India’s wicked problem: how to loosen its grip on coal while not abandoning the millions who depend on it


Anupam Nath/AP

Vigya Sharma, The University of QueenslandIndia is the world’s third largest emitter of greenhouse gases, and its transition to a low-carbon economy is crucial to meeting the goals of the Paris Agreement. But unfortunately, the nation is still clinging firmly to coal.

Our new research considered this problem, drawing on a case study in the Angul district, India’s largest coal reserve in the eastern state of Odisha.

We found three main factors slowing the energy transition: strong political and community support for coal, a lack of alternative economic activities, and deep ties between coal and other industries such as rail.

India must step away from coal, while maintaining economic growth and not leaving millions of people in coal-mining regions worse off. Our research probes this wicked problem in detail and suggests ways forward.

people carry baskets filled with coal
India’s energy transition must ensure those living in poverty are not left behind.
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Why India matters

India’s population will soon reach 1.4 billion and this decade it is expected to overtake China as the world’s most populous nation. This, combined with a young population, growing economy and rapid urbanisation, means energy consumption in India has doubled since 2000.

The International Energy Agency (IEA) estimates India will have the largest increase in energy demand of any country between now and 2040.

An affordable, reliable supply of energy is central to raising the nation’s living standards. A recent World Bank analysis found up to 150 million people in India are poor.

Alongside its massive reliance on coal, India has one of the world’s most ambitious renewable energy plans, including an aim to quadruple renewable electricity capacity by 2030.

The IEA says coal accounts for about 70% of India’s electricity generation. And as the nation rebounds from the coronavirus pandemic this year, the rise in coal-fired electricity production is expected to be three times that from cleaner sources.

Coal-powered generation is anticipated to grow annually by 4.6% to 2024, and coal is expected to remain a major emitter of greenhouse gases to 2040.

While India’s energy trajectory remains aligned with its commitments under the Paris Agreement, the speed and readiness of its transition remains a complex, divisive issue. The World Economic Forum’s 2021 Energy Transition Index ranks India 87th out of 115 countries analysed.




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students hold lights
India’s young, growing population is fuelling the nation’s energy demand.
EPA

Bottlenecks in the transition

Our research involved visits to the Angul district in Odisha in 2018 and 2019, where we conducted focus groups and interviews. Angul is home to 11 coal mines.

We found three crucial bottlenecks to the energy transition, which arguably exist in India’s other coal belts and could derail the nation’s decarbonisation efforts.

First, the Odisha government has historically been very pro-business. Politicians across the spectrum support coal mining and seek to position it as the region’s primary economic lifeline.

The official pro-coal position receives little pushback from Angul residents, who are largely unaware of Odisha’s contribution to national greenhouse gas emissions. Any local opposition to coal usually stems from concern about environmental degradation such as air, water and land pollution.

Most of Angul’s residents felt a deep connection to coal because their livelihood depends on it. One participant told us:

even if all the water is polluted and five inches of dust settles on our well, we would prefer mining to continue as my family’s survival depends on (the contract with the mining company).

Most participants considered their farming land as an asset to be sold to the mining companies for a significant sum. The money would, in turn, allow them to start a business, buy a car or arrange a marriage in the family.

people sit in dark room
Coal is important to the livelihoods of millions of Indian people.
AP

Second, the heavy reliance on coal means efforts to diversify the region’s economy have been grossly neglected.

In Angul, mining zones and coal-dedicated railway lines passing through paddy fields mean agricultural productivity has declined over time. Rural development agendas have been short-lived, often set within six months of an election deadline then changed or abandoned.

Skill-development programs in non-coal vocations have also been limited. This lack of viable alternatives implicitly generates local support for coal.

And third, a suite of industries in Odisha – such as steel, cement, fertiliser and bauxite – depend on cheap coal for power. This is reflected across India, where coal has deep ties with other industries in ways not seen elsewhere.

For example, in 2016 Indian Railways earned 44% of its freight revenue from transporting coal. Indian Railways is India’s largest employer and coal revenue helps keep passenger fares low. So in this way, a potential coal phaseout in India would have far-reaching effects.

people look out train window
Coal revenue helps subsidise train fares in India.
EPA

The way forward

We offer these pathways to ensure a steady, just energy transition in India:

  • India must help its coal regions diversify their economic activities
  • bipartisan support for a coal-free India is needed. Transition champions such as Germany can show India’s leaders the way
  • a national taskforce for energy transition should be established. It should include representatives from across industry and academia, as well as climate policymakers and grassroots organisations
  • India’s coal regions are endowed with metals needed in the energy transition, including iron ore, bauxite and manganese. With improved regulatory standards, these offer economic alternatives to coal
  • concerns about the coal phase-out from communities in coal regions should be addressed fairly and in a timely way.

The world’s emerging economies are responsible for two-thirds of global greenhouse gas emissions. The energy transition in India, if done well, could show the way for other developing nations.

But as new industrial sectors emerge and clean energy jobs grow, India must ensure those in coal-dependent regions are not left behind.




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The Conversation


Vigya Sharma, Senior Research Fellow, Sustainable Minerals Institute, The University of Queensland

This article is republished from The Conversation under a Creative Commons license. Read the original article.

Paying Australia’s coal-fired power stations to stay open longer is bad for consumers and the planet


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Daniel J Cass, University of Sydney; Joel Gilmore, Griffith University, and Tim Nelson, Griffith UniversityAustralian governments are busy designing the nation’s transition to a clean energy future. Unfortunately, in a misguided effort to ensure electricity supplies remain affordable and reliable, governments are considering a move that would effectively pay Australia’s old, polluting coal-fired power stations to stay open longer.

The measure is one of several options proposed by the Energy Security Board (ESB), the chief energy advisor to Australian governments on electricity market reform. The board on Friday released a vision to redesign the National Electricity Market as it transitions to clean energy.

The key challenges of the transition are ensuring it is smooth (without blackouts) and affordable, as coal and gas generators close and are replaced by renewable energy.

The redesign has been two years in the making. The ESB has done a very good job of identifying key issues, and most of its recommendations are sound. But its option to change the way electricity generators and retailers strike contracts for electricity, if adopted, would be highly counterproductive – bad both for consumers and for climate action.

Electricity lines at sunset
One proposed reform to Australia’s electricity market would be bad for consumers and climate action.
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The energy market dilemma

The National Electricity Market (NEM) covers every Australian jurisdiction except Western Australia and the Northern Territory. It comprises electricity generators, transmission and distribution networks, electricity retailers, customers and a financial market where electricity is traded.

Electricity generators in the NEM comprise older, polluting technology such as gas- and coal-fired power, and newer, clean forms of generation such as wind and solar. Renewable energy, which makes up about 23% of our electricity mix, is now cheaper than energy from coal and gas.

Wind and solar energy is “variable” – only produced when the sun is shining and the wind is blowing. Technology such as battery storage is needed to smooth out renewable energy supplies and make it “dispatchable”, meaning it can be delivered on demand.

Some say coal generators, which supply dispatchable electricity, are the best way to ensure reliable and affordable electricity. But Australia’s coal-fired power stations, some of which are more than 40 years old, are becoming more prone to breakdowns – and so less reliable and more expensive – as they age. This has led to some closing suddenly.

Without a clear national approach to emissions targets, there’s a risk these sudden closures will occur again.




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Wind farm near coast
Wind and solar energy is variable.
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So what’s proposed?

To address reliability concerns, the ESB has proposed an option known as the “physical retailer reliability obligation”.

In a nutshell, the change would require electricity retailers to negotiate contracts for a certain amount of “dispatchable” electricity from specific generators for times of the year when reliability is a concern, such as the peak weeks of summer when lots of people use air conditioning.

Currently, the Australian Energy Market Operator has reserve electricity measures it can deploy when market supply falls short.

But under the new obligation, all retailers would also have to enter contracts for dispatchable supply. This would likely require buying electricity from the coal generators that dominate the market. This provides a revenue source enabling these coal plants to remain open even when cheaper renewable energy makes them unprofitable.

The ESB says without the change, the closure of coal generators will be unpredictable or “disorderly”, creating price shocks and reliability risks.

hand turns off light switch in bedroom
The ESWB says the recommendation would address concerns over electricity reliability.
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A big risk

Even the ESB concedes the recommendation comes with considerable risks. In particular, the board says it may:

  • impose increased barriers to retail competition and product innovation
  • lead to possible overcompensation of existing coal and gas generators.

In short, the policy could potentially lock in increasingly unreliable, ageing coal assets, stall new investment in new renewable energy storage such as batteries and pumped hydro and increase market concentration.

It could also push up electricity prices. Electricity retailers are likely to pass on the cost of these new electricity contracts to consumers, no matter how much energy that household or business actually used.

The existing market already encourages generators to provide reliable supply – and applies strong penalties if they don’t. And in fact, the NEM experiences reliability issues for an average of just one minute per year. It would appear little could be added to the existing market design to make generators more reliable than they are.

Finally, the market is dominated by three large “gentailers” – AGL, Energy Australia and Origin – which own both generators and the retail companies that sell electricity. The proposed change would disadvantage smaller electricity retailers, which in many cases would be forced to buy electricity from generators owned by their competitors.

Australia’s gentailers are heavily invested in coal power stations. The proposed change would further concentrate their market power while propping up coal.




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warning sign on fence
The proposed change brings a raft of risks to the electricity market.
Kelly Barnes/AAP

What governments should do

If coal-fired power stations are protected from competition, it will deter investment in cleaner alternatives. The recommendation, if adopted, would delay decarbonisation and put Australia further at odds with our international peers on climate policy.

The federal and state governments must work together to develop a plan for electricity that facilitates clean energy investment while controlling costs for consumers.

The plan should be coordinated across the states. Without this, we risk creating a sharper shock later, when climate diplomacy requires the planned retirement of coal plants. Other nations have acknowledged the likely demise of coal, and it’s time Australia caught up.




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The Conversation


Daniel J Cass, Research Affiliate, Sydney Business School, University of Sydney; Joel Gilmore, Associate Professor, Griffith University, and Tim Nelson, Associate Professor of Economics, Griffith University

This article is republished from The Conversation under a Creative Commons license. Read the original article.

Forget about the trade spat – coal is passé in much of China, and that’s a bigger problem for Australia



Greg Baker/AP

Hao Tan, University of Newcastle; Elizabeth Thurbon, UNSW; John Mathews, Macquarie University, and Sung-Young Kim, Macquarie University

Australian coal exports to China plummeted last year. While this is due in part to recent trade tensions between Australia and China, our research suggests coal plant closures are a bigger threat to Australia’s export coal in the long term.

China unofficially banned Australian coal in mid-2020. Some 70 ships carrying Australian coal have reportedly been unable to unload in China since October.

This is obviously bad news for Australia’s coal exporters. But even if the ban is lifted, there’s no guarantee China will start buying Australian coal again – at least not in huge volumes.

China is changing. It’s announced a firm date to reach net-zero emissions, and governments in eastern provinces don’t want polluting coal plants taking up prime real estate. It’s time Australia faced reality, and reconsidered its coal export future.

Coal ship unloads at Chinese port
China’s coal import quotas are hurting Australian exporters.
Wang Kai/AP

First, the coal ban

In May last year, China’s government effectively banned the import of Australian coal, by applying stringent import quotas. As of last month coal exports to China from Newcastle, Australia’s busiest coal exporting port, had ceased.

In 2019, Australia exported A$13.7 billion worth of coal to China. This comprised A$9.7 billion in metallurgical coal for steel making and A$4 billion in thermal coal for electricity generation.

The latest official Australian data shows these export levels fell dramatically between November 2019 and November 2020. Comparing the two months, metallurgical and thermal coal exports to China were down 85% and 83% respectively.




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Several Chinese provinces experienced power blackouts in late 2020. China’s state-backed media said the shortages were unrelated to the ban on Australian coal. Instead, they blamed cold weather and the recovery in industrial activity after the pandemic.

We dispute this claim. While Australian coal accounts for only about 2% of coal consumption in China, it helps maintain reliable supply for many power stations in China’s southeast coastal provinces.

Coal mining in China mostly occurs in the western provinces. Southeast coastal provinces are largely economically advanced and no longer produce coal. Instead, power stations in those provinces import coal from overseas.

This coal is cheaper than domestic coal, and often easier to access; transport bottlenecks in China often hinder the movement of domestic coal.

Coal mine at Gunnedah in NSW
Australian thermal coal helps supplement China’s domestic supply.
Rob Griffith/AP

Beyond the trade tensions

Experience suggests trade tensions between Australia and China will eventually ease. But in the long run, there is a more fundamental threat to Australian coal exports to China.

Data from monitoring group Global Coal Tracker shows between 2015 and 2019, China closed 291 coal-fired power generation units in power plants of 30 megawatts (MW) or larger, totalling 37 gigawatts (GW) of capacity. For context, Australia decommissioned 5.5 GW of coal-fired power generation units between 2010 and 2017, and currently has 21 GW of coal-fired power stations.

The closures were driven by factors such as climate change and air pollution concern, excess coal power capacity, and China’s move away from some energy-intensive industries.

Our recently published paper revealed other distinctive features of the coal power station closures.




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First, China’s regions are reducing coal power capacity at different rates and scales. In the nation’s eastern provinces, the closures are substantial. But elsewhere, and particularly in the western provinces, new coal plants are being built.

In fact, China’s coal power capacity increased by about 18% between 2015 and 2019. It currently has more than 1,000 GW of coal generation capacity – the largest in the world.

Second, we found retired coal power stations in China had much shorter lives than the international average. Guangdong, an economically developed region of comparable economic size to Canada, illustrates the point. According to our calculation, the stations in that region had a median age of 15 years at closure. In contrast, coal plants that closed in Australia between 2010 and 2017 had a median age of 43 years.

coal plant in China
Coal plant closures have been most marked in China’s east.
AP

This suggests coal power stations in China are usually retired not because they’ve reached the end of their productive lives, but rather to achieve a particular purpose.

Third, our study showed decisions to decommission coal power stations in China were largely driven by government, especially local governments. This is in contrast to Australia, where the decision to close a plant is usually made by the company that owns it. And this decomissioning in China is usually driven by a development logic.

Coal plant closures there have been faster and bigger than elsewhere in the country, as governments replace energy- and pollution-intensive industries with advanced manufacturing and services.

And as these regions become richer, the value of land occupied by coal power plants and transmission facilities grows. This gives governments a strong incentive to close the plants and redevelop the sites.

In coming years, southeast China will increasingly shift to renewable-based electricity and electric power transmitted from western provinces.

Man covers mouth
Air pollution concerns are helping drive China’s move away from coal-burning for power.
Ng Han Guan/AP

Securing our energy future

Coal power stations in China’s eastern coastal regions will continue to close in coming years, and power generation capacity will be redistributed to western provinces. For reasons outlined above, that means power generation in China will increasingly rely on domestic coal rather than that from Australia.

China’s coal exit is in part due to its strategy to peak its carbon emissions before 2030 and achieve net-zero by 2060. Australia must realistically appraise its coal export prospects in light of the long-term threat posed by shifts in China and other East Asian nations.

The Morrison government, and industry, should re-double efforts to rapidly expand renewable energy in Australia. Then we can leave coal behind, and emerge as a renewable energy superpower.




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The Conversation


Hao Tan, Associate professor, University of Newcastle; Elizabeth Thurbon, Scientia Associate Professor in International Relations / International Political Economy, UNSW; John Mathews, Professor Emeritus, Macquarie Business School, Macquarie University, and Sung-Young Kim, Senior Lecturer in International Relations, Discipline of Politics & International Relations, Macquarie School of Social Sciences, Macquarie University

This article is republished from The Conversation under a Creative Commons license. Read the original article.

The Paris Agreement 5 years on: big coal exporters like Australia face a reckoning



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Jeremy Moss, UNSW

On Saturday, more than 70 global leaders came together at the UN’s Climate Ambition Summit, marking the fifth anniversary of the Paris Agreement.

Prime Minister Scott Morrison was denied a speaking slot, in recognition of Australia’s failure to set meaningful climate commitments. Meanwhile, the European Union and the UK committed to reduce domestic emissions by 55% and 68% respectively by 2030.

As welcome as these new commitments are, the Paris Agreement desperately needs to be updated. Since it was passed, the production and supply of fossil fuels for export has continued unabated. And the big exporters — such as Norway, Canada, the US, Russia, Saudi Arabia and of course Australia — take no responsibility for the emissions created when those fossil fuels are burned overseas.

It’s time this changed. Australia is the world’s biggest coal exporter. And in 2019, emissions from fossil fuels exported by this nation, as well as the US, Norway and Canada, accounted for more than 10% of total world emissions, according to calculations from a research project on Australia’s carbon budget at the University of NSW, which I run. Exporting nations are not legally responsible for these offshore emissions, but their actions are clearly at odds with the climate emergency.

Business as usual

A 2019 UN report notes governments are planning to extract 50% more fossil fuels than is consistent with meeting a 2℃ target and an alarming 120% more than a 1.5℃ target, by 2030. Coal is the main contributor to this supply overshoot.

UN Secretary-General António Guterres urged all leaders to declare a climate emergency.

But rather than reducing their production of fossil fuels, many countries are doubling down and actually increasing supply. For example, in Australia, government figures show the greenhouse gas emissions from Australia’s exported fossil fuels increased by 4.4% between 2018 to 2019.

Australia is the world’s largest coal exporter and approved three new fossil fuel projects in recent months: the Vickery coal mine extension, Olive Downs and the Narrabri Gas Project

This is a worldwide trend. Let’s take Norway as another example. Norway gets the bulk of its electricity from hydropower and has partially divested its Government Pension Fund from some fossil fuels. Yet it’s also one of the largest exporters of greenhouse gases through its gas exports, behind Qatar and Russia.




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The situation is mirrored in the corporate world. Many large fossil fuel companies are trumpeting their emissions reductions targets while continuing to push for new fossil fuel mining projects. BHP, one of the world’s biggest miners, stated it is reducing its emissions, yet in October the company increased its stake in an oil field in the Gulf of Mexico.

Responsibility doesn’t stop at the border

What underpins this situation is an outdated “territorial” model of responsibility for climate harms. Governments and companies seem to think responsibility stops at the border, not with the overall livability of the global climate. Once the coal, oil and gas products are loaded onto ships, they are no longer our problem.

Unfortunately, the accounting rules of the United Nations, under the Paris Agreement, currently allow exporters to pass on responsibility for fossil fuel emissions.

We must move from this territorial model of responsibility to one that considers the whole chain of responsibility for climate harms.

So what should Australia, Canada, the US, Norway and other exporting countries do to address the over-supply of fossil fuels?

First, they need to acknowledge their responsibility, at least in part, for the emissions and associated harms caused by their exports. Allowing compensation and funding for mitigation to track the role played in the causal chain better attributes responsibility and places mitigation burdens back on the exporting countries.




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Future climate negotiations, such as in Glasgow in 2021 (COP26), need to adjust the scope of their targets to include robust reductions in the supply of fossil fuels in the next round of agreements.

Instead of just focusing on reducing demand, the process needs to function as a kind of “reverse OPEC” (the Organisation of the Petroleum Exporting Countries), where exporting countries are given ambitious phase-out targets for their fossil fuel exports.

Drastic emissions cuts needed

The 2020 Production Gap report notes global fossil fuel production will have to decrease by 6% a year between 2020-30 to meet a 1.5℃ target.

For Australia, this must mean we include the reduction in “exported emissions” as part of any net-zero target. Australia’s exported emissions are double our domestic emissions – a situation that cannot continue.

Top of the list of what’s needed, is the phasing out of generous subsidies for fossil fuel producers. The billions of dollars currently spent annually in Australia on subsidising and encouraging fossil fuel exports are simply not compatible with the aims and spirit of the Paris Agreement.




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Phasing out the supply of fossil fuels also needs to occur in a way that doesn’t just pay the current big suppliers to stop. Governments implementing a transition ought to think very carefully about how to fairly deploy scarce resources to ensure a just transition.

Last but not least, governments need to accept that the strong influence fossil fuel corporations wield over the political process is hindering global efforts to address climate change. The donations , rotation of industry staff to government positions and influence of fossil fuel lobby groups cannot lead to good decisions for the climate.

Placing a ban on such influence, particularly at future climate negotiations, would go a long way towards addressing the undue influence of the fossil fuel industry.

Until the fossil fuel export industry is subject to demanding targets, and made to accept responsibility for the emissions associated with their products, Earth will continue on its highly dangerous global warming trajectory.The Conversation

Jeremy Moss, Professor of Political Philosophy, UNSW

This article is republished from The Conversation under a Creative Commons license. Read the original article.

These Aussie teens have launched a landmark climate case against the government. Win or lose, it’ll make a difference



Five of the eight young plaintiffs. From left: Ava Princi, Izzy Raj-Seppings, Ambrose Hayes, Veronica Hester, Laura Kirwan.
Equity Generation Lawyers

Laura Schuijers, University of Melbourne

On Tuesday, eight young Australians aged 13-17 filed a class action seeking an injunction to prevent federal Environment Minister Sussan Ley approving a new coal project expansion.

They are bringing their case to the Federal Court. They argue if Whitehaven’s Vickery coal mine expansion in New South Wales is approved, it will contribute to climate change which endangers their future.




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Saying the environment minister owes the young plaintiffs a duty of care is a novel approach. In their view, signing off on a new coal project will breach that duty. Such an approach to a climate change case has not been tested before in Australia, and would chart new territory if successful.

Although a legal victory would appear difficult on these grounds, the implications of this case are already significant. They show young people, determined to fight for action on climate, will continue to find new ways to hold powerful people to account.

What is the case about?

The case concerns a proposal to construct an open-cut coal mine, about 25 kilometres north of the NSW town of Gunnedah. It’s an extension project, meaning it will expand a mine that has already been approved, increasing its coal production by about 25%, and emissions by 100 million tonnes of greenhouse gases over the life of the project. The coal would be exported.

Like many mining proposals, this one has been divisive. Farmers worry about competing for water, and the local community has expressed concern over the environmental record of the coal company.

Yet in August, the NSW Independent Planning Commission approved the proposal, finding the expansion is in the public interest, given the forecast jobs and revenue. It has not yet received federal approval.

What are the teenagers arguing?

The young plaintiffs are not bringing their case under environmental law, which would be the traditional way to launch a legal challenge objecting to a coal mine.

Environmental law invites government decision-makers to balance competing concerns — such as economic benefits versus environmental impact — with no clear stipulation as to how much weight to give each relevant factor.

There is limited recourse to argue a decision is wrong because the positive and negative impacts were not given particular priority by a minister. This means decision-making on major projects is largely within the political realm.

Instead, the plaintiffs are arguing the environment minister shouldn’t approve the coal proposal because doing so would breach a duty of care owed by the minister to protect them from the harmful impacts of climate change. This includes more frequent extreme weather events, and destruction of the natural systems that support human life.

The case has parallels with a landmark Dutch case, where it was successfully argued in 2019 that the Dutch Government breached its duty of care to its citizens through inadequate action on climate change.




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For the Australian case to succeed, the Court will first need to consider whether a duty of care exists in Australian law. There is no statutory duty (under laws created by the parliament), so the Court would need to “find” the duty as existing in common law.

Then, the plaintiffs would need to establish that the duty would be breached by the environment minister signing off on the coal project.

Will it succeed?

Establishing both these things is likely to be very difficult in our legal context. From past cases, we know Australian courts have been reluctant to find a causal link between climate change and individual projects, even large mines. However, this link was found in a NSW case last year.

The court is likely to look closely at the particular relationship between the minister and the vulnerable young people, who will be strongly impacted by climate change but have no voting rights. It will consider whether they represent a particular class of individuals, in relation to which the minister has a responsibility.

One of the plaintiffs’ lawyers recently highlighted a case that potentially paves the way to support this idea. In 2016, the Federal Court found the immigration minister Peter Dutton owed a duty of care to a vulnerable refugee with a history of trauma, who was detained on Nauru.

One thing in the current case’s favour is that, similar to the Dutch case, the plaintiffs are not seeking monetary compensation. If they were, the difficulty for the courts to determine what future obligation the government might have to pay out young people would, almost undoubtedly, prohibit success.

What’s also interesting about this case, unlike the Dutch case or the famous Juliana case that was recently quashed in the US, is that it’s not asking the government for broad-scale policy action on climate change. It’s only concerned with one coal mine approval. This is a more straightforward remedy which a court could be more willing to grant.

Beating the odds

If the case successfully established a duty and that it was breached, this would open up the possibility future coal approval decisions would also breach the duty — somewhat of a Pandora’s box.

Although we will have to wait and see what the Court says, the suit will draw attention to the government’s climate policies, whether or not it succeeds.

If the case succeeds, it might compel the government to stop approving any coal mines that would significantly contribute to climate change. If it doesn’t, it will remind us that it’s up to the government to respond to the threats climate change poses, rather than the courts.

Either way, the teenagers in this case are part of a growing number of people willing to find creative avenues to pursue action, even if it means taking a long shot. And beating the odds is exactly how the law tends to evolve.




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The Conversation


Laura Schuijers, Research Fellow in Environmental Law, University of Melbourne

This article is republished from The Conversation under a Creative Commons license. Read the original article.

Japan is closing its old, dirty power plants – and that’s bad news for Australia’s coal exports



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Llewelyn Hughes, Crawford School of Public Policy, Australian National University

Last month, the Japanese government announced a plan to retire its fleet of old, inefficient coal-fired generation by 2030. And what happens to coal power in Japan matters a lot to Australia.

Australia shipped more than A$9 billion dollars’ worth of thermal coal to Japan in 2019 – about 12% of our total thermal coal exports.

In the short term, several new coal plants are being built in Japan to replace scrapped capacity. But there are signs investors are not flocking to invest in expensive new Japanese coal technology.

And in the long run, the investment environment for new coal technology is worsening. If Japan’s commitment to coal weakens, that will mean less demand for Australia’s exports.

Coal on a ship at the Japanese port of Nakhodka.
Coal on a ship at the Japanese port of Nakhodka. Japan is phasing out its old coal infrastructure.
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Japan’s changing coal fleet

Almost all Japan’s nuclear power stations remain shuttered ten years after the Fukushima disaster. The Japanese government has positioned coal as a long-term hedge against the possibility the nuclear power restarts will not proceed as hoped.

However, Japan has also been criticised for its lack of ambition on plans to address climate change under the Paris Agreement.

Last month, the government signalled it will decommission about 100 inefficient coal-fired power units. It aims to reduce coal’s share of the power mix to 26% by 2030 – down from 32% in the 2018 financial year.




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The big questions are: what are the prospects for Japan’s coal fleet, and what does this mean for Australia?

The Japanese government is supporting investment in newer plants, including some that use a high-pressure “gasifier” to turn coal into gas. But these types of plants are expensive to build. With a typical coal plant expected to operate for about 40 years, companies are wary of making huge outlays with relatively limited time to recoup the investment.

Reflecting this, last year Osaka Gas withdrew plans to build a 1.2 gigawatt (GW) coal plant in Yamaguchi Prefecture. Tokyo Gas, Kyushu Electric and Idemitsu also abandoned plans to build a 2GW coal plant in Chiba Prefecture near Tokyo. In total, 30% of planned investment in coal power has been scrapped since 2016.

Then prime minister Malcolm Turnbull shakes hands with a Japanese dignitary at Loy Yang A power station in Victoria.
Then prime minister Malcolm Turnbull shakes hands with a Japanese dignitary at Loy Yang A power station in Victoria. Japan’s phase-out of old coal plants raises questions over its demand for Australian coal in the long term.
Julian Smith/AAP

Renewables are also becoming increasingly important. Japan has big plans for offshore wind power, and renewable electricity is falling in price.

In Europe and elsewhere, such changing economics have helped drive falls in the number of hours that coal plants operate. Globally, final investment decisions for new coal plants fell from more than 100GW in 2010 to just over 20GW in 2018. Although it might take a little longer in Japan, there is no reason to expect things to be different there.

Crucially, these dynamics are underpinned by shifts in Japan’s electricity market to encourage more competition. Over time, that should mean companies find it increasingly difficult to pass the costs of expensive investments in coal technologies to final customers.




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Machinery working in a coal pile
Australia shipped more than A$9 billion dollars of thermal coal to Japan in 2019.
Dave Hunt/AAP

Dim prospects for coal

Mining company Glencore this month announced a plan to cut production from Australian coal mines, citing weak demand due to COVID-19.

The world will recover from the pandemic. But in the longer term, coal in Japan faces even stiffer headwinds – not least market competition and increasing renewables from offshore wind and other technologies.

This creates real questions about the appetite of Japanese companies to wage the increasingly risky bet that coal-fired power represents. Changes in Japan’s power market show the need for Australia to begin transiting to an economy less reliant on carbon-intensive exports.




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The Conversation


Llewelyn Hughes, Associate Professor of Public Policy, Crawford School of Public Policy, Australian National University

This article is republished from The Conversation under a Creative Commons license. Read the original article.

45,000 renewables jobs are Australia’s for the taking – but how many will go to coal workers?



Dan Himbrechts/AAP

Chris Briggs, University of Technology Sydney; Elsa Dominish, University of Technology Sydney, and Jay Rutovitz, University of Technology Sydney

As the global renewables transition accelerates, the future for coal regions has become a big worry. This raises an important question: can renewables create the right jobs in the right places to employ former coal workers?

According to our new research, the answer in many cases is “yes”. Renewable energy jobs provide a good match for existing coal jobs across a range of blue and white-collar occupations, including construction and project managers, engineers, electricians, site administrators and mechanical technicians.

But about one-third of coal workers, such as drillers and machine operators, cannot simply switch over to renewables jobs. So as our economy pivots to renewables, planning and investment is needed to help coal regions survive.

Some renewables jobs could be filled by coal workers.
Tim Wimbourne/AAP

Renewables jobs: a snapshot

Our research, commissioned by the Clean Energy Council, is the first large-scale survey of renewable energy employment in Australia.

We surveyed more than 450 Australian renewable energy businesses, covering large scale wind, solar and hydro, rooftop solar and batteries. We wanted to find out how many people were employed, and in what jobs.




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We then projected employment until 2035 using three scenarios for the future of the electricity market, developed by the Australian Energy Market Operator (AEMO).

Our results suggest renewable energy can be a major source of jobs in the next 15 years. But the trajectories are very different depending on government COVID-19 stimulus measures and wider energy policy.

Policy crossroads

We found the renewable energy sector currently employs about 26,000 people. Temporary construction and installation jobs now comprise 75% of the renewable energy labour market, but as the sector grows, this will change (more on that later).

Australia’s renewable energy target was reached last year, and has not been replaced. According to the Reserve Bank of Australia this caused renewables investment to fall by 50% last year compared to 2018. Under a “central” scenario where these policies continued, 11,000 renewable jobs would be lost by 2022.

Under the right policies, there could be an average of 35,000 renewables jobs annually in Australia until 2035.
Michael Buholzer/Reuters

We then examined a “step change” scenario where Australian policy settings were in line with meeting the Paris climate agreement. This would create a jobs boom: renewable energy employment would grow to 45,000 by 2025 and average around 35,000 jobs each year to 2035. Up to two-thirds are in regional areas.

Under all scenarios, job growth is strongest in rooftop solar and wind. Most are in the construction and installation phase, comprising both ongoing and project-based jobs in trades, as well as technicians and labourers. But by 2035, as many as half of renewable energy jobs could be ongoing jobs in operation and maintenance.




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Renewable energy jobs will be higher than our projections. We excluded employment areas such as building electricity transmission networks, bioenergy, professional services, renewable hydrogen, growth in minerals needed for renewable energy, and jobs in heavy industry such as “green” steel.

Renewables vs coal jobs

All up, coal mining in Australia employs about 40,000 people. As mentioned above, renewable energy jobs could grow to 45,000 by 2025 – and more once other sectors are included.

Australia’s renewable energy industry already employs considerably more people than the 10,500 working in the domestic coal sector – mostly thermal coal mining and power generation.

About 75% of coal mined in Australia is exported. About 24,000 people work in thermal coal mining for both domestic use and export – slightly fewer than the current renewable energy workforce.

Employment in renewable energy and coal.
Author supplied

New renewables jobs in coal regions

Around two-thirds of renewable energy jobs could be created in regional areas. These would be distributed more widely than coal sector jobs.

The leading coal mining states, NSW and Queensland, have the biggest share of renewable energy jobs under all scenarios.

AEMO has identified “renewable energy zones” where most large-scale renewable energy is expected to be located. In both NSW and Queensland, some of these zones overlap with the coal workforce. In NSW, the Central West zone could also create employment in the Hunter region. In general, though, many renewable energy jobs will be located in other regions and the capital cities.




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In terms of occupations, there is overlap between coal and renewable energy. These include construction and project managers, engineers, electricians, mechanical trades, office managers and contract administrators and drivers.

The timing and location of these renewables jobs will influence whether they can be a source of alternative jobs for coal workers. Re-training of coal workers would also be required.

But there is no direct job overlap for the semi-skilled machine operators such as drillers, which account for more than one-third of the coal workforce.

Renewable Energy Zones and coal mining employment in Queensland.
Author supplied
Renewable energy zones and coal mining employment in NSW.
Author supplied

Planning for the decline

Renewable energy can meaningfully help in the transition for coal regions. But it won’t replace all lost coal jobs, and planning and investment is needed to avoid social and economic harm.

Coal regions need industry development plans and investment to diversify their economies to other industries, including renewables. Almost half our coal workers are aged under 40, so Australia will not be able to follow Germany and Spain’s lead by relying on early retirement schemes.

At some point, demand for our coal exports will collapse – be it due to the falling cost of renewables, or policies to address climate change. If we don’t start preparing now, the consequences for coal communities will be dire.The Conversation

Some coal workers can be retrained to work in renewables, but others cannot.
Dan Himbrechts/AAP

Chris Briggs, Research Principal, Institute for Sustainable Futures, University of Technology Sydney; Elsa Dominish, Senior Research Consultant, Institute for Sustainable Futures, University of Technology Sydney, and Jay Rutovitz, Research Director, Institute for Sustainable Futures, University of Technology Sydney

This article is republished from The Conversation under a Creative Commons license. Read the original article.

If we could design JobKeeper within weeks, we can exit coal by 2030. Here’s how to do it



Shutterstock

John Quiggin, The University of Queensland

As we emerge from the lockdown phase of the pandemic, there are many lessons to learn. One is that when given credible warning of an existential threat, it is better to act early and risk doing too much than to delay acting and face a much bigger and harder to solve problem when the warnings turn out to be correct.

While the pandemic will pass, one way or another, the problem of global heating, and its many consequences, is going to be with us for the rest of our lives, and those of our children and grandchildren.

Already the world has had decades of warnings, and has done little to heed them.

To hold the increase in global temperatures to 2⁰C, the world needs to reduce emissions of carbon dioxide by 25% over the next decades, and cut them to zero by 2050.




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Current commitments are inadequate to achieve this.

In Australia’s case, the unjustified use of “carryover credits” means the government is actually proposing an increase in emissions over the next decade, with even larger increases likely in the future.

Quite simply, there is no way of prevent catastrophic climate change unless we stop burning coal to generate electricity, and do it sooner rather than later.

We need to switch 20-25,000 jobs

As of 2020, coal-fired electricity generation is the only major use of carbon-based fuels for which we have a well-developed and affordable alternatives.

For most other uses of carbon-based fuels, alternatives rely on using electricity, as in the case of electric vehicles and “green” hydrogen.

These alternatives are helpful only if the electricity that powers them is coal-free.




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But in Australia, any move to break with thermal coal runs up against the claim that jobs in coal mining and coal-fired power are essential for workers and for communities.

It is a claim I examine in a new report published by the Australia Institute entitled Getting off coal: Economic and social policies to manage the phase-out of thermal coal in Australia.

It finds that a transition from thermal coal mining could be managed fairly, without significant job losses and while protecting coal-dependent regions.

25,000 is not a big number

Contrary to widespread perceptions, thermal coal mining is not a major employer, and most workers in the industry are not miners in the ordinary understanding of the term.

According to the latest Labour Force Survey, in February 2020 coal mining employed about 43 300 people, down from a peak of 60 000 in 2012.

Since Australia’s coal output is roughly evenly divided between coking and thermal coal, it seems likely that about 20-25,000 are employed producing the thermal coal that is used for heating and electricity generation.

This compares with a Bureau of Statistics estimate of about 26,850 in renewable energy. A successful transition to a decarbonised electricity sector would require at least a doubling of the current growth rate of renewables, implying more than 26 000 new jobs.

Many of the jobs are transferable

Many of the people employed in coal mining in February 2020 were not miners in the ordinary sense of the term. About 14% worked in white collar (managerial, professional and clerical) jobs.

A large portion of the remainder, such as carpenters, truck drivers and labourers, worked in trades not tied to mining.

The exception is the category known as Drillers, Miners and Shot Firers, which accounts for about 20% of total mining employment. If the same proportion applies in coal mining, there would be around 5,000 specialist drillers, miners and shot firers in producing thermal coal.

A transition program for these workers could be funded for less than the government’s recently announced HomeBuilder.

The wages high, but the conditions are bad

Advocates of coal mining point out that coal mining generally pays higher wages than other industries, including the renewable energy industry. This partly reflects high levels of unionisation, which could be encouraged more broadly.

More significant is probably its reliance on socially destructive fly-in, fly-out working arrangements, which necessitate high wages to offset family separations.

An indication that the wages earned by workers in the mining industry represent
compensation for poor conditions can be derived from evidence on workforce turnover.

The mining industry is characterised by annual turnover of 20% to 30%, substantially higher than that for the labour market as a whole.

And much of the employment isn’t local

Largely because of fly-in, fly-out, the number of communities that depend on coal as the primary source of their local employment is small.

Moreover, in many cases, these communities, such as those of the Bowen Basin, are well endowed with solar and wind resources.

With appropriate planning (instead of the current chaos in electricity policy) these communities could be given priority in the development of utility-scale solar and wind generation, along with the necessary transmission links.

The result might be be a net gain in local employment.




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On Monday the Minerals Council of Australia announced a Climate Action Plan, proclaiming the need for action to reduce the risks of human-induced climate change and expressing support for “world-wide decarbonisation”.

What it did not do was suggest that the 25,000 or so Australians who work in coal mining could be switched to other industries.

That has been the conventional wisdom for some time – that a switch of 25,000 jobs from one industry to another would be too much for Australia to handle.

Yet when the coronavirus hit, we shut down industries employing three million Australians overnight, and dealt with the economic consequences impressively.

We have demonstrated our capacity to do the same for the much more dangerous, if less immediate, risk of catastrophic climate change.The Conversation

John Quiggin, Professor, School of Economics, The University of Queensland

This article is republished from The Conversation under a Creative Commons license. Read the original article.

Yes, carbon emissions fell during COVID-19. But it’s the shift away from coal that really matters



Flickr/David Clarke

Frank Jotzo, Australian National University and Mousami Prasad, Australian National University

Much has been made of the COVID-19 lockdown cutting global carbon emissions. Energy use has fallen over recent months as the pandemic keeps millions of people confined to their homes, and businesses closed in many countries. Projections suggest global emissions could be around 5% lower in 2020 than last year.

What about Australia? Here we’ve seen sizeable reductions in electricity sector emissions, but mostly from the sustained expansion in solar and wind power rather than the lockdown.

That is good news. It means our electricity sector emissions will not bounce back once COVID-19 restrictions are lifted, as they might in other parts of the world.

But on the other hand, a prolonged recession could cloud the outlook for new investments in the power sector, including renewables.

What’s clear right now is this: COVID-19 restrictions matter far less to Australia’s power sector emissions this year than the shift away from coal and towards renewables.

A recession would dampen investment in new power projects, including renewables.
AAP

Small fall in electricity demand

We examined Australia’s National Electricity Market (NEM) in the seven weeks from March 16 (when national restrictions came into force) to May 4 this year. We compared the results to the same period in 2019.

The NEM covers all states and territories except Western Australia and the Northern Territory.

Total electricity demand was 3% lower during the first seven weeks of the lockdown, compared with the same period in 2019. About 2% of this was due to an actual fall in electricity use. The rest was due to extra rooftop solar panels installed since May 2019 which lowered demand on the grid.




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Some of the 2% reduction may be due to cooler weather this autumn, leading to lower air conditioning use.

So while COVID-19 restrictions have hammered the economy in recent weeks, they haven’t had a big effect on electricity use. Most industrial and business power use has continued uninterrupted. Most office buildings have not fully shut down, although many people are working from home and use more electricity there.

A hefty drop in emissions

Despite the modest fall in electricity demand in the first seven weeks of lockdown, emissions fell substantially – by 8.5%. Comparing the first quarter of 2020 and 2019, emissions fell by 7%.

This is primarily because more renewable energy is now supplying the grid. Output from solar farms increased by 55% and from wind parks by 19% compared with the first quarter of 2019, reflecting massive amounts of new installed capacity coming online. Output from hydroelectricity increased by 18%, likely reflecting higher rainfall.

More renewables supply combined with falling demand means less output from fossil fuel power plants. Coal plant output fell 9% compared to the same period in 2019, entirely due to lower output by black coal plants in New South Wales and Queensland. Gas fired power output fell by 8%.

Electricity prices plunge

Meanwhile, wholesale prices in the NEM have fallen dramatically. The average price was 60% lower in the seven weeks since March 16 compared with the same period in 2019. A marked reduction in prices was evident from November 2019.

Why? One reason is that prices for natural gas are much lower and hence gas-fired power stations can make lower bids for electricity. Gas prices fell through much of 2019, and dropped further in the first quarter of 2020, associated with the pandemic-induced economic downturn. Gas plants often set the prices for everyone in the market, so this has a big effect on the market overall.




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Also, coal and hydropower plants lowered their bids in this more competitive environment.

The outlook for wholesale prices remains flat. Gas prices seem unlikely to rebound soon. More wind and solar power will come into the market and there is no underlying growth trend in electricity demand.

Relaxation of COVID-19 restrictions is unlikely to make a big difference. What may drive prices up once again is the next large coal plant closure. The last one to close was Victoria’s Hazelwood plant in 2017.

What does this mean for coal and renewables?

Low wholesale electricity prices are good for consumers – in particular industry, where the wholesale price is a bigger proportion of the total charges for electricity supply. On the flip side, they mean less money for power generators.

Across the National Electricity Market, revenue for generators was about A$160 million per week lower during the first seven weeks of lockdown compared to the same period in 2019.

This revenue fall makes coal plants less profitable, and makes life uncomfortable for plants with relatively high costs for fuel and maintenance. It’s likely to push older plants closer to closure.




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Lower prices also make investment in new renewable power less attractive. In recent years, average wholesale prices were well above the typical lifetime average costs of producing electricity from newly built solar and wind parks. There is also uncertainty around how prices will be set in power markets in the future, and how congestion of power transmission lines will be managed.

Nevertheless, the longer term prospects for renewables in Australia remain very good. Solar and wind power are the cheapest of all new generation technologies producing power, and solar power is expected to become even cheaper. A new coal-fired power plant, if one was ever built, would have far higher costs per megawatt hour. Costs for a nuclear plant would be higher still.

A drop in revenue during COVID-19 is bad news for coal-fired power generators.
Wikimedia

The way forward

The numbers show Australia does not need a painful recession to drive carbon emissions down. It needs sustained investment in new, clean technology.

The better the Australian economy recovers, the more private businesses will invest in new energy supply. But if the world falls into a deep and lasting recession, and the Australian economy with it, then the prospects for private investment in new power plants will suffer.

In that case, governments may be well advised to invest public funds in clean energy, more so than they have in the past.The Conversation

Frank Jotzo, Director, Centre for Climate and Energy Policy, Australian National University and Mousami Prasad, Research Fellow, Australian National University

This article is republished from The Conversation under a Creative Commons license. Read the original article.

Aren’t we in a drought? The Australian black coal industry uses enough water for over 5 million people


Ian Overton, University of Adelaide

Water is a highly contested resource in this long, oppressive drought, and the coal industry is one of Australia’s biggest water users.

Research released today, funded by the Australian Conservation Foundation, has identified how much water coal mining and coal-fired power stations actually use in New South Wales and Queensland. The answer? About 383 billion litres of fresh water every year.

That’s the same amount 5.2 million people, or more than the entire population of Greater Sydney, uses in the same period. And it’s about 120 times the water used by wind and solar to generate the same amount of electricity.




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Monitoring how much water is used by industry is vital for sustainable water management. But a lack of transparency about how much water Australia’s coal industry uses makes this very difficult.

Adani’s controversial Carmichael mine in central Queensland was granted a water licence that allows the company to take as much groundwater as it wants, despite fears it will damage aquifers and groundwater-dependent rivers.

Now more than ever, we must make sure water use by coal mines and power stations are better monitored and managed.

Data on total water use by coal mines is not publicly available.
Shutterstock

Why does coal need so much water?

Mines in NSW and Queensland account for 96% of Australia’s black coal production.

Almost all water used in coal mines is consumed and cannot be reused. Water is used for coal processing, handling and preparation, dust suppression, on-site facilities, irrigation, vehicle washing and more.

Coal mining’s water use rate equates to a total consumption of almost 225 billion litres a year in NSW and Queensland, which can be extrapolated to 234 billion litres for Australia, for black coal without considering brown coal.

About 80% of this water is freshwater from rainfall and runoff, extracted from rivers and water bodies, groundwater inflows or transferred from other mines. Mines are located in regions such as the Darling Downs, the Hunter River and the Namoi River in the Murray-Darling Basin.




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The other 20% comes from water already contained in tailings (mine residue), recycled water or seepage from the mines.

The burning of coal to generate energy is also a large water user. Water use in coal-fired power stations is even harder to quantify, with a report from 2009 providing the only available data.

Water is used for cooling with power stations using either a once-through flow or recirculating water system.

The water consumed becomes toxic wastewater stored in ash ponds or is evaporated during cooling processes. Water withdrawn is returned to rivers which can damage aquatic life due to the increased temperature.

No transparency

Data on total water use by coal mines is not publicly available. Despite the development of Australian and international water accounting frameworks, there is no reporting to these standards in coal mine reports.

This lack of consistent and available data means water use by the coal industry, and its negative effects, is not widely reported or understood. The problem is compounded by complex regulatory frameworks that allow gaps in water-use reporting.

A patchwork of government agencies in each state regulate water licences, quality and discharge, coal mine planning, annual reviews of mine operations and water and environmental impacts. This means that problems can fall through the gaps.

Digging for data

An analysis of annual reviews from 39 coal mines in NSW, provided data on water licences and details of water used in different parts of the mine.

Although they are part of mandatory reporting, the method of reporting water use is not standardised. The reviews are required to report against surface water and groundwater licences, but aren’t required to show a comprehensive water balanced account. Annual reviews for Queensland coal mines were not available.

Collated water use — both water consumption and water withdrawal – showed coal mining consumes approximately 653 litres for each tonne of coal produced.

This rate is 2.5 times more than a previous water-use rate of 250 litres per tonne, from research in 2010.

Using this rate the total water consumed by coal mining is 40% more than the total amount of water reported for all types of mining in NSW and Queensland by the Australian Bureau of Statistics in the same year.

By the numbers

NSW and Queensland coal-fired power stations annually consume 158,300 megalitres of water. One megalitre is equivalent to one million litres.

A typical 1,000-megawatt coal-fired power station uses enough water in one year to meet the basic water needs of nearly 700,000 people. NSW and Queensland have 18,000 megawatts of capacity.

Coal-fired generation uses significantly more water than other types of energy.

In total, coal mining and coal-fired power stations in NSW and Queensland consume 383 billion litres of freshwater a year – about 4.3% of all freshwater available in those states.

The value of this water is between A$770 million and A$2.49 billion (using a range of low to high security water licence costs).

They withdraw 2,353 billion litres of freshwater per year.


Author provided/The Conversation, CC BY-ND

The problem with large water use

Coal mining is concentrated in a few regions, such as the Hunter Valley and the Bowen Basin, which are also important for farming and agriculture.

In NSW and Queensland, the coal industry withdraws about 30% as much water as is withdrawn for agriculture, and this is concentrated in the few regions.

Coal mining and power stations use water through licenses to access surface water and groundwater, and from unlicensed capturing of rainfall and runoff.

This can reduce stream flow and groundwater levels, which can threaten ecosystem habitats if not managed in context of other water users. Cumulative effects of multiple mines in one region can increase the risk to other water users.

The need for an holistic approach

A lack of available data remains a significant challenge to understanding the true impact of coal mining and coal-fired power on Australia’s water resources.

To improve transparency and increase trust in the coal industry, accounting for water consumed, withdrawn and impacted by coal mining should be standardised to report on full water account balances.




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The coal industry should also be subject to mandatory monthly reporting and a single, open-access point of water data must be created. Comprehensive water modelling must be updated yearly and audited.

Coal water use must be managed in a holistic manner with the elevation of water accounting to a single government agency or common database.

Australia has a scarce water supply, and our environment and economy depend on the sustainable and equitable sharing of this resource.The Conversation

Ian Overton, Adjunct Associate Professor, Centre for Global Food and Resources, University of Adelaide

This article is republished from The Conversation under a Creative Commons license. Read the original article.