The Australian government has watered down an international deal on coal subsidies – essentially protecting the future profits of the Carmichael coal mine ahead of the best interests of our communities and environment.
Hailed as a ‘landmark’ deal to reduce public subsidies to coal fired power stations, the agreement by the Organisation for Economic Co-operation and Development aims to stop public financing of the dirtiest coal projects. In the past seven years, rich countries' export credit agencies have funded about $35 billion worth of coal. The Turnbull Government was looking to block the deal, but has come onside at the last minute with a caveat – that old dirty coal power plants can still be financed in 8 of the world’s poorest nations.
The Minerals Council of Australia, hardly champions of climate action and poverty reduction, welcomed the deal, saying that it paves the way for coal powered development. And Trade Minister Andrew Robb said the deal provided coal fired power to lift millions out of energy poverty.
But we know that coal is not the answer to energy poverty and development. International development organisations, including Oxfam, the Overseas Development Institute, and Christian Aid, all tell us that renewable energy provides a cheaper, more equitable and more accessible path to development. Reliance on coal will, in fact, hinder energy access. According to the International Energy Agency, 147 million Indians will remain without electricity into 2030 under a business as usual scenario where coal is central.
And then there’s climate change, one of the biggest threats to development worldwide. The World Bank has just released a report saying that climate change will push 100 million people back below the poverty line in the next 15 years. Viewed in this light, Australia’s carbon polluting intensive proposed Carmichael mine will add to global poverty, not solve it.
Viewed in this light, Australia’s carbon polluting intensive proposed Carmichael mine will add to global poverty, not solve it.
Again Australia is getting left behind by a world ready to move beyond coal. As well as the international political intent shown at the OECD, international markets are moving. Global coal consumption has fallen 2-4% this year, including a 6% drop in China. This being the case, we have, in fact, passed peak coal. Demand is dropping, and yet Australia continues to champion the Carmichael mine as the future of low emissions development. Continuing down the mine shaft will only leave us with stranded assets in a dinosaur economy.
In contrast, the international renewable industry is booming, with India investing $100 billion in renewables so far this year. Australia’s coal developments look measly in contrast to the scale of renewable energy investment happening across the world. Adani Group, the very same company trying to build big dirty coal in Australia, has pledged to build 10 GW of solarin India in the next seven years.
Domestically the markets are turning on coal too. New projects are struggling to attract private investment, as seen by the Victorian brown coal project in the Latrobe Valley that was just withdrawn by Chinese firm Shanghai Electric Australia as it failed to reach the first investment milestones. Major generators such as Origin and AGL are planning to shut down their coal plants and shift to renewables. Banks have pledged to divest from fossil fuels and invest in renewables.
There’s an opportunity for Australia here. Instead of barracking for big polluter’s profits in the international sphere, and pushing ahead with unwanted new coal mines domestically, the Turnbull Government can choose to get ahead instead of being left behind. We can lead in emerging international markets and we can get serious about tackling energy poverty. We can choose to invest in a renewable future.