China has lots of BROWN Coal

Posted to Bolt Blog (31-July-2008)

In this article : Gas on about that clean coal - and Rudd’s mad plan

For those that still think its about the 'environment' or the 'science' debate...

China has lots of Brown Coal (lots of countries do), Australia has lots of Black coal (most countries don't). In a mild ETS environment (even it you are just thinking about it) Black coal has a comparative advantage when making large capital investments with low, but long term, returns. The risk rating to your capital is higher.

Once you build a power station to use black coal you can't just start using brown coal, so you lock in exports for 30-50 years.

ETS is about 30-50 years of black coal exports into rapidly emerging markets and a local massively public funded investment in co2 technology that will assist in maintaining existing markets.

This is why the 'science' arguments won't cut through on either side of politics. Do you really think Rudd would be doing this for the greenies that already vote labor by default? Count the number of ex-labor luvvies on the boards of coal companies....where's Kev's money invested?

Next walk through what happens if Australia doesn't do the ETS. Europeans will do their own ETS thing and this means less coal exports, China will use their own brown coal, no/less market for our black coal. I wonder if this the economic cost that Garnaut is talking about?

'Carbon Watch'

On ABC TVs Insiders on Sunday Andrew Bolt made the label for the ETS - 'Carbon Watch'

Lots of action, no movement. priceless.

For anyone who missed it, GetUp posted an interesting retort to 'Fuel Watch' which must be followed you would hope by a 'Carbon Watch' - See the Video here: http://www.youtube.com/watch?v=CZlT4w2tZmg

Post in response to Andrew Bolt encouraging Brendan Nelson to go ANTI AGW

Andrew Bolt is a columnist for the Sun Herald, and a regular 'conservative' on the couch rotation with Barry Cassidy and the 'Insiders' on the ABC on Sunday mornings. He devotes a lot of his blog to presenting the case against man-made climate change. Although I would consider Andrew Bolt to be far closer to the centre than most give him credit, make no mistake this is a Capital 'L' Liberal blog hang out. The content is generally about the 'science' and I believe the forum generally misconstrues the debate in relation to an ETS as a 'socialist' versus 'capitalist' 'left versus 'right' 'greenie' versus 'conservative' one.

This week he is presenting (and some might say leading) Opposition Leader Brendan Nelson with a case for a position where he would oppose both 'climate change' and an ''Emission Trading Scheme.' - Articles include: 'Nelson’s Trafalgar' & 'Nelson Changes Tack - for the Better'

I posted on the topic, 'Nelson's Trafalgar' as follows:

"Whilst I don’t agree with the introduction of an ETS, I think we should consider the economic advantages for Australia with a ‘mild’ reduction framework of greenhouse gases.
China is our biggest growth export market for energy. There is an abundance of brown coal in China. Black coal, a big earner for Australia, is a far more scare commodity. Its also slightly better in greenhouse terms, potential a comparative advantage in a ‘mild’ carbon reduction framework. If carbon capture and sequestration can be made to work, then this would further enhance the comparative advantage whilst sidelining nuclear, gas and other options. The ETS is effectively going to be a massive public fund to develop that technology.

Whilst I think the ‘science’ is absolutely worth debating, I don’t think we should lose sight of the economic reasons and vested interests that are involved and be assuming that the ETS is a ‘greenie’ thing.

Its important to understand your enemy and I don’t think Rudd is a ‘greenie’ in any sense of the word but I think the ETS gives him green credibility while delivering comparative advantage to the black coal industry and a boon for the financial sector. I think its very dangerous territory for Nelson to move to opposition to an ETS, when big business, despite their pan handling, are supportive of it."

RISK not Science

Some Political Truths for Deniers, Sceptics and True Believers.

Its not about the science of climate change, I don't think that can never be proved or disproved. Its not about the percentage or volume of carbon emissions that Australia is responsible for or the difference we can make. Its not about whether the Great Barrier Reef lives or dies.

Its about the RISK to your economy when you are:

• a big exporter of stuff (coal) that your trading partners may not want at some point,
• one of the most carbon intense economies in the world, and
• the world is thinking seriously about changing the playing field on you.

Attention Australia:

• One of your major revenue sources is under threat
• Your comparative advantage of 'cheap' energy is under threat

In a scenario like this most good CEO's would be acting now don't you think?

Crikey Comment - ETS its about the Economy...

Crikey.com.au carried 2 stories in its edition on Thursday that make good points but in my opinion miss the underlying intention of what the emissions trading scheme is all about.

Bernard Keane - Green Paper: ever get the feeling you've been cheated?

Clive Hamilton - Hamilton: Shameless political capitulation

My Comments submitted to Crikey (11:58pm Thursday) -

Who says the ETS is about saving carbon emissions or the environment? It’s the economy…(you know the rest) and it is the only reason that makes bipartisan political sense to lead the rest of the world with an emissions trading scheme.

As you know Australia makes a bucket load of money out of coal exports, and as Bernard said the other day, projections of coal sales into markets like China are just silly big numbers. The biggest threat to this is, if countries start taking this climate change thing seriously and maybe China might even starting thinking more about gas, nuclear and other options.

How to mitigate that risk? Well what about a massive public subsidy to develop ‘clean’ coal technologies? Sound familiar?

If the technology works, there is a ‘holier than though’ green message to the rest of the world that will support our coal exports, our coal fired power industry will have benefited from the public investing in the technology they need to capture and store their carbon emissions, and big industry will benefit from the comparative advantage of cheaper base load electricity, again thanks to the public investment.

In the early stages of the ETS they only need to generate enough money to support the research and early stage development of ‘clean coal’. Over the next 5 or so years there are no big capital expenditures In carbon capture and storage that are ready to go.

There can be no better way to mitigate your risk than to get somebody else to pay for it, AND have them feel good (greenJ) about themselves for doing it.

ETS - Australian Public being asked to fund the technology to mitigate the risks to Coal Export

Has anyone worked out yet who benefits from an emissions trading scheme? Why is the Australian Government of both sides of the house embracing it? The player with the most to lose in a world environment where carbon emission intensity is an issue is the coal export industry. Still wondering why there is unanimous support?

Then consider the proposed make up of the ETS. We are looking at emitters of carbon dioxide having to buy a permit to emit. Mostly this means coal fired power stations. The cost of this will be passed onto consumers in one way or another. Please do not confuse the electricity generation sector with the coal export sector. There is a real possibility that there will be major bankruptcies in the electricity generation sector in a poorly implemented ETS caused by re-evaluation of current asset values.

The revenue generated from these permits (according to Garnaut) will be put into transition support for 1) exporting industries 2) the public and 3) emission reduction technologies. What they are talking about is a massive pool of funds that will extensively be used to 'clean' up coal. The development of this technology is fundamental to maintaining coal exports for the next 100 years if the carbon emission equals climate change paradigm persists. If it doesn't, and Andrew Bolt and Piers are right and this all turns out to be a hoax, then coal will have effectively blocked introduction of options such as nuclear.

All this might be completely ok if the greenhosue thing is real and we need to reduce carbon emissions and we like the considerable economic benefits to Australia from exporting coal. However, given that the coal export sector is doing pretty nicely at the moment, so WHY is the private consumer and businesses like manufacturers that are already doing it pretty tough being asked to foot the bill for this?

Getting the public to fund the mitigation of your risk and feel good about themselves for fighting climate change at the same time is a nice strategy if you can get away with it.