Comment by defrost | Hacker News Reader

Comment by defrost | Hacker News Reader

Parent Full thread

> What they can’t import from AU, they will import from Indonesia or Russia ...

This particular court rejected the “market substitution assumption”

From the article:

[Quote]

From a legal perspective, I believe there are four reasons in particular this case is so significant.

1. Rejecting an entrenched assumption A major barrier to climate change litigation in Queensland has been the “market substitution assumption”, also known as the “perfect substitution argument”. This is the assertion that a particular mine’s contribution to climate change is net zero, because if that mine doesn’t supply coal, then another will.

Kingham rejected this argument. She noted that the economic benefits of the proposed project are uncertain with long-term global demand for thermal coal set to decline. She observed that there’s a real prospect the mine might not be viable for its projected life, rebutting the market substitution assumption.

[/Quote]

It sounds like she understands the commercial prospects and risks of the project better than its investors. Perhaps she should become a VC!

I don't get the argument since when it's no longer economic it will presumably be shut down.

Personally I don't think the "perfect substitution" argument is that great in the first place (since it fails to take into account what it means for more supply to be on the market).

"if that mine doesn’t supply coal, then another will." smells of assuming that demand is fixed, use is insensitive to price and that substitution can't happen.

... BUT I also don't follow the logic behind this ruling.

> I don't get the argument since when it's no longer economic it will presumably be shut down.

You should read the (excellently named) No Country for Coal Gen report, which argued in detail that closing coal power plants was the economicly efficient thing to do but that various regulations meant they'd stay open long after they became net negatives costing tens of billions.

https://carbontracker.org/reports/no-country-for-coal-gen-be...

In minerals and energy the assumnption is rarely that "demand is fixed" ..

Population and per capita consumption have both increased for more than a century so the long term data is hard on the side of "demand relentlessly increases" (for major mineral demands and for energy supplies).

The logic here behind this ruling is that within the global thermal coal market it appears that demand is levelling and peaking, coal is on the nose, and thermal coal demand will start to fall within the decade.

That's based up such things as (say) the Standard & Poor (of SP100 fame) 2022 global coal forecast report.

Thats the same S&P that are also famous for their role in the 2007/8 sub-prime mortgage and global financial crisis right?

Given the majority of major players in US stock market dicked about and inflated ratings of mortgage-backed securities the answer is yes, them and a host of others.

What they do as finnancial players in the stock market, though, is largely orthogonal to the market reports from independent experts that they commission or purchase.

The entire S&P global mineral intelligence wing was aquired from a third party and was built up to reflect the ground truth of lease acquisition, exploration, capital development, etc in the mineral resources domain.

Yeah, exactly. She chose to ignore market substitution assumption, but there is no rebuttal to it.

The market substitution assumption was not ignored (do please make intelligent comments in HN).

The assumption was (rightly or wrongly) rejected on the basis that long term thermal coal demand (over the lifetime of this particular project) is projected to decline.

eg: Standard and Poor Mineral intelligence report (2022)

https://www.spglobal.com/en/research-insights/featured/speci...

Ignored or rejected is a technicality that does not matter in this case. Assuming that investors did not take into account the forecasted demand is stupid.

For the last 10 years, coal consumption has been roughly the same. Within last couple of years relationship between China and Australia reached low points, at least on surface, as low as vague of threats of military force. Yet, China still buys coal from Australia. Even if it peaks in couple of years, there is still a long way to go and this mine can remain profitable for a while. I don’t know if you read your own links, but right at the top ot says:

  Demand for thermal coal is set to decline after peaking in 2024 as coal-fueled power is increasingly replaced with renewables in Europe and the U.S.

   However, transitioning away from coal is complex and slow for countries like China and India, which account for 70% of global coal demand and are facing a steep rise in power demand, with a fairly new coal fleet ensuring affordable power.

   The success of meeting net zero goals for countries like China, India, and Indonesia hinges significantly on the future economic and technical feasibility of carbon capture, usage, and storage (CCUS) technology.

So yeah, basically the link you posted says that China is gonna be one of the biggest consumers of coal and it won’t change dramatically, unless some fundamental advances in energy tech.

> Ignored or rejected is a technicality that does not matter in this case.

Nonsense.

Ignored is "did not address at all, behaved as if unaware of, etc."

Rejected is "was aware of, investigated, addressed, used documented reasoning".

You're commenting in English so do please take this onboard - there is a difference and it matters.

I'm aware of the link I posted, it shows that the major global mining companies expect a decline in thermal coal demand during the lifetime of this coal project.

Whether correct or incorrect it's an informed opinion based on data by those with skin (artual billions) in the game.

Oh boy, here we go, my English isn’t good enough, well this definitely means you have nothing of essence to say.

> an informed opinion based on data by those with skin in the game.

This is hilarious. Those with skin in the game actually decided to try to build a mine in Australia. S&P is analytics, they don’t take immediate risks on their analysis. Looks like you don’t understand what “skin in the game” means, I guess this English expression is actually foreign to you.

Let's consider a simplified example. When China cannot buy Australian coal, it must instead buy, let's say, Indonesian coal, which is more expensive. (Otherwise there would have been no need to consider Australian coal at all.) So that makes coal less attractive to China, reducing consumption and giving China more economic incentive to seek out alternative fuels.

Sounds like the policy would work exactly as intended. Anything missing?

China and everyone else is already seeking out alternative sources of energy, not fuel though. But the only viable alternative to fossil fuel available at this point is nuclear. The others are still theoretical. Or you can find some cleaner fossil fuel, like gas from Russia. But it is arguably better. So in near term it is mostly going to be one of the existing producer of coal increasing production and offsetting the deficient and most likely doing it with even worse impact on environment and people. As Russia was preparing its assault on Ukraine, it also made some deals to supply more coal to China and India. And long term it won’t go away. A form of ever increasing carbon and environment tax applied across trade partners will put a long term pressure to move away from coal entirely, because it will force to switch to a different energy source, not just switching suppliers.

Reply on news.ycombinator.com