Australia’s mining industry could lift millions out of poverty, writes Brett Hogan.
Coal is the world’s cheapest and most reliable source of electricity. It powered the Industrial Revolution and, together with other fossil fuels, has created an economic environment that over the last 200 years has enabled billions of people across the world to achieve a better quality of life.
Between 1820 and 2011, the proportion of people living in extreme poverty decreased from over 80 per cent of the world population to only 14.5 per cent. In his 2015 report World Poverty, Max Roser indicates that the number of people living in extreme poverty halved between 1990 and 2011 alone.
This extraordinary achievement has been accompanied by commensurate improvements in other major quality of life indicators such as life expectancy, infant mortality and literacy.
Affordable electricity has powered the increased production and safe storage of food, clean drinking water, the mass manufacture of clothing, the ability to heat and cool our homes and businesses, a better quantity and quality of housing, access to and safe storage of medicine, and the ability to transport ourselves around our local neighbourhoods, cities, and countries.
INDIA, COAL AND AUSTRALIA
India is the world’s second largest nation by way of population, and is currently undergoing a stunning electricity grid transformation. And it is coal that is making this possible.
Between 1990 and 2012, India’s total electricity consumption quadrupled and India is now one of the world’s largest consumers behind China, the United States, the European Union and Japan.
Coal is responsible for more electricity in India than all other sources of energy combined, and the domestic supply of coal is unable to keep pace with demand. The IEA believes that India will overtake the United States as the world’s second biggest coal consumer after China before 2020, and will be the world’s largest coal importer by 2025.
Despite India’s significant progress in modernisation over the last twenty years, the number of people without access to electricity is still estimated to be at least 300 million. The IEA estimates that around 815 million people are still relying on biomass (wood, crop waste, dung and similar materials) for cooking. According to the World Health Organisation, over 4 million people throughout the world die each year from this form of household pollution.
India is also plagued by insufficient electricity capacity, poor infrastructure planning and delivery, and significant transmission losses, which has led to limited or zero electricity supply, and regular blackouts.
This is where Australia could be a vital partner in India’s growth. With a total export value of $40 billion in 2013-14, coal is currently Australia’s second largest export earner, ranking only behind iron ore in terms of the most valuable single commodity, and significantly ahead of the third and fourth ranked commodities (natural gas worth $16.3 billion and international education worth $15.7 billion).
However, while Australian exports of thermal coal—coal used for the purpose of electricity generation– increased from 87 million tonnes in 2001 to 201 million tonnes in 2014, only 6.7 million tonnes of this was exported to India.
From 2017, India is expected to be increasing its investment in newer ‘supercritical’ coal-fired plants that are better suited to Australia’s better quality coal (i.e. high energy content, low sulphur and low ash).
Queensland’s Department of State Development claims that the state’s Galilee Basin, which has one of the world’s most promising, undeveloped coal deposits, has the potential to attract some $28 billion worth of investment and create 28,000 jobs.
GVK Hancock (a joint consortium between Indian conglomerate GVK and Australian company Hancock Prospecting) is proposing to develop three mines in the Galilee Basin, with a potential total of at least 8 billion tonnes of thermal coal. The expected export total of the two major mines would be 60 million tonnes per annum.
Adani’s Carmichael Project is another proposed multi-billion dollar project, with the potential for 11 billion tonnes of thermal coal. The expected export total of this mine is estimated at approximately 60 million tonnes per annum.
Just these two projects, if realised, could add an additional 120 million tonnes per annum to Australian thermal coal exports.
To assess what this would mean for people in India, one tonne of middle grade Queensland black coal in a supercritical power plant can generate around 2268 kilowatt hours (kWh) of electricity; one million tonnes of coal generates approximately 2.268 billion kWh. Using an average yearly consumption per capita of 3298 kWh—which is equal to current levels in China, a reasonable short term aspirational goal for India—an extra 120 million tonnes of coal per year would allow 82,522,741 Indian people to have access to a regular and reliable supply of electricity.
THE MORALITY OF COAL
Solar and wind power may very well have a place in future world energy supply, but not even the most earnest activist can change the laws of physics and force solar power to work at night or in cloudy weather, or make wind power work in calm conditions, or hydroelectric power work in times of drought or in areas that lack large rivers or mountains. In the absence of large scale battery power, the chances of renewables replacing fossil fuels in the near future are unlikely. Coal-fired power stations typically have lower operations and maintenance costs, and last at least twice as long as solar and wind farms.
Two metrics that don’t currently get a lot of attention in the energy debate are system reliability, and the morality of ensuring that people in the developing world have the same opportunities for a secure and rewarding life that nations like Australia enjoy. Electricity networks exist as a means to provide people with reliable and affordable power.
For people in India and other developing nations, it is just as important to them that their electricity system is reliable and affordable.
The things we take for granted in Australia—that our household heating and cooling works when we need it, that our meat and milk is properly refrigerated, that our stoves and ovens don’t release polluted smoke into our kitchen, and even that our televisions and lights are always available for use and mobiles can always be charged—are just not the reality in many other countries.
Australian mines are poised to be the partner to India and assist in literally changing the lives of millions of people. We should be supporting the rights of the Indian people to improve their lives, and equally supporting those Australian businesses who are in the position to make that a reality.