By Zella Downing, of CANA and Coal Action Murihiku
The Australasian Institute of Mining and Metallurgy, the AusIMM, focuses on “promoting excellence across all professional disciplines through advocacy and provision of continuing professional development opportunities.”
New Vale lignite mine, Mataura, Southland.
One such development opportunity might have been the AusIMM’s upcoming field trip this Saturday to the lignite fields of eastern Southland, as part of its upcoming conference – except the proposed development of those lignite fields bears no kinship with “excellence.”
The proposed development of the lignite was one of Solid Energy’s biggest failures. They spoke boldly about the wealth and glory that would flood the region, but the project was a complete washout, and its exorbitant cost helped lead Solid Energy into financial ruin.
Promotional material for Saturday’s fieldtrip describes the aborted briquetting plant as “the initial step in [a] thwarted lignite development strategy”. Promoters need to say something like that because it would be impossible justifying a field trip to a failure. This plant failed to produce the wee energy sumptuous briquettes that it said it would produce because they were plagued with difficulties. GTL’s North Dakota plant had to be closed after spontaneous combustions.
As the country reeled with the news last week that Solid Energy had gone into administration with a $300m debt, another event was happening in the Pacific that puts the debate in a context that it too seldom receives in New Zealand.
Sign on Kiribati’s island of Tarawa. Photo: flickr
On Thursday, Kiribati Prime Minister Anote Tong wrote to world leaders calling for a moratorium on new coalmines.
“Kiribati, as a nation faced with a very uncertain future, is calling for a global moratorium on new coal mines. lt would be one positive step towards our collective global action against climate change and it is my sincere hope that you and your people would add your positive support in this endeavour,” he wrote.
“The construction of each new coal mine undermines the spirit and intent of any agreement we may reach, particularly in the upcoming COP 21 in Paris, whilst stopping new coal mine constructions NOW will make any agreement reached in Paris truly historical.”
UK Economist Sir Nicholas Stern agreed: “The use of coal is simply bad economics, unless one refuses to count as a cost the damages and deaths now and in the future from air pollution and climate change,” he told Reuters (Stern’s full statement here).
In June, Pope Francis said in his encyclical that the use of “highly polluting fossil fuels needs to be progressively replaced without delay.”
Coal Action Network Aotearoa today called for the Government to “get real” about the future of coal.
Former Solid Energy CEO Don Elder and Finance Minister Bill English turn the sod for Solid’s failed lignite briquetting plant in Southland.
Solid Energy going into administration is good for the workers currently employed by Solid Energy in the short term, but the future of coal is looking bleak.
“It’s good that no workers will lose their jobs today,” said CANA’s Cindy Baxter. “But, our “Jobs After Coal” report shows coal mining in New Zealand doesn’t have a history of helping the communities it serves – in most areas where coal is mined, the median income of those communities is lower than the regional average.”
The Government has continually failed to face the reasons for Solid Energy’s freefall in recent years. It pushed the company into an untenable position by changing policies such as the mandatory biofuels regulation, and backed the its failed and highly irresponsible plans to mine billions of tones of Southland lignite. What’s more, the Government continued to insist that Solid went into more debt, all the time ignoring the plummeting coal prices. Continue reading
Coal Action Network Aotearoa today welcomed Genesis Energy’s announcement that it will close its Huntly coal-fired power station – but noted that this would now bring close scrutiny onto the next biggest coal user: Fonterra.
No more coal for Huntly
“The Genesis announcement will give the owners of the consented wind and geothermal projects the certainty to go ahead and build, creating jobs in a clean energy future,” said Jeanette Fitzsimons of CANA.
“We have more than enough renewable projects in the pipeline to replace Huntly coal and most of our gas-fired power stations,” she said.
“The question is how will Fonterra explain to its customers that it will now be going head-to-head with industrial steelmaking to be New Zealand biggest cause of coal-fired climate disruption.”
Fonterra is New Zealand’s third largest coal user. Its coal use has grown by 38 precent since 2008 and more growth is planned as it ignores the options of more sustainable waste wood-fired boilers in favour of coal for its milk drying processes.
Solid Energy is a stranded asset and the sooner the Government and the Labour Party realise this, the faster New Zealand can start seriously discussing a “Just Transition” away from fossil fuels, Coal Action Network Aotearoa said today.
“Several commentators in New Zealand are today saying that coal has a future, but the world is thinking otherwise, as can be evidenced from President Obama’s Clean Power Plant announcement today,” said Cindy Baxter, of the CANA organising group.
“Solid Energy’s Chairperson resigned in April because her view that the company was not viable conflicted with Bill English. She was right. We need to face up to this fact, not continue to promote coal use around the country,” said Baxter.
Consider these factors:
- Today, shares of the world’s largest coal company, Peabody Energy, plunged again to just over USD$1 and the company is struggling, with others like Arch Coal on the edge of bankruptcy
- In Germany, a brand new coal fired power plant could be bought last week for just one Euro. In Queensland last week, a coal mine sold for $1.
Coal Action Network Aotearoa today congratulated the Greenpeace climbers on the roof of Parliament drawing attention to the lack of Government action on climate change.
“Who is the bigger threat to security here: John Key’s apparent intention of letting global temperatures rise by 4degC by taking virtually no action – or four peaceful activists and a few solar panels on a roof?” asked Jeanette Fitzsimons of CANA.
The Greenpeace action comes on the back of a Dutch Court yesterday ordering its Government to increase its 2020 emissions reduction target of 17% to at least 25%. New Zealand’s target is 5 percent.
“The Dutch Government’s 2020 target was already better than New Zealand’s – yet the court ordered it to increase that target in order to ‘protect its citizens’. The world is moving to tackle climate change, yet New Zealand seems intent on doing as little as possible,” said Cindy Baxter of CANA.
By Zella Downing, Coal Action Network Aotearoa
Climate risk is being linked to investment risk, which makes sense.
An unstable climate creates an unstable globe which creates an unstable market. How can commodity investors feel confident about their investment amidst record droughts, devastating floods, unprecedented snowfall, and an absence of water?
What doesn’t make sense is the New Zealand Superannuation Fund increasing its investment in coal over the last three years when the global movement to divest from coal is not only gaining momentum, it’s gaining mana as well.
Analysis by the Parliamentary Library and released by the Greens last week tells us our Superfund increased the value of its investments in the world’s twenty dirtiest coal companies from $29 million at June 30, 2011 to $36 million at June 30, 2014. As the Fund has increased its exposure to these companies, their average (unweighted) stock price declined by 31 percent.
This comes amid warnings from global investment analysts Mercer, who last week released the results of a year-long modeling exercise that looked at the impact of climate change on investments. Backed by the World Bank’s IFC, the German Economics Ministry and the UK’s Department for International Development, amongst others, it says:
“New investment modelling the potential impact of climate change on investments shows the average annual returns from the coal sub-sector could fall by anywhere between 18% and 74% over the next 35 years, with effects being more pronounced over the coming decade (eroding between 26% and 138% of average annual returns over the next 10 years).”