From about 2019 iron ore had spiked in price due to the Chinese construction boom and production problems in Brazil. Since the start of 2021, however, the price of iron ore has plummeted, while the price of coal, natural gas, and oil have all greatly risen due to economic recovery and resurgent demand for cheap energy. The Australian thermal coal price has gone up from about $64 a tonne in January 2021 to $237 in October, a record in Australian dollars. So much for the coal industry being finished due to market forces!
The reality is that ,like it or not, (currently unfashionable) fossil fuels are our biggest export earner, and are currently growing (not declining) in importance despite state governments delaying key projects. Even in 2019-20, when you add in Australia's crude petroleum exports (1.8% by value of our exports) to coal (11.5%) and natural gas (10%), our total fossil fuel exports (23.3% by value) exceeded iron ore, and the gap will be much bigger in 2021-22.).
The Australian coal industry paid over $5.2 billion in royalties in 2019-20, including $3.5 billion in Queensland and $1.6 billion in NSW. Coal supplied 68.6 per cent of electricity to the National Electricity Market in 2019, gas 9.1 per cent, hydro 6.7 per cent and other renewable energy (wind, solar farms and solar PV) 15.9 per cent.
Everywhere across the Western world, where wind and solar energy has been promoted at the expense of fossil fuels, economic and production problems have resulted. The same scenario is playing out here.
It seems insane that it is economic for Asian counties to ship our coal halfway around the world to benefit from its cheap energy, while Australia (which can build high efficiency low emissions coal-fired generators right on its coalfields) turns its back on potentially some of the world's cheapest electricity. Even sillier is our policy of wanting reduced CO2 emissions, while ruling out nuclear energy. The context of all this is that Australia is responsible for only a small proportion of World CO2 emissions (1.4 per centin 2017). (Accounting for fossil fuel exports, lifts Australia's global carbon footprint from domestic use and export of fossil fuels to about 5 per cent.)
According to economist Alan Moran, Australian taxpayers are spending approximately $13 billion annually or around $1300 per household trying to get rid of coal and interject renewable energy into the electricity market. These policies cause a net loss of jobs in the economy, with every green subsidised job created causing 2.2 jobs to be lost elsewhere. Green energy policies are also destabilising the electricity grid.
Recent spending promises have included Scott Morrison's announcement of $178 million in new funding for a future fuels fund, while Matt Kean announced an additional $105 million to boost uptake of electric vehicles among fleet operators in NSW. The latter comes on top of$490 millionthe NSW government has already committedto drive uptake of EVs.
A number of critics, notably Professor Bjorn Lomborg, have argued that the apparent mild support Net Zero gets from most people in Western democracies will collapse when its practical consequences (expensive less reliable energy) are increasingly felt.
The gulf between politicians and citizens is most apparent in France. This is because the "yellow vest" protest movement has already taken to the streets to push back against the French government's fuel price surcharges, which disproportionately hit car-dependent people in rural areas.
So where is Australia heading?
In my view Scott Morrison is increasingly showing his "moderate" credentials (a "church-going Malcolm Turnbull"?). I believe that enough of the Coalition's conservative base has already turned against the Government, that Labor will comfortably win the next election.
It is possible that the Coalition has adopted Net Zero by 2050 in the anticipation that the policy will collapse well before then, thus avoiding more aggressive cuts before 2030. On balance, however, I doubt that such considerations were more important than appeasing the mob at Glasgow.
Australians can therefore expect a "full-on" switch to so called "renewables" for five or six years. This will lead to still higher power prices and the spread of peak-demand blackouts from South Australia and Victoria to the other states and territories. The whole policy will eventually be discredited, but by then huge amounts of money will have been wasted.
Net zero amounts to a commitment to kill Australia's "golden goose". Be alarmed. Be very alarmed.
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