Demand for thermal coal is tipped to dramatically decline in coming years if the world meets its climate change commitments according to an international energy report, highlighting the urgent need for a transition to new industries in places like the NSW Hunter Valley.
Lock the Gate spokesperson Georgina Woods said the International Energy Agency’s World Energy Outlook 2018, released today, revealed a stark choice for Australia and challenged governments to help coal mining communities with the rapid transformation that must come to avoid dangerous climate change and millions of lives.
The report follows the Institute for Energy Economics and Financial Analysis (IEEFA)’s recent report, which showed a terminal future for thermal coal demand globally.
“The World Energy Outlook 2018 depicts the world at a crossroads, with three possible paths forward, only one of which - the Sustainable Development Scenario - can avoid catastrophic climate change, reduce deaths from air pollution and provide for affordable universal energy access,” Ms Woods said.
“Only this scenario meets stated international goals to mitigate climate change, and brings about a rapid divestment in coal use and accelerates clean energy transitions.
“It is unthinkable that at this time the NSW Government is not only behaving with a ‘business as usual’ approach to the Hunter Valley, but is actively considering a new coal mine in Bylong, the United Wambo Mine in the Hunter, and the Vickery mine near Boggabri.”
Ms Woods said the WEO 2018 also delivered a harsh reality check into the continuing and increasing methane leaking from gasfields around the world.
“The Federal Government must take urgent action to reign in the gas leaks across Australia, and start properly measuring and accounting for our surging emissions from gasfields,” she said.
“Australian gas is also among the most expensive in the world, and is tipped to only constitute five per cent of new gas production out to 2040.”
Ms Woods said governments must act now to allow communities time to adjust to the economic disruption rapid divestment in fossil fuels would create.
“Regions like the Hunter Valley should not be left to flounder while the world moves away from coal: we need a multi-decade plan to make this change work for us,” she said.
“It is time to choose the future we will give to the next generation of Australians. If we want them to have the opportunities we have and to enjoy this beautiful country, then that means a change of direction for coal mining communities.
“We can and must take that path and help mining regions adjust to change, because the alternative is unthinkable.”
Highlights from the WEO 2018
Coal
- “Coal demand has been revised down in the New Policies Scenario, our main scenario, reflecting not only strong competition in some markets but also an increasing focus on policy measures that either penalise coal directly or give a helping hand to its competitors. Such policies become much more stringent in the Sustainable Development Scenario.”
- In the New Policies Scenario, coal production in Australia remains roughly stable at 417mt till 2025, and then rises to 474Mt by 2040.
- And yet, the Outlook sees the global thermal coal trade declining by 55Mt in the next two decades, even in the New Policies Scenario, “as declining import demand in China and advanced economies outweighs rising demand in India and other Asia Pacific.”
- In the New Policies Scenario, Australia’s current biggest markets for thermal coal imports will decline, including Japan and Korea (-32 percent, or 95Mt) and China (-61% or 128Mt).
- However, “The gap between [the New Policies Scenario] and the Sustainable Development Scenario, in which accelerated clean energy transitions put the world on track to meet goals related to climate change, universal access and clean air, remains huge. None of these potential pathways is preordained; all are possible. The actions taken by governments will be decisive in determining which path we follow.”
- Under the Sustainable Development Scenario “premature deaths from outdoor air pollution are half a million lower in 2040 than today. As well, CO2 emissions decline rapidly in line with the objectives of the Paris Agreement.”
Gas
- Although the report shows gas demand growing in Asia, particularly under the New Policies Scenario, Australia doesn’t figure largely in the gas section, or in the predicted share of future production growth.
- Table 4.3 shows Australian gas production roughly doubling out to 2040 under the New Policies Scenario, but the IEA expects Australia to only supply 5% of new gas production out to 2040, and does not mention the NT as a new source of shale gas.
- This may be because Australia’s gas is the most expensive in the supply pipeline to China (as shown in Figure 4.13 on page 195).