Monday, April 23, 2018

Climate change: What about coal?

Now the government has banned offshore oil exploration and effectively called time on the gas industry's future, people are asking the obvious question: what about coal? But the government says they haven't done any work on this - something National finds incredulous. But its not really all that surprising.

Firstly, yes, the government has made an international commitment to end coal in electricity generation, backing its domestic pledge for a 100% renewable electricity system. But that's working at a generator level, and the only power company which still burns coal to generate electricity - Genesis - has already said they're phasing it out. So there's not much to do there. While I expect they'll be looking at a ban on new thermal generation to ensure the target is met and prevent the lock-in of dirty assets, none of that is coal-specific.

As for the rest of coal emissions, the problem with coal isn't that people keep looking for it (as they do with oil and gas) - we already know where most of it is. The problem is that people keep digging it up and burning it. But on that front, the market seems to be cleaning up coal all by itself. Major users like Fonterra have committed to end coal use, while low international prices have seen coal mines close down and driven Solid Energy into bankruptcy. Provided this situation continues, the government doesn't need to do much except keep the ETS in place and the market will probably do the rest (ensuring carbon prices rise by cutting credit supply would make it more certain). Banning mining on conservation land - again, not coal specific, but affecting a few coal projects - won't do any harm either. But they don't need to do anything so specific as banning new coal mines or shutting down old ones because the industry is already dying, and all they need to do is wait until it passes.