A proposal to export to dry and export brown coal from Victoria’s Latrobe valley (discussed in this earlier LP post) is still up for consideration, along with a variety of other proposals to turn the stuff into everything from diesel to fertilizer.
As Mark Wakeham from Environment Victoria puts it:
The fact is, because brown coal is more polluting than other fuels, exporting it to developing countries will increase their emissions and lock them (and the world) into a dangerous emissions trajectory, thereby destroying attempts to negotiate a safe climate deal globally.”
So why is the Victorian government so anxious to have coal leaving the Port of Hastings? Ross Gittins’ recent column hints as to one reason – the Australian dollar seems to be on the up-and-up for a good while:
But whether or not we do, the likelihood is that over the coming decade and more it (RM: the Aussie dollar) will exceed parity (RM: with the US dollar). The days of the Pacific Peso look long gone.
Is that good news? Yes if you like overseas travel and buying things on the internet. Yes if you’re in mining, industries associated with mining or even just live in Western Australia, Queensland and South Australia.
But no if you’re in farming, manufacturing or local tourism. Just as the Chinese and Indians are in the process of transforming their economies over the coming quarter century, so our part in that process will involve significant change to the industrial and geographic structure of our economy.
In a nutshell, the manufacturing sector, particularly the car industry – and arguably more important to Victoria, the education sector, which is Australia’s third-biggest export earner – are likely to find it increasingly difficult in a world where high commodity prices pushes the Australian dollar higher. So it’s unsurprising that the Victorian government is dead keen for Victorians to get into the carboniferous mud exporting racket. The long-term global emissions trajectory? Not John Brumby’s problem.
I can’t see how this would actually happen, and I’m flabbergasted at the people in DPI who thought this idea up. Just by floating it (OK so it was leaked, no surprises) they’ve done a lot to damage the good perceptions of Victorian regarding climate change.
By the way, the Secretary of DPI is Richard Bolt, and he has a brother whose name is Andrew. He’s some sort of media commentator I believe.
Wilful, so why the hell hasn’t the proposal gone away yet?
My information is that the owners of the brown coal generators are planning for conversion to gas fired generation. They are negotiating a deal right now.
This change will free up a vast resource of (very) low cost brown coal.
Thus the plans to sell it to offshore markets.
Dramatically Reduce the CO2 emissions here and increase them in developing countries.
Good thinking Batman.
Huggy
Huggy, it seems that for once we are in total agreement
Scandalous, really … sheesh …
Robert: Best post of the year. Keep it up.
Don’t forget that the NSW and Qld governments are busily approving new coal mines and building new coal infrastructure. Until Australia comes to terms with that fact that we export climate change, and that we profit it enormously from it, no serious action will be taken.
Huggy@3 Dramatically Reduce the CO2 emissions here and increase them in developing countries.
I thought the plan was to keep increasing emissions here and pay developing countries to reduce theirs?
It seems that the Government is driven by the need to find jobs for the coal miners and the workers in the vast infrastructure that supports coal mining.
If this deal comes off it means that “clean coal” is in trouble. Why mess with that stuff when you can install gas fired plant, sack most of your workforce and come up as a greener than green saviour of the world.
The CO2 avoidance in Victoria will be huge as brown coal is probably the worst CO2 emitter of all.
Huggy
“Until Australia comes to terms with that fact that we export climate change, and that we profit it enormously from it, no serious action will be taken”
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I imagine that no serious action will be taken in either case actually — stopping exports of energy would massively cut people’s living standards.
This is even better than the sustainable construction policy (bigger, faster spreading Melbourne), the sustainable transport policy (freeways placed strategically through remaining key areas of natural habitat), the sustainable water policy (transport water from drier to wetter areas and create even more water with a sky-high energy footprint) and the sustainable biodiversity policy (let ‘em fight it out with the weeds, pests and everything else going on).
I agree. We’re not going to do anything because coal mining is crucial to Australia, both in terms of export earnings and domestic energy production.
Everything we hear from Rudd, Wong et al on climate change is empty rhetoric. If you want to know the government’s true position listen to Marn.
Robert: Thanks again for a post that ties together three of my favourite topics: Climate change, coal mining, and the Australian dollar.
Why do we keep electing these plonkers? (The ones here in SA are no better.)
The thing is that a high dollar makes all exports more expensive, coal included. We’re talking here about low quality brown coal. It either needs to be dried here before export – which is expensive – or the cost of shipping is way higher than black coal because you’re lugging all that moisture content around the world. And then the pollution is bad when you burn it at the end.
So in the context of an ongoing high dollar its questionable just how profitable exporting brown coal will be, particularly if the world puts any price on carbon at all, even a low one.
Alternatively one could actually do something about violence against overseas students and the shortage of accomodation, thus putting our education system back in the game, even with a high dollar. But apparently Brumby prefers the first option.
moz @ 7
“Huggy@3 Dramatically Reduce the CO2 emissions here and increase them in developing countries.
I thought the plan was to keep increasing emissions here and pay developing countries to reduce theirs?”
Follow the money: The other way around is even better. Save the world at home while you sell the old stuff to the rest of the world. Now that’s win win. This way the developing countries pay us to reduce our emissions.
Those Victorians are clever,
Huggy
Not a fan of “clean coal” at all but I think the government believe they can develop the clean coal technology here and then export it to countries like India and China, therefore allowing them to export their dirty brown coal to places practising CCS. The problem is that the technology is a long way from developed and even if utilised it is no golden goose, coal mining with ccs is still pretty damn energy intensive.
Is Richard Bolt really Andrew’s brother? I know he supports the Adelaide Crows, I thought that was a turn off but he seemed a switched on dude.
HB @14, never laughed so much!
“Save the world at home while you sell the old stuff to the rest of the world. Now that’s win win.”
“This way the developing countries pay us to reduce our emissions.”
While we are at it, we should get them to contribute funds to our smokescreen called CCS. Then we can offer them an impressive bound volume of “Everything you ever wanted to know about the theory of CCS”, together with megatonnes of brown coal as a “special bonus offering”. How generous is that?
Because you don’t really have a choice with the 2PP system. One of the two major party plonkers in every lower house seat (state and federal) invariably wins.
They then trot out the party line.
101 ways to use brown coal keeps indusry masters happy and working family voters in Latrobe Valley Labor marginal seats happy.
But it contributes to the death of the planet.
FS @13, I suspect you are quite correct about the poor economics (to say nothing of emissions) of either exporting wet brown coal, or using dirty energy to dry the wet brown coal for shipment.
“The thing is that a high dollar makes all exports more expensive, coal included.”
Yep.
And so far, a lot of our resources commodities (oil and minerals) are still sold in US$. When our A$ is stronger, Aussie companies wind up with less A$ revenues from US$ sales.
The US$ appears to be losing favour indefinately, such that our exchange rate may keep climbing, and the Chinese are angling for a different default trading currency.
If so, then perhaps we should be thinking about a different way of pricing our commodities? We need a better exchange rate deal for our commodities.
Tim, if this wonderful “clean coal technology” showed any signs of actually existing anywhere other than in coal company marketing documents, we’d all be more impressed.
The fact is that the only working CCS coal-fired power station in the world is a toy-sized one in Germany.
Elise,@16 That is very generous maybe they could help us with one CCS idea – 400m diam Dry Ice spheres that are stored on site. This is just one of the CCS ideas that can be found here : http://www.chooseclimate.org/cleng/part2.html
They could get a free sphere to care for as well.
Huggy
HB @3: “My information is that the owners of the brown coal generators are planning for conversion to gas fired generation. They are negotiating a deal right now.”
I hope Victoria has arranged a decent reservation percentage of their natural gas, to supply their future needs for gas-fired power, and possibly/probably for future transport (either as CNG or synthetic diesel)?
Apparently we have 15% reserved for future domestic use in WA, and Qld is currently planning 20% reservation for future domestic use.
What worries me, is that fine day when the multinationals controlling our gas reservoirs tell Aussies “sorry chaps, no more for you, we promised all the rest to the Chinese…”
HB @3: “My information is that the owners of the brown coal generators are planning for conversion to gas fired generation. They are negotiating a deal right now.”
I hope Victoria has arranged a decent reservation percentage of their natural gas, to supply their future needs for gas-fired power, and possibly/probably for future transport (either as CNG or synthetic diesel)?
Apparently we have 15% reserved for future domestic use in WA, and Qld is currently planning 20% reservation for future domestic use.
What worries me, is that fine day when the multinationals controlling our gas reservoirs tell Aussies “sorry chaps, no more for you, we promised all the rest to the Chinese…”
“If so, then perhaps we should be thinking about a different way of pricing our commodities? We need a better exchange rate deal for our commodities.”
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I have no idea how this might work – a better exchange rate deal? For commodities?
The free float is such an orthodoxy I can’t see it going anytime soon.Rather than holding a whole bunch of “instruments” Australia looks better off owning the commodities and how others pay becomes less of a threat.
However why aren’t we taxing coal exports ?
Even at a fraction of a percentage of cost the funds would be considerable could be directed to alternative energy investments and preferably research.
This would also make our coal slightly less attractive in the spot markets but I gather the majority is on long term contract terms still.Isn’t predictablity of conditions the preferred situation?
The lessening of the attractiveness of our coal will also reduce demand for the $A.
There isn’t a complicated reason why this couldn’t be done – it only needs the political will.
We do tax coal exports; there’s company tax, royalties, and so on.
Whether we tax it enough is another question.
Specifically an export tax though.
Owning coal should stimulate the nation to try and understand the power it has owning these deposits.Other market players would respond to such a tax in various unpredictable ways – and not lessen the usefulness of acting in such a direct manner.
There is a great appeal in the idea that we should act in a global manner on the sale of coal and in the use of any funds received.
I made a bit of a blue about AdBlue last time I stepped into the firing line here.To bore people witless here,I use to live in Hastings,and grew up to be a young man in the town of Bittern.Back of the hand country to me,or use to be.When Iwas a young teenager Lysaghts BHP took over Westernport Bay.The major protestor to that development ended up at Bellingen some kilometres from here down from the Dorrigo Plateau N.S.W. I use to play Aussie Rules footie for Hastings etc. but didn’t quite make it into senior sides.Although I also played under age stuff for Somerville and in the Seconds of Somerville.The saddest moment in my life,was a level crossing accident at a Graydens Road ,where my father was directed by Police as as a rail fettler to pick up the remains of a dead train driver,who was a friend from a previous experience within the rail community at a place called Ultima, where the deceased were neighbours living in rail houses.I was the only one home,when my father arrived crying,and blurted out about about who had died and how he was directed,went to his bedroom and closed the door,and I almost felt a flood coming through the gap from the floor to the door with tears.That accident summarised a life time fear for him about accidents and trains etc.He was not a complex over educated man,real events effected his nervous condition. So now this matter of coal exports,I personally think the ALP is full of raving idiots whose power to be in office is depleted everyday by how their enstrangement from reality to be TV images of no particular merit engulfs the whole country.I just don’t like what motivates them.Coal should and can be sold overseas with all the concern the critics are saying uppermost in peoples minds.That is carbon dioxide and the other atmospheric pollutants must be usable products,or at least rendered benign to say be used as filler.Green type criticisms are welcome by me,because,after all,if all that stuff is going to be dug up and used,as close as a 100% usability without pollutants is a worthy aim.Anything less than that requires dedicated criticism.
On Thursday there was talk about buying out the owners of Hazelwood and closing it down. But neither the owners nor the State Government would say anything.
One advantage of Victorian carboniferous mud is its low sulphur content (remember “acid rain”?). However its high moisture content is a big disadvantage, especially in an era when burning-mud-to-dry-mud is considered a poor choice.
Relatively low workforce because open cut mining.
Latrobe Valley seats not necessarily Labor. State seat of Morwell was lost to the Coalition (spelt COALition??) at the last State election. Not rusted-on-to-rusty-productionist-Labor as it turned out. Also, neighbouring seat (Narracan?) lost in huge swing to Libs. Disastrous. State Labor HQ held a special inquiry into the losses including “focus group” community meetings in the Valley.
Local newspaper “Latrobe Valley Express” constantly runs stories about the uncertain future of the mud mining and electricity-from-mud industries. The area previously (and in living memory) experienced large job losses under Jeff Kennett’s privatisation of the State Electricity Commission [Mud Mining and Atmospheric Dioxide Injection Division]. Very sensitive to job losses, is the Latrobe Valley. A bit touchy. Not yet feely.
Elise @ 18:
Give the girl a cigar! And what about all those Aussie companies who export products and services (priced in USD) that aren’t digging up ever more expensive minerals? Well, they’re screwed. Their employees are laid off, and the engineers and scientists we train to work for these companies move overseas. Think about that next time you see a financial commentator cheering the Aussie dollar higher.
Look what’s happening to CSL.
The Chinese have been running a giant vendor financing scheme for the past 5 years and the customer is in default. China cannot move to another currency or revalue the RMB because the products they export to the US would be much more expensive in USD terms. This would devastate what’s left of China’s export sector.
Oh, and the miraculous recovery in China you’ve been hearing about is largely due to easy credit that’s been flowing into speculation on real estate, equities, and commodities, and investment in productive capacity for customers in the US and Europe that are no longer buying.
Compare recent Chinese growth numbers and export numbers. Its instructive.
One of the main reasons the AUD is rising is because we export commodities, and commodity prices are rising. It wouldn’t matter what currency we price our commodities in, the AUD would rise against that currency.
The “problem” is not the exchange rate, the problem is that Australia is rapidly transforming into a resources-only economy, at least as far as trade is concerned. We have a bad case of the resource curse.
And which of our resources is our biggest export earner? Yep, coal — destroyer of worlds. Doesn’t it make you proud.
Carbonsink, this is not a criticism or disagreement with your comment, but the headline on the SMH article about CSL linked to has a problem. It’s not a case of no dividend, it’s a case of a dividend downgrade and the inability to pay franked dividends. The article also says this:
You are perfectly right about the ‘resource curse’. It is particularly devastating for farming and manufacturing but also affects tourism and services. In fact there aren’t many countries with a heavy resource base that can develop well-diversified successful economies. Norway comes to mind, but they didn’t piss their profits from resources up against the wall like Howard and Cossie did.
Elise,
My understanding is that the gas to be used in the Victorian conversion from brown coal to gas is actually Coal seam Methane (CSM). It seems that there are vast resources of CSM in the Latrobe Valley. This will not compete directly with natural gas. CSM has the advantage of high hydrogen content CH4. The downside is that you usually have to pump water out to get at it.
Methane in the atmosphere is about 1800 ppb – nearly 3 times that of pre-industrial times. it is a potent greenhouse gas and is continually leaking from the ground into the atmosphere. It is better to burn it to CO2 and water vapour than leave it as methane.
The conversion efficiency to electricity is about twice that of nuclear >70% vs <40% but nuclear wins in the mass conversion bit. Hoever I estimate that the embodied carbon dioxide in nuclear will take at least 3 years to recover vs less than a year for CSM generation
As a short term (20 years) time buyer CSM is a total winner; globally there is a huge resource – not counting the Methane Hydrates. These are "methane ice", that lies about on the bottom of the sea, if these ever melt we are totally stuffed.
Some people want to "mine" these. Interestingly, one CCS method, the dumping of liquid CO2 into the deep ocean has come unstuck because the pipe has become blocked with CO2 clathrates at the water CO2 interface.
Huggy
Quite right Brian. Australia would be a lot better off if we ran down our coal exports, brought the value of the $Aus back to a sensible level and boosted our manufacturing industry. Mining jobs may pay well but too many of the jobs are in places like central Qld where the workers spend most of their time living in dongas away from their families so moving to a slightly less well paid manufacturing job in a civilized part of the country.
Dried brown coal is going to have major problems with spontaneous combustion so shipping will be expensive and the stuff will be a hazard to stockpile.
The optimistic view is that the proposal is just Brumby putting himself in a postion to say “well I tried” when the power stations convert to gas.
Replacing coal with gas would reduce Australia’s emissions by the magic 25% without the need for CPRS.
JohnD @ 31
“Replacing coal with gas would reduce Australia’s emissions by the magic 25% without the need for CPRS.”
Exactly right. The CPRS is just a money making machine for the coupon clippers. Entirely agree also about investing in manufacturing should be really big time. We already export manufacturing know how around the world we should do it here as well in hugely automated factories.
(BTW,for the Luddites, academics, arts graduates and “human services” latte drinkers among you; automation does not destroy jobs it raises the skill level and worker get better pay).
We should also tell the cement and steel industries that the days of high CO2 emissions are over. We can actually use CH4 to reduce Iron ore to iron, I did it for the CSIRO over 30 years ago – easy. (actually I used Methanol (CH3OH) but hey what’s a bit of this or that among friends.
Dunno how to reduce the CO2 emissions for Cement but I understand there is considerable room for improvement over the present tonne per tonne of CO2/cement.
If dried brown coal is to be shipped it will have to be stored and shipped under a dry nitrogen blanket otherwise it will blow up. It’s a fucking insane proposition altogether.
Huggy
“the problem is that Australia is rapidly transforming into a resources-only economy,”
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An alternative view on all of this is that a resources-only economy is better than no economy. Last time I was working in China (quite some time ago), I formed the impression that apart from a few rather unreplicable Australia specific things, in the future, there isn’t going to be a whole lot Australia can do that China won’t be able to for half the price and twice the quality. That’s what lots of smart, motivated, well educated, and hard working people do for your economy. It’s quite impressive given that year zero for China was about 1970.
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Now personally, I think it was rather foolish of successive Australian governments (both State and Federal), to allow both the university and high school education to decay for the last decade and half, but in the end it’s happened now, the tide certainly hasn’t turned, and given this, it seems to me that the belief of all those people that happen to think that Australia is going to end up as some high-tech manufacturing/design hub is incorrect. Given this, resources remain one of those unreplicable things, and you are simply not going to be able to do anything about that unless there is some reasonable alternative. Just like India, China etc. people would rather be rich and dirty than poor (and I mean really dirty — let alone this out of mind out of sight stuff like coal exports).
Conrad,
I profoundly disagree,
In a carbon constrained global economy, local manufacture with a low CO2 footprint will be essential for most goods
The days of air freight without CO2 accounting will draw to a close. The comparative CO2 footprint for a particular good will become part of the cost metric. I expect sea freight and rail will dominate goods transport.
Australia has a number of industries where we lead the world in the technology. (No not solar panels) There are very successful companies that export high tech know how because successive governments have mad it difficult to manufacture in this country.
We need to be more than a”service” and hole digging economy.
We want it all.
We should not throw our hands up in the air in some sort of girlie fit just because the Chinese are getting better at design and manufacture..
Huggy
Huggy, the vast majority of goods imported from China come in on ships, not air freight. Frankly, shipping stuff from China is more efficient than, say, rail freight across the Nullabor.
HB,
I think you are confusing what you want with reality.
Here are Australia’s top exports:
http://www.trademinister.gov.au/releases/2009/sc_090724-tis.html
You’ll notice coal alone, the top export, accounts for 46 Billion.
Thus even if the industries you are thinking of are super growth industries, it’s hard to see them replacing coal soon, especially given all the baby boomers are going to shuffle off into pensions, ill-health and so on and these will have to be funded somehow or other (no doubt taking funding away from other potential areas that could replace coal in the long long long term, if we started tomorrow and wanted that, the second of which I doubt — the more the merrier for most people). Also, the fact that we don’t manufacture a whole lot in Australia is because our wages are medium-high, we’re not especially skilled at it (and no doubt to become worse as the effects of the education system propagate through and as manufacturing requires people with greater and greater high-tech engineering/science etc. skills), and we don’t have economies of scale compared to many other places.
Robert, Conrad,
Behind your arguments is the classic Free Market Liberalism of the Chicago School.
No policy, no plan, let the market sort it all out and we will all be happy little campers.
I think we can do better than that. We need policies and strategies that will produce viable export industries that are more than simply raw material suppliers.
Your view seems to reek of cringe and sounds pathetic “Oh we are not smart enough to do these clever things with our raw materials”. Sob Sob and “we are getting older” well no shit Sherlock so is every-body else.
Huggy
Brian @30: My point about CSL is their profit will be slashed by the rampant AUD:
CSL will be extremely lucky if currency rates stay as they are for the rest of the fiscal year. AUD = $1.00 to $1.25 is more likely. If a fantastically profitable company like CSL is hurting, how are exporters who are on the edge at AUD = $0.80 going to cope?
conrad @ 34:
Ideally Australia would have a more mixed economy — some resources, some agriculture, some manufacturing — so we have something to fall back on when there is a resources bust. That said, I can’t see it happening. As you say, our comparative advantage is with resources. Iron ore can be mined in WA and shipped to China cheaper than it can be mined in China. It is completely “rational” that Australia specialises in resources, and the floating currency brutally enforces that outcome.
What annoys the crap out of me is Australians pride in our recent economic performance, and the rising Aussie dollar. We have nothing to be proud of. We dig dirt out of the ground that just happens to be in huge demand in developing Asia. We import everything, we do bugger all science or R&D, we’re just lucky, lazy lard-arses of the South Pacific. The fact that our biggest dirt export is climate enemy #1 just adds to the shame.
” lucky, lazy lard-arses of the South Pacific”
That is just gold Carbonsink….
When you consider how a country like The Netherlands(unlucky,energetic,skinny-arses of Northern Europe) does so well with virtually no resources….
What about and ideas summit or an education revolution.
Good Grief
Actually, the Dutch are (or at least were) very well endowed with natural gas resources, which is the origin of the Dutch Disease.
37 Given that we managed fine in 2007 when our coal exports were less than half the $46 billion value, I’m not convinced that restraining coal exports (particularly to the extent of not starting exports of far more damaging brown coal) will bring the economy to a screaming halt. It’ll probably take ourselves a while to ween ourselves off them, but we’re not as dependent as the $46 billion figure would suggest.
Well I’ve been over there 4 times and I didn’t see no stinkin’ Dutch Disease.
Just a very well run, organised, well educated,intelligent,interesting place to be.
I think that because they are surrounded by much bigger countries they need to be super competitive.And it starts with education.
Virtually in every category Australia lags behind… except digging things up and putting them on a ship.
The Dutch Disease was a phenomenon of the 1960s, so that’s why you see no evidence of it today. Dutch gas production peaked in 2007-08 and the Netherlands will become a net importer of natural gas by 2025.
Interestingly, on the wiki page for the Dutch Disease they list “Possible examples: Australia: Mineral commodities in the 2000s”.
Conrad at #37
With minor variations [swap coal for wool or wheat whatever] I have been hearing the excuse, cos that is all it is, that we can’t change the nature of our export economy etc all my life.
Too many decades.
Ross Gittins was writing today about Dutch Disease. As he puts it,
The Victorian Government has been so captured by Liberal economics that when faced with the substitution of CSM for that brown muck they call coal the only thing they can think of is to export the mud instead.Otherwise they have a stranded asset, oh dear how dreadful. All those dredges lying idle all those worker looking for jobs.
Perhaps a massive program to design and build the next generation of high energy efficiency appliances, electric vehicles, ground sourced heat pump systems – stuff like that would be a good idea? These are the technologies we will need if we are to lift the global living standards. Stop waving your hands about folks and get down to it.
Huggy
There are reasonable prospects for using more of the carboniferous mud as fertiliser or soil conditioner, but it wouldn’t be a $40 billion export industry and you wouldn’t need those dredges and large mines. Likely better to use the stuff within Australia.
Japanese firm spent large amounts investigating mud to oil conversion at Morwell in the 1980s/90s; but if Japanese et al convert to electric vehicles it may leave that mooted process stranded.
Industries come and go. What of tallow, typewriter ribbons, whale oil, nowadays?
“What annoys the crap out of me is Australians pride in our recent economic performance, and the rising Aussie dollar.”
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I agree. But people are happy about gold medals won by people they don’t know also (often trained at the AIS, which appears to be the approximation of something East Germans would proud of), so I guess it’s to be expected.
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HB:”Your view seems to reek of cringe and sounds pathetic “Oh we are not smart enough to do these clever things with our raw materials”….HD:”With minor variations [swap coal for wool or wheat whatever] I have been hearing the excuse, cos that is all it is, that we can’t change the nature of our export economy etc all my life. Too many decades.”
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I’m just being realistic. I’m happy to see a mixed economy (it will be to some extent — lots of little things we don’t think about like wine etc.), but if you wreck your education system and you have no idea how to fix it (or your ideas are foolish, like having one off investments in buildings and not people, or the other incorrect one, that 21st century science can be done on shoe-string budget — it can’t), then the idea we’ll be great high-tech leaders and this will create billions and billions to replace coal is beyond my imagination. I don’t know what’s left of engineering and science in our universities, for example, but it’s pretty decimated (with CSIRO along for the poor ride), and it would take eons to fix, even if we started tomorrow (of which neither party is even slightly committed to do). So you can pretty much cross engineering and science off the list of possible futures. It’s no doubt one of the reasons why we need record skilled migration in a recession — if that runs out, we’re screwed.
Aussie Oskar @ 46: Gittins is saying the transformation of Australia to a resources-only economy is inevitable, we shouldn’t fight it, and the strong dollar is one of the mechanisms for making this transition. I largely agree with all of this, but that doesn’t stop it being a desperately sad outcome for Australia. I also believe its a near certainty that no serious action will be taken on climate change, that doesn’t mean I have to applaud it, like Gittins and others cheer on Quarry Australia.
Gittins piece raises a couple of points:
- If Australia’s resources boom is to last “forever” why are we training Australians in professions that don’t service the mining industry? It seems to me the “endless” resources boom also implies that much of the education sector will be used exclusively by overseas students, because we have no use for many professions in a resources-only economy.
- Gittins says: “We have a lot more investment in coal and iron ore to come, plus massive investment in liquefied petroleum gas facilities”. Why would there be a lot more investment in coal in a carbon-constrained world? Clearly the market doesn’t believe there will be any slowing of growth in Australia’s coal exports in the near to medium term.
Conrad,
The CSIRO is now run by content free mangers and Chicago School graduates.
The universities are infested with Post Modernism and also heavily infected with the CSIRO disease.
All this is true.
This means that we are about ready for a renaissance.
Maybe.
Huggy
Carbonsink @ 50: I basically agree with you, and also find it sad that we’ll never get into high value added goods where the exchange rate wouldn’t have mattered as much. I also don’t think Gittins is on the ball with the exchange-rate — most of it is a story of US dollar weakness (and pound weakness), not Aus dollar strength. Try comparing with the Euro or all the other currencies in the world that arn’t pegged.
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“If Australia’s resources boom is to last “forever” why are we training Australians in professions that don’t service the mining industry? It seems to me the “endless” resources boom also implies that much of the education sector will be used exclusively by overseas students, because we have no use for many professions in a resources-only economy.”
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Because there’s a big service economy, because it compensates for our high school system getting worse, because OS students are worth a lot of money, and because there isn’t anything wrong with training OS students (indeed, at least for those that really want to learn something good, even if it wasn’t for the money, I would consider it a good thing to do).
Can I remind people that our manufacturing industry employs about a million people. I’m not qualified to talk about what it’s made up of but some of it is highly automated and some is high value-added. So there is a base to work from if we have the policies and the will.
Unfortunately all commodities and most other tradeable products are priced in US dollars. So the AUD-EUR rate really doesn’t matter to most exporters.
Brian, the problem is that most of the academic opinion makers and leaders have never been inside a factory of any kind. They fondly believe that manufacturing is just soo yesterday.
I have been doing R&D – in the heart of enterprises – since 1968.
The skills level in industry has increased by orders of magnitude in the past 40 years. Meanwhile the academics who are meant to assist with technological progress, teach graduate engineers stuff that is about 5-10 years behind the state of play.
That is the real problem. Australia has no real centre of engineering excellence, it has a whole lot of mini specialist centres and hugely dispersed industrial R&D. Once upon a time the CSIRO was meant to provide this focus, now it is a sad joke.
Huggy
“Meanwhile the academics who are meant to assist with technological progress, teach graduate engineers stuff that is about 5-10 years behind the state of play”
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Well it’s good that we finally agree HB. Of course, the fact that most universities even have people to teach stuff 5-10 years out of date is, in many places, really only thanks to Iran and China exporting lots of smart people — who would do a crappy job in a university for 2/3 of the pay they can get in a good job? Until this is fixed (and you need to solve it from both the student and the staff side), you know why I don’t have faith in things that require high levels of skilled engineering in the long term.
Conrad,
We are at the risk of heated agreement here.
I do not entirely share your pessimism, however.
This despite the fact that almost all R&D in Australia is underfunded and undervalued.
The essence of the problem lies in the minds of our political leaders who are, to a man, scientifically illiterate.
Huggy
“The essence of the problem lies in the minds of our political leaders who are, to a man, scientifically illiterate.”
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The second of those is no doubt true unfortunately (that’s just the way the parliament works for everything in Australia unfortunately — a bunch of lawyers that know very little run everything). Alternatively, I used to think the first of those things, but after working in other countries, I now think it’s a cultural problem in that Australians don’t particularly value science or scientific achievement, and would rather live in big houses and have flash cars than pay their kids’ teachers enough. Perhaps that’s really a question for a sociologist.
As I understand it, Australia currently exports, black coal, oil, gas and uranium, all of which have their environmental problem. We also currently export brown coal in the form of brickettes. As I understand the proposal, a company wants to dry out and export brown coal to India. The question is what fuel source does India currently use to generate its electricity and does dried broan coal have less of an impact on the environment than the current enrgy source India is using. I don’t know the answer but a few facts instead of kneejerk reactions are always helpful in any discussion.
Steve 1: there is nothing worse than brown coal (except peat, which is even more muddy carboniferous mud).
Whatever else they might use, it will have less greenhouse impact.
I think if we were to export brown coal from Victoria it would compete with Indonesian coal which is apparently somewhere between brown coal and black coal in environmental scale.
I think Conrad is really on the ball with the attitude of every day Australians. I mean you only need to look at the newspapers we read and the tv we watch to see the way most Aussies think. The Herald Sun and the Today show are two that spring to mind. Complete rubbish.
We still seem to have some decent intellectual property coming out of Australian universities despite the dumbing down of the nation but most if it is bought by multinational coprorations rather than used to develop any sort of local industry.
Robert Merkel: there is nothing worse than brown coal (except peat, which is even more muddy carboniferous mud). Whatever else they might use, it will have less greenhouse impact.
So you don’t know what they are using in India.
Steve, you’re being vexatious. India is a large and diverse country which uses everything from burning cow dung (which, for the record, is a more polluting source of energy than even brown coal – it kills thousands of Indians every year) to nuclear energy.
However, most of India’s domestic electricity generation is done with black coal.
According to wiki, electricity generation in India is made up of: Coal: 53.3% (doesn’t specify black or brown, but India has much more black coal than lignite), Hydro: 21%, Gas: 10.5%, Nuclear: 4%
By contrast 75% of Victoria’s electricity is generated from brown coal. Pretty much anywhere else in the world is has less carbon-intensive electricity.
Interestingly India wants to dramatically expand its power generation capacity in the coming decade:
Which will obviously be met primarily by coal. More good news for Planet Earth.
Not for much longer. China has pegged its currency to the US dollar, is spending trillions on more productive capacity, and has millions of unemployed factory workers looking for something to do. Who here thinks the Chinese couldn’t manufacture something cheaper (and better) than Australians?
Robert, I am putting a relativity argument. If what is currently being used by India to generate electricity is worse than brown coal, then sending brown coal to India , while not necessarily a good thing, is an improvement. However I said i didn’t know. You said ‘there is nothing worse than brown coal’ then you said ‘India uses everything from burning cow dung which, for the record, is a more polluting source of energy than even brown coal’ and then ‘However, most of India’s domestic electricity generation is done with black coal’ My point is that if the dried brown coal is used to replace the use of cow dung then that is a better result for the environment, but if it is used to replace black coal it is a bad thing. All I was seeking was facts about the issue rather than people simply spruiking assertions. If this makes me vexatious I apologies. However, calling people names is not how you win debates or arguments. Carbonsink actually answer my first post.
Steve 1, it isn’t feasible to replace India’s cowdung with brown coal, as it is used as cooking fuel by people too poor (or too far from any trees) to use wood or charcoal. They wouldn’t be able to afford the brown coal, aside form the logistic problems of getting it to them.
Additionally, cowdung’s main negative effects are on air quality. Unlike brown coal, it doesn’t add any (long-term) CO2 to the atmosphere.
Incidentally, a bit of googling suggests that attempts to get poorer families to stop cooking with cow dung and other dirty biomass fuels – or improve the combustion – haven’t worked all that well. It seems that there’s a fair bit of work currently going on into improving house ventilation, instead.
That said, if people weren’t dirt-poor, they would probably shift to cleaner fuels of their own accord.
Can’t imagine that cowshit would burn all that well, anyway, Robert. Even dried, it’s just coagulated grass after all.
We used to burn cow pats at times to keep the mosquitoes away. My memory is that it hardly generates any heat at all.
More “good news” for Australia: Peabody to double coal exports from Australia in next five years
Economic commentators cheer loudly.
Brian @69, I think I read somewhere that you can make paper from it too. Not sure what it smells like.
Perhaps people could write ETS protests on it and send them to Canberra?
you can make decent houses from cow dung.
@72 Decent houses for whom?
Canberra pollies?
It might even be a sustainable industry for Canberra, on account of all the BS they produce…
wilful, I believe it’s a great render, and can be used as part of a mud brick, but I don’t think you can use just cow dung to build a house.
David @74, perhaps wilful is referring to a special fibre-reinforced cow dung?
Wonder if you can get them cyclone rated, for the future climate change to wilder weather…?
A few snippets of cheery news:
Xstrata plans $1bn Australian coal port
Last Australian tyre plant to close
And from Crikey today…
The tyre plant makes some sense, carbonsink. After all, we’re not going to need car tyres for much longer. Once trade collapses and we need to make our own rubber tyres for horse-drawn vehicles, they can re-open it and retool.
DI, in the long run we’re all dead, its the short term impact of our love affair with digging up dirt and the rising $AUD that distress me. We are losing our ability to make anything, anything at all!
The Dark Underbelly of Australia’s Resource Boom: Chinese Resource Demand
Read from here…
That last statement from Ken Henry strikes me as extraordinary triumphalism, and probably premature. He could look a right nong in 12 months time.
There’s more here
carbonsink, I agree completely about our declining capability to make anything. In fact, I think the buggy whip manufacturers (favourite meme of the free market boosters and libertarians) should’ve just hung on for a bit longer.