdate.22September2022.pdf
Published on 1 Aug 2022 in the journal PNAS was a perspective paper by Luke Kemp et. al. titled Climate Endgame: Exploring catastrophic climate change scenarios. The authors give four reasons to be concerned about climate catastrophe:
i. Warnings from history, where climate change (either regional or global) has played a role in the collapse or transformation of past societies;
ii. A threat multiplier for other catastrophic risks, including global geopolitical conflict, pandemics, and other spillover events;
iii. Economic damage, loss of land, and water and food insecurity that coalesce together into system-wide synchronous failures; and
iv. Create significant latent risks that could irrevocably undermine humanity’s ability to recover from another cataclysm, such as nuclear war.
The paper included:
doi.org/10.1073/pnas.2108146119
Geoff, You don’t get the point either Geoff in your long-winded response. Of course climate change is an externality. But that isn’t the point behind John’s post. He is saying that private costs are all against new coal mines. No externality argument at all. In that case why the need for an intervention? Are the investors in such projects stupid?
Harry Clarke: – “Are the investors in such projects stupid?”
Yep. I’d suggest they are ignoring the longer-term consequences of their actions, contributing to facilitating future civilisation collapse and the future suffering for their own children & grandchildren (if they have any), and if they live long enough, then for themselves eventually as well.
Geoff, You still miss the obvious point and are confused. We are talking about firms that will (according to your erroneous thinking) knowingly go into projects that make losses. The implications of their activities for the climate dont bear on this issue.
Anonymous: – “You still miss the obvious point and are confused. You still miss the obvious point and are confused. We are talking about firms that will (according to your erroneous thinking) knowingly go into projects that make losses.”
Not confused. It seems to me that global mean surface warming is apparently happening at a much faster rate than the expectations of policymakers, business leaders and the media. I’d suggest many firms are in denial or don’t understand the need for urgent action, and are baulking at taking the required action to rapidly reduce GHG emissions.
Current warming at +1.2 °C is already dangerous & disrupting society, including for fossil fuel assets. For example:
https://reneweconomy.com.au/coal-driven-climate-change-is-becoming-a-big-problem-for-coal/
https://www.abc.net.au/news/2022-11-11/nsw-floods-gas-supply-outage-bathurst-lithgow-wallerawang-oberon/101637384
The consequences of ongoing fossil fuel industry activities on the climate are already manifesting, and they will get worse.
+1.5 °C warming is inevitable, and some climate scientists suggest it could arrive within this decade. As more people and businesses experience the worsening consequences of climate disruption, as well as rising extraction costs for coal, gas & oil, there will likely be a greater social pressure to divest in fossil fuels, perhaps rapidly, leaving fossil fuel assets ‘stranded’.
Looks like Australia narrowly avoided becoming another of these”storm autocracies,” thank goodness. As it was , we could well have had six months of you -know-who clandestinely in charge of more than half our government departments
Geoff, I was “anonymous”. I am unsure why as I logged in in the usual way.
Geoff, You repeat the same irrelevant illogic 3 times and I sense that trying to reason with you will be unproductive. I don’t think you read what I wrote. Just made the guess, for some reason, that I was opposed to action on climate (I am not) and responded with irrelevant claims.
Minor point about the Glasgow COP. You don’t need to show causation to prove the coal phaseout. It makes no difference if the agreement caused the phaseout or the phaseout caused the agreement. Either way it’s real.
A nice closeup of the process, from the USA. The energy regulator FERC publishes a monthly series of estimates of future additions to and retirements from US generating capacity, in a rolling 3-year horizon. ( https://cms.ferc.gov/media/energy-infrastructure-update-september-2022 , scroll down to page 5). FERC is a powerful agency and utility executives are not likely to make stuff up when the regulator asks about their plans, so the data are high quality.
Coal retirements are projected at 19 GW, 8.7% of total coal capacity: not too dramatic. For gas generation, additions and retirements will balance. But the “highly probable” additions to wind and solar are respectively 18 GW and 72 GW. Assume their capacity factor will be half that of ageing coal plants, and total demand stays flat. The coal retirements will need at least to double: ballpark 45 GW, or 20% of current coal capacity.
The scenario may change over time – but only in one direction. There is another 186 GW of less probable (but still seriously considered) wind and solar capacity waiting in the project pipeline. Because it’s much cheaper, see Lazards.
Public policy has little to do with this; Obama’s and Trump’s efforts, in opposite directions, both failed. The phaseout is driven by costs. The problem is that absent an operational recognition of environmental costs, it is all still much too slow.
Harry, Geoff: JQ is making a submission to an environmental assessment reopened by the Queensland government. Therefore this is no longer a private market situation but one of public policy. Mistaken investment decisions on coal mining by private investors, which happen all the time under capitalism (as they also do under socialism), will likely have a wider impact on society, the environment and public funds. I don’t get the objection to his intervention.
China is the worlds biggest coal consumer and due to recent shortages there has been efforts to increase China’s domestic production.
The energy and coal shortages have been caused by a number of factors including the limitation on the importation of Australian coal.
Chinas domestic production is likely to be less efficient with the likelihood of increased pollution.
Despite the promises of laissez faire market promoters, energy security has become of critical importance globally requiring an urgent response by policymakers.
Taxonomy & classification changes to include gas & nuclear, as neutral or up for debate again by proponents, show their aporia in efforts to change EC taxonomy.
Aporia
“In rhetoric, it is a declaration of doubt, made for rhetorical purpose and often feigned.”
https://en.wikipedia.org/wiki/Aporia
I am not even sure if the above is grammatically correct. But my word of the day – Aporia – seems appropriate.
… sure is a lot of aporia these days in energy, financial & political debates.
Via:
“Rearguard Battle”
MARTIJN KONINGS
24 NOVEMBER 2022
ECONOMICS
“The award of the Nobel Prize in Economic Sciences to Ben Bernanke last month unleashed a wave of indignation among those who view the former chair of the Federal Reserve as the epitome of unoriginal establishment thinking.”…
“This aporia became more obvious when the era of ‘fiscal dominance’ came to an end and financial instability made a comeback from the second half of the 1960s, challenging the Keynesian paradigm and lending credibility to rival strands of thought. Rational expectations theorists underscored the inherent futility of government attempts to interfere with the inner workings of the market, while Milton Friedman’s monetarism fostered the notion that Keynesian inflationism was responsible for the corruption of America’s monetary standard.”
…
https://newleftreview.org/sidecar/posts/rearguard-battle
James, It’s not really enough to say that a clotish Labor leader declares it to be a public policy issue. A primary focus of public economics is the rationale for policy – is there a market failure or are their distributional issues that make interventions essential? I can see none here. The externalities generated by climate change are irrelevant to the issue of whether entrepreneurs will invest in projects that will generate them losses. I cannot take seriously John’s claim that in a contracting market incumbents must be given preference over new entrants. Why would you? Thus in some way you must establish a case that the potential entrants are deluding themselves with unwarranted optimism and that government needs to intervene to save their unfortunate shareholders from this deluded entrepreneurial bravery. I don’t buy that. Maybe John doesn’t believe that the planned ending of reliance on coal will occur and that the lower prices engendered by new entry would slow this retreat from coal further. That’s a more elaborate story that he does not mention.
Harry Clarke,
You use words like “erroneous thinking“, “irrelevant” and “illogic“, but don’t explain why.
You then say “I sense that trying to reason with you will be unproductive…“, which suggests to me you wish to shutdown the argument. Methinks that’s convenient for you to not have to explain your position.
HC: “Just made the guess, for some reason, that I was opposed to action on climate (I am not)…”
Well, you did state earlier: “I am questioning the need for an intervention.” That suggests to me your denial of the magnitude, urgency and increasing existential threat to civilisation of the worsening climate crisis.
2 questions Harry re your comment: Harry Clarke says:
November 27, 2022 at 1:56 pm above.
Harry, as EC changed taxonomy – see below – and “55% of investors surveyed by Natixis intend to use the taxonomy in their investment processes for SFDR funds”…
Q1. are you ignoring cost of funds and incentives now changed due to European Commission altering taxanomy & SFDR regs & incentives?
And considering Harry “The SFDR is a fundamental pillar of the EU Sustainable Finance agenda, having been introduced by the European Commission as a core part of its 2018 Sustainable Finance Action Plan, which also include the Taxonomy Regulation and the Low Carbon Benchmarks Regulation.”
https://www.eurosif.org/policies/sfdr/
Harry bravely asserts “The externalities generated by climate change are irrelevant to the issue of whether entrepreneurs will invest in projects that will generate them losses.” …
Q2. Harry, do you believe or infer from “the Taxonomy Regulation and the Low Carbon Benchmarks Regulation.” that these benchmarks are recalibrated and taxonomy changed in any manner due in part relating to your phrase “The externalities generated by climate change”.
*
Data Harry.
“KT2 says:
November 27, 2022 at 9:05 am
I’ll restate that prior to EC taxonony”
“55% of investors surveyed by Natixis intend to use the taxonomy in their investment processes for SFDR funds (article 8 or 9), both to identify relevant activities and define exclusion thresholds. As part of their “green bond funds”, several investors are even considering setting targets of green bonds aligned with the Taxonomy”
https://gsh.cib.natixis.com/our-center-of-expertise/articles/changing-investors-perceptions-on-nuclear-in-the-midst-of-the-war-in-ukraine-and-taxonomy-inclusion
https://johnquiggin.com/2022/11/26/another-nuclear-renaissance/comment-page-1/#comment-257569
*
Sorry KT2 but I have no idea what your questions have to do with my comment which relates to the non-need for an activist policy..
Harry, I understand you “I have no idea what your questions have to do with my comment which relates to the non-need for an activist policy..”.
That is the problem.