World Coal Association’s Post

World Coal Association - April 3, 2023
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World Coal Association’s Post
Coal faces ‘carbon tax by stealth’

Across the world, countries are waking up to the reality that they need a diverse energy mix.

The United States has ratified the Bipartisan Infrastructure Law, the single-largest investment ($12.1 billion) in CCUS projects over five years.

India’s five largest power companies have announced plans to invest over $4 million (Rs 35,000 crore) in coal gasification projects. These have received support from Coal Minister Pralhad Joshi, who views these projects as a step towards self-reliance, ‘Aatmanirbhar’, in thermal coal production.

Chinese President Xi Jinping recently announced China’s intention to “enhance the clean and efficient use of coal” and the resource’s importance in balancing the energy transition and security.

In contrast, Europe’s more restrictive policies towards fossil fuels have led to a lack of energy diversity and foresight compromising energy security and economic advancements, such as job creation and unmanageable inflation.

Now, Australia, where 51% of the total electricity generation in 2021 stemmed from coal, is imposing stronger conditions on fossil fuels via its ‘Safeguard Mechanism’.

The government plans to set new emission permit baselines centered on emissions intensity – how much a facility releases per production unit. Baselines will be reduced by 4.9% a year. The overall impact, however, is likely to have implications for energy-intensive industries.

Many view the updated Mechanism as having a detrimental impact on Australia’s coal industry. WCA Member Whitehaven Coal chief executive, Paul Flynn, has spoken up highlighting that it would put Australia at a “significant” competitive disadvantage and create risks for energy security for strategic partners including Japan.

“In the midst of a global shortage of energy, and considering alternative technologies aren’t ready to pick up the slack from the 80% of primary energy derived from fossil fuels today.”

WCA Member Bowen Coking Coal Ltd. chief executive Nick Jorss further states that the mechanism can curtail foreign investment in Australia and trickle down to other critical minerals and fuels including hydrogen.

Given the plethora of energy challenges experienced over the past year, now is the time to pause and address energy affordability, energy reliability, and energy security and what that means from a development and decarbonisation perspective. Attempting to disincentivise the responsible use of fossil fuels would have undesirable consequences, some of which we are experiencing today. This is why all fuels and all technologies will be needed to achieve climate targets