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-Post-covid price squeeze on the cards
-Producers pivoting
By Sarah Mills
A decade ago, fuelled by China’s industrialisation, the fossil-fuel industry appeared unstoppable. Now, the impossible isn’t just possible, it is a reality.
Producers globally are falling like dominoes to the inexorable and sharply accelerating transition to renewables and vehicle-and-industrial electrification.
Investors barely had time to blink when covid and the Saudi-Russian oil war hit, before many major producers wrote down roughly one fifth or more of proved fossil fuel reserves.
The industry has its back to the wall and is kow-towing to ESG investors across the globe for the desperately needed funds that will ensure their survival as a back-up fuel to support the coming transition.
Australia is caught in the geopolitical quandary of having China as our key trade partner and the United States as our key military ally. When US president Donald Trump started a trade war with China, it was never going to turn out well for Australia. And incoming president Joe Biden is unlikely to change tack too materially where China and trade and technology are concerned (whereas on climate, Bidenâs arrival changes everything). But we in Australia are like a mouse caught in the middle of two sparring elephants.
In business, the best rule is that the customer is always right (even if they are not). Our coal exporters will however survive this near-term political fight, probably far better than our wine or lobster export industries, by comparison.