The evidence suggests the push for government help is an attempt to squeeze money out of unwise investments made at the end of the mining boom

Why coal-fired power handouts would be an attack on climate and common sense

The recent coordinated push for new coal-powered electricity generators in Australia comes as the industry is on its last legs.

The intensified push for government handouts can be seen as a last-ditch attempt for the coal industry to squeeze some money out of the unwise investments it made at the end of the mining boom.



Here are the facts and figures that point towards that conclusion.

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The coal industry knows that to stop runaway climate change all coal-powered generators need to close



Australia joined 174 countries and the European Union in 2015, signing the Paris agreement. In doing so, Australia agreed to do its part in keeping the global temperature rise “well below” 2C.

It also commits countries to achieving net-zero emissions “in the second half of this century”.

That agreement, designed to stop runaway climate change, requires that all of Australia’s coal-fired generators close.

According to the International Energy Agency, OECD countries such as Australia need to shut down almost all of their coal-fired power stations by about 2035.

And the rest of the world will need to phase out coal power by 2050, it says.

With coal-fired power stations taking up to a decade to build, and designed to last 30 or 40 years, building new ones now is obviously inconsistent with those commitments.

In particular, Australia has committed to reducing its emissions by 26% below 2005 levels by 2030 – a commitment that is not strong enough to limit global warming at 2C and will need to be “ratcheted up”.

But the Australian government recently released projections of the country’s carbon emissions showing that current policies are going to cause emissions to rise to 2030, not drop, leaving Australia overshooting that commitment by a long way.

In producing those projections, the Department of Environment and Energy assumed that 2,000MW of coal capacity would retire between 2020 and 2030, and that the generation would be taken up by existing coal and some gas. (That’s equivalent to about two large power stations.)

If, instead, even more coal is built, the already rising emissions would get even worse.

Demand for coal for electricity has been dropping

Meanwhile, even before coal generators begin to close, the demand for their power has been dropping as renewables enter the mix.



According to data from the Office of the Chief Economist, the demand for coal-generated electricity has dropped by more than 15% in the past eight years.

Moreover, New South Wales budget papers show that the state government has recently downgraded its projections for domestic consumption by a whopping 20%.

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Last year it estimated domestic consumption would be 30m tonnes a year for the next five years. This year it changed that estimate to just 24m tonnes each year.

In response to the new figures, the NSW Greens’ energy spokesman, Jeremy Buckingham, said: “Coal power has been in decline for nearly a decade and it is clear that no one is going to build a new coal-fired power station anywhere in Australia.

“Coal is the whale oil of the 21st century and should be phased out as rapidly as possible for the sake of the climate.”

New coal is the most expensive form of energy

While the proponents of coal talk about coal power being “cheap and reliable”, they are wrong on both fronts.

Coal is now the most expensive form of new power.

According to Bloomberg New Energy Finance, the cost of energy from a new coal power plant would be $134-$203/MWh.

That’s more expensive than wind, solar or highly efficient combined-cycle gas (costing $61-$118/MWh, $78-$140/MWh and $74-$90/MWh, respectively).

Levelised cost of new energy sources in Australia in 2017. (AUD/MWh) Photograph: Bloomberg New Energy Finance

Coal is not ‘reliable’ anymore

Whether or not an energy source is “reliable” depends on what you’re relying on it for.

The only people who still think we need the old-fashioned sort of “baseload power” that coal provides – power that is always running regardless of whether you need it – are those in the coal industry.

Coal power stations are slow to start up and so can’t respond efficiently to fluctuations in supply and demand.

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Old energy systems were built assuming coal would always be running. It was the “baseload” energy and other forms of energy such as gas would switch on to satisfy the peaks in demand.



In a world where wind and solar energy can produce a lot of energy, but not constantly, baseload needs to be replaced with flexible power that can smooth out the spiky energy supply created by variable sources of renewable energy.

In the short term, that can be gas. But, in the longer term, to stop runaway climate change, that service will need to be supplied by renewable sources such as battery storage, hydro, solar thermal with storage or geothermal.

When competing with renewables, coal generators end up burning costly fuel, even when they are giving the electricity away for free.

Leonard Quong from Bloomberg New Energy Finance said when releasing a recent report: “In the grid of the not-too-distant future coal’s baseload operation becomes a curse, not a blessing.”

And Steven Holliday, the chief executive of the UK’s National Grid, recently said: “The idea of baseload power is already outdated.”

The coalmining industry has a backlog of projects it can’t get off the ground

According to the Office of the Chief Economist’s most recent Resources and Energy Major Projects Report, there are 37 major coalmining projects that are currently in the works.

However, that number has dropped since the last report a year ago and, in that time, no new projects have moved from along the pipeline from being “committed” to “completed”.

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If all the projects still listed as being actively pursued were to reach completion, they would produce almost 300m tonnes of coal each year.

Adam Walters from Energy & Resource Insights said that list is a “salient reminder, if one is needed, that vast amounts of proposed new coal capacity, much with most approvals in place, remains waiting for a favourable market”.

He said most of those projects were begun during the mining boom, when commodity prices were high. With prices depressed, they’ve stayed on the books but are not progressing.

The push for rejuvenating the coal industry with government subsidies is the sort of thing that could help the industry get some of these projects back on track, Walters said.

The global coal industry recently saw its biggest player, Peabody, go bankrupt in the US. If companies are forced to take write-downs for these projects by admitting they will never go ahead, it could mean the end for some of the companies.

At his National Press Club address last week, Malcolm Turnbull appeared to point to this as the reason he is now looking to subsidise the most expensive and dirtiest form of energy, saying that it could help our mining industry. He said: “As the world’s largest coal exporter, we have a vested interest in showing that we can provide both lower emissions and reliable baseload power with state-of-the-art, clean, coal-fired technology.”