Coal exports are the elephant in the climate policy room

China has plenty of coal, but not the high-quality inputs it needs for steelmaking. This is why China is the world’s largest importer of coal. Australia has what it needs, and we can’t get it to China fast enough.

Prime Minister Anthony Albanese said he was a big supporter of fossil fuel and mineral exports, “a reliable and stable supplier”.

But Australia is different from all the other countries because we are the largest coal exporter in the world. The only other major exporters are Russia and Indonesia.

The four biggest importers, in order of size, are China, India, Europe, Japan and South Korea. These account for about 72 percent of all coal imports.

The three largest exporters supply almost all the needs of these five countries: Russia for Europe and Australia and Indonesia for Asia.

Our politicians on both sides like to focus on our (relatively small) domestic shows. In 2021, these amount to only 433 million tonnes. China’s increase in 2021 was 30% greater than our national emissions as a whole.

Our coal exports, on the other hand, are not small. In 2021, these amounted to 1,100 million tonnes of Co² equivalent, i.e. almost two and a half times the total of our national emissions from coal exports alone. This is what Australians need to worry about.

What does it mean to reduce domestic emissions by 43% below 2005 levels from these coal exports? From 2021, this implies cuts of around 21 million tonnes per year to meet the 2030 target.

These amounts are insignificant compared to what our politicians want to do on the export side. Labor wants to speed up exports of 1,100 million tonnes of coal, but also gas and minerals.

Politicians on both sides say that if we didn’t export it, someone else would. It’s not true.

China and India have twice Australia’s coal reserves, but that doesn’t suit their steelmaking needs. Russia and Indonesia cannot fill this gap with the “good stuff”.

The political strategy seems to be to focus public attention on domestic emissions and to encourage the idea that this is what matters, rather than our massive coal exports, in dealing with climate change.

Many kind-hearted voters don’t seem to realize that, as popular as Australia’s little climate policies are (electric vehicle charging stations for example), the damage done by our coal exports is where we really should be looking.

How many times does it have to be said that a piece of coal burned in China or India has the same implications for climate change as if it were burned right here in Australia.

We package our fossil fuels and minerals and send them to pollute China and India, while we look the other way.

Australia has never had a comprehensive economic plan that moves away from reliance on energy and mineral exports. Such a plan does not mean trying to achieve everything by tomorrow, destroying jobs, as the opposition likes to suggest.

But that means starting the transition now.

The centerpiece of a plan to achieve this, as recognized by Julia Gillard, is a tax on the carbon content of fossil fuels. Unlike a cap and trade system, this does not predefine what should happen to coal production and exports, but it does predefine the price of carbon and leaves it up to businesses, individuals and buyers of our exports. to adapt over time.

It also encourages and accelerates the switch to cheaper renewable energies.

Environmental destruction is a massive social cost (an externality) that is not paid for by big polluters.

A good plan also requires that the carbon price be accompanied by a complementary policy to find alternatives to the export of fossil fuels and minerals over time.

This policy should consist of joining Europe (the EU’s already legislated carbon border adjustment) and perhaps also the United States (the Clean Competition Act), with a carbon border tax strategy.

This encourages domestic manufacturing, helping us avoid digging holes in the ground. All imported goods would be taxed at the level of what would be paid if the foreign goods were produced in Australia.

This creates a level playing field. The policy imposes a tax on China to bring it into line with the domestic costs industries face in dealing with climate change.

Together, these price signals would initiate the transition away from our damaging export footprint while creating new jobs over time to fill the gap.

But there doesn’t seem to be a leader in this country who has the guts to do the right thing. Getting re-elected is all that seems to matter.

And that’s best served by organizing the national discussion to focus on cutting 43% of our small national emissions as if it makes sense for our grandchildren.

It’s worth it, sure, but it’s a small beer compared to what governments want to do with fossil fuel and mineral exports.