Australian Notes

We could be a superpower, too

22 February 2020

9:00 AM

22 February 2020

9:00 AM

Back in 2008, Kevin Rudd announced a new ‘Green Car Plan’ which in his words would ‘make the automotive industry more economically and environmentally sustainable by 2020.’ As per much of what Kevin Rudd promised for 2020, things haven’t gone to plan. This week General Motors announced that it would retire the Holden brand by the end of this year. It is a useful reminder of the Tim Blair principle, that nothing green ever works. Like Charlie Brown trying to kick the football, however, constant failure does not seem to stop constant trying.

This week also saw the new Greens leader Adam Bandt announce that he had a ‘Green New Deal’ for the mining industry. According to Adam, the Greens really do want to see a thriving mining industry, just not in coal and gas.

According to Adam all of our coal miners could be retrained to get jobs in acceptable mining industries like lithium and critical minerals but let’s just review the facts.

Last year, Australia’s oil, gas and coal exports amounted to $123 billion, or almost one third of Australia’s total merchandise exports. Australia’s exports of lithium were $1.6 billion. And, while there are no figures on the value of rare earth exports, given that the global market is only $1 billion in total, our exports would not be more than a few hundred million.

None of this is to denigrate the opportunities that Australia has to expand exports of lithium, rare earths and other commodities. Yet these exports amount to just 1.3 per cent of our fossil fuel exports.

Let’s say that lithium and critical mineral exports grow at a very generous 10 per cent for the years to come. It would take until 2066 for Adam Bandt’s preferred mining products to equate to those of our fossil fuel exports. Even the youngest miner today would be retired by then. This also assumes that our fossil fuel exports remain stagnant.


That is not what has been happening despite what you might read. Our exports of coal and gas have been galloping along.

Coal exports have increased by more than six times since before the mining boom. Gas exports have increased by even more (an increase of more than 20 times) albeit from a lower base. On the eve of the mining boom in 2004, Australia exported just $2 billion of gas. Last year we reached $50 billion of exports and became the world’s largest exporter of LNG.

The latest surge in our coal and gas exports is marking out a new era in the development of our resources industry.

The first era was from the gold rushes to after World War II. During this time our gold reserves helped develop Australia but the industry did not really grow beyond that sector. Australia’s coal industry remained union dominated, and domestically focused. Other potential resources were not developed in the face of export bans, such as on iron ore.

The second stage began after World War II as we opened Australia to the world and began exporting our iron ore, coal, nickel, copper and other minerals. Many credit the Hawke-Keating government with opening up our country to the world. However, it was the earlier decision of the Menzies government to remove resource export controls that began tearing down the protectionist walls built at Federation.

Now we are entering a third stage thanks to the ability of being able to freeze gas to minus 153 degrees centigrade that we can efficiently supply to the world. This is turning Australia from a resources superpower to an energy superpower too. Thirty years ago, Australia’s energy exports made up only one third of our total resources exports. Last year, energy made up almost half of our resources exports.

If state governments get out of the way and let us develop the coal of the Galilee Basin and the shale gas of the Beetaloo Basin, energy could soon make up the majority of our resources exports for the first time on record.

This trend puts Australia into an influential and strategically important position, not yet grasped by many Australians, and certainly not the Greens. Whether it be Texas, the Middle East or the North Sea, the areas that produce the world’s energy become the most important areas of the world. It is from these areas that world economic growth derives its wellspring. Millions of people have come out of poverty in the past few decades because energy has been relatively affordable and available.

Compare that to the 1970s when millions were pushed into poverty because the oil from the Middle East was shut down.

However, our potential to benefit from this prize is not unchallenged. Other countries are also pursuing opportunities to expand energy exports. Russia is building a rail line to India to export their coal and a pipeline to China to export their gas.

The United States has massively expanded its gas exports to Europe and Asia and will possibly overtake Australia as the world’s largest LNG exporter in this decade. The US has the potential to expand its coal exports too; seven coal export terminals are proposed for its west coast to take advantage of growing Asian coal demand. They are all held up in red tape for now. From Australia’s perspective, long may the Democrats rule in Washington, Oregon and California.

So all the best to Adam Bandt’s small tribe of Greens from the suburbs of Australia’s inner cities. Given our supine media, they may very well be successful at limiting Australia’s production of energy for the good of the world. All that will achieve, however, is to provide a free ride to our energy competitors. It will mean fewer jobs for Australians, the removal of energy supplies from a peaceful neighbour and another example of why nothing green ever works.

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