While State and Federal Coalition governments determinedly push for the expansion of coal mining at the expense of water, farming communities and the Great Barrier Reef, the coal market continues to deteriorate. More coal jobs are being cut, ports are working significantly under capacity, and despite assurances the mining boom will “continue for decades”, BHP’s decision to scrap plans to build a new US$5 billion coal terminal at Queensland’s Abbot Point shows that coal investments are increasingly at risk of becoming stranded assets.
MT @blairpalese: Big day for the planet when BHP puts the brakes on coal development at Abbot Point – tide is turning…http://t.co/BH2M3CuJlb
- The coal industry’s reckless expansion not only poses serious risks for farming communities, groundwater and the Great Barrier Reef, it also threatens to strand investor assets as international demand slows. The Centre of Policy Development says China’s decision to cap energy consumption by 2015 has “changed the game for energy exports”, and that the decision to rush through approvals for ports that aren’t needed is misguided. Queensland ports are working at only 65 percent capacity, and as coal prices are projected to remain low, further impacting exports.
- State and Federal Coalition governments are playing risky games with Australia’s economy in a misguided attempt to “reboot the mining boom”, and are doing it at the expense of the Great Barrier Reef, farming communities, and groundwater supplies. By approving GVK-Hancock’s massive Kevin’s Corner coal project in the Galilee basin on the same day that it released its draft strategic assessment of the Great Barrier Reef, the Government has shown that it holds the irrational belief that it can protect the reef while threatening it.
- While the future of coal grows bleaker and the risk of stranded assets grows, the continued support for coal projects such as Kevin’s corner still puts additional burdens on the local environment and global climate. Australia has between 10 and 17 years left in its carbon budget, according to separate reports from Ecofys and the Climate Change Authority, while the global carbon budget to 2100 will be gone in a mere 21 years according to PriceWaterhouseCoopers. Approving new coal mega projects at a time when the world needs to be making urgent and vigorous moves to reduce greenhouse gas emissions multiplies investment risks while simultaneously making inevitable future emissions cuts, both domestically and internationally, more painful and harder to achieve.
As the Government approves a new mega coal mine for Queensland, a new report has shown that the mining investment boom is turning to bust. The Centre for Policy Development (CPD) report, Too many ports in a storm, says that Queensland’s ports are already operating at only 65 percent capacity, well below the industry average of 85 percent.
Prices are expected to remain low, around US$70 a tonne according to World Bank forecasts, and as many of Queensland’s new coal projects rely on US$120 a tonne to be viable it is unlikely any new capacity will be needed in the foreseeable future, according to CPD.
BHP has seen the writing on the wall, this week abandoning its US$5 billion terminal two expansion plans for Abbot Point and the associated rail link. However, the Federal Government’s approval of GVK-Hancock’s 37,380 hectare Kevin’s Corner coal project on Friday – the same day as it released its Great Barrier Reef draft strategic assessment report – shows that the authorities are willing to ignore market developments, “feverishly” approve mines that threaten the environment, and allowing investors to risk buying into stranded assets in order to “reboot the mining boom”.
Australia has between 10 and 17 years left in its carbon budget, according to separate reports from Ecofys and the Climate Change Authority, while the global carbon budget to 2100 will be gone in a mere 21 years, according to PriceWaterhouseCoopers. Approving new coal mega projects at a time when the world needs to be making urgent and vigorous moves to reduce greenhouse gas emissions multiplies investment risks while simultaneously making inevitable future emissions cuts, both domestically and internationally, more painful and harder to achieve.
- BHP gives up on Abbot Point terminal, cools growth elsewhere (Australian Financial Review)
- BHP Billiton scraps plans for new coal port at Abbot Point in Queensland (Guardian)
- Massive coal mine approved in Qld (Seven / Yahoo)
- Oversupply of port capacity could prove very costly for Queensland (Courier Mail)
- Report: Queensland ports only working at 65% capacity (My Daily News)
Tools and resources
- Report: Too many ports in a storm (Centre for Policy Development)
- Special report: Will Global Coal Boom Go Bust As Climate Concerns Increase? (Yale 360)
- PR: Approval of Galilee mega mine leaves Reef strategy in tatters (Greenpeace)
- Draft report: Reducing Australia’s Greenhouse Gas Emissions: Targets and Progress Review (CCA)
- Report: Feasibility of GHG emissions phase-out by mid-century (Ecofys)
- Report: The state of Australia’s water sector 2013 (Australian Water Association / Deloitte)
- Report: Draining the Lifeblood: Groundwater impacts of coal mining in the Galilee basin (Lock the Gate Alliance)
- Briefing: Cooking the climate – wrecking the reef (Greenpeace)
Images and video
- Video: Abbot Point wetlands: Why risk this beautiful place for coal?, Great Barrier Reef: Thrills and Spills
- Images: Abbot Point, Galilee water use, Reef
- “China’s decision to cap energy consumption by 2015 has really changed the game for energy exports in Queensland. The Queensland Government has rushed through approvals for ports that aren’t needed, given current ports are operating under capacity and future demand is slowing. The risk is more development will lead to stranded assets.” Centre for Policy Development Research Director and report Author Laura Eadie.
- “The very day the Minister was trying to assure Queenslanders that he understood the threat posed by industrialisation to the Reef, he was signing off on a mine that will ship coal through the Reef. The approval of Kevin’s Corner mine makes it very clear the Minister has no intention of doing anything other than “business as usual” when it comes to saving our Reef.” Greenpeace Australia Pacific Climate & Energy campaigner Erland Howden.
- “The Abbott and Newman governments are insanely pushing ahead with their industrialisation of the Great Barrier Reef, even though the market reality is that more coal ports for the Reef aren’t wanted or needed. The old parties need to wake up and realise we’re at the end of the fossil fuel era, with global coal markets dwindling, while we have safe viable renewable alternatives at hand.” Australian Greens Senator Larissa Waters.
- “G20 countries are still consuming fossil fuels like there’s no tomorrow. The results raise real questions about the viability of our vast fossil fuel reserves, and the way we power our economy. The 2DegC carbon budget is simply not big enough to cope with the unmitigated exploitation of these reserves.” PwC Sustainability & Climate Change Director Jonathan Grant.
Related Tree Alerts
- Fast tracking fossil fuel projects threatens water supplies and Great Barrier Reef
- Ten years left on Australia’s carbon budget, 27 globally
- Climate Change Authority finds Australia’s 5% emissions target “not credible”
- Cut finance for fossil fuels to reduce risk exposure advises OECD chief
- MT @sunriseoz: #Coal faces tough trading: low export price & high dollar hurting Whitehaven’s profit http://bit.ly/1hFSH9p #Investors
- MT @fightforthereef: Explain again why we need more #coal ports? More from @centrepolicydev http://t.co/4FjWXmhNi3 http://t.co/x7e21lDyVJ
- MT @olliemilman: Le Monde says Great Barrier Reef has been ‘infiltrated’ by mining/gas industry (think that’s right) http://t.co/CsPyiUi7kc