As the tide turns: the world’s biggest coal users are not buying into the high-cost anti-coal doctrines

In 2007, Australians elected a Labour government that’s the down-under equivalent of Canada’s NDP.

In 2007, Australians elected a Labour government that’s the down-under equivalent of Canada’s NDP. Almost immediately, its climate change policy took off.

The ambitious plan was to commit the country to emissions trading schemes and mandatory renewable energy targets. In Southern Australia, the target for renewable energy was set at 50 per cent of overall capacity. Coal-fired electricity, though reliable and cheap, was eliminated in that region.

Ten years have passed and the chickens have come home to roost. Recently, as summer temperatures have pushed their way well above 40 degrees Celsius, homes and businesses in Southern Australia have faced blackouts. (Australian heatwaves are not new or rare. Years ago, temperatures never fell below the 45-degree mark in one part of the country for six weeks, with the maximum hitting 53.

This month, thousands of homes in Southern Australia lost power because the renewable electric system relies on wind, which doesn’t work when the wind stops blowing. It stopped.

The Australian Defense Department, unwilling to trust the electrical system, has committed itself to developing massive standby generation capacity for its needs. Plus, the electrical system is said to be a threat to the very important shipbuilding industry. Meanwhile, homeowners are out buying standby generators that run on gas or diesel.

Another serious fallout for Southern Australia is the impact on investment. Who wants to invest in a region where you can’t trust the on-off switches?

The irony is that the Aussies have abundant coal supplies that can easily produce low-cost, reliable electricity. The country could embrace new clean coal technologies, yet for political and ideological reasons, coal is not an option in Southern Australia.

Ironically, Australia ships huge quantities of coal to Pacific Rim countries, which allows them to produce low-cost reliable electricity. In fact, Australia is responsible for nearly a third of the world’s coal trade. In 2011, it was the largest exporter of metallurgical coal and the second largest exporter of thermal coal. Major customers include Japan, China, South Korea, and Taiwan.

The market for Australian coal is not just profitable, it’s secure. Japan recently announced that it’s building 45 new coal-fired electrical plants. China, which is by far the world’s biggest coal consumer, says it’s increasing its consumption in the next few years by nearly 20 per cent.

Another irony is that Australia is out of step with the rest of the world. This week in the Financial Post, Jack Mintz from the School of Public Policy at the University of Calgary noted that “governments everywhere are starting to back away from anti-carbon policies.”

Germany is returning to coal power. Green subsidies have been cancelled in the UK, Portugal, and Spain. The US has committed itself to defunding the UN’s climate machinery, and to expanding the American coal and petroleum industries. Ontario’s anti-coal policy has seriously hurt its economy and created energy poverty. There are now Ontarians who have to choose between eating or paying for heat.

There are two lessons here for Alberta: First, electrical policy rooted in the ideological opposition to coal won’t be implemented without a steep and unnecessary price. Second, despite the rhetoric, the world’s biggest coal users are not buying into the high-cost anti-coal doctrines.

At the same time, many nations that moved much further down the renewables road than Alberta are turning back, recognizing that the financial and human costs are simply prohibitive.

 

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