13 Jul 2011

TAX WILL NOT HURT "King coal" Australia's complicated commodity

Tim Colebatch
July 13, 2011 Edited by : S W T ReadAUSTRALIA A LONG WAY BEHIND

The coal industry is in no danger of being killed off by the carbon tax.

The great bulk of Australia's coal production is exported.

A carbon tax of $1 or so a tonne on coal output will barely dent export growth when coal prices are more like $200 a tonne.

Treasury estimates the carbon tax will mean coal exports will increase 45 per cent over this decade instead of 48 per cent. So long as Japan, China, India and Korea keep burning coal, the industry will keep growing.

But what is the future of coal in Australia's power mix?

The reality is that it depends on whether carbon capture and storage develops into a economically viable technology. If it does, coal - including the brown coal of the Latrobe Valley - has a future here.

The power companies have turned instead to gas and wind.

 In Victoria, the Western District is home to the new power industry, with Origin's 550 megawatt (million watt) gas plant about to open in Mortlake, and AGL building a 420 megawatt wind farm by Macarthur.

By 2009-10, coal's share of our electricity supply was already down to 75 per cent. Gas now provides 15 per cent and wind 2 per cent.

By 2030, officials forecast, gas will provide 37 per cent of our power, wind 12 per cent and coal just 43 per cent.
China's emphasis on developing clean energy sources has rattled some of its economic competitors and could transform the global energy marketplace.

In 2009, according to the Pew Charitable Trusts, China surpassed the United States and other members of the G-20 for the first time as the leader in clean energy investment.

Last year clean energy investment in China totaled $34.6 billion, compared with $18.6 billion in the United States. Last month, Chinese officials announced they will spend $75 billion a year on clean energy.

"In China, the policy has gotten very aggressive," said Peggy Liu, chairperson of the Shanghai-based Joint U.S.-China Collaboration on Clean Energy. She said Chinese officials are trying out a range of new technologies.

 "It's like throwing spaghetti on the wall. They're very open to experimenting."

Zhou Dadi, vice chairman of the State Expert Advisory Committee to the National Energy Leading Group of China, said his nation is trying "to change the system" of how it uses and produces energy.

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