The search for clean coal

Australia has become a partner of China in this initiative by joining the Asia-Pacific Partnership on Clean Development and Climate. India, Indonesia, South Korea and Japan have joined also, thus creating a framework through which progress can be made. It is conservatively estimated that at least 30 billion dollars must be spent by the Partnership over the next decade before there will be a majority of power stations working with efficient, low-cost carbon capture and storage.

The unanswered question is whether the coal industry and governments are willing to invest capital of this significance. Actually, they have no alternative but to do so.

Australia has made a number of attempts at establishing small clean coal power stations - 15 in all so far, at places like Callide, Tarong, Munmorah, Hazelwood, Loy Yang, Mulgrave, Otway, Collie, etc.

Some have failed, others are slowly progressing, and a couple are looking very promising, particularly where oxyfuel capture technology is being used. Those to have failed have suffered from very high costs of production and an inability to find places nearby to safely store CO2. Similar projects overseas have also experienced failure for the same reasons - causing some scientists to say that it will be at least 2030 before long-term solutions are found, but this forecast is unnecessarily gloomy.

There is no doubt that CCS technology works, but the cost of building power stations with capacity to handle this technology will consume a lot of capital. This will be offset by the knowledge that, in the long term, operating costs will be lower and pollution will disappear, making the investment worthwhile.

Storage of CO2 in liquid form is another major issue. Underground sites are best, and there are many possibilities out in the Australian desert, except that it is a long way from the people who consume the power. Additionally, authentic answers must be found to allay fears that it may contaminate water reserves or slowly escape into the atmosphere. Nonetheless, the task is by no means impossible.

The inescapable issue is that the future of coal is dependent on finding economic and socially acceptable solutions for all of the above. It will become unjustifiable for the coal industry to say that it can’t be done because it will cost far too much. This price must be paid or the industry will die.

Governments cannot wash their hands of the matter like Pontius Pilate. They have no option but to partner the industry, as they will lose billions of dollars in royalties unless they become major investors in the action. They also have an unavoidable responsibility to be prime carers of the environment.

This being so, let us look at the cost of producing coal as it is the other major problem, particularly in Australia, where wages paid by mining companies are an outrage - out in the field and in head office. BHP, Rio Tinto and other major miners set an extraordinarily bad example in the boom years of mining by paying all executives and workers extravagant wages and bonuses in the naive belief that the boom would never end. In acting so irresponsibly, they caused enormous wage pressures in other industries to the detriment of the national economy as a whole.

All mining companies must now take urgent action to remedy this. They must cut executive pay first, then negotiate with unions to bring workers’ pay levels down to the same scale as the rest of Australia. I can already hear the yells of outrage, but the solution may be to progressively close every mine in Australia for a year and then open them again with new wage contracts that have a trace of commonsense in them.

Unless the pain of this drastic action is absorbed as a matter of priority, they will all be out of jobs within a decade.

The plus is that a reduction in the cost of coal on world markets, together with it becoming an environmentally clean product, will usher in an era of responsible prosperity for an important industry.