Supply Chains & Carbon: Australia Is Worlds Largest Coal Exporter, Japan It's Largest Customer

There's no breaking news in this post. But, I thought it worthwhile to put some recent good news out of Australia - the carbon tax has apparently passed - in context of other developments. Bottom line: that Australian drought must have really gotten folks attention. You'll see.

As this USEIA report indicates, "Australia accounted for almost one-third of bituminous coal exports worldwide in 2010; a large share of this coal consisted of coking coal used for steel manufacture. Japan is Australia's top export market for coal, accounting for about 43% of 2010 Australian coal exports. Other key markets include South Korea, China, India, and several countries in Europe." Separately, EIA estimated, that coal production in Australia grew by 99 percent, with "new projects continuing to come online every year."

Coal + iron ore + limestone = Toyota's + Honda's + Nissan's + CO2
A quick scan of the Australia Coal Association website makes clear that the industry's top priority is fighting the national carbon tax.

Japan, too, has an economic interest in the Australian carbon tax. Japan is the second largest buyer of iron ore in the world as well as a big customer for Australian coking coal (the kind used for steel making).

US consumers have a mostly-invisible stake in the proposed Australian carbon tax: they buy Japanese cars made of the steel produced with Australian Coal.

The US Government, too has a stake. President Obama recently announced plans to station US troops in a base near Darwin Australia. Looks like managing the risk of China over running energy sources and trade routes is why. Bloomberg has most interesting reporting on it that I have seen.

The initiative will anchor an American presence in the western Pacific that can help safeguard the flow of more than $5 trillion of commerce, about $1.2 trillion of it U.S. trade...In addition to its value for trade, Chinese studies cited by the U.S. Energy Information Agency in 2008 said the South China Sea could hold 213 billion barrels of oil. While the sea borders several countries, China claims “indisputable sovereignty” over most of it, including oil and gas fields.

Climate in the shadows.
When President Obama recently traveled to Australia to announce the troop agreement, climate action was not on his agenda - at least not publicly. Instead, consumption of goods and the protection of supply chains was front and center; climate protection was left in the shadows - the only blade of power catching the media's light.

Predictably, in Australia there is much disagreement and apparent confusion over the purpose and prospects for enforcement of the new carbon tax. Tim Worstall, a Forbes contributor has a nice explanation of how this is going : Australia's Carbon Tax: Now They're Being Silly.

"We'll see" questions that follow from the supply chain factors outlined above.

  • Will Japan simply resort to buying coking coal from China or from Appalachia, instead?
  • Will US-made cars become cheaper than Japanese made cars because of the Australian carbon tax?
  • Will the success or failure of the Australian carbon tax become a model for other developed nations to follow?
  • What would it take to get the Obama Administration to bring climate action back out from the shadows?

Supply Chains & Carbon: Australia Is Worlds Largest Coal Exporter, Japan It's Largest Customer
Coal exportation is key part of Australia's economic productivity.

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