Solid Energy and coal’s future? What future?

I had one of those “where were you?” moments last week. “Where were you when you heard Solid Energy had dropped their Southland lignite projects?”

I was making mid-morning toast and coffee while listening to Kathryn Ryan’s National radio interview with Mark Ford, new Chair of Solid Energy. When he mumbled that yes, Southland lignite was one of the non-core assets Solid Energy would exit, I almost dropped the black currant jam.

Mr Ford’s quiet tone made me wonder if I’d heard correctly. It must not be easy to admit that you’re going to have to cut your losses after your company made a monumental business balls-up, buying up a whole valley, dispersing the community of farmers who lived and worked there for generations, wasting $29 million of taxpayer money on the likes of a briquette plant that uses dirty lignite.

But, he did say it, and it is great news for our campaign. It’s all about CO2, and Solid’s plans would have contributed to the approximately 8.9 billion tonnes of carbon dioxide emissions from the 6 billion tonnes of economically recoverable lignite in Southland. CANA intends to stop this insanity and give the future a fighting chance.

Lignite and briquettes

In the same radio interview Geoff Bertram from Victoria University said the cyclical downturn in coal was easy to spot a year ago. Solid Energy’s lignite champion and now ex CEO Don Elder didn’t spot it, nor did his cheerleaders in Government. During that year, they egged him on while the briquette plant on Craig Road, Mataura turned from this…

into this

…still no briquettes, more than half a year behind schedule, and now dropped, like a ton of hot coals.

This plant wasn’t just Solid Energy’s baby; it’s also the flagship project of Australian company GTL Energy, whose new, unproven technology the plant showcases. GTL’s 2012 annual report is full of high hopes for their world-first commercial coal ‘beneficiation’ plant.

“When achieved, completion of the Solid Energy New Zealand plant will be a significant milestone.” (GTLE annual report to June 2012)

GTL’s dream is to ‘improve’ the quality of the world’s junk lignite/brown coal, from Southland, NZ to USA, Australia, and Indonesia – for starters – giving owners of junk coal a means by which to palatably market this stuff as

DRYER, LIGHTER, CLEANER, MORE CONVENIENT BRIQUETTES!!

and hey, there’s money to be made, right?

Wrong. Firstly, coal, in whatever form, is an unacceptable fuel for a CO2-choked twenty first century. Second, coal is not the place to put your money these days. Even the most optimistic investors know the volatility of coal prices and must realise they are very soon going to have to pay the true cost of its environmental damage.

The coal industry has a problem; it’s their product. Coal is the planet’s tobacco; a deadly addiction, and the more record heat waves, droughts and floods planet Earth throws our way the more people understand the connection and are calling for its phaseout.

However, it was not a surprise to hear that three months ago GTL formed a ‘wholly owned NZ subsidiary company, GTLE Development Ltd’, and have taken over the Craig Rd briquette plant for the next three and a half years. They have far too much to lose, financially and credibly, to let this baby go.

But that does not solve the briquette plant’s main problem: who’s going to buy them? Briquettes, anyone? If coal is your thing, you can get the same quality heat from the plain old sub bituminous stuff down the road at Nightcaps. Even Fonterra, the coal salesman’s dream buyer, prefer the Nightcaps coal to stoke their boilers.

Clean coal? Yeah right

The third reason why GTL are on to a loser is simple mathematics. Energy analyst Steve Goldthorpe has calculated that the process of digging up the lignite, transporting, squeezing out the water and making the briquettes emits 10 % more CO2 than if they had simply burned the lignite in the first place.

As long as the Mataura briquetting plant exists we will oppose it – and the expansion of this technology.  Energy expert Steve Goldthorpe explains why here:

CANA and Workers

On a tour of Stockton in last May we were told that the high turnover of workers has led to a younger and more inexperienced workforce than desirable in such a dangerous industry. “We are the training ground for Aussie” said one worker we spoke to.  Worker dissatisfaction is nicely portrayed in this lovely poster in the onsite smoko room:

Who can blame them? Rumours were rife of a management push to change shift hours that would mean lower take home pay for them, while Don Elder’s CEO salary sat at $1.4 million. And sure enough, the moment coal prices dipped, Stockton workers were faced with the threat of job losses or a change in shift. A year later, they are again being squeezed. In his National radio interview Mark Ford said that while he couldn’t comment on job losses at Stockton “there needs to be different work patterns there to extract that optimal coal production”.

CANA has never advocated the closure of working coal mines. That’s why we supported Spring Creek miners when job losses were announced. We want a just transition out of the industry by 2027, by which time we have calculated that current mining permits will have expired and current mines worked out.

We do not presume to know how coal mining towns should achieve this transition. But it has to happen. While we stand in solidarity with workers against profit-hungry companies, we ask: would you work for the tobacco industry? Coal was once an important industry, and mining towns have a rich history that must be preserved, but we now know its destructive effect on the future. It is morally wrong to keep mining coal, knowing what we do. Coal is worse than tobacco. It’s time for an exit strategy, starting now.

The industry line is that we still need coal for steelmaking, so West Coast coking coal will always be required. They are wrong. New technologies mean steel can be made without coal and CANA will soon be releasing our latest report into the benefits and pitfalls of this. Steel recycling, which produces a fraction of the carbon footprint of new steel production, can be considerably stepped up. Many of steel’s current uses are wasteful and can be replaced with lower carbon alternatives.

Stockton is NZ’s second biggest user of diesel. A steady withdrawal from Stockton will save us 55-60,000 litres/day of imported diesel. The money saved, and some of the fuel, should be contributing to new sustainable industries for the Coast.

Miners pride themselves on their hard working culture, bravery and stoicism. While coal must be relegated to history, those cultural traits are what’s required in the years to come as we move out of a fossil fuel charged economy and towards stabilising an out of control climate. What’s the use of profits with no planet left to spend them on?

CANA and Solid Energy

Solid Energy’s situation from a CANA perspective is clear. They are in the climate destruction business. There is no future for coal. Solid Energy must work towards phasing it out. Any other option is unacceptable.

Now is our window of opportunity. We can thank Don Elder for his contribution to our campaign with his over-exuberant ambitions on the lignite front. They got in the way of common sense, and the fortunate outcome is Solid’s new boss deciding to leave the Mataura valley coal in the hole.

A 2027 phaseout gives companies and the government time to exit the industry in a socially responsible way. True, socially responsible is something the industry likes to keep for their glossy websites, but maybe even coal company bosses can learn new tricks.

Then again, maybe not. Solid Energy’s recent announcement that they are seeking permission to investigate open cast mining at Pike River looks as though, even without Don, rote behavioural over-ambitious thinking threatens to lead them down the same debt- ridden track all over again.

No Bailout

To Solid Energy: your future is clear. Our call to you is to transition out of coal in a fair and sustainable way, starting right now.

To the Government: don’t bail-out Solid Energy to the tune of $389m (and growing) of our money. Don’t sell it to overseas interests. The bailout money should be used instead for the transition to new industry and new jobs away from coal, towards the future. Because coal has no future.

Lignite is dead – and coal is not far behind.