Subsidies total a billion dollars annually

Briefing on subsidies to the coal mining industry. 

In the 2006/07 year the coal industry produced a record 170.3 million tonnes of raw coal with an estimated value of $8.1 billion. In 2008, the NSW government gave the green light to an additional 32 million tones of coal production annually spread across 12 separate coal mine projects. This is larger than the additional coal production approved in 2007 and almost double that of the coal production approved in 2006. 

There are 60 operating coal mines and colliery holdings in NSW and more than 30 major development proposals on the table.  

Coal mine approvals in 2008 

The NSW government approved 12 new coal projects in 2008, including new mines and expansions to existing mines. 9 of these new coal projects are in the Hunter Coalfields. 

These 12 new projects will result in an additional 32 million tones of coal production in NSW annually. 

Using the Australian Greenhouse Office figures that burning a tonne of coal emits 2.4 tonnes of CO2, the additional 32 million tones of coal production will result in the emission of more than 76.8 million tones of carbon dioxide into the atmosphere. This is equivalent of more than quadrupling the number of cars on NSW roads each year. 

By way of comparison:

• in 2008, 12 new coal mine projects resulted in an additional 32 million tones of coal production in NSW annually
• in 2007, 6 new coal mine projects resulted in an additional 30.55 million tones of coal production in NSW annually
• in 2006, 5 new coal mine projects resulted in ad additional 16.5 million tones of coal production in NSW annually 

See table below for details of the 2008 approvals. 

Subsidies 

Greens MP Lee Rhiannon commissioned research in 2007 / 2008 to show the extent of government subsidies to the coal industry and to coal-fired electricity generation in NSW.  To date, the Government has not published any comprehensive information on the level of coal subsidy in NSW. 

Read the report here:

• Subsidies by the NSW Government to the Coal Industry Part 1
• Subsidies by the NSW Government to the Coal Industry Part 2
• Subsidies by the NSW Government to the Coal Industry Part 3

This research report found that in NSW between 1998 and 2007 a staggering $10 billion in direct and indirect government subsidy was given to the coal industry - over $1 billion per year (see Subsidy Report – Section 3).  

The coal industry, whose wealth and power has further increased with the rising export price of coal, is enjoying the highest level of government subsidy in NSW.  This level of subsidy to the coal industry is driving down the cost of generating coal-fired electricity and helping to stall the growth of renewable energy.  

Summary of direct and indirect coal subsidies 

The Government paints the coal industry as a vital contributor to the state economy, but this research demonstrates that subsidies to coal mining and coal-fired electricity far outweigh any royalty gains.  The research methodology identified that the Government does not publicly account for the full extent of subsidy to the coal industry.

Renewable energy industry stalled

Subsidies to the rich and established coal industry have come at the expense of investment in fledgling renewable energy industries.  In contrast to the $1 billion annual subsidy of coal and coal-fired power, the level of subsidy announced for the renewable energy sector over the past nine years is estimated at $604 million - a mere $67 million per year. (see Subsidy report - Section 4) 

The Government’s overwhelming bias towards coal has restrained the growth of a renewable energy sector at a time when NSW should have been ramping up to respond to the economic restructuring that will follow climate change.  Instead of becoming world leaders in new technologies and renewable energy generation, NSW has increased its dependence on coal. 

To plan for climate change and the vital transition to a low carbon economy the NSW Government should reduce its level of coal subsidy to the coal industry and, in turn, heavily subsidise the expansion of renewable energy industries.  Instead, subsidised electricity prices and the skyrocketing export price of coal are driving the runaway expansion of the coal industry in NSW. 

Artificially low price of coal-fired power 

Australian electricity prices are almost the lowest in the world.  Residential prices are 36% of those in Japan and little over half of those in most of Europe.  Both the NSW Government and the coal industry use the subsidised price of coal-fired electricity to argue that it is not cost effective to generate electricity from renewable energy sources.  

Factored into the price of coal-fired electricity should be the enormous environmental cost of mining damage through loss of biodiversity, damage to rivers and underground water aquifers and pollution, and the impact of burning coal on greenhouse gas emissions.  

If both coal subsidies and the environmental costs of coal were factored into in the price of coal, it would rise so significantly that renewable energy would become cost-effective in comparison.   This has been demonstrated in a Canadian study into renewable energy pricing. 

Background to research project 

In the US the Congress enacted its Energy Bill in 2005, the same year that Kyoto came into force, giving US$5 billion worth of subsidy to the coal industry.  At a time when world Governments should be phasing out coal and subsiding sunrise energy industries, the coal industry is going from strength to strength. 

To unmask the extent of coal industry subsidy in NSW, Greens MP and mining spokesperson Lee Rhiannon commissioned research into the level of government subsidy to the coal industry in NSW. The work was undertaken by a Newcastle University Honors student, Sarah Patterson, using budget papers and a variety of government publications and sources to collate subsidy information.  The report defines both direct and indirect subsidies to industry. 

Read the report here:

• Subsidies by the NSW Government to the Coal Industry Part 1
• Subsidies by the NSW Government to the Coal Industry Part 2
• Subsidies by the NSW Government to the Coal Industry Part 3

Clean Coal is a Con

The Greens are strongly opposed to Government subsidy of the coal industry's clean coal public relations stunt.  Clean coal research is a desperate delaying tactic adopted by the coal industry to justify continued rises in greenhouse gas emissions, and to divert Government support away from renewable energy.  The coal industry’s future hinges on the development of clean coal – a clever name for an untested idea to bury trillions of tons of liquidised, high pressure carbon dioxide in the ground and hope it will stay there forever. 

The NSW Government started earmarking money for clean coal industry research programs in 2006. The Clean Coal Administration Act 2008 commits $100 million of public money via the new Clean Coal Fund, to be introduced under the currently before the Parliament. The Greens opposed this bill. 

• Read more about the 'clean coal con' here 

More information:  Lee Rhiannon  9230 3551, 0427 861 568