Coal mining will outlast green hysterics

In his book What it means to be a Libertarian, American writer Charles Murray addresses this subject of skewed perspectives with admirable clarity. “Most environmental measures represent class interests in disguise”, he explains, “and involve no public goods worthy of the name”. Writes Murray:

A thought experiment will illustrate what I mean by class interests. Imagine a Congress of the United States that is composed entirely of blue-collar workers and farmers … They identify with blue-collar neighbourhoods, blue-collar incomes, and blue-collar recreations. The rest of this Congress are farmers who know the environment not as an abstraction or an ideal but as a day-to-day reality of their working lives. Let us imagine this new Congress as it turns to the latest proposals for environmental law …

Who is right? The Congress we have now or the Congress of blue-collar workers and farmers? Neither. Many of the currently fashionable environmental positions are arbitrary, and the different rules set by a Congress of blue-collar workers and farmers would be equally arbitrary.

Obviously, some people will suffer dislocation from Kyotoesque emissions cuts, notably workers employed in fossil fuel related industries. On the other hand, most middle class professionals will emerge unscathed or benefit from the process.

Aggregate figures don’t tell the real story. First, there is no unanimity that the impact on GDP growth over time will be negligible. Last year the Australian Bureau of Agricultural and Resource Economics (ABARE) published a much overlooked paper on the economic impacts of climate change policy. The bureau estimated that if we met the Kyoto targets, GDP in 2050 will be 10.7 per cent lower than otherwise. That’s not so trivial. And some environmental economists have come out against Stern’s conclusions, Professors William Nordhaus (PDF 110KB) of Yale and Sir Partha Dasgupta (PDF 37KB) of Cambridge to name just two.

Second, aggregates, national or global, say nothing about the distribution of employment growth over time. Under the hammer of carbon abatement measures, some industry sectors will decline or disappear, while others will expand.

In the same paper, ABARE estimated that if we took independent climate action, even in conjunction with global action, by 2050 our coal and “non ferrous metal” industries (measured by output) will be respectively 32 per cent and 75 per cent smaller than otherwise. In contrast “services”, where most of our loud-mouth greenies are found, will only be 6 per cent smaller. Few displaced workers will manage the transition to expanding sectors.

That’s something you won’t hear from the assortment of “shut-the-mines” zealots, including the Greens, Greenpeace, the Wilderness Society and the Nature Conservation Council, who assembled in Sydney for a coal crisis summit on April 30.

It won’t be a “breeze” at all. Our green-tinged middle class can afford to push the whole panoply of Kyotoesque measures like carbon taxes, emissions trading and renewable energy development. As Murray suggests, however, their choices are “arbitrary”. There are alternative perspectives.

The starting point, of course, is that domestic action will have no impact on global climate realities. Our population is too small. The coal question, though, has a particular twist. Hardline greens contend that, as a major coal exporter, we are morally culpable for the carbon emitted by end users.

This can only be judged in the overall context of global energy, and specifically, coal markets. Australia is the world’s largest single coal exporter, but we account for 29 per cent of coal exportation. The rest comes from various suppliers, ready to fill the gap created by our withdrawal. Many of these are developing countries with few qualms about carbon emissions. And our largest buyers are Japan and South Korea, not emerging giant emitters like China, India, Brazil and Indonesia or major contemporary emitters like Europe and the US.

Japan, which in 2004-5 bought 54 per cent of our steaming coal and 36 per cent of our coking coal, emits 5 per cent of the world’s carbon. By comparison, the US (24.3 per cent), the European Union (15.3 per cent) and China (14.5 per cent) together emit more than half the total.

The dynamic factor in this mix is China, which is set to overtake the US by 2009. The dimensions of China’s coal consumption are sobering. According to Steve Piper of energy information firm Platts, climate change has done little to spoil the world’s appetite for coal, and China, in particular, is voracious.