There’s a good chance Prime Minister Rudd will announce new ALP climate change policy this week. Whatever the substance of the policy, Labor will likely laud it as a serious down payment on Australia’s climate action. The Coalition will describe it as a economy- and job-destroying tax, downplaying the degree of climate change response measures worldwide and shaking their fists over real or imagined cost-of-living impacts. The mining industry and many environment groups will have plenty to say for and against – round three of the carbon fight will be on.
But two decisions due imminently will also have a major impact on Australia’s greenhouse contribution – and Australia’s most iconic natural asset – and will probably slide past both major political parties and many media organisations without comment. One is on the desk of the new Environment Minister, Mark Butler, and the other will be made by the CEO of one of Queensland’s best recognised companies. Both will have long-term implications for the national interest.
How these two decisions are received will be shaped by Australia’s failure to reconcile two paradoxical propositions – a raging and bitter debate about Australia’s domestic climate action and the silent progression of the world’s second largest ‘carbon bomb’ in Australia’s growing coal exports.
Today is the deadline for the new Minister to announce whether he is going to give approval to dredge three million cubic metres of the sea floor at Abbot Point, north of Bowen, and have the spoil dumped in the Great Barrier Reef World Heritage Area.
North Queensland Bulk Ports are asking for this approval so they can expand Abbot Point on behalf of Indian companies GVK and Adani to facilitate their coal export plans.
This decision will have profound consequences for the Great Barrier Reef and for Australia’s commitment to keep global warming to below 2°C above pre-industrial levels, since it will enable up to three new coal terminals to be built there during the climate’s “critical decade”, with a combined additional export tonnage of close to 200 million tonnes per annum.
While previous environment ministers have approved requests to build new coal terminals, construct the necessary railways lines and dig coal mines – much to the consternation of the UN body tasked with maintaining World Heritage sites – Minister Butler may find granting this approval a little trickier and more politically embarrassing.
That’s because, while Australian politics was in the grip of a leadership challenge ten days ago, Labor Party senators joined with the Greens to pass a motion in the Senate calling on the government to ban the dumping of dredge spoil in the Great Barrier Reef World Heritage Area.
It’s hard to imagine how Minister Butler can give his approval in contradiction of that: to do so would make the new Rudd government look shambolic, to say the least.
Then there is the additional problem that the World Heritage Committee is in the process of evaluating whether to list the Great Barrier Reef as endangered as a result of the industrialisation threatening the Queensland coast. The Committee may consider the dumping of three million cubic metres of dredge spoil in the Marine Park, not far north of the world-renowned Whitsunday Islands, a reckless disregard of their concerns.
Finally, Mark Butler is not only minister for the environment, he is also the minister for climate change. The reason GVK want to build a new coal terminal at Abbot Point is so the company can mine for coal in the Galilee Basin. If GVK realises its ambition, it could produce 122 million tonnes of carbon emissions per year from just two proposed mines – Alpha and Kevin’s Corner.
Wherever that coal is burnt, the pollution will all end up in the atmosphere. That’s why any discussion about managing Australia’s carbon emissions must include a discussion about coal exports.
The second decision that will have an enormous bearing on Australia’s contribution to climate change and coal exports is one being considered by the CEO of Aurizon, Lance Hockridge.
The formerly government-owned business, once known as Queensland Rail, is considering buying a 51 per cent stake in one of GVK’s subsidiaries, taking over the rail and port component and leaving GVK to run the mines in the Galilee Basin.
Aurizon is making this multi-billion dollar decision to buy into Queensland’s coal mining against a backdrop of falling coal prices and a slowing market.
Last week, the Western Australian Premier said coal was experiencing a structural decline and quick perusal of the recent job losses in the industry confirms that analysis. As does the sell-out of the major players like Brazilian miner Vale, which is trying to offload its Galilee Basin mine proposal – a sensible de-risking strategy in the current climate.
In fact, according to the federal government’s Bureau of Resource & Energy Economics, three proposed coal export terminals were stalled or cancelled in May. In the past six months, no publicly announced coal project had progressed to feasibility, secured an investment commitment or progressed to the committed stage.
In terms of the project Lance Hockridge is considering getting his company into, GVK’s proposals are well behind schedule. Going back to announcements in 2008, they are now at least four years delayed and the final construction contract for their Abbot Point coal terminal is now more than three months behind since their last announcement.
While it is unclear why Aurizon would invest in GVK’s coal ambitions, it is clear that if the investment was made it would leave mum and dad investors exposed in the likely event that the assets become stranded as the coal market’s long-term decline is recognised and adjusted for by financial markets.
In the event that the market fails to make this adjustment, those mum and dad investors will have been responsible for financing the next generation being “roasted, toasted, fried and grilled” by climate change, in the words of International Monetary Fund boss Christine Lagarde.
Erland Howden is a Climate & Energy Campaigner at Greenpeace Australia Pacific
