Why the Adani project should be rejected

By Leith van Onselen

John Hewson has penned an article today explaining why Adani’s Carmichael mega coal mine project should not go ahead. From The SMH:

With an urgent global challenge to transition to a low carbon society, Paris Agreement and well beyond, any sensible carbon budget to achieve net zero emissions by mid-century would suggest that 70-plus per cent of known coal reserves should never be mined. Nor burned for electricity generation. At just this level, it is impossible to justify a new coal mine, let alone one that aspires to be among the world’s largest…

Yet some even attempt to provide a “humanitarian” cloak for their base prejudice [about climate change], by claiming that a new mine, such as Adani plans for the Galilee Basin, will be important/fundamental to solving the challenge of “energy poverty” in India; ensuring cheap and reliable electricity to hundreds of millions in India that don’t have it. When you get over the “tug on your heartstrings”, you might note the recent statements of the Indian government to permanently reduce thermal coal imports, as they become increasingly uneconomic…

I suggest the whole Adani “house of cards” is predicated on just one thing, namely, that the federal government is prepared to commit about $1 billion from the Northern Australia Infrastructure Facility (NAIF) – effectively low return, high-risk “quasi-equity” – to the project, ostensibly to fund the rail link from the mine to Abbot Point…

Evidence and commonsense suggests that Adani’s Carmichael proposal should already be recognised as a “stranded asset”. There is absolutely no justification for financial support from either the federal or state governments. To do otherwise is simply “intergenerational theft”. Any short-term political arguments are entirely misplaced, the employment benefits exaggerated and the international reputational damage to Australia long lasting.

Hewson’s criticisms are spot on.

India’s Minister for State Power has already acknowledged that the cost of solar power is now cheaper than coal:

Therefore, the Adani Carmichael Project risks becoming an unviable stranded asset, and Australian taxpayers risk losing their dough by lending $1 billion for the project.

Moreover, the taxpayer-subsidised Carmichael project would flood the world with more cheap coal, thus depressing its price and putting non-subsidised mines in NSW and QLD out of business, resulting in job losses. It also jeopardises the environment – both globally via exacerbating climate change and locally through threatening the Great Barrier Reef.

John Hewson could also have mentioned that the employment payoffs from the Carmichael project are likely to be immaterial or maybe even negative. Adani’s CEO has continuously boasted that the Carmichael Project will be the most autonomous in the world:

Whereas Adani’s own hand-picked economic expert, Jerome Fahrer from ACIL Allen consulting, told the Queensland Land Court that only 1,464 full-time equivalent jobs would be created by the project. These immaterial job gains must be offset by the job losses that would occur among other Queensland and New South Wales (non-subsidised) coal mines.

Then there is the massive public opposition to the Adani project. A ReachTel survey of almost 2,200 people conducted last month found 55.6% of respondents opposed the mine going ahead – more than twice the number who supported the mine. The overwhelming majority of those surveyed also wanted Premier Palaszczuk to veto the project. From The Guardian:

When told that the Queensland premier, Annastacia Palaszczuk, had made an election commitment not to spend public funds on Adani’s project, 65.8% of those polled said she should use her power to veto the possible $1bn loan the federal government might give the project through the Northern Australian Infrastructure Facility (Naif).

Likewise, a Roy Morgan Research opinion poll conducted last month found the majority of Australians (53.5%) did not think ‘the Adani mine should go ahead’ – well ahead of the 16% that said the Adani mine should go ahead:

Clearly, there are far better ways to use scarce taxpayer funds than on this wasteful and destructive white elephant. Australia must withdraw its concessional loan immediately and tell Adani that if it wants the Carmichael mine, then it must fund it entirely itself and bear the risk, as well as pay the correct amount of royalties to the Queensland Government.

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