In recent days, PM Malcolm Turnbull has completed his transformation into Tony Abbott. While insisting that the government is undertaking climate action and is “technology agnostic”, Turnbull has assailed renewable energy and fully embraced coal again as an important part of Australia’s energy future. And he has done so while his government has no policies beyond the Renewable Energy Target to achieve even the unambitious targets it agreed to meet as part of the Paris climate agreement. Instead, the Coalition passes lumps of coal around Parliament and insists the lights will go out unless we start building fictional “clean coal” power plants.
But Turnbull’s embrace of coal is increasingly at odds with simple commercial reality. Australia’s major power companies almost knocked each other over in the rush to distance themselves from the prospect of investing in highly expensive “clean coal” plants when Turnbull flagged it at his National Press Club speech last week. Never mind, was the government’s response — we’ll just subsidise it. Just like it wants to subsidise another dud project, Adani’s vast new Carmichael coal mine, which has long struggled to attract finance.
There’s a reason why private investors are gun-shy about coal and its role in the world’s future power needs. BP’s most recent Statistical Review of World Energy raised forecasts for wind and solar energy for a sixth year in a row, cut the outlook for coal for the fourth consecutive year and gas for the third year. More importantly for Australia, BP forecast no real growth in global coal consumption from 2025 onwards, and forecast, for the first time, that coal use would start falling from around 2030. It also found that coal use around the world fell by more than 70 million tonnes-of-oil-equivalent (Mtoe) – a record 1.8% decline – in 2015, thanks to falls in China and the US, as well as Europe.
Why? Last month, China reportedly suspended more than 100 coal-fired plants totalling more than 100 giga watts (GW) of capacity that were either approved or under construction, in a bid to curb overcapacity in generation and pollution. The directive came from the National Energy Administration, China’s energy regulator, according to media reports from Bloomberg and Reuters. Chinese coal production fell in 2015 (by 3.5%) and by around 9.7% in the first half of 2016. That 100 GW is one-third of America’s entire installed coal-fired power-generating capacity. Coal stations are also being closed and scrapped in the US, or they are going broke by the month due to shale gas production, which continues to rise and will rise faster under Trump.
US coal production had its biggest fall on record in 2016, according to preliminary figures from the country’s Energy Information Administration, which said last year was the worst for the industry in 38 years thanks to falling use in power stations; the EIA says it expects total coal production of 743 million short tons (MMst) for 2016, 17% lower than in 2015, and the lowest level since 1978. Cheap gas is the also major factor which has replaced coal as the major power energy source: in 2016, natural gas-fired electricity generation surpassed coal-fired generation for the first time, accounting for an estimated 34% of total electricity generation compared with coal’s 30% share. That is driving down coal consumption and output, not regulations.
At the moment, BP still sees coal consumption rising to around 2025, but the final data for 2016, especially for the US and China, will change that. Even without any change, its 2025-30 decline date is only eight to 13 years years away. There is no chance the government’s vaunted clean coal capacity can be built in Australia (or elsewhere) in that time and be up and running, especially given energy industry recalcitrance and major banks turning their backs on coal investment.
Renewables still have a long way to go. Despite rapid growth taking them past both hydro and nuclear, BP sees wind and solar energy still far behind fossil fuels at the outer limits of its forecast in 2035. All low-carbon sources combined, at 3785 Mtoe in 2035, would still supply less energy than coal, oil or gas alone — though some analysts point out that the BP review has consistently been too optimistic on fossil fuels, especially coal, and underestimated the growth in renewables. That’s why they expect further downgrades in coal estimates when BP next updates its data in June.
The government can jawbone coal all it likes, but global forces are moving against coal — and quicker than many expect.
Hydro power IS renewable.
What’s puzzling is that CSIRO reports that 75 per cent of Australians accept the science of climate change and it follows accept that we should be cutting down on our fossil fuel consumption…so Mal is hitching his wagon to a quarter of the population? Won’t have his job for long either way.
“Mtoe” is the language of people who want us to replace coal with oil and gas. However in the language our students understand, 1 Mtoe/a of heat would generate about 200 MW of electricity.
You’re lucky that they aren’t using BTUs.
Oops, that was incorrect.
1 Mtoe/a of heat would generate ~400 MW of electricity, assuming an efficiency of 30%. We don’t know what efficiency BP assumes.
Thus the 70 Mtoe drop would equate to 28 GW less generation from coal across the year. The 2035 prediction of 3785 Mtoe/a equates to 1500 GW of low-carbon electricity.
Surely the units should be Joules not Watts i.e. energy not power.
@ Matt Hardin – thank you for checking the maths, I wish more people would apply that reality test more often!
In this case, we are talking power, so the units are correctly in watts. Australians average about 1 kW of electricity each, so a megapax city uses 1 GW. A flow of black coal into furnaces at a rate of 1 kg/s is a heat flow of 20 MJ/s=20MW, generating 20 MW * 30% eff = 6 MW of electricity.
Any confusion is because the reports that the data comes from were written by accountants who thought their shareholders so trenchantly anti-school as to need rates to be expressed in terms of so many lumps that go clunk in a year. A “toe” had little to do with a ton of crude oil, instead it was defined as ten billion calories. The calorie, along with the rest of the CGS system of units, was rescinded in 1960. Don’t sleep with these guys, you’ll wake up in the 1950s.
Thermal coal will soon be history but coking coal will be used for quite a while for iron. The ore needs to be reduced to iron and that is most conveniently done with carbon.
Malcolm, you’re sounding so much like Tony these days it’s only the polished white teeth that tells you apart. Come on Malcolm, it’s time then to shirt-front the Gas and Petroleum producers who are siphoning off our LNG and returning little to Australia in the form of Royalties and Taxes compared with other major exporters. Why is it we receive such small return compared with Qatar, Malaysia, Nigeria, Indonesia, Canada and Norway? Come on Malcolm, use the same formula for calculating gas revenues and you’ll earn your country a cool $20 Billion+ extra revenue. S’pose that doesn’t sound so much when you’re a billionaire yourself. Why Malcolm (and Josh) can’t we fire up places like Pelican Point, which uses the very latest, cleanest and efficient generating technology? Why? It’s because our electricity generators, unlike those in countries that also export LNG, don’t have to buy gas at world market prices. Malcolm, you like to rant about the need to reduce corporate taxes to maintain a competitive business edge, then why are you under taxing the gas producers and letting a real competitive advantage we had until a couple of years ago (low energy prices) slide away. All you have to do is tax the gas producers on volume rather than profit. Like the others do. Then maybe you’ll cease your latest Tony like rant. The one that is falsely blaming renewables for our energy crisis.
Well said!!
Very well said. Massive incompetence or corruption in the LNG market in Australia. Worth a Royal Commision?