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Australian State and Federal governments gamble reef, public funds and climate for coal

Working with the Environmental Defenders offices in NSW and QLD, the Mackay Conservation Group has launched a legal challenge with the federal court to overturn Federal Environment Minister Greg Hunt’s approval of Indian conglomerate Adani’s vast Carmichael coal mine in the Galilee basin.

The case argues that as greenhouse gas emissions threaten the Great Barrier Reef, and the coal from the mine will emit a huge 130m tonnes of carbon dioxide every year – one quarter of Australia’s total annual emissions – the Minister should have considered the impact of burning the coal from the mine during the approval process.

If successful, the challenge could set a landmark precedent, as it would force dirty projects such as Adani’s Carmichael mine to to be evaluated on their total lifecycle emissions, not just what they will produce domestically.

The challenge is not the first one for the project, or even the only current trouble facing it. The Queensland government is also under attack for its “terrible concept” of diverting 700,000 megalitres of water from QLD rivers to Carmichael and other nearby mines in order to allay concerns of groundwater depletion. For perspective: an Olympic-sized swimming pool holds about 2.5 megalitres.

It is also facing criticism from competitors, with mining billionaire Gina Rinehart and partner GVK complaining Adani has been granted unfair advantage given the State is reportedly sinking almost half a billion dollars into the project in the form of rail infrastructure, and is doing so as its only investor to date. Banks like HSBC and Deutsche Bank are refusing to touch the Great Barrier Reef-threatening Abbot Point coal terminal expansion, not least because of coal’s bleak economic prospects.

2014 saw China’s coal consumption drop for the first time, with its imports for the full year dropping 10.9 per cent. More Chinese provinces have since been ordered to cut coal use.

Citibank sees structural decline in the global thermal coal market, and independent analyses show that Australian projects such as those in Queensland’s Galilee basin are commercially unviable. The IMF and World Bank are calling on finance ministers to remove fossil fuel subsidies and use policies such as carbon taxes to reallocate resources and combat climate change; China, India and the US are moving away from coal; and continued oversupply and rapidly slowing demand growth thanks to renewable expansion will only exacerbate coal’s already bleak future.

According to a new report from the Institute of Energy Economics and Financial Analysis (IEEFA), rapid take up of renewable energy and weakening electricity demand has created a structural decline in seaborne thermal coal. IEEFA says India cannot afford to continue importing coal, as Australian coal could double energy costs for its consumers. It notes that India’s finance minister is even considering ending thermal coal imports entirely within 2-3 years.

“Globally, 2014 was the year of the renewable energy installation juggernaut. With the notable exception of Australia, where policy uncertainty served as an effective hand-brake, wherever you look around the globe, be it China, India, Europe or the U.S., the trend of a rapidly-expanding renewable energy industry is the same. 2015 will inevitably see this gather pace.” IEEFA director of energy finance studies, Australasia, Tim Buckley.

The question is: why would State and Federal Government be so keen to ram through the expansion of an industry that is being eaten alive by booming renewable development?

China is moving to triple its installed capacity for solar, and the office of India’s new Prime Minister Narendra Modi declared that by 2019 every home should run at least one light bulb powered by solar energy.

India is already the world’s fifth largest producer of wind energy, such an expansion of wind generation, coupled with new Prime Minister Narendra Modi’s desire to speed solar development and tax coal, will be another nail in the coffin for the coal industry.

Even Adani has recognised the opportunities in renewable developing, this week partnering with SunEdison to build a US$4 billion solar panel factory.

So why has Queensland Premier Campbell Newman been joined by the Australian CEO of Adani to spruik coal jobs during the election campaign? Why is Trade Minister Andrew Robb insisting that there is a “clear pathway to finance” for Adani’s “100-year” Carmichael coal project? Why is Prime Minister Tony Abbott adamant that “few things more damaging to our future” than leaving coal in the ground despite the economic, social, environmental, and climate risks?

The writing is on the wall, and the window for coal as a dominant, growing energy source is closing. Australia is pushing free trade with India so it can lock in more coal and gas sales when we know 95 per cent of Australian coal needs to stay in the ground to avert dangerous climate change. Australia is mining the age of entitlement.

Top image credit: NASA

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