The extreme complications and impossible conditionality built into the latest version of the government’s CPRS, with even more concessions to the polluting industries, appear to reflect an equally extreme pessimism that Australia can neither do anything meaningful to reduce our carbon emissions or that anything meaningful would bring apocalypse upon the economy via the collapse of the mining industry.

What happened to the analyses by Nicholas Stern and Ross Garnaut who showed that spending big on renewable energy could be a net benefit to the economy?

Just last week Paul Krugman (2008 Nobel Prize, Economics) said “opponents of action claim that limiting emissions would have devastating effects on the US economy”. By contrast Krugman believes “committing ourselves now might actually help the economy recover from its current slump”.

The scientific and technical claims of the coal lobby promotion of Clean Coal have been widely challenged, but their unceasing doomsday economic scenarios need another critical appraisal, or at least a re-reading of Garnaut.

As Mark Byrne pointed out, the Clean Coal scenario promoted by the coal lobby is a very risky strategy. There does not appear to be a Plan B if CCS (carbon capture and storage) either does not work well enough (>90% capture, safe geo-sequestration) or is economically infeasible.

Perhaps this has been examined most succinctly by George Monbiot in his response to the UK government plan to build four new coal-fired power stations with partial CCS. Despite the horrendous cost — more than A$2B for each of four CCS plants attached to four power stations — they will capture at most 25% of the carbon output, with a promised 100% capture by 2025 (crossing their fingers for the technology and costs).

These frightening numbers are roughly in accord with the Mountaineer project in the US, which will cost US$100M to capture at most 3.5% of carbon output.

It is worth remembering that the only CCS working on a coal-fired power generator is the 12MW pilot plant opened some months ago at Schwartze Pumpe, Germany. The UK scheme is nothing if not ambitious, as it will be about 100 times the scale (or eight times the planned capture of Mountaineer).

That is Plan A but, as Monbiot points out, then we are asked to believe that if it fails, Plan B is that these gigawatt coal-fired plants will be closed down? Just like the dirty brown coal plant being built in Victoria at a cost of billions of dollars, it is inconceivable that any new coal plants being built today will be closed down much before their 40 year lifespan. The politicians are making promises that cannot be enforced and at a time they will not be in office.

As if the technological and financial scenarios are not fanciful enough, the coal lobby ventures into more and more outlandish claims of what will happen if other options, such as a carbon tax or seriously supporting renewable energy, are adopted. In other words, the country’s Plan B.

The Australian reports two weeks ago Peter Coates told the Senate Select Committee on Climate Policy that coal mining output would be slashed by 35 per cent by 2020 if the ETS went ahead as planned. Last week the Steel lobby was making similar noises. Presumably next it will be the aluminium industry then the LNG industry.

Politicians on both sides appear to be totally in thrall to these industries and their over-the-top claims of doom. But who believes this stuff? Does the Senate Committee not demand to see calculations and justification for such claims? This concerted lobbying by these powerful forces is morally and ethically suspect because, not only will none of them be around or in office when these various promises fall flat (after 2025), but the claims of industry Armageddon are way out of proportion to the reality.

There are three main ways in which a tax on carbon (an ETS, or CPRS or simpler carbon tax) could impact on the amount of coal mined in Australia:

  1. So-called fugitive emissions from direct sources (methane–coal seam gas) and indirect (energy used in mining operation)
  2. A reduction in the use of coal for electricity generation in Australia
  3. Global reduction in the use of coal due to an internationally agreed ETS.

It should be noted that, under an ETS, the coal miners do not pay for the carbon emitted by their customers who subsequently burn it. Their own emissions are modest and no doubt they could reduce those emissions if encouraged by a carbon tax.

On the first point the Garnaut Review estimates it to be about 5% of production value under the maximum carbon cost model.

On the second point the domestic consumption of coal is less than 25% of coal mined in Australia, so any Australian CPRS has a much smaller effect than the miners are implying. Even if one assumed that all coal-fired power stations closed down tomorrow it would be difficult to arrive at a 35% drop in coal mined in Australia.

In reality, given the average operating life of coal generators of up to 40 years, even under the greenest scenario (no new coal generators constructed in Australia) there would be a very slow reduction in the use of coal measured over decades. Garnaut shows current-technology coal-fired electricity generation to be steady up to 2033, then tapering off towards zero between 2063 and 2073. This could be true worldwide in the (unlikely) event of serious agreement at Copenhagen later this year, but it too would be a very gradual drop-off in demand.

Clearly global events unrelated to climate politics can have much greater impact on the coal industry in Australia. In the context of about 50% drop in the price of coal counterbalanced by the 30% drop in the exchange rate, any effect of a carbon tax in the early years (and ignoring the massive subsidies to the miners proposed by the Rudd/Wong CPRS) is almost a rounding error in any annual profit forecast, at least in short to medium term — and, as they say, in the long term we are all dead, possibly from climate change!

Michael James is an Australian scientist who has co-authored over 100 papers in international science journals. These are the author’s personal opinions and do not represent the views of any organisation or institution with which he is affiliated.

Peter Fray

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