Yahoo Finance What would quitting coal cost the Australian economy?
If Australia stopped digging up and exporting coal, what sort of impact would it have on our economy?
Supporters of fossil fuels have long claimed that because coal - aka ‘black gold’ - is one of Australia’s strongest export performers, the idea of abandoning it, even for the sake of the environment, would be economically reckless.
Keith Pitt, Minister for Resources and Water, released a statement in September which confirmed coal contributed to around “$50 billion in exports and the industry provides direct jobs for over 50,000 Australians and supports the jobs of another 300,000”.
However, given the rising popularity and affordability of alternative energy sources such as solar power, growing outrage about the impact of climate change, and China’s decision to ‘unofficially’ boycott buying coal from Australia, the suggestion to abandon coal may not be as financially risky as it may seem.
Read more: How One Australian Coal Giant Turned China’s Ban Into a Win
Read more: Climate change: Why Australia refuses to give up coal
Read more: Australia 'stuck in the past' after COP26
Australia could end reliance on coal in '10 years'
John Quiggin, economist and professor at The University of Queensland, recently wrote in The Conversation that Australia could “easily” end its use of coal within 10 years and at a much lower cost than many may expect.
“Given a modest amount of political will, or just the end of obstructionism from the Federal Government, Australia could easily replace coal-fired electricity generation with a combination of solar and wind, backed by storage,” he said.
“Most of Australia’s coal-fired power plants were commissioned in the 20th century with obsolete sub-critical technology, and would be approaching the end of their operational lives even in the absence of climate-change concerns.”
Quiggin said bringing those dates forward to 2030 would be almost “costless”.
“We could easily double our current rate of installation of utility-scale solar and wind generation, if the Federal Government got out of the way and let the states tackle the job.”
He added that to phase out coal by 2030 and to transition the thermal coal workforce through a mixture of early retirement, retraining, and “investments in renewable energy targeted at coal-dependent regions” would cost about $50 million over 10 years.
“That’s less than the estimated cost of a week of COVID-19 lockdown in Sydney.”
Australia and COP26
At the COP26 climate summit in Glasgow, Australia was criticised for not agreeing to tighten its 2030 targets and declining to join more than 100 other countries in committing to cut global methane emissions by 30 per cent by 2030.
Morrison did sign up for a new $500 million fund to help neighbouring South Pacific countries fight climate change, agreed to end deforestation by 2030 and finally agreed to net zero greenhouse gas emissions by 2050. However, details on the latter have not been released.
One of the decisions made at COP26 was to “phase down” unabated coal power, which Australia agreed to. However, in January, the PM declared during a visit to the regional Queensland town of McKinlay that coal would continue to generate wealth for the country for decades to come.
“These mines have got, you know, 10, 20, 30 years to run,” Morrison said.
“What's important is that we continue to extract and get the value from the opportunity and wealth that's there that really benefits the rest of this country.”
However, he ruled out government subsidies for coal mines, saying, “things change over time”.
Labor leader Anthony Albanese also supported the continuation of coal exports.
More than $10 billion in industry subsidies
Australia produces about 8 per cent of the world’s thermal and metallurgical coal and exports it to more than 25 countries, including the UK, Germany and New Zealand.
The Federal Government provides about $10 billion in subsidies to fossil fuel industries every year, which includes fuel rebates for farmers and miners, plus hundreds of millions of dollars to the gas industry to explore new basins and create new plants.
Morrison’s support of the coal industry is well documented; in 2017 when he was treasurer, he infamously brought a piece of coal into parliament, announcing: “This is coal. Don’t be afraid. Don’t be scared.”
Follow Yahoo Finance on Facebook, LinkedIn, Instagram and Twitter, and subscribe to the free Fully Briefed daily newsletter.
