Coal at what price?

Are politicians and business serious about effectively addressing climate change? Australia has significant raw resource availability, it drives the nation’s economy, but who would have imagined, in the face of peak oil and the damaging effects of fossil fuels, the Victorian government would be entering a minerals extraction boom with a major focus on coal.

Coal: at what price?

Climate change and greenhouse emissions have become a hot political topic: the biggest emitter being coal. Australia, like the United States, is largely dependent on coal for income. With this in mind the Australian governments, together with other stakeholders have embarked on a process of attempting to transform coal into an environmentally friendly product even though all the costs and risks stack up against it.

Coal sequestration is the new technology being used for extracting the harmful C02 from coal, turning it into what has been called “clean coal”. In October, 2008, the Victorian Government passed Australia’s first stand alone legislation enabling permanent onshore storage of C02s. The Act comes into effect in January 2010. The carbon dioxide and other greenhouse gasses are to be injected into the earth’s cavities, some of which lay in strategically unstable and ecologically sensitive environments. In Victoria the Gippsland and Otway Basins have been earmarked by “national research organisations as having the greatest potential” for this kind of carbon storage. This is because they already have the vacuous channels required in the form of aquifers or old mine shafts. But the question is how safe are they?

Victoria’s “brown coal fired power station is already in the La Trobe Valley” and this is in convenient proximity to the basins, making the area Australia’s leading “Clean Coal Storage hub”. The storage will stretch from Morwell to the coast impacting on some of the nations’ most beautiful coastal scenery. The potential for damage to land and marine life is enormous.

Clean coal storage will also impact on the local economy. It is a development that could replace the existing primary industries, dairy farming and fishing, especially if there is leakage. What will happen to these industries is not yet known and so far there has been no consultation with the local communities.

Government urgency

On the October 30, 2009 the federal government put out tenders for carbon storage capture or so called “clean coal” (now known as “green coal” because the Australian Climate Justice Program, with the support of Greenpeace, lodged a complaint with the ACCC over the use of the term “clean coal”) in relation to a proposed new brown coal-fired power plant in Victoria. The government tenders followed the Department of Primary Industries’ Recourses Victoria Technical Forum in August 2009, which looked at presentations from various stakeholders on the best ways to proceed with the Victorian government’s mining agenda.

The whole process has been hurried through because as Andrew Bolt explained in the Australian Herald Sun on November 4, 2009 not only is Australia spending $7 billion a year in signing the Global Warming Treaty (money that is to be passed on to countries such as China and Bangladesh to offset adaptation to climate change in developing countries) but could also be faced with enormous fines - “10 times the market price of carbon” - if the governments’ green policies do not meet the UN expectations.

Let us be clear, rich countries need to help poorer nations to adapt to climate change and governments need to be accountable for their actions, or lack of them, but whose interests are really being served here? Is this coming mining boom truly in the interests of Australians and will it do anything to offset climate change?

Clearly, the overseas experience of coal retrieval and sequestration shows categorically there is no such thing as “clean” or “green” coal. However, long shipping queues plague ports as rail networks as they struggle to keep pace with coal exports. There has been a sudden shift in the acceptability of coal because it is now being heralded as “renewable”. The use of this term is very misleading.

Economic crisis drives production: it makes no sense

In 2008 commodity prices dropped significantly during the global economic crisis but the activities of the mining sector quickly rose on the back of acquisition opportunities emerging from the market downtown. Even the failure of BHP Billiton’s attempt to take over Rio Tinto did not alter its long term A+ rating. Share prices fell in some cases but a cursory glance reveals just how much investment activity is going on, especially in the fossil fuel industries.

Australian governments are dreaming if they think they can survive on these resources as the cost of global production rises alongside the devastation of the environment. Already there have been large protests about coal production and there will be more to come. The terms “clean coal” and “green coal” are not fooling anyone.

Carbon capture: the risks

According to the Australian government’s Department of Primary Industries website [DPI], “the term carbon capture and storage [CCS] is used to describe non-biological processes of capturing carbon dioxide from combustion at the source”. Carbon capture and storage is said to “reduce emissions into the atmosphere by approximately 80% to 90% but the process is also energy intensive and greatly increases the amount of fuel a power station needs with CCS by 25% - 40%”.