My colleague Chris Bowen, Labor's new spokesman for climate change and energy, said in a speech on Thursday that Labor owes "our coalminers and coalmining communities more than respect, we owe them honesty". I couldn't agree more. But let's be completely honest. Sure, the long-term outlook for coal is uncertain, but that's true of many of the commodities we export.
Australia's coal generators are ageing and will come to the end of their physical and economic lives at some point: the Liddell plant in NSW's Hunter Valley in 2023, Queensland's youngest in 2050.
But the lion's share of Australia's coal is exported, mainly to Asia. Each year we export about $26bn worth of thermal coal for electricity generation and $43bn worth of metallurgical coal for steelmaking. In the absence of the still-mythical "green steel" revolution, the growing nations of Asia are going to be hungry for our high-quality metallurgical coal for many decades to come.
That is also true of our iron ore, the other ingredient critical to the steelmaking process. I know of no economist or investor predicting the demise of iron ore in the foreseeable future.
Global seaborne thermal coal volumes doubled between 2006 and 2019. But predicting global demand for thermal coal is challenging. As the Reserve Bank has pointed out, there are many variables, including the pace of economic growth in developing countries, changes in the cost and capabilities of technologies, and changes to government policies.
What is more certain is Australia's capacity to compete in quality and price. One tool available to governments striving to reduce their country's carbon emissions is to buy more Australian coal, which is cleaner and more efficient than that of our competitors. Conversely, exporting less Australian coal will add to emissions. And despite our high wage costs (a good thing), our embrace of technology has allowed us to remain price competitive on global markets.
Despite demand uncertainty, investors have expressed confidence in the industry. In thermal coal-dominated NSW, $6bn worth of expansion projects await regulatory approval. Those who transport our coal by rail to port also have capacity expansion plans. In arriving at their decisions, these fully funded investors no doubt have taken note of what's happening in Asia.
In a deep global recession, China's coal-fired power generation grew by 38 gigawatts last year. That's the equivalent of 19 new Liddell power stations. Indeed, China has 127 new coal-fired plants in the pipeline. It is not alone; Indonesia is building 52, India 28, Japan 22 and Vietnam 17.
Many of India's units were built in the past decade and have a long way to run. That in part explains the huge financial commitment it has made in the Adani coalmine.
For completeness, South Korea temporarily is shutting down 28 of its oldest coal-fired generators as it switches to gas to address air pollution. No doubt other older stations across Asia will come offline as new plants are commissioned.
The value of the coal industry to the Australian economy, the jobs it creates and the contribution it makes to government coffers, is well known. We would be a less wealthy country without it. Our coalminers know this; that's one of the reasons they are so proud of what they do. They know the world will change. Like me, many support action on climate change.
But what concerns them is those who would accelerate change unnecessarily at the expense of their jobs. They are wary of those who say the energy system is in transition when they know what the latter really means is that they want it to transition.
In the Hunter we've been successfully diversifying our economy for decades. Along the way we've leveraged off the wealth of the coalmining industry to do so.
We haven't been waiting for Beijing, Tokyo or Seoul, we've been getting on with it. That's the truth.
