NSW Sees Diminishing Role For Coal As Canada Plans To Phase Out Thermal Coal By 2030

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5 years ago, the New South Wales treasury released an intergenerational report that projected the demand for coal would increase at about 1.6% a year pretty much forever. This year, the Treasury’s intergenerational report is completely different.

In a technical paper prepared for this year’s report, the NSW treasury says “global demand for coal is expected to weaken considerably. Declining global demand for coal will reduce New South Wales’ economic growth over the projection period and will have impacts both on employment and the fiscal outlook.”

“This does not necessarily mean that no coal will be used in the future — new coal generators continue to be built and net zero policies allow for offsets. Nonetheless, future coal production is now expected to be considerably weaker than was forecast for the 2016 intergenerational report”, the NSW treasury says.

How much of a decrease are we talking about here? The new report posits a number of different scenarios, the worst one projecting that coal volumes will fall to zero by 2042. Even under the middle scenario, coal volumes will fall to less than half current volumes by the mid 2046. Jobs in coal production will fall from 22,000 today to no more than 10,000 by 2046 in the best case and may disappear completely in the worst case.

The NSW Treasury acknowledges that thermal coal’s worsening outlook “is being driven by a combination of policy measures at a global scale aimed at reducing greenhouse gas (GHG) emissions, and technological development which is lowering the cost of renewable generation. This will impact the New South Wales economy and budget, and because it is driven by global factors, is largely outside the control of the New South Wales Government.”

In an email to CleanTechnica, Simon Nicholas, energy finance analyst for the Institute for Energy Economics and Financial Analysis, says the NSW Treasury is absolutely right — ultimately, demand for Australian thermal coal will be set by the policies and actions of governments and companies in coal importing Asian nations. The NSW Treasury makes clear that its worsening projections has been driven by the fact that its top three thermal coal export markets — Japan, China and South Korea — all committed last year to reaching net zero emissions by the middle of this century.

In fact, the situation is worse than that. The coal power project pipelines in South and Southeast Asia, which are supposed to save the coal mining industry in NSW, are drying up rapidly. Demand in those countries is down 80% since 2015. “We believe this is set to accelerate as the capital subsidies from export credit agency underwritings of new coal proposals have now largely been withdrawn,” the IEEFA says.

It adds the accelerating pace of the energy technology transition calls into question  the wisdom of adding more coal supply by opening new mines or extending existing ones because new mining capacity steals market share from existing operations, which puts existing mining jobs at risk.

The price of Australian coal is up, but even that may not be good news. High coal prices will kill long term demand because they will make electricity from coal-fired generating stations more expensive compared to renewable energy, which is getting cheaper all the time.

Canada To End Thermal Coal By 2030

The government of Canada has reiterated its pledge to end the mining and use of thermal coal by 2030, a policy first announced in 2018. Environment minister Jonathan Wilkinson said last week that Canada will not approve new thermal coal mining projects or plans to expand existing mines because of the potential for environmental damage, according to a report by Reuters.

“The government considers that these projects are likely to cause unacceptable environmental effects within federal jurisdiction and are not aligned with Canada’s domestic and international climate change commitments,” Wilkinson said. “The continued mining and use of thermal coal for energy production in the world runs counter to what is needed to effectively combat climate change.”

The new policy will apply to the plans by Coalspur, a privately owned coal mining company, to expand an existing thermal coal mine in the western province of Alberta, a province that has staked its entire financial future on destroying the planet with emission from its tar sands oil, the dirtiest oil found anywhere on Earth.

In a press release, the Canadian government said, “The evidence is clear: the continued mining and use of thermal coal for energy production in the world runs counter to what is needed to effectively combat climate change and seize the economic opportunities that it presents. It is in this context that the Government has announced this policy today and will continue to work with Canadians to deliver strong climate action.”

“New thermal coal mining projects or expansions are not in line with the ambition Canadians want to see on climate, or with Canada’s domestic and international climate commitments. Eliminating coal-fired power and replacing it with cleaner sources is an essential part of the transition to a low carbon economy, and as a result, building new thermal coal mines for energy production is not sustainable,” Wilkinson added.

G7 Backs Away From Coal Statement

Meanwhile, at this year’s G7 economic summit in  Brussels, the United States backed down from a pledge to push the world’s nations to end the use of thermal coal within the next decade, a commitment many nations were prepared to make before the conference began.

The softening of the US stance appears to be an attempt to appease Senator Joe Manchin of West Virginia, a state where coal had played a dominant role in politics for generations. Manchin is one of those “all of the above” people who sees a role for all fossil fuels for the foreseeable future, the climate crisis be damned.

“It’s very disappointing,” Jennifer Morgan, executive director of Greenpeace International, told the New York Times. “This was a moment when the G7 could have shown historic leadership, and instead they left a massive void.” The final conmuniqué from Brussels only mentioned a call to “rapidly scale up technologies and policies that further accelerate the transition away” from coal without the resort to carbon capture technology, which has failed to perform adequately at any coal fired generating station anywhere in the world as of yet.

“The G7 announcement on climate finance is really peanuts in the face of an existential catastrophe,” said Malik Amin Aslam, Pakistan’s climate minister. He called it a “huge disappointment” for his country and others that have been burdened with the cost of coping with extreme weather, displacement and other impacts of global warming attributable to economic policies of the world’s industrialized nations. “At the least, countries responsible for this inescapable crisis need to live up to their stated commitments, otherwise the climate negotiations could well end in futility,” he warned.

The Takeaway

Talk about the tail wagging the dog. One US senator has used his influence to favor his campaign contributors among the fossil fuel industry and the whole world has to suffer as a result. It may be that the world somehow avoids making the Earth uninhabitable for humans but the foot dragging and platitudes from fossil fuel apologists are making that outcome less and less likely.

The only saving grace is that renewables become so cheap they drive all other sources of energy out of the marketplace. The question is whether that will happen in time to avert disaster. Will humanity save itself from its own destructive tendencies? “We’ll see,” said the Zen master.