Earlier this year Economists at Large and wrote a snappily-titled report for the Nature Conservation Council of NSW, Economic assessment of environmentally damaging mining and gas developments in NSW. In the report we summarise and assess some of the work that we and TAI have done for NSW community groups looking at coal and coal seam gas studies. Our main conclusions are that economic assessments of these projects:
- Overstate economic benefits
- Downplay environmental costs
- Downplay greenhouse gas emissions
- Overstate employment benefits
- Ignore costs to other industries
- Ignore health costs
One of the mines discussed in the report is the Ashton Mine, owned by Yancoal in the Hunter Valley. In the report we wrote:
Increases in greenhouse gas emissions associated with the project’s impact on coal consumption are not included, potentially overstating the project’s value to the world by $460m.
Since writing the report we have examined the project more closely and feel we need to correct this statement as it seems likely to heavily overstate the greenhouse impact of the mine’s production. The reason for the overstatement is our assumption that the mine’s production would be sold largely for use as thermal coal burned in power stations. This production would have the effect of marginally lowering the price of thermal coal, and therefore coal-fired power generation, displacing energy generation by less greenhouse intensive means. We believe such a marginal effect should be considered in relation to thermal coal projects.
However, from examining Yancoal’s reports and those of independent analysts, we find that this assumption was wrong. Most of the Ashton Mine’s production is sold onto metallurgical coal markets. To our knowledge there is no less emissions intensive method for steel production than to use coal – although we are unsure of the emissions implications of use of semi soft coking coal as opposed to higher quality coking coals.
If the project proponents are able to sell most of their coal onto metallurgical coal markets and if use of lower quality coking coal does not have a major effect on the emissions of steel production, then it seems the original assessment is correct that the project will not result in major increases in emissions at a global level.
The same overstatement may apply to a lesser degree to other projects listed in table 2 of the report, particularly Maules Creek, which we understand is likely to sell a considerable part of its production onto met coal markets.
