(AU) China's Power Game Puts The Pressure On Australian Coal

Sydney Morning Herald - Cheryl Durrant

Author Cheryl Durrant is a climate councillor and former director of preparedness and mobilisation at the Australian Department of Defence.

With China committing to reach net zero emissions before 2060, a timeline and a plan has been set for the curtain call on fossil fuels.

As China is the largest carbon dioxide emitter and the largest fossil fuel importer, its actions reverberate globally. And with the China-Australia relationship at a low-ebb it looks like Australia’s thermal and coking coal exports to China could be taking an early hit.

China’s recent announcements are not surprising. While the eye of the world has been on COVID-19, China has experienced some of its worst flooding in recent decades, affecting more than 60 million people, disrupting food supply, and testing the limits of the giant Three Gorges Dam. China gets the existential nature of climate change risks.

A worker monitors the coal dumping process at the Caofeidian Port in Hebei Province. Credit: Sanghee Liu

The timing of this announcement shows that China grasps the opportunity of climate diplomacy. A recent Pew poll shows that many countries hold record unfavourable views towards China.

Notwithstanding Australian and other nations’ valid concerns about the nature of Xi Jinping’s China and its ability to deliver on its net zero pledge, it makes sense for China to attempt to regain some lost ground ahead of a possible Biden victory in the upcoming American elections.

Reported curbs on Australian coal imports to China might fit in with this diplomatic narrative. While it’s uncertain what is behind the ban or whether it extends to both thermal and coking coal, the timing certainly sends a signal to Australia.

Whether this signal becomes an enduring trend will need to be closely monitored. Initial modelling of the impact of China’s transition to renewables suggests it will benefit economically from a clean energy shift. China’s shift to net zero emissions could also accelerate the take up of green industries and technologies worldwide, such as green steel, electric or hydrogen vehicles powered by renewables.

It does this by creating a much bigger market for these technologies, much sooner. In Defence we used to say “in warfare, mass has a quality all of its own”. What China’s shift does is create a massive future market for green industries, driving price down and accelerating current trends, increasingly making renewable and green industries a cost-effective choice. Of course, whether China can accelerate action to match its words is another thing.

Countries like Australia, whose economy is tightly coupled to fossil fuels should anticipate economic shocks ahead unless we move swiftly to diversify our economy and embrace our potential as a clean energy exporter.

Not only is Australia heavily reliant on fossil fuels now, as a percentage of overall exports, but if the government’s rhetoric is to be believed we are about to embark on substantial taxpayer funded fossil fuel infrastructure investments, in particular gas. Given global energy trends, it’s difficult to see how this makes domestic prices cheaper, or the value of Australian exports higher.

If China does follow through with decisive action this creates a double whammy for Australia’s energy security – not just hitting our future economy but also isolating us internationally. Both the Foreign Affairs, Defence and Trade White Paper and Defence’s recent Strategic Update flag China’s rising influence in the Pacific and the need for Australia to work harder to maintain its standing in a region where many countries face extreme climate risks.

The Pacific has long recognised climate change as the single greatest threat to its security and wellbeing and grown more and more impatient with Australia’s recalcitrance. With Europe and China onboard with a mid-century net zero target and with Europe’s clean COVID-19 recovery, Australia’s “gas led recovery” now looks to be swimming against the tide of international sentiment. A Biden election win in the United States would entrench Australia further in a group of carbon polluting powers, alongside Russia and Saudi Arabia.

This is where environmental, economic and traditional security strategies come together in the national and the global interest. With a net zero target China achieves reduction in its environmental risks, gains potential economic advantage, and builds global influence from its current low point. It also opens the door on enhanced global collaboration on climate change, should Biden succeed in the US Presidential election.

This global collaboration is urgently needed to avoid tipping the planet into a Hothouse Earth trajectory, which threatens global civilisation itself. China’s policy has “strategic coherence” and a long-term goal.

In contrast Morrison’s Australia, and Trump’s America have three-word slogans and a lot of misplaced optimism.

Links

• Chinese companies given 'verbal notice' to stop importing Australian coal
• BHP's Chinese customers seek to defer Australian coal
• Old king coal has surrendered to solar, says global power report
• China's Zero Emissions Target Puts Australia On Notice
• China Changes The Game On Climate Action, For Renewables And For Coal
• Climate Change: China Aims For 'Carbon Neutrality By 2060'
• (AU) China's Surprise Climate Pledge Leaves Australia 'Naked In The Wind', Analysts Say
• China Is Rapidly Building A World-Beating Wind Energy Revolution

Old King Coal Has Surrendered To Solar, Says Global Power Report

Sydney Morning Herald - Nick O'Malley

Solar power has been declared "the new king of electricity" by the International Energy Agency in its annual energy outlook report, which finds it is already cheaper than power generated by new coal and gas developments in most countries and is providing, "some of the lowest-cost electricity ever seen".

For the first time since the industrial revolution, coal-fired power will constitute less than 20 per cent of the world's energy by 2040, according to one scenario in the report, which found the end of the coal era has been accelerated by the COVID-19 pandemic.

The report has major implications for the Australian government, with Tim Buckley of the Institute for Energy Economics and Financial Analysis saying it was hugely significant that the IEA was now predicting that coal was in structural decline in all of its modelled scenarios, as in previous years in some scenarios it predicted that coal demand would have continued growth at lower rates.

“It deprives Australian state and federal governments of a crutch. They have relied on the IEA modelling in the past to say there was evidence of continued growth, so has the industry,” he said.

Moree solar farm in NSW.

This year global greenhouse gas emissions will fall by 7 per cent to 33.4 gigatonnes according to the 2020 World Energy Outlook, but the agency warns that the economic slump cannot be viewed as a solution to climate change. Unless nations adopt green economic recovery policies emissions will quickly rise in the recovery, it says.

"The economic downturn has temporarily suppressed emissions, but low economic growth is not a low-emissions strategy – it is a strategy that would only serve to further impoverish the world’s most vulnerable populations,” said IEA chief Dr Fatih Birol.

Instead, governments should adopt policies to drive down emissions.

The report models four possible scenarios of recovery and energy use, ranging from one in which governments adopt policies to reach net-zero emissions by 2050 to one in which governments respond with their already stated policies. In this scenario greenhouse gas emissions bounce back to pre-COVID levels by 2023.

All the scenarios predict that coal’s peak use has already passed and cast renewables as taking "starring roles".

"I see solar becoming the new king of the world’s electricity markets. Based on today’s policy settings, it is on track to set new records for deployment every year after 2022," said Dr Birol.

"If governments and investors step up their clean energy efforts in line with our sustainable development scenario, the growth of both solar and wind would be even more spectacular – and hugely encouraging for overcoming the world’s climate challenge."

The report predicts peak oil demand will hit in the coming decade, but unless governments shift policies that support its use it could plateau for years after that.

Gas demand is expected to rise in Asia over coming years under one scenario as governments use it to replace coal energy plants, but for the first time the agency is predicting that gas demand will begin to decline by 2040.

Gas’s environmental credentials will be challenged by new technologies demonstrating that methane “fugitive emissions” associated with gas are causing significant harm to the climate, it says.

Professor Paul Dastoor from the University of Newcastle talks about the first public display of printed solar panels at Lane Cove.


Professor Paul Dastoor from the University of Newcastle talks about the first public display of printed solar panels at Lane Cove.

"An uncertain economic recovery also raises questions about the future prospects of the record amount of new liquefied natural gas export facilities approved in 2019," the report says.

"Investors are looking with increased scepticism at oil and gas projects due to concerns about financial performance and the compatibility of company strategies with environmental goals."

Mr Buckley said the IEA’s acknowledgement of the climate impact methane emissions related to the gas industry have was also a signal of future uncertainty for the industry, though he said he did not believe it would prompt the government to reconsider its support for a gas-led recovery.

Director of the Grattan Institute’s energy program Tony Wood said it would be difficult for Australia to dismiss the IEA’s modelling because it is one of the agency's most long-standing and active members.

Kingsmill Bond, an energy analyst with Carbon Tracker, a finance and climate change think tank in London, welcomed the recognition that the world began to hit fossil fuel peaks in 2019, but said he believed it underplayed how far and fast solar costs would continue to fall.

"The IEA is forecasting a massive slow-down in the rate of fall of solar costs. Costs have been falling at 18 per cent a year since 2010," he said. "The [report] expects that the rate of cost falls reduces to just 2 per cent a year in the period to 2040. This is simply not credible."

Mr Bond also said he believed solar would continue to expand at a faster rate than that predicted by the agency's business-as-usual scenario.

Links

• World Energy Outlook 2020
• International Energy Agency - Australia
• World Energy Outlook 2020 shows how the response to the Covid crisis can reshape the future of energy
• World's largest solar farm and battery to export green energy
• (AU) In A World First, Australian University Builds Own Solar Farm To Offset 100% Of Its Electricity Use
• (AU) Public Debut For Printed Solar
• Plunging Solar Energy Prices Spell Bright Future For Clean Electricity
• Wind And Solar Plants Will Soon Be Cheaper Than Coal In All Big Markets Around World, Analysis Finds 

Climate Change Poses 'Profound Threat' To Global Growth - IMF Chief

Reuters - Andrea Shalal

WASHINGTON - Climate change poses a serious threat to global growth, the head of the International Monetary Fund said on Monday, urging the world’s top emitters to agree on a floor for carbon prices.

FILE PHOTO: International Monetary Fund (IMF) Managing Director Kristalina Georgieva makes remarks during the IMF and World Bank's 2019 Annual Meetings of finance ministers and bank governors, in Washington, U.S., October 19, 2019. REUTERS/Mike Theiler

IMF Managing Director Kristalina Georgieva told finance ministers meeting on climate change that countries should also ensure that green investments are included in the money they are spending to contain the COVID-19 pandemic and mitigate its economic impact.

Doing so, she said, could boost global gross domestic product by 0.7% on average in the first 15 years of the recovery.

“Even while we are in the midst of the COVID crisis, we should mobilize to prevent the climate crisis,” Georgieva told a meeting of finance ministers from 52 countries working to integrate climate change into their economic policies.

The group, launched in April 2019 and led by the finance ministers of Chile and Finland, met virtually Monday on the sidelines of the annual meetings of the IMF and World Bank.

China and the United States, the world’s largest emitters of heat-trapping gases, are not part of the coalition. Together they account for 43% of the world’s emissions.

“The evidence is clear: Climate change is a profound threat to growth and prosperity. It is macro-critical. And macroeconomic policies are central to the fight against climate change,” she said.

Georgieva said IMF research showed that policy tools could help achieve net zero emissions by 2050 despite the pandemic, but it was imperative that countries earmarked some of the $12 trillion in fiscal stimulus toward green investments.

Carbon pricing should be at the heart of the strategy, she said, adding, “It is critical to get the implementation right, including to shield vulnerable people and sectors to ensure a just transition.”

Voicing concern that the current Paris framework would not deliver the needed 25% to 50% reduction of emissions over the next decade, Georgieva called on top emitters to adopt a carbon price floor, which could pave the way for a global consensus.

Links

• Fourth Ministerial Meeting of The Coalition of Finance Ministers for Climate Action (pdf)
• Finance ministers reaffirm commitment to climate action amid COVID-19 pandemic
• Achieving Social Equity Is Connected with Climate Finance
• Long Term Strategies For Climate Change: A Review Of Country Cases (pdf)
• Ministries  of  Finance  and  Nationally  Determined  Contributions-Stepping  Up  for  Climate Action (pdf)
• Better  Recovery,  Better  World:  Resetting  Climate  Action in  the  Aftermath of  the  COVID-19 Pandemic (pdf)