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Australian coal industry will still grow after Paris COP21 decisions, says economist Warwick McKibbin

Warwick McKibbin, a former member of the Reserve Bank of Australia board and a professor of economics at the Australian National University, was commissioned by the Abbott government to model the economic consequences of the Paris talks.

In his report, published in August, Professor McKibbin found that coal bore the largest cost of any Australian industry, with exports in 2030 estimated to about 7.8 per cent lower than without a Paris agreement.

Overall Australian coal production would be 8.3 per cent lower, although “still higher than 2015 levels”.

The Australian Financial Review went back to the McKibbin report last week, noting that his views were consistent with those of the International Energy Agency and the Australian coal industry, which welcomed the Paris agreement on the grounds that Australia’s high-energy, low-ash and sulphur coals would still be in demand if Asia installed more new-generation power stations in response to Paris.

Professor McKibbin was quoted by the AFR as saying Paris meant the Australian coal industry would not expand as much as it otherwise would have.

“So we’re not closing the coal industry,” Professor McKibbin said.

“Even though exports fall a lot relative to where they would have been, they’re still, in our baseline, rising quite significantly, so the actual coal industry itself from today doesn’t shrink from today’s scale.”

The latest assessments of Hunter coal exports show that Port Waratah Coal Services – operator of one of the two Kooragang terminals and one at Carrington – was on track to ship 107.6 million tonnes of coal in 2015, down slightly on the 2014 figure of 110.6 million tonnes.

 Shipments from the second Kooragang terminal operated by Newcastle Coal Infrastructure Group are not publicly available but figures showing the amount of coal railed to the port show NCIG is likely to lift its annual exports from about 45 million tonnes to 48 million tonnes.

Taken together, Newcastle exports are on track to match last year’s levels.

The Queensland coal industry is also looking to add to its export capacity, with the federal government approving an expansion of the Abbott Point Coal Terminal.

source: http://www.theherald.com.au