© Reuters. FILE PHOTO: Coal is discharged into large piles at the Ulan coal mines near Australia’s central New South Wales rural town of Mudgee on March 8, 2018. REUTERS / David Gray / Stock Photo
MELBOURNE (Reuters) – Global regulators, banks and investors are making ideological rather than market-based investment decisions around coal, which will still see strong demand for decades to come, the minister told Reuters on Thursday. Resource Officer for Australia, Keith Pitt.
Pitt’s National Party, a minor member of Prime Minister Scott Morrison’s ruling coalition representing many Australians in coal-producing districts, has refused to support a net zero carbon emissions target by 2050 for the country, the largest world coal exporter.
The National’s position has prevented Morrison from committing to attend the COP26 climate conference in Glasgow next month, where world leaders will meet to set more climate targets to follow up on the landmark 2015 Paris agreement.
Pitt said record fuel prices show Australia’s second most lucrative export needs to be supported and that financiers and insurers shedding the industry are not making decisions based on the economy.
“The (financial) market is not making a viability decision, it is making an ideological decision,” Pitt said. “If it was a decision based solely on what they think the forecasts are, well, the demand has gone up, the forecasts have gone up.”
Pitt has proposed that the government establish a 250 billion Australian dollars (180 billion US dollars) line of credit for the industry to replace the lack of private financing, in exchange for his party’s support of the net emissions target. zero by 2050.
The National Party will meet this weekend to decide whether to support the 2050 goal, although Pitt did not say what the party plans to do.
“I want to be very clear to the banks of Australia and the banks of the world, they do not set internal policy in this country,” he said.
“We need to support those industries and support the economic growth and wealth of Australians and provide jobs for Australians.”
Australia expects a rise in demand for coal until about 2030 and then fall by about 40% from that peak by 2050, Pitt said, based on a line of new coal-fired power plants and a ready demand for steelmaking coal of high energy from Australia.
About 140 gigawatts (GW) of coal plants are under construction and more than 400 GW are in various planning stages, Pitt said, citing figures from the International Energy Agency.
Pitt downplayed alternative energy sources that would stop the world from using more polluting fuels for power generation, such as coal.
Hydrogen markets would take decades to develop, he said, while examples of governments messing with the energy transition could be seen in the UK and European energy crisis where energy costs were “through the roof”, which shows that intermittent renewables don’t work.
In contrast to Pitt’s stance, a top central banker said on Thursday that Australia could face rising costs of capital and divestment of offshore funds if it is not seen to be doing more to address climate change.
Reserve Bank of Australia (RBA) Deputy Governor Guy Debelle pointed to isolated examples of divestment in Australia due to climate risk and said the likelihood of larger divestments was increasing.
But Pitt said the RBA should “stick to its fabric.”
“They should be concerned about what is happening in terms of potential inflation and make sure our economy remains strong and has the ability to pay Australia’s bills.”