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King Coal rules « Previous | |Next »
January 15, 2011

Australia has a contradictory de facto industry policy--support the mining industry and shift the economy to a low carbon one. It is contradictory because the attempt to set prices for global carbon emissions failed, due to ‘coal' – or, rather, the fact that coal is cheap and abundant, the mining industry is powerful, and the owners of coal mines and their clients are strongly opposed to any tax on carbon. Coal has been the engine of the economy for a very long time because it is cheap and abundant, and it provides cheap electricity for the economy.

The shift to a low carbon economy is as trans formative as the transformed from an agrarian to an industrial economy. In his Industrial Policy Comes Out of the Cold at Project Syndicate Justin Yifu Lin says that historical evidence shows that in countries that successfully transformed from an agrarian to an industrial economy – including those in Western Europe, North America, and, more recently, in East Asia – governments coordinated key investments by private firms that helped to launch new industries, and often provided incentives to pioneering firms. He adds:

the lesson from economic history and development is straightforward: government support aimed at upgrading and diversifying industry must be anchored in the requisite endowments. That way, once constraints on new industries are removed, private firms in those industries quickly become competitive domestically and internationally. The question then becomes how to identify competitive industries and how to formulate and implement policies to facilitate their development.

In Australia renewable energy industry is anchored in the requisite endowments. The question of how to formulate and implement policies to facilitate the development of the renewable energy industry is continually sidelined by the coal industry.

So we have ad hock mickey mouse proposals that are soon dumped, rather than a fully fledged industrial policy that deals with the transformation to a low carbon economy in a systematic way. The Coalition is dead set against any substantive action on climate change, such as pricing carbon.

King Coal have gotten used to doing things the way they wanted to do things. Their public stance is one of don't mess around with us, we're in charge here. This is not a dynamic industry, in the sense of innovation and change. They want to do things their way, they want to do things the old-fashioned way, they don't want to change, and they don't believe they need to.

This is an industry that is used to getting by on political muscle and not on compromise. It presents itself as a hapless collection of hard-working guys just trying to keep the lights on for us, as the Greens and the environmentalists are carrying out a “regulatory jihad” against coal. Coal is on the wrong side of the innovation curve — it is a 19th century fuel that has thrown itself into the 21st century with sheer political muscle.

The coal mining states--Queensland, NSW, Victoria-- do not see the need to think differently about their future because the era of coal is coming to its close. They are keeping up the fiction that the long term economic health of the state is dependent on coal. A fiction because these states are a resource colony for the rich mining corporations that are pulling the coal out of the ground as fast as possible. They are only interested in getting more years of profits from the black rock--- not the warming of the planet. That market failure the coal industry gladly supports in order to avoid any reasonable regulator regime. Why CO2 pollution is a great boon for civilization because it increases plant productivity. They are playing a short term game.

Big Coal is more powerful today than ever. As Jeff Goodell points out:

The triumph of coal is deeply connected with an anti-science agenda, and always has been. Over the years, the industry has argued that.... air pollution from coal plants doesn’t cause an increase in heart attacks; that mercury, a potent neurotoxin emitted from coal plants, does not cause neurological damage; that mountaintop removal mining does not hurt the environment; and that burning coal does not heat up the atmosphere. All these arguments fly in the face of science — and, often, in the face of common sense. But it doesn’t matter. Coal is an empire of denial.

They are playing a short term game of block, block, block and talking up the state subsidizing nuclear power. "Clean coal" increasingly looks to be a promotional slogan designed to help spiff up coal’s image from a relic of the nineteenth century to a viable fuel source for the twenty-first century.

| Posted by Gary Sauer-Thompson at 8:04 AM | | Comments (8)
Comments

Comments

Now, that's not a happy thread starter!
But the meme is very powerful one. Australian have been saturated with news that we avoided the nastier side effects of the 2007-8 crisis because of North East Asia's continued purchasing of our coal. Australians aren't all smart, but most are cunning.
They'll say, "They are going to build lots more coal fired generators, things go to wrack and ruin therefore, any way, so it may as well be our coal as someone elses, for our own short term sake".
The critical point in this thread starter is actually the deliberate discouragement of investigation of alternatives, couled withthe dumbing down of education and media; what ever happened to the "clever country"?
Can we be consumers AND citizens anymore, is a question I'd begin to ask, when we live in a world where resources, humans and markets even, are or are defacto, commodities.

It is not just renewable energy. There is an industry policy for cars with lots of government money----the hybrids--- but there is no support for thedevelopment of electric cars in Australia.

Isn't the federal government interested in low emission cars?

China is roaring ahead in manufacturing solar panels and wind turbines. American solar panel companies are shifting to China because they get greater help from the Chinese government.

The article briefly mentions the uncertainty around prices at which Western regulators will let solar farms sell electricity to national grids. Big Coal will have its hand in that uncertainty.

Hooray let's go the Spanish way, the renewable revolution, wind farms galore, and 22% unemployment, and on the verge of catastrophic bankruptcy! Who wants standards of living anyway, that's only for capitalists!

Roy,
I'm not sure how you go from the federal government's industrial policy of nurturing renewable energy feeding into the national grid (and electric cars) in Australia to unemployment, and being on the verge of catastrophic bankruptcy

The link appears to be Spain. So how does the argument go that says Australia is going down the path of Spain?

It is true that Spain is one of the world leaders in renewable energy, not just for installed capacity, but also for its established industry. Spain has been at the forefront of producing clean energy, especially wind energy.

Renewable energy in Spain represented 12.5% of total energy generation in 2009. Spain has set the target of generating 20% of its energy needs from renewable energy sources by 2020---a goal of the EU.

Spain's wind energy industry is well rooted: the 240 companies are turbine factories, parts providers and park builders throughout the country. So you have employment in a new industry.

The energy industry did not cost any jobs---the unemployment arises from the collapse of the construction and secondary sector after the global financial crisis.

the job losses in the energy sector in Spain primarily come from a new regulatory framework that will result in subsidized tariffs for ground-mounted solar energy projects drop 45% this year.

Approximately 75,000 jobs have been lost as countless firms move abroad to Latin America to find new growth opportunities.

Spain has needed to curb spending as the effects of the global financial crisis resulted in it being hit with one of the biggest recessions ever to rock the country in its long history.

fundamental change in the basic infrastructure of power station technology is inevitable, it is just a question of how quickly it will happen, and how different economies want to position themselves.