Australia’s coal and China

2009-05-13

in Economics, Law, Politics, Science, The environment

Sasha Ilnyckyj on Andrea's porch

All regular readers of this site are familiar with Canada’s energy dilemma, as far as the oil sands, the United States, and climate change are concerned. The US has a huge appetite for oil, and is increasingly anxious about getting it from the Middle East. From a short-term perspective, this positions Canada’s unconventional oil very nicely. Of course, when you think long-term and realize the importance of climate stability, you become a lot more likely to think we would be better off leaving the stuff in the ground.

A similar dynamic seems to exist when it comes to coal, Australia, and China. In March 2009, China imported 1,716,802 tons of Australian coal. All told, it imported 211% more coal between January and March as in the previous year. Like Canada, Australia has extremely high per-capita emissions, a poor record on greenhouse gas mitigation, and a lot of export-oriented resource extraction industry. Also like Canada, it may well be the case that long-term climatic stability requires leaving most of that coal underground.

As such, it is disappointing that Australia has delayed plans to institute carbon pricing. When it comes to the negotiations at Copenhagen in December, dealing with the complexities of energy imports and exports will certainly be among the trickier issues that need to be sorted out in negotiations. While the climatic requirements are clear (sharply reduce global emissions), the economic and moral ones are trickier. After all, a fair bit of the coal China is burning is being used to make products for people in other states. Who, then, bears the moral responsibility for the emissions associated with extracting, shipping, and burning the coal? What sort of legal regime can be established to effectively incentivize decarbonization throughout such complex international production chains?

{ 3 comments… read them below or add one }

Edward May 13, 2009 at 7:58 am

The most interesting part of your post:
“Who, then, bears the moral responsibility for the emissions associated with extracting, shipping, and burning the coal?”

The notion of international responsibility isn’t good enough with so many short-term economic benefits to dragging one’s feet on emissions control. As you suggested, people need to come up with a framework for assigning responsibility in order to move forward. Good insight, Milan.

Milan May 13, 2009 at 1:28 pm

It’s not an original argument. It came up here before when considering Canadian emissions by province.

Alberta’s emissions are huge, but a good chunk of them are generated in the process of making fuels for other people.

. December 14, 2017 at 6:39 pm

THE bars along Wood Street have gone quiet. Thirsty mine workers on six-figure salaries have become a rarity since a coal-exporting boom ended. Boom-bust cycles are hardly new for this northern coastal city in the state of Queensland. But Greg Williamson, the mayor, says: “The cliff we fell off this time was enormous.” Many see salvation in a plan by Adani, a firm based in the Indian state of Gujarat, to build Australia’s biggest thermal coalmine in the remote Galilee Basin, about 300km (190 miles) west of Mackay (see map). The proposal has ignited protests around Australia, and could even decide the outcome of a state election on November 25th.

Coal has long helped Australia prosper. It is its second-biggest export (after iron ore), and Queensland’s biggest. The industry employs over 40,000 people. Adani wants to build a railway 388km across the outback from the Galilee Basin to a terminal it owns at Abbot Point, north of Mackay. From there, the coal will be shipped through the Great Barrier Reef, just offshore, to power stations in India.

But Adani has yet to secure financing for the A$16.5bn ($12.5bn) project. Australia’s four biggest banks have demurred. One of them, Westpac, announced a climate policy in April to limit lending for new thermal-coal projects to “existing coal-producing basins only”, in effect ruling out the as yet untapped Galilee Basin.

The banks’ reluctance reflects wider misgivings. Many Australians are queasy about the primacy of globe-warming coal in their power supply (it provides almost two-thirds of the country’s electricity). They consider it hypocritical to be boosting exports of coal even as Australia seeks to cut its own emissions of greenhouse gases. And they fear harm to the Great Barrier Reef, from the increased maritime traffic and the warming effect of the coal once it is burnt.

Others question the scheme’s economic viability. After crunching costs against projected returns, John Quiggin, an economist at the University of Queensland, argues that “any public funds advanced to the project will be at high risk of loss.” Adani is reportedly negotiating funding in China; the company says it is “very well advanced getting our finances internationally”. Queensland’s voters, in other words, are not the only people being asked to take a punt on the project.

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