On Wednesday, September 16th 2009 The Illawarra Greens hosted a public forum titled ‘The Illawarra: Beyond Coal’. It was held at the Aboriginal Cultural Centre, Kenny St. Wollongong.
The purpose of the forum was to hear informed experts speak on the economy and technology of coal as they apply in Australia and particularly in the Illawarra, and to initiate discussion on the future of the coal industry here.
The speakers who kindly agreed to give presentations were as follow, in the order in which they spoke:-
Lee Rhiannon, Greens MP in the upper house of NSW parliament
Dr Adam Lucas, Science and Technology Program, University of Wollongong
Dr George Takacs, University of Wollongong Faculty of Engineering
Mr Graham Larcombe, Strategic Economics Group
Mr Graham Brown, retired miner and activist
Mr Trent Brown, Climate Camp organiser
The proceedings were recorded on video by Jonathan Doig and posted on the Web where they may be viewed. The link to view is here and the Illawarra Greens are very grateful to Jonathan for providing this service.
There follows an attempt at a transcript of what was seen and heard at the forum. This text is not verbatim but sets out to recount the main points and opinions expressed by the speakers and to serve as a written record of the proceedings.
Lee Rhiannon MP:
Over two centuries the coal industry has contributed enormously to the Illawarra economy, but it has also ruthlessly exploited its workers. Coal companies are not here for altruistic reasons, they exist to make a profit and are exploiting both people and the environment to do so.
There is much mis-information published concerning the Greens policy on coal mining and consumption, an example being the big headline on the front page of the Illawarra Mercury published during the run-up to the state election of 2007 which said Greens policy would cost the Illawarra 20,000 jobs. This was rubbish and misrepresented our policy which is, in a nutshell, that there should be no new mines or coal projects or expansion of existing mines, and there should be a planned transition away from the mining and use of coal to a jobs rich, clean energy future. This sort of misrepresentation of our policies continues today.
The Federal Government’s Carbon Pollution Reduction Scheme will not achieve the necessary changes for Australia to carry its share of the measures needed to protect the climate.. The subsidies currently provided by governments to the coal and coal power generation industries should be diverted to green energy research and development. The target of 5% below 1990 levels of greenhouse gas emissions by 2020 contained in the CPRS is pathetically inadequate - even John Winston Howard would have been ashamed to propose this when he was in government. The CPRS also hands billions of free dollars to the big polluters, enabling them to continue dumping CO2 into the atmosphere at current rates and this will seriously undermine international negotiations on carbon reduction.
The coal industry is at centre stage in the struggle to clean up Australia’s act as it contrtibutes about 40% of our total greenhouse gas (GHG) emissions.
Regarding the preservation and creation of jobs, in the Australian coal industry mechanisation has caused job losses for decades. In the period 1980 - 2002 18,000 coal jobs disappeared throughout this country. By contrast in the small country of Denmark its leaders saw the future of energy production and made the decision to guide their nation to a leading position in the clean energy industry. Over the same period as Australia was losing its coal mining jobs Denmark has become a leading producer of wind energy equipment and has created 16,000 secure jobs and a healthy export trade in the sector. Germany has also embraced wind and solar technology and gained much export business as a result.
Australia is lagging far behind; in Japan the newly elected government has committed to a reduction in GHG emissions to 25% below 1990 levels by 2020, and China has legislated for 20% of its electrical energy to be produced by renewable methods by 2020 also.
In Australia our governments are beholden to the coal industry; when the world turns its back on coal, as it must, where will that leave us?
Under the Kyoto protocol Australia, uniquely, pleaded a special case and was allowed to actually increase its GHG emissions by 8% over 1990 levels by 2012, to a limit of 559 million tonnes per annum (mt/a) of CO2 and equivalent gases. We are already emitting 553mt/a and rising, so will inevitably exceed our Kyoto oblgations and by a large margin.
Dr Adam Lucas:
The Australian Coal Industry:
Most of Australia’s coal is mined in Queensland’s Bowen Basin, the Hunter Valley and the Illawarra in NSW, and Victoria’s Latrobe Valley. Some 97% of Australia’s coal exports come from Queensland and NSW. Many national governments are convinced that coal will remain a major source of energy for decades to come and look to carbon capture and storage to provide the technical fix for CO2 emissions, but there are sound economic, technical and environmental reasons to be skeptical about the ultimate success of CCS.
Australia is by no means the holder of the largest reserves of coal in the world. The following table shows where we stand in this league in millions of tonnes (mt) of recoverable reserves and percentage of the global total (source: BP - Statistical Review of World Energy 2009)
USA 238,308 mt 28.9%
Russia 157,010 mt 19%
China 114,500 mt 13.9%
Australia 76,200 mt 9.2%
Neither are we the largest producers. The next table shows our position in annual production of millions of tonnes (mt/a) and percentages of the global total in 2008.
China 2,782 mt/a 41%
USA 1,062.8 mt/a 15.7%
Europe 578.7 mt/a 8.5%
India 512.3 mt/a 7.6%
Australia 401.5 mt/a 5.9%
But we are the largest exporter of coal in the world as the next table shows. This expresses annual export volumes as a percentage of the global total.
Australia 28.9% year 2004-5 (Source - Australian Coal Association)
Indonesia 14.2%
China 11.5%
Then come Russia, South Africa, USA, Canada…..
The reason we are predominant in the coal export trade is that most coal produced is consumed in its country of production. It is not a highly traded commodity. In 2005/06 Australia exported about 60% of its production, mostly to Japan (45% of the total).
Australia has massively increased its production and export of coal in recent years, from 150 mt in 1984 to 391 mt in 2004 a 160% increase. But not all countries are increasing coal consumption; over the period 1980 - 2002 while some countries increased their coal consumption, such as the USA by 50%, Japan by 80%, China 100%, Australia 130% and India by 230% others have reduced it, notably Germany by 37%, UK 53%, Russia 50%, and France by 60%. In these countries coal has been partially displaced by gas, nuclear and renewable energy technologies. It is evident that increasing coal consumption is not an inevitable feature of modern economies
The contribution of the coal industry to the Australian economy is not as significant as is generally assumed, and when the direct and indirect subsidies it enjoys are taken into account the economics of the industry start to look questionable.
During the resources boom many Australian polititians became dazzled by the rapid growth in export volumes. In 2008 Dr Brendan Nelson stated that the Australian Mining, Metals and Energy sector contributed 37% of this country’s GDP. This claim was incorrect, as the true figure was only 15%.
In 1990 - 2008 coal mining industry revenue amounted to only 3% - 4% of Australian annual GDP and contributed 10% - 20% of export income. This is less export income than from tourism or the food industry. The contribution to Australian GDP of the coal industry is about the same as the agricultural sector but just one third of the manufacturing sector.
Employment in the coal industry is much less important than claimed. At the height of the mining boom the industry directly employed about 30,000 nationwide. Compare this figure with the following workforces of some other national enterprises:-
Bunnings 26,000
McDonalds 75,000
Barrier Reef tourism 60,000 *twice the coal industry total at the height of the boom!*
Australian tourism as a whole 500,000
Australian agriculture 300,000
Within NSW the coal industry employed 14,000 at the boom peak, 1000 of these were in the Illawarra.
About 7000 coal jobs have gone since the peak of the boom so the industry now employs nationwide fewer than the Bunnings hardware chain.
Governments often justify the financial support and assistance given to the coal industry as needed to protect jobs. This contrasts with governments’ lack of concern for the jobs of their own employees in the public services when, between 1992 and 1998, the Kennett and Howard governments together sacked 75,000 public employees. Public service jobs are evidently less valued than those in the coal industry, as are the 800,000 jobs in the Agriculture and Tourism industries, both threatened by climate change.
Government assisted expansion of the coal industry continues apace as, for example, in 2008 the Queensland and NSW governments approved expansions of the Gladstone and Newcastle coal export facilities at a public cost of $4.5 billion. These expansions will enable a 60% increase in export volumes over the 2008 figures.
In 2009 Waratah Coal announced a new mine in the Galilee Basin (Qld) which will be Australia’s largest thermal coal mine, and BHP-Billiton announced the expansion of the Mt Arthur mine in the Hunter Valley from an output capacity of 11.5mt/a to 15mt/a.
These are just some of the many expansions in the industry planned or under way.
Australian coal fired electricity generation:
Coal fired generation supplies between 80% and 84% of Australia’s electricity. As the global average proportion of coal fired power is only 40% we use proportionally twice as much coal to generate our power as the rest of the world. Even China’s electricity supply is less coal dependant than ours at 70%, and in the USA the proportion is 50%.
NSW tops all these figures at 92% coal fired power generation.
Electricity generated from coal in Australia produces a third of our total greenhouse gas (GHG) emissions and the coal we sell overseas produces three times as much again. Our domestic coal burning produces the equivalent GHGs of 40 million cars on the road, four times our national car fleet.
NSW power stations contribute one third of the nation’s coal burning GHG emissions.
In the period 1990 - 2004 Australia’s coal created GHGs increased by 50% although under the Kyoto protocol we are limited to an 8% increase in GHG enmissions. We claim to be meeting our Kyoto obligations only by offsetting the GHGs with carbon sinks.
There are 14 new coal fired electricity generating stations planned within Australia at present.
Government subsidies to coal industries:
BHP-Billiton, Rio Tinto, Xtrata and Anglo-American produce 40% of the coal mined here. None of these companies is majority owned in Australia so most of their profits go overseas.
In 2007 Chris Reidy of the Institute for Sustainable Futures researched government subsidies and found between $9 billion and $10 billion in direct and indirect subsidies was provided in 2005-6 to the fossil fuel industries. This is roughly equivalent to the NSW budget for primary and secondary education and the Howard government’s expenditure on universities.
In 2005-6 the NSW government gave $300 million in diesel fuel rebates to the Hunter Valley coal mines alone.
In that year the entire renewable energy sector received $330 million in government assistance.
An examination of the cash flows in the coal mining industry during 2005-6 has been made using data from Chris Reidy’s research at UTS and the Australian Bureau of Statistics - Mining Operations Australia 2005-6 and shows:-
Gross income:- $29.9 billion
Outflows:-
Labour $3b
Equipment and other purchases $12.9b
Other expenses $2.4b
Royalties paid $1.6b
Profit:- $10b
In this year the industry received $1.7b in direct cash subsidies from governments, mostly in diesel fuel rebates. Indirect subsidies were not counted in this examination.
In 2007 the Australian Greens commissioned a study into the indirect subsidies provided or committed to coal mining in the form of road, rail and port facilities which found that over the period 2000 - 2011 these amount in value to $970m, or close to $100m a year.
Government subsidies to the electricity generators in 2005-6: (source: Chris Reidy - Energy and Transport Subsidies in Australia (2007))
Broken down by fuel type the subsidies received were:-
Coal $1091m - $1866m Notes: 1) much data is obscured as ‘commercial in confidence’, hence this wide ranging figure. 2) this is a separate subsidy given to power generators in addition to the $1.7b given to coal miners.
Oil $3m
Gas $120m
Total fossil $1214m - $1989m
In contrast generation by renewable technologies received $110m - $119m assistance in 2005-6.
These actions by our governments demonstrate that they intend to fully exploit the global demand for coal for years to come. This flies in the face of what climate science is demanding. If anthropogenic climate change is to be seriously addressed then energy generation using coal must be phased out. Carbon Capture and Storage is an unlikely solution to GHG emission and at best cannot start to be effective until 20 or 30 years have passed. Despite the uncertainty clouding CCS technology the Labor Governments have committed $4 billion of taxpayer’s money to its development while giving no Federal assistance to Biochar research.
Richard Dennis of the Climate Institute has questioned, if the prospects for CCS are favourable, why has the energy industry not put up its own money to fund its development instead of asking for more money from the tax payer ?
What is needed is a gradual transition from coal fired energy production over the next 10 or 15 years with retraining for displaced workers to take up new employment. Australia has done it before during the 1980s in the manufacturing industry and we can do it again.
Data sources drawn on for this presentation include:
BP - Statistical Review of World Energy 2009
Australian Coal Association
International Energy Annual
International Energy Agency
ABARE
Energy Watch Group
Australian Bureau of Statistics
Chris Reidy (UTS Institute for Sustainable Futures)
At the conclusion of his address Dr Lucas distributed a list of questions he suggested should be asked of our state and federal politicians. The list is included below
QUESTIONS
1. Why are the Queensland and NSW Governments gearing up for an expansion in
coal exports when Australia has international obligations to significantly cut its
greenhouse gas emissions, and coal is by far the largest source of Australia’s
contribution to those emissions?
2. Why does the coal industry need diesel fuel subsidies if it’s such a profitable
industry?
3. Exactly how much money is being paid to electricity generators by the
Queensland, NSW and Victorian Governments to subsidize their purchases of
coal, and what would be the real cost of coal-fired electricity generation if these
subsidies and those for coal mining were factored in?
4. Why are Australian taxpayers heavily subsidizing research into geosequestration
when there are biological alternatives that appear more likely to be successful and
which have a range of ancillary benefits to Australian agriculture?
5. What will be the cost of converting Australia’s existing 35 coal-fired power stations
to ‘clean coal’ technology over the next twenty years, and where will those
emissions be stored?
6. Do the Labor and Coalition parties have any contingency plans for those workers
in the mining, metals processing and fossil fuel industries who are likely to lose
their jobs over the next five to fifteen years when an emissions trading scheme is introduced?
Dr George Takacs:
Dr Takacs started by commenting further on the Denmark story, saying that Denmark had introduced a carbon tax in the mid 1990s and there was no sign that this was hurting their economy.
The coal industry of the Illawarra, in a community of 450,000 people, provides about 1000 jobs directly with in addition some 4900 ’spin off’ jobs also dependent on the industry (source: IRIS study of the Impact of Coal Mining in the Region). This puts the lie to the Mercury headline that appeared in 2007 that Greens policy would cost the Illawarra 20,000 jobs.
In the 1980s the Pt Kembla steelworks employed 21,000 but now employs only 6000. This is a direct loss of 15,000 jobs and a further 45,000 to 60,000 jobs if the same multiplier effect as in the coal industry applied here. So the complete loss of the coal industry in the Illawarra would have nothing like the effect on the region that the downward trend in the steel industry has had.
Global GHG emissions are currently about 49 Gigatonnes (Gt) annually of CO2 equivalent gases and current levels of GHG in the atmosphere are about 455 parts per million (ppm) of CO2-e. If the warming of the globe is to be held to little more than 2 deg C then the GHG level must be stabilised at somewhere between 445 and 490 ppm of CO2-e; pretty much where we are now. So there is no scope for continued emission at current rates.
In fact, because the re-absorbtion of carbon into the biosphere is slow, to stabilise the GHG levels in the atmosphere to about where it is now requires a very rapid rate of emission reduction - such that by 2050 it is down by 50% - 85% of the 2000 levels - and then a continuation of reduction at that rate.
Australia emits GHGs at a rate of 28 - 29 tonnes annually per person. The global average for this figure is about 8t per person per year and for China it is 6 - 7 t. A global cut of GHG emission by 60% of the 2000 rate requires the average per person emission (with the global population growing to 9 billion by 2050) to fall to 2.2 tonnes, and for Australia to come within that limit a 92% - 93% reduction in our current per person rate of GHG emission is required.
David Archer of Chicago University has worked out how much carbon, in total, we can put into the atmosphere and not drive global warming beyond a 2 deg C rise over time, and his conclusion is a total of 600 billion tonnes. We already have 300 billion tonnes up there, so only another 300 net can ever be added if the 2 deg C limit is not to be exceeded.
The usable deposits of fossil fuels known of in terms of the carbon they contain are:-
Coal - about 700 billion tonnes of carbon
Oil - about 200 “ “ ”
Natural gas - about 500 “ “ ”
The fuel that gives the greatest energy yield per tonne of carbon burned is natural gas, not coal or oil, so we should not be burning these latter fuels for our energy. We have enough gas to completely fill our ‘quota’ of 600 bt of carbon in the atmosphere without burning any more coal.
Steel production:
Traditional steel production requires hard coking coal for its chemical and physical properties, and in 2006 Australia used 717 million tonnes of coking coal in steel production. No economically viable alternative method of new steel making has yet emerged although electric arc furnaces are used in the creation of about 40% of the world’s steel, mostly by recycling steel scrap.
As we have already heard, Australia is not a major coal producer but we do have in the Illawarra some reserves of good quality coking coal. In 2006-7 BHP-Billiton mines here produced 6.45 mt of this commodity and 0.8 mt of thermal coal. In 2009 Gujarat-NRE produced about 0.65 mt of coking coal.
Making 1 tonne of steel produces about 2.2 tonnes of CO2 and Australia produces about 10 million tonnes of CO2 annually in steel making. No low emission steel making technology is around the corner, but a carbon sequestration technology that works is to replace steel construction with timber !!
Graham Larcombe:
I was asked to speak specifically about the Illawarra economy and how it may expect to move into a sustainable future.
The key concept to discuss is sustainability. This requires -
Economic dynamism - good, socially useful jobs
Social cohesion - equality, equity, openness, health and engagement
Ecological harmony - air, water, biodiversity
The path of development followed by Wollongong is unsustainable as measured by these criteria and has created unemployment, poverty and marginalisation.
We now recognise, after twenty years of debate, that Greenhouse Science is well established and that we should have been holding forums like this twenty years ago.
The ideas that underpin sustainability clash with neo-liberalism and the drive for greater competiton. Within the mining industry the miners and their unions have played a critical role in developing the social structures of the region; they are not and have not been part of the problem for Wollongong.
The history of this region is based on steel making and the coking coal needed for it. The Illawarra has always struggled to diversify away from being just a quarry economy and the region’s wealth has been derived from natural resources and land ownership.
Generally human resources and skills have been undervalued and neglected. When BHP-Billiton used the state intervention in oil pricing to divest itself of the steel business, and set up a local company - Bluescope Steel - to carry that business it left the new company stripped of many of the assets that had previously supported steel making here and the industry became lean, mean and narrowly based.
Creative arts have long been starved of resources in Wollongong and human creativity and skill are still undervalued here although the University of Wollongong stands out as a success story in diversification and sustainability for the region.
Decision making:
How are decisions affecting Wollongong’s development made? The narrow economic and political base of the region has stunted decision making on the city’s development path. The Steel Regions Assistance Package failed to exploit the potential of the workforce to evolve in innovative ways; instead it sought to turn miners into drinks waiters. This was because of the political influence of the energy and industrial establishment here and its narrow vision.
The Illawarra Regional Development Board was under resourced and narrowly represented and suffered from political appointments to its body, and as a result compared unfavourably with other regional development organisations, for example in Logan, near Brisbane.
Resulting from all this we find ourselves with a collection of infrastructure resources and projects that do little to equip the region for the future, such as the Port Kembla coal loader, the port expansion, the Northern Distributer and the on-again, off-again Maldon Dumbarton rail link and lack decent local public transport and Wollongong - Sydney rail services.
Green jobs and green skills:
Sustainability requires the wholesale transformation of existing job skills to meet the needs of a low carbon economy. These new skills will be needed in housing, energy and transport as well as in manufacturing.
Wollongong manufacturing will embrace advanced materials and techniques and more compact supply chains and greater energy efficiency, particularly in steel manufacture. There needs to be a ‘ten year plan’ for the steel industry aimed at developing less carbon intensive methods with perhaps greater use of gas and cogeneration. The Steel Innovation Council would play a role here.
So a strategy for a low carbon economy for the Illawarra should address the manufacturing sector of course, but also in housing - the work of builders, designers, retrofitters and energy efficiency specialists, in energy production - the introduction of gas fired generators and renewables and in transport - the provision of more resources for inter-city transport, intra-city public transport, cycleways and transport logistics.
There is a need to strengthen the quality of government of our city, which is currently extraordinarily weak. To develop Wollongong and the Illawarra into a sustainable economic region there should be a devolution of resources and responsibilities from the state to local government, the establishment of good legal and institutional frameworks, good participatory democracy and a sustainable vision and agenda for change with the establishment of an Office for Sustainability and Economic Development.
Graham Brown:
Graham has worked in a variety of fields, including coal mining at Tower and Cordeaux Collieries, which are two collieries currently undermining the Sydney Water Catchment. In his time in the industry Graham has seen it change from one that could work with the local community to a scourge and a blight on the Hunter Valley. In the Illawarra the presence of the coal industry is less obvious as most work is underground, but one aspect that is not seen either here or in the Hunter Valley is the billions of dollars that flow from this country to overseas owners of the mining companies.
Here in Australia we do not see much evidence of climate change yet but Graham has travelled widely and seen for himself that it is happening, and this has convinced him that the coal industry has a limited life span.
The industry owners maintain that carbon capture and storage will be its saviour but its workers do not believe this. They know that if no new mines are approved they can transfer to other industries. The coal comanies should be paying the cost of this transition and we should be using the money governments are pouring into coal infrastructure to assist workers to leave the industry instead.
The Venezuelan government has changed the conditions under which its oil industry operates so that the state exacts a royalty of 80% of the oil price, leaving only 20% for the oil companies, a complete reversal of the old formula and Australia should follow this example in the coal industry.
The coal industry is revenue negative for Australia; BHP Coal costs every Australian $8 per week when all assistance and subsidies are taken into account.
So what can miners do when their industry dies? In the Hunter there is decades of rehabilitation work to be done. Work is also needed in health and education.
Coal mining and power generation take 40 gigalitres of water from the Hunter river annually and they have forced the cost of water up from $600 per megalitre to $4800 per Ml, so irrigation has become uneconomic and irrigation farming is in retreat.
Mining employs only 20% of the Hunter Valley workforce yet it infects the whole community with dust, noise, social and educational problems and environmental degradation.
Water acidity is poisoning the Hunter river. BHP-Billiton say ‘there is no problem, after 700 years the valley will be as good as new” !
And what about the power stations? Liddell station is being retrofitted with solar concentrator steam generators , but only the first stage of 1MW capacity. David Mills has asked the state government for $40m to progress to the next stage but this was refused, so David Mills emigrated to the US and works there developing solar concentrator technonlogy.
Natural gas is not the answer to the energy problem; once it has been liquified and transported it loses most of its low carbon advantage and coal fired power stations should instead be retrofitted with solar concentrator technonlogy to replace the coal fired furnaces.
Graham urged his audience to believe “we can move from coal dependance to a renewable energy future - we can do it!”
Finally, Graham reminded his audience about the Climate Camp coming up at Helensburgh from October 9 to 11.
Trent Brown:
Trent appeared to promote the Climate Camp due to take place in Helensburgh on October 9 - 11 next and to encourage the audience to be part of the event.
Climate Camp started in the UK in 2006 as a non violent means of raising awareness of the climate change emergency and has since spread around the world.
One was held recently at Hazelwood in Victoria, Australia’s dirtiest coal fired power station.
The Helensburgh camp is to be focussed on the Peabody Energy owned Metropolitan mine which has gained government approval to extend longwall mining operations under the Woronora reservoir and catchment. The demand for coking coal for steel production cannot justify the threat to the Sydney water supply that this mine expansion represents.