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OPINION: Coal Investment Still High

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Last October ANZ announced it would stop lending money for thermal coal projects. The Bank was at it again in February, proclaiming it would stop funding Newcastle’s coal port.  What’s next, high sugar drinks? Fatty food? 

Our miners need not panic just yet. A spokesman for green lobby group Reclaim Finance recently lamented that while 88 commercial banks around the world have adopted some form of anti-coal mantra, only four have embraced “robust coal exclusion policies”. This subterfuge is not unique to lending institutions. Governments around the world are committing to Net Zero Emissions without any realistic implementation plans or, in some cases, any intention to achieve it. 

The United States of America remains home to coal’s the biggest institutional investors. Between them they hold 58 per cent of global coal investments, totalling $US602 billion. Japan’s banks are the biggest lenders for coal projects, with loans totalling $US76 billion. They are also big consumers, buying billions of dollars of Australian thermal coal each year to fuel their growing fleet of electricity generators. Australia’s other thermal coal customers both invest and consume too. Between them our Asian customers are building or plan to build more than 200 coal generators between them.

In NSW, around $4.5 billion has been committed to new coal mines and to the expansion of existing mines. Those who rail our coal to port are investing too. Those looking for a good return know there is still plenty of money to be made in the coal industry.

But none of this means we shouldn’t be concerned about the ANZ’s attitude. Their debt finance remains important to the coal mining industry and there’s a risk the Bank’s behaviour will put pressure on other corporates struggling in the face of shareholder and other green activists. 

In 2015 Newcastle Council decided to divest itself of any investments in fossil fuel industries. Yet its coal loaders are significant employers. Last year, the University of NSW – home to one of Australia’s proudest mining schools – took the same decision.

The University’s Richard Holden is doubling down. Sharing his wisdom in the UNSW’s online news bulletin last week, the Economics Professor saw opportunity in the earlier-than-expected closure of Yallourn power station when he wrote:

“The crucial question in all of this is whether Australia’s coal-fired power stations are being closed too slowly – or even too quickly. It’s hard to know without a price on carbon to create a level playing field for renewable energy and fossil fuels.”

Professor Holden went on to insist that we need a carbon tax that reflects the “social cost of carbon” before suggesting that cost is $65 per metric tonne. In doing so he answered his own question. His carbon tax would shut down our coal-fired generators sooner. They are already closing prior to the end of their physical lives as a result of government policies. Professor Holden wants to accelerate that process.

He says we risk “blackouts or brownouts”. But the real threat to supply reliability is his proposed carbon tax and all those who believe we can keep putting more and more renewable energy into the grid without holding on to our coal generators for all their physical lives.

We’ve achieved a lot, in both adding variable solar generation to the system equal to the capacity of nine Yallourn powers stations and achieving a 46 per cent reduction in our per capita emissions since 1990.

But we can’t close base-load coal-fired power stations and reject new gas-fired power stations without causing blackouts and driving up energy prices. And we can’t hope to put more renewables into the grid without new supplies of firming power, namely gas fuelled.

If the banks, state governments, and our public institutions want to desert our fossil fuel industries, they surely have a responsibility to tell us what they are prepared to do to manage the impact on our economy, jobs and our energy system. Remember, the banks benefit from funding guarantees provided by the same government which purports to represent the interests of those who will lose their jobs and suffer bigger electricity bills as a result of bank behaviour. You can be sure those participating in the looming parliamentary inquiry will labour that point.

Hon Joel Fitzgibbon MP

Federal Member for Hunter

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