Executive Summary
In IEEFA’s view, there are many reasons why we entirely support this bill to introduce an Act to prohibit the mining of thermal coal in the Galilee Basin. These include:
- The likely collateral damage to Australia’s existing thermal coal mining basins. Any plan that could lead to a more than doubling of Australia’s thermal coal export capacity is overtly contrary to our national interest at a time when global forecasters say the seaborne thermal coal market will more than halve within two decades if the world acts on the Paris Agreement.
- The very low quality of coal in the Galilee Basin is in direct contrast to Australia’s coal export production from existing regions. The remote location compounds the adverse cost implications of having to transport long distances potentially unprecedentedly large volumes this low energy, high ash coal. The global market is now pricing low quality thermal coal exports at an unprecedented discount.
- Global financial institutions and key customers of Australian coal are increasingly divesting from thermal coal and/or raising coal taxes / carbon emission levies.
- Thermal coal imports for power generation are now entirely uncompetitive in India against ever lower cost, domestic renewable energy projects. IEEFA views India – the world’s second largest producer, consumer and importer of thermal coal – as a leading example how quickly stranded asset risks associated with new coal power proposals are rising. India’s banking system is drowning under the burden of over US$100bn of non-performing loans to the coal power sector within India.
- Developing the Galilee Basin is in direct contradiction to Australia’s Paris Climate commitment to do all we can to reduce carbon emissions.
- The likely permanent collateral damage to Queensland industries like agriculture and tourism as extreme weather events become more regular, and more extreme.
As such, given the scientific consensus on the need to act urgently on climate change, to IEEFA the Galilee Basin cost-benefit equation is unambiguously skewed to the negative for Australia. The Galilee Basin is likely to prove both a stranded asset while also creating significant financial risks for Australia. Prohibiting development before any project has commenced construction is clearly in Australia’s national interest.
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