Hunter coal exports will hit hard times if the world acts on its Paris climate change promises

The Hunter Region’s coal exports will dry up over the next few decades, if world governments act to restrict global temperature rises to two degrees above pre-industrial levels, a climate and energy consultant has warned.

Governments across the globe have set a course towards this long-term goal, but there are doubts about whether they will be able to meet it.

Mining advocates believe demand for Hunter coal will remain strong because the product itself is high quality and global demand for electricity is increasing.

But climate advocates say coal’s days are numbered, with action on global warming becoming more urgent and renewable energy advancing.

In the Hunter economy, thousands of jobs and billions of dollars are at stake. Remplan economic modelling shows that the Hunter has about 12,000 jobs in the mining industry, which is about 5 per cent of the region’s total jobs.

The Hunter’s economy had a value of about $44 billion last year, with mining contributing about 10 per cent of this.

The NSW Minerals Council said mining contributed up to 20 per cent of the Hunter’s economy, when spending from mining workers was considered.

About 85 to 90 per cent of Hunter coal is exported. The future of the industry will depend on the pace of technological change, economics, market moves and politics.

At the recent G20 summit in Germany, 19 world leaders – including Malcolm Turnbull – signed up to a declaration that the Paris climate agreement was irreversible. 

US President Donald Trump was the only leader not to sign the document, having pulled his country out of its Paris commitments.

However, climate and energy consultant Erwin Jackson said “it’s not the US leaving, it’s the Trump administration”.

“US emissions are continuing to fall and coal-fired generation is a dead industry in the long-term. It can’t compete with gas and renewables any more,” Mr Jackson said.

CoalSwarm research shows that China and India have frozen construction of coal-fired plants at more than 100 project sites.

A CoalSwarm report said coal-plant retirements were occurring “at an unprecedented pace”, particularly in the European Union and United States.

Bloomberg New Energy Finance said in its 2017 outlook that “a mere 18 per cent” of new coal power plants planned worldwide will get built.

Nevertheless, NSW Minerals Council CEO Stephen Galilee sees growth for Hunter coal exports in countries such as Vietnam, Malaysia, Japan and the Philippines. 

“Technological deployment in coal-fired power generation is, to a large extent, embedding long-term demand for our coal,” Mr Galilee said.

He conceded that the pace of change in the renewable sector could change the landscape.

“All this technological advancement is good, whether for renewables or gas, coal, nuclear, and it should be supported, because it’s all needed,” he said.

“But the use of coal is so big and demand for it is so strong, particularly for countries who want to deliver energy to their populations who haven’t had it before. These countries are not going to give up that opportunity.”

However, lobbying is fierce among world governments for coal-fired power to be dumped to help meet the long-term goals set in Paris.

Prime Minister Malcolm Turnbull has said Australia will not walk away from the Paris agreement.

But on Saturday, Mr Turnbull that "those people who say coal and other fossil fuels have no future are delusional”. 

The agreement’s long-term global aims could end up having a massive impact on the future of the Hunter coal industry.

The Paris accord’s main aim was to “keep a global temperature rise this century well below two degrees” above pre-industrial levels.

It also aimed to “drive efforts to limit the temperature increase even further to 1.5 degrees above pre-industrial levels”.

“The 1.5-degree limit is a significantly safer defence line against the worst impacts of a changing climate,” a United Nations statement said when the agreement was struck.

The International Energy Agency (IEA) last November produced a scenario for global coal demand, which would give the world a 50-50 chance of limiting long-term global warming to two degrees above pre-industrial levels.

Under this so-called “450 Scenario”, world demand for coal for power generation would fall by 71 per cent from 2014 to 2040. 

Mr Jackson, a former deputy CEO of the Climate Institute, said such a decline would mean Hunter coal exports will “dry up over the next few decades”.

“The world is moving away from coal. This means that communities dependent on coal need a strategy to manage that transition over the next couple of decades,” he said.

Mr Galilee said the 450 Scenario was based on an “aspirational” target made at Paris for the future.

Having consulted energy economists, he believes the 450 Scenario to be “virtually impossible” to achieve.

“It’s not going to happen unless someone comes up with a fantastic new energy technology,” he said.

To limit warming to less than two degrees, global emissions from the burning of fossil fuels will need to be net zero by around 2050.

Mr Jackson said there “certainly is technology to limit global warming to less than two degrees”.

“We would need to scale up existing technologies in a way which we haven’t done before,” he said.

He said growth in solar power was tracking well, but “we’re being challenged in other technologies like carbon capture and storage”.

“It’s not a question of technology, it’s more a question of political will.”

The IEA also modelled the “New Policies Scenario”, which incorporated global governments’ existing and intended actions on climate change.

Under this scenario, world demand for coal for power generation will remain stable, rising by 0.1 per cent a year from 2014 to 2040.

Mr Galilee said the New Policies Scenario was closer to the “expected reality”.

“Some say even this won’t happen because countries who have signed up to agreements won’t necessarily follow through on them.”

Mr Jackson does not expect the world to follow the New Policies Scenario.

“It assumes no changes in policies over the next 25 years,” he said.

He said this scenario would lead to the world warming by 2.7 degrees from pre-industrial levels, which would have catastrophic consequences.

Scientists say climate change is already having costly and dangerous impacts.

They say a rise of two degrees will mean extreme heatwaves, declining water supplies, increased bush-fire risk, reduced agricultural productivity, severely degraded coral reefs and about half a metre of sea level rise by the end of the century, causing long-term problems for economies, coastal infrastructure, settlements and ecosystems.

Mr Galilee said there was “an evolution of energy happening, not a revolution”.

“It’s only going to succeed if it’s allowed to evolve, rather than being forced too quickly,” he said.

He agrees there needs to be a transition in the world’s energy sector.

“All the conventional wisdom and sensible observations are you need a mix of these energy sources,” he said.

Climate advocates, such as Greenpeace, have said a world with 100 per cent renewable energy is possible by 2050.

Mr Galilee said: “There may come a time in the future where we have an ability to do that, but it’s a long long way away”.