Australia's coal industry outlook ignites dispute

A report commissioned by The Australia Institute is causing some bickering between the mining industry, the scientific community, and policy-makers as it states that the country’s economy would not be hurt by a gradual phasing out of coal production.

Economist Philip Adams, who led the research at Victoria University’s Centre of Policy Studies, said in an interview with The Australian Broadcasting Corporation there would be minimal economic impact if the Government imposed a moratorium on new coal mines or the expansion of existing ones.

According to Adams, "the world outlook for coal is fairly bleak,” as world leaders impose moratoriums on new coal mines or the expansion of existing ones. The effects of such decisions, however, will not be seen just yet.

"Our modeling suggests that the impacts will not start for 10 to 15 years. There is enough coal in mines that are operating or will be operating to continue the level of exports that we see now,” Adams told ABC.

Annual coal exports reached $38 billion in 2014/15, almost twice those of beef, wheat, wool and wine combined so following the report's logic, eliminating those great industries would also have negligible consequences — Minerals Council of Australia.

Once that time window has passed, the economist said, the Australian economy will continue to grow with a difference of 0.06% in 2040. The impact on jobs wouldn’t be significant either since the industry's share of employment is 0.04% of the Australian workforce or some 44,000 workers.

But not everything is “good news.” An in-depth look into how the phase-out would affect specific regions in the world’s second biggest producer of coal shows a grimmer picture. Real Gross State Product in the Fitzroy area in Queensland, for example, will fall to be around 40% of its Reference case value in 2040, while real GSP in Mackay will be down 25% and real GSP in the Hunter Valley of New South Wales will be down 31%.

Nevertheless, TAI’s study concludes that “Australia can and should impose a moratorium on new coal mines and mine expansions, as part of climate and wider environmental policy, and should expect minimal economic disruption from doing so.”

But the Malcolm Turnbull administration doesn’t seem to be moving towards such direction. Despite having received calls from his counterparts in other nations to reconsider his position, the Prime Minister has said that global emissions wouldn’t change “one iota” if his country stopped all coal exports.

Source: The Australia Institute.

Source: The Australia Institute.

"Only the green movement and their mouthpieces such as the Australia Institute (TAI) would be able to contend shutting down Australia’s second largest export industry would have limited economic impact," Greg Evans, executive director of coal at the Minerals Council of Australia said in an e-mailed statement.

It's not realistic to think the world is moving away from a resource that provides 41% of its electricity— World Coal Association.

He noted that annual coal exports at $38 billion in 2014/15 were almost twice those of beef, wheat, wool and wine combined so under the institute's logic, eliminating those great industries would also have negligible consequences.

The coal industry also reacted to the think tank’s document. Benjamin Sporton, Chief Executive of the World Coal Association, told ABC that he doesn’t think it is realistic to think the world is moving away from the resource that provides 41% of its electricity.

“Coal is going to play a big role in the world's economy and the world's electricity mix for decades to come and it's incredibly important that we focus on a role for low-emission coal technology,” he said.

Meanwhile, 2016 has seen an unexpected surge in coal prices mainly driven by slowing supply growth from China.

As MINING.COM reported earlier this week, the commodity has surged almost 150% since February, adding $14.80 per tonne.