SMH: Aussie Government Economic Forecasts Ignoring Net Zero Impacts

Guest essay by Eric Worrall

It is almost as if the Aussie Government thinks commitments to shut down coal plants and eliminate the use of steel and alumina in industry will not happen.

Failure to model costs of climate change to coal, gas ‘beggars belief’
By Mike Foley and Nick Toscano

June 29, 2021 — 5.00am

Australia’s 40-year economic outlook is forecasting dwindling demand for some of the nation’s most valuable exports including coal and natural gas after China, Japan and South Korea unveiled targets to achieve net-zero emissions.

But prominent think tank the Grattan Institute on Monday said it “beggars belief” that the Morrison government’s modelling failed to make projections about the scale of loss of export earnings or the impacts from global warming such as drought and natural disasters.

Australia’s mining and energy exports are expected to have hit a record-high of $310 billion this financial year. The nation’s top export, iron ore, accounted for an all-time-high $149 billion, while fossil fuel exports of coal and liquefied natural gas (LNG) together accounted for $71 billion, helping to underpin the economy amid a worsening trade spat with China and a global pandemic.

However, the Treasury’s 2021 Intergenerational Report on Monday warned the emissions-intensive commodities’ export earnings would fall as global efforts to combat climate change accelerated. It noted that countries had committed to net-zero emissions by 2050 including key trading partners Japan and South Korea, while China has committed to carbon neutrality by 2060.

“These commitments by other countries, if fully implemented, are likely to reduce demand for unabated fossil fuels over some decades,” it said.

Read more: https://www.smh.com.au/politics/federal/failure-to-model-costs-of-climate-change-to-coal-gas-beggars-belief-20210628-p584x3.html

One question – if Aussie coal, iron ore and other exports are eliminated, exactly what will governments use to manufacture all those wind turbines and solar arrays they plan to deploy?

Solar panels are especially coal intensive. Turning quartz or high grade sand into silicon metal used to manufacture solar cells requires vast quantities of coal, a very similar process to using a blast furnace to reduce iron ore to steel. And of course the solar panels need glass, plastic, alumina, stainless steel and concrete mounts.

Wind turbines likely require even more coal. An Ohio wind farm built in 2013 required 30,000 tons of cement, + whatever steel reinforcing was required for all that cement. All this cement was used to produce just 304Mw of electricity. Enough to supply a small town, at least when the wind blows just right.

A Chinese study in 2017 suggested wind farms struggle to supply 15% of nameplate capacity, but lets be generous and call it 15%. So 15% x 304Mw x 365 x 24 = 399,456MWh / year.

Total US energy use is around 25,155 TWh / year. Multiply by a million to convert to MWh, the USA needs to generate 25,155,000,000MWh / year to replace current energy supplies.

How much cement do you need? Scaling up the Ohio wind farm, to have a hope of supplying the USA’s energy needs using wind power you need 25,155,000,000 / 399,456 = 62,973 wind farms the same capacity as that 2013 Ohio wind farm. Multiply by 30,000 tons of cement per Ohio scale installation, and you need 1,889,190,000 tons of cement, to create enough wind farms to have a hope of supplying the USA’s energy needs.

The USA currently produces around 100,000,000 tons of cement every year. If the USA wants to hit net zero, we need 1,889,190,000 / 100,000,000 = 18 years worth of cement production. Spread this out over 30 years, to hit Biden’s net zero by 2050 target, without reducing supplies to other end users (you don’t want people to go homeless or bridges and buildings to collapse for lack of civilian cement), and this means for the next 30 years, US cement production would have to increase by 60%.

And of course, we haven’t even considered all the cement needed for new pumped hydro storage, and other infrastructure like gravity storage or even cement walls for new battery buildings, to try to deal with the hour by hour intermittency of renewable energy sources.

With a few exceptions, other countries which want to hit net zero are in a similar position.

Cement production is a very energy intensive process. Vast amounts of coal or natural gas are required, to superheat and shatter the raw limestone (calcium carbonate) matrix and other raw ingredients into oxides and silicates which are constituents of refined cement. The shattering of the raw ingredients releases vast quantities of chemically bound CO2, even without all the CO2 released by burning whatever fossil fuel you choose to supply the heat.

Assuming Australia maintains its proportion of raw materials exports, just to supply the global net zero push, Australia is looking at a 60% rise in minerals exports, over the next 30 years.

So I suggest the Aussie government has nothing to worry about over a 30 year timeframe. Either the world will continue business as usual, in which case mineral exports will continue to grow at more or less their current pace, or the world will genuinely attempt to hit net zero, in which case demand for mineral exports will rise by 60% for 30 years, then whatever additional supply is required to maintain all that new concrete and steel infrastructure. Either way, Australia’s coal and iron ore export industries win.

What happens after 30 years? Frankly that is someone elses problem. Anyone who thinks it is meaningful to make economic predictions more than 30 years into the future needs to read about the great horse manure crisis of 1894.

Why are economists making absurd predictions which ignore this obvious net zero driven surge in industrial demand?

As far as I can tell, the reason economists are ignoring the industrial effort required to achieve net zero, is they are starting from the assumption that unrealistic government carbon emission targets are absolute, and will be met no matter what the human cost. If you start by assuming government decrees are set in stone, you have to assume any industrial activity which would cause government targets to be missed will be eliminated. If there is no industry to consume Australian exports, there will be no exports.

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June 29, 2021 at 12:30PM

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