SYDNEY, Australia – China is forcing Australia to tell how many countries are ending: the coal era is ending.
China has now officially halted the import of coal from Australia after months of vague sanctions that slowed trade and trapped huge ships at sea.
For Australia, the world’s largest coal exporter, the decision is a gut punch that ends its second-largest market at a time when many countries are already reviving their dependence on a dirty fossil fuel that Accelerates the destruction of climate change.
While Beijing’s objectives are difficult to divine, there are Merchant Protection Signs Willingness to punish Australia for local growers and for alleged sins, including seeking to investigate the source of coronovirus. China’s commitment to emission reductions may also allow it to be marginally more selective with its huge purchases.
Whatever the reasoning, this effect is deepening for a country that has tied its fortunes to coal for more than 200 years. Mining policy can still hold elections in Australia and the current conservative government is determined to perform minimally on climate change, which has made China’s coal cuts a symbolic, cultural and economic setback.
“A transition has forced us,” said Richie Mergian, director of climate and energy programs at the Australia Institute, an independent think tank. “It’s hard to see how things will really get up from here.”
Realization, if it holds, may take time to sink.
Prime Minister Scott Morrison has brought to power Australia’s traditional dependence on fossil fuels. He famously held a coal scam in Parliament in 2017, declaring that “Don’t be afraid,” And after his predecessor, Malcolm Turnbull, became Prime Minister in the intraparty coup, he tried to take a more aggressive stance to combat climate change.
“Kol-mo”, as some of his critics call him, dismissed concerns about China’s ban on Wednesday, arguing that many other countries are still lining up for the product.
“Let me emphasize, at one point, that our largest coal-exporting country, the largest coal-exporting country, is actually Japan and India,” he said. “China is not our major importer when it comes to thermal or metallurgical coal.”
While Japan accounted for 2 percent of Australia’s nearly $ 50 billion in coal exports last year, China was second to none. India was third at 16 percent.
Mr. Morrison’s faith in coal is hardly irresistible. Combustible rock is one of the most Australian products. It was first discovered on the continent in 1797, less than a decade after the first British settlers arrived. Since then, entire communities have been built not only around mines, but also the ports where cargo ships dig mountains of coal around the world.
It is not a huge work maker. Only 50,000 people worked in coal mining in Australia last year. (Plumbers were seen at around 80,000.)
But it is a big money earner. Coal production in Australia has more than doubled in the last three decades, jumping from 75 percent in FY 2017 to exports, up from 55 percent in 1990.
Queensland, a coal royalty for one state alone, approached $ 4 billion last year.
And in many areas, coal has long been stable from Hunter Valley outside Sydney to Mackay near the Great Barrier Reef. This is what you see on trains and at sea. This is what puts Australia on the global map. For many, it inspires nationalist pride.
China’s ban, which began gradually reducing imports in August, is defying that image.
One of the largest coal mining companies in Australia, Glencore temporarily closed many of its mines in September and October.
In Mackay, where the amount of coal from ports is decreasing, fear of lost employment and lost way of life is increasing.
Shares of Australian coal companies fell this week after Chinese news hit the market.
And there are very few signs of improvement. S&P Platz, a pricing agency, estimated that 32 million metric tons of thermal coal sales would end in Australia in the first quarter of next year – coal for power plants – that would have gone into China.
China is, in many ways, the face of a more significant global disruption.
Japan announced earlier this year that it would retire about 100 of its most inefficient coal plants and invest in renewable energy. The country’s new Prime Minister announced in October that it would be carbon neutral by 2050.
Two other buyers in Australia’s top five, South Korea and Taiwan, have also announced sharp targets for emission reductions, which would most likely mean less coal.
“It’s not market force, it’s politics all the way,” said Robin Eckersley, a political scientist at the University of Melbourne who specializes in climate change. “Politics leads to the drying up of markets.”
For the coal industry, broader trends beyond China are raising more concern. The United Nations Scientific Panel on Global Warming has repeatedly emphasized that a radical change of the world economy is needed to avoid catastrophe, running away from coal.
There are indications that this may happen faster than the industry.
But there are also industry luminaries who take note that energy politics and economics are liquid, and that coal cannot yet be counted.
“None of this stuff happens very quickly,” said Clinton Dine, former head of BHP China, a subsidiary of the Australian-British mining company.
In particular, he said that while there are signs of a transition away from coal in some countries, coal-fired power plants are still being built in India, China and elsewhere, even if aggregate demand declines. It is also unclear, he said, how long the favorable politics and liberal subsidies around renewable energy will last.
“You’ll probably get a boom in the next few years,” he said. “Once the voting population has to pay for it, that’s another matter.”
With China, of course, trade is always a complex calculation with a web of products and companies. Even after Beijing targets Australian coal, wine, barley and beef, China’s exports to China could be flat or depleted by 2020, accounting for about half of the total iron ore. Mr Dines argued that China may lift the coal ban after its businesses deteriorate.
But now the difference between economics with energy and the health of the planet, many coal critics in Australia feel as if a turning point has already been reached. Banks in many countries are refusing to finance coal projects. Washington has a new president who has pledged to join a worldwide effort to move away from fossil fuels – and Mr Morrison’s stance, which includes committing to net zero emissions by 2050, is leading to global isolation .
Last week, UK Prime Minister Boris Johnson rescinded Mr Morrison’s request to speak at a UN summit focused on climate change, questioning whether Australia was earning enough.
“Australia is like the guy in the party who is still living like a 20-year-old in his 40s and 50s,” said Mirjian at the Australia Institute. “Everyone is taking it seriously because their health depends on it and they know better, but Australia is still angry.”
No matter how much Australia’s leaders want to hold onto coal, “the blow is coming”, said Alex Turnbull, an energy investor based in Singapore who is also the son of the former prime minister.
It is time, he said, to find a way to support communities that have been told for decades that coal will always be there to protect them.
“We need to realize that the game is over here in the form of export markets, which seem very challenging,” he said. “If you’re Scott Morrison, you need to pivot or rip through the Band-Aid, or change the narrative. This is as good an opportunity as you can get because ultimately, it’s not your fault. “