Very interesting reading.

Peak coal: Are we saying a long goodbye to Queensland’s economic heartbeat?

Billions of dollars have flooded into Queensland through the coal exports, but the curtain could be coming down on the golden days of the sector and that spells big trouble for the state. John McCarthy reports.

John McCarthy

Jul 08, 2024, updatedJul 08, 2024

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Queensland could be reaching peak coal

It may be something many would prefer to ignore or even dispute, but Queensland has benefitted mightily from a product that is blamed for slowly choking the planet – chiefly, metallurgical coal, the stuff that is used to make steel.

Met coal, until recently avoided much of the angst its cousin, thermal coal (used in power stations), has received, however, it could be that it is in the first stages of decline, or the long goodbye to our economic heartbeat, or what others call Peak Coal.

Technology and the demand for green steel is catching up with met coal and the implications for Queensland are profound.

Coal is worth about $80 billion to the economy and last financial year provided Treasury with royalties of $10 billion, which was used to fund a host of things including the $1000 energy rebates and a downpayment on the CopperString project.

Its supply chain is also long and deeply embedded in the Queensland economy.

A University of Queensland analysis found that “if and when the transition is fully underway, the risks to communities and landscapes are likely to be significant, and perhaps even permanent in nature”.

While the mines themselves are not big employers, the jobs they do provide are high-paying and bring considerable wealth to regional Queensland.

But an ominous sign for coal was the recent deal between BHP and Rio Tinto to develop a new type of processing for its Pilbara iron ore, using gas, rather than coal.

The iron ore giants have clearly seen the writing on the wall.

Steel, which contributes about 7 per cent of global emissions, has to decarbonise and to do that it has to find a process that doesn’t include coal, or gas. The cost of decarbonising the industry has been estimated by Wood Mackenzie at $US1.4 trillion ($A2 trillion) globally.

Other technologies are moving just as fast and the move by BHP and Rio is also about the competition, which includes one coal-free process to make green steel that uses a higher grade of iron ore than the type available in the Pilbara.

Even the Federal Government’s Future Made in Australia Bill works in some way against coal. It includes a green hydrogen production tax incentive of $2/kg of green hydrogen and a further A$1.3 billion to fund green hydrogen project development over the next decade through the Hydrogen Headstart program.

Not to put too fine a point on it, but green hydrogen is the replacement for coal and gas in steel making and potentially an energy source that replaces thermal coal in energy. That’s if it could ever became commercially viable.

Both sides of the coal debate tend to overcook their claims on this issue, but the truth is that technology may have caught up with met coal in the same way that renewables have put a knife through thermal coal, and that is pretty frightening news for the economy because we are nowhere near replacing the income coal delivers each year.

Simon Nicholas, the lead analyst for the IEEFA, which sits on the anti-fossil fuel side of the debate, told a Brisbane audience last week that eight years ago he never considered metallurgical coal as a dying commodity, but that had changed considerably in recent years.