Coal helps fire economy

20:36, Jun 12 2012

Coal is essential to the New Zealand economy, and mining should be encouraged, writes Chris Baker.

The Environment Court has reached the logical decision that coal miners cannot be held responsible for carbon dioxide emissions arising from later burning.

Now the matter is being appealed to the High Court in what can only be considered a frivolous attempt to stymie coal mining.

What gets lost in the debate on coal is that New Zealand's coals play a vital role in our economy and society. It is not good enough for climate change campaigners to cry "keep coal in the hole", without offering realistic alternatives.

New Zealanders could hardly live a day without using something that has had coal input - buildings, medical equipment in hospitals, trains, cars, bicycles, shampoo, toothpaste, computer chips, solar panels, and wind turbines. All rely on the sort of coal found on the West Coast.

New Zealand's high- quality coking coal is an essential component in steel- making, carbon fibre, silicones, and related products and chemicals. It attracts premium prices in the global market because of its low ash and its physical properties in a furnace.


The Glenbrook steel mill employs 1200 staff, injects $80 million a year into the South Auckland economy, and produces steel for domestic and export markets using New Zealand non-coking coal and ironsands.

Our coals are also used as a low-cost and effective source of heat for many industrial processes, where there is no cost-effective alternative.

Consider that in terms of heat value average and industrial coal prices are around one- fifth the price of electricity.

The conversion of milk into milk powder, drying of wood and timber, hothouse horticulture, cement and lime manufacture, are among industries that rely on coal (or at places natural gas), as do freezing works, wool processors, hospitals, schools, and many other facilities.

As a result, a high proportion of New Zealand's export income continues to be dependent on competitively-priced coal.

I wonder if these facts are generally known in New Zealand. They should be, considering the implications.

If coal were not available, we would be significantly less competitive in the export industries mentioned, so exports would decrease, cement would need to be imported, and costs of infrastructure would rise.

Reduced tax revenue from reduced exports would impact adversely on education, health, social welfare, and every other service the State provides to New Zealanders.

Solid Energy's activities create directly and indirectly 10,000 jobs throughout New Zealand. On that basis, the figure for all coal is 12,500 jobs.

The above figures will increase further depending on the pace and level of:

lignite development in Otago and Southland;

new coal production on the West Coast;

gas development from deeply-buried coal seams in the Waikato.

Coal and gas play a vital role in the national electricity supply. With 73 to 77 per cent of our electricity being renewable (over the last three years), fossil fuels provide base load capacity that prevents power cuts or brown-outs when the sun's not shining, when it's not raining, or when the wind is not blowing.

Even if New Zealand did achieve a 90 per cent renewables target by 2025, we will still need fossil fuels to make electricity.

On that basis, no government will ever ban coal mining in New Zealand, or anywhere else in the world - until, or unless, there are economically-viable technology alternatives. Of course, coal use has implications for the world's climate.

Consider that 85 per cent of the world's population has on average one-tenth of our standard of living, and that these people reasonably want what we have, and are doing what they can to get it - running water, food, electricity, resources. To satisfy this demand, the world uses five billion tonnes of coal a year and this is growing.

Carbon capture and storage (CCS) will inevitably be part of the mix of technologies to manage emissions arising from fossil fuels.

The International Energy Agency has said CCS could account for 19 per cent of emissions reductions by 2050, however, there is much work still to be done for commercial-scale implementation of this technology - as there is for any technology with similar potential for emissions reduction.

Investigations have shown that CCS is feasible in New Zealand, subject to better regulation, and further development work. That is a relevant consideration for future lignite development.

To conclude: it is, with respect, unrealistic and irresponsible to advocate for a halt to coal mining in New Zealand.

What is required is a debate based on full information, including the role of coal in the economy, including CCS and other technologies, not a perpetuation of unhelpful slogans.

Chris Baker is the chief executive of Straterra, an incorporated society which advocates for the New Zealand minerals and mining sector.

The Press