Skip to content

Up and Up and Up

23/08/2011

I am not sure if people understand why it is we need to move to greener energy sources. People don’t seem to take in what it will mean if we do not. The blog title steals from a phrase Greg Hunt likes to band about, but it is about a price Greg conveniently ignores.

Mining is a non sustainable industry. Sorry but it is. Eventually what you dug a big hole to get to runs out. As the third world shifts to move firstly to the second world and then to the first, they will need coal.

To create their bridges and their buildings. And to power their energy usage. That’s why we are seeing a huge investment in coal and iron production – to meet the rising demand. But as I said. The supply itself is finite.

So given that mining resources are non renewable, the more you dig it up, the higher the price will be as there is now less of it in the hole then before. And as more is mined the price will rise.

Coal is not subject to a CPI index. In the last few years its price has surged. In 2050, the cost of a tonne of coal is expected to be anywhere between $3500 dollars and $5000. Probably much higher as demand is rising.

And that is the part most forget. Coal fired power stations require coal to produce energy. That means as the price of coal rises, so will the fuel required to generate energy and therefore the cost of energy will also go, up and up and up.

Any increase in energy costs will then filter through the industry and the economy as would the Carbon Price through a ETS system. So even without a carbon price, energy costs rise under a fossil fuel based generation system.

As our own population and productivity increase, then the demand for energy will rise accordingly. As will the cost because of its link to the cost of the coal fuel cost.

BUT! If you have say a 50% power from coal and 50% power from ZERO FUEL COST renewables, you actually HALF the cost of energy generation. Energy from wind or solar or geothermal have no ongoing fuel costs.

So while wages will rise in both coal fired generation and renewable green generation, coal fired will ALWAYS have an ongoing fuel cost. Further the more coal you use, the higher you increase the price because the amount of resource on the planet has just dropped.

And do not forget what this means for manufacturing. If energy costs go up, so will the price of the goods they sell. And in a fossil fuelled based industry, the more goods you make, the higher you force the cost of coal as explained.

Again,if we have a 50% zero fuel cost energy source, we drop that cost meaning they can lower their prices to compete. For instance, if a country is on say 30% renewables and we on 50%, we have already reduced the energy cost for manufacturing by 20% giving them an edge. The more you reduce that ongoing cost, the cheaper you can produce energy and the more competitive industry is.

So next time Greg Hunt says up and up and up, remember what that really means before the situation gets away from us.

A. Ghebranious  2011  (All Rights Reserved)

Advertisements
4 Comments
  1. Jennifer Baratta permalink

    Thanks Ash Totally agree.

  2. John permalink

    Garbage. Complete distortion. This article has no merit and sounds like it was written by someone with a year 10 business studies C grade.

    Consider the environment before printing such bullshit.

    • Would you care to elaborate?

  3. Roger permalink

    Ash, This article is really a touch disingenuous. Your discussion about finite resources doesn’t really address the issue of resources like coal and iron ore. Whilst they are technically finite, they are not likely to become scarce in any lifetime that we (or you) can imagine.
    You really should not try and make economic points to sustain a philosophical position. The position should stand on its own.
    If it doesn’t then it is in fact, your position that is unsustainable.
    In any case, your economic understanding here is very suspect to be kind.

Leave a Reply

Fill in your details below or click an icon to log in:

WordPress.com Logo

You are commenting using your WordPress.com account. Log Out / Change )

Twitter picture

You are commenting using your Twitter account. Log Out / Change )

Facebook photo

You are commenting using your Facebook account. Log Out / Change )

Google+ photo

You are commenting using your Google+ account. Log Out / Change )

Connecting to %s

%d bloggers like this: