Tuesday, 16 April, 2019


Hunter decision makers should prepare for the effects of a global shift from coal-fired electricity generation to renewable sources, according to Tony Wood, Energy Program Director for the Grattan Institute.

Wood spoke at the Upper Hunter economic breakfast in Muswellbrook on 10 April. He told a capacity crowd of 170 that this shift is being driven by concerns about climate change by policymakers and investors.

“The direction and drivers of change are clear,” Wood says. “Less clear are the scale and rate of change in Australia over the next three decades.”

The International Energy Agency’s (IEA) forecast says that global coal demand is forecast to remain stable over the next five years. Declines in Europe and North America will be offset by strong growth in India and South-east Asia.

Wood compared the rate of growth in new coal-fired power stations versus the retirement of old ones. More capacity in coal-fired electricity generation is to be shut down globally within the next five years than to enter service.

What does that mean for coal exports from Australia and the Hunter?

“We have little influence over the global trend. Yet, its implications for our export coal revenues are existential” Wood emphasised. “That is an important lesson from the numbers.”

In the short term, Wood says that Australia’s thermal coal exports look stable. In the longer term, he noted, the risks for thermal coal exports are on the downside, and could accelerate quickly.

He compared Australia’s response to preparing for these trends with the five stages of grief.

“Denial, anger, bargaining, depression and acceptance are a part of the framework that makes us eventually able to navigate loss. We are currently struggling with denial.

“In the denial stage, we are able to find data and opinions to support our preferred view of the world and ignore the data that say otherwise. Ultimately, the accumulating, quantitative and qualitative data should lead to acceptance and strategic planning.”

Wood said that recent data show that Australia has more time for planning and a strong economy to fund change. He warned that this opportunity should not be wasted.

“Industries, governments, social advocates and community organisations can deliver a better outcome if they are mobilised together,” he stated. “Without plans, everything becomes reactive and much more painful.

“A strategic plan is required based on a pragmatic view of the data and trends. It  needs to be informed by scenario planning for the region.”

He suggested that the Hunter Research Foundation (HRF) Centre could conduct scenario modelling to inform planning for the effects of different potential outcomes in the region. The Centre will seek support for such a study.