But hey, rail freight's green! So goes the spin. It's a case study in the complete separation of two realities: daily reality for the energy industry and daily reality for those working on climate policy. One industry source reckons that's ''absolutely right … they are separate worlds. Everyone's all for zero pollution but at a basic level, food and energy, you want to have that first before you necessarily start worrying about what's going on with climate policy, particularly with all the politics and nebulousness around it all.'' Too true. It's beyond this column to work out quickly just how much of the globe's remaining carbon budget will be used up by the coal QR expects to haul from mine to port. It will be worth checking any mention of climate in the ''risks'' bit of QR's prospectus, when it comes out in a fortnight. Basically, QR's business model - predicated on an expansion of coal exports - is fundamentally inconsistent with effective action on climate change. Or is it?

Last week Professor Ross Garnaut, author of Australia's 2008 Climate Change Review, told ABC Radio he thought world coal demand would peak before 2020 unless carbon capture and storage (CCS) - or some other use for massive carbon dioxide emissions - succeeds. Garnaut is not pessimistic about CCS being commercially viable at scale in the right locations. But the Chinese want their demand for coal to peak before 2020, and while he admits that's ''not a certainty'', Garnaut thinks there are ''reasonable prospects of China achieving objectives along these lines''. ''China over recent years and in the years immediately ahead represents a large majority of the global growth in coal use, and with other developed countries seeking to reduce total emissions absolutely by substantial amounts, such a change in trajectory in China would be likely to be associated with a peaking over the next decade in global coal use.'' Investors want a growth story. If the idea gets about that coal demand might peak within a decade, it could seriously weaken demand for QR shares. Media reports this week, based on figures supplied by the investment banks promoting the float, forecast QR's earnings before interest, tax, depreciation and amortisation would increase 22 per cent in 2011-12, to $1.1 billion. About 40 per cent of those earnings - a lot - would come from coal haulage.

Energy consultants Wood Mackenzie expect a 60 per cent increase in Australia's total coal exports (both thermal and metallurgical coal) to 2020, above current levels, from identifiable existing mines and new projects, in line with producers' expectations. The majority of the growth is in Queensland. Coal supply research analyst Steve Hulton says his firm sees no peak in coal demand before 2025, and that forecasting becomes difficult beyond that date. That outlook is reflected in still-strong prices for both coking and thermal coal - even if they have come off their peaks of a couple of years ago, they are historically high. Possibly Garnaut and Wood Mackenzie are both right. The peak demand for high-quality Australian coal could come later than the peak in world coal demand. An effective global climate mitigation effort could even drive demand for Australian coal, if it saw the shutdown of dirtier coalmines around the world. Says Garnaut: ''Australian export coal tends to be of relatively high quality (low emissions per unit of energy, or of steel production in the case of coking coal), and in a world of economically efficient mitigation of climate change, it is possible that Australia's sales of coal would increase, perhaps substantially, in a world of static or declining coal use. Note that the Australian share of China's coal use has increased dramatically over the past several years, in response to Chinese authorities taking action to reduce environmental damage from use of low quality coals … There would be a tendency of this kind in a world that was co-operating in climate change mitigation, and in which Australian policies were respected as making proportionate contributions to the global mitigation effort.'' Would the rest of the world agree to shut down their dirty coalmines and pay a premium to buy coal from us? Sounds a long shot. Like having our cake and eating it.

Garnaut is well aware of the downside risk - he has previously pictured an alternative, ad hoc ''messy world'' in which importing countries implement domestic mitigation measures in a protectionist way. ''The easiest coal to cut out would be imported coal,'' he says. Sounds more likely. QR's spokeswoman argues that the majority of the company's coal freight is metallurgical coal. It is often assumed that there is no alternative to coking coal for steelmaking. But the CSIRO's Minerals Down Under flagship has a brilliant ''CO2 breakthrough'' pilot program under way, part-funded by OneSteel and BlueScope Steel, to cut emissions from steelmaking in half by replacing at least 20 per cent of the coking coal used with biochar. Life-cycle modelling still under wraps found the process is almost cost-effective now and would be attractive with a carbon price of $20-30 a tonne. The program is seeking $15-20 million to build a demonstration plant. They should get it, because there are multiple benefits: mallee plantings to generate biomass feedstock can help rehabilitate vast salinity-affected land areas; production of the biochar generates significant quantities of biofuels and heat for conversion to electricity. And of course emissions go down. In theory, biochar could be a replacement for coking coal. Steelmaking globally generates a staggering 2 billion tonnes of CO2 emissions a year. Alternatives like aluminium and titanium are far more emissions-intensive. The World Steel Association's own CO2 breakthrough program also aims to cut steelmaking emissions in half and in Europe and Japan hundreds of millions of dollars are being spent on research. World Steel ranked its members' programs for impact and how long they'd take to implement, and CSIRO's programs ranked very highly. An export opportunity beckons. Loading

Or we could load up on QR stock and bet the world does nothing. paddy.manning@fairfaxmedia.com.au