The future of coal mining in the Hunter - ABC 1233 Drive

February 11, 2019





SUBJECTS: Coal mining in the Hunter, Rocky Point mine decision, renewable energy, climate change.

AARON KEARNEY, HOST: First of all to you, Michael Johnsen, what is the grassroots, ground-floor reaction you have had to that decision on Friday, with three or four days to come to terms with it?

MICHAEL JOHNSEN, NATIONALS STATE MEMBER FOR UPPER HUNTER: Well, I think it’s somewhat predictable in that there is a certain group of people who are cheering the decision because they are just philosophically opposed to fossil fuels and mining and so forth, and that’s understandable. That’s OK. But the vast majority of people are saying that this is a wrong decision and the more they think about it the more they understand what the potential implications are beyond this particular decision for Rocky Hill. People are a bit nervous about it. I was talking to a dairy farmer this morning who said to me, you know I can’t believe this particular decision, because he’s got quite a large dairy farm and he said based on that premise alone it won’t be long before I’ll be forced to close down my dairy farm.

KEARNEY: Pat Conroy, if the assertions of Brad Jessup are true or there can be a degree of self-fulfilling prophecy around a decision like this as well where people think there won’t be further mine expansion then that can have its own echoes through the economy, what is your reaction to what went down on Friday?

PAT CONROY, FEDERAL MEMBER FOR SHORTLAND, SHADOW ASSISTANT MINISTER FOR CLIMATE CHANGE & ENERGY: I think it is one that will need to be further tested in the courts. I think that’s really important to say firstly.  Secondly, there are big jurisdictions that export lots of coal from this country that aren’t related to this. Queensland obviously exports over 50% of the coal that’s produced in this country. So, my main focus is that this just reinforces the point that we need a national plan, national policies, to actually cut our greenhouse gas emissions. Because I think if you read the reasoning from the judge, he did not have a lot of confidence that other things were going to happen. So he was saying the mining company couldn’t rely on that happening. So that, to me, emphasises the fact that we need to have a national plan to cut greenhouse gas emissions and our policy is 45% by 2030, which is very achievable. But secondly, we do need to start having a conversation about transitioning in the Hunter region, not because of the court decision, but because of the market. So, the market for seaborne thermal coal peaked in 2014 globally; globally it peaked five years ago. Now, people have been switching off less efficient coal than ours, and so Australian exports have increased by 27% in that period, which is good news for jobs and income for our area. But at some stage that won’t continue. The market has spoken and the global trade is declining and we need to prepare our region for that and start planning and investing accordingly.

KEARNEY: There’s a couple of threads there I’d like to pick up but you two are from opposite ends of the political spectrum but you both have skin in this game in so far as your constituents are heavily tied up in this industry. First of all the point that you made Pat Conroy about this being a state-based decision, it isn’t legally binding here or in other states, however, all things being equal, you would probably pursue a new mine outside of NSW in the wake of this decision. Michael Johnsen do you fear that this is going to force opportunity interstate?

JOHNSEN: Well it could do and it’s interesting listening to Pat about some of the statistics and so forth. Let’s not forget that mining alone represents 23.5% of the gross regional product and it’s not the single biggest contributor to the regional economy – it’s not the biggest overall in terms of majority – but it is the single biggest industry. And our coal in our particular region is growing in terms of exports and the demand for energy is increasing around the world. Yes, around the world there are changes to the mix of energy but still coal is on a [trajectory] upwards around the world. So, we will have a long, very long-term coal industry in the Upper Hunter or in the Hunter region and we should do because there is global demand. But, but, having said that, we can build HELE coal-fired power stations for example and reduce our emissions by around 30-33%, which is effectively meeting the Paris agreement targets on that one component alone. And, you know, this has implications around other industries. Let’s not forget that the Upper Hunter is the home of world-class mines, wines, equines and bovines. Every one of those critical industries to the Upper Hunter in it will have emissions, and every one of them are potentially at risk. Will we then potentially lose market share to other states? Well, I don’t know, because the Adani decision had a similar decision in the Queensland courts and was overturned by the Queensland Supreme Court, saying it had no bearing or no impact on global emissions, given the size of the particular project. Now, we’re talking Adani here. Rocky Hill in this particular case is a quarry in comparison to say the world’s largest coal mine in Muswellbrook here on the edge of town, being Mount Arthur.

KEARNEY: So let me put some of what you’ve observed there to Pat Conroy. Pat, you are perhaps uniquely positioned in Australia if not the world in that you have local constituents that are employed in this industry and yet you are the shadow [assistant] minister for climate change and energy. You understand better than anyone the tension that happens between a global obligation and a local implication in this space.

CONROY: Absolutely and that’s why we have to be frank and honest with people. But firstly, I always start by saying I welcome the jobs and the income that the coal industry has delivered in our region and will continue for a couple more decades. I do welcome that. I’m not ashamed to come from a coal region. But we need to take a national approach to reducing emissions rather than piecemeal decisions around individual mines and that’s why it is important to take action to reduce emissions properly. That’s why Labor’s got a plan, unlike the current Federal Government that actually has emissions rising under its governance right now. I want to pick up Michael on the projections. Everyone can point to different projections about what’s happening with energy demand globally but according to the official statistics of the Federal Government, no friend of mine, total trade in thermal coal globally peaked five years ago and is falling. It is falling. We’re increasing our exports into the market as people prefer Australian coal over Indonesian or Vietnamese coal that has less calorific value, and that’s a good thing. That means more jobs at the moment. But we have to be honest with people that change is coming, not because of a court decision but because of the market, because renewable energy is cheaper than coal-fired power.


KEARNEY: So Pat Conroy, if that market reality is mapped over the top of this court decision that Brad Jessup for one asserts could mean that there are no new mines, then this is an action now, this is a local crisis for the Hunter, is it not?


CONROY: Well, certainly if the court decision is replicated in other decisions it will impact on new coal mines; that’s a big ‘if’. But we’ve got lots of existing coal mines. We’ve got 13,000 people directly employed. And they’ll be there for a while longer. It’s really important that everyone stays calm and understands that this is a situation we need to start planning now for a future coming down the track in the next decade. The first transition is in energy, to be quite frank. We’ve got three of our four coal-fired power stations have closure dates set by their companies that own them. They will close in 2022, 2032 and 2035, and we need policies to transition the workforce and the community. We announced our Just Transitions Authority and a policy around pooled redundancies where people can transfer to other power stations. The fact is, absent a massive government subsidy, we won’t built a new coal-fired power station in this country ever again because renewable energy is cheaper than new coal and it’s cheaper than existing coal, according to Origin Energy. So that’s the first stages, around our energy workforce, which is really urgent. And then, having a frank conversation about the actual coal industry over the longer term.


KEARNEY: Michael Johnsen, what have you got to disagree with in that analysis?


JOHNSEN: Look, a whole bunch of things. Australia is such a small contributor to climate change. And I don’t think anyone could ever deny the fact that humans living on this earth don’t have an impact; we do have an impact. It would be crazy to think we don’t have some level of impact. But what is the balance? And what can we do at an individual or smaller level to be able to make a difference?


KEARNEY: OK that’s a broader philosophical anthropomorphic climate change conversation, but what of the reality, quoting your own figures at you, 23% of the Hunter economy is tied up in this industry? What if Brad Jessup is right that there are no more Hunter coal mines? And what if Pat Conroy is right, and I mean it’s not really a disputable fact in this sense, if we do never build another coal fired power station then what does that mean right now in February in 2019 for 23% of the Hunter economy?



JOHNSEN: Well, if that was to play out that say for example a new HELE coal-fired power station would never be built, then that would be a disaster. And if they were never to be built anywhere else around the globe then that would be a disaster for our local coal industry. But the fact is there are hundreds upon hundreds of new coal-fired power stations actually being built around the world and our coal is required for that. It is the number one coal in the world in terms of efficiency and so forth. And so I don’t know that that is actually going to happen. I think there is a lot of discussion around what may or may not happen but, when you actually look at what is happening, new coal-fired power stations are being built around the world. I can tell you from my position that people do come knocking, companies do come knocking on my door asking about what do we need to do to go and build a coal-fired power station, a new coal-fired power station. Companies are actually willing to build these things. What they need, though, is in order to get a return on their capital, which is fair enough, is some level of certainty around the contracts for the sale of that electricity that they generate. That’s where the issue is, not whether or not there’s a potential return, there is a potential return. [Renewables] it’s not necessarily cheaper at all, especially when you consider that coal operates 24 hours a day and solar, for example, has a maximum potential of eight hours a day and there are significant restrictions on wind power as well. For example, the optimum wind speed is 14 knots and once it gets a certain point above that or below that they shut off. So, you need that baseload power. Companies know this, our communities know this, they want reliability of despatchable power and the only way that we are getting that reliably up to date is through coal-fired power. And yes we can do it a lot more efficiently with a lot less emissions. And companies are willing to do it.

KEARNEY: You have started a conversation there that is for another day. Energy security and energy strategy are their own half-hour of conversation. Thank you for both being available today.