Photographer: Gillianne Tedder/Bloomberg

Australia's Joyce Sees Merit in Government Taking Stakes in Coal

  • Lenders need greater political certainty on coal, Joyce says
  • World powers move on climate change talks without U.S. support

Australia’s Deputy Prime Minister Barnaby Joyce indicated he supports the government being an equity partner in any new coal-fired power station, and said that lenders are willing to finance fossil fuel-based electricity generation.

“I have got nothing against taking equity in it,” Joyce told Sky News’ Sunday Agenda program, adding that an equity stake would be preferable to lending money to enable such a facility to be built. “Why? Because an equity position on a reasonable asset is an asset for the Australian balance sheet.”

Barnaby Joyce

Photographer: Lukas Coch/EPA

Prime Minister Malcolm Turnbull’s government is under pressure to curb carbon emissions by electricity generators without driving up power costs. Residential power disconnections have risen as much as 140 percent in six years amid a doubling in average household energy costs, the Weekend Australian newspaper reported Saturday. Australia exported more coal than any other country in 2015, and has the fourth-largest share of the planet’s coal resources, the Department of Industry, Innovation and Science said in December.

Not having any coal-fired power generation in Australia is “an absurdity,” Joyce told Sky. “We have a massive coal resource. We should be developing the capacity to do it as efficiently and as effectively as possible, and also possibly selling that technology to the world as well.”

The cost of building a high-efficiency low-emission black coal plant, known as ‘clean coal,’ is estimated at A$2.2 billion ($1.7 billion) for 1,000 megawatts of capacity, a report commissioned for the Minerals Council of Australia and the Coal21 Fund said this month.

Lender Pressure

Still, Australia’s four biggest banks have come under increasing pressure from green groups to review their lending to fossil fuel projects.

Westpac Banking Corp., Australia’s second-biggest bank, said in April it imposed tighter rules for financing new thermal coal mines in a move that would bar it from lending to Adani Group’s $16.5 billion Carmichael mine in Queensland state, the nation’s largest coal project.

Joyce refuted the idea that lenders are unwilling to finance new coal-fired electricity projects, saying they will commit if they are given assurance that the government won’t be against the fossil fuel in three years.

“If we can create certainty, we can bed this thing down,” Joyce said. “We’ll have people willing to invest in that section to give us highly efficient delivery of power.”

Coal provides a more reliable source of base-line power, Joyce said, compared with alternatives such as wind, which require storage systems.

Elon Musk’s Tesla Inc. won a tender to build what the billionaire says is the world’s largest lithium-ion battery system in rural South Australia to support the state’s blackout-plagued power grid. Tesla will provide 100 megawatts of battery storage by Dec. 1, pairing it with a wind farm at Hornsdale north of Adelaide operated by France’s Neoen, South Australian Premier Jay Weatherill said in a statement on Friday.

“South Australia of course has suffered from the very ideological approach to power where they allowed a lot of wind power to be built without taking into account that the wind doesn’t blow all the time and backing it up,” Turnbull told reporters Saturday at the Group of Eight meeting in Hamburg, where world leaders collectively advanced talks to fight climate change without U.S. backing.

Australia’s national energy policy is guided “by engineering and economics, not by ideology and politics,” the Australian Prime Minister said.

“Fossil fuels are going to be part of the energy mix of the world for a very long time -- nobody disputes that,” he said. “The object of climate policy is to reduce net emissions; it’s not to eliminate the burning of all fossil fuels.”

— With assistance by Perry Williams

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