Coal is having a renaissance. Despite the fact that even the most coal-dependent countries agree that coal needs to be phased out as soon as possible, it’s proving to be much, much easier said than done. As the price of energy soars on the back of geopolitical risks and supply shortages, legions of consumers are returning to the dirtiest of fossil fuels. In fact, the world consumed a record-breaking amount of coal in 2021 and is on track to reach an all-time high once again this year.
All of the UN climate scenarios which could feasibly lead to keeping the world from heating by more than 1.5 degrees Celsius over pre-industrial averages require the complete elimination of coal, along with seriously scaling back the production and consumption of oil and gas. Despite this, economies around the world are having an all but impossible time weaning themselves off of it. Many developing countries are highly dependent on the cheap, reliable, and relatively readily available fossil fuel, and are faced with difficult trade-offs between climate-friendly policies and arrested economic development. But it’s not just the developing world that’s keeping coal alive. In fact, a recent study found that a handful of financial firms from just six countries – the United States, China, Japan, India, Canada, and the United Kingdom - are collectively responsible for more than 80% of coal financing and investment. What’s more, as European energy markets face the double whammy of Russian aggression in Ukraine and pandemic recovery, oil and gas supplies are painfully tight and coal has helped fill the gaps. And in Australia, its long love affair with coal simply never ended.
As a clear outlier among developed nations, Australia currently boasts the highest carbon emissions from coal in the world on a per capita basis. In one telling anecdote, the current Australian Prime Minister Scott Morrison once physically toted a lump of coal to parliament and held it in his hands while saying, “This is coal. Don’t be afraid, don’t be scared, it won’t hurt you.” The coal-rich nation has been an ardent resister of phasing out the fossil fuel, which accounts for 65% of its domestic energy mix.
Many Australian citizens support the ousting of coal from the country’s economy, but one Australian man might actually have the power to do it. Mike Cannon-Brookes, the third-richest person in Australia with a net worth of A$20 billion, has declared that he wants to end the domestic coal industry by buying it up and shutting it down, and replacing it with renewable energy capacity. Cannon-Brookes has already made a bid to buy the nation’s biggest electricity company and says that negotiations are ongoing.
Morrison and other critics of this plan have warned that the continued use of coal in Australia is essential to keep energy prices affordable for the public. Cannon-Brookes has countered by saying that renewables are now cheaper than coal and that consumers only stand to benefit from the transition. It’s true that in terms of building new energy capacity, renewable energies are now the cheapest form of energy production on Earth. And when you factor in environmental externalities and the long-term economic impact of coal’s carbon footprint, it is hard to argue against. In the short term, however, a transition is sure to be painful.
A transition away from coal in Australia, where coal is the status quo and has been throughout the nation's post-colonial history, was always going to be a difficult one. Indeed, the energy transition around the world will be marked by price shocks and economic disruptions due to the magnitude of the task at hand. Now, with private interests and deep-pocketed investors, such Cannon-Brookes, getting involved and forcing the agenda forward without waiting for government or industry, the future for coal in Australia is looking more uncertain than ever.
By Haley Zaremba for Oilprice.com
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