The Green Institute has published a collated paper on The End of Coal, asking the questions: How should governments respond to coal’s rapid and terminal decline? Will governments and corporations act to protect people and the planet, or will they try to extract the last drops of profit from coal before it is left it behind?
The essays in the paper argue that not only that change is coming, but also that, if we embrace and accelerate that change, it brings with it tremendous opportunities to build a better, fairer democracy, economy and society.
Green Agenda is pleased to publish a selection of the essays collated in The End of Coal, starting with the Introduction by Green Institute Director, Tim Hollo.
The End of Coal: How should the next government respond?
How did we find ourselves here?
While Australian politics has been looking elsewhere, assuming that old realities will continue unimpeded, the coal industry has entered a phase of terminal and rapid decline.
According to the Institute for Energy Economics and Financial Analysis (IEEFA), the world passed peak coal in 2013/14. And this isn’t a gentle curve. IEEFA projects a 25% drop in global demand for thermal coal by the end of the decade – a crash of a quarter in the next four years!
Let’s dig into this, with some key facts and figures extracted from the papers in this collection.
The USA has closed or will close over 100GW (twice Australia’s total grid) of coal plants this decade. The collapse of both domestic and export demand has led to all of the USA’s major listed coal companies filing for bankruptcy, and stranded assets in the industry estimated by McKinsey at $75 bilion.
China, long treated by Australia as an endless excuse for inaction, is shifting rapidly to efficiency and renewables, driven largely by air pollution concerns, but also by climate change and global economic drivers. China’s coal use dropped 2.9% in 2014, 4% in 2015 and 6.8% to this point in 2016.
India’s new government is taking huge steps, partly driven by environmental and social concerns, but largely by the simple economic fact that domestic solar already out competes imported coal on price alone. Despite the protestations of Australian coal spin-doctors, it is now irrefutably cheaper to lift people out of poverty in India with solar power than with imported coal. The Indian government’s goal to cease all coal imports in three years is well on its way to being achieved, with a 15% drop in 2015/16 alone.
Coal plants are being mothballed or closed from South Australia to Queensland, with Victoria’s Hazelwood the latest to be slated for closure.
Here in Australia, the coincidence of increasing energy efficiency, falling demand and greater supply of renewables has led the Australian Energy Market Operator (AEMO) to belatedly recognise that our market has some 8-9000MW of excess capacity. Coal plants are being mothballed or closed from South Australia to Queensland, with Victoria’s Hazelwood the latest to be slated for closure. Meanwhile, the massive expansion of export coal mining planned for Queensland is stalled because the global markets are simply not there.
This did not happen by accident. It is thanks to a combination of the sudden affordability of renewable energy, massive public and private investments in energy efficiency, and market forces and political decisions in India, the USA and China making themselves felt. Critically, it should be recognised that all of these forces have themselves being driven by invigorated civil society demands for action across the globe, from widespread adoption of green technologies through the fossil fuel divestment movement to the increasing civil disobedience campaigns in the USA, Australia, Europe, India and South East Asia. It is impossible to ignore the conclusion that coal has lost its social licence. The arrival of affordable battery technology, the solar price crash, and ever-growing campaigns will only accelerate these trends.
The Paris Climate Agreement, while deeply flawed, has been read as locking in the end of coal, with its promise to reach zero net emissions in the second half of the century impossible to achieve without closing the coal sector. A strategic reading of Paris is that such a geopolitical agreement could not have been reached in the absence of the growing civil society and market signals that coal’s demise was already happening.
It is a harsh indictment on our politics that this has taken Australia by surprise.
For years, experts from former Australian Coal Association chair Ian Dunlop to former Greens Leader Christine Milne to energy analyst Tim Buckley have been pointing towards the beginnings of structural decline for coal. Because governments, business leaders and commentators have ignored the warnings, the price crash, stranded assets and bankruptcies of major coal companies such as Peabody are still being treated as an aberration. The attitude of governments has been at worst to deny that there is a problem and at best to conclude that this will be a slow, steady decline over decades. Either way, the response has been to attempt to hold back the tide with subsidies and support packages to keep the industry afloat.
But we can see the implications of such action in sectors like car manufacturing in Australia and coal in the USA. By keeping industries on life support, handing out ever more subsidies to continue business-as-usual, governments are laying the groundwork for workers, landholders and indigenous people being left on the scrap heap by corporations when they eventually close shop and skip town, as well as a mess of unrehabilitated sites and worse climate change. Time and again, we have seen this process repeating. Industries struggling to get by ask for handouts, continue with stagnating practices as long as they can, then walk away, paying their directors large bonuses while abandoning any responsibilities to employees or the environment.
Governments – and oppositions – enabling this behaviour to continue while claiming that they are supporting workers are either delusional or dishonest.
In fact, the most honest approach, and the one that will be best for people and the planet, is to immediately prepare for a staged transition, facilitate a dignified exit from the coal industry for workers and communities, and ensure that the corporations which have caused this mess cover the costs.
Coal phase outs across entire jurisdictions are not, as caricatured by opponents, pipe dreams of environmentalists which would lead to economic devastation. They have been completed, and they are underway, in places comparable to Australia. Ontario, Canada, completed a full phase out of coal power in 2014. New York State plans to phase out all coal power plants by 2020, and the United Kingdom by 2025.
And, of course, South Australia, while still connected to the coal-dominated National Energy Market, closed its last coal fired power station on May 9 this year.
It is worth noting that this paper deliberately takes climate change as understood. But it does require an honest appraisal of the situation we find ourselves in.
There are positive signs that outright rejection of climate science is increasingly outside the norms our politics. However, what remains mainstream political consensus is a misguided idea that it is possible to tackle global warming without rapid and radical change. Liberal, Labor and National Party politicians, business leaders and commentators are able to simultaneously profess support for the Paris Climate Agreement and argue that coal has a long term future.
Set against this, a recent paper from the Climate Institute calculates that, in order to have a chance of hitting the Paris targets, Australia will have to phase out all coal power by 2030-35. One of the word’s most respected climate scientists, Professor Michael Mann, goes further. He has concluded that “We have no carbon budget left for the 1.5°C target and the opportunity for holding to 2°C is rapidly fading unless the world starts cutting emissions hard right now”.
The clear lesson from climate science is that all coal plants should be closed as swiftly as technically achievable. The decline that has already started will have to be accelerated as governments manage the exit.
There are, of course, a multitude of other reasons why we should be accelerating the phase out of coal, rather than simply waiting for the market to do its work, or holding back the tide and keeping it on life support.
There are, of course, a multitude of other reasons why we should be accelerating the phase out of coal, rather than simply waiting for the market to do its work
The health impacts of coal mining and burning, and of climate change itself, have recently been brought to the fore by doctors and medical associations around the world. In May 2016, an open letter was published from “82 organizations from 30 countries who represent more than 300,000 doctors, nurses and public health professionals” calling on governments meeting at the G7 to accelerate the phase out of coal fired power. They set out evidence of premature deaths and ill health caused by air pollution, mercury and climate change that can be traced to coal.
The disproportionate impact of coal mining on Indigenous peoples in Australia and overseas, on people in developing nations, and on vulnerable people within rich nations like Australia is another reason to accelerate its phase out. The recent Beyond Coal and Gas conference in Maitland, NSW, featured stark and passionate presentations from Indigenous leaders from central NSW, Cape York, Borroloola in the Northern Territory, as well as visitors from India and the USA. All of them told of a coal industry, backed by governments, trampling the rights of local communities, destroying cultural heritage, and poisoning the water, the land and the people living on it.
But the reasons to phase out coal aren’t just to stop bad things happening. Embracing the end of coal also opens up a whole range of possibilities that currently are closed off. Just as any menu limits our choices, our fossil fuel entrenched politics limits what we can imagine for ourselves. The opportunity now is to deliberately expand our horizons and think big. Here is just one example.
Whenever the end of coal is raised, our political debate very quickly – and quite rightly – focuses on what will happen to communities where coal is currently a big part of the economy. The problem is, our politics currently allows for only two perspectives.
The most common approach, epitomised by Deputy Prime Minister Barnaby Joyce in the Regional Leaders’ Debate on ABC on May 25, is to proclaim that there are no alternatives to coal mining for people living in these communities and that those who want to close the mines want to leave them out of work. Aside from the fact that this is an offensive slur against thousands of skilled people, it has the impact of increasing depression and disenchantment in those communities, as Dr Amanda Cahill finds in her contribution below.
The second approach, epitomised by well-intentioned unions and community campaigners, is to insist that coal be replaced by similar, high-paying full time jobs. For many people, this will be important or necessary, and this should in no way be taken as suggesting every effort shouldn’t be made to provide them.
There is, however, a third way. Around the globe, there is increasing awareness that automation of jobs, ecological limits and growing post-consumerist behaviour are leading towards a world where we can finally free ourselves of the daily grind. After a three decade hiatus, we can return to the previous goal of both left and right politics – less work. In this context, alongside drives for a shorter working week and more affordable housing, health and education, there is a swiftly building push for the introduction of some form of guaranteed basic income for all people. Trials are already underway or planned in the Netherlands, Finland and Canada, simply providing regular payments to all people.
What if we were to establish a trial of guaranteed basic income for all people in the Hunter and Latrobe Valleys, in Collie, Port Augusta and the Gladstone area? Alongside properly resourced community consultations, and investment in seeding new industries and supporting existing ones to grow, this would enable people in coal communities to move beyond coal with confidence, with hope, and with exciting visions for the future.
The climate, health and human rights drivers make it imperative that we phase out coal, and there are tremendous opportunities from doing so. But the message from the papers in this collection is that, whether we embrace it or not, the end of coal is happening now and the challenge the next government will face is how to respond.
whether we embrace it or not, the end of coal is happening now and the challenge the next government will face is how to respond
These papers are an object lesson in strength in diversity. They take a wide array of angles and approaches to the question: technical and personal, economic and ecological, geopolitical and geological.
In the first two papers, IEEFA’s Tim Buckley and the Climate Justice Project’s Julie-Anne Richards set out the context we’re in.
In a commissioned paper, Buckley paints a picture of an industry in free fall: stranded assets, high profile bankruptcies, and capital flight from every part of the coal industry, from mines to ports to power generation. He shows us a global transformation underway, with major implications for the Australian coal sector. Around the world, thanks to various drivers, coal is being squeezed from both directions – on the one hand the successful decoupling of economic activity from energy use reducing demand and, on the other hand, coal rapidly losing market share of remaining demand, being outcompeted by other technologies and fuels. As noted above, Buckley concludes that the world passed peak coal in 2013/14 and projects a crash in global demand for thermal coal of 25% by the end of the decade.
Richards, meanwhile, examines the geopolitics leading up to and out of Paris, charting the political end of coal. In particular, she highlights the rise of loss and damage as a concept in global climate negotiations, next to mitigation and adaptation. Richards examines the growing threat of litigation against both governments and corporations, following the model of tobacco and asbestos litigation. In those cases, litigation was a precursor to governments pursuing corporations for liability for damages they caused. She notes that there is already momentum towards a levy on coal extraction so as to ensure that governments have funds to cover such liabilities.
Dr Nick Aberle, from Environment Victoria, then looks at the fact that falling domestic energy demand, increasing renewable energy penetration and affordability, and the climate reality, provide the perfect moment to accelerate the phase out of coal. He sets out the case for properly preparing for and planning this phase out or we risk leaving workers and the environment in the lurch. Noting that AEMO calculates that 30-40% of existing coal plants in Australia will need to be closed in order to meet even the current government’s woeful climate targets, he follows the Climate Institute’s recommendation of working to retire our entire coal fleet by 2030-35. Canvassing the barriers to exit as well as entry to the energy market, Aberle sets out policy options for staging retirement, concluding with a plea to start preparing communities for transition now, instead of waiting until it’s too late.
Dr Amanda Cahill of the Centre for Social Change contributes powerful personal reflections on working in and with communities in transition. She highlights the opportunities not just for climate action but also for deep social and economic renewal that come with a swift and well-prepared transition away from coal. Unsurprisingly, she notes that responses from communities depend on the questions they are presented with. People swing from understandable depression and disempowerment when thinking only about coal’s demise, to excitement and inspiration about future opportunities when prompted to consider the strengths of the local community, to anger at what governments and corporations have done. Cahill finds that the communities she has worked with begin to raise radical questions of their own, challenging the failings of our current economic system.
Lock the Gate founder, Drew Hutton, takes a different approach, starting with a call to action to broaden the movement fighting climate change and fossil fuels into one that builds a new economy and new democracy. He takes the huge task of mine rehabilitation as his example, noting the immense opportunities in rehabilitating mine sites covering some 94,600km2 in Queensland’s Bowen Basin alone. Seizing that opportunity means rewriting our current political economy, Hutton argues, since mining companies currently avoid their responsibilities in various ways, and are enabled to do so by governments. “Interventionist governments and regulatory enforcement”, as well as a cultural shift in board rooms, are prerequisites to effectively tackling this challenge.
Finally, Charlie Woods, Campaigns Director of 350 Australia, brings the activist perspective. She articulates in plain language how deeply entangled politics and fossil fuels currently are, thanks to donations, subsidies and the revolving door of politicians and lobbyists, and sets out urgent steps we can and must take to disentangle them.
There is no simple answer to the question “how should the next government respond to the end of coal”. There is certainly no silver bullet. The contributors to this collection set out a broad range of recommendations pointing towards the kind of systemic shift that needs to occur if our politics is to truly face up to the challenge. In summary, the next government must:
- Publicly acknowledge that coal is on its way out and we need to manage its decline and replacement in energy supply, in the economy and in employment. Phasing out coal power and mining as soon as feasible and no later than 2030-35;
- Set a climate target in line with science, and one which explicitly includes a managed phase-out of coal in line with Paris commitments at a minimum;
- Remove coal’s stranglehold on politics, through donations reform, ending fossil fuel subsidies and closing the revolving door between industry and politics;
- Ensure that coal companies pay for rehabilitation of sites and just transitions plans for communities, as well as contribute towards loss and damage, before they relocate or go bankrupt; and
- Engage communities thoroughly and honestly in questions about their future, through properly funded consultations beginning immediately, and enable them to walk into the future with confidence through a mechanism such as a localised trial of a guaranteed basic income.
The end of coal doesn’t need to fill us with fear. We can embrace it as an exciting opportunity. But, frankly, regardless of how we approach it, we’d better get used to the fact that it is now upon us. After wasted years ignoring the signs that it was coming, it’s about time we made the end of coal work for all of us.