Australia – A Future Saudi Arabia of Coal?

Imagine a peak oil world – which isn’t too far off according to the International Energy Agency. Perhaps we’ll all be driving electric cars by then, recharged via our rooftop solar systems. Or perhaps they’ll be powered by liquid coal fuels. 

While abundant, coal generates 25 to 50 percent more carbon dioxide per energy unit than petroleum according to the IEA. Everything to do with coal is
essentially an environmental nightmare, from the mining through to combustion.

A "low emissions" or otherwise coal powered world has Ken Caldeira, a climate scientist with the Carnegie Institution in Stanford, California very concerned; fearing that coal is likely to be the cheapest alternative and therefore a very tempting prospect.

With that in mind, let’s turn to Australia’s coal industry, which has the 5th largest proven reserves globally, is the 4th largest coal producer in the world and the world’s largest exporter of coal

Even given that status, the coal industry in this country was in big trouble prior to last week, with "New Generation Coal" failing to convince many of the public that a low emissions version of the black/ brown stuff could ever be climate and generally environmentally friendly, nor should it be considered a long term solution to our energy needs. Even low emissions coal can take up to 20 – 25% more coal to provide the energy needed in the scrubbing/gasification/sequestering process. Additionally,  the possible bankruptcy of Victoria’s Latrobe Valley power stations may have eventuated in the wake of a looming massive fall in the value of coal fired power generators.

Given the short term threats and the role that coal may play in liquid fuels of the future, it may then be not so surprising then that Australia’s Carbon Pollution Reduction Scheme is providing a great deal of support to the coal industry. The government sees it as a viable long term activity; leaving clean and green renewable energy  and the prosperity it can bring to this country looking by comparison somewhat like a poor cousin, even taking into account the upcoming new solar credits program.

Some are hypothesising the Australian government is lavishing support on the coal industry and establishing low carbon reduction targets with a bigger picture than the short term woes of the sector in mind – the potentially massive riches and power for Australia in the years ahead that could be gained through a huge global demand for liquid coal fuels.

Regardless of the good that the renewables sector will do both environmentally and economically for Australia; if liquid coal fuels were to take off, Australia could potentially become a coal driven Saudi Arabia of sorts. 

But at what cost?

Whatever the intentions, the Rudd government’s unconditional 5% carbon reduction target and support of the coal industry has drawn all sorts of criticism in recent days, including from the government’s own climate adviser, Ross Garnaut. 

Professor Garnaut lashed out at the low target and the compensation deal for heavy polluters; making a play on Winston Churchill’s famous words with the statement, "never in the history of Australian public finance has so much been given without public policy purpose, by so many, to so few".