2016: The coal party is over and the cleanup begins

Intro

With the landmark COP21 climate deal signed in Paris just a few weeks ago, 2016 has kicked off with yet more positive signs that the ‘Paris effect’ is speeding the transition away from fossil fuels. Share markets crystal ball-ed the future for coal as the conference hammer came down, and while the Australian government was still wearing its heart on its sleeve by again approving teetering coal giant Adani’s barrier reef-threatening port expansion at Abbot Point, its love for coal is looking more unrequited than ever. Dramatic cost declines in solar power tenders in India have severely undermined expectations for coal, while China has announced a ban on all new coal mine approvals for three years. Excess capacity, its ‘war on pollution’, and efforts to transition its economy from traditional drivers to new drivers has already seen the country close around 1,000 coal mines in 2015, and 1,000 more are expected to go in 2016. This has had a tremendous social impact, with 100,000 coal workers to lose their jobs. However, considering France coincidentally expects to generate the same number of jobs with its burgeoning solar industry in the next three years, it is clearer than ever what urgent steps must be taken to ensure a just and fair transition away from dirty energy happens. The Australian government has no time to be forlorn if it wants to put the right policies in place to protect workers during its own speeding and inevitable renewable transition.

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Key Points

  • COP21 has made it abundantly clear that the age of fossil fuels is over. While Australia thankfully did not play the wrecker role at the Paris climate conference some feared it might, it is still doing everything it can to push a rickety coal cart with square wheels. As it does, policies the government continues to trumpet as effective at reducing greenhouse gas emissions are leading to the exact opposite, demonstrating that Australia needs to get serious about cleaning up its economy, and do it very quickly.
  • The future for coal is deteriorating faster than anyone imagined. Big changes to coal imports and consumption are underway in China and India as both seek to clean up their air and their economies, and to speed down the clean development path. The ‘Paris Effect’ saw fossil fuel shares dive in the wake of the agreement, coal companies like India’s Adani are on the precipice of “junk” credit ratings, and with windows closing in these major export markets Australia will have to move fast to protect its own economic development and the future for its workers.

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Key Quotes

  • “The atmosphere doesn’t care about emissions intensity. What matters is what we put into the atmosphere and if we’re putting more into the atmosphere than the year before, than we’re heading in the wrong direction. We’ve got to drop emissions fast. We’ve got to get out of fossil fuels very quickly, coal first – there can no new coal mines anywhere in the world.” – The Climate Council’s Professor Will Steffen
  • “The IEA’s report confirms that coal demand has stalled and free-falling prices are unlikely to ever recover. As an economy that’s heavily dependent on fossil fuels, Australia cannot keep ignoring these warnings. Continued dependence on coal mining is an economic timebomb for Australia as well as a carbon bomb for the global climate. Australia now has to start making plans for a future in which there will be no market for coal.” – Greenpeace Australia Pacific climate and energy campaigner, Shani Tager
  • “When the wind of change blows, some build walls, while others build windmills. China is now in a transition from traditional drivers to new drivers,” Mr Li said. “From an extensive model of growth in the manufacturing sector to an intensive model of growth and from over reliance on investment to a growth model driven by consumption and investment. This is going to be a painful and treacherous process, so ups and downs in economic performance is hardly avoidable.” – Chinese Premier Li Keqiang at the World Economic Forum in Davos last year.

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