The future of coal has already been decided in boardrooms around the globe

ABC News
January 28 2020


It was a story that raised a few hackles, particularly in Canberra, but one largely overlooked as the unfolding disaster gripped the nation.

Early last month, as fire swept across large parts of the east coast and South Australia but before the Christmas conflagration, secret internal documents detailing ANZ's rapid retreat from coal hit the news.

Contrary to its public statements before Parliament just a few weeks before, the bank had formulated a plan to shed more than $700 million in thermal coal loans within the next four years: a 75 per cent reduction.   

This was a major shift for ANZ, the country's biggest lender to the coal industry, and one that would bring it into line with the Commonwealth Bank and the National Australia Bank.

A few weeks later, investment bank Goldman Sachs, in one of the strongest positions from any American financier, ruled out future thermal coal financing, either for new mines or power stations globally.   

Then, a fortnight ago, the world's biggest investment house Blackrock, announced it was drastically reducing its exposure to thermal coal.
United in the unbridled pursuit of profit

These weren't knee jerk reactions to the horror, the wholesale destruction and tragic loss of life across rural Australia, unfolding on television screens around the world.

Nor were they the actions of the "green left".
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These were considered, long-term, strategic decisions made individually by disparate groups united by a single cause — the unbridled pursuit of profit.

The message each is broadcasting is clear. When it comes to investment, coal, particularly thermal coal for electricity generation, has little, if any, future.

It's a message our politicians should heed if they want to limit the damage to communities that rely upon the coal industry.

Given Australia is one of the world's biggest coal exporters, shipping about $30 billion of thermal coal a year and around the same in metallurgical coal, the stakes are high.
Global banks are aware of the dangers

For decades, sceptics have disputed the science of climate change. Now they want to ignore the economics.

The reason global financiers are rapidly turning their backs on coal is because there's no longer a buck to be made from it.
Australian bosses have started caring about climate change

Australian company directors nominate climate change as the number one issue they want the government to address in the long-term, in a survey of more than 1,200 business leaders.

Last week, that message was rammed home rather forcefully by the Bank of International Settlements, the governing body of the world's central banks, including our own Reserve Bank.

In a paper entitled Green Swan, the BIS warned central banks that bad loans on power stations and mines could spark the next financial crisis.

Should that occur, central banks could be forced to pick up the tab, just as they had to wade into mortgage markets during the global financial crisis.

Most global banks already are acutely aware of the dangers. That's why no-one will commit to financing the Adani mine in Queensland's Galilee Basin.

Coal mines and coal fired power stations are projects with very long life spans that require huge amounts of capital.

Many now deem the risk of committing vast billions over decades to be too high. Not surprisingly, it was ANZ's Credit and Market Risk Committee that advocated the retreat from coal.
Renewable energy is no longer just a cleaner alternative

There's a personal aspect too. Committing vast sums to coal fired generation — when the financial and environmental risks have been evident — leaves executives and directors open to legal action.

Renewable energy is now no longer just a cleaner alternative to coal.


It's also cheaper and costs continue to fall. According to the Federal Government's energy market operator and the CSIRO, "wind and solar are clearly the cheapest new form of electricity generation".

In a joint report last year, the pair found that while existing coal plants remained the lowest cost, when it came to building new plants, coal could not keep pace. And that's even without the introduction of a carbon price.

"Our data confirms that while existing fossil fuel power plants are competitive due to their sunk capital costs, solar and wind generation technologies are currently the lowest cost ways to generate electricity for Australia, compared to any other new build technology," CSIRO chief energy economist Paul Graham said.   

You'd be surprised at the large number of Australian companies that have been trading in carbon credits for the last 15years. The problem is that none of the financial benefit is being felt in Australia.

Patrick Suckling was torn to shreds on BBC 1's  "Hardtalk" last night.