Australia coal mining marks challenge for U.N. green push

GVK Power & Infrastructure

03/11/2014 09:38

* U.N. report calls for curb on coal-fired electricity 
generation 
    * But number of coal mines in Australia growing 
    * Coal remains most important fuel for global power 
generation 
 
    By James Regan 
    SYDNEY, Nov 3 (Reuters) - U.N. calls to curb greenhouse gas 
emissions by ending most electricity generation using coal will 
face some tough challenges, with coal mining going through a 
growth spurt in countries such as Australia. 
    The U.N on Sunday released a report saying governments could 
keep climate change in check at manageable costs but would have 
to cut greenhouse gas emissions to zero by 2100 to limit risks 
of irreversible damage.  ID:nL6N0SS0B8  
    Although coal is blamed for contributing to climate change 
and causing large amounts of harmful pollution, it remains by 
far the most important fuel for power generation at a global 
share of around 40 percent. 
    Australian production of thermal coal is forecast to rise by 
8 percent over the next two years to 270 million tonnes, 
according to government figures, confirming the nation as the 
world's second's biggest-exporter after Indonesia. 
    By fiscal 2018/19, production will reach 290 million tonnes, 
says the Australian Bureau of Resource and Energy Economics, the 
government's forecaster. 
    Australian growth is expected to continue as companies 
including Rio Tinto  RIO.AX   RIO.L , BHP Billiton  BHP.AX   
 BLT.L  and Glencore  GLEN.L  earmark capital to dig and acquire 
new mines. 
    Those companies are banking on projections that use of coal 
will rise, not fall, in coming decades, creating new markets for 
Australian collieries. 
    Glencore in particular is said to be eyeing an even greater 
presence in Australian thermal coal mining under its chief 
executive, Ivan Glasenberg, whose recent attempt at a merger 
with Rio Tinto was largely structured around combining the two 
companies coal assets, according to people familiar with 
Glencore's strategy. 
    The idea was rebuffed by Rio Tinto. 
    As coal is a plentiful resource, spread globally, and 
relatively easy to use in power stations, it is cheaper than 
other fuels and therefore particularly attractive for emerging 
economies with fast rising electricity demand. 
    And Australian Prime Minister Tony Abbott has been a strong 
advocate of coal, describing it last month as "good for 
humanity".   
     
    CARBON CAPTURE 
    The Intergovernmental Panel on Climate Change (IPCC), 
established by the U.N., warned in its report of findings by 800 
scientists that to keep a rise in global temperature below 2 
degrees Celsius (35.6 Fahrenheit) fossil fuel power generation 
in the absence of accompanying carbon capture and storage (CCS) 
would need to be phased out by the end of the 
century. ID:nL6N0SS0B8   
    "CCS represents a path of least resistance in balancing the 
developing world's burgeoning energy demand with the emission 
targets scenario presented by the IPCC," said Michael Roche at 
the Queensland Resources Council, comprising the nation's 
biggest coal miners. 
    But CCS is expensive and little tested. Last month, Canada's 
Saskatchewan Power  SSPOW.UL  opened the world's first big CCS 
unit at a coal-fired power plant after a C$1.35 billion ($1.21 
billion) retrofit. 
    "Australia's power generators are nowhere near big enough to 
meet the costs associated with (CCS) development," said Alan 
Oxley, from trade and investment consultants ITS Global.  
    The size of the challenge is reflected in forecasts for 
energy demand growth across Asia, where coal is the fuel of 
choice and expected to meet almost 60 percent of demand growth 
over the next 20 years, according to Roche. 
   Already a major supplier to North Asia, Australia is emerging 
as a key source of thermal coal for India's growing population 
of electricity users, many of whom had been relying on wood and 
kerosene to cook food and illuminate their homes. 
    India's Adani Enterprises  ADEL.NS  has hired consulting 
firm Parsons Brinckerhoff to manage contract reviews for its     
 A$7 billion ($6.11 billion) Carmichael coal mine in Australia 
as it looks to start production in three years. 
    Meanwhile, India's GVK and Australian billionaire Gina 
Rinehart have obtained an environmental permit to build their 
Alpha Coal project in Australia, moving it a closer to signing 
off on a mine it estimates would cost $10 billion to construct. 
    Environmentalists have attacked the projects as unnecessary 
and a way to siphon off capital that might otherwise be 
channeled into renewable energy sources. 
    "The cruel reality is that Australian coal from Carmichael 
will not bring us light or power," said Debi Goenka of India's 
Conservation Action Trust, which has launched legal proceedings 
against Adani over development of the mine. 
   "Many are not connected to the electricity grid. Those who 
are, cannot afford electricity from Australian coal," he said. 
    But the International Energy Agency projects electricity 
demand in India will more than double in the next decade and 
that a continued reliance on coal power will require local 
supplies to be heavily supplemented with imports.  
(1 US dollar = 1.1460 Australian dollar) 
 
 (Editing by Joseph Radford) 
 ((jim.regan@thomsonreuters.com; +612 9373-1814; Reuters 
Messaging: jim.regan.reuters.com@reuters.net)) 
 
Keywords: COAL AUSTRALIA/CLIMATE CHANGE