The AFR’s struggle to get the coal story right goes on today with Matthew Stevens reiterating a rather limited view of International Energy Agency (IEA) research on the future of coal-fired power first promulgated by Ben Potter:
The decision to loose the Minerals Council on the coal problem says only that the campaign to undermine community, investor and government confidence in Australia’s second-biggest export industry is beginning to develop debilitating momentum.
The MCA has hired Alan Oxley’s consultancy, ITS Global, to prepare what is in effect a coal industry newsletter and distribute it to 500 leaders in Australian investment life.
Stevens goes on to describe that the new research is likely a response to Ben Caldecott, the Oxford economist at the head of “stranded assets” coal push. From Caldecott:
…“Since the campaign started about a year ago, six colleges and universities have committed to divest, along with 17 cities, two counties, 11 religious institutions, three foundations and two other institutions,” Caldecott noted.
“While this is clearly a small number, the movement has grown fast and we are likely to see many more institutions divesting over the next 12 to 18 months,” he suggested.
And how has the MCA responded?
Research gathered for the MCA by ITS Global repeats the latest IEA outlook that says China’s coal consumption will peak in 2025 and by then it will fuel 59 per cent of China’s power demand. At the same time the US Energy Information Administration reckons coal demand will double by 2040.
I haven’t yet seen the newsletter so can’t say for sure what it says. But I can only repeat that in its most recent World Energy Outlook, the IEA forecast for coal is rosy only so long as [my italics]:
policy interventions…improve efficiency, curtail local air pollution and mitigate climate change…
And in its 2013 special report, Redrawing the Energy Climate Map:
The financial implications of stronger climate policies are not uniform across the energy industry and corporate strategy will need to adjust accordingly. Under a 2 °C trajectory, net revenues for existing nuclear and renewables-based power plants would be boosted by $1.8 trillion (in year-2011 dollars) through to 2035, while the revenues from existing coal fired plants would decline by a similar level. Of new fossil-fuelled plants, 8% are retired before their investment is fully recovered. Almost 30% of new fossil-fuelled plants are fitted (or retro-fitted) with CCS, which acts as an asset protection strategy and enables more fossil fuel to be commercialised. A delay in CCS deployment would increase the cost of power sector decarbonisation by $1 trillion and result in lost revenues for fossil fuel producers, particularly coal operators. Even under a 2 °C trajectory, no oil or gas field currently in production would need to shut down prematurely. Some fields yet to start production are not developed before 2035, meaning that around 5% to 6% of proven oil and gas reserves do not start to recover their exploration costs in this timeframe.
Delaying stronger climate action to 2020 would come at a cost: $1.5 trillion in lowcarbon investments are avoided before 2020, but $5 trillion in additional investments would be required thereafter to get back on track. Delaying further action, even to the end of the current decade, would therefore result in substantial additional costs in the energy sector and increase the risk that the use of energy assets is halted before the end of their economic life. The strong growth in energy demand expected in developing countries means that they stand to gain the most from investing early in low-carbon and more efficient infrastructure, as it reduces the risk of premature retirements or retrofits of carbon-intensive assets later on.
So, does coal have a PR problem? Or does it have a real problem, labelled variously as “global warming”, “climate change” or “the greenhouse effect”?
Ironically, one really does have to wonder about the future of an industry that responds to a forecast $1.8 trillion calamity by blowing smoke.
