Green Activism Fuels A Bonanza In Coal Demand

Unless the supply of coal is increased, the world’s poor will be trapped for even longer in poverty, burning kerosene, animal dung or whatever they can get their hands on. Industrial development will be constrained. Fewer goods and services will be purchased. The smug inner glow of virtue-seeking First World activists will hardly compensate for the global decline in material prosperity.

Like most simple answers to complex questions, the theory that World War I was started by befuddled generals failed the test of time.

“There can be no doubt whatever but that alcohol — the universal enemy — has played an important part in making the ­nations disregard the teachings of civilisation and engage in a cruel, wicked and savage war,” thundered The Reformer, a West Australian temperance newspaper in August 1914.

“Whatever the loss of life, and the cost of this international conflict, it will be dwarfed in each of the countries engaged in both respects by the liquor traffic.”

A century after the end of the Great War, the lure of the single-cause explanation has lost none of its power to seduce.

The fervour to stop the evil trade in coal burns as brightly in today’s wowsers as the passion to shut down the liquor industry in their forebears.

History is unlikely to be kind to them. Coercive attempts to stop the use of fossil fuels are delivering the same perverse economic consequences as the attempts to close down American saloon bars in the 1920s.

The consumers pay more for a substance they choose not to live without, while the producers count the profits.

The American fondness for ­alcohol hardly abated during Prohibition. Consumption fell only slightly, from about 1.6 gallons (about 6 litres) of pure alcohol per person a year in 1910 to 1.2 gallons in the late 1920s.

With demand and supply unequal­ly matched, the price of beer rose by 700 per cent in the US between 1920 and 1933. The price of a bottle of brandy rose by 433 per cent and spirits by 270 per cent. A fourfold increase in deaths from alcohol poisoning and a rise in organised crime were just two unintended consequences. The enrichment of the alcohol companies was another.

A report released last week by international financial analysts Redburn predicts a similar result from the activist-driven campaign against fossil fuel companies.

The attempt to starve coal producers of capital has impeded their attempts to build new coal mines but it hasn’t got in the way of profits. The price of coal has risen to a six-year high, which is good news for the coal business but bad news if you’re living in, say, India’s Bihar state, where three out of four households don’t have electricity.

“Energy prices will need rise to the level at which the marginal consumer of fossil fuels is incentivised not to be a consumer,” Redburn reports. “In other words, the 1 to 2 billion people on the planet with zero or unreliable access to modern energy would remain priced out of the market.”

Unless the supply of coal is increased, the world’s poor will be trapped for even longer in poverty, burning kerosene, animal dung or whatever they can get their hands on. Industrial development will be constrained. Fewer goods and services will be purchased. The smug inner glow of virtue-seeking First World activists will hardly compensate for the global decline in material prosperity.