The government’s failure to accept and address the global shift away from coal is putting thousands of jobs at risk, a new report by Australia’s biggest investors has warned.
The report, commissioned by the Investor Group on Climate Change, whose members include giants such as Commonwealth Bank, Westpac and AustralianSuper, found that a perfect storm of domestic and global factors had made the decline of coal inevitable.
The report found that investment in clean energy technology in the regions worst affected was the most sensible response to this looming jobs crisis.
But such redeployment of investment would require decisive government policy, something that has so far been missing.
The timing of the report was fortuitous. Just a day earlier, Energy Minister Josh Frydenberg signalled the government had given up on implementing a clean energy target (CET), and would pursue an entirely different, as yet undisclosed policy.
Mr Frydenberg’s comments, made at an energy summit organised by The Australian Financial Review, put the government at odds with the majority of business leaders present, most of whom argued that some sort of CET was urgently needed.
Coal is dying, and renewables could save the day
The IGCC report outlined a number of factors contributing to the terminal decline of coal. They included global efforts to reduce carbon emissions, increasingly cheaper alternatives to coal, reluctance of investors to back coal, and ageing coal-fired power stations.
As the world’s largest coal exporter, Australia would be particularly hard hit by this dramatic paradigm shift, the report found.
Worst affected would be Victoria’s Latrobe Valley, where ultra high-carbon brown coal is mined and then burnt in neighbouring power stations.
There is no international market for Australian brown coal, meaning as the Latrobe Valley power stations closed down – as happened earlier this year at the Hazelwood plant – the coal mines would have to close down with them.
That would mean the loss of thousands of jobs.
Areas like the Hunter Region that produce higher quality, ‘cleaner’ black coal will continue to find an international market. However, the report noted that Australia’s major trading partners were increasingly moving to low-carbon energy sources, and as such, demand even for high-quality coal would decline.
The most plausible answer to this looming jobs crisis, the report claimed, was investment in renewable energy technology in Australia’s coal producing regions.
Investment in other industries was also a plausible solution, though not as popular with stakeholders as investment in renewable energy, the report found.
What big business wants
Above all, the business lobby has stated it wants a bipartisan solution so that businesses can invest in clean energy, safe in the certainty that the rules will not drastically change with a new government.
Labor has said it is committed to a clean energy target, and the party’s rhetoric has been unequivocally in favour of climate change action. Given current polls suggest a Labor victory at the next federal election, such certainty would only come if the government introduced a clean energy policy that Labor could support.
James Pearson, chief executive of the Australian Chamber of Commerce and Industry, said: “We need a solution. Now, whether that’s a CET or something else, it needs to be technology-neutral, it needs to attract federal bipartisan support and it needs to win the backing of COAG.”
Innes Willox, chief executive of Australian Industry Group, was more explicitly in favour of the CET proposed by chief scientist Alan Finkel.
“The CET holds promise as a means of clarifying the way the energy sector will be able to deliver affordable and reliable energy ensuring the sector makes its contribution to the reduction in emissions we have committed to under the Paris Accord.”
A Labor spokesperson said details of the government’s new clean energy policy would need to be released before Labor could decide whether or not to support it.