The cost of coke is the biggest single barrier to the development of a viable new energy source, according to a new report.
A report by the Australian Manufacturing Workers Union says that, over the past two decades, the cost of manufacturing and producing electricity has increased from around $1.50 to more than $1 per kilowatt hour.
“It’s quite astounding,” says Steve Smith, who works in the coal mines in the Hunter Valley.
“There’s a huge cost of producing electricity and a huge number of things that go into that.”
Mr Smith, along with others, say the increase in electricity costs has had a significant impact on the jobs of people who make coke.
“Coke is a major contributor to the unemployment crisis,” he says.
“You’re going, ‘Oh well, I’ll just make it more expensive’.” The study also finds that the cost to build a new plant to extract coal from the Australian Coke Industry has doubled since the 1980s. “
In addition, the industry has experienced two major price rises in recent years, rising from $9.50 per tonne in 2002 to $18.50 in 2014. “
You’re going, ‘Oh well, I’ll just make it more expensive’.” The study also finds that the cost to build a new plant to extract coal from the Australian Coke Industry has doubled since the 1980s.
In addition, the industry has experienced two major price rises in recent years, rising from $9.50 per tonne in 2002 to $18.50 in 2014.
The report says the cost for electricity from coal to supply a coal plant increased from $6.50/kWh in 2005 to $15.50 at the end of last year.
“What we’ve found is that the energy cost has increased by around $6 per ton in just the last 20 years,” Mr Smith says.
“That’s more than the cost we pay for gas and diesel.”
Mr Jones says the costs have increased even more.
The cost of energy for electricity generation in the mining industry has risen by around 10 per cent a year.
In his view, the mining sector is facing a “political crisis”.
“The Labor Party is the only party in the Coalition that doesn’t want to tackle the energy sector and they’ve done a terrible job of that, with coal, which they’ve just come out with a $10.50 price tag,” he said.
Labor is proposing to cap coal prices in 2020 at $35/kW, but the Greens have opposed the proposal.
Mr Jones says it’s also not just the mining business that is struggling with coal prices.
“[The mining] industry is also facing significant challenges,” he adds.
While the cost increases have been dramatic, they are offset by a relatively steady increase in the number of jobs in the industry.
But despite the growing joblessness crisis, many industries are still struggling to find the money to invest in technology and equipment.
Industry groups say the cost growth is a problem for the entire industry.
“One of the challenges we have is that in the past, it’s been relatively easy to get an increase in price and there’s been a lot more investment in things like energy storage, in things that could increase efficiency,” Mr Jones said.
“Now, we’re seeing a lot less investment in these areas, which is a big problem.”
But at the same time, there’s a growing need for technology, which means that we have to think about how to improve the efficiency of the energy industry in the long-term.
“Labor’s energy spokesman for the Hunter-Perth electorate, Luke Simpkins, says the industry is “very optimistic” about the future of the mining boom.
However, he says there are some key problems that need to be addressed if the industry hopes to be competitive.
There is a lack of transparency in the cost-of-living survey, he argues.
He says there is a “huge disconnect” between the number and quality of data used to assess the cost and the number the companies provide.
A report by independent research group Energy Australia found that many of the companies that were surveyed did not have the information to assess their costs accurately.
Another problem is that Australia has been slow to introduce new renewable energy technologies, which are a big part of the industry’s future.