Escolar Documentos
Profissional Documentos
Cultura Documentos
Coal Prices DA
Coal Prices DA
Coal Prices DA................................................................................................................................................................1
*** Main ***..................................................................................................................................................................3
Australia DA – 1NC........................................................................................................................................................3
High coal prices are driving Australian growth..........................................................................................................3
Australia DA – 1NC........................................................................................................................................................4
Coal exports are vital to Australian growth................................................................................................................4
Australian economic collapse destroys ANZUS and relations with the U.S..............................................................4
Australia DA – 1NC........................................................................................................................................................5
That sparks Asian wars...............................................................................................................................................5
Goes nuclear................................................................................................................................................................5
*** Uniqueness ***........................................................................................................................................................7
U – Coal Prices High......................................................................................................................................................7
Domino reaction of oil and gas drove up prices of coal in the US.............................................................................7
Coal prices are rising daily .........................................................................................................................................7
Coal price will be solid high in 2008..........................................................................................................................7
U – Coal Prices High......................................................................................................................................................8
Global demand for coal keeps prices high..................................................................................................................8
Australian Coal prices are at an all-time high.............................................................................................................8
U – Coal Prices High......................................................................................................................................................9
Coal prices high now and expected to continue rising................................................................................................9
The trend of coal prices shows a massive increase.....................................................................................................9
U – Yes US/Australia Relations....................................................................................................................................10
US-Australian alliance high now due to bipartisan support in both countries..........................................................10
US-Australian relations will advance in energy policies and global stability after Bush leaves presidency............10
U – Australian Economy High......................................................................................................................................11
Australian economy performance will be strong for 2008........................................................................................11
Rise in trades strengthen Australian economy in 2008.............................................................................................11
*** Links ***................................................................................................................................................................12
Link – Alternative Energy.............................................................................................................................................12
Alternative policies to replace traditional coal trades off with US investment in Australian coal...........................12
Low coal prices sacrifices Australian economy for renewable ................................................................................12
Investors will stop investing in Australian coal as we shift towards renewable energies.........................................12
Link – Alternative Energy.............................................................................................................................................13
Renewable energy will displace coal........................................................................................................................13
Renewable energy, especially solar and wind, will replace Australian coal industry..............................................13
Link – Solar Power.......................................................................................................................................................14
As solar power prices decline due to demands the price of coal drops due to the lack of demand..........................14
Solar energy will displace coal imports....................................................................................................................14
Link – RPS....................................................................................................................................................................15
Renewable Portfolio Standards decrease demand for coal which decreases the price.............................................15
Renewable Portfolio Standards decrease the price of coal.......................................................................................15
Link – Efficiency..........................................................................................................................................................16
Energy efficiency programs reduce the demand for coal..........................................................................................16
Link- Carbon Tax..........................................................................................................................................................17
Carbon tax cripples Australian coal demands...........................................................................................................17
*** Internals ***...........................................................................................................................................................18
US Key to Australian Coal............................................................................................................................................18
US coal investment key to Australian coal exportation industry..............................................................................18
US commitment in Australian coal industry key to global coal demands................................................................18
Coal Key Australian Economy.....................................................................................................................................19
Coal exportation stabilizes trade deficits in Australia...............................................................................................19
Coal plays a crucial role in Australian economy through exportation and employment..........................................19
Global coal price reduction kills Australian economy..............................................................................................19
Coal production is a major foundation of Australia’s economy. .............................................................................20
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Miami Debate Institute 2008
Coal Prices DA
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Miami Debate Institute 2008
Coal Prices DA
*** Main ***
Australia DA – 1NC
High coal prices are driving Australian growth
Chris Richardson, Access Economics, “Global Economy A Cause For Concern” ABC Transcripts (Australia), 7-
1-2008, Lexis
CHRIS RICHARDSON ACCESS ECONOMICS: I think they're right to be worried about the potential for more
problems on markets. I'm less clear that there are bigger problems ahead for the world economy. Yes, the
US is in recession, yes, Japan and Europe are weak, but the emerging economies, particularly China and
India, are still travelling at pace. And that means, as far as Australia is concerned, our global backdrop
remains surprisingly strong and things like oil prices are high for the same reason that coking coal prices
are high. Mostly because of strength in the emerging nations rather than fears over Israel and Iran, but those
things are important, but it's the strength in the emerging world which is the main driver and I think the
best buffer against the sorts of risks that BIS report's talking about.
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Miami Debate Institute 2008
Coal Prices DA
Australia DA – 1NC
Coal exports are vital to Australian growth
Dr. Lila Gurba, Research Manager – Cooperative Research Centre for Coal in Sustainable Development,
“Australia–Indonesia Joint Symposium In Science And Technology”, 9-13-2006,
http://www.science.org.au/events/indonesia/gurba.htm
Australian context Australia has a very substantial coal resource, with significant reserves of both black
and brown coal. Black coal currently provides 60 per cent of Australia's electricity. Australia derives
significant economic benefit from the competiveness and reliability of its coal-based electricity supply
sector. Australia is the world's largest coal exporter making coal vital to the national economy.
Australia's large coal resources are low in sulphur and trace elements and are exploited using the best practise in
mining.
Australian economic collapse destroys ANZUS and relations with the U.S.
Rod Lyon, IR – U Queensland and William Tow, Prof IR – U Queensland, The Future of the Australian-U.S.
Security Relationship, 2003, http://www.strategicstudiesinstitute.army.mil/pdffiles/PUB50.pdf
Some Australian officials also speak of Australia’s continuing impressive economic growth as an
important determinant of a larger strategic role. As the Australian economy continues to show
good growth figures over a long period, when many of the world’s major economies have been
stagnant, it has offered Australian policymakers both a larger sense of Australia’s role in the world
and the resources necessary to underpin an expanded role. The Australian intervention in East
Timor in 1999 constituted a harbinger of that larger role; in the post-September 11 world an expansive
policy of Australian global and regional engagement―in Afghanistan, Iraq, and the Solomon
Islands―is even more evident. [Continues…] The Australian defense budget might still have some
upside in it, but it must reflect the overall health of the Australian economy. Defense spending as a
percentage of gross domestic product (GDP) is still low, in part because the defense increases outlined
and approved in the 2000 White Paper have been affordable from GDP growth. But the government is
cautious about any dramatic longterm increase in defense spending, uncertain of the actual level of
public support during a decade when the nation’s “baby boomers” will be starting to move into
retirement and impose higher costs on welfare budget items. [Continues…] Australia’s overall
strategic policy direction bodes well for the future of ANZUS. Its shift from a concentric circles
posture to one reflecting a more balanced approach between global and regional contingencies, many
of which involve asymmetrical threats, is compatible with the U.S. force structure reorientation toward
fighting more low intensity conflicts against hostile nonstate actors and occasional mid-to-high
intensity conflicts against “rogue states” or other anti-Western forces.45 Australia’s new proactive
defense identity in Southeast Asia and the South Pacific and, even more centrally, its willingness to
participate in American-led military coalitions even without UN support, correlate directly with
traditional American concerns about allied loyalty and defense burden-sharing. Latent policy
hazards such as leadership disillusionment or economic pressures could yet create future ANZUS
crises. Over the nearterm, however, such developments appear unlikely as the nature of currently
emerging threats predicate closer rather than qualified security cooperation among the world’s
developed states and as Australia endeavors to reconcile its international security objectives with finite
resources and capabilities.
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Miami Debate Institute 2008
Coal Prices DA
Australia DA – 1NC
Australian interdependence with the U.S. through ANZUS is vital to control security
threats.
Lyon and Tow (lecturer of IR @ the U of Queensland; prof. of IR @ U of Queensland) 2003 (Rod and William,
“The Future of the Australian-U.S. Security Relationship”,
http://www.strategicstudiesinstitute.army.mil/pdffiles/PUB50.pdf) accessed 7/2/08
Yet a more intimate relationship is possible. The theme of defense self-reliance has been superceded by events and new thinking
in Australian security policy. The theme was instrumental in allowing Australia to cast off its dependency on great and powerful
friends in the 1970s and 1980s, but strategic interdependence is an increasingly sound strategic recipe for the challenges
of the 21st century. The ANZUS alliance will remain central to Australian security policy for three key reasons:
the nature of the emerging security threat which is asymmetrical and global; Western defensive technological
evolution towards network-centric warfare; and the inability of autonomous security policies and “orphan” capital
equipment to provide a competent defense even of continental Australia. Rather, we expect a doctrine of
interdependence must play a larger role in Australian security policy. Such essential interdependence will clearly pose
serious tests for Australian policymakers, in large part because self-reliance previously assumed such a prominent position in the
Australian 35 strategic lexicon. It makes more necessary the nurturing of a greater level of bipartisanship within the Australian
body politic about the advantages of interdependence and the imperatives of good alliance management. The payoff of such an
effort will be sustained ANZUS credibility and viability―an outcome that should advantage both countries’ ability
to anticipate and confront those contingencies that will inevitably emerge to challenge their shared aspirations and
their security.
Goes nuclear
Paul Dibb, Prof – Australian National University, Strategic Trends: Asia at a Crossroads, Naval War College
Review, Winter 2001, http://www.nwc.navy.mil/press/Review/2001/Winter/art2-w01.htm
The areas of maximum danger and instability in the world today are in Asia, followed by the Middle
East and parts of the former Soviet Union. The strategic situation in Asia is more uncertain and
potentially threatening than anywhere in Europe. Unlike in Europe, it is possible to envisage war in
Asia involving the major powers: remnants of Cold War ideological confrontation still exist across
the Taiwan Straits and on the Korean Peninsula; India and Pakistan have nuclear weapons and
ballistic missiles, and these two countries are more confrontational than at any time since the early
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Miami Debate Institute 2008
Coal Prices DA
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Miami Debate Institute 2008
Coal Prices DA
*** Uniq ueness ***
As consumers struggle to get used to $4-a-gallon gasoline, there’s another source of energy that is becoming more
expensive: coal. The price of a ton of Central Appalachian coal on the futures market was $42.65 a year ago and has risen to
around $96, according to figures from the U.S. Energy Information Administration. That increase comes at a time
when crude-oil prices have roughly doubled and natural-gas prices have risen more than 40 percent. “Crude oil rises up
and then natural gas rises up and when natural gas gets crazy, it’s coal,” said Tony Kolton, the president of Chicago-based Logical Information
Machines Inc., which provides analysis of commodity trends. “It’s like dominoes.” The rise in coal prices could eventually be bad news for
residential and business electrical customers since coal is used to fire many of the electrical generating plants in the United States. Consolidated
Edison Inc., the giant Manhattan-based utility company, gets 11 percent of its electricity from plants fired by coal. Orange and Rockland Utilities
Inc., the Con Edison subsidiary that serves Rockland County, said coal accounts for the biggest piece of its electricity portfolio, about 30 percent,
followed by natural gas at 24 percent.
An upward trend in coal prices could mean higher electricity bills for consumers. The cash price for coal that utilities burn to generate
electricity exceeded $101 per ton this week at a West Virginia mine served by Norfolk Southern Railway. The price was reported
yesterday in Platts, a trade publisher for the energy industry. The price adds an exclamation point to a trend that saw the average price of high-
quality, Central Appalachian coal climb from less than $50 per ton on the spot, or cash, market in October to roughly
$85 per ton at the end of February. High-heat, low-sulfur coal from Central Appalachian mines is popular with utilities because it burns
cleaner and helps them comply with federal clean-air rules. Five years ago, the same coal was selling for around $30 per ton. With
half the state's and half the nation's electricity produced from coal, the price trend could mean higher electricity prices for Virginians. Utilities
generally are allowed to pass along the increased cost of fuel for their power plants.
Xstrata, the world's largest exporter of thermal coal, says with global coal prices expected to stay firm in 2008, it
will increase its production capacity by 44% to 40 million metric tons in the next three to five years. In a recent
Reuters report, Garry Beck, general manager of marketing for Xstrata, said, "We believe that the tightness in today's
market reflecting in record spot prices up to $200 indicated that the 2007 price reduction was an over-correction.
Ongoing undersupply of prime hard coking coals and current spot pricing in our view points to a very strong price
outlook for 2008."
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Miami Debate Institute 2008
Coal Prices DA
NEW YORK: Steady demand from utilities and surging global demand for coal will push up prices of coal in United
States, the one fossil fuel the country has in abundance. United States is all set to become major exporter for the first
time ever since 1990 s thanks to the vast reorganization of global coal trade. Coal has long been a cheap and
plentiful fuel source for utilities and their customers, helping to keep U.S. electric bills relatively low. With global
demand rising for coal, it is becoming another hot global commodity, with domestic buyers having to compete with
buyers from countries such as Germany and Japan. Environmental concerns have forced some U.S. utilities to cut
back plans for coal burning power plants. The prospect of electricity prices shooting up in USA with in a three year
period cannot be ruled out if domestic prices of coal were to rise. Coal and utility executives predict that coal will
remain the most economical fuel in years to come.
Energy coal prices at the port of Newcastle, Australia, the world's biggest export harbor for the fuel, rose 1.3 percent
to a record on expectations of supply shortages in Asia and a disruption to deliveries from a Queensland State mine.
Coal for immediate delivery at Newcastle rose 96 cents to $76.95 a metric ton in the week ended last Friday,
according to the globalCOAL NEWC Index. The previous all-time high was $76.16 reached two weeks ago.
Supply has struggled to meet demand this year because of bottlenecks in producer countries like Australia and South
Africa, and as China became a net importer of coal for the first time. Anglo American, the world's second-biggest
mining company, last week declared force majeure on shipments from the Dawson mine in Queensland.
"It's the expectations that demand continues to outpace supply so the market is in deficit; it's about people's
perceptions of what is around the corner," Rory Simington, a senior coal analyst at AME Mineral Economics in
Sydney, said of the record price. "We're coming into a period of higher demand, winter is approaching, and people
are wondering where the additional supply is going to come from."
Japanese power generators may accept a 22 percent increase in the contract price of coal in the year starting April 1
amid the supply constraints, Citigroup said in a report Friday. The bank forecast prices will be set at $67 a ton, from
$55 this year.
"Producers are well placed" for negotiations, two Citigroup analysts, Alan Heap and Alex Tonks, said in the report.
AME is more bullish, forecasting contract prices next year may be at least $70 a ton.
"There's a good chance it's going to have a seven in front of it, a very good chance," Simington said. "We have
increased our price forecast a couple of times. We've been surprised by the strength of the prices."
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Miami Debate Institute 2008
Coal Prices DA
The price for a ton of coal has doubled in the United States since January 2007. It has risen 143% in Asia during the
same period. Over the last five years, the price has gone from about $20/ton to more than $120/ton there, an increase
of 600%. Given surging demand in China that is not likely to relent, growing expansion of coal use in India, and
challenges facing global suppliers in Australia, Russia and South Africa, it looks like the price of the fuel that
supplies 40% of the world's electricity is on a permanently upward trajectory.
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Miami Debate Institute 2008
Coal Prices DA
Foreign Affairs Minister Stephen Smith says the strength of Australia's alliance with the United States will continue,
despite the change of government. Opposition spokesman Andrew Robb says the Federal Government has sent a lot
of mixed signals about Australia's relationship with the US. He says it is critical the strong ties developed between
former prime minister John Howard and US President George W Bush are not damaged. But Mr Smith has told Sky
Television the Australian-US alliance is above partisan politics. "The alliance is supported by Republicans and
Democrats in the United States and it's supported by Labor and Liberals in Australia," he said. "The base of the
alliance of course was effected by the Labor prime minister John Curtin in the course of World War II, so it is one of
the fundamental pillars." Mr Smith is in the United States for a series of meetings with officials from the United
Nations and the US Secretary of State, Condoleezza Rice. He says he is looking forward to working with the US
administration. "The purpose of the visit is to, one, make the point that our alliance with the United States transcends
Labor or Liberal, Democrat or Republican, but [also] to make contact with the current administration," he said.
"There is effectively 12 months [of the Bush administration] to go and we already have, in terms of contact, a very
good relationship with the current administration."
US-Australian relations will advance in energy policies and global stability after Bush
leaves presidency
The Fiji Times (News Source Online) 2008 (“The Kevin Rudd Alliance,” The Fiji Times Online, June
30 2008, http://www.fijitimes.com/story.aspx?id=93651)
THE 2008 US election is both an end and a renewal in terms of Australian-US relations. It is the final curtain on the
uncritical intimacy of the Bush-Howard era and creates the opportunity for Kevin Rudd to put his personal stamp on the American
connection. Rudd will seize this opportunity. The departure of George W. Bush early in Rudd's prime ministership is a gift for Labor. It
removes a US president deeply unpopular with the Labor Party, the Australian people and much of the world. The contest
between Republican John McCain and Democrat Barack Obama is a race between two quality candidates who have lived
extraordinary lives to become contenders for the presidency. Not even the inevitable mudslinging will obscure that this contest is about
change and renewal. With polls showing that 80 per cent of Americans feel their country is on the wrong track, the symbols and reality of a new
start are at a premium. The arrival of a new president with a fresh mandate is the perfect recipe for Rudd. Any notion that Rudd will meekly put
US relations on ice while he operates in East Asia is mocked by his history and outlook. Rudd understands that Australia's influence in
Washington has been riding a long upward cycle and that the US is pivotal to his ambitious foreign policy
aspirations. Rudd's aim, contrary to some analysis, is not to put distance between Australia and the US but to inject relations with a new
to
political and intellectual vigour. Rudd wants a bond with the new president strong enough to disagree but, more significantly, strong enough
identify new areas of strategic co-operation: think climate change, energy policy, managing China's rise, East Asian
security and nuclear non-proliferation. It is a long list. Like John Howard, Rudd is a believer in the US relationship and
he will become an activist with a new president. Rudd has managed Bush and their differences over Iraq with a disciplined
professionalism. His task was to avoid antagonising the Bush administration and he succeeded. But the pendulum is moving from managing risk
to creating opportunities. The US election is the threshold to this new stage.
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Miami Debate Institute 2008
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Director Chris Richardson says most states will perform well over the next financial year but with a few notable
exceptions. "Victoria has dropped off the pace a little of late, New South Wales having been weak for several years
now is slowly starting to show some signs of recovery," he said. He says predicted high consumer spending and
Australia's strategic trade partnership with China will further buoy the national economy. "Despite a slow down in
the United States, the back drop for Australia's 2008 is still very good." Queensland and Western Australia remain
the country's best economic performers.
The Australian economy has experienced a long period of strong expansion (Figure 4). Real GDP in Australia has grown in each
of the last 16 years at an average rate of 3.7% per annum, making it one of the strongest performers in the OECD over this period. Most recently,
Australia has seen a rebound in growth from 2.7% in 2007 to 4.4% in 2008 (March years). By comparison, annual economic growth in New
Zealand since 1991 was slightly lower (3.4%) and exhibited more volatility, partly due to a fall in real GDP in 1998 (due to a larger impact from
the Asian Financial Crisis, tight monetary policy and consecutive droughts). Domestic demand has driven economic growth in
Australia in recent years. While export growth in Australia has been dampened by a high exchange rate and low agricultural production
due to drought conditions, consumer spending and investment have risen strongly as a result of factors such as a higher
terms of trade, strong employment and wage growth, and high population growth. … as the terms of trade surged upwards …
An important driver of recent developments in the Australian economy is a strong rise in the terms of trade. The terms
of trade in Australia rose 41% in the past five years after falling over much of the 1990s (Figure 5). This strong rise has led to high growth
in national incomes. The terms of trade in Australia have been lifted by sharply rising prices for commodity exports, which have benefited
from a range of factors, especially growth in developing economies. World prices for Australian commodity exports rose sharply
in the last five years, led by base metals. Prices for food commodities, which dominate commodity exports from New Zealand, also rose but
not by as much as non-food commodities, hence the smaller rise in the terms of trade in New Zealand. Prices for Australia’s commodity
exports have lifted further since the start of 2008 so, given the lags between spot prices and actual export prices, the terms of
trade in Australia are expected to continue rising.
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Coal Prices DA
*** Lin ks ***
THE Government is facing a tough decision over whether to continue funding the world's leading clean coal
experiment after the Bush Administration ended its commitment to the $US1.8 billion ($2 billion) project, citing
massive budget blow-outs. The US move is a grave setback for the Australian coal industry's hopes that a
commercially-viable clean coal plant would be built in the foreseeable future. The US-led FutureGen project was
embraced by the Howard government which pledged $15 million to it shortly before last year's election.
Now the Construction Forestry Mining and Energy Union has written to Senator Wong urging her to ignore this
advice, arguing that a low initial price on carbon would encourage energy supply from gas, but do nothing to
develop technologies that are necessary to deliver the far deeper cuts in emissions that will have to be made in the
future. "If we remove the renewable target it will result in a substitution of gas for wind power and other forms of
renewable energy," wrote CFMEU mining and energy division general president Tony Maher. "While that will
result in a lowering of our average emissions it does not help to prepare the economy and the energy supply industry
for the medium to long term."
Investors will stop investing in Australian coal as we shift towards renewable energies
Sven Teske (Renewable Director of Greenpeace International) 2007 (“An Overdue Farewell for Old
King Coal,” Sydney Morning Herald Newspaper, June 8 2007,
http://www.greenpeace.org/australia/news-and-events/opinion/old-king-coal) Assessed June 30 2008
So what might global trends mean for Australians heading into a federal election? Investors will start to cool on coal
companies that stake their futures on unproven and financially risky clean coal technology. Investors will compare
the risks and likely delays in clean coal to the annual growth in solar and wind of more than 30 per cent over the
next decade. When consumers understand that renewable energy offers more security, coal will begin to face real
political trouble.
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Miami Debate Institute 2008
Coal Prices DA
Because increased renewable energy use reduces the demand for natural gas, and creates new competitors to
traditional power plants, increasing renewable energy would reduce natural gas prices. Achieving the 10 percent
RES could reduce gas prices by 1.9 percent ($0.12 per million Btu) compared to business as usual in 2020. A 20
percent standard could reduce natural gas prices by as much as $0.25/million Btu, resulting in cumulative gas bill
savings of $15 billion (Fig. 5) through 2025. Under current EIA forecasts, renewable energy begins to displace new
coal-fired power plants (which become economically competitive) instead of natural gas facilities after 2020. As a
result, renewable energy has less of an impact on natural gas prices in these later years, but it continues to provide
total energy bill savings to consumers from lower electricity prices, and even greater air pollution reduction benefits.
The analysis found that a 10 percent renewable standard would decrease electricity prices throughout the study
period. Under a 20 percent standard, electricity prices would be lower than business as usual through 2018. Between
2019 and 2025, as renewable energy displaced more coal, electricity prices would increase slightly (7.0 ¢/kWh)
compared to business as usual (6.9 ¢/kWh). Electricity prices under a 20 percent RES would still be 1.7 percent
lower in 2025 compared to today’s prices. Cumulative electricity bill savings would reach $10.9 billion through
2025.
Renewable energy, especially solar and wind, will replace Australian coal industry
MEFL (Moreland Energy Foundation: Energy and Environment Efficiency for Home and Business)
2006 (“Renewable Energy Can Replace Coal,” MEFL, 2006,
http://www.mefl.com.au/documents/MW_renewable_baseload.pdf) Assessed July 1 2008
Renewable energy is big business. The solar and wind industries are amongst the fastest growing businesses in the
world. Renewable energy is threatening the market share of the coal and nuclear industries globally. An estimated US
$38 billion was invested in renewable energy plant in 2005 alone - up from $30 billion the previous year4. It’s because renewable energy
can and is replacing fossil fuels that the fossil fuel based industries are fighting back to protect their market share. Their
primary line of attack is to belittle renewable energy technologies and attempt to prevent progressive policy which fast-tracks
renewable energy. By casting doubts in the public’s mind about whether renewable energy can deliver, the coal industry buys further delays
in climate change action, while the nuclear industry attempts to recast itself as a climate change solution. In Australia the coal industry and the
nuclear lobby have been very effective in controlling Federal energy policy, although some states are starting to support renewables. While Prime
Minister Howard clearly continues to toe the coal industry line, he’s even being left behind by President Bush who recently declared that wind
power alone could meet 20% of the US’s massive energy needs.5 Renewable energy and energy savings programs
can replace coal-fired generation in Australia. What’s lacking is not the technology – it’s the political will to make it happen.
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One benefit that cannot be banked on (at least not without intervention or a complete turnover of the capital stock) is
reduction of carbon pollution. Cost of coal is about nil. It is between $10–40/ton delivered. That generates about 25
million BTU, which converts into about 7,300 kWt-h or about 2,400 kWe-h. That puts it right around $0.01/kWe-h.
If the cost of Lunar solar generated electricity dropped to that, coal would still be burned in about half the plants in
America if we discount operating and maintenance costs. Since there is nothing really to do with coal if we don’t
burn it, the price of coal would drop if we stop. The prices would drop to microprices.
Solar thermal electricity can be the "big gorilla on the grid", replacing coal-fired power stations across the United
States the world's biggest greenhouse polluter over the next 40 years, a leading Australian scientist says.
California-based solar energy entrepreneur and former Sydney University physicist David Mills told a US energy
conference solar power was the only technology capable of "almost eliminating" global warming caused by
electricity generation by 2050. Solar thermal electricity could supply "the great majority" of the US electricity
grid and " by logical extension those of China and India", as well as eliminating carbon emissions from cars by
powering fast-recharging electric vehicles. Earlier this month, federal Energy Minister Martin Ferguson
described Australia as a fossil-fuel dependent economy, adding there was no alternative to building new coal-
fired power stations.Frustrated by a lack of federal funding for renewables, Dr Mills left Australia last year to
base his solar energy company, Ausra, in California, after venture capitalists offered $US40million
($A43million) to bankroll his world-first technology. The company is currently building a 177-megawatt solar
thermal plant to supply the Pacific Gas and Electric Company,
with California Governor Arnold Schwarzenegger launching the project last November. Addressing an International
Energy Agency conference in California, Dr Mills said peer-reviewed research showed 90 per cent of US electric
grid and car energy needs could be met by solar thermal power. "The US could nearly eliminate dependence on coal,
oil and gas for electricity and transportation, drastically slashing global warming pollution without increasing costs
for energy. "This new study shows that our daily and annual energy needs closely match the energy production
potential from solar thermal power plants with heat energy storage, and our models show solar thermal power will
cost less than continuing to import oil."
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Link – RPS
Renewable Portfolio Standards decrease demand for coal which decreases the price
Energy Information Administration, “Impacts of a 15-Percent Renewable Portfolio Standard”, June 2007. Office
of Integrated Analysis and Forecasting U.S. Department of Energy
1 The increased use of renewable sources in the RPS case leads to lower coal generation. Nuclear and natural gas
generation are also lowered to a lesser degree. Relative to the reference case, retail electricity prices rise by an
average of 0.9 percent over the 2005 to 2030 period in the RPS case. Reduced demand for coal and natural gas in the
RPS case results in slightly lower prices for these fuels by 2030 when compared to reference case projections.
The shift away from coal to renewable fuels, together with the costs of retail electricity sellers holding RPS credits,
affects electricity prices. In 2030, EIA projects the national average electricity price with the RPS to be 2 percent
higher than in the reference case, i.e., 8.2 cents per kilowatthour with the RPS compared to 8.1 cents per
kilowatthour in the reference case. By 2030, prices for natural gas and coal, two key fuels for the electric power
sector, are lower with the RPS than in the reference case.
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Link – Efficiency
Energy efficiency programs reduce the demand for coal
David Swenson and Liesl Eathington, Swenson is the Regional Scientist/Research Scientist at the Department of
Economics, Iowa State University, Eathington is the director of the Office of Social and Economic Trend Analysis
at Iowa State University,”Statewide Economic Values of Alternative Energy Sources and Energy Conservation”,
March 2002, http://www.nyserda.org/rps/iowaaltenergystatevaluereport.pdf accessed 7/1/08
Encourage energy efficiency programs that lead to further savings in importation of fuel, especially coal. Energy
efficiency programs not only save money for energy consumers, but provide them with more disposable income to
spend in the state. Conserving energy also reduces the demand for coal imports.
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DEMAND for Australian coal could be crimped if major trading partners introduce a carbon tax, writes Michelle
Wiese Bockmann. The country’s government commodity forecaster, ABARE, warned that long-term demand for
coal exports remained high but told an industry conference last week to watch out for any introduction of a carbon
tax overseas.
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*** Internals ***
Until recently, the United States was the world's primary source of coal exports. In 1970, the United States accounted for one-half of the
international coal trade {see Endnote 293}. By 1994, the U.S. share of world coal trade had declined to 15 percent of the total. In 1986,
Australia supplanted the United States as the world's largest exporter of coal. As recently as 1980, U.S. coal exports
had been double those of Australia. Coal is Australia's number one export {see Endnote 294}. Some of the
companies most prominent in the U.S. coal industry are also prominent in Australia's coal industry, particularly that
part of the industry directed towards export markets. As in the United States, foreign investment plays a key role in
Australia's coal industry, further indicating how multinational in character world coal investment has become. Australia consumes less than
a third of domestic production (versus 90 percent in the United States).
LONDON (AFP) — Global mining giant Anglo American said Friday it had bought a 70-percent share in the
Foxleigh coal mine in Queensland, northeastern Australia, for 620 million US dollars (432 million euros). The
majority stake, acquired from independent group Bowen Basin Investment, will add to Anglo American's growing
coal mining operations in the region, the company said in a statement. Foxleigh produces 2.5 million tonnes of coal
annually for use in the production of steel. "The addition of Foxleigh is in line with Anglo American's strategic
commitment to further grow our coal business in Australia in order to meet forecast increases in global demand for
coal, particularly in the Asia-Pacific region," said Anglo American chief executive Cynthia Carroll.
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Bellow comment from Lehman Brothers economist Stephen Roberts in Sydney: Despite the somewhat better March trade position, the
cumulative trade deficit in the three months to March widened sharply from the cumulative trade deficit for the three months
ended December. Exports of goods and services climbed 4.4% from the previous month while imports grew 1.3%, the statistics
bureau said.
Exports of coal rose 22.9% for the month, while mineral ores climbed 16.5%, reflecting a recovery in
mine output after floods disrupted operations in Queensland last year.
Coal plays a crucial role in Australian economy through exportation and employment
Australian Coal Association (Representatives of Australian Coal Producers) 2008 (“Coal Fact Australia
2008,” Australian Coal Association, Feb 2008, http://www.australiancoal.com.au/Pubs/COAL
%20FACTS%20AUSTRALIA%202008%20Feb08-4.pdf) Assessed June 30 2008
Coal plays a pivotal role in the Australian economy. At $22.5 billion it is our largest single export, is used
to generate 84% of Australia’s electricity and supports 130,000 employees. Use of coal in Australia
contributes less than 0.5% to global greenhouse gas emissions. The coal industry is funding low emissions coal
technologies, including the $1 billion plus COAL21 Fund. Coal reserves Black coal: 39.6 Gigatonnes (Gt.)
economic demonstrated resources (EDR) - 5% of global. Reserves to production - more than 100 years. Brown coal:
37.3 Gt. EDR - 24% of global (largest holding globally). Reserves to production - more than 500 years (2006).
IAN DYMOCK: Any price reduction is disappointing, of course, but it was inevitable in view of the very difficult market we're operating
in. The decline in prices reflects an over-supply of hard coal on work markets and price discounting by some suppliers in the markets
outside of Japan. MARK SIMPKIN: Because BHP is such a big producer, it is one of the world's largest coal exports. The price cuts will
become a benchmark for the entire industry. Australian producers are still coming to terms with last year's 18 per
cent cut in price, a decision that cost hundreds of jobs. Australian Unions estimate that 6,000 coal miners, one quarter of
the national work force, have lost their jobs in the last two years and they predict today's announcement will mean
further cutbacks.
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The Australia-US relationship is also about our strong economic future. We have the Free Trade Agreement
that provides a framework for ongoing development of our trade. The United States is the largest foreign
investor in Australia. The United States is the largest destination for Australian outwards investment . And
Australia is the eighth-largest investor in the United States. The United States is Australia’s third-largest
trading partner (and what is remarkable about our trade is the prominence of the services sector – accounting
for around 43 per cent of our exports ). It is a good story of a growing services trade, and one I am keen to see
develop even more.
During the last century, the world has witnessed an accelerating technological development in almost all aspects of
the human life, resulting in rapidly improving living standards in the vast majority of countries. This development
would have been impossible without energy, and the growing demand for energy services has led both to the
discoveries of new energy sources and the development of new energy technologies. While the world’s attention
was shifting between the “Oil Era” and the “Nuclear Age”, the “Dash for Gas” and the “Renewable Future”, coal
had firmly stayed in the background playing a vital role, in particular, in conferring supply security and price
stability. Price stability in fuel supplies is fundamental to world economic prosperity and political stability.
Let us consider coal's role as an export. As Australia's largest export industry, the Australian coal industry generates
around $8 billion annually. Proportionally, that represents over 50% of Australia's energy exports, and
approximately 20% to 25% of total minerals resources sector exports. Coal is also vital at a domestic level; it
provides 80% of Australian electricity requirements, cheaply and reliably. This is the basis of our international
comparative advantage in electricity supply, which in turn supports Australia's energy-intensive industries, which
are also exportoriented.
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Some commentators claim that Australia under Mr Howard has paradoxically achieved unprecedented
closeness to the United States as well as performing impressively in our region. If success means
Australia being able to export coal, gas, and uranium to some of our neighbours, and to discuss with
others how to fight terrorists and deter refugees, well that's hardly remarkable. In fact, Australian policy is seen abroad as
uncritically identified with that of George W. Bush: do as we say and we'll do as we like. To be really impressive, Australia must
develop independent policies in consultation with our region, with the UN, and with multilateral
trading partners. If we do not, as the damaged Bush presidency ends and distaste for its policies spreads even among America's
friends, Australia will be left behind, left alone, and it will be our own fault.
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*** Impacts ***
The long-term success of a free trade agreement depends upon the economic context in
which it operates. Questions to be answered cover obvious matters such as the relative
economic size of the partners and the relative size of potential changes within the total
economy in either case. Less obviously, how have the two economies performed in recent
times? How robust and flexible are they likely to be in dealing with changes brought about
by freer trade? How open are they and thus how likely are they to benefit from changes to
trade patterns? And what sort of broader benefits can be envisaged? These questions are
hard to answer precisely, partly because we do not know what form the final agreement
might take, and partly because the economic future is inherently uncertain. However, with a
review of the main developments and features of the two economies, we can draw broad
conclusions about the likely economic response to an agreement. An FTA will also have
marked effects on other aspects of Australia’s economy, particularly on its participation in
the emerging global information economy and on Australian business culture. These aspects
are considered in more detail in Chapter 6.
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Alliances are not merely the product of rational calculations of national interest. (1) They involve shared values,
belief systems, and a history of cooperation. Australia and America have long-shared common democratic values
and beliefs. The two nations are among the oldest continuous democracies in the world. For a long time, the United
States and Australia (along with New Zealand) were the only democratic countries in the entire Asia-Pacific region.
Alliances also demand strong domestic political support: public support for the alliance in Australia has been
remarkably resilient, even though there has been enormous strategic change over the half-century of its existence.
Together, the United States and Australia fought against fascism and communism in the 20th century. Australians
and Americans share the use of the English language and inhabit continent-sized New World countries that are ill at
ease with many of the traditions and attitudes of old Europe.
According to the theory of the democratic peace, the United States should support the spread of democracy not just because it is the
right thing to do, but also because history demonstrates that democracies do not fight wars against fellow democracies; thus it
is in the U.S. interest to support democratization in order to reduce the risks of war. The theory does not claim that
democracies don't go to war at all. They have, and they do—against non-democracies. But they don't, and they
won't, it is argued, against other democracies. This is the tenet of the democratic peace paradigm that right makes for might, that the
world is a safer and a better place to the extent that democracy spreads
Democracy is key to preventing all impact-including nuclear war, extinction, and the lost of
rights
Larry Diamond (Senior Research Fellow at the Hoover Institute) 1995 (Promoting Democracy in the 1990s.
p6-7)
The experience of this century offers important lessons. Countries that govern themselves in a truly democratic
fashion do not go to war with one another. They do not aggress against their neighbors to aggrandize themselves or
glorify their leaders. Democratic governments do not ethnically “cleanse” their own populations, and they are much
less likely to face ethnic insurgency. Democracies do not sponsor terrorism against one another. They do not build
weapons of mass destruction to use on or threaten one another. Democratic countries form more reliable, open, and
enduring trading partnerships. In the long run, they offer better and more stable climates for investment. They are
more environmentally responsible because they must answer to their own citizens, who organize to protest the
destruction of their environments. They are better bets to honor international treaties since they value legal
obligations and because their opponents makes it much more difficult to breach agreements in secret. Precisely
because, within their own borders, they respect competition, civil liberties, property rights, and the rule of law,
democracies are the only reliable foundation on which a new world order of international security and prosperity can
be built.
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Important ally and undervalued guarantor of Asian stability, or victim of American manipulation? All of these terms and
more could be used to describe Australia’s role in the U.S.-Australian alliance. In recent years Prime Minister John Howard
has reversed the strategic drift between the two countries that had begun in the 1980s, and after 9/11, Australia became one of the
United States’ closest allies. As it tilts its foreign policy toward the United States, Canberra has also been conducting a
soul-searching review of the country’s defense policy, aimed at better aligning Australia’s strategy with the
American military’s as both respond to new terrorism threats. However, despite these developments, there may be
storm clouds on the horizon of U.S.-Australian relations. The problem lies at the very core of Howard’s security policy, which
rejects the traditional consensus within Australian politics on the goals and means of Australian foreign and defense policies. The first assumption
was that Australia’s best interests would be served by supporting multilateralism and closer relations with Asian
countries; the second was that Australian security is best guaranteed by eschewing expeditionary conflicts, instead
focusing on its air and sea power in order to protect Australia from invasion. Howard has rejected both these assumptions. He
has reinvigorated Australia’s ties with the United States, pushed for defense transformation, and reallocated resources from continental defense to
mobile and technologically advanced troops designed for rapid foreign deployments.
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Australian military key to winning the war on terror and strengthening US military
worldwide
Michael Horowitz (Ph.D. candidate at Harvard, Graduate at Weatherhead Center for International
Affairs) 2004 (“Don’t Take Canberra for Granted: The Future of the U.S.-Australian Alliance,” Elsevier
Inc, 48(3), May 26 2004, http://www.sciencedirect.com/science?_ob=ArticleURL&_udi=B6W5V-
4CG6RN5-D&_user=2518055&_rdoc=1&_fmt=&_orig=search&_sort=d&view=c&_acct=
C000057738&_version=1&_urlVersion=0&_userid=2518055&md5=8723d113d207251e7c8e4df8365daf
29) Assessed June 30 2008
Current trends inAustralian domestic politics and the international environment seem to guarantee the nation’s progress in
reforming its military and strengthening ties to the United States. Since 9/11, Prime Minister Howard has become one of
President Bush’s key confidants. In response to President Bush’s call for the world to join in the war on terror, Australia
deployed forces to Afghanistan in fall 2001. Howard was also a strong proponent of the war in Iraq in 2003, following
up his vocal support with a commitment of 2,000 troops. Australian special forces, in particular, made important contributions
in both wars, providing targeting assistance for British and U.S. precision-guided munitions, among many
activities.1Howard’s government also seems stable. Howard has been prime minister since March 1996, and since the 2001 elections has
consistently held a double-digit lead in the polls over the opposition Labor Party (though his lead has shrunk in early 2004). President Bush
hosted Howard at his Crawford ranch in May 2003, and in June 2003 U.S. Deputy Secretary of Defense Paul Wolfowitz met with
Australia’s Defense Minister Robert Hill about the possibility of enhanced defense cooperation. While talks have publicly
danced around the possibility of a U.S. military base in Australia, Australia fits well into the likely U.S. military
strategy of establishing multiple small bases throughout the Asia-Pacific, rather than relying entirely on a few key forward
deployments., 2
Organizations such as the Russian military and Minatom are now operating in circumstances of great stress. Money is
in short supply, paychecks are irregular, living conditions unpleasant ... [D]isorder within Russia and the resulting strains
within the
military could easily cause a lapse or a breakdown in the Russian military's guardianship of nuclear weapons. 38
Accordingly, there is a significant and ever-present risk that terrorists could acquire a nuclear device or fissile
material from Russia as a result of the confluence of Russian economic decline and the end of stringent Soviet-era
nuclear security measures. 39 Terrorist groups could acquire a nuclear weapon by a number of methods, including
"steal[ing] one intact from the stockpile of a country possessing such weapons, or ... [being] sold or given one by
[*1438] such a country, or [buying or stealing] one from another subnational group that had obtained it in one of these ways." 40 Equally threatening,
however, is the risk that terrorists will steal or purchase fissile material and construct a nuclear device on their own. Very little
material is necessary to construct a highly destructive nuclear weapon. 41 Although nuclear devices are extraordinarily complex, the technical barriers to
constructing a workable weapon are not significant. 42 Moreover, the sheer number of methods that could be used to deliver a
nuclear device into the United States makes it incredibly likely that terrorists could successfully employ a nuclear
weapon once it was built. 43 Accordingly, supply-side controls that are aimed at preventing terrorists from acquiring nuclear material in the
first place are the most effective means of countering the risk of nuclear terrorism. 44 Moreover, the end of the Cold War eliminated the rationale
for maintaining a large military-industrial complex in Russia, and the nuclear cities were closed. 45 This resulted in at least 35,000 nuclear
scientists becoming unemployed in an economy that was collapsing. 46 Although the economy has stabilized somewhat, there [*1439] are still at
least 20,000 former scientists who are unemployed or underpaid and who are too young to retire, 47 raising the chilling prospect that
these scientists will be tempted to sell their nuclear knowledge, or steal nuclear material to sell, to states or terrorist
organizations with nuclear ambitions. 48 The potential consequences of the unchecked spread of nuclear knowledge
and material to terrorist groups that seek to cause mass destruction in the United States are truly horrifying. A
terrorist attack with a nuclear weapon would be devastating in terms of immediate human and economic losses. 49
Moreover, there would be immense political pressure in the United States to discover the perpetrators and retaliate
with nuclear weapons, massively increasing the number of casualties and potentially triggering a full-scale nuclear
conflict. 50 In addition to the threat posed by terrorists, leakage of nuclear knowledge and material from Russia will reduce the barriers that states with
nuclear ambitions face and may trigger widespread proliferation of nuclear weapons. 51 This proliferation will increase the risk of nuclear attacks against
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the United States [*1440] or its allies by hostile states, 52 as well as increase the likelihood that regional conflicts will draw in the United States and
escalate to the use of nuclear weapons. 53
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China. Dealing with the rise of China similarly could be either the undoing of the U.S.-Australia alliance or its greatest achievement. An obvious
downside to independence from America is that if the PRC becomes more powerful, Australia may be forced to
become its vassal. Would Australia be better off beholden to Beijing or as a cooperative partner with Washington? Given Australia’s material
weaknesses in comparison to both the United States and China, effective balancing is not a sustainable strategy. U.S.-Australian
cooperation on China policy will make it more difficult for the Chinese to isolate America in Asia in the future, if
they choose that path, and provides Australia a hedge against the possibility that China becomes more willing to challenge the territorial and geo-
strategic status quo in the future. Siding with the United States in a Taiwan scenario would have permanent negative
consequences for Sino-Australian relations. Beijing’s decision in 1997 to cut economic ties with Australia until Howard began
advocating more cooperation with China demonstrates its willingness to do this. The United States, in contrast, is seen as likely to
continue trading with Australia and maintaining alliance ties even if Canberra fails to back its ally during a major
regional contingency. However, the perception that the balance of interests over Taiwan favors China, meaning there is less cost to angering
America on the Taiwan issue, wrongly underestimates the importance of Taiwan as a test of U.S. credibility in Asia. Michael Richardson
describes the Taiwan issue as a “time bomb” for U.S.-Australian relations., 30 The United States will want a military commitment
from all of its Asian allies, especially Australia, if tensions in the Taiwan strait rise once again., 31
US isolationism can lead to multiple scenarios of nuclear wars in Asia and Europe
Hirsh-Foreign Policy Correspondent and Analyst for Newsweek-2003
(Michael, At War With Ourselves)
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US military power in the region addresses the American Empire's strategic objectives to contain the rise of power
competitors such as - but not limited to - China, and deter the growth of other threats to its hegemony including
revolutionary movements and the rise of independent regimes. Because Asia Pacific is a vast mass of land and sea
territory with huge economic and geopolitical potentials, and because it is contiguous to the American mainland and
its Pacific territories, this region remains of strategic interest to the United States. Without a strong power
projection in Asia Pacific, America's drive for global hegemony and domination will be threatened.
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The U.S.-Australia Free Trade Agreement is a milestone in the history of our alliance. It expands our security and
political alliance by creating a true economic partnership. It will create jobs and opportunities in both our nations. It
will fuel economic growth throughout the Pacific Rim, and it will strengthen our common ties of family and friendship.I appreciate
so very much those in my Cabinet who have worked hard to make this agreement come true: Secretary of State Powell, Secretary of Agriculture
Ann Veneman, Secretary of Commerce Don Evans, and, of course, Ambassador Bob Zoellick, who is the U.S. Trade Representative. Just as an
aside, Zoellick has done heroic work, as has his staff, to see to it that the world trades more freely and America is treated fairly when it comes to
trade. I appreciate Ambassador Michael Thawley, the Ambassador of Australia to the United States, for his tireless efforts in representing his
country's best interests as we negotiate this trade agreement. Mr. Ambassador, you are a credit to your country. I'm also proud that Senator Orrin
Hatch is with us. Senator, I appreciate you taking time to come and represent the United States Congress. This agreement received strong
bipartisan support, it represents that members of both parties understand the benefits of trade to our country. Welcome, Senator, I appreciate you
coming. We support free and fair trade. I support free and fair trade, because it has the power to create new wealth for whole nations and new
opportunities for millions of people. Sound policy can help unleash the initiative and talent of free people. Open trade is sound policy. It has a
record for creating jobs and raising living standards and lowering consumer prices. My administration is working with the Congress to extend
the benefits of free trade throughout the western hemisphere, in Africa, and into the Middle East. We renewed the
African Growth and Opportunity Act, which promotes economic reforms and reduces trade barriers on goods from the nations of sub-Sahara
Africa. Working with Congress, we entered into a new free trade agreement with Morocco and Chile. We're encouraging
the free flow of trade across the Pacific. Last year I had the honor to sign a free trade agreement with Singapore, America's first with an
Asian Pacific nation. Today, I'm honored to sign legislation enacting the second.
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The total annual two-way trade in American and Australian goods and services stands at $28 billion. Australia is America's 10th largest export
market. Our trade with Australia is important to every American. It is vital to our economy. The U.S.-Australia Free Trade
Agreement is a recognition of that importance and a commitment by both our nations to work in partnership for common prosperity. This
agreement will immediately eliminate duties on 99 percent of all U.S.-manufactured exports to Australia. That is the
largest immediate reduction of tariffs on manufactured goods ever achieved in an American free trade agreement.
America's manufacturers estimate that eliminating these tariffs will increase the export of manufactured goods by nearly $2
billion per year. That will mean new jobs for American workers. This agreement will also be good for America's farmers. It will
eliminate all duties on American agricultural products entering Australia. Today, American farmers export almost
$700 million worth of goods to Australia. And because of this agreement, that total will rise. Free and fair trade means
more than eliminating tariffs on existing trade. We must also work to open up new sectors of our economy to competition and trade. This
agreement opens important sectors of Australia's economy, such as telecommunications, government procurement, express delivery, computers,
tourism, energy, construction, financial services and entertainment. And the agreement strengthens protections for intellectual property and
promotes electronic commerce.
Hundreds of millions – billions – of people have pinned their hopes on the international market economy. They and their
leaders have embraced market principles – and drawn closer to the west – because they believe that our system can work for them. But what if it can’t?
What if
the global economy stagnates – or even shrinks? In that case, we will face a new period of international conflict:
South against North, rich against poor. Russia, China, India – these countries with their billions of people and their
nuclear weapons will pose a much greater danger to world order than Germany and Japan did in the 30s.
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Sadly, the recent focus on climate change has given rise to a political debate that suggests support for coal and
support for tackling climate change are mutually exclusive. Nothing is further from the truth. Some have
suggested shutting down our coal-fired electricity production, plunging Australia into darkness. Bob Brown and
the Australian Greens want to end coal exports, which would cost Australia thousands of jobs and nearly
$25billion. As a consequence, our ravaged economy would be less able to develop long-term climate change
solutions. Brown's plan would not even reduce carbon emissions. Australia's export coal is among the highest
quality in the world. Ending supplies would force buyers to other markets and possibly to lower-quality coal,
which would lead to an increase in carbon emissions.
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*** Aff Answers ***
The price of coal is expected to decline in much of the world this year from a record level because of increased
exports from Indonesia, South Africa and Australia.
Analysts at National Australia Bank forecast a price decline of almost 20 percent, to less than $45 a metric ton.
Prices in Rotterdam, the European port used by utilities like E.ON of Germany, will drop to $55 a ton from $60.70
in 2005, according to Société Générale.
While coal prices might be temporarily increasing, the overall trend is towards a decrease.
Bouw (Reporter and Editor of The Canadian Press) 2008 (Brenda, “Westshore Terminals not taking record coal
prices for granted”, The Canadian Press, June 17,
http://www.cfrb.com/news/13/738748/westshore+terminals+not+taking+record+coal+prices+for+granted) accessed
June 30, 2008.
Paul Holden, an analyst at CIBC World Markets, said in a recent note to clients that he is cautious in the long-term
on Westshore because coal prices are expected to drop, and due to the expiry of key loading rate contracts in 2010
and 2012.
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Business confidence, sales, profits, employment and forward orders are also falling, according to the February
National Australia Bank (NAB) survey. Business confidence was the lowest since the September 2001 attacks in the
US, and the business conditions index suffered one of the biggest falls in the survey’s history. NAB chief economist
Alan Oster admitted that the size and breadth of the slowing in domestic demand and business conditions “has
caught both business and us by surprise”.
There are signs that the fallout from the financial meltdown is far from over. In its current “World Economic
Outlook”, released this month, the IMF named Australia as having one of the four most overvalued housing markets
in the Western world, and one of four highest levels of housing debt. Borrowings by households had grown from 75
percent of disposable incomes a decade ago to 175 percent, and this included credit card debt of $42 billion, or
$2,000 for every man, woman and child. The IMF estimated that Australian housing prices last year were 25 percent
higher than could be explained by “economic fundamentals”, producing the risk of a sharp “correction”.
Australia's Reserve Bank has been fighting the 'inflation demon' since May 2002 and the result has been 12 straight
rate rises, taking the official rate to 7.25 per cent. The result has been a major reining in of consumer spending, with
borrowing for housing at its lowest since 1991. Business lending growth has also fallen. But it seems the Australian
economy will remain resilient despite the global outlook and will remain so as long as the resources boom is still
with us. The Reserve Bank board met this afternoon and left rates on hold. ABC business editor Peter Ryan says
rates are unlikely to go up in the near future. "The expectation is that if the economy continues to cool, and if
households and businesses continue to rein in their spending, rates should be unchanged for some months and even
be eased this time next year," he said. But he says the big share market falls in the United States in recent days
remind Australia that there is no room for complacency.
"Inflation is likely to remain relatively high in the short term, and the consumer price index will be further boosted in coming quarters
by the recent rises in global oil prices." With that statement, the Reserve Bank has signalled that we are in for a period of high inflation,
much longer than previously thought, and as a result interest rates will remain at current levels for much longer than
previously thought as oil price driven inflation works its way through the system. The warning was issued in the statement
after the RBA yesterday left its cash rate unchanged at 7.25%. The warning that inflation will rise in coming quarters and won't ease until oil
prices (and other cost inputs, such as food) drop, was very different to what it had been saying after previous meetings. Then the bank said
inflation was expected to remain high before moderating. That moderation is still expected, if the slowdown continues, but it will take much
longer to happen. Just how long a period is uncertain, but it could be well into 2009 before there's any hint of a rate cut. Anyone thinking
of the first half is being optimistic, unless there is a sharp contraction in the economy.
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SteelGuru.com quotes the bank as saying that that the floods that disrupted mining this year in Australia, the world's
largest exporter of coking coal, forced at least six producers to forecast delays in shipments resulting in steelmakers
cutting output because of shortage of the fuel. "The loss of Australian tonnage to the market in 2008 has created
sheer panic. Delays in new capacity combined with the disastrous floods in Queensland earlier this year appear to
have created a structural shortage of met coal, which could now last for several years," the bank reported. It says the
floods may cut supplies by 12 million tons to 15 million tons and warns that Chinese steelmakers may face desperate
shortages in the coming years and may be forced to increase imports.
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Link Answers
Taxes on CO2 emissions cause coal prices to rise
Siegel (managing editor of Green Chip Stocks, an investment advisory service that focuses on stocks in the
renewable energies market) 2007(Jeff, “Saving and Making Money with Renewable Energy”, November 30,
http://www.greenchipstocks.com/articles/renewable-energy-prices/182) accessed 7/1/2008.
Big Coal was dealt a reality check this week after a new independent study found that Nevada will likely save
money and definitely cut pollution it if goes for renewable power instead of building three coal-fired power plants.
According to the study, uncertainty over higher construction costs and the value of what could be an inevitable tax
on CO2 emissions will cause the cost of coal power to skyrocket as wind, solar and geothermal power costs
decrease.
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No Link – RPS
Renewable portfolio standards have no overall change in coal prices
Hall and Kirkham (natural resource attorneys with Stoel Rives LLP) 2007 (Richard R. and John. S., “Coal:Like It
or Not, It’s Here to Stay, June 4th, http://www.stoel.com/showarticle.aspx?Show=2484) accessed 7/1/08
Some point to the introduction of renewable portfolio standards as a means to reduce coal reliance and the
environmental impacts associated with coal-fired generation. Renewable portfolio standards typically require a
certain level or percentage of electricity purchased or consumed by a utility or governmental entity to be produced
from renewable sources. While renewable portfolio standards have had measured success in promoting the
development of renewable energy sources, they do not appear to have a significant effect on coal consumption. Due
to price differentials, renewable portfolio standards tend to decrease the consumption of natural gas, rather than coal.
In the long run, the development of renewable energy sources may certainly prove key to reducing global reliance
on coal. However, in the short term, encouraging the development of renewable energy sources alone does not
appear to have a substantial effect on coal use or carbon dioxide emissions from the electricity sector in the absence
of other policy measures.
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Last week, speaking after attending meetings of the International Monetary Fund (IMF) in Washington, Treasurer
Wayne Swan said he was now certain that Australia would not escape the deepening international financial crisis. In
an interview with Fairfax newspapers, he said no one at the IMF meetings believed that Asia was de-coupled from
the turmoil that began last year with the sub-prime mortgage collapse in the US.
The IMF’s “World Economic Outlook” report, presented to the Washington meetings, described the financial crisis
as the biggest since the Great Depression, forecast a US recession this year and warned of a 25 percent chance of a
worldwide downturn “equivalent to a global recession”.
Swan stated: “Australia has never been immune from these sorts of financial crises. The fallout will have substantial
knock-on effects to developing and emerging economies, and from our point of view that means flow on effects to
Australia.” He also warned of an end to the 15 years in which cheap imports from countries such as China had a
deflationary impact. A new period had commenced of high inflation and interest rates, combined with slowing
growth.
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War on Terror. The Asia-first school would subordinate cooperation with the United States in the war on terror to the quest for better relations in
Southeast Asia. Criticism that the U.S.-Australian alliance was undermining Australia’s political and economic objectives
in Asia had been heard before 9/11, and Australia’s subsequent military cooperation with the United States has intensified
this debate., 18Some scholars, such as Scott Burchill, argue that with regional anti-Americanism and growing U.S. unilateralism
being what they are, close ties with America will expose Australia to regional blowback, undermine its ability to cooperate
with in countering Islamist terrorism within the region, and invite more terrorist threats to Australia., 19 For
example, given former Malaysian prime minister Mahathir’s staunch opposition to the war in Iraq, if Australia signals that it is growing
closer to the United States, the new prime minister, Abdullah Badawi, a close Mahathir associate, may punish Australia by
excluding it from important regional forums. Being associated with an unpopular American strategy would also undercut
Australia’s ability to cooperate with Indonesia in combating groups such as Jemaad Islamiah., 20The same argument
could be made against defense transformation. If increasing levels of U.S.-Australian defense cooperation alienates potential
adversaries and creates terrorist threats to Australia that might necessitate expeditionary deployments, then reorienting to Asia
should reduce the threats that currently justify defense transformation. Also, were Australia not to support U.S. military action, the
interoperability warrant for transformation loses force.
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