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The Silent Giant Coal Monster

Greg Combet (our Minister for keeping-the-weather-the-same) can keep a straight face when he tells coal miners that their jobs are protected with him. You might think that’s insane, (especially if you are Green) but he has a point. Even if carbon mattered, our coal exports do not. (Not that Combet seems to explain this point very well, he seems to think people won’t notice the contradiction about supposedly “making the big polluters pay”, even though he’s taxing mom-and-dad and partly-exempting Big-Coal).

Australia is the worlds largest exporter of coal, you’d think our production mattered. But Combet knows that it makes no difference at all to the environment if we dig masses of coal up and send it to the Chinese to burn. Australia might have lots of coal, but it earned the ‘biggest exporter” title only because lots of the other contenders forfeited. Basically, we only win because there are not many people living here.  Other places dig up a lot more coal, but coal is so handy, vital, and irreplaceable that they keep every last sodding bit, burn it all themselves and have none left over to sell.

Australia sold about $55 billion dollars worth of coal in 08/09, more than iron, gold, beef and wheat. It’s our largest commodity export. Despite Australia making stacks of money selling coal, and using it to power 85% of all our electricity needs, we don’t talk about coal much. Coal has no friends, but it very much keeps Australia going, energy, jobs and money . Keep that thought in mind, as Cohenite shows the entire Australian annual coal production can pack into one Chinese average mining month. Then explain what would happen to the Australian economy if we made our coal more expensive.

Australia Coal Reserves

Australia might be the world largest Exporter of coal, but that’s only because all the bigger producers keep their coal to themselves.

Guest Post by Cohenite

The major aim of the carbon tax is to cut CO2 emissions by making coal and oil energy too dear. Very few other nations in the world have or propose having carbon taxes despite all the lip service about fighting man-made global warming. So, the argument is that Australia should set the moral precedent by being the first major country [apologies to Kiwi readers] to have a carbon tax. This moral argument is bolstered by claims that vast economic opportunities for business and jobs will follow the imposition of the new tax and movement towards green energy.

However, there is a simpler argument against Australia bringing in, essentially unilaterally, a carbon tax.

Coal Exports are Australia’s largest single export industry. In 2009 Australia produced for sale ~335 million tonnes [MT] of coal, of which ~261MT were exported leaving 74MT for internal power generation.  But large as that is, what China produces blows that number away.

In 2009, entirely for domestic consumption, Chinese production was just over 3 billion tonnes [BT] of hard and brown coal.

China is consuming about 40 times what Australia is and nearly 12 times the entire amount that Australia exports.

However the proposed carbon tax will only  apply to what Australia consumes not to what it exports.

Coal supplies 76.3% of Australia’s energy consumption and together with gas, supplies 94% of Australia’s energy. That coal energy produces about 293 megatonnes of CO2 emissions. A carbon tax of $45 per tonne, as advocated by the greens, will generate just over $13 billion. That $13 billion will devastate the Australian economy but that reduction in CO2 if all the coal is replaced by renewable will be negated by what China consumes in 9 days.

There are many other side issues of the carbon tax such as the total failure of the preferred renewable energies of wind and solar to work effectively anywhere in the world despite decades of intense R&D and massive subsidies [see Spain, California, Greece, Denmark, Germany etc], however one final point about how the carbon tax will ‘work’ needs to be high-lighted.

The carbon tax will not just apply to emissions from the production of the energy as shown above, but also to the emissions from the consumption of the energy produced [see definitions for Scope 1 and Scope 2 emissions]. It is hard to see how this is not double dipping. So, as well as the ~$13 billion tax for production emission, another $13 billion or so will be clawed back for Scope 2 emissions for the use. And this is before emissions from petrol and agriculture are factored in. With triple dipping, Gillard could pay for the NBN in one tax year.

That’s assuming there is any functioning economy to take tax from.

[Note from Jo: A $13 billion dollar moral precedent? Perhaps we could say, spend 5% of that, and actually achieve something. Why not help Tuvalu? With a GDP of $15 million in toto, we could not just help Tuvalu we could buy it, relocate all 10,000 citizens, and turn it into a National Park. We could turn the spot into a specialist climate institute, staffed by, say,  Tim Flannery. Now that’s a moral precedent the world would notice, and a 12.5 billion dollar national savings plan too.].

Erratum: Corrected above   ….power 85% of all our energy electricity needs…

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