Now A Coal Shortage !

It does look like the people of Australia are at the end of the queue when it comes to our natural resources.  A few months back we were told that one of the reasons there was a coming electricity shortage was the lack of sufficient gas to run power stations converted from coal use.

We are about to become the biggest gas exporter in the world and so much of this gas is contracted for export that insufficient remains for local supply.  It was suggested we could keep the lights on if we stopped our irrational opposition to " fracking " the unlimited gas beneath our feet here in New South Wales.

Now we learn that those existing old coal burning monsters that the energy industry is so keen to close are running short of sufficient coal to meet our electricity needs this summer.  If all started when the Hazelwood plant in Victoria closed in March.   The loss of its production made output from AGL's generating stations at Liddell and Muswellbrook critical, but both have been starving for coal and stockpiles have dwindled to about three weeks supply.  These two plants deliver 4300 megawatts of power and burn twelve million tonnes of coal a year.

Liddell is scheduled to close in 2020 and that is resulting in a battle between the government and AGL to keep the plant running for another five years.  It seems certain that it will not close because the government will compulsorily acquire it as a last resort.  Until we finally deliver working replacements for our future electricity needs plants such as these are essential to maintain the base load supply.

Australia is also one of the world's biggest exporters of coal and it is this product that keeps the lights on in both Japan and India - and to some extent, in China.   It seems that it is our very success as a coal exporter that is starving Liddell and Muswellbrook of the coal they need to operate.  Our rail structure is insufficient to move coal to both the power generating industry and the coal export hubs with a degree of reliability.

It is all a matter of priorities.  The priority of rail freight goes to export because export coal prices are higher than domestic ones.   We have plenty of coal but we lack the ability to reliably move it from its production base to where it is needed.  Every time a supply glitch occurs the impetus is on supplying the export need and the power stations miss out on their intended deliveries.

This is not a new problem.  These two Hunter region plants have been forced to ration coal since October, 2016.  It is also a shortfall that is in the hands of the government to overcome.  Keeping the lights on in this country must take precedence and the government has the awesome power of legislation at its disposal.   It would not be unreasonable for it to enact legislation to give priority to the movement of coal to power stations to have absolute necessity on our rail network.

In fact, many people will wonder why that was not part of the deal when the entire coal export industry structure was put in place when new mines were opened.   It should have been a very logical part of the consent structure !