Carbon bombs scrubbing Australia’s emissions cut

I’VE got a blog post up at The Guardian having a look at Australia’s current and future arsenal of “carbon bombs” – those massive multi-billion dollar projects to extract and mainly export fossil fuels.

But before you go off and lose yourself in The Guardian’s website (it’s got electric bees and Mark Hamill for goodness sake), I thought it worth dwelling on a load of numbers about CO2 (you’ve all gone already haven’t you?).

In The Guardian piece, I’ve highlighted a new study  published in the journal Biogeosciences (yeh I know, it’s not Return of the Jedi is it, but just hang on in there) by a team of 10 researchers, eight of which are at Australia’s CSIRO.

The study is an attempt to get a better handle on the flow of greenhouse gas emissions across different industry sectors and across borders.

For me, the really interesting bit was when it looked at how much greenhouse gas Australia emits at home from burning fossil fuels compared to the fossil fuels we export for someone else to burn instead. The climate, after all, doesn’t give a monkey’s chuff who or where the fuels are burned.

The numbers in the study come out looking like this. In 1990, Australia emitted 279 Mt of CO2-e from burning fossil fuels in Australian power plants. By 2010, this had gone up to 418 Mt CO2-e.

Now to what we export. Between 1990 and 2011, Australia exported 513 Mt CO2-e a year over that period. But it’s accelerating due to the booming coal export industry. In 2010, the study shows that Australia’s exports of coal and gas would generate 884 MT of CO2-e when it was burned.

To put this number into further context, Australia still has a target to cut emissions from their levels in 2000 by 5% by 2020. According to the Treasury, this gets us down to 530 Mt by 2020. Without the target, we’d be up at something like 679 Mt CO2e.  That’s a saving of 149 Mt CO2-e – a saving scrubbed out five times over by our exports now.

And there’s much more exporting action to come.

In October 2011, I highlighted one of the first international studies to look closely at the trading of emissions between different countries. Carnegie Institute for Science’s Steven Davis, who was also one of the co-authors on this most recent Biogeosciences paper, had found that in 2004 Australia was already responsible for double its “official” carbon footprint thanks to all the coal and gas we were sending to Japan, China and other mainly Asian countries.

One issue which both these studies raise, is at what point in the chain from digging up fossil fuels to burning them, do you decide to impose the tax? As things stand the worldwide convention is that you make the burner of the fuel pay the carbon price to their nation’s government.

So what might happen if countries decided to tax all carbon emissions at the point of extraction – that is, at the gas well or the mine mouth? The result for Australia is obvious. Tax emissions at the point of combustion, and other countries get the cash. Tax at the point of extraction, and Australia recoups far more.

I guess it all comes down to where you think the responsibility for greenhouse gas emissions sits. When it comes to coal, gas and oil for energy, it’s not being pulled out of the ground for us to look at.


Author: Graham

Graham Readfearn is a Brisbane-based journalist. Go to the About page in the top navigation for more information.

12 thoughts on “Carbon bombs scrubbing Australia’s emissions cut”

  1. If Australia was to tax carbon at the point of extraction, then it would make our coal uncompetitive and therefore would only serve to benefit the other coal exporting countries which do not have a carbon tax. It would reduce our coal exports while doing nothing to reduce global coal consumption. It’s only a good idea if your intent is to destroy our economy.

  2. Skeptikal
    This is absolute nonsense. Our economy together with those of all other nations of the world are currently dealing with the skyrocketing costs of the damage caused by extreme weather. Some examples – At one degree of warming (more or less the current situation):

    1. Back-to-back extreme weather events are already hitting rice crops hard. In 2010, Thailand experienced $450 million in crop damages due to a severe drought. The following year, flooding again decimated rice crops, causing $40 billion in damages throughout the country’s economy.

    2. With more than half a billion people, Southeast Asia is one of the fastest growing regions in the world. According to the United Nations, the economic impact of a “business-as-usual” increase in emissions could cause a roughly 6.7% decline in the region’s GDP by 2100.

    3. At the end of the last northern summer nearly every corner of the United States had suffered through extreme weather such as oppressive heat waves, damaging storms, and devastating droughts and wildfires. 2011 saw the most billion-dollar disasters on record in the United States, and 2012 may be similarly as costly. Insurance claims from wildfires in Colorado have already reached nearly $500 million, and experts fear costs from the current drought may reach tens of billions of dollars.

    4. According to AON Benfield extreme weather disasters cost the United States $120 billion in 2012 including $65 billion for Hurricane Sandy.

    5. Extreme downpours in the United States are now happening 30 percent more often than in the mid-twentieth century.
    In 2011 alone, the United States experienced 14 weather disasters totaling over $50 billion in damage.

    Haven’t got figures for Australia at hand but you could do your own scrounging if you are genuine and not just trolling for some industry or other.
    Remember ‘Skeptikal’ that this is at ONE degree of warming and we are on course for THREE degrees or more over this century. Of course we will have to CHANGE the structure of our economy to accommodate the necessary changes to SAVE our environmental viability but ALL the sober economic predictions over recent decades have shown that the costs of the necessary changes are eminently bearable although rapidly becoming more severe as we prevaricate.

  3. Doug,
    You claim that my comment is nonsense, yet you say nothing to refute my claim that applying a carbon tax to Australian coal at the point of extraction will only serve to benefit the other coal exporting countries which do not have a carbon tax.

    Your comment is refuting claims which I haven’t made, which makes you look like some kind of automated troll for greenpeace.

    If you don’t understand the comment I’ve made, then maybe you should have someone explain it to you before you decide whether or not it’s nonsense.

  4. Skeptikal

    You are right. I missed a couple of important sentences in Mr Readfearn’s piece and did not respond directly to your assertion(s) that:

    1. Should an EXPORT tax be applied to coal the coal export industry would suffer, that others would step into the breach and that Australia’s economy would be damaged possibly destroyed.

    2. That this would achieve precisely nothing in terms of emissions reductions

    Sorry for that but your claim is still nonsense. The following is what I should have said the first time.

    Actually Richard Denniss has refuted your first claims more elegantly and authoritatively than I could ever manage here:

    But allow me to summarise:

    Denniss states that research conducted by the Australia Institute shows that slowing or halting Australia’s coal exports would ‘result in enormous benefits to the Australian economy.’ This claim is detailed and justified here:

    But in essence, restricting even reversing growth in the minerals boom ‘would allow our other key export industries – including manufacturing, tourism, education and agriculture – to expand, employing more people and paying more tax. Because these industries are all far more labour intensive than mining, less subsidised and mostly better taxpayers than mining, it would lead to more jobs and increasing state and federal revenue in the long run.’ The claim in respect of job growth is justified and detailed here:

    The mining boom (of which coal exports are a part) is responsible for our much discussed two-speed economy. It has achieved this by driving up the exchange rate to unprecedented levels and by creating an acute skills shortage.

    ‘The Reserve Bank has cited the mining boom as a reason for every interest rate rise since 2005. This has had a devastating impact on our non-mining exporters. Manufacturers who were receiving $100 for a product sold into the American market a few years ago now receive less than $70 for the equivalent item. The dollar has also appreciated by a similar amount relative to most of our other markets. Hotel rooms, meals and tours and university courses are similarly more expensive for those thinking of visiting Australia.
    Australian tourism visitors have dropped by around 250,000 over the last decade, as more Australians holiday overseas, and overseas tourists go elsewhere. This is during a 20% boom in global tourism over the last decade.
    Since the beginning of the mining boom, Australia’s rural sector has lost $43.5 billion in export income. This includes $14.9 billion in 2010-11 alone. These losses have occurred because the mining boom has forced the Australian dollar to historic highs. The beef industry took a $2 billion dollar hit last year alone.
    Manufacturing job losses are announced with depressing regularity, with well over 120,000 manufacturing jobs disappearing since the GFC.’

    In addition mining receives in the order of $5 billion yearly in government subsidies.

    Crowding out of these industries also means a loss of tax that these industries would have been paying. The mining industry pays an effective corporate tax rate of around 13.9%, compared to the industry average of 21%.
    To take the latest year available, 2009-10, mining companies paid $6.8 billion in company tax, amounting to just 2.2% of government receipts.
    The coal industry also pays around $4 billion dollars a year in royalties to the states.’

    Now Skeptikal set coal’s share of the mining subsidies and coal’s share of the revenue and job losses that the minerals boom is responsible for against coal’s share of the revenue accruing to government and the tiny numbers of people employed by coal and tell me again that slowing or reversing growth in coal exports will contribute to ruining Australia’s economy. You are indeed talking nonsense, in fact mindlessly mimicking a discredited press release from the Minerals Council’s Mitch Hooke.

    Actually Denniss deals neatly with your second unsupported assertion also. Here I’ll just cut and paste the last couple of paragraphs from the article.

    ‘As it stands mining is highly subsidised, to the tune of at least $5 billion dollars a year, which makes subsidies to manufacturing look modest.
    Mitch Hooke’s claim that “the proposal to stop Australian coal exports won’t stop global coal use” is true, as far as it goes. But no one would seriously suggest that it would. Other countries will continue to export coal.
    What it will do is drive up the coal price considerably, because Australia is the world’s largest coal exporter. In fact, Australia has a larger share of the world’s coal exports than Saudi Arabia does of oil, and no one would doubt the effect on global oil prices of Saudi Arabia reducing its oil exports.
    This will have the effect of our customer countries – primarily Japan, Taiwan and India – reconsidering investing in coal for their energy infrastructure.
    Luckily they already are. India has had to scrap huge coal power plants due to coal price fluctuations and difficulties in securing enough coal that have led to massive blackouts. This has led to rapid ramping up of solar targets to 10GW by 2017.
    This shift to renewable energy is gaining pace around the globe with renewable energy investment exceeding fossil fuel in 2011. This is an unstoppable trend, and is great for the developing nations who will be able to avoid dependence on volatile and ever increasing fossil fuel prices, and the myriad of health and pollution problems associated with burning coal.’

    So Skeptikal sorry but your comment is all nonsense. Industry generated propaganda generated to keep the gullible ignorant.

  5. Doug,
    The Australia Institute is a delusional left-wing think tank.

    Their claim that manufacturing, tourism, education and agriculture would expand could only possibly happen if the Australian Dollar sinks to the lows experienced over a decade ago… but it still wouldn’t be a road paved in gold. The problem with this is that business needs capital to expand and this capital is generally sourced offshore. The cost of borrowing foreign money can go up when the dollar is low as a falling dollar gives the impression that the country isn’t doing very well, and as such is a higher risk. This perception is the very reason that the currency falls. People who already have loans from offshore lenders find their debt, in terms of Australian dollars, increases overnight as most offshore loans are written in either US dollars or the currency of the loaner country. Not exactly a big help for businesses already struggling.

    Other effects of a low dollar are increased costs of living as imports suddenly become a whole lot more expensive. You can use the argument to buy local but a lot of stuff just isn’t made here anymore. The argument that more jobs will be created is undermined by the fact that energy costs in Australia are substantially higher than overseas (due to the crazy green energy requirements put in place by our government) and labour costs are still higher here than in developing countries. It will still be cheaper for companies to produce overseas and import the finished product, but Australians will have to pay more for those goods due to the low exchange rate of the dollar.

    At least you agree with me that stopping Australian coal exports wouldn’t stop global coal use. Your claim, however, that it would put up the cost of coal globally is only correct in the short term and only if australian coal exports ceased all at once. You have to look at what’s happening in the coal exporting industry globally to understand why. Between 2003 and 2010 Australian coal exports rose by less than 40%. In the same period, Indonesian coal exports rose almost 300%. Indonesia now exports almost as much coal as we do. Russia’s coal exports in the same period also rose by almost 300%. It’s all about supply and demand. As demand increases and prices rise in the short term, this drives the incentive to increase supply as countries seek to cash in on the higher prices. If Australia was to stop ALL coal exports tomorrow, the effect would be a short term price shock… but other countries would happily ramp up production to fill the void. While Australia is the largest coal exporter, it still only represents about 6% of annual global coal production. 6% isn’t that big a hole to fill.

    The loss of export revenue to Australia, however, would be a much bigger hole to fill and would be devastating to the entire economy. Not only the jobs in the coal mines would go, but all the jobs servicing the coal industry would also go. The trade deficit would balloon. The loss of revenue to the both the federal and state governments would be substantial. Do you seriously believe that the State governments could lose $4billion in royalties without having to implement savage cost saving measures?

    This left-wing think tank, like all left-wing thinkers, hasn’t really done all that much thinking.

  6. Skeptikal

    AI bases its projections on actual research carried out by competent, qualified researchers. What is your delusional right wing corporate propaganda provider of choice?


    Success in “tackling climate change” is surely measured in terms of GHG pollution reduction but Australia’s Domestic plus Exported GHG pollution increased from 1,077 Mt CO2-e (CO2 equivalent) in 2000 to 1,415 million tonnes CO2-e in 2009 and is expected to reach about 1,799 Mt CO2-e by 2020 and 4,490b Mt CO2-e in 2050.

    However Treasury ABARE and US EIA data show the following Australian Domestic and Exported GHG pollution (in millions of tonnes of CO2-equivalent, Mt CO2-e) for Australia under the proposed Carbon Price plan:

    2000: 555 (Domestic) + 505 (coal exports) + 17 (LNG exports) = 1,077.

    2009: 600 (Domestic) + 784 (coal exports) + 31 (LNG exports) = 1,415.

    2010: 578 (Domestic) + 803 (coal exports) + 34 (LNG exports) = 1,415.

    2020: 621 (Domestic) + 1,039 (black coal exports) + 80 (LNG exports) + 59 (brown coal exports) = 1,799.

    2050: 527 (Domestic) + 2902 (coal exports) + 1,061 (LNG exports) = 4,490.


    “The 5 million tonnes of coal we export weekly produces the roughly the same amount of CO2 as a million Australian households do yearly. Coal exports are set to double over the next 10 years with enthusiastic bipartisan political support. On average, that involves increasing coal exports by another million tonnes every fortnight—the CO2 equivalent of adding nearly 50,000 cars every single day. We often hear about China building a new coal fired power station every week or so, but few of us realize Australian coal exports effectively add a new coal fired power station or steel mill somewhere in the world every 3 or 4 weeks.

    Factor in existing coal exports and a growing LNG export industry, increasingly reliant on coal seam gas under prime agricultural land, and Australia could by 2020 be exporting more CO2 annually in fossil fuels than Saudi Arabia does today.

    The argument for ignoring Australia’s coal exports because they’re not so significant and that if we stopped, someone else would step in and take our place is a deliberate distortion of the truth.

    This argument suggests that countries are lining up to replace Australia—that the biggest coal users have lots of options, and that the biggest producers can rapidly up production. THE TRUTH IS DIFFERENT.

    While Australia accounts for only 5.6% of total world coal production, some 70% of the world’s coal is consumed by the three countries mining it—China, India and the US. What makes Australia so important is how integral we are to enabling India and China to turbo-charge their coal addictions in the next decade, and to hooking up other developing nations to the habit.

    Australia is the undisputed king of the global seaborne coal trade, providing JUST UBDER 30% OF THE WORLD’S EXPORTS, including more than half of coking coal exports. But we’re more important than that suggests because our companies are at the heart of coal mining in the other big coal exporting nations. Indonesia, for example, is our nearest rival as a coal trader, and Australian companies MINE AT LEAST 1/3 OF THEIR EXPORTS.

    Other coal exporters can’t dramatically up production with the flick of a switch. In South Africa, rail infrastructure obstacles make it very hard to increase exports at anything like the same pace as we’re seeing in Australia. In Indonesia, there’s growing pressure to use coal domestically, and there, as in Mozambique, the need to ferry huge quantities of coal down rivers is a major obstacle to ramping up exports quickly.

    In Russia and in Mongolia, freezing temperatures are among a host of problems. The US is enthusiastically diverting large amounts of coal production to the export market, partly driven by recession and rising opposition to coal. And it’s conceivable that the US could quadruple coal exports this decade. Even so, the US would take a DECADE TO MATCH AUSTRALIA as a coal exporter. So, sure, there are coal rushes elsewhere, but the coal trade depends on our coal rush more than any other.”


    Skeptikal you haven’t even bothered to read the first 2/3 of my comment. Losses to the Australian economy incurred by the coal industry, nearly all of whose profits flow offshore, outweigh by far the revenue accruing to Australian governments as a result of royalties and taxes. This industry which has by far outlived its social license should be phased out as quickly as is consistent with climate justice for the relatively small, but geographically concentrated workforce. This should be done for the sake of both our economy and our continued environmental viability.

    Better tell Mitch Hooke he needs more sophisticated lies.

  7. “The US is enthusiastically diverting large amounts of coal production to the export market, partly driven by recession and rising opposition to coal.”

    Pure propaganda… and not even close to reality. The US is enthusiatically embracing cheap and abundant gas… coal is being diverted to export because domestic consumption is falling as gas fired power generation has become the most cost effective method of power generation over there.

    Indonesia and Russia both tripled their coal exports in less than a decade. Your claim that they are not capable of ramping up production looks kinda silly in the face of what they’ve already demonstrated they are capable of doing.

    You want to destroy an industry which is a major player in our economy, and vital to the prosperity of this nation, for no other reason than for some extremists saying that it’s bad for the planet. You’re an economic vandal using the justification of some ideologically based “climate justice”. You just can’t seem to comprehend that we live in an economic world, where demand will always be met with supply… if we don’t sell our coal, then there will always be someone else who will sell theirs.

    Where is your conscience when it comes to social justice?… You want to take away coal miners jobs like they don’t have a right to feed their families because YOU deem their jobs as bad.

    You really are living on the fringes of society.

  8. Hi Skeptikal How persistent you are. They must be paying you a bit.

    The US is BOTH ‘enthusiastically embracing cheap and abundant gas AND ‘enthusiastically diverting large amounts of coal production to the export market’. The statements are mutually consistent. The US has doubled its coal exports in 10 years BUT even now sits on only about 7% of total exports. It DOES have plans to massively increase coal exports in the next 10 years. With OUR HELP Indonesia HAS tripled exports in a decade and now rivals Australia but it is levelling off as other factors begin to bite.

    ‘One change in Indonesia is that all coal must now be sold at the Indonesian Coal Reference price or HBA which is based on international prices. This is having a SIGNIFICANT IMPACT on some of Indonesia’s major customers who have invested in the development of the coal industry. The biggest impact is on Indian power utilities. They have operating margins based on set power tariffs and discounted coal prices. Combine these factors with a depreciating Rupee and some operators are being forced to re-evaluate operations and potentially defer future coal purchases.’

    INDIA IS INDONESIA’S LARGEST COAL PURCHASER. Indonesia will be unable to rapidly expand its coal export market.

    Russia has tripled its coal export market in less than a decade but now has ONLY about 10% of global exports. It will struggle to maintain this rate of growth also for reasons similar to Indonesia.

    Australia is THE KEY PLAYER here. The only country with the capacity to fill any gap left by declining Australian coal exports (should this miracle eventuate) within a decade or so would be Indonesia and it will struggle to meet demand. Other countries will of course continue to export coal and attempt to fill any gap left by shrinking Australian exports but it takes time and capital to build the infrastructure required to achieve this. There is a window of time over the next decade when prices WOULD BE DRIVEN UP as both Pearse and Denniss assert, by Australia staging a withdrawal from the coal export market facilitating a shift to renewable energy. Your initial assertion that this would make no difference to global emissions is as I stated COMPLETE RUBBISH.

    Now lets look at the new RUBBISH you have added this time.
    ‘You want to destroy an industry which is a major player in our economy, and vital to the prosperity of this nation’

    A ‘major player’ in the economy it may be there are certainly major profits being extracted and lodged in the bank accounts of foreign companies and substantial benefits being delivered to share holders, but when all the factors that should be considered are considered as Denniss showed (You still haven’t read the second post properly have you Skeptikal) the coal industry is a substantial NET DRAIN on the Australian economy. That’s right Skeptikal this industry despite its propaganda is a parasite which costs Australia plenty to subsidize. History will determine whether or not Denniss, Pearse and I are economic vandals but we don’t have to wait to see that you are completely economically illiterate.

    ‘for no other reason than for some extremists saying that it’s bad for the planet.’

    Aha. Now we are getting to the heart of the matter. You are a DENIER, someone who chooses to believe paranoid fools without knowledge or expertise like Monckton, Jo Nova et al rather than accept the virtually universal assessment of the world’s climate scientists that the greenhouse gases generated from our massive combustion of fossil fuels is destroying our environmental future. If I’s realized this at the beginning I wouldn’t have wasted my time on you – silly me.

    ‘Where is your conscience when it comes to social justice?’ Read my last comment you idiot.

    ‘You really are living on the fringes of society’

    Well history will show whether I am some sort of extremist desperado living on the fringe of society or you are just another shrill death rattle from dying world view. Goodbye Skeptikal I won’t be responding to you again.

  9. Debating with a denialist who falsely claims to be a ‘sceptic’ is a wonderfully pointless exercise. Could anyone expect an honest rational argument from a person who says that the whole of the genuine scientific effort to understand climate change for the past 30 year has been falsified? Yes, all of it, every single investigation! If we ask him to provide substantive evidence that the tens of thousands of peer reviewed papers establishing the reality of CO2 induced climate change are the work of ‘ some extremists’ he can only produce an already discredited rant about hacked emails. When Prof Richard Muller, funded by coal billionaire and denier Christopher Koch, re-examined the supposedly falsified climate record he discovered that the climate scientists’ work was ‘excellent’, and not distorted as he had previously believed. When he announced his honest assessment of the temperature record, the denialists claimed he had ‘sold out to the extremists’. These people don’t do science any better than they do economics. And as for ethics…

  10. Hello,

    It is clear that something needs to change… From BOTH perspectives. Maybe collaboration is what is in order…… A few good ideas from you…. A few good ideas from others…. You both seem passionate about the topic so why argue when you can be doing something productive! Something has to crumble and I would rather it be our economic system than the world around us. It is never too late to try!

    Nice comments on both sides. Thanks for the read.

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