Scale Of NSW Government Coal Subsidy ‘Scandal’ Revealed

A report on Climate Spectator reveals the enormous scale of coal subsidisation in New South Wales and asks a very important question: will the government’s criteria for solar incentives, that they not cost either consumers or the government, be applied to coal-fired generators?

Cost has always been the cry of those opposed to renewable energy subsidies. Opposition can often be traced back to fossil fuel and related sectors, which, as we have reported so many times in the past, have had their faces well and truly planted in the public trough for decades.

It’s been this ongoing gravy train for fossil fuel that has been a major factor in renewable energy subsidies being needed in the first place. Even the International Energy Agency says enough with fossil fuel subsidies already.

The bottom line is the era of cheap energy never really existed – “cheap” electricity been paid for in other ways and Australians will keep paying for it for a long time to come, thanks in part to the environmental destruction caused by the sourcing and burning of fossil fuels.

Last year, we wrote about plans by the New South Wales government to provide cheap coal to electricity generators through the proposed Cobbora coal mine. Since that time, the Government has gone on to make New South Wales somewhat of a solar backwater by slashing incentives for solar panels; citing costs as the primary factor for doing so.

While home solar power in NSW is still a very attractive way for households to buffer against spiralling electricity prices, some have been turned off by the misinformation disseminated and then parroted by elements of the mainstream media.

The result has been a lose-all-round situation – fewer households able to reduce their energy costs, emissions are on the increase, what was a blossoming industry in the state has been undermined and thousands of green jobs have been lost.

Somehow in all this, the issue of fossil fuel subsidies continues to be glossed over.

Giles Parkinson, writing for Climate Spectator, reports the Tamberlin inquiry into the NSW energy privatisation reveals coal-fired power stations in NSW are unable to compete with other power sources unless their coal is supplied at around one quarter of the cost of export coal.

For them to acquire coal at that price means ongoing subsidisation is needed – subsidisation for not just a heavily polluting industry, but one unlike solar that has had decades to stand on its own two feet.

Mr. Parkinson suggests the New South Wales Government should invest heavily in solar power, financed by the returns that could be gained by freeing up coal for export. A subsequently strengthened and cost-competitive solar industry will then be ready to “fall back on when the world finally gets really serious about cutting greenhouse emissions”.

He points out the government-owned Cobbora coal mine will likely be supplying all of NSW’s coal-fired power plants by the end of the decade. At a current export price of $100 – $120 a tonne and an output of 30 million tonnes; this coal could generate $3-$3.6 billion annually in export revenue as opposed to the comparatively paltry sum of $900 million it will receive from coal fired power generators at the subsidised price.

Under the current strategy, assuming the Cobbora coal mine goes ahead and isn’t sold off (the point has been raised of who would buy a coal mine that doesn’t turn a profit anyway), billions of dollars will be lost from the public purse each year in New South Wales so electricity generators can have cheap, polluting coal.  While this loss to the community may not show up on power bills, it will be made up in other ways – and electricity bills will continue to skyrocket regardless.

Electricity prices rose by a staggering 17 per cent in July 2010 in NSW and further increases of between 2 and 10 per cent are expected within the next year – and that doesn’t take into account the impact of the upcoming carbon tax.

Whether it’s exporting coal to extract its maximum value in order to finance renewable energy projects or pulling the subsidisation of coal altogether – either way, solar suddenly becomes even more attractive and fossil fuel based power generation is shown for what it truly is – not just filthy, but expensive.