Two developments this week should – but probably won’t – end the Coalition’s obsession with propping up coal-fired power generation in Australia.
Firstly, Toyota has flagged a new wave of electricity-hungry vehicles by promising to electrify every model in its range by 2025.
Secondly, mining giant BHP released a report explaining why it can no longer support industry groups that put coal power sources ahead of other sources regardless of the economics.
Both announcements are more complicated than they look, so let’s start with the demand side.
When Toyota promises to ‘electrify’ all of its models, it means it will offer electrified options for those customers who want to move away from petrol or diesel.
Those choices will include all-electric vehicles, hybrid petrol/electric vehicles, ‘ranger extenders’ that use a petrol generator to increase battery life, and even fuel cell technology that produces a flow of electrons by slowly combining hydrogen and oxygen.
Toyota says half its sales by 2030 will be electrified, and hopes to reduce carbon emissions in its new vehicles by 90 per cent, based on 2010 levels, by 2050.
Any way you slice it, that means motorists are going to start demanding more electricity.
Supplying the electrons
Firms whose main profits flow from thermal coal would love to supply that electricity, but BHP is not such a company – a fifth of its turnover comes from coal, but mostly the kind used for steel production rather than power generation.
That has allowed it to take a ‘fuel neutral’ view of energy markets.
On Tuesday BHP released a report that takes a number of industry lobby groups to task for backing coal regardless of the economic or climate-change implications.
It has ended its membership of the World Coal Association (WCA) on the grounds that the WCA “supported abandoning the proposed Australian Clean Energy Target because in their view abandoning the Clean Energy Target would improve the investment climate for HELE [high efficiency, low emissions coal] generation”.
By contrast, BHP said it believes “energy markets should not artificially favour one type of technology over another”.
“We also believe governments should focus on setting policies to facilitate efficient markets. Government intervention in resources and energy markets should only be in response to a demonstrated market failure, and informed by cost-benefit analysis.”