Obama's crusade can't halt Australia's coal-burning ambition
Published 14/08/2015 | 02:30
US President Barack Obama challenged America and the world to step up efforts to fight global warming at the formal unveiling last week of his administration's controversial, ramped-up plan to cut carbon emissions from US power plants.
The plan mandates a shift to renewable energy from coal-fired electricity, marking what many see as the rapid decline of the coal industry. But while coal becomes increasingly viewed as a "sunset" business in many developed countries, production is rising in Australia.
"To say coal mining will stop in Australia is unrealistic," said James Wilson, an analyst with Morgans Financial in Perth, noting that some of the biggest and most efficient mines are located in the country.
Banks have poured more than $3bn into Australian coal projects in the past 18 months, seemingly oblivious to a 28pc fall in thermal coal prices over the same period, according to data compiled by Reuters.
Australia's coal exports are forecast to rise this year to 202.9m tonnes, second only to Indonesia and nearly twice that of Russia.
While President Obama is trying to wean the United States off coal, Australian Prime Minister Tony Abbott has in contrast said coal "is good for humanity" and for his commodity-reliant economy.
This year coal is forecast to generate A$346 billion in foreign sales for Australia, right behind iron ore, the country's most lucrative export, according to Australia's Department of Industry and Science.
Another Australian miner, Whitehaven Coal, says that developing new coal assets is key to its future so that it can meet rising demand from Asia.
"Whitehaven's imperative is to grow by developing more assets," said its managing director Paul Flynn. "I am not hiding behind that at all."
Some banks in Australia, however, are turning their noses up at coal projects. Standard Chartered has just become the second bank in a week to walk away from a multi-billion dollar Australian coal venture, leading environmentalists to claim a major victory.
Standard Chartered announced it will not advise or help finance the Carmichael coal mine, being developed in Queensland by Indian conglomerate Adani Mining. The move came after Commonwealth Bank of Australia, pulled out as a financial adviser earlier this month.
Adani declined to comment, but both banks cited the firm's delays in gaining government approvals to proceed with construction of the project, estimated to cost $10bn, as reasons for withdrawing and did not mention any environmental concerns on their part.
But while lenders may be under pressure to back away from coal, funding has by no means dried up. Australia's four largest banks have lent more than A$36bn to fossil fuel projects in Australia since 2008, according to environmental group Market Forces.
Advocates for more coal mining in Australia warn if coal resources aren't exploited, India and other foreign buyers will turn to Indonesia and South Africa, eliminating economic benefits to Australia and doing nothing to cut emissions.
"If these countries cannot source our coal, they will seek it elsewhere, and that coal may not be as high quality, producing a worse outcome for global carbon emissions while denying Australia jobs," said Michael Roche, head of mining lobby Queensland Resources Council. (Reuters)