If the Queensland Labor government’s final all-clear of plans to develop the world’s largest new thermal coal mine in the Galilee Basin signifies anything, it is that Australia’s major political parties are not yet ready, or willing, to let go of the fossil fuel dream.
But while the Palaszczuk government seems determined to keep the coal fires burning, even Adani – the Indian energy giant behind the much-derided Carmichael development – appears to have moved on. Largely, to solar.
As we write, Adani Group is reportedly hovering over the Indian solar assets of America’s SunEdison, as the former PV giant lurches towards bankruptcy.
And in Australia, the company is showing more active interest in the potential development of a large-scale solar plant in the heart of another Queensland coal region, the Bowen Basin.
RenewEconomy reported last October that Adani executives had been meeting with landowners in the Isaac Regional Council to gauge their interest in hosting a large solar farm.
Since then, the company has confirmed it is chasing investment opportunities in Australia’s solar generation sector, with a focus on potential opportunities in Queensland and South Australia.
Meanwhile, Adani responded to the news of the state government approval of the Galilee Basin coal project by pushing it out yet another year.
That is because, as Fairfax media’s Michael West has rightly pointed out, a green light from the Queensland Labor – dispiriting though it may be – means very little in the big scheme of this project.
As Adani well knows, the true hurdle for this project – and it’s a big one – is finding the $10 billion-odd of financial backing required to progress the mine and connected port and rail expansion, in a market where coal prices and demand are falling off a cliff.
Since the Carmichael mine was proposed, thermal coal prices have fallen more than 70%. How will this be profitable? pic.twitter.com/qg3exxXJpA
— Mr Denmore (@MrDenmore) April 3, 2016
As IEEFA analyst Tim Buckley wrote here in February, the Indian government’s draft Ultra Mega Power Project (UMPP) policy guidelines, released in December 2015, formally acknowledged that the capital construction cost of coal-fired power generation rose by 35-40 per cent over the last five years or so, mainly on the requirement for modern ultra-super critical (USC) power plant technologies with full emissions controls built in.
“By comparison, the cost of renewable energy is forecast to continue to decline at a rate of 5-10 per cent per annum over the next decade. This follows a staggering 25 per cent year-on-year decline in unsubsidised installed solar costs in India in the year to January 2016 to a new record low of Rs4.34/kWh (US$64/MWh).”
The world over, Buckley writes, “financing for old coal-fired power plants is progressively disappearing, just as debt and equity financing for new coal mines across Australia, America and Indonesia has evaporated over the last year and bankruptcies progressively claim most of the US industry. As capital flight from the global coal sector continues, the stranded assets risks increase.”
Certainly, Australia’s big four banks – not to mention a number of international financial groups – have signalled they want little to do with the project, which is about as environmentally toxic as it is financially risky.
In climate terms, a November 2015 report from The Australia Institute projected that the digging up and burning of the 2.3 billion tonnes of coal contained in the Galilee Basin deposit would effectively cancel out the pledged annual emission reductions of Australia, and for New Zealand nearly 10 times over.
In terms of the global carbon budget, TAI’s report finds that the cumulative emissions of the Carmichael coal mine over the course of its life would account for 1/180th of the world’s remaining carbon budget between now and 2050.
So why on earth would the Palaszczuk wave through such a carbon bomb? As West puts is, “it is all about the appearance of commitment to jobs, jobs that will never occur unless the coal price doubles, and it is about the government not getting bashed up by the opposition for being anti-jobs and abandoning its election commitments.
“Coal price $US50 a tonne, transport costs $US25/t. It’s not going to happen.”