AUSTRALIAN Coal Association boss Ralph Hillman was on the money when he told the National Press Club yesterday that carbon was an "accident-prone" area of policy.
Just days ahead of the release of the tax details, the coalminers believe they have lost the argument against taxing fugitive emissions, the coincidental carbon gas that escapes at the mine site as coal is extracted. The leakage is difficult to contain -- especially in open-cut mining -- but represents 5-6 per cent of carbon emissions in Australia. That's about half the level of methane emissions that come from our cattle.
Fugitive emissions are so hard to measure and difficult to abate that they are exempted from overseas efforts to manage carbon. They are not included in the European Union's cap-and-trade emissions trading scheme, which is often held up by the Gillard government as an example to be followed. The Australian coal industry says taxing fugitive emissions could help force 18 mines to the wall, even with compensation, and could lead to the loss of 4700 jobs in the next 10 years. There may be room to question the detail of this modelling but Mr Hillman argues, correctly, that "growth is precious" and that Australia must not pass up the opportunity to benefit from the historic wave of industrialisation sweeping the developing world.
In any case, reducing exports to China and India by pricing Australian coal out of the market would harm our economy, but will have no impact on demand from the developing world. It would lock Australian workers out of jobs and wealth that will simply be redirected to workers in other coal-exporting countries where lower-grade coal produces higher emissions. We suffer and the planet suffers, which makes sense only to those who see redemption in self-flagellation. Salvation may yet be contained in Labor's compensation package, but it would be a disaster if we moved so far ahead of the world with our carbon tax that we simply succeeded in threatening our 300 million tonnes of annual coal exports.
None of this matters much in the abstract world of the Greens, where coal is the bete noir of global warming and the only clean coal is coal left in the ground. They want the industry closed down. Yet the characterisation of coal companies and power generators as Neanderthal brutes, untouched by the realities of the climate change debate, is unfair. The sector has recognised the need to reduce carbon and accepts the inevitability of phasing out dirty, low-value brown coal over time in favour of black coal.
Coal companies invest their hopes in technology, such as carbon capture and storage, while power generators have lower-emission options such as gas, if they can be made competitive. There is certainly a long way to go before CCS can be integrated efficiently into the operations of coal companies, but it would be foolish to rule it out, in the same way that effort must be put into the development of alternative renewable sources of energy.
The Australian has long recognised the need to take action on carbon but, like the coal industry, we are anxious about any policy that would position us so far ahead of our competitors that the result is not a reduction in emissions but a reduction in jobs, household wealth and national growth.