Blog | 3rd Jun, 2013

Burying our heads in the coal in Victoria

In 2013, the energy megatrends of the 21st century are a lot more visible and better understood. For instance, it’s now clear from analysis like that was released by Deutsche Bank that global thermal coal markets are peaking, and many planned new coal mines and ports in Australia will be shelved.

China is poised to cap emissions and ban the import of low grade coal. Solar power is exceeding all growth expectations, posing an existential crisis for traditional electricity businesses. And electricity demand in Australia – and industrialised countries globally – has done what was unthinkable just a few years ago, and started falling in absolute terms.

These megatrends tell an encouraging and hopeful story.
There’s another more difficult and depressing story though, and that’s the story of the climate science. In a nutshell the story is this. On our current emissions trajectory we are headed for 4°C warming, well above the 2°C danger threshold, perhaps as early as 2100. Professor Hans Joachim Schnellnhuber recently posed the question “What is the difference between a 2°C and a 4°C world?” and concluded “Human civilisation”, with a 4°C world able to support an estimated global population of less than 1 billion. Others are less optimistic- Kevin Anderson from the Tyndall Centre suggests only half a billion people might survive.
Good grief.
How then is the State Government of Victoria engaging with the new energy and climate reality? Based on two developments in Victorian politics this week; Parliamentary hearings at which the State Energy Minister presented his vision for the year ahead in his portfolio, and the release of a long-awaited Parliamentary Inquiry into mining exploration, their heads are well and truly buried in coal.
First to the little known Public Accounts and Estimates Committee of the Victorian Parliament. Now hold yourself back, but Hansard of the 2013-14 State Budget hearings went live this week – I’ll save you the trouble of wading through the detail and cut to the chase. A powerpoint presentation by Energy Minister Nick Kotsiris mentioned renewable energy once, but it was only to point out that his government had introduced a new, lower solar feed-in tariff. Rather the year ahead was all about developing the state’s ‘earth resources’- code for brown coal reserves.
The only funded programs mentioned by the Minister were a $19 million program to attract new mining activity, a $4.2 million ‘mine stabilisation’ program to address persistent mine management problems at the privately owned Yallourn and Hazelwood mines and $8.3 million for ‘Clean Coal Victoria’ to “facilitate access to and development of Victoria’s coal resources”. This money is to prepare the way for a proposed coal allocation of 13 billion tonnes of unallocated coal in the Latrobe Valley, about which the Minister promised some news later this year. Other priorities identified for the year ahead included “realise the potential of brown coal through the Advanced Lignite Demonstration Program” and “Continued support of investigation of CCS through the CarbonNet project”.
Victorian governments past and present have always been mesmerised by the size of the Latrobe Valley brown coal deposit and harboured fantasies of its ‘liberation’. But there’s always at least been lip service, and sometimes actual attention and support, paid to the State’s renewable energy sector also. Not anymore. While the Coalition in Opposition promised to fulfil the State’s target to reduce emissions by 20 per cent by 2020, to source 5% of the State’s electricity from solar power by 2020 and to improve the average standard of Victoria’s homes to 5 stars, these promises seem to have been forgotten in Government. Instead, it’s full steam ahead with blocking wind farms, reducing support for solar power, reviewing the highly successful Victorian Energy Efficiency Target and pursuing a brown coal export industry.
On to the release of the Government’s response to a Victorian Parliament “Inquiry into greenfields mineral exploration and project development in Victoria” (available here).
The Parliamentary Inquiry report had recommended a series of measures to increase mineral exploration, but also proposed a number of safeguards for affected communities, such as ensuring landholders were notified in writing when an Exploration Licence was lodged over their farm, or undertaking strategic land use planning to identify high agricultural or conservation value land for exemption from mining.
The Napthine Government’s response though has rejected the safeguards and strengthened the pro-mining recommendations. Notifying landholders that exploration licences were about to be issued over their farm was deemed “impractical”; rehabilitation bonds for mines were halved in their early years of operation (exactly the time when they are most likely to go belly-up and leave taxpayers with a burden); mining leases will be given greater protection from other land uses; ‘low-level exploration and drilling’ activities will be redefined so that a works and environmental management plan will not be required; and the possible lowering of mining royalties were all mooted. The Government response was a brown-wash, putting the interests of carpetbaggers and fly-by-nighters ahead of ordinary Victorians.
What’s most confusing about the Victorian Government’s coal obsession though is that it makes neither economic nor political sense. From an economic perspective Victoria faces serious economic headwinds, with unemployment higher than the national average and manufacturing industries suffering from the high dollar. Yet the State Development Minister, and the Energy Minister’s response is to pursue phantom jobs in ‘clean coal’ while ignoring the megatrends of the 21st century and destroying real jobs in clean energy. And the central plank of the Government’s vision for energy is to try and develop a brown coal export industry, despite countries like China flagging a ban on import of low grade coal. It’s not just environmentally irresponsible, its economically illiterate.
From a political perspective putting all the eggs in the coal basket is “courageous” as Sir Humphrey might say. Victorians are on the whole progressive. Just this week national polling found that support for the Federal ALP’s carbon laws is highest in Victoria. Polling by Essential Media found 76% of Victorians expect the State Government to act to reduce greenhouse pollution, while just 13% want more coal mines, so they’re not winning any friends among progressives. Meanwhile they are alienating their own support base by trampling over the rights of National Party voting farming communities in Gippsland to allow miners access to prime agricultural land.
It all begs the question, what’s going on in Victoria and why does the State Government think we are immune to  global trends and challenges?