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Insight into the Politics of Climate Change: A Letter and Response

A friend of mine, Govind Maksay, who works at the Moreland Energy Foundation, recently wrote a letter to Martin Ferguson (Minister for Resources and Energy, Federal Government, Australia – who actually resigned as I was writing this post!). Govind asked questions about Australia’s position on fossil fuels in the face of climate science. With permission, I post Govind’s letter below, followed by a link to the response he received from the Minister’s office. I feel this provides an interesting and rather disturbing insight into the government’s failure to either understand or take seriously the implications of climate change. As you will see, the government has two main lines of evasion: first, it says we can’t stop exporting coal, because that will just mean importers buy coal elsewhere; secondly, it says technology will save the day, so we don’t need to stop burning coal. I take this as further evidence that any response to climate change may have to be driven the the ‘bottom up’ rather than from ‘top down.’ But I am sure everything will be put right when Tony Abbott is Prime Minister. (I’ll be posting some more resources in a few days).

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Dear Mr. Ferguson,

I am writing to you because I have a few questions regarding climate change and the Federal Government’s coal export policy.

The 2012 Energy White Paper contained the following statement on page 18.

Australia’s nine major coal-exporting terminals had a combined capacity of almost 400 million tonnes and loaded nearly 290 million tonnes of coal in 2010-11. Further planned investment in coal, rail and port infrastructure in the next decade will support growth in this vital export industry.

I am very concerned by the fact that Australia is seeking to expand its coal exports exactly at the time when climate change science and policy is clearly indicating that the global community must rapidly de-carbonise if we are to avoid catastrophic climate change impacts.

Increasing coal exports concerns me for two reasons.

  1. Australia will be directly contributing to accelerating climate change by selling its coal to the world in an uncontrolled manner. I believe that coal exports should be capped and that a plan should be established to phase out coal mining within a decade. There are various policies that could help achieve this objective but I don’t hear the Federal Government talking about the need to do this.
  2. Investing heavily in coal exports will leave Australia open to significant economic shocks as the world moves away from fossil fuels over the coming decades. I believe that a time will come soon when the global community clearly realises the catastrophic impacts unchecked climate change will have and this will result in a rapid retreat from fossil fuels. Australia should be preparing for this time and we should not be investing heavily in fossil fuels.

This brings me to another important point. At Copenhagen in 2009 the majority of the world agreed to take action to hold any increase in global temperature to below 2 degrees Celsius. Australia signed the Copenhagen Accord so has clearly supported this objective.

There is a growing consensus that if were are to limit warming to two degrees 66%-75% of proven fossil fuel reserves cannot be consumed unless carbon capture and storage (CCS) is widely deployed.

Respected and conservative international bodies, such the International Energy Agency (IEA), have clearly stated this point. The following quote is taken from page 6 of the IEA’s ‘World Energy Outlook 2012’ report. I have attached the report also if you wish to take a look at it.

No more than one-third of proven reserves of fossil fuels can be consumed prior to 2050 if the world is to achieve the 2 degree Celsius goal, unless carbon capture and storage (CCS) technology is widely deployed.

Importantly the IEA also states on the same page that ability to widely deploy CCS is highly uncertain as only a small handful of commercial-scale projects are currently in operation. I believe to rely on CCS to save the situation would be very risky and is not a sensible bet. We need to get out of fossil fuels and move rapidly towards renewable a d zero emission energy sources.

There is a growing awareness in the finance industry that the fact that 66%-75% of fossil fuels is potentially unusable could result in massive financial disruptions. Many reports are being published stating that the market is currently not adequately pricing this risk into the share price of fossil fuel companies and that this is creating significant investor and market risk.

A very recent report from HSBC (attached) states the following:

This analysis has prompted concerns that fossil fuel assets – and not just power generation facilities in the IEA scenarios – could become stranded in the transition to a low-carbon economy. Indeed, Carbon Tracker argues that equity investors could be facing a potential ‘carbon bubble’, with assets in excess of what can be safely and profitably exploited.

It seems clear to me that investment in fossil fuels at such a time is very risky from a financial and economic perspective. Australia should be preparing for the inevitable rapid shift towards a low-carbon economy rather that investing further in fossil fuels.

Importantly, the decision to continue investment in fossil fuels (especially coal) is not only risking our environment but also our economic future. To continue to do so requires ignoring the overwhelming evidence before us.

We urgently need government direction and policy to firstly cap coal mining and coal exports, and secondly to manage the phase-out of the coal industry.

I would like to know how the Federal Government is taking the above information into account. Specifically I have the following questions.

  1. Does the Federal Government acknowledge the fact that the best analysis to date clearly indicates that 66%-75% of proven fossil fuel reserves cannot be consumed unless CCS is widely deployed?
  2. Does the Federal Government acknowledge that the goal of restricting global temperature increases to 2 degrees is fundamentally in conflict with a policy of expanding Australia’s coal exports?
  3. Has the Federal Government factored in a rapid retreat from fossil fuels into its decision to expand Australia’s coal exports?
  4. Does the Federal Government acknowledge that a significant investment in fossil fuels (especially coal) leaves the Australian economy open to significant shocks given the fact that the world has agreed to limit warming to 2 degrees?

I look forward to receiving a response from you.

Regards,  Govind Maksay
Brunswick, VIC, 3056

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Govind received a response from the Minister’s office, which can be read here. There is much more to say on these issues, and I hope to address some of them in coming weeks, including providing a list of resources worth considering.

One Response to “Insight into the Politics of Climate Change: A Letter and Response”

  1. SJ says:

    I often email state or federal ministers over environmental issues and I am so used to the lame resposes, sometimes individual and sometimes scripted but always condecending and lame.

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