The Government’s reliance on coal for Australia’s economic future could prove damaging as global powers prepare to transition to a lower-carbon environment.
According to the Sydney Morning Herald, Swiss Bank UBS told its clients that the world was on the verge of a shift towards renewable energy, with “solar and batteries” at the forefront.
This statement is in response to a growing boom in renewables investment across the world.
According to a new report from Bloomberg New Energy Finance, global investment in clean energy alternatives in the first three quarters of this year was 175.1 billion, a 16 per cent increase on the same period in 2013.
In the July to September quarter, clean energy investment was 55 bn up 12 per cent from last year, though it is 16 per cent down from quarter two, 2014.
Perhaps the most surprising figure was from China, which invested 12.2 billion in solar energy up from 7.5bn in quarter three in 2013.
Japanese investment grew by 17 per cent to 8.6 billion. They too prioritized solar energy. Other countries showing increased investment included Canada, France and India.
But Australia is not following this trend, with a sharp decline in investment for renewable energy. Bloomberg New Energy Finance data shows that Australia may record its lowest level of financing of large scale renewables since 2002 with only 193 million committed in the third quarter of the year.
As a result Australia has slipped from being the world’s 11th largest investor in clean energy to 31st in 2014.
This ranking is below Algeria, Myanmar, Thailand and Uruguay.
The fourth edition of the Global Green Economy Index (GGEI), which measures the green economic performance of 60 countries, ranked Australia in 37th place, down from fourth in 2012.
Four key dimensions are considered in the index: leadership and climate change, efficiency sectors, markets and investment and environment and natural capital.
In the Leadership section, Australia was ranked last, a result attributed to negative media coverage, “unconstructive behaviour” in international forums and poor climate change performance.
And the Coalition show no signs of developing a plan for renewable energy in the future or limiting carbon emissions.
Since taking power, Tony Abbott has publicly supported coal mining as a driver of economic growth. The Government repealed carbon and mining taxes and recently approved the controversial expansion of coal ports within the Great Barrier Reef.
At the opening of a new colliery in the Bowen Basin in Queensland, the Prime Minister said “coal is good for humanity”, a statement which stands in stark contrast to renewable energy efforts across the world.
Last year Australia exported approximately $39.8 bn of coal as its second biggest export. Annual production of thermal coal, used to generate electricity, is expected to grow by 3 per cent a year to 291 million tonnes in 2018.
But the price of coal is only expected to decline as a result of investors moving towards clean energy companies and increased competition from more affordable renewable energy options.
Spot thermal coal prices at Newcastle port have reportedly halved since January 2011 and are now near a five year low of about US$65 a tonne.
However demand for coal is still expected to continue for the coming decade, with China and India as Australia’s largest markets.
China’s power stations are expected to continue operating for another 50 to 60 years, though the government is attempting to combat pollution through using solar, wind and hydroelectric energy.
India’s new Prime Minister Narendra Modi has also promised to bolster energy supply in a country where over 300 million people do not have electricity. Coal currently accounts for 59 per cent of electric capacity. However, a party official has also promised an initiative to produce enough solar power to run one light bulb in every home by 2019.
Kobad Bhavnagri, head of the Australian operation of Bloomberg New Energy finance stated in the Sydney Morning Herald that “Australia’s policymakers are doubling down on tying the economy to a fuel source of the past…the developing world is turning as fast as it can to other sources of power.”