Coal and gas are set to become more expensive in the decades ahead as climate risks are identified.
Key points:Coal plants are set for major price spikes as greenhouse gas emissions are identifiedCoal production is set to peak around 2035-2040As CO2 emissions become more pronounced, coal plants will become more costlyCoal is set for significant price spikesAs climate risks identified, coal plant owners are expected to be compensatedA number of coal power stations will be phased-out, with prices expected to spike by up to 5 per centA number will be sold off for coal-fired power stations as a result of climate risks, according to industry analysts.
Key Points:The transition to renewables is expected to begin in 2020 and coal plants are expected see significant price increasesA new coal-burning power plant will be built in South AustraliaA new wind farm is expected in QueenslandCoal prices will spike by 5 per to 10 per cent in the 2020s and by up $10 to $20 per tonne in the 2030s, according the Energy and Resources Institute (ERI).
The organisation’s report, Coal: A New Climate?, highlights the impact of climate change on the industry, with the transition from fossil fuels to renewables expected to take place in the next few decades.
“Coal will be a key element of this transition,” ERI research director Nick Kowalski said.
“There is a real concern about the costs associated with CO2, particularly when coal plants become less efficient, as coal is a significant component of power generation.”
The transition is expected “to occur in the mid to late 2020s, and will likely continue to occur in 2020”, the report said.
The transition will also occur in Queensland.
A new, coal-free power station in the state, The Coal River Power Station, will be constructed.
“Copper mining in Queensland is set as the main focus for the 2020-2030 period, with more than 70 per cent of the current coal mines in Queensland being owned by a single company,” the report noted.
“By 2035, there will be more than 100 mines in the area and more than 60 coal mines with the potential to produce more than 200 million tonnes of CO2 each year.”
Electricity generation from the existing coal mines will increase by 30 per cent by 2035 in South Queensland, with wind and solar becoming more efficient.
Electricity generated from coal-generated electricity will be about 50 per cent less efficient by 2036 than it is now, the report found.
It noted that wind and wave power are also being phased out, but coal plants and other power stations are expected still to be the most efficient.
“This shift will increase demand for coal, and in particular, for coal fired power stations, where CO2 is the primary energy source,” the ERI report said, adding that “there will be significant cost increases for coal plants in the years ahead”.
The report noted that coal production will peak around 2030-2041.
However, the transition to renewable energy is expected and the costs of coal-powered power plants will increase.
Coal and gas production is expected continue to decline over the next several decades as CO2 concentrations in the atmosphere are expected remain relatively low.
According to ERI, the “sustainability of the coal industry is dependent on the CO2 levels in the environment and the CO 2 emissions that can be prevented”.
In the meantime, coal is expected become more affordable, with electricity prices set to be “roughly 20 per cent higher than today”, the ERPI report noted, adding: “Coal has become the main energy source for much of Australia, and a key component of the Australian economy.”
In 2030, “there are more than 1.4 million existing coal- and gas-fired electricity generating facilities in Australia”, the study said.
“Copper, gas and wind power are expected be phased off, with coal being phased in to peak in 2035.”
The report also noted that renewable energy and other sources of energy such as hydro and nuclear will be increasingly important.
In a report published in the Australian Journal of Sustainable Energy and Infrastructure, the ERIS said that, “The introduction of new generation of electricity from renewable sources, such as solar and wind, and from coal is likely to accelerate in the future as CO 2 concentrations in our atmosphere increase”.
However it warned that “it will take a considerable period of time before this transition is complete.”
The ERI said the transition was “expected to occur over the medium to long term”, but that “the impacts will vary by location”.
“A number [of coal-based] power stations in South Australian and Queensland will be dismantled and sold off at a significant cost,” the study stated.
ERI’s report is not the first to highlight the impact CO2 and CO2-emitting sources have