Australia’s coal industry is slowly dying, and without a transition plan taxpayers can expect to be slugged billions, a former president of BP has warned.
The warning comes at the end of a dark week for Australia’s coal industry, with China officially blocking coal imports from Australia after months of vague restrictions.
This was swiftly followed by the owners of Australia’s newest coal-fired power station announcing they had written down the value of the asset to zero, wiping out a $1.2 billion investment.
Climate Council energy expert and former President of BP Australasia Greg Bourne said the writing is clearly on the wall for coal.
We urgently need an energy transformation, Mr Bourne told The New Daily.
“Transition carries that sense of smooth and gentle. We’re looking at a desperate need to transform our energy systems,” he said.
There are currently 24 coal-fired power stations operating in Australia, according to the federal government, and without a plan to phase them out Australians could be left to pick up the bill, Mr Bourne said.
The remediation of coal plants – cleaning up the hazardous materials to meet federal and state requirements – can cost upwards of $100 million, depending on the site.
If the company can’t cover the cost, it falls to the taxpayer.
Some sites are simply abandoned. Australia has at least 60,000 abandoned mines, some of them dating back to the gold rush. But others closer to inhabited areas need to be cleaned up.
In 2016 a report by the ABC revealed in Queensland alone, taxpayers are exposed to a $3.2 billion black hole in funding for the future environmental clean up of the state’s coal mines.
At the start of this month, mining giant Peabody announced it would temporarily close its Metropolitan Mine at Helensburgh on the NSW Illawarra Coast for eight weeks from January 4.
The announcement sparked fears the company will soon fold and leave taxpayers to foot the bill.
The Queensland government and the NSW minister for natural resources have been named as insurance obligees – to the tune of a combined $35 million.
But they have both said they will not be picking up the bill.
It’s not just coal – federally taxpayers are about to fork out for an estimated $200 million to clean up the Northern Endeavour floating production, storage and offtake facility.
The federal government has been responsible for maintaining the Northern Endeavour and associated subsea facilities since February after its owners, the Northern Oil and Gas Australia (NOGA) group of companies, were placed in liquidation.
The coal industry employs 50,000 Australians. For context, plumbers number around 80,000. But the coal industry has made money.
In 2018, the value of coal exports was $67 billion, equivalent to 3.5 per cent of nominal GDP. Mining companies paid $12 billion in royalties to state governments in 2017-18.
Coal not only helped build modern Australia but has broken prime ministers and become one of the most contentious topics in the nation.
“Isn’t it amazing what this little black rock can do?” was the key slogan of the Minerals Council’s notorious marketing campaign about coal’s “endless possibilities” in 2015.
Prime Minister Scott Morrison famously held up a hunk of coal in Parliament in 2017, saying “don’t be scared”.
But Australia is now out of step with our largest trading partners in Asia, the institutional investment community, and a growing number of the world’s biggest companies for its refusal to commit to net-zero carbon emissions by 2050.
A transformation of Australia’s energy sector does not need to be destabilising.
Research released this year from The Australia Institute’s Climate & Energy program has shown that an orderly approach to phasing out thermal coal would shield Australian workers, communities and the economy from the negative consequences of an unmanaged transition.
The study, authored by John Quiggin, Professor of Economics at The University of Queensland, found that a managed transition out of thermal coal over 10 years could be achieved with minimal disruption to coal workers, regional communities and the Australian economy.
Australia’s transition away from excessive carbon pollution must begin with an urgent and co-ordinated phase out of thermal coal production and use,” Professor Quiggin said.
“Fortunately, with enough advance notice and an appropriate transition plan, the thermal coal industry can be phased out over time without any significant dislocation to workers.”
Mr Bourne said Australia must plan this transformation into new energy or risk a massive social cost to mining communities and taxpayers.
“In the UK a lot of mines were never remediated after they stopped coal and so many of the workers were dropped in it with no transition planning. That’s a social disaster,” he said.
“We can’t afford to have one in the Illawarra, the Hunter, wherever. You’ve got to have a plan.”