Monday 15th June 2015

With the price of coal plummeting and our biggest customers turning to renewable energy, is Australia backing a loser?

When Prime Minister Tony Abbott famously declared coal to be "good for humanity" and "essential to the prosperity of Australia" there was no doubting he saw a coal-fuelled future for the nation.

And it's easy to see why: Australia has one of the world's largest deposits of coal; it provides two-thirds of our power, employs more than 50,000 people and brings in more than $40 billion a year from exports.

Yet not everyone is so upbeat. Some argue that the downturn is permanent.

"There's been a number of price cycles like this in the past. I have to say this is probably the worst we've seen." Mining Executive

Four Corners explores the driving forces that neither the Federal Government nor the mining industry can control.

Among the challenges, rapid technological change revolutionising the way we generate and store power.

"It is totally a game changer." Christina Figuerres, UN Climate Change Chief

And investors are getting nervous.

"With fossil fuels we want to get out as quickly as possible for financial reasons, as fast as is prudent, but also because we feel like the value of these stocks is really declining." US Investor

"Financial markets though operate like a herd. Once one of the bulls runs, a stampede is caused." Energy Analyst

And with countries like China, America and the rest of the G7 committing to curbs on fossil fuels, will Australia be left on the wrong side of history?

THE END OF COAL?, reported by Geoff Thompson and presented by Kerry O'Brien, goes to air on Monday 15th June at 8.30pm. It is replayed on Tuesday 16th of June at 10.00am and Wednesday 17th at midnight. It can also be seen on ABC News 24 on Saturday at 8.00pm, ABC iview and at abc.net.au/4corners.

Transcript

KERRY O'BRIEN, PRESENTER: Tonight on Four Corners: Australia against the world on the future of coal.

TONY ABBOTT, PRIME MINISTER (Oct. 13 2014): Coal is essential for the prosperity of Australia. Coal is essential for the prosperity of the world. And coal is the world's principal energy source and it will be for many decades to come.

VALERIE ROCKEFELLER, CHAIR, ROCKEFELLER BROTHERS FUND: Australia's an extremely progressive country that has been an international player on so many issues. It is baffling to me why the current Australian Government is stuck in the past, rather than looking towards the future and becoming part of the solution.

KERRY O'BRIEN: Australia's love affair with coal has helped sustain our prosperity for many generations. It's the source of most of our power and tens of billions of export dollars every year.

But around the globe, a seismic shift is underway. Seven of the world's most powerful nations last week pledged to de-carbonise the globe by then of the century, effectively phasing out fossil fuels, and to reduce global carbon emissions by up to 70 per cent within the next 35 years.

The UN says it's the beginning of the end for coal.

We can have the richest coalfields on the planet and it will mean nothing if the world's big investors take their money elsewhere - and that's what some are already doing.

All this begs the question: is Australia digging itself into a hole with its continuing attachment to this unfashionably dirty fossil fuel?

Geoff Thompson reports on the harsh realities for the future of coal.

GEOFF THOMPSON, REPORTER: The final gasps of a dying coal mine, dug down to the dregs. Thousands of tonnes of rock and soil scratched away to expose the last coal seam at the Drayton mine.

BRAD MCNAMARA, MINEWORKER: Oh, as you can see this is our final wall. Um, so yeah, this is as far as we can go.

GEOFF THOMPSON: And after that's gone, this mine's over?

BRAD MCNAMARA: That's right.

GEOFF THOMPSON: For coal mining giant Anglo American, it's crunch time in the New South Wales Hunter Valley.

RICK FAIRHURST, PROJECT MANAGER, ANGLO AMERICAN COAL: Over here we have the, ah, full extent of the southern edge of the mining area we intend to, er, mine.

GEOFF THOMPSON: Yep.

RICK FAIRHURST: And then we have the, um, the ridgelines.

GEOFF THOMPSON: If it's to have a viable future, here the company needs to open a new pit just a few kilometres from current operations, according to the project's manager, Rick Fairhurst.

RICK FAIRHURST: Well, Drayton mine's already been operating for 30, 30 years. This is an extension for Drayton to add another 15 years of mine life to the open cut operations. We have all the equipment. We have all the facilities already in place. We have a workforce of around 500 people who will be out of a job if this mine isn't extended to, to this area.

GEOFF THOMPSON: This is Anglo's third attempt to get government approval, over strong local opposition.

As the coal boom fades and prices drop, the economic viability of new mines is in doubt.

RICK FAIRHURST: There's been a number of coal cycles, of price cycles like this in the past. I've g- I have to say this is probably the worst we've seen.

GEOFF THOMPSON: Do you think that coal has passed its price peak in Australia?

RICK FAIRHURST: Yes, I think it has for the time being. I'm not saying it may never happen again, but, um, ah, I don't see it happening quickly.

GEOFF THOMPSON: Craig Bates was one of the first apprentices employed at Drayton mine 31 years ago. He was told he had a job for life.

CRAIG BATES, MINEWORKER: This was my grandfather's actual original hard hat from, like, 100 years ago. Um, so the old cap lamp: that was before electricity was even in any of the mines. And that...

GEOFF THOMPSON: If the mine is not extended, this fourth-generation miner loses his job and probably his home.

CRAIG BATES: The coal industry's taken a real hit at the moment and you know, you've just gotta think that if, if it takes another hit, like say even with us closing, you know, like, what's going to actually happen?

GEOFF THOMPSON: The war on coal is escalating. The United Nations says there can be no new coal mines if the world is to keep global temperature rises below two degrees.

Christiana Figueres is the UN's climate change chief.

CHRISTIANA FIGUERES, CHIEF CLIMATE NEGOTIATOR, UNITED NATIONS: We do have to get to global peaking of emissions and a dramatic reduction of emissions quite soon after that, to the point where we would be re-establishing an ecological balance between emissions and absorption.

So what that means, ah, is that there certainly is no space for any new coal. I think there is a growing awareness of the fact that there is no, ah, there's no space for new coal.

GEOFF THOMPSON: Australia has the fourth biggest coal reserves in the world. It's also our second biggest export earner, bringing in $40 billion a year. Two-thirds of our own electricity also comes from burning coal.

Shifting away from coal would have severe impacts.

CHRISTIANA FIGUERES: There is probably, um, an easier transformation in de-carbonising electricity in Australia than there is in de-carbonising the export portfolio. But both of those need careful, considerate, nuanced, planned, ah, transition so that you are able to do this in a manner that is protective of the, ah, of the economic stability of Australia.

GEOFF THOMPSON: It's aging power plants like these the UN has in its sights. Victoria's La Trobe Valley is the smoking heart of Australia's addiction to coal consumption.

This is why: sitting alongside the plants is 500 years' worth dirty brown coal, with no export market but ready to burn. Hazelwood is not just the most polluting power station in Australia but one of the worst in the world.

ANNOUNCER (archive film, ABC): Vast conveyer belts carry a river of brown coal to the State Electricity Commission's power station at Hazelwood in Victoria.

GEOFF THOMPSON: When it was built in the sixties, Hazelwood was a beacon of Australia's success in bringing power to the people.

ANNOUNCER (archive film, ABC): The belts can deliver 2,200 tonnes of coal an hour to the power station' furnaces.

GEOFF THOMPSON: Fifty years later plants like Hazelwood have survived the challenges of the carbon tax and an attempt to shut them down. Because their dirty power remains cheap to produce, their emissions are increasing again. There is no real effort yet to clean them up or to pursue alternatives for baseload power.

LUKE VAN DER MEULEN, CFMEU MINING, VICTORIA: We, we need breakthroughs. We need research. You know, we need, we need real effort into this.

GEOFF THOMPSON: The union's head of mining in Victoria accepts that they can't go on forever. But he worries about the jobs of thousands in the La Trobe Valley - and what comes next.

LUKE VAN DER MEULEN: If the answer isn't these power stations and these jobs, then we need transition plans on how to transition this community.

GEOFF THOMPSON: New coal mines are the frontline for climate change protesters. The battle to develop Australia's biggest new coal mine at Maules Creek in NSW intensified at the height of the coal boom four years ago.

(Footage of protesters at Maules Creek)

PROTESTERS (chanting): Coal, don't dig it. Leave in the ground, it's time to get with it. Coal, don't dig it. Leave in the ground, it's time to get with it.

(Footage ends)

GEOFF THOMPSON: Whitehaven's coal is high quality and in demand. But by the time the first trainload left the mine in December, the coal price had halved.

TIM BUCKLEY, ENERGY ANALYST, IEEFA: Like almost every listed western coal producer, Whitehaven's shareholders have worn the absolute brunt of the pain. I mean, their share price is down around $1.50. It's down 70 per cent in the last five years - and that's in an equity market that's been rising. So shareholders have lost 70 per cent of their value, their investment over the last five years.

GEOFF THOMPSON: The coal industry is banking on coal's downturn being only temporary and the price bouncing back.

STEPHEN GALILEE, CEO, NSW MINERALS COUNCIL: When you consider the fluctuations we've seen, ah, in the thermal coal price and indeed in all commodity prices over the last 20 to 30 years or more, ah, I think it's unfair to base a 20- to 30-year mine life projection on the price that's being experienced at the time that the mine commences production.

GEOFF THOMPSON: However other analysts believe lower coal prices are here to stay.

TIM BUCKLEY: Ultimately shareholders in listed coal companies have been suffering what I'm forecasting, which is structural decline of coal. They're suffering the consequences of that.

So the IEAE is forecasting a dramatic change in the...

GEOFF THOMPSON: Tim Buckley was an analyst with Citigroup for 17 years, before leaving to join the Australian arm of the US-based Institute for Energy Economics and Financial Analysis. It's anti-coal and pro-renewables.

Buckley argues something his old employer Citigroup very recently agreed with: that, far from bouncing back, world demand for imported coal to produce electricity is now in permanent structural decline because of China.

TIM BUCKLEY: China is the world's biggest consumer of coal. Fifty percent of the world's coal consumed in 2014 was from China. China actually peaked in coal consumption 2013, and the last 15 months has seen absolute concrete evidence that China is accelerating, far faster than anyone in the west understands, away from coal.

GEOFF THOMPSON: Last November China and the United States, the world's two biggest economies and polluters, reached a landmark agreement to cut their emissions. Since then China has accelerated its retreat from imported coal - with serious implications for Australia.

TIM BUCKLEY: China has had two major structural changes: one is the breakdown in energy intensity of growth; and the second is a diversification of their electricity supply away from coal. Both of those to me are structural changes, not cyclical.

But in 2015 we saw electricity demand grow by 0.8 per cent, GDP grew by seven per cent. So to me there is a massive reduction in electricity intensity of demand. That's permanent. We saw it in 2014; we've seen it again in 2015.

Secondly, they're diversifying as fast as they possibly can, so that even though electricity growth in the first quarter was up marginally, coal consumption was down 4.7 per cent in the first quarter. They used more power, but it was power from wind, solar, hydroelectricity, gas, nuclear.

GEOFF THOMPSON: Only about one quarter of Australia's coal exports are sent to China. But the rapid drop in China's demand is a major factor in coal's export price plummeting.

ROSS GARNAUT, PROF., ECONOMIST: The world price of coal went to very high levels, ah, because China, the world's most populous country, engaged on the fastest growth the world has ever seen and the most coal intensive growth the world has ever seen. That added up to Australia's coal boom.

GEOFF THOMPSON: The author of the former Australian government's Climate Change Review, Professor Ross Garnaut, agrees that China's demand for imported coal has likely passed its peak, with dire consequences for Australian coal producers.

ROSS GARNAUT: Since 2011 we've had, ah, diminished growth in demand and accelerated expansion of supply. Now, that would be even worse if new large mines, ah, came, er, into operation. But at the moment there is excess supply. That's not going to be turned around quickly.

Ah, there are, there will be some developing countries where coal demand, ah, continues to grow - and some of them even, ah, reasonably strongly - but none of them are anywhere near as big in their demand for coal as China.

GEOFF THOMPSON: Coal mining companies and their lobbyists in the nation's Minerals Councils rely heavily on forecasts made by the International Energy Agency. It still predicts a bullish outlook for coal for decades to come.

STEPHEN GALILEE: The forecasts from the International Energy Agency, ah, will, ah, are that over the next 20 or 30 years Chinese energy demand is going to increase by around 40 to 50 per cent and that coal's share of that market, while it will fall, ah, will still represent an increased amount of coal volume being used.

GEOFF THOMPSON: But the International Energy Agency's projections are based on old data.

TIM BUCKLEY: And so as of today they're still using data from 2013 when the world, for coal in China, was still growing.

GEOFF THOMPSON: Australia's big new hope for coal export growth is on one of the most ambitious mining proposals the world has ever seen, in the Galilee Basin. It's more than an hour and a half's chopper ride from the central Queensland town of Emerald.

Even from the air, the size of the basin is difficult to comprehend. It covers an area greater than the United Kingdom and is estimated to contain more than 25 billion tonnes of coal.

The sheer quantity of coal buried out here is mind-blowing. If you loaded it all into a single train, it would be 2.5 million kilometres long: enough to wrap around the earth 62 times.

Indian company Adani has plans to develop its vast Carmichael mine here. The pits will span more than 30 kilometres and the coal will travel over 400 kilometres of railway line to an expanded port at Abbot Point, near the Great Barrier Reef.

DEREC DAVIES, CONSERVATIONIST, COAST AND COUNTRY: There's no sealed roads around. It's highly remote. There's no railway lines around, ah, and it's many hours' drive from, ah, you know, regional centres.

GEOFF THOMPSON: We travelled over the Galilee Basin with environmental activist Derec Davies.

DEREC DAVIES: The investment required, ah, is, would be substantial: with railway lines, ah, development of, of, new roads also to get, ah, materials for mine development trucked in.

GEOFF THOMPSON: He has taken Adani to Queensland's Land Court, delaying the company's $16 billion project. Down on the ground, in the middle of nowhere, are the rare freshwater springs that Derec Davies wants protected.

DEREC DAVIES: We're eight kilometres away from the proposed mine and we're right on the edge of the Great Artesian Basin. And these springs are artesian springs: so natural water, drinkable fresh water, flowing to the surface out of these springs.

GEOFF THOMPSON: Local farmers are also concerned that the underground water table here will be badly affected by the coal mining pits.

DEREC DAVIES: We're discovering more and more about these springs and their natural values.

ANNOUNCER (Adani advertisement): What does Adani mean to Queensland?

GEOFF THOMPSON: Adani has promised thousands of jobs and billions in royalties.

ANNOUNCER (Adani advertisement): Adani means 10,000 jobs for Queensland workers, from young apprentices through to older skilled workers. Adani means $22 billion in royalties and taxes invested back into Queensland communities. One of the world's leading resource companies, Adani is proud to build a long-term future with Queensland.

GEOFF THOMPSON: But in court, even Adani's own expert witness admitted the company's claims were overstated.

TIM BUCKLEY: The evidence that Adani's own experts in court have testified to is that that claim - both those claims - are totally out of the, ah, realms of, um, reality. Adani has testified. Adani's own experts, their own economic expert said the number of jobs would be 1,464, so, you know, 80 per cent less than the 10,000 jobs they claimed.

GEOFF THOMPSON: Despite the court testimony, the industry is backing Adani's bigger figures.

MICHAEL ROCHE, DIRECTOR, QUEENSLAND RESOURCES COUNCIL: I can guarantee you that a 40-million-tonne mine cannot operate with 1,400 people.

GEOFF THOMPSON: A deal to help finance the project was signed last year when Adani's boss, Gautam Adani, was here. It was part of the excitement accompanying the G20 meeting, when world leaders discussed global economic issues.

Uncomfortably, Barack Obama changed the subject to climate change.

BARACK OBAMA, US PRESIDENT (Nov. 15, 2014): Nobody has more at stake when it comes to thinking about and then acting on climate change.

GEOFF THOMPSON: But coal was on the business agenda. The State Bank of India pledged $1 billion towards financing Adani's project. Adani has not yet got that money, or other finance. And without Government assistance, many observers believe its Carmichael mine will never happen.

TIM BUCKLEY: I think the Adani Carmichael proposal is a white elephant. Their logic for saying it's commercially viable is premised on it being a cyclical recovery in seaborne thermal coal markets, and that the cyclical recovery will be extreme: like a doubling of the coal price over the life of the project.

ROSS GARNAUT: At current coal prices and realistic- and with realistic assessments of the demand growth, um, ah, it's hard to, er, to see those, er, er, projects, ah, generating the returns on capital that are necessary to justify the investment.

JOHN HEWSON, CHAIR, ASSET OWNERS DISCLOSURE PROJECT: It's a very, very big, expensive project. It's going to be quite expensive to get that coal across to India, ah, and, um, you know, a lot of people I think legitimately believe that it will never get built.

GEOFF THOMPSON: The project's supporters say its future hinges on Adani's controversial expansion of the coal terminal at Abbot Point, near the Great Barrier Reef. The latest plans are awaiting approval by the Federal Government.

MICHAEL ROCHE: There are banks ready, willing and able to lend to the project. What they're waiting to see is the finalisation of the port solution for the project and, as the chief executive of Adani Mining has made very clear, ah, that is, ah, critical, ah, to raising the finance.

So getting the port solution, ah, ah, nailed down is what it's all about. Ah, why would you be lending to a project that doesn't have a port solution?

GEOFF THOMPSON: Adani came to the Galilee Basin to provide coal to India, where 280 million people are still living without electricity. The new Indian government is determined to bring power to its people.

PIYUSH GOYAL, INDIAN ENERGY MINISTER: We're committed to ensuring that every citizen in India, every person in India gets power by 2019, 24 by seven. And we are working to a plan to achieve that in the next four years.

GEOFF THOMPSON: India's minster for energy, Piyush Goyal, does plan to dramatically increase his country's consumption of coal-fired power.

PIYUSH GOYAL: Most western countries have, ah, developed their nations at the back of cheap coal power. The West had the same level of coal consumption 150 years ago as we in India have today on a per capita basis.

GEOFF THOMPSON: But, in bad news for Australia, India has announced its intention to use its own coal and to stop importing coal for electricity within three years.

PIYUSH GOYAL: This plan is on the back of opening nearly 60-plus mines in the next five years. I have already opened nearly five mines in the last few months and going forward, almost every month there'll be some of the other mines being opened.

GEOFF THOMPSON: Piyush Goyal says he's not interested in providing a market for Adani's Australian coal.

PIYUSH GOYAL: It's not for me to decide whether there will be a market or there won't be a market. I'm working on how to increase India's coal production.

MICHAEL ROCHE: I simply don't accept that India, ah, is institutionally capable of meeting the demands for coal, ah, or meeting the demands for energy supply from their domestic industry.

KOBAD BHAVNAGRI, ENERGY ANALYST, BLOOMBERG: Even though demand for coal is going to increase in India, India is doing everything it can to reduce its reliance on imported coal. China is also doing everything it can to increase its domestic production of coal and reduce its reliance on imported coal.

Now, Australia is at the high end of the cost curve in, in many instances: particularly our new coal mines. They're expensive by global standards. And the demand for those, ah, those projects may just never eventuate.

GEOFF THOMPSON: As Australia's outlook for coal exports becomes uncertain, the elusive promise of dependable renewable energy is becoming a reality.

(Footage of Elon Musk's speech, May 1)

ELON MUSK, CEO, TESLA: All right. Welcome, everyone, to, basically the announcement of Tesla Energy. All right.

(Audience whoops and applauds)

GEOFF THOMPSON: Last month electric car company Tesla and its celebrity CEO, Elon Musk, announced a slick and affordable battery storage system. It's another blow for coal.

ELON MUSK: And the cost of this is $3,500.

(Audience whoops and applauds)

(Footage ends)

CHRISTIANA FIGUERES: It is totally a game changer. It is totally a game changer, um, because it does allow, ah, solar and other renewables that have a barrier with storage.

Um, in particular, if we're going to move toward what today seems like complete, complete la-la land, which is to use renewables as base load: that, you know, sounds completely out, out of, out of the possible today, but the more we're able to invest in this storage, the more we might be able to move into that direction.

GEOFF THOMPSON: South Australia is leading the way on renewable energy advances in this country. A third of its electricity is generated by wind and solar. Four days ago it was announced that two dirty coal-fired power stations are to be shut down as early as next year, with the loss of more than 400 jobs.

South Australia is looking to exploit even more renewable power.

CHRISTIANA FIGUERES: It is not just Tesla. You actually have Australian industry: ah, ZEN in Adelaide actually investing very interestingly into a competing technology. So a very exciting industry possibility for Australia, the sunniest and windiest continent on the world.

RICHARD TURNER, CEO, ZEN ENERGY SYSTEMS: What we build here are the full energy storage systems. So this is what goes in a home. This is our current technology.

GEOFF THOMPSON: Zen Energy says that soon not just homes but whole communities could live off stored renewable power.

RICHARD TURNER: Now, the average home in Australia consumes 20 kilowatt hours of energy a day. So...

GEOFF THOMPSON: That'll do a whole house?

RICHARD TURNER: Yeah. Basically, that's enough energy to run a whole house for a day, an average home in Australia for a day.

The utilities are telling us that they want to run a thin grid out to the regional areas and have local micro-grids that produce and store and consume their own power. And each micro-grid in each township might have its own optimised mix of renewable energy. And then you optimise that and mix it with energy storage and you can produce all the energy and store the energy and make it quite grid-independent. And that thin network really just becomes a battery charging system.

GEOFF THOMPSON: Battery technology also has the potential to revolutionise the electricity markets of countries where Australia sends its coal.

PIYUSH GOYAL: I believe storage will be the next game changer, particularly for the renewable energy space. And, ah, with economies of scale and better technologies, I hope in the years to come we can see an explosion of renewable energy on the back of cheaper storage.

KOBAD BHAVNAGRI: Look, at the moment, ah, coal is still a source of choice for, for bulk electricity generation. Ah, but the key question is: will it be in five years? Will it be in 10 years?

With the pace of innovation in new technologies in wind power and solar - and now, as we're seeing, in energy storage - it may not be the source of choice in five or 10 years, ah, for India, for China, for South Africa, ah, for the developing world.

RICHARD TURNER: If you relate that back to mobile phones: you'll find India, Africa and those developing countries ha- have almost skipped over the copper network and gone straight to mobiles. Um, you'll see a bit of that happening with what we're doing. So they may start to roll out some, some coal-fired power stations and some traditional networks, but very quickly I think you'll find the, the common sense will kick in.

GEOFF THOMPSON: In its competition with renewables, coal has backed its own new technology: clean coal. Without it, it's doomed.

MICHAEL ROCHE: If we don't have, ah, commercial application of carbon capture and storage by 2050, ah, then there is not a strong future for coal. So that's a given.

Ah, will we have commercial application of carbon capture and storage? Where there is a commercial opportunity right now, these projects are working. Ah, but we do need to bring the costs down because by 2050 we do need to have commercially available carbon capture and storage, otherwise, ah, there's not a strong outlook for coal, particularly for supply into electricity.

GEOFF THOMPSON: This plant in Canada has become the poster child of clean coal's hopes. It opened last year and is successfully capturing the emissions from a brown coal-fired power station as old as Hazelwood.

MIKE MONEA, PRESIDENT CCS INITIATIVES, SASKPOWER: Whatever plant is already running, you could build this system and capture CO2 from the flue gas - 90 per cent - and that works out to 1 million metric tonnes a year. So that's a lot. That's a lot of CO2.

GEOFF THOMPSON: But it's incredibly expensive. It cost US$1.4 billion to build.

MIKE MONEA: The next plant: maybe 30% cheaper. The next plant after that will be cheaper yet. And we need to have more of these plants built by other companies, sharing knowledge, and it'll continue to drive that cost down.

GEOFF THOMPSON: It's doubtful the cost of carbon capture and storage will come down fast enough to rescue coal and the communities relying on it.

ROSS GARNAUT: There are very few incentives now for companies to apply carbon capture and storage technology or invest in new technology. Ah, there will never be, ah, use of carbon capture and storage without a carbon price, or, ah, without regulation that forces companies to use it.

Ah, so, er, in the absence of a carbon price or, um, or leg- or legislation requiring carbon capture and storage, it's just not going to be used.

KOBAD BHAVNAGRI: The last few years have clearly, clearly shown that advancements in renewable technology have left advancements in carbon capture and storage for dead. Ah, there haven't been the significant leaps or even the incremental improvement in carbon capt- carbon capture and its storage costs, ah, like there have been in renewable technologies.

GEOFF THOMPSON: The momentum to move away from coal is gathering global force. More than 300,000 people joined the largest climate rally in history in New York last September, as world leaders gathered for the United Nations Climate Change Summit.

BAN KI MOON, SECRETARY GENERAL, UNITED NATIONS (Sep. 23 2014): We must cut emissions.

GEOFF THOMPSON: Just last week, the G7 group of industrial nations agreed to give up fossil fuels by the century's end.

There's a new front in the war on coal: the campaign to divest from fossil fuels.

TEM BLESSED, RAPPER (YouTube) (sings): Divest, divest, divest, you say divest / Divest, divest, divest, we must divest

(Raps) Add it up, yo, add it up / Five times more gigatons, what the f***? / You know what's up, you s*** outta luck / Outta time, you must be outta yo' mind.

(Sings) Divest, divest, divest, divest, I say divest / Divest, divest, divest, you say divest / Divest, divest, divest, we must divest / Divest, divest...

AL GORE, CHAIR, CLIMATE REALITY PROJECT (archive): The following foundations, NGOs and institutions announced the divestment of $50 billion - another $50 billion - from dirty energy, ah, to invested in clean energy instead.

VALERIE ROCKEFELLER WAYNE: With fossil fuels, we want to get out as quickly as possible for financial reasons - as fast as is prudent - but also because we feel like the value of these stocks is really declining. Coal is obviously the main example of that: the value of coal stock in the United States has gone down 60 to 90 per cent.

This is a global phenomenon and we want to get out of those, because we see the fossil fuel investments as risky.

And obviously we've been working on this for a long time...

GEOFF THOMPSON: The Rockefellers are synonymous with fossil fuels, with a fortune built on oil. Descendant Valerie Rockefeller is chair of the $860 million Rockefeller Brothers Fund. She says the numbers for coal no longer add up.

VALERIE ROCKEFELLER WAYNE: I mean, look at the price of coal. If you look over the past five years, the SNP500 has gone up by 76 per cent. The value of coal stocks has gone down by 71 per cent, according to this, the Stowe Coal index of the leading coal companies. So you've lost a lot of money if you've been in coal.

To put more money into something that you know is damaging the environment is not only denying science: it's denying data. But there are coal interests out there who - and gas interests - who have, um, have allies in the current Australian Government. I would say there's, there's been a lot of denial at the Federal level.

GEOFF THOMPSON: The Abbott Government has called divestment decisions "stupid" and rallied behind Australian coal producers.

TONY ABBOTT (Oct. 13 2014): Coal is essential for the prosperity of Australia. Coal is essential for the prosperity of the world. Energy is what sustains prosperity and coal is the world's principal energy source and it will be for many decades to come.

GEOFF THOMPSON: In stark contrast, Valerie Rockefeller says big new coal mine proposals in Australia no longer make sense.

VALERIE ROCKEFELLER: I mean, you look at Australia, which is such a fragile environment in so many ways. And you think of what's planned for the Galilee Basin and it is just heart-breaking.

And I just don't understand. In my mind, Australia's an extremely progressive country that has been an international player on so many issues. It is baffling to me why the current Australian Government is stuck in the past, rather than looking towards the future and becoming part of the solution.

GEOFF THOMPSON: Former Federal Liberal leader John Hewson warns that Australia is taking a huge risk by backing coal.

JOHN HEWSON: Hank Paulson, the US secretary of the Treasury at the time of the GFC, is now saying it dwarfs - the risk of a climate-induced crisis - it dwarfs what we've just experienced. And, er, ah, when you look at it from the point of view of those individual funds, the directors and trustees of those superannuation funds have a clear cut fiduciary responsibility.

GEOFF THOMPSON: He's urging super funds to disclose the companies they're investing in, so people can see how exposed they are to fossil fuels like coal.

JOHN HEWSON: Within a portfolio there are a number of ways to manage that risk, but divestment has got a lot of attention and there's a big global movement driving divestment from, from things like coal.

ANNOUNCER (HESTA TV advertisement): More people in health and community services choose HESTA for their super.

GEOFF THOMPSON: HESTA, Australia's $29 billion super fund for health workers, agrees. For it, the risk of coal is now too high. It's banned any new investments in companies which earn more than 15 per cent of their income from coal.

ROBERT FOWLER, EXECUTIVE MANAGER, HESTA: Our role is a fiduciary, and our role as a fiduciary is to maximise returns for our members while, while managing risk. And that is the primary driver of the reason for the thermal coal restrictions we've put in place.

The development of new production capacity in thermal coal is pretty much aimed now at the harder-to-get-at thermal coal. The easy thermy- thermal coal's actually already been deployed. Therefore the new developments will have higher cost.

It'll make them less competitive as, um, the impact of pricing of, of carbon actually gets implemented globally. And therefore they'll be the first assets which potentially become stranded as, um, thermal coal energy production is, is, ah, ah, replaced by renewable energy production.

GEOFF THOMPSON: The divestment movement's biggest win came 10 days ago. Norway decided that its $900 billion sovereign wealth fund, perhaps the world's richest pension fund, will limit its exposure to coal companies.

KOBAD BHAVNAGRI: It's starting to become a conversation about financial risk. Ah, we're at the early days of the fossil fuel divestment movement and it's, it's really anyone's guess as to where it will go.

Financial markets, though, operate like a herd. Once one of the bulls runs, a stampede is caused. And we don't know if and when the big bull will run and, and the stampede will ensue.

GEOFF THOMPSON: If its 15-year extension in the Hunter Valley proceeds, Anglo American also enjoys the security of long-term supply contracts with Japan and Korea. Coal is not dead yet.

TIM BUCKLEY: Coal is for Australia going to be a core industry for many years to come. Whether I like it or not, whether the Greenies like it or not, the industry is going to be a major global supplier. But the reality is: the transition is happening irrespective of what Australia does.

KOBAD BHAVNAGRI: What happens to Australia and our national prosperity if, ah, coal becomes a less and less valuable commodity? In many ways, ah, the current Government and Australia as a whole is doubling down on coal. And we're doubling down on a technology which is 100 years old, ah, and which is rapidly being out-competed in many parts of the world by new technologies that are cleaner, ah, and superior in many ways, that have outlook of just lower and lower costs through time.

GEOFF THOMPSON: Coal's future is uncertain - and so are the livelihoods of those who depend on it.

CRAIG BATES: You know like, even with the, um, with my kids now, you know, I've said to them, like, you know, "You wouldn't be looking at a career in, um, in mining, like locally, because, you know, there's just not gonna be the, um, jobs there."

GEOFF THOMPSON: Craig Bates accepts that his family has seen its last generation of coal miners.

CRAIG BATES: So everyone knows it will run out, but, um, we just don't want it to run out just yet.

GEOFF THOMPSON: Coal is fighting a battle with forces beyond Australia's control. The world is committing to a low-carbon future.

Australia's challenge is not to be left dependent on coal if the rest of the world leaves it behind.

KERRY O'BRIEN: We approached both Adani and Whitehaven Coal for interviews. Both declined. Their written responses are on our website.

Ironically, less than two weeks ago the managing director of Whitehaven, Paul Flynn, called on the coal industry to "find its voice" in the debate over the future of coal.

Next week on Four Corners: a journey into hell as we go undercover on the trail of the people smugglers.

Until then, good night.

Background Information

RESPONSES

Adani Response [pdf]

Whitehaven Response [pdf]

MEDIA

Renewables on course to overtake coal by 2030 | Financial Review | 15 June, 2015

Alinta Energy executives, Government ministers visit Leigh Creek to discuss SA coal mine closure plan | ABC News | 15 June, 2015

Australian Government 'stuck in the past' defending fossil fuels, descendant of John D Rockefeller says | ABC News | 15 June, 2015

India's growing demand drives NSW's coal export | The Australian | 15 June, 2015

What legal battle? Adani orders 55 dump trucks for mine | The Chronicle | 15 June, 2015

Port Augusta power stations, Leigh Creek coal mine closures set to drive up electricity prices, economist says | ABC News | 12 June, 2015

Coal closures give South Australia the chance to go 100% renewable | The Conversation | 12 June, 2015

Port Augusta power stations and Leigh Creek coal mine expected to close by 2018, costing about 440 jobs | The Australian | 11 June, 2015

Adani a dud candidate for government support | Sydney Morning Herald | 6 June, 2015

Will Australia continue to sacrifice its international reputation on the altar of coal? | The Guardian | 5 June, 2015

Coal miners cut output as prices fall | The Daily Telegraph | 3 June, 2015

Anything but coal: solar the most popular energy source in Australia | The Sydney Morning Herald | 25 May, 2015

'Rational excitement' as China primes for solar boom | Financial Review | 19 May, 2015

SaskPower's Mike Monea on carbon capture and storage | Finacial Review | 19 May, 2015

Zombie koalas protest at ANZ bank over funding of Whitehaven coalmine | The Guardian | 17 May, 2015

Standard Chartered faces pressure to cut links to Australian 'carbon bomb' project | The Guardian | 5 May, 2015

AGL's decision to drop coal another nail in the coffin | Financial Review | 17 April, 2015

Fossil fuel-free super funds pay off for investors | The Sydney Morning Herald | 10 April, 2015

Queensland's proposed Carmichael coalmine faces legal bid over climate change | The Guardian | 31 March, 2015

RESEARCH AND RELATED WEBSITES

Adani Environmental Impact Statement

United Nations and Climate Change

International Energy Agency

The Institute for Energy Economics and Financial Analysis (IEEFA) | Conducts research and analyses on financial and economic issues related to energy and the environment.

ZEN Energy Systems | Solar Energy business, Australia

SaskPower | Power company, Canada

Adani Mining Coal Mines Company India

Anglo American Australia | second largest Australian and third largest global export metallurgical coal producer operating in open cut and underground mining.

Rockefeller Brothers Fund | The Rockefeller Brothers Fund advances social change that contributes to a more just, sustainable, and peaceful world.

Bloomberg New Energy Finance

Queensland Resources Council | Not-for-profit peak industry association representing the commercial developers of Queensland's minerals and energy resources.

NSW Minerals Council

CFMEU Mining | Australia's union representing mining and energy workers.

Asset Owners Disclosure Project | Independent, not-for-profit global organisation whose objective is to protect retirement savings and other long term investments from risks posed by climate change by improving disclosure and industry best practice.

Energy White Paper 2015 | Australian Government [pdf]

RenewEconomy.com.au | Web-site focusing on clean energy news and analysis, as well as climate policy.