Sign up for a daily newsletter defining what matters in business and markets

Stories
Column / Harder Line

Why Australia's climate change election matters to the world

Illustration: Rebecca Zisser/Axios

SYDNEY, Australia — This country is at a crossroads with its energy future: one that aggressively moves toward cleaner resources in response to climate change versus one that holds onto fossil fuels far longer.

Why it matters: Australia is the poster child, but the entire world faces similar choices, albeit not quite as stark as Oz. Fossil-fuel exports are booming here while large swaths of its population are enduring the wrath of extreme weather — which scientists say is getting worse as global temperatures rise.

Driving the news: Australia is facing a federal election this spring that offers voters a stark contrast on climate change and energy, and the world a window into two very different futures.

“A lot of people think this will be the climate action election, that unless politicians are supportive of action on climate change, that they are less likely to be elected,” said Kerryn Phelps, an independent Parliament member, in an interview in the nation’s capital, Canberra.

  • In a nod to that sentiment, the current leadership, whose views generally align with that of President Trump and U.S. Republicans, has in just the past week proposed a series of policies that current Prime Minister Scott Morrison says will help address climate change.
  • The initiatives are far less ambitious than the ones being pushed by the opposing parties, which resemble that of U.S. Democrats.

Details:

  • Australia’s last five changes of prime minister, including one late last year, can be at least partially attributed to fights over climate and energy policies.
  • Australia’s Labor Party, akin to the left wing of America’s Democratic Party, is going into the election promising to roughly double both the country’s target to reduce its greenhouse gas emissions and its renewable-energy target. The former goal is currently 26–28% below 2005 levels by 2030, and the latter is 20% by 2020.
  • The two parties currently in power as a coalition, the Liberal and National parties, are more closely aligned with America’s GOP. They just proposed government funding to adapt to climate change, improve energy efficiency and increase hydropower.

Here’s a snapshot of how central energy and climate change are here:

  • Australia is the world’s largest exporter of coal by value (Indonesia is largest by tons).
  • It's the world’s largest exporter of liquefied natural gas exports.
  • It's home to the world’s biggest battery installation, at a wind farm in South Australia.
  • The country is grappling with a two-pronged electricity crisis with spiking prices and sporadic blackouts. While wind and solar, which only produce energy when the wind blows or the sun shines, face criticism for causing these problems, there are other, bigger factors.
  • Australia's hottest summer ever was just recorded.
  • A record “catastrophic” wildfire season plagued parts of the nation.

A recent Brookings Institution report found that Australia is poised to be worse off if the world acts on the ambitions of the 2015 Paris Climate Agreement to drastically reduce greenhouse gas emissions.

  • Australia’s current dependence on fossil-fuel exports would decline if other nations acted as aggressively as the Paris deal proposes.
  • That’s a big if, though, considering most countries are on a far slower path to cleaner fuels.
  • The disagreement here in Oz is over how fast this transition could occur.

To the executives managing coal exports at the Port of Newcastle, a sprawling industrial site a couple hours' drive north of Sydney, they’re banking on a long shift. The type of coal mined in the nearby Hunter Valley burns more efficiently than other kinds, and it’s close to growing economies in Southeast Asia.

  • “We’re well-positioned for this to be a longer rather shorter time frame because of where the market is positioned,” said Hennie du Plooy, CEO of Port Waratah Coal Services, in an interview at the port, the world’s largest coal-export terminal.
  • Independent analysts agree, despite a recent announcement by mining giant Glencore to cap coal production. The consulting firm Wood MacKenzie says demand for the Hunter Valley type coal will be stronger in a carbon-constrained world.
  • The biggest unknown for Australian producers is to what degree permits for new coal mines in Hunter Valley and elsewhere are rejected on the basis of climate change concerns, based on a potential precedent-setting court ruling last month. If there are fewer permits, there will be less coal for exports.

To sheep farmer Charlie Prell, who makes more than AU$150,000 ($106,000) a year for 11 wind turbines on his land in between Sydney and Canberra, the transition has been slowed by politicians beholden to fossil fuels.

  • During in an interview at his house, with one turbine so close you can hear the blades turn, Prell lays out a future far different than the coal executives.
  • “We can teach the world how to transition from this old-fashioned, fossil-fuel based economy to a clean economy, which is actually exporting renewable energy,” Prell said.
  • Prell was referring to early plans to export wind and solar to Indonesia via an undersea cable and initial developments for hydrogen-based energy.

What’s next: Australia’s elections, which determine party control that then decides the prime minister, are set for May.

Go deeper: