Campbell Newman’s Coalition government is set to invest hundreds of millions of dollars into the mine, and it’s associated infrastructure. This comes as many international banks refuse to back the upgrade of the Abbott Point coal terminal, and others baulk at the $3 billion cost of the rail link.
Even though it is conceivable that a coal mine could generate some short term profits from international sales, few believe that the coal market will be long standing, and fear that the associated infrastructure, with a life of 30 years or more, will end up as stranded assets.
“Many would consider this a Government simply pissing taxpayers’ money up against the wall,” Tim Buckley, Director of Energy Resource Studies Australasia at the Institute for Energy Economics and Financial Analysis (IEEFA) said.
He said Australia’s “coal addicted” politicians have stepped up with public cash “where international financiers wouldn’t dare to tread”, by proposing to use taxpayers money to fund “unviable and highly questionable” coal projects.
“The people of Queensland and Australia should be outraged at this idea of questionable politicians spending many billions of tax payer dollars to make an unviable, unwanted and dangerous mega coal project a reality,” Buckley said.
Buckley noted that Newman has historically been at pains to say that the state of Queensland is in dire financial straits with huge debt – $80 billion.
“The Galilee coal projects are totally, commercially unviable. Any project undertaken is highly likely to end up as a stranded fossil fuel asset as the rest of the world rapidly transitions to lower carbon solutions. Coal has entered structural decline – there is no two ways about that fact,” he said.
Australia – at federal and state level – is insisting that coal has a long term future, but the stand ignores both the cost of imported fuel for nations such as China and India, and their growing options in other energy sources.
China has already halved its coal imports and may cut them altogether. India has even indicated it may not need to import coal within a few years, although that does depend on getting its internal infrastructure into order.
An investment by the Newman government would come despite his railing against subsidies for rooftop solar and large scale renewables! and will come on top of the $600 million a year subsidy paid to keep down the cost of delivery of coal fired power to regional areas.
“We want a new coal basin to open,” Newman has repeatedly stated.
But Buckley said Eight of the largest global financiers have already said they wont provide financing to the Galilee projects,” Mr Buckley said.
On Wednesday 12 November 2014 India’s Energy Minister Piyush Goyal said he plans for India to cease importing thermal coal within 2-3 years.
“This makes a mockery of the plan by Adani to export 2/3 of the Carmichael coal back to India. His own energy minister is making it clear India cant afford to solve energy poverty using hugely expensive imported coal.” Buckley said.
Goyal early last week cited distributed solar and microgrids, wind farms, energy efficiency, grid efficiency, plus domestic coal and hydro as the preferred domestic solutions.
“This is a taxpayer subsidy of a private foreign company who has to-date invested almost no equity capital into the Australian economy.”