Hunter Business Chamber says coal exports won't fall off a cliff

The Hunter will not be “going cold turkey on coal”, the region’s business chamber says.

Newcastle Port and the region’s coal mines will continue to “respond to demand” from countries that buy coal from Australia, Hunter Business Chamber CEO Bob Hawes says.

Mr Hawes rejected “sky is falling-type scenarios” that suggest mining and burning coal have to “stop tomorrow”.

“It’s not falling off a cliff,” Mr Hawes said.

Mr Hawes said Australia and the world were on a bridge towards lower emissions.

“It’s not going to be a short bridge, it’s going to be quite a long bridge and coal will still play a significant part in providing the pillars for that bridge.”

Believing that coal will continue to play a part in energy supply “does not make us climate sceptics”.

“We’re trying to be realistic and reasonable,” he said.

The Herald reported on Friday that Tomago Aluminium had lobbied politicians to support a high efficiency, low emissions (HELE) coal-fired power station to replace the Upper Hunter’s Liddell plant, when it closes in 2022.

But Liddell’s owner AGL said solar and wind are “the most economic” options to replace the plant.

The Herald reported last month that climate and energy consultant Erwin Jackson warned the Hunter Region’s coal exports would dry up over the next few decades, if world governments act to restrict global temperature rises to two degrees above pre-industrial levels.

The International Energy Agency (IEA) has modelled a scenario in which world coal demand would plummet by 71 per cent by 2040, if governments act to avert catastrophic climate change. 

However, the IEA’s medium-term market report said “it is too early to say that coal is dead”.

The IEA’s World Energy Outlook said exporting countries “can take steps to reduce vulnerabilities by limiting their dependence on fossil fuel revenue, as Saudi Arabia is doing with its sweeping Vision 2030 reform program”.

It said the long-term future of coal is “increasingly tied to the commercial availability of carbon capture and storage”, however doubts remain about the technology’s economic viability.

Australian power company AGL has found carbon capture technology to be uneconomical. 

Meanwhile, environmental finance group Market Forces said that Australian banks were reducing loans to some carbon-intensive sectors, including the coal industry.

Adam Lucas, an energy and climate change researcher at Wollongong University, told the Herald that the international market for thermal coal “appears to be in terminal decline”.

“This is partially due to concerns about pollution and climate change, but primarily due to a global shift to renewables,” Dr Lucas said.

Dr Lucas said this included “the high-growth nations of China and India”.

“The costs of renewables and battery storage are in rapid decline, while the costs of coal-fired power are increasing,” he said.

He said coal-fired power costs were rising because of concerns about pollution, climate change and carbon pricing in various countries.

Another factor was the “relative costs of construction, production, fuel supply and maintenance”.

“However, Australia has good quality thermal coal and has managed to significantly lower production costs in recent years,” he said.

“It will probably be able to maintain current production levels for at least the next few years. Forward contracts for coal supply to many of the industry's export destinations will ensure some stability over the short to medium term.”

Dr Lucas said coal-fired electricity generation “will need to be phased out worldwide by 2030,  if world governments and industries are serious about avoiding” a two-degree rise in temperatures.

Adam Lucas is an energy and climate change researcher at Wollongong University.

Adam Lucas is an energy and climate change researcher at Wollongong University.

He was somewhat sceptical that the political will existed to achieve this, particularly in “fossil fuel exporting countries like Australia, the US and Canada”.

However, as the costs of renewables and storage fall and “the adverse consequences of human-induced climate change become more obvious, the momentum for change will become unstoppable”, he said.

He said the economic and political power of the international fossil fuel industry and its allies in politics, business and media were strong.

Given this, he believes the market for thermal coal will start to dry up “between the late 2020s and the late 2030s”.

He said many communities in Australia and other countries have “become dependent on coal mining for their livelihoods”.

“Local, state and federal governments have a duty of care to those communities and the workers directly affected to make what is commonly described as a just transition,” he said.