Beijing's Coal Plant Closures are Cause for Australia to Think Twice about Investing in Dirty Energy Projects

Concerns about air pollution and poor viability have pushed Beijing to announce the closure of all of its coal plants. As a major coal supplier to China Australia is watching with interest and more than a little bit of concern. The move to shut Beijing’s remaining coal plants comes in response increasingly vocal protests that are making government officials nervous. Pollution is one of the major sources of friction between the government and citizens. There are also a very real productivity issue at stake. The move to close the plants is intended to reduce the incidence of death and disease associated with the chronic air pollution.

Beijing’s last coal fired electricity plants will be switched off in 2016. Beijing has air pollution rates that are almost twice the national standard. However, Beijing is not the most polluted city in China. Nine out of ten Chinese cities exceed the government’s own minimum air quality standards.

The closures will reduce China’s consumption of coal by 9.2 million metric tons annually and prevent 30 million tons of climate change causing carbon from being released into the atmosphere each year. The Beijing coal plant closures are in addition to the closure of more than 2,000 smaller plants which are slated to occur by the end of this year.

At present almost two thirds of China’s energy is derived from coal. However, people in China are concerned about air pollution and these concerns are a contributing factor pushing the central government’s world leading climate mitigation efforts. China’s energy equation is rapidly changing due to massive investments in cleaner energy including hydroelectric, solar, wind and nuclear.

As the world’s largest emitter of carbon, China is under pressure from
within and without to reduce its emissions. China has already signed a major emissions reduction deal with the US and further
cuts can be expected at the COP 21 climate talks later this year in Paris.

All of this calls into question Australian Prime Minister Tony Abbott’s efforts to supply more coal to China. He is working to significantly expand the nation’s coal extraction and he is investing billions of dollars to expand Australia’s coal export infrastructure.

These Australian coal projects, not only imperil the Great Barrier Reef, they may end up being worthless if the Chinese coal market dries up. At the very least the reduction in Chinese coal consumption will drive down the already low price of coal. To make matters worse last fall China announced that it will reintroduce import tariffs of 6 percent a tonne on thermal coal used to generate electricity.

Like Canada’s tar sands, coal is a dirty source of energy and a major contributor to climate change. At a time when the data clearly shows that the world is moving away from coal, Abbott’s massive coal investments make little sense. There is already a glut of coal as markets are rapidly declining.

Indian mining giant Adani is developing the Carmichael coal mine in central Queensland and Australia’s largest coal terminal at Abbot Point. In January, the Mackay Conservation Group launched a legal challenge to the project. They allege that the Abbott government’s environmental assessment was flawed because it did not take into account projected greenhouse gas emissions from the project. The same criticisms have been leveled at the Keystone XL pipeline which would ferry 800,000 barrels of tar sands crude each day from Alberta to the the Gulf of Mexico.

The indigenous people of Australia are challenging the coal project. In a similar fashion Canada’s indigenous people have challenged the tar sands.

Abbott and Canadian Prime Minister Stephen Harper have a lot in common when it comes to fossil fuels. The Canadian situation may serve as a cautionary tale for Australia. Just as Canadians are reaping the economic repercussions of Harper’s misguided energy efforts, Australians will end up footing the bill for Abbott’s energy miscalculations.

Abbott and Harper are united in the love for fossil fuels and they also share a belligerent disregard for climate science. Their common obsession with fossil fuels wastes tax payer’s money on doomed energy investments and it would appear they are both destined to preside over vast quantities of stranded assets.

In addition to epic energy mismanagement, the defining legacy of these two men will likely be their wanton disregard for future generations.