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June 3, 2013
The fossil fuel industry currently has its back to the wall with declining demand for its coal exports and the electricity produced by coal-fired power stations. The decline in electricity demand is due to the high penetration of solar power wind energy, the success of energy efficiency scheme and the popularity of energy efficient appliances.
The coal based electricity network owners are in a situation where they have overspent on their network infrastructure (they've spent around $40 billion) and they now face difficulties in recouping their investment (plus the regulated return on their investment that is decided by market regulators) due to the declining consumer demand for their coal fired electricity.
Since people are using the inefficient network less (its a system that uses less than 10 per cent of the original energy burned at its end point), the revenue needed to match the regulated returns have to be gained from elsewhere. So electricity prices rise and, as a consequence, consumers use the network less. So we have bigger networks with more spare capacity most of the time. As more people reduce demand, or even leave the grid, this leaves network owners with an increasingly redundant system.
So how does the Australian Coal Association address this issue? Primarily in terms of its pro-development ideology rather than the market's supply and demand. In her May speech to the Sydney Institute Dr Nikki Williams, the Chief Executive of the Australian Coal Association, poses the question: 'Is Australia on an unwitting slippery slope towards the strangulation of the coal industry and all its related rail, road and port infrastructure and diverse supporting services - with all that implies for jobs, investment and prosperity?"
Yes, is her response. Her reason for the industry’s woes was that it is almost entirely due to “environmental extremists”, not falling coal prices due to declining Chinese demand for Australia's thermal coal exports or coal mines losing money.
Her speech is structured along the lines of virtuous miners versus nasty environmentalists. On the one hand there are supporters of the resources industry and a robust economy, and on the other hand, there are environmental guerrillas in thrall to a green religion opposed to economic growth.
Williams says that:
The war against coal and fossil fuels, in the name of climate, should be exposed for what it really is: an attempt to snooker development by stealth. It is often an affront to democratic values whilst posing as legitimate ‘people power’. Anti-development activists are attempting to bludgeon society with a singular value-set that has the capacity to transform our world in ways that most of us would not endorse. This is a more fundamental debate than climate versus coal – it speaks to the burning issue of energy poverty and the way our society deals with volatility and tension; with accommodations that breed expectations of further accommodation; with paradoxes; with a quantum of information that can obscure as much as enlighten; with the growth in the number of constituencies which makes it harder to achieve consensus.
She states that the core of the debate is fundamentally about development: how much or little, how fast or slow, if or when human needs take precedence over those of other living things, and whether the developing world has a right to aspire to, and eventually obtain, the quality of life enjoyed in the developed world or not.
The consequences of the anti-development activist's agenda, according to Williams is far reaching for all citizens: constricting consumption patterns, limiting population, depressing prosperity and redefining what people should and can aspire to. The activists want to close down Australia’s $60 billion coal industry which steered our economy through the GFC, and with the support Greens Party, seek to tax the industry to death in order to redistribute those funds to needy social and environmental causes.
Williams goes on to say:
Many anti-coal activists are deluding the public about their real agenda. For them, development is the problem: environmental impacts simply manifest the problem. They are really saying that energy consumption must be radically cut. But, that means accepting unfed mouths, uncured poverty and subsistence existence. People in the developing world do not aspire to this. Neither do most Australians....We need an informed debate about the full dimension of the challenges and solutions to the energy /climate change conundrum. Religious-like wars on the subject must be rebutted. Distortion, mistruths and single issue evangelism are diversions from developing realistic solutions to the energy / climate change challenge.
Williams' reference to the issue of climate change is to dismiss global warming alarmism. She says that "the last time I flew to Europe (which was last week) it was pretty apparent that the Arctic was still there and I think the majority believe that ‘give and take’ and ‘compromise’ is how consensus is constructed."
William's understanding ‘ of give and take’ and ‘compromise’ to achieve consensus is to demonize her opponents.
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There we have the strident and shrill voice of the coal lobby in Australia.