Let's stop expanding yesterday's coal and shift to tomorrow's solar and wind

Paul Malone

Canberra Times columnist

Small-scale renewable power projects generate energy and offer employment in many locations.
'

While environmental approvals for individual coal mines continue to divide the government there's a wider issue for consideration: How many new coal mines and what volume of coal exports should Australia approve?

In the last three months we've not only had federal approval for the Shenhua Watermark mine in the Liverpool Plains which has so embarrassed Agriculture Minister Barnaby Joyce, we've also had approvals for the Taroborah​ open-cut and underground mines west of Emerald (June 17), the expansion of the Bengalla​ mine west of Muswellbrook (May 27) and a new open-cut mine and two underground mines at Moolarben​ north-east of Mudgee (May 18).

These come on top of other projects such as the Adani Carmichael megamine​ in Queensland which has long had approval but has yet to get under way and a current thermal coal market which according to the latest assessment by our Industry Department is "plagued with oversupply" and a metallurgical coal market which is set to decrease by 2.9 per cent in 2015.

Other independent studies confirm the depressed conditions. Of 2214 economic zones across the nation examined by economic consultants PwC, the coal region of Nanango in Queensland is the most troubled in the country and two other coal regions, Churchill and Moe in the Latrobe Valley, ranked fifth and sixth for the largest decline in economic activity.

The coal and iron-ore boom is going much the same way as the gold rushes of the 1850s, which lifted the Australian standard of living to one of the highest in the world.

Iron ore and coal exports have contributed to Australia's current top ranking in the UN Human Development Index but the way things are going we'd better start getting prepared for a drop in rank.

Our relative prosperity decline will not be instant. Just as gold continued to contribute to the wealth of the nation for decades and white Australians' standard of living remained generally high until the 1890s crash, mining will continue to contribute wealth.

But iron-ore and coal exports won't be making anywhere near the contribution they have in the past and we will come to regret government and Reserve Bank decisions that allowed our economy to become grossly unbalanced in favour of commodity exports.

Contrary to Prime Minister Tony Abbott's claim in October last year that "coal is the world's principal energy source and it will be for many decades to come", coal's world dominance is over.

Conservative British magazine, The Economist, recently pointed out that last year's fall in Chinese demand wasn't a blip. The first four months of this year have shown a further fall of 8 per cent. In North America cheap natural gas is replacing coal-fired power stations.

On top of that European coal consumption is dropping and The Economist says investors are taking fright. Norway's huge sovereign wealth fund is getting out of coal.

The Australian government's great hope – clean coal technology – is fantasyland. The Economist points out that it raises the cost of coal-powered electricity generation by 80 per cent and cuts efficiency by 30 per cent.

Not surprisingly thermal coal is now selling at about $US63 ($85) a tonne compared with $US142 at its peak in January 2011.

To maintain our high standard-of-living ranking we need government action – action to develop infrastructure and action to encourage alternative industries which offer employment opportunities across the nation and demand a wide range of skills.

Metropolitan rail development, which the federal government inexplicably rules out, can for example make a huge difference to the lives of hundreds of thousands of daily travellers.

Positive action to develop renewable energy has multiple benefits, making last week's intervention in the allocation of renewable energy finance equally inexplicable.

PwC points out that the Australian economy's overall growth of 2.5 per cent last year hides the fact that more than one in three of the 2214 locations it analysed had economies that contracted.

Since 2000-01 the growth in the central business districts of Sydney, Melbourne, Perth and Brisbane has far outstripped the national average. At the same time regions that were previously dependent on manufacturing and the associated wholesale, transport and logistics services, such as Condell Park and Wetherill Park in Sydney, have experienced 14 years of decline.

The government challenge is not only how to lift the overall growth figure but also to ensure that the wealth and opportunities are fairly distributed.

In the budget, Treasurer Joe Hockey forecasts an increase in the unemployment rate in 2015-16 to 6.5 per cent. It's well known that an increase in the unemployment rate results in an increase in long-term unemployment and that both the long-term unemployed and their families fall further and further behind the rest of the community.

Our low growth, no growth and contracting regions and our Indigenous population now confront this problem. In Shepparton, Victoria, where last year the SPC Ardmona canning plant was saved by state government intervention, the unemployment rate is 7.5 per cent, compared with the ACT's 4 per cent. In Geelong, where the Ford manufacturing plant is due to close in 2016, the rate is also 7.5 per cent and in Northern Adelaide where Holden's Elizabeth plant is due to close in 2017, it is 8.5 per cent.

Small-scale solar and wind power projects kill two birds with one stone, generating energy and offering employment across a wide range of locations.

Given this, it's hard to see why the government is so hostile to such development.

Ideologically the government believes the market will solve all.

But voters believe the government is there to do something. In the high unemployment regions, the Coalition will be held to account if all it does is lecture about increasing nationwide productivity and innovation.

Similarly it cannot wash its hands in the decision-making process for new coal mines, coal seam gas, farmland and water. The federal government has constitutional authority over exports and should be giving export permits only to the least environmentally damaging and most competitive projects.

Read more: http://www.canberratimes.com.au/comment/lets-stop-expanding-yesterdays-coal-and-shift-to-tomorrows-solar-and-wind-20150716-gidjdo.html#ixzz3gNDfXRRi