While the climate agreement in Paris is being hailed as the beginning of the end of fossil fuels, the Turnbull government is having none of it. “Coal-fired power generation is here to stay,” Foreign Minister Julie Bishop defiantly declared last week. “Fossil fuels will remain critical to promoting prosperity, growing economies, alleviating hunger for years to come.” And the weekend outcome in Paris didn’t faze her. “It doesn’t matter how one achieves the outcomes in the targets,” she said yesterday when asked about the final agreement’s significance for fossil fuel industries.
Last week, alleged environment minister Greg Hunt went further in the course of defending the vast white elephant Carmichael coal mine, saying it would be an act of “neo-colonialism” not to support the mine, because Australian coal would “bring people out of poverty”.
Expect to hear a lot more about how coal is fundamentally linked to developing world prosperity. With the price of coal collapsing, an increasing number of major institutions turning their backs on investment in fossil fuels and major mining companies watching their stock prices slump, the argument that the road out of global poverty is made of lumps of coal will appear more and more. Talking points for the argument were distributed by US coal lobbyists in response to Pope Francis’ highly damaging climate encyclical and are now used widely in the fossil fuel lobby, the denialist fringe and the resource industry’s political pawns like Hunt and Bishop. In a nutshell, the argument runs that only fossil fuels, not renewables, are cheap enough to address the “tragedy of global energy poverty.”
The claim is a lie, for several reasons.
The numbers don’t add up. When you factor in the full costs of fossil fuels, including the impact on the environment of extracting and burning them, they’re more expensive than renewables currently are — despite the industry preferring to cherry-pick numbers from the 2000s, before renewables underwent the dramatic fall in costs we’ve seen over the last seven years.
But you don’t need to factor in externalities to produce this outcome: it’s the result of the basic maths of fossil fuel generation and distribution. According to the International Energy Agency in 2013, around 18% of the world’s population don’t have access to electricity — primarily in sub-Saharan Africa, India, Pakistan and Indonesia. Energy poverty is primarily (84%) a rural problem — what progress has been made in reducing energy poverty in developing countries in recent years has mainly been in urban areas where existing energy distribution networks can be affordably extended. The IEA believes grid extension is not the answer for 70% of rural areas without power because of the prohibitive cost and energy losses associated with extending infrastructure from fossil fuel generation plants. The way out of energy poverty for most of the people enduring it involves local renewable infrastructure solutions, not fossil fuels. As Eas Sarma, the former secretary of the Indian Ministry of Power said in response to Tony Abbott advancing the “energy poverty” argument in August:
“In the rural areas, many remote villages are beyond the reach of the electricity grid. There are also many families in electrified villages who cannot pay for expensive electricity. Studies have shown that when a village is more than 5 km from the grid, the cost of supplying electricity from solar and other off-grid solutions is far below the costs of supplying from conventional sources such as coal. This is due to the high cost of building out the poles and wires to provide access to coal electricity and the technical losses involved in transmitting and distributing electricity to the consumers.”
Coal kills the poor. Far from being the saviour of the poor in developing countries, coal kills them in large numbers. An Indian study found that in 2011-12 exposure to pollution from coal-fired power plants killed at least 80,000 Indians and inflicted health problems on tens of millions more. And Sarma noted that:
“Studies on people residing near coal-based power plants along the border of Uttar Pradesh and Madhya Pradesh have revealed unsafe levels of mercury in their blood samples, at times as high as 110 parts per billion. Similarly, studies around a coal power plant in the Punjab have indicated widespread radioactive contamination of the environment, impacting the health of pregnant women and children.”
As the recent return of “black lung” in Queensland mines shows, this isn’t of course a problem confined to developing countries. Last year the Climate Council released a statement that found “coal pollution is linked to the development of potentially fatal diseases and studies show severe health impacts on miners, workers and local communities”. In 2009 the American group Physicians for Social Responsibility released a report detailing “health consequences at each step of the coal life cycle” with massive impacts in the United States.
Coal companies avoid taxes. If coal companies genuinely believe their rhetoric about the importance of coal to prosperity in developing countries, they have a peculiar way of demonstrating it: coal companies, like other miners, systematically avoid paying taxes to developing country governments every bit as much as they avoid paying taxes in developed countries.
For the latter, billions in lost revenue is an annoyance that undermines voter support for the tax system and reduces governments’ capacity to return to fiscal surplus. But for developing countries, lost billions have serious impacts on their ability to deliver services and infrastructure to some of the world’s poorest people. A joint African report earlier this year estimated that Africa had lost over US$90 billion in revenue between 2000 and 2010 through transfer pricing and other forms of tax avoidance and evasion by oil companies and ore miners. Another UN report suggested the problem was much greater, and that illicit measures by coal and petroleum extraction (not including oil) companies alone had cost Africa $20 billion between 2001-10.
Coal companies are all about lifting the world’s poorest out of dire poverty — but not when it comes to paying taxes to their governments.