State government banking on coal exports as world chases Paris targets

June 24, 2020, 10:08 am | Admin

The state government is banking on global coal demand defying the Paris climate goals of slashing carbon emissions, predicting instead only a marginal cut in consumption of the fossil fuel by mid-century.

According to the government's new Strategic Statement on Coal Exploration and Mining, to be released on Wednesday, the appetite for thermal coal burnt in power stations will only ease about one-tenth from just over 1 billion tonnes a year to about 900 million by 2050.

The modest decline is well short of the Paris goal of developed nations reaching net-zero emissions by 2050 and also out of line with NSW's own net-zero target by then.

Even so, the government forecasts "significant disruptions" for NSW communities reliant on thermal coal exports, the report states.

It plans to release maps clearly outlining where coal exploration and expansion will be allowed to continue and where it will be banned in order to give more certainty to communities and mining interests.

Deputy Premier and resources minister John Barilaro said the resilience of the coal industry has "never been more important" given the state's need to bounce back from drought, bushfires and now the COVID-19 crisis.

"We are determined to set a clear and consistent policy framework that supports investment certainty in NSW as the coal sector responds to global demand," he said.

To reduce emissions from coal mining and "support responsible coal production", the government would spend $50 million on new infrastructure projects and community programs to mining-affected towns under the Resources for Regions program, he said.

Coal was the single-largest export for NSW last year, amounting to $23.1 billion, or about 3 per cent of global coal consumption. Of NSW's exports, more than 80 per cent was thermal and the rest coking coal used to make steel.

Projections set out in the report indicate that demand for seaborne coal exports in 2050 will be slightly less than today, though demand will remain significant.

A rise in demand for coal from India in particular would counter expected falls in shipments to major markets such as China, Japan and South Korea. South-east Asian imports are predicted to rise and then plateau.

According to the strategy document, use of thermal coal in NSW itself will decline over coming decades as ageing coal-fired power plants are closed and replaced with cleaner power technologies.

The release of the coal report comes a day after Mr Barilaro joined Energy and Environment Minister Matt Kean to trumpet the success of the state's first renewable energy zone. The region around Dubbo attracted investment funds the equivalent of nine times the target of 3000 megawatts, prompting Mr Kean to consider expanding the pilot scheme's size.

Over the medium term the government plans to support the mining industry to shift its focus from thermal coal to mining for metals used in high-tech industries such as copper, cobalt and rare earths, the report says.

But it acknowledges that as these metals and minerals tend to be found in the state's central and far west regions rather than in existing coal-mining heartlands, there will be "significant disruption for coal-reliant communities."

In a foreword to the plan Mr Barilaro writes that the government expects a shift away from coal in the medium term, but "during the transition, the NSW Government will continue to support the responsible development of our abundant, high-quality coal resources for the benefit of the state".

The NSW government prediction of coal demand is broadly in line with that of the International Energy Agency, but it is at odds with the cuts in coal use that scientists say the world will need to adopt if we are to achieve the goal of keeping global warming beneath 1.5 degrees.

In its most recent global energy analysis the IEA warned that though coal demand had decreased due to COVID-19 and climate action by some governments, new plants under construction around the world "risks increasing the locked-in emissions from coal-fired power plants that already threaten to put a sustainable energy pathway out of reach".

In recent months major institutional investors have begun abandoning their stakes in thermal coal companies due to the impact coal has on the climate, compounding pressure on businesses already facing a slump in global thermal coal prices.

Last modified on June 24, 2020, 10:10 am | 255