A collaboration between local and state government, businesses, unions and local environmental organisations is part of an advisory group for the Port of Newcastle as it works on how to diversify from the world’s biggest coal port. It just might help the Hunter Valley coal region to prepare for the massive changes ahead without the divisiveness seen in other regions and in the federal politics of climate change and the energy transition.
The website for the Port of Newcastle (PoN) boldly states it is, “More than a port. Australia’s deepwater global gateway. Diversifying for the future.”
It’s an ambitious and forward-thinking purpose statement by a port that’s smack in the economic centre of the massive Hunter Valley coal region in New South Wales, and as part of the region’s effort to be ready for the immense economic change ahead.
Origin Energy’s announcement on Thursday that it will bring forward the closure of Australia’s largest coal-fired power plant, Eraring, nearby, by 2025 shows how quickly things are changing.
Faced with the complete transformation of the global energy sector in the wake of the Paris climate change agreement, Newcastle port, the world’s largest thermal coal shipping terminal, faces existential challenges. How to get ahead of the transition from coal exporting and be ready for a new, low-carbon economy?
How can the port help ensure that the Newcastle business sector and community are along for the journey?
“Done well, the Hunter could quickly become the exemplar for the entire nation,” PoN chair Roy Green said at the time of his appointment in 2017. “As before with the transition out of steelmaking, it will call upon the leadership and vision in local communities and business, including by the resources sector and related industries.”
With that in mind, port executives have developed a two-pronged diversification strategy and Plan for 2040 that includes a new Port of Newcastle Hydrogen Hub in partnership with Macquarie Group’s Green Investment Group and backing from the federal government, along with plans for a $2.4 billion multi-purpose deep water container terminal. The project has the potential to see 1 gigawatt of hydrogen capacity by 2030.
“A green hydrogen hub in the Hunter, underpinned by a 40MW electrolyser, would support the development of new industries in the region and contribute to Australia’s long-term economic and energy security,” Green said when the project was launched. That and, importantly, jobs.
In a federal election year, the potential for new jobs – green jobs, long-term jobs, jobs in a coal-diminished world – is a priority for all of the major political parties.
The diversification planning doesn’t stop there. A newly launched regional renewable energy zone saw interest this week from potential solar, wind, battery and pumped hydro projects to the value of $100 billion. An airport extension that will make Newcastle ready for international flights are already underway.
Newcastle Airport director Samantha Martin-Williams says that the airport is committed to investing $10 to $15 million in route attraction and regional marketing to complement the $66 million government infrastructure investment.
A Hunter Global Summit involving the 10 councils of the Hunter and a range of regional stakeholders is underway this week to discuss plans, investment and coordination.
Alice Thompson, chief executive officer, the Committee for the Hunter tells The Fifth Estate that “diversification of the Hunter economy from coal is the question that everything we do in the region needs to be answered to”.
“Meanwhile Australia’s productivity has stalled and is behind global competitors. It is time for parties to work strategically and collaboratively to unlock the Port of Newcastle and the smart, modern and diverse industry it will catalyse and support,” she says.
One major hiccup: in June, 2021 a Federal Court found, in a case brought by the Australian Competition and Consumer Commission, that NSW ports Kembla and Bottany are allowed, in effect, have a monopoly for shipping containers for 50 years.
The ruling stated that if it develops a rival terminal the PoN would have to pay significant and commercially unviable compensation to Port Botany and Port Kembla operators if its traffic exceeds 30,000, 20-foot equivalent units (TEUs) a year.
Port Botany is NSW’s biggest container port by far, handling 2.5 million TEUs a year but it is hampered by congestion issues that add delays and costs to shipments.
Newcastle’s development plan would allow the port to increase its container handling from 10,000 TEUs currently to up to 2 million TEUs a year.
At the time of the court decision, ACCC Chair Rod Sims said, “It’s a real setback for competition, it’s a setback for productivity, it’s a setback for the NSW economy.”
An appeal has been lodged and there are hopes that a solution may be found, possibly within months.
Right now, Newcastle is ready to spend $2 billion of its own money to develop its port to become an efficient, automated and competitive second container terminal that could service not only Sydney and the Hunter region but the whole of the country’s east coast.
“In order to maximise our ability to get new opportunities like green hydrogen and large-scale renewable energy going in the region, we need to be able to start building for those opportunities now. The port is central to that,” Warrick Jordan, coordinator of the Hunter Jobs Alliance tells The Fifth Estate.
The alliance, of union and community environment groups, is focused on supporting the region through the structural change in energy and related industries in the region.
Jordan, along with local and state government representatives, businesses, unions and local environmental organisations are part of the port’s advisory committee to diversify – a collaboration that many believe have helped Newcastle prepare for the massive changes ahead without the divisiveness seen in other regions and in the federal politics of climate change and the energy transition.
Currently, shipping through the Newcastle Port is made up of about 90 per cent coal. “The port and its shareholders have been pushing for four or five years now for a plan to get that down to 50 per cent over the course of the decade. They aren’t doing that for fun,” Jordan says. “They are ready to invest in that so that we can be competitive in the long run.
“With the port, we have such a great physical transport asset and it is a competitive advantage, along with our rail and transmission infrastructure, that many of the regions we are competing with for new opportunities don’t have.”
In October 2021, the ACCC released a report on Australian container shipping productivity. The report found that, “after initial improvements through advancements in technology, quayside productivity and efficiency have stagnated in the past 10 years” and that international studies show, “Australian ports are among the worst performing ports in the world”.
“Containerised trade is growing and ships are getting bigger,” Alice Thompson says.
“Australia lacks capacity to accommodate modern shipping on the east coast while the ACCC found that Australia’s container ports are performing in the bottom 10 per cent of global productivity.
“The pandemic has highlighted significant impacts on supply chains which need to be remedied to remain resilient. The Port of Newcastle – with its strategically placed yet under-utilised land on a rare deepwater gateway – is central to solutions at scale and speed.”
“Being able to reconfigure Newcastle port’s operations to access new opportunities with a container terminal is really important because the future of the region is probably going to revolve around it in terms of our economic base,” Jordan says
With the green hydrogen hub and the potential for $100 billion in 80 renewable energy and battery storage projects, that the NSW Treasurer Matt Kean said this week would allow the Hunter to continue to be the state’s “energy powerhouse,” it is likely there is significant interest in finding a solution to the state’s ports standoff.
Jordan says Newcastle and the Hunter region aren’t putting diversification plans on hold while they waits for a ports resolution.
“One of the biggest lessons we’ve learned in the region is, you’ve just gotta get on with it,” Jordan says.
“I think people are just trying to do that in whatever way they can, whether it’s attracting green hydrogen or making use of renewable energy zones or building the capacity of SMEs, the defence industry, whatever it might be. When we get the green light, we have to be ready to go.”