Coal Powers On

 
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Despite wishful predictions from the anti-mining lobby, demand for coal continues to increase, especially from nations that are delivering millions from poverty. By Nick Cater

Our friends from The Australia Institute took a break from talking down the Australian economy last week to join the climate emergency protest.​

The green-left think tank has become notorious for its false predictions of a collapse in the global demand for coal and dire warnings that the investors in the Adani coal mine were about to do their dough. Four years ago, for example, the Institute’s Richard Denniss produced a paper with the amusing title When You’re in a Hole - Stop Digging! It purported to present the “economic case” for a moratorium on new coal mines.

Global demand for coal was “flat”, said Dennis, the market “stagnant”. New mines would create oversupply and drive the price of coal down. Denniss urged us to heed the wisdom of President Tong of Kiribati who said that a moratorium on new coal was “an essential first step towards significantly reducing greenhouse gas emissions.”

The myth that global demand for coal is about to collapse is one of those truthy little factoids that is beyond dispute in climate worrier circles. In August The Guardian carried a report claiming that the government’s own advisers were warning of falling demand from India.

It was a blatant misrepresentation of a report from the Department of Industry, Innovation and Science that said India’s thermal coal consumption “is likely to continue to increase next decade, and possibly beyond, in order to meet India’s increasing energy requirements.”

“Thermal coal is expected to remain a major part of India’s energy mix for decades,” the report said.

So where is the evidence for the stagnancy in the market, as boldly proclaimed by TAI? Since Denniss wrote his report, India has become the world’s second largest coal consumer. Consumption rose by 9.1 per cent over the past year and is now a touch shy of a billion metric tonnes a year. To put that in perspective, it is roughly twice as much coal as Australia digs out of the ground.​

China (naturally) is the world’s number-one coal burner, consuming around 4 billion tonnes, half the worlds’ coal production, the equivalent of eight times Australia’s output.

Denniss’ predictions of an oversupply have proved equally groundless. In fact supply has tightened considerably in the past three years. Both India and China are relying more heavily on imports than they once were.

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Indeed, as we reported recently, China’s reliance on imported energy is one of the biggest constraints on its further economic growth, one its biggest disincentives to pursuing and aggressive strategic policy and one of its biggest incentives for setting its trade dispute with the United States, a country it may be obliged to turn to in the future for supplies of liquid natural gas.

A Reserve Bank of Australia report on Australia’s coal export industry this month also fails to confirm the gloom for which Denniss might have wished.

The RBA forecast paints the picture one would expect: further growth in the short-term, sustained demand in the medium term as newly built coal generators serve out their useful life and uncertainty in the long run as newer, more efficient technology kicks in.

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Thermal coal demand in China is still rising, albeit somewhat slower than before. In India and other parts of Asia coal demand is rising sharply.

In the mature economies coal demand has fallen substantially in Europe and even more quickly in the US, where abundant gas now provides a cheaper option. Demand is falling more slowly in Japan and Australia.

The graphs also expose the conceit of the protests to which TAI was enjoined last week. If Australia stopped coal production tomorrow, a move that would collapse the economy faster than a punctured balloon incidentally, it would make barely a dent on global output of carbon.

If the TAI wants to make a difference, we suggest they paint their banners in Mandarin Chinese, fly to Beijing and unfurl them in Tiananmen Square, a place where we gather the attendance at last week’s climate process was disappointingly low. Zero, in fact.