Coal exports can be cut instead of domestic use

Opinion Article

2019 May, 4

The Puritan wanted to work in a calling; we are forced to do so. For when asceticism was carried out of monastic cells into everyday life, and began to dominate worldly morality, it did its part in building the tremendous cosmos of the modern economic order. This order is now bound to the technical and economic conditions of machine production which today determine the lives of all the individuals who are born into this mechanism, not only those directly concerned with economic acquisition, with irresistible force. Perhaps it will so determine them until the last ton of fossilised coal is burnt. 

— Max Weber, 1904

Max Weber’s prescience at the end of The Protestant Ethic and the Spirit of Capitalism foresaw the predicament of world capitalism more than a century later. The explanatory power of Weber’s thesis is still compelling: how Protestant calling broke out of its religious confines to fire the engine of secular capitalism, and the hydrocarbon coal was its fuel. 

Weber closes his tour de force with a devastating conclusion: “In Baxter’s view the care for external goods should only lie on the shoulders of the ‘saint like a light cloak, which can be thrown aside at any moment’. But fate decreed that the cloak should become an iron cage.” 

Can we break the iron cage, save the planet and find capitalism anew? 

Australian baseload coal power stations consume about 68 million tonnes of coal each year to supply 162 gigawatt hours of electricity to make our country function. Coal provided 63 per cent of the fuel for the electricity we consumed in 2017.

Australia exported 201 million tonnes of thermal coal and 147 million tonnes of coking coal in 2017, our main customers being Japan, China, South Korea and India. Australian coal exports in 2017 comprised 21 per cent of the world’s thermal coal trade and about 60 per cent of the coking coal trade. 

About three times more Australian thermal coal is used to fire power stations abroad than our domestic consumption. 

Plainly, the carbon emissions from Australian coal that has been exported are of a vastly greater magnitude compared with our domestic emissions. 

In the climate and energy wars of the past decade, the Australian public has been caught in the crossfire of an unrelenting battle between those who seek energy security first and either deny or dismiss climate change, and those who seek to confront climate change by reducing emissions through moving to renewable energy. 

But the debate is a complete charade, lacking in rationality and morality. 

If we want a national policy that is rational, then the starting point would be to agree with the climate obscurantists that reducing our domestic emissions is a meaningless contribution to climate change abatement if we continue to annually export at least three times our domestic consumption of thermal coal. 

Australian domestic emissions have no bearing on the future of the world’s climate, and yet we have tied ourselves into a tangle of political and ideological knots in pursuit of reducing Australian emissions. 

Labor and the Greens are steadfast in their embrace of renewable energy and seek higher targets for its share of our power supply. They argue renewables can be reliable — dispatchable, as we have learned from the jargon — and will bring down power prices. 

Last year, this newspaper’s contributing economics editor Judith Sloan surveyed the accumulating evidence around the world and concluded power prices have risen in countries that increased renewable energy. Her argument seemed to accord with the Australian experience of power price rises over the past decade. 

Putting aside debates about what models may or may not prove correct in the future, we should at least accept the rational truth that whatever levels of renewable energy we deploy, and whether or not we meet the Paris goal of reducing our emissions by 26 per cent, it will make negligible difference to the world’s climate. 

Let me repeat: even if we meet our Paris obligations, it will make negligible difference to the world’s climate crisis. 

But we want to act morally too. We who believe global warming is a planetary catastrophe have a moral responsibility to future generations and to the planet as a whole. Our policy should be moral. 

So what is moral about our current focus on reducing domestic emissions that are rationally meaningless? Is it because we believe it important to be a compliant global citizen, binding ourselves to a shared goal to reduce emissions? That it is only fair and right that we join the international effort and carry our share of the burden? That is certainly a moral argument. 

Or is it because we believe that though our emissions are negligible in the scheme of things, we can influence the larger nations whose emissions are much more significant into joining or staying within the international compact to reduce emissions? 

We don’t hear cogent arguments about how Australia as a small emitter will influence the larger scene involving large emitters. Is it based on game theory or some other strategy? Will our political leaders and policymakers please tell us the game plan and the theory behind it? 

Or does the irrational focus on our domestic emissions rates have to do with our sense of moral correctitude, unrelated to its impact on the problem we say we want to address? We have to wear the hair shirt regardless? 

The debate is a game of charades, where both sides are pursuing irrational policies. 

It is irrational because the discussion omits the one thing that is actually decisive to the world’s climate problem: our mammoth coal exports to the rest of the world. 

Our coal is contributing to China, Japan and South Korea’s high and damaging CO2 emissions. It is our coal that will add to India’s growing contribution to the world’s problem in the future. 

The fact our coal will be burned in other countries, and fall within their ledgers and not ours, does not absolve us from moral responsibility for the effect of these emissions. Coal has overtaken iron ore as our largest export product. A large part of Australian wealth is plainly based on its coal export industry. 

We’re supposed to profit from coal exports and their contribution to world CO2 levels is supposed to be overlooked? 

It would appear this moral deception is at the centre of our prevailing national policy framing. And yet our contribution to the world’s CO2 emissions problem would be clear and meaningful if we curtailed coal exports. This would be both a rational and moral position. 

While the Greens would say we should ban coal exports completely, why would we not fulfill more than our international responsibilities by curtailing exports as an offset to our domestic use of coal for baseload, dispatchable power requirements? 

One could be offset against the other. We use our own coal for our domestic needs and we offset their emissions by putting a larger cap on our coal exports. 

This thermal coal is to be distinguished from metallurgical coal used in the production of steel, which we would still export into the world market. 

We should still seek to increase renewable energy over the longer term but without needless self-harm to our domestic needs. 

We are unlike almost all other signatories to the Paris accord. We are a small emitter but a very large exporter of the dirtiest of fossil fuels, and both the nature of thermal coal and the volumes we export are very significant contributors to global warming. 

An emissions reduction commitment of 26 per cent when the volume of our emissions is not significant in the larger scheme, while ignoring the impact of our coal exports, does not make sense. The prevailing way we frame this debate is an absurdity. 

Curtailing coal exports and offsetting exports against domestic emissions will be alarming to the country’s coalmining industries, state governments that receive royalties from their mining, and the towns and workers who rely upon coal for jobs. 

Putting a cap on exports would not be easy to implement while ensuring minimum disruption of existing industry, jobs and the multiplier effects of coalmining. Greenfield thermal coalmines would have to be prohibited.

It will bring into sharp relief the hypocrisy of state politicians who say they want a 50 per cent renewable energy target and yet rapturously count the ways they can spend windfall coal royalty receipts. The Queensland Labor government comes to mind here. 

Curtailing exports is the price we must be prepared to pay if we are to utilise our coal resources to provide baseload power for our domestic needs and still do the right thing by ourselves and the world. The future of the Great Barrier Reef will be better served by Australian coal not burning in the power stations of China and India than by fiddling with emissions targets at home. 

Malcolm Turnbull and his environment minister Josh Frydenberg failed to thread a technocratic middle way between reducing emissions and electricity prices and guaranteeing power supply. Labor walks two sides of the street at once: pledging a 50 per cent renewables target for 2050 for the benefit of the country’s urban majority, who are increasingly against coal, while assuring its regional working base and unions that the country’s coal export industries will remain a leading source of export dollars. 

This tricky path will work before the election but the contradictions will heighten in the aftermath of victory. 

As prime minister, Bill Shorten will have to devise his own version of the so-called national energy guarantee that balances real climate change amelioration with guaranteed, affordable power.

A market-based emissions system is still the right means to achieve the desired balance; the Liberals should never have abandoned a market solution. 

The Liberals were supposed to be the markets party, but on climate change they became “direct action” socialists. This is what Paul Keating meant when he said the Liberals were not as committed to markets as they were to big business. Their commitment to the coal lobby during the years of John Howard and his industry, science and resources minister Nick Minchin has now run its course, and their old obscurantism on climate change won’t hold for the future. 

Every market operates within parameters decided by democratic policy, determined by the laws of parliament. 

In this case the parameters should combine a renewables goal with a preference for domestic coal-fired power offset against a cap on coal exports that makes a real contribution to climate change action on a planetary scale. 

The argument that capping Australian thermal coal exports will just increase the use of dirtier coal from overseas sources should be noted and seen for what it is: another attempt to sustain the unsustainable. 

The same goes for the argument invoking proper charity for Third World energy needs. 

As for purchasing international carbon credits, there could be nothing more immoral than feigning to reduce local emissions while continuing to export coal at planet-destroying levels and importing credits from other nations. 

We would be better off going back to the drawing board and devising a plan to build baseload coal power to meet our needs while capping the export of thermal coal and reducing it in favour of renewable sources over the longer term. 

We need a balanced policy framework that tells all of us plainly that we cannot have our cake and eat it too, let alone eat other people’s cake. My argument here means the Adani project should not be allowed to proceed along with the other giant coalmining projects planned for the Galilee Basin. 

We should ration our fossil-fuel resources for our domestic needs rather than shipping them abroad as if there’s no tomorrow.

Coal exports can be cut instead of domestic use