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Issue #1780      June 7, 2017

King Coal’s death rattle

Last week US President Trump dumped the Paris climate agreement, demonstrating ruthless contempt for the planet’s future, and implacable support for fossil fuel industries.

Treasurer, Scott Morrison, brings a lump of coal into a parliamentary question time. “This is coal – don’t be afraid, don’t be scared,” said Morrison.

The decision also demonstrates the enormous power of those industries, particularly coal, the biggest single contributor to atmospheric carbon dioxide emissions and climate change.

The malignant influence of those industries is glaringly obvious here. Australia is now the world’s biggest exporter of thermal coal, and the Indian coal mining corporation Adani has proposed building the nation’s biggest coal mine at Carmichael, in central Queensland’s Galilee Basin.

The Turnbull government is seriously considering granting Adani’s application for a $1 billion low-interest loan from the federal Northern Australia Infrastructure Fund, for construction of a new coal terminal and rail line to transport coal from the mine to the coast.

Resources Minister Matt Canavan enthusiastically claims the Adani project would create 15,000 jobs, even though the company says the mine would only have 1,464 employees when fully operational.

The Turnbull government studiously ignores the Indian government’s refusal to offer funds for the project, and that government’s pursuit of Adani for outstanding debts.

The Queensland government has given Adani unlimited use of groundwater for the mine, and has granted all the companies involved in new Galilee Basin mining ventures a reprieve from royalty payments during the first four years of operation.

After that, the mines would have to pay an increased royalty rate, calculated so the total royalties paid over the mine’s operating life would be the same as if paid at normal rates from commencement of operations.

However, coal will soon become uncompetitive with renewable energy as an energy source. Many coal mines have operated for 50 years or longer, but given the development of renewable power, the Adani mine could become unprofitable in less than 20 years.

Investment in renewable energy projects has increased six-fold over the last decade. Last week Jim Barry, head of an international electrical investment group, commented: “...anyone who’s looking ... beyond a ten-year view on coal is gambling very significantly.”

And that’s what the Queensland and federal governments are doing. Construction of the Adani mine would probably take five years. It’s therefore likely that total royalties collected under the four-year royalty reprieve would amount to a fraction of those normally payable – or nil – and that the company would default on repayment of the $1 billion loan.

Capitalism fumbles and bickers

The Adani furore illustrates the unwillingness of big business to deal with climate change. Tourism and other industries directly threatened by climate change have expressed concern about the government’s environment policies. But others haven’t, even though the future of entire generations is at risk.

Mining corporation AGL has published full-page newspaper advertisements declaring proudly it’s “getting out of coal”. However, its prime motivation is to avoid getting stuck with “stranded asset” coal mines that cannot compete economically with renewable energy.

Westpac Bank when recently announced it would not fund construction of the Adani mine, Canavan snarled: “Corporations unfortunately today are wimps in regard to standing up to those [anti-coal] activists”. But Westpac’s decision wasn’t weak; it was carefully calculated to enhance its profits by taking advantage of mounting public concern over climate change and Adani’s activities.

There are no friends in business. Big capital knows the game is up for coal, and sooner or later time will run out for other fossil fuels. But corporate tactics differ. AGL might be moving out of coal production, but Adani is likely to stay in operation as long as it can, stashing profits away in tax havens before winding up its operations and leaving behind mountains of unpaid debts, outstanding royalties and rusting mining equipment.

Coal corporations operating in NSW have complained that coal from the huge Adani mine would flood the international market at a time of falling coal prices, forcing them to lower their prices or close their mines. But opportunity rules here, not principle. With the exception of AGL none seem to have made plans to phase out coal production or ensure the future welfare of their employees.

Rail corporation Aurizon has criticised the government for even considering the Adani loan application. It says its own Queensland goods line, which it wants to extend with federal funding, could easily transport Adani’s coal to the coast.

Apparently, Adani does not want to pay Aurizon’s freight charges, and would rather build a new line for its own use, paid for by the Australian taxpayer.

If the Turnbull government lends Adani $1 billion it could lose most or all of the money. If the Queensland government grants the royalty reprieve it could end up with little or no royalties at all. And Queensland might even find itself saddled with two redundant railway goods lines running roughly parallel and close, halfway across the state.

The biggest issues in the climate change struggle include time and vested interests. The fossil fuel corporations have a financial interest in prolonging their operations indefinitely, but people everywhere – including the families of coal corporation executives and climate change deniers– have a vital interest in curbing climate change by cutting emissions as rapidly as possible.

Yet climate change did not get a mention in the federal budget, which provided $90 million for a feasibility study into constructing a multi-state gas pipeline, and retained tax loopholes for fossil fuel companies.

As one commentator observed: “When it comes to energy the biggest ticket items in [the] budget were still about providing advantage and assistance to fossil fuel companies”.

If Adani fails to get funding from the banks, the Turnbull government might even fund construction of the mine itself, as well as the rail line and port facilities.

The old song asks the question: “Which side are you on?” A non-committal response, or worse, support for the prolonged use of fossil fuels, will betray this and future generations.

Australia is in a prime position to take positive action on climate change. We must elect new left and progressive governments, commit to the struggle to cut carbon emissions and prepare for the global challenges of the future.

Next article – “My name is Julia”

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