Yep, you heard that right. You can now buy a tonne of coal for less than the price of a tonne of water in China. A spectacular statistic that illustrates just how steeply the price of coal has crashed in recent years.
China is currently the largest market for Australian coal exports, but its value has plunged a massive 50% since its peak in 2011.
China is experiencing two starkly opposing trends: on the one hand, slumping prices and dwindling demand for coal and on the other, record investment and growth in renewable energy.
In response, a growing chorus of expert voices, including the Climate Council, are warning that Australia risks missing the boat and being left stranded with costly and out-of-date coal assets. Investing in coal rather than renewable energy in 2015 is a bit like investing in CDs & DVDs, over iTunes and Netflix - it’s backing an obviously losing horse.
According to Climate Councillor Will Steffen, “the odds are increasingly stacked against the development of coal. There are two undeniable trends occurring globally. Uptake of renewable energy is accelerating and coal-fired power plants are increasingly closing.”
China's Gansu wind farm, set to be the largest in the world.
Underpinning this trend towards renewable energy is a global goal to limit global warming to 2ºC, a goal that was reaffirmed last month by all G7 countries and has also been endorsed by Australia. Our recent report Unburnable Carbon: why we need to leave fossil fuels in the ground found that any new coal development in Australia is fundamentally at odds with this target - in fact, to meet this goal 90% of Australian coal must stay in ground.
The thing is, Australia’s coal reserves, particularly in the Galilee Basin, have been identified as one of three potential “Climate Hotspots” that if developed have the potential to send the world rocketing past 2 degrees of warming. The others are Canada’s tar sands and new fossil fuel reserves in the Arctic.
Even industry experts can see the writing on the wall. Former BP Australasia President Gerry Hueston said “Australia is one of only a handful of countries with a vested interest in continued coal expansion but we’ll be left out in the cold by countries with nothing to gain and everything to lose from new fossil fuel development.”
It’s true Australia is being left behind: Global investment in renewable energy has increased five-fold in the last decade and one million new jobs in the renewable energy sector were added last year.
There’s a timely quote that observes “The Stone Age did not end for lack of stone”. The question for Australia is when will we see the signs?
Photo via creative commons Flickr user Leard State Forest