politics / renewable energy

the economics of Australian coal

Despite being one of the most well positioned countries in the world to produce energy from renewable sources, solar power especially, Australian federal government is refusing to give up coal. This is somewhat understandable as the country is not only majorly powered by this particular energy source, but also because a significant chunk of its total wealth acquired from exports comes from shipping coal to quickly developing economies, such as China and India – in 2016 alone, Australia exported 485 mega tonnes of coal, earning a profit of $56 million AUD for that year.

However, seeing the ever increasing investment into and installation of renewable energy sources in both China and India over the past few years, Australian reliance on coal as both a domestic energy and export income source needs to be put into question. This is also and important matter yet to be addressed, as Australia has signed the Paris Agreement in November last year, meaning that it will be put under international pressure to cut its emissions as quickly as possible.

Two questions that remain to be answered, or rather problems that need to be addressed – losing the potent export income source, as well as unemployment within the mining industry. As Australia is a country with some of the biggest sources of rare earth components in the world – materials used for wind turbine manufacturing among others – its exports could potentially replace some of the income previously gained from coal exports. There have also been studies on the potential for Australia to be a significant exporter of solar fuels. As to the mining industry, the answer seems straightforward enough – Australian government could invest into retraining and employing former mining industry workers in renewable energy sector jobs.

One of these questions needs to be addressed right now, as a number of Australian power plants are being closed or are expected to close soon. An instance of that is the Hazelwood plant closure that came into effect on the 31st of March, with 750 of its workers being left hung out to dry. One cannot ignore the sense of anger and hopelessness that seems to be present among the now ex-employees, with many blaming the ‘unreachable renewable energy targets’ and the Greens for the closure.

Things could be handled differently, even without the support from the federal government, as the Victorian government is eager to prove. The state has been pushing for increased renewable energy targets alongside announcing additional funding of $1 million AUD for green initiatives within former mining communities in the state. Mining communities cannot be left out of the picture if transitions to renewable energy are to take place not only in Australia, but also other coal-dependent countries.

If thought-through and planned properly, transitions away from coal could include and empower former mining communities, giving them skills needed to earn a living for them and their families, instead of alienating.

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