Coal in Australia

Coal underpins Australia’s energy security, and – with carbon capture and storage playing a role to mitigate its carbon emissions - will continue to do so in the future.

Most of the benefits of modern life, including transport, industry, heating and cooling, require a secure, affordable and uninterrupted supply of energy. Coal is Australia’s principal energy source, providing 40% of our energy and 81% of all our electricity. [PDF] 

Coal is abundant in Australia and considerably less expensive than other energy sources. Australia’s black coal reserves are located primarily in NSW and Queensland, along the eastern seaboard where the majority of electricity is generated and consumed. Brown coal (or lignite) reserves, located primarily in the Gippsland Basin of Victoria, are also significant, with Australia having 25% of the world’s economic demonstrated resources (EDR) of the fuel. Brown coal contributes to around 24% of Australia’s electricity. [PDF]  This abundance and proximity means that Australian electricity prices are among the lowest in the world. [visualise]

As Australia’s population and economy continues to grow, growth in energy consumption, which has averaged 2.3% in recent years, is likely to continue. We are fortunate to have an abundant supply of coal with approximately 9% of the world’s reserves located here – enough to last almost 200 years. [PDF] 

Coal guarantees a secure supply of the cost-effective energy Australia requires and will continue to need in future. As stated by Prime Minister Rudd in 2009,  “Coal will be a major source of power generation for many years to come.”

Of course, emerging renewable energy technologies offer great promise. At present, renewables contribute around 7% to Australian electricity generation for public consumption, with 4.5% sourced from hydroelectricity. [visualise] Wind energy has experienced strong growth over recent years and now represents 1.5% of total electricity generation. Emerging renewable energy technologies include large-scale solar energy plants, geothermal and wave and tidal generation technologies. [PDF]

This will change, and renewables will soon make up more of our energy mix. In August 2009, the Australian Senate passed the Government’s Renewable Energy Target (RET) which states that 20% of Australia’s electricity must come from renewable sources by 2020. 

However, the remaining 80% will continue to come from fossil fuel sources, primarily coal. Coal’s share of domestic electricity generation, while declining, is still projected to be 43% in 2029–30. [PDF] 

Coal plays, and will continue to play, a vital role in our energy security.

Coal is Australia’s top export and plays a major role in our nation’s economy, bringing in billions of dollars in tax and royalties.

Coal was the first commodity to be discovered and mined in Australia. 

Now, we are the world’s largest coal exporter, with 78% of the coal we mine sent to over 30 countries. [PDF] Coal is Australia’s number one export by a significant margin, representing 19% of the total value of goods and services exported in 2008-09. [visualise] Export revenue from coal in that year was a record $54.7 billion, up from $24.4 billion in 2007-2008.

The two broad types of coal, brown and black, are both found in Australia. They have different chemical and physical properties. Brown coal (lignite), mined in the Victoria’s Latrobe Valley, is the lowest quality of coal, and is not exported.  With a high moisture content and lower energy content than black coal, it is used primarily for power generation. Black coal, which comes predominantly from New South Wales and Queensland, and is exported, has a lower moisture content than brown and higher energy content, making it more useful and valuable as a fuel.

Australia ranks fourth in global black coal production after China (46%), the USA (17%) and India (9%). [PDF] We export two kinds of black coal: thermal coal which is used for power generation, cement manufacturing and some industrial processes, and metallurgic coal, which is used in the manufacture of iron and steel. In 2008, 54% of the world’s exported metallurgic coal and 19% of the world’s exported thermal coal came from Australia. [PDF] 

The majority of our metallurgical coal is sold to Asia and Europe, where it is used in steel-making. [visualise] The largest buyers are Japan, India, China and the European Union. Thermal coal exports principally go to Japan, the Republic of Korea and Chinese Taipei for use in power generation. [PDF]

Coal is a key driver of Australia’s growth and economic prosperity. It provides a valuable income from exports, and supplies a reliable and low-cost source of energy to drive power generation and industry.

Every year, the coal industry pays billions to Commonwealth and State governments in the form of corporate taxes, natural resource royalties, and payment of freight charges. 

In 2007, the Minerals Council of Australia estimated that the Australian mining industry accounted for 9.1% of all Commonwealth company tax, or $5.2 billion, with a significant portion related to coal mining. [PDF]

Coal royalties are a critical source of revenue for the governments of our principle black coal producing regions. In 2008-2009 they were worth $3.1 billion to the Queensland Government, and $1.4 billion to the New South Wales Government. This flows back into the community in the form of state funding for hospitals, schools and roads.

As one of Australia’s largest industries, coal mining also contributes billions of dollars to governments through GST payments, salaries and wages paid to workers, and the income taxes paid by workers directly and indirectly employed by the industry. 

In addition to the significant annual revenue it generates, the coal industry has also played a role in Australia’s development. This includes investing in physical infrastructure within the mining industry, and by contributing to infrastructure development in regional areas, such as roads, rail, ports and dams.

New and planned investments in new coal mining projects are important in ensuring the creation of jobs and inflow of revenues into government coffers. Between May and October 2009, $1.5 billion worth of coal infrastructure projects were completed in Australia, and billions of dollars more will be completed over the coming years. [PDF]

The black coal industry is an extremely important employer in Australia, with over 150,000 people either directly or indirectly employed as a result of the coal mining industry.

As at June 2009, the Australian coal industry directly employed over 38,000 people. [visualise] This includes just over 20,000 people in Queensland, nearly 17,000 in New South Wales, and another 1,000 in South Australia, Western Australia and Tasmania combined. That’s 80% of the jobs in the mining sector of those states. 

However, the coal industry also underpins the creation of additional jobs, such as in retail and services (what economists call ‘indirect employment’), generating over 120,000 further jobs in those states. [visualise] 

As a result of coal production in 2008-2009, household disposable income grew by nearly 7% in Queensland and 6% in New South Wales. The Australian coal industry is also noted for paying good wages, with average salaries often over $100,000.

In 2006-2007, the total salaries and wages paid by the coal mining industry amounted to $3.5 billion, with a further $3.9 billion paid to contractors and sub-contractors.

The coal industry provides vital economic support to hundreds of communities, especially in regional areas where mining and related jobs are the main or only source of work in the region.

The coal industry has played a leading role in the development of some of Australia’s largest regional centres and ports, particularly in New South Wales and Queensland. 

Coal mining is extremely important in rural Australia, as it is often the principal source of income in many regional areas. The loss of the industry would be disastrous for places such as Muswellbrook and Singleton in the New South Wales Hunter Valley, and Moranbah and Capella in Queensland’s Bowen Basin where the coal industry is critical for the local economy. 

The coal mining industry offers generous wages in these rural communities. In the mining town of Muswellbrook, for example, wages are around $120,000 a year. Without such income many rural communities would flounder or simply cease to exist.

The coal-mining town of Moranbah in Queensland’s Bowen Basin typifies a regional centre that relies on the coal mining industry. With coal mining in the area expanding, the population of the town increased 80% in less than two years, and there was substantial development of local infrastructure.

Of Moranbah’s workforce, 43% are employed directly by the coal mine, with the remainder employed in services like education, health and retail which address community needs. Wages here are well above the Australian average. Coal mining accounted for 76.1% of total Gross Regional Product 2007-08 in the region. Without the coal industry this prosperity would not be possible. 

As coal mining investment has created new towns and communities, it has also played a major role in funding their social infrastructure, such as schools, hospitals, and community leisure facilities. The Australian coal industry is a major education sponsor, spending millions of dollars each year on training, scholarships and educational programs. 

It is also a generous contributor to community projects.  Rio Tinto Coal Australia, for example, has contributed over $12 million to the communities in which they operate. In 2008 alone, $2 million was allocated to a variety of programs including education, training and employment, sport and cultural and heritage programs.

Currently over 80% of the world’s energy comes from fossil fuels – coal, oil and natural gas.  [visualise] Abundant, secure and affordable sources of energy, the world will rely on these fuels to power its growth and development in the future. 

However, these fuels are also the source of approximately two-thirds of anthropogenic or human-induced greenhouse gas emissions. [PDF] Worldwide, energy production from coal accounts for about 27% of anthropogenic greenhouse gas emissions and 42% of carbon dioxide emissions. [visualise] Helping balance our global need for energy security with mitigating climate change is where carbon capture and storage can make its greatest contribution.

It’s clear that, right now, the world needs coal. Globally, coal usage has grown faster than any fuel for the sixth consecutive year. According to the International Energy Agency (IEA), in 2008 the world consumed 5814 Mt (million tonnes) of hard coal and 625 Mt of brown coal. Coal accounted for about 27% of global energy production, and 42% of total electricity production. [visualise]

At the current rate of consumption, there are enough proven coal reserves to supply the world for at least another 122 years. This is fortunate, because the IEA forecasts that world energy demand in 2030 will be 40% higher than in 2007, with demand for coal growing by 53% in the same period. Even with an ambitious plan to rapidly deploy renewable energy technologies like solar and wind, fossil fuels will continue supply the majority of global energy in 2030. 

Under current trends it’s predicted that fossil fuels will be responsible for 77% of the demand increase. Even with this dramatic rise, the IEA forecast that 1.3 billion people will still lack access to electricity. [PDF]

The US Energy Information Administration forecasts that under current trends, world coal consumption will increase by 49% from 2006 to 2030 to help meet energy demands. [visualise] They predict that coal will account for 28% of total world energy consumption by 2030 (up from 27% in 2006). China, the US and India are expected to account for 88% of the rise in coal demand. China alone is expected to bring online 600 GW (gigawatts) of new coal-fired generation capacity by 2030 to fuel their rapid development.

What this is telling us is that the world will rely on coal for a long time to come for the basic provision of energy and electricity for our growing population. These trends would put the world on a path towards dramatically increased greenhouse gas emissions. Atmospheric concentrations of such emissions could reach as much as 1000 ppm (scientists recommend a target of 450 ppm). Such a rise could result in warming of up to 6ºC, which would be disastrous for global climate. [PDF]

Given our planet’s massive demand for coal, both now and for the foreseeable future, any solution to climate change must deal with the reality of coal. This means the world can't afford not to invest in and support low emission coal technologies like carbon capture and storage. It can be built in to new powerstations or bolted on to existing ones, with the potential to make a big difference in CO₂ emissions. Alongside renewables, taking personal and collective action, and new scientific ideas and technology, carbon capture and storage must play a role in the world’s climate change response.