Submission: Galilee Basin (Coal Prohibition) Bill 2018

by Rod Campbell and Tom Swann

There is a contradiction between Australian policy on climate change and on coal production. Australia is committed to the Paris Agreement, which requires reductions in global demand for coal. Yet Australian governments all promote growth in coal production. This bill is a step towards reconciling these policies.
The Bill’s goal of limiting coal supply could be achieved in many ways and could be improved by expanding its scope. However, given the lack of a more comprehensive approach, such as a nation-wide moratorium on new coal mines, it should be supported.

Climate policy generally focuses on demand for fossil fuels and greenhouse emissions. Too little attention is given to supply side options such as the Bill’s proposal to restrict thermal coal development. Combining supply and demand policies will help ‘cut with both arms of the scissors’. Advantages to supply side policies include:

  • Price and efficiency effects
  • Low administrative and transaction costs
  • Avoiding infrastructure lock-in
  • Greater potential to mobilise public support
  • Potential to mobilise fossil fuel industry support
  • Potential for international policy cooperation

The economic impact of the bill would be minimal, as Australia already has large volumes of coal production approved in existing mines. Research by The Australia Institute and Victoria University’s Centre of Policy Studies has modelled the impact of a nation-wide moratorium on new coal mines, including but not limited to the Galilee Basin, finding that changes to economic indicators are almost imperceptible:

  • GDP is affected by just 0.6% in 2040
  • Difference in employment peaks at 0.04% in 2030
  • Reduction of export value of around 1% in 2040

Restricting Galilee Basin development provides benefits to existing coal regions such as the Hunter Valley, Bowen Basin and Surat Basin.

Clause 6 of the Bill calls for a penalty of up to two years imprisonment. In NSW protesters face up to seven years in jail for protesting against fossil fuel development.

Submissions to this inquiry by coal industry bodies rely on misinterpretations of statistics from the International Energy Agency (IEA) and the Office of the Chief Economist (OCE). The IEA scenario consistent with the Paris Agreement sees rapid decline in coal demand and trade. Consistent with this scenario Australian coal exports peaked in the year to March 2015, Newcastle’s fourth coal terminal has been abandoned, while under capacity issues are ongoing at the Wiggin Island Coal Export Terminal.

The OCE’s does not publish forecasts of Galilee Basin employment, but basic, unsourced project level estimates. Even these estimates have been revised down in the latest publication. We would encourage the Committee to seek clarification from the OCE on these estimates and other aspects of this Bill. The OCE could provide research useful for a wide range of policies by assessing Australian resource trends under various global decarbonisation scenarios.

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