Coal is Australia’s Biggest Export

Spotlight Activity: Coal is Australia’s Biggest Export

Coal is currently Australia’s biggest export. Thermal coal is exported overseas for power generation, with new and bigger projects planned (for example, coal from the proposed Adani megamine will be shipped to India). Australian coking coal is by far the largest component of its total coal production and is used for steelmaking here and overseas (primarily China and India). All coal is combustible, but coal with more non-combustible impurities (known as “ash content”) is burned to produce electricity. Generally, there are two types of this “thermal coal”: brown coal and black coal.

Coal with lower impurities is known as metallurgical or “coking coal” is used in steel-making furnaces. Coking coal is heated at incredibly high temperatures in the absence of air to form “coke”: concentrated lumps of carbon that are used to oxidise iron ore to steel (a useful reference to different types of coal is provided at the end of this post).

The biggest producers of coal are all multinational mining companies, with a handful of major players dominating the market. Around 75% of coal extracted in Australia is sent overseas; a point of contention, as successive governments have argued emissions from Australian coal burnt overseas (for steel or power) should not count towards Australia’s total carbon emissions. Official government projections for the extraction and export of Australian coal indicate that it will be its biggest earning export for another few years before heading into permanent decline. These estimates do not take into account changing international attitudes to coal or an inevitable price on carbon.

In the 1970s, Australia’s coal power station fleet was constructed (the newest was finished in 2009), with most stations consuming thermal coal mined at an adjacent location. Australia’s use of coal for electricity has declined as old power stations have been closed or mothballed, but it still accounts for 70-80% of electricity production. Some smaller Australian states use zero coal, instead relying on renewables or natural gas. The biggest states: Victoria, New South Wales & Queensland, still rely heavily on thermal coal for power generation. However, ambitious new state-based renewable energy targets and emissions reduction goals mean that reliance on coal will soon have to be reduced.

Australia then is stuck in an awkward position: coal will continue to be its biggest export in the short term, with a significant number of new exploration projects planned and a large number of jobs and local economies tied into the coal industry. However, there are no plans for what comes next. Additionally, conservative politicians in the Liberal and National parties are clearly influenced by mining/coal donations, and the rhetoric coming from politicians at federal and local levels indicates they are sympathetic to the interests of the coal industry, even as Australian voters are voicing their desire for the country to move away from coal. Australia’s clean energy ambitions will also require it to wean itself off coal-fired power, with a significant amount scheduled to be shuttered before 2050.

Status: Falling Behind

Official forecasts for coal exploration and income still put coal as Australia’s #1 export, but only in the short term. There is a growing consensus that income from and demand for Australian coal will sharply decline during the 2020s. The argument that coal jobs prop up regional economies is increasingly irrelevant, as mining companies wish to automate as much of their current and future operations as possible. Mine remediation work is often done haphazardly or not at all, leaving local communities furious about the blight on their landscapes. Just last month, an Australian court rejected a proposed coal mine expansion on the basis of climate change grounds.

The coal industry in Australia is clearly approaching terminal decline. The biggest reason for Australia to reconsider its tight relationship with coal is its Paris commitments. Australia needs to shut more than half of its coal-fired power stations by 2030 to have a hope of working towards the 1.5-degree goal outlined by the IPCC last year. Australia provides thermal and coking coal to be burnt in south-east Asia but refuses to take responsibility for the resultant carbon emissions. Australia is now the only country in the world to use taxpayer money to upgrade coal power stations under the guise of “emissions reduction” schemes and plans to use “credits” from participating in the Kyoto Protocols towards its Paris goals (not actual emissions cuts); a move many other countries have ruled out as not being in the spirit of the Agreement. Australia is clearly prioritizing its ailing coal industry over its commitment to the Paris Agreement. This is especially galling when you consider there are only a few years left to take meaningful action on climate change.

Take Action

Senator Canavan,

Last year you trumpeted “Coal is King” to anyone who would listen. Coal may be our number one export for a short time, but the writing is clearly on the wall. Your own government forecasts suggest a steep decline in the income from selling Australian coal in the next few years, and to meet our international obligations Australia will have to wean itself off selling and consuming its coal quickly. This exit might happen extraordinarily fast, and you have a responsibility as resources minister to make sure Australia doesn’t get left in an awkward position. The economic impact of a hasty, unplanned retreat from coal could decimate Australia’s regions. The downturn is inevitable, and we desperately need to plan for what comes next.

Above all, Australia has a responsibility to join the international effort to combat climate change. We have been repeatedly warned that our addiction to coal (export and consumption) is out of step with the rest of the world. We are now the only country in the world to use money from emission reduction funds to upgrade old fossil fuel power plants & use accounting tricks to meet our Pairs commitments. We are certainly the only developed country where a government is seriously considering using taxpayer money to underwrite new coal power, which could become a stranded asset in a matter of years. The opportunities for Australian resources to play a leading role in the clean energy revolution are there if we take them, but we need to quit our dangerous coal habit – and fast.