After so much of a Punch and Judy biff-fest about electricity prices and climate change, it takes a fair bit to shake most of us out of our slightly jaded torpor. But one announcement two weeks ago certainly made me sit up and take notice.
That was Glencore’s announcement on February 20 that it was going to put a cap on its annual global coal production.
So what, you might think. Given that Glencore is now one of the biggest coal producers in the world, putting a cap on production might smack more of controlling the commodity price than making the world a cleaner place.
My take is that I’ve spent more than 40 years in journalism and stockbroking and I’ve never heard of a miner announcing it was going to limit production of anything.
In this case, it announced a limit of 145 million tonnes of coal production a year, in line with its current high output.
Oil sheikhs, yes: OPEC is forever trying to keep a lid on oil production, but coal is something quite new.
And what’s more, the arch capitalists at Swiss-based Glencore appear to be more progressive on this issue (lefty, if you like) than our own Federal Government.
“To deliver a strong investment case to our shareholders, we must invest in assets that will be resilient to regulatory, physical and operational risks related to climate change” a company statement said.
It also noted that the company would examine its relationships with trade associations to ensure those groups aligned with the Paris climate agreement, one of those organisations being the Minerals Council of Australia.
In other words, global investors have pressured Glencore into asking itself whether it wants to remain a member of the mining companies’ umbrella body in Australia. That’s quite a development.
In contrast Resources Minister Senator Matt Canavan, who in a past life was an economist, announced that what Glencore had done “sounds like just basic self interest” since Glencore dominates the seaborne coal market.
What he seems to have dismissed is the fact that there’s a group of institutional investors calling themselves Climate Action 100+ who specifically want the big miners to limit coal production. And before you howl about bossy foreigners, our biggest institution Australian Super is part of that push.
That’s the new world we are in, which is so far from the “Monash forum” approach to coal espoused by the conservative end of the Liberal party that they might as well be on different planets. The big end of town (Australian Super holds assets worth $145 billion) is saying one thing and the Monash Forum quite another. Not that we’ve heard a lot from the Forum lately.
You might remember that the Forum, which features Tony Abbott, Eric Abetz, Kevin Andrews and some 16 other MPs and Senators, takes the view that the best solution to rising power prices is to build a new coal-fired power station.
This is despite solid and growing evidence that it would be cheaper to build an equivalent capacity solar station.
The “two planets ” issue was further emphasised yesterday when a statement from the Federal Liberal candidate for the seat of Gilmore, Warren Mundine, predicted all kinds of economic disaster if we follow Labor’s plan to cut emissions by 45% by 2030. A 50% increase in electricity bills, the loss of 366,000 full-time jobs and a drop of $9,000 in the average full-time wage, it predicted.
At about the same time, my friend and former colleague Giles Parkinson’s RenewEconomy website said that a group of 28 Australian climate scientists , academics and industry veterans has slapped down energy minister Angus Taylor over his repeated declaration on Sunday’s ABC Insiders program that Australia’s emissions were “coming down”.
What’s happening is that per capita emissions are coming down (because our population is growing) but overall emissions are going up, but that’s not how he expressed it.
Australia is NOT on track to meet its 2030 emissions reduction target, they said, contradicting the Government and Taylor’s line that we will meet it “in a canter”.
They then threw in that even if we were on track, the target itself is woefully inadequate for what scientists say must be done.
That’s not so much a yawning gap as a Grand Canyon chasm between those two perspectives, and we are the pained spectators.
Meanwhile, what has unarguably happened in the most recent years is that Australia’s climate is changing at an accelerating rate, and for all the talk of climate change being a “Green/Labor hoax” as some diehards call it, the majority of the population now believes that Something Must Be Done.
Clearly, we have to start re-thinking the whole concept of thermal coal. Some 10 years ago, I visited Newcastle to do a feature article on our coal exports and came away suitably impressed at the millions of tonnes of the high quality black stuff lining up to go offshore from the Kooragang Island coal loader, our biggest coal export terminal.
Attitudes have changed, including mine, but in New South Wales we are still 80% reliant on thermal coal for electricity generation. That’s a pretty dire percentage, given that for instance in the UK they have cut the use of coal for electricity generation to zero.
However the Australian Energy Market Operator (AEMO) notes there is actually more solar and wind generating capacity currently proposed (at 11,555 megawatt hours) than there is existing installed coal generating capacity (at 10,160).
The national picture is even more marked. AEMO says there’s just over 23,000 megawatt hours of installed coal fired capacity but, if you add solar and wind together, there are no less than 38,000 megawatt hours of those two on the drawing board.
It’s not the Government doing that: it’s the market, but please note that those solar and wind capacity numbers are merely proposed, and not yet a reality. And yes, battery development needs to keep pace with solar and wind, to keep the lights on.
The Government is talking interstate interconnectors, such as the planned second cable from Tasmania, and of course Snowy 2.0, both of which would assist, although the Snowy 2.0 will cost several billion dollars and won’t be economic until we close more coal-fired capacity, apparently.
No one said this was going to be easy, but it’s never been more important for our Federal leaders to tell us the truth about the transition we must sooner or later make to renewables.
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