Changing the investment climate:Confronting Australia’s coalConfronting Australia s coal addiction and the climate crisis.

John KayeGreens Member, NSW Upper HouseGreens Member, NSW Upper HousePh: (02) 9230 2668Email: John.Kaye@parliament.nsw.gov.au

Australian Investors Association

23 July 2007

Investors and the climate

Climate change investmentInvestment climate changeOutline:– Climate change overview– Australia’s emissions

E i– Economic consequences– The Alternatives: bad and good

Changing the investment climate

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– Changing the investment climate

C b di id t tiCarbon dioxide concentrationsincreased by 30% from 1000 AD to 2004 AD

3Data Source: World Watch Institute

Variations of the Earth’s surface temperature; 1000 to 2100

4From: IPCC – 3rd Assessment Report 2001

from: www.sternreview.org.uk5

from: www.sternreview.org.uk6

Stern says: " stabilisation of greenhouse-gas concentrations in the

from: www.sternreview.org.uk7

Stern says: …stabilisation of greenhouse gas concentrations in the atmosphere is feasible and consistent with continued growth."

Per Capita Emissions Australia leads the way!

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Trends in Australia's Emissions

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In 2005:

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560 million tonnes CO2 equiv.

Plus approx. 600 million tonnes CO2 in export coal

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stationaryenergy

agriculture transport landclearing &

industrydirect use

fugitive waste

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gy gforestry

Data Source: Australian Greenhouse Office

Stationary Energy

279 million tonnes CO2 equivalent (Australia - 2005)Ab t 70% l t i it ti– About 70% electricity generation

– About 30% gas and other fuels

Fastest growing greenhouse sourceg g g– 42.6% increase from 1990 to 2005– Air-conditioning, lower efficiency houses (lighting, heating),

commerce and industrycommerce and industry

NSW electricity industry dominated by coal– 90% of energy generation is coal burning

10– Rest hydro, small amount of gas

The big problem: Coal fired generators

Mt Piper

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Mt PiperPower Station

Lithgow, NSW

C l i A t li ’ G hCoal in Australia’s Greenhouse Emissions

Electricity generation 30%Cement and steel making 5%Fugitive (escaped CH4 from mines) 4%Total in Australia 39% 226 MTExports 106% 600 MTTOTAL: 145% 826 MT

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Australian Coal Exports

approximately 600 million tonnes CO2 each year– 30 tonnes per person each year

+ 27 tonnes in Australia = 57 tonnes per person each year57 tonnes per person each year

231 million tonnes of coal exported in 2004/05231 million tonnes of coal exported in 2004/05– worth $18.3 billion (to whom?)– 77% of total Australian coal production– 77% of total Australian coal production

Australia = largest exporter in the world– about 30% of world trade

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about 30% of world trade– Newcastle = world's largest coal export port

(about 10% of world trade)

A t li i ld’ l t l tAustralia is world’s largest coal exporter = 29% of world coal trade

In 2003, useable coal:,Aus mined = 279 MtAus usage = 67 MtAus exports = 208 Mt World trade = 719 Mt

Mt illi t– Mt = million tonnes

Export = 74.5% of Aus useable production

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p

Source: www.australiancoal.com.au

Coal “economics”

1 tonne coal = 2.6 tonnes CO2b t 1 t CO2 $107 d– but 1 tonne CO2 = $107 damage (Stern

Report)

Thus: 1 tonne coalThus: 1 tonne coal – does $270 damage– earns $70 (approx)earns $70 (approx)

1 tonne coal = $200 loss1 tonne coal = $200 loss280 million tonnes a year mined 280 million tonnes a year mined

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yy= $56 billion net losses= $56 billion net losses

18 000 j b l t i A t li ’ l18,000 jobs lost in Australia’s coal industry from mid 1980’s to 2002

16From: Diesendorf 2004

Jobs and coal: in perspective

Industry Jobs at risk (fte) x 1000x 1000

Coal 28

Great Barrier Reef Tourism 106

A i lt M th 200Agriculture More than 200

Renewable energy More than 200

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gy

Expanding coal industry (NSW)

Anvil Hill– 10.5 million tonnes of coal each year– 26 million tonnes CO2

M h th ll t t i NSW– More greenhouse than all transport in NSWNew coal fired power station(s)

One 1400 MW station could add 10 million tonnes– One 1400 MW station could add 10 million tonnes CO2 a year

– Undermine energy efficiency and renewables

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gy y

Business as usual is high risk

Likely scenario: some time in next 15 years:Rapid decline in demand for Australian coalRapid decline in demand for Australian coal

– Reduced export earnings– Declining employment

Increased pressure to reduce Aus emissions– Threat of sanctions– Increased energy & transport costs of emergency response;

imports Rising environmental stresses on economy

– Drought & disease food production

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g p– Violent storms & sea level rise increasing insurance costs

Potential for massive economic disruptionPotential for massive economic disruption

Alternative low risk scenario:Alternative low risk scenario: deliberate decisions to change

Start now with timetable for transition away f l d dfrom coal dependency:Avoid economy hitting brick wallReduce long term costs of transition by planningI d i t t t iti iIncreased investment opportunities in Australian technologiesI d t iti f t

20Increased opportunities for export.

Th i t t thThe convenient untruths: “clean” coal & “safe” nuclear power

Generation IV nuclear reactors

Carbon capture and storage(geosequestration)

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Problems with “clean” coal

Technological riskU t h l bl– Unproven technology: a gamble

TimingCostCost

– Estimates vary: A$10/tonne CO2 (Batterham) A$140/tonne CO (US DoE)A$140/tonne CO2 (US DoE)

Limited suitable storage sites close to sourcesLong term risk

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g– Release due to geological activity– Impacts on aquifers

Nuclear Power Issues

Technological risksTi i ld t k t l t b ild t d tTiming: would take too long to build to respond to climate changeCosts: Heavily subsidisedCosts: Heavily subsidisedResource scarcityWaste storage

Pl t i h lf lif 24 000 ( b t 700 ti )– Plutonium half life = 24,000 years (about 700 generations)Accidents, leakages, environmental & health issuesWeapons & Terrorism

23Greenhouse gas emissions

Th dThe good news:There are solutions and they work!

"Clean Energy Future for Australia"( f / k/ li h / l f /)– (wwf.org.au/ourwork/climatechange/cleanenergyfuture/)

Halve emissions by 2040 just Halve emissions by 2040 just with existing technologiestechnologies– Wind (20%)– Bio-electricity (26%)y ( )– Natural gas (17%)– Solar heat

24– Energy efficiency

Renewable Energy

Wind generation Bio-electricity

25Burning agricultural wastes, crops, by-crops

Bio-electricity: “Closed” Carbon Cycle

Carbon released from combustion isiscarbon recently taken from atmosphere

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Wind & jobs

Jobs change from

+ 16,000 new jobsWind Energy Industry in Denmark

mid 1980s to 2002

- 18,000 jobs lostCoal in Australiain Denmark

• wind (with 80% Aus content) creates:

4 x number of jobs as coal4 x number of jobs as coal

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jjfor each unit of energy generated

Data Source: Diesendorf 2004

Solar HeatingSolar Heating(especially hot water)

28 Direct solar: e.g. solar water heater

Energy efficiency

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Energy Efficiency: 9,000 new jobs9,000 new jobs

Ministerial Council on Energygy20% to 30% reduction in energy consumption possible

12 years benefits using available technology:y g gyEmployment increase by around 9,000 (+0.1%)Employment increase by around 9,000 (+0.1%)GDP $1.8 billion higher (+0.2%)GDP $1.8 billion higher (+0.2%)9% reduction in stationary energy consumption (-213 PJ)9% reduction in greenhouse emissions9% reduction in greenhouse emissions ( 32MT)

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9% reduction in greenhouse emissions9% reduction in greenhouse emissions (-32MT)

Impact on GDP (Using available technology)

31Data Source: Australian Ministerial Council on Energy

C ti th l l l i fi ldCreating the level playing field:What needs to be done?

Ending the fossil fuel age:Ending the fossil fuel age:–– no new coal powerno new coal power–– no new coal mines no new coal mines –– no new motorwaysno new motorways–– reduce dependence on export coalreduce dependence on export coal

Commit to 80% reduction by 2050 (on 1990 levels)

Carbon taxes (polluters pay)

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(p p y)– alternative: cap emissions and trade permits– assistance to low income households

What needs to be done? (2)

Minimum energy efficiency standards– Industry, commercial and residential

Invest in – renewable energy– Energy efficiency

E d b idi t l & i t iEnd subsidies to coal & energy intensive uses

Just transitions to sustainable jobs

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– Just transitions to sustainable jobs

H t k th t iti dHow to make the transition and reap the benefits?

Industry policy (vs. globalisation & market ideology)D l i d t i th t l li t bl– Develop industries that solve climate problems

– Make deliberate decisions locating manufacturing in areas with high unemployment

– High volume + low value added High value added + low volume

– Focus on innovation & developing export industries

Workforce– Unionised workforce, collectively bargaining

Public education opportunities

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– Public education opportunitiesTAFE

Changing the investment climate

Restore optimism to the greenhouse debateC d i i t f l l d t bili li t– Can reduce emissions to safe levels and stabilise climate

– Can create export economy– Can generate jobs

Government policies that 1. deliberately set the agenda for the end of the age

of coalof coal2. Incubate renewable technologies3 Secure the long-term for renewables

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3. Secure the long term for renewables

Conclusions

This is the Greenhouse CenturyIf we fail the challenge– Destroy investment, jobs and the environment

If we pass the challenge– Can build a strong economic future for Australia

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