A political economist and an anthropologist engaging in magical thinking. Oh, coal doesn’t contribute as much to GDP as say the insurance and financial services, they say, completely missing the fact that Australia has no other available energy resource to replace it and no means of sustaining any economy without coal-fired electrical generation. At the very least 3 out of every 4 units of electricity in this country come from coal-fired generation. We have a little hydro but the enviros managed to get water taken from that for ‘environmental flows’ (which actually means a short dash down downhill and into the sea as near-immediate waste).
As we are so often reminded, Australia has abundant reserves of high quality coal. Mining magnates, industry lobbyists and politicians all talk up the value of coal for the Australian economy, with exports worth $44 billion in 2012. As delegates in Rio discuss the future for fossil fuel subsidies in a carbon constrained world, it’s time for Australia to ask itself the hard questions. What is the real cost of energy from coal? How should we weigh up the costs and the benefits of the resources boom in which coal exports play a major part?
The Reserve Bank has argued that, while the importance of the resources boom has provided a positive impetus for the Australian economy, our over-reliance on minerals is a “resource curse” that looms ominously over our economic future.
In a resource curse, high levels of investment and support for the resource sector undermine the viability of other industries that provide more enduring employment opportunities and are more ecologically sustainable. But Australia’s resource curse has an even blacker side, because it is based on an insidious myth about the real economic costs of coal.
Burning coal is the primary source of Australia’s apparently “cheap” energy. Paradoxically, while coal generates a lot of royalties for State governments and is the nation’s second largest export earner, the industry contributes only around 1.8 per cent to GDP. This is compared to other industries such as financial and insurance services (9.6%), retail and wholesale trade (8.6%), construction (7.7%) and health care and social services (6%). It is a relatively insignificant employer, even where mining is concentrated. In the Hunter it employs only 6% of the region’s workforce.