Just as any other country, Australia needs income from exports to keep their economy at a certain level. One of the prime export products for the Australian economy is coal. The huge Australian landmass features high amounts of fossil fuels, and coal is widely present in the country – especially in the eastern areas. With ever increasing worldwide demands for fossil fuels, Australia generates lots of income from their coal production and the country keeps increasing its production scale throughout the country. Over the past decades, India has emerged as the prime country where Australian coal goes to, with the Indian industry and population growing at an extreme rate over the past few years. It seems that this situation is ideal for Australia: the huge surplus of coal enables Australia to set up contracts with other nations eager to benefit from Australia’s coal production. The economy-based development, however, comes with a price. This article focusses on the situation regarding the Abbot Point coal port and its coal mines, and the debate on whether Australia should focus on economy, or do more to preserve its unique ecology.
This article is based on a report for the ‘Infrastructure, Economy & Space’ course, which is part of the Economic Geography master’s programme. The original essay was written by Wouter van Heugten, Nick Klappe, and Jeroen de Regt. This article is produced with permission from all original authors.
Most of Australia’s coal mine industries are situated in the northeastern side of the country, primarily in the states of Queensland and New South Wales. Coal that is produced in inland mines are transported by rail to coal ports on the east coast. The Abbot Point coal port is Australia’s northernmost coal port, situated close to the city of Townsville. More importantly, the port is just a few kilometres away from the famous Great Barrier Reef (GBR), which is widely recognized as one of the most unique wildlife areas in the world. The GBR is a UNESCO World Heritage site and the local governments are therefore obliged to preserve it from threats, such as nearby industry development and fishery. Nevertheless, the GBR is under massive threat from climate change, among other threats such as increasing amounts of garbage and human vandalism. The national and state governments are therefore pushed to do more to preserve what is left of the GBR.
New projects at Abbot Point
With the GBR situated that close to Abbot Point and other coal ports, it could be expected that industrial activity is limited at these ports and that a wide range of measures is applied in order to limit the industrial influence on the GBR. However, this isn’t exactly the case regarding the Abbot Point situation. In fact, the Australian federal government has reached an agreement to massively expand activities at Abbot Point. Over the next few years, the current coal port will be expanded, a new rail line will be added to the current infrastructure, and mines will be added and expanded. This huge project follows an agreement with the Adani Group, an Indian resource extraction and power plant firm that will be the link between Australia’s coal exports and India’s coal imports in this particular case. From an economic perspective, the project means huge benefits for Australia. When looking at the project from an ecological perspective, the project’s effects could be disastrous. The two perspectives are further explored below. This is followed by a general conclusion on the project.
Economic arguments
As previously stated, coal exports are an important source of income for the Australian economy. The Abbot Point project will mean that Australia will be able to export even more coal (and probably other fossil fuels as well) to other countries, therefore increasing its income from fossil fuels. Though the coal industry is not just important because of the exports. Coal mines need very specific technology in order to extract as much coal as possible, while still making sure the safety at the mines is secured and ecological impact is limited. Firms that specialize in mining technology are naturally located fairly close to the mines themselves, which means that the mining regions benefit from the presence of these firms. Australia is generally well developed regarding mining technology, which has led to mining technology firms providing their services to other countries as well, primarily in Latin America. In other words, the coal production not only leads to direct income, but secondary income streams as well. Additionally, mining technology firms (and the mining firms themselves) generate employment, which in turn makes the mining region more attractive for other services and facilities to locate.
The Abbot Point is of great economic importance for the Australian economy, as well as for the Queensland regional economy. The Abbot Point coal port is linked to the Bowen Basin coal mines, with contribute for 85% to the national coal exports. This huge percentage means that the Australian government is very interested in keeping the coal port fully up to date. From the economic perspective, it is well arguable that the government has agreed on expanding the coal port and its additional infrastructure.
Nevertheless, on the long term, these numbers are far from secured. Apart from the obvious argument of the world running out of fossil fuels, direct mining-related employment is closely related to coal demand and prices. In other words, if coal demands suddenly decrease, this could lead to big increases in local unemployment. So although the short-term results of increased coal exports are positive, coal mining regions should always keep in mind that a full focus on mining industries comes with high risks.
Environment and energy transition
Opposition to the project at Abbot Point is huge and its arguments are diverse, though they primarily focus on climate change in general and local environmental implications in particular. One of the key aspects of opposition to the project is the dredging of the below sea-level area surrounding the ports. The waste material that is dredged must be left somewhere, and opposition groups fear that this material could end up in or close to the GBR area. This, in turn, would have huge negative effects for local wildlife. It is examined whether dredged waste material could be left somewhere else, for example on land, though at this point it is still unclear what will happen in this case.
Apart from the dredging argument, opposition groups focus on global warming as well. They fear that the Australian government doesn’t invest enough in renewable energy sources, and instead keeps on focusing on fossil fuels. Although fossil fuels, as explained, lead to economic benefits on the short term, it is argued that in the long run these investments will be of less economic benefit than renewable energy investments. Furthermore, renewable energy sources have far less impact on the local environment and don’t (or hardly) contribute to global warming.
The third opposition argument focuses on the risk of fossil fuel disasters near the GBR, which could have disastrous effects on the GBR and other areas that feature unique wildlife. An accident, such as the Mexican Gulf oil disaster a few years ago, should be avoided at all costs, and opposition groups argue that increased coal exports lead to a higher risk of a disaster taking place near the GBR. A final argument against the Abbot Point expansion project relates to local communities. Mining industries and its infrastructure come with a wide range of negative impacts, such as dust, noise, ground vibrations, as well as visual amenities.
Conclusions
Based on the arguments in favour and against the projects of Abbot Point, it is simple to state that this is a very complex situation in which a solution that fits all interests doesn’t exist. The Australian federal government, as well as the Queensland government, have decided in favour of more fossil related industries in the area, in spite of the environmental risks that come along with these, among other, developments. However, one could state that on the long term, this may well be the wrong decision – at least when looking at the case from the perspective of the environment and, in particular, the Great Barrier Reef. The economic arguments are certainly not wrong, though by focusing on other forms of economic development, Queensland and Australia in general could be in for just as good economic prospects, while also help saving the environment and helping the world through the massive task of realizing the energy transition. The case of Abbot Point is one of many examples where short-term economic and environmental interests collide, and hopefully current and future governments learn from past decisions, either being right or wrong, in order to achieve their goals – including both economic development and a sustainable environment.
This article was published in our December 2017 issue.
Top photo: by Peabody Energy, Inc. – Provided by Peabody Energy, CC BY-SA 4.0, https://commons.wikimedia.org/w/index.php?curid=37744312