tag:theconversation.com,2011:/ca/topics/adani-group-19252/articlesAdani Group – The Conversation2023-02-02T19:16:33Ztag:theconversation.com,2011:article/1989912023-02-02T19:16:33Z2023-02-02T19:16:33ZShort selling Adani: how an obscure US firm profited from triggering the Indian giant’s price plunge<figure><img src="https://images.theconversation.com/files/507763/original/file-20230202-3961-nxfh9e.jpeg?ixlib=rb-1.1.0&rect=0%2C134%2C733%2C392&q=45&auto=format&w=496&fit=clip" /><figcaption><span class="caption">
</span> <span class="attribution"><span class="source">Sam Shere/Wikimedia Commons</span></span></figcaption></figure><p>A few weeks ago, Gautam Adani was indisputably India’s richest man. </p>
<p>Now his fortune is slipping away as the stocks of his many companies crash, thanks to the efforts of a relatively obscure US company named after the 1937 Hindenberg disaster (in which a hydrogen-filled airship caught fire, killing 98 people).</p>
<p>Adani’s personal fortune was an estimated <a href="https://www.forbes.com/india-billionaires/list/">US$150 billion</a> in 2022. He catapulted past the previous richest Indian, Mukesh Ambani, on the back of the meteoric rise of Adani Group, a multinational conglomerate with holdings in <a href="https://www.adanienterprises.com/businesses/mining-and-mdo/australia">mining</a>, energy, airports, <a href="https://www.adani.com/newsroom/media-release/adani-becomes-indias-second-largest-cement-player">cement</a>, <a href="https://www.adanienterprises.com/businesses/edible-oil-and-foods#:%7E:text=Besides%20oil%2C%20AWL%20has%20also,%2C%20Fryola%2C%20Alpha%20and%20Aadhar.">food processing</a> and <a href="https://www.adanidefence.com/small-arms">weapons manufacturing</a>. </p>
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<img alt="Gautam Adani is no longer India's richest person." src="https://images.theconversation.com/files/507785/original/file-20230202-18-5ckpcj.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=754&fit=clip" srcset="https://images.theconversation.com/files/507785/original/file-20230202-18-5ckpcj.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=600&h=400&fit=crop&dpr=1 600w, https://images.theconversation.com/files/507785/original/file-20230202-18-5ckpcj.jpg?ixlib=rb-1.1.0&q=30&auto=format&w=600&h=400&fit=crop&dpr=2 1200w, https://images.theconversation.com/files/507785/original/file-20230202-18-5ckpcj.jpg?ixlib=rb-1.1.0&q=15&auto=format&w=600&h=400&fit=crop&dpr=3 1800w, https://images.theconversation.com/files/507785/original/file-20230202-18-5ckpcj.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=754&h=502&fit=crop&dpr=1 754w, https://images.theconversation.com/files/507785/original/file-20230202-18-5ckpcj.jpg?ixlib=rb-1.1.0&q=30&auto=format&w=754&h=502&fit=crop&dpr=2 1508w, https://images.theconversation.com/files/507785/original/file-20230202-18-5ckpcj.jpg?ixlib=rb-1.1.0&q=15&auto=format&w=754&h=502&fit=crop&dpr=3 2262w" sizes="(min-width: 1466px) 754px, (max-width: 599px) 100vw, (min-width: 600px) 600px, 237px">
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<span class="caption">Gautam Adani is no longer India’s richest person.</span>
<span class="attribution"><span class="source">Aijaz Rahi/AP</span></span>
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<p>Since January 25, Adani Group’s stock price has fallen 45%. The catalyst? An <a href="https://hindenburgresearch.com/adani-response/#_ftnref1">explosive report</a> published on January 24 by Hindenburg Research, alleging Adani Group engaged in “brazen stock manipulation and accounting fraud scheme over the course of decades”.</p>
<p>What complicates this report is that Hindenburg Research isn’t just a research company. It’s an “activist short seller”, with a financial incentive in seeing Adani’s stock price fall. </p>
<p>Hindenburg makes its profits by identifying “man-made disasters floating around in the market”. It bets on the stock falling, then publicises that company’s negatives – including doing so <a href="https://hindenburgresearch.com/adani/">in Adani’s case</a>:</p>
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<p>After extensive research, we have taken a short position in Adani Group Companies through US-traded bonds and non-Indian-traded derivative instruments. </p>
</blockquote>
<p>Adani’s <a href="https://www.adani.com/-/media/Project/Adani/Invetsors/Adani-Response-to-Hindenburg-January-29-2023.pdf">response</a> includes calling the report a “calculated attack on India” and “intended only to create a false market in securities to enable Hindenburg, an admitted short seller, to book massive financial gain through wrongful means at the cost of countless investors”.</p>
<p>Activist short selling is certainly controversial. But it’s not necessarily illegal, nor unethical.</p>
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Read more:
<a href="https://theconversation.com/unpicking-the-labyrinth-that-is-indias-adani-74552">Unpicking the labyrinth that is India's Adani</a>
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<h2>How does short selling work?</h2>
<p>Short selling (also known as having a “short exposure”, or “shorting”) is essentially betting on a company’s stock falling. </p>
<p>The process is more complicated than betting on a share price rising, for which all you have to do is buy the stock and wait for it to appreciate. </p>
<p>It can be done in several ways. The most common is to sell borrowed stock. The “short seller” makes a contract with a share owner to borrow shares for an agreed period. They then sell that stock, banking the proceeds. When the time comes to return the stock, they buy shares on the market to “repay” the loan. If the price has fallen in the meantime, they make a profit. </p>
<p>There are also methods that involve “derivatives”. These are financial instruments that allow investors to “bet” on financial outcomes. For example, a “put option” involves betting a stock’s price will fall below a specific level (called the strike price). Similarly, a futures contract pays out the difference between the current stock price and the future stock price. This allows the investor to effectively bet on price movements. </p>
<p>Investors might also invest via bonds. A corporate bond is much like a loan. Investors can short sell a bond like they would a stock. Alternatively, they can buy “credit default swaps”, which enable betting on a company defaulting on on its debt repayments.</p>
<p>There are even more complicated strategies than these. For fun explanations, check out the 2015 movie The Big Short, about the guys who bet on the collapse of the subprime mortgage market that led to the 2008 Global Financial Crisis. </p>
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<iframe width="440" height="260" src="https://www.youtube.com/embed/epb98OcFLZE?wmode=transparent&start=0" frameborder="0" allowfullscreen=""></iframe>
<figcaption><span class="caption">Short selling explained by Margot Robbie in ‘The Big Short’.</span></figcaption>
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<h2>Is short selling legal?</h2>
<p>There are two main legal issues arising with short selling.</p>
<p><strong>Market manipulation</strong>. It is illegal in most jurisdictions for activist short sellers to profit by spreading false or misleading information. This is the case in Australia and the US (where Hindenburg and some of its positions in Adani are based). But this is relatively easy to discover.</p>
<p><strong>Insider trading</strong>. it would be illegal to bet on a company’s future share price using information that is not generally available, then reveal that information.</p>
<p>On this, Hindenburg Research is skating on thin ice with some of its assertions. For example, its report says of Adani’s deals to build a rail line to transport coal in Queensland:</p>
<blockquote>
<p>None of the transactions were specifically disclosed in the Adani Enterprises annual reports. We uncovered them only by reviewing financials for the private Singaporean Carmichael Rail entity.</p>
</blockquote>
<p>If those financials were <strong>publicly</strong> available in a database or online, Hindenburg Research is in the clear. But if the financials were not generally available, it risks being accused of insider trading. </p>
<p>However, Hindenburg’s report contains many allegations involving a large volume of public information, which means it would be difficult to establish whether it also used any non-public information to assemble the report. </p>
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Read more:
<a href="https://theconversation.com/vital-signs-asics-crusade-against-activist-short-sellers-will-be-bad-for-regular-folk-161906">Vital Signs: ASIC's crusade against activist short sellers will be bad for regular folk</a>
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<h2>Is this ethical? Should we be concerned?</h2>
<p>There are some concerns about the ethics of profiting from a company’s demise. </p>
<p>Ethics can be arbitrary. However, we can consider some guidelines. These include: </p>
<ul>
<li><p>Does society benefit from information about fraud coming to light?</p></li>
<li><p>If there were no financial incentive, would a company really spend two years doing detailed forensic analysis?</p></li>
<li><p>Does anyone unfairly lose to justify rules or laws to discourage such profits?</p></li>
</ul>
<p>Exposing fraud is in the public interest. There must be some financial incentive to do such work. Existing shareholders are losing from Adani’s stock tumble, but that should properly be credited to the alleged fraud, not the report. </p>
<p>Ultimately, then, companies such as Hindenburg are generally a net positive if they comply with all relevant laws, securities regulations and privacy guidelines. </p>
<p>If the report is truthful, blaming Hindenburg for Adani’s crash is like blaming an alarm for a fire.</p><img src="https://counter.theconversation.com/content/198991/count.gif" alt="The Conversation" width="1" height="1" />
<p class="fine-print"><em><span>Mark Humphery-Jenner receives funding from the Australian Research Council and AFAANZ.</span></em></p>Activist short selling is certainly controversial. But it’s not necessarily illegal nor unethical.Mark Humphery-Jenner, Associate Professor of Finance, UNSW SydneyLicensed as Creative Commons – attribution, no derivatives.tag:theconversation.com,2011:article/1215522019-08-12T20:04:19Z2019-08-12T20:04:19ZAdani beware: coal is on the road to becoming completely uninsurable<figure><img src="https://images.theconversation.com/files/287681/original/file-20190812-71897-7kq207.jpg?ixlib=rb-1.1.0&rect=722%2C893%2C5148%2C2448&q=45&auto=format&w=496&fit=clip" /><figcaption><span class="caption">Insurers have to protect themselves against foreseeable risks. For insurers of fossil fuel projects, those risks are growing.</span> <span class="attribution"><span class="source">Shutterstock</span></span></figcaption></figure><p>The announcement by <a href="https://www.theguardian.com/australia-news/2019/jul/26/insurance-giant-suncorp-says-it-will-no-longer-cover-new-thermal-coal-projects">Suncorp</a> that it will no longer insure new thermal coal projects, along with a similar announcement by <a href="https://www.insurancenews.com.au/corporate/qbe-ditches-coal-business">QBE Insurance</a> a few months earlier, brings Australia into line with Europe where <a href="https://www.insureourfuture.us/updates/2018/12/17/europes-largest-insurers-move-to-limit-coal-and-co2-related-risks">most major insurers</a> have broken with coal. </p>
<p>US firms have been a little slower to move, but <a href="https://www.reuters.com/article/us-chubb-ltd-ch-coal-policy-idUSKCN1TW3I2">Chubb</a> announced a divestment policy in July, and <a href="https://www.ran.org/press-releases/pressure-grows-on-adani-as-liberty-mutual-reveals-it-will-not-insure-carmichael-project/">Liberty</a> has confirmed it will not insure Australia’s Adani project. </p>
<p>Other big firms such as America’s AIG are coming <a href="https://actions.sumofus.org/a/adani-aig-insurance">under increasing pressure</a>. </p>
<p>Even more than divestment of coal shares by banks and managed funds, the withdrawal of insurance has the potential to make coal mining and coal-fired power generation businesses unsustainable. </p>
<p>As the chairman and founder of Adani Group, Gautam Adani, has shown in Queensland’s Galilee Basin, a sufficiently rich developer can use its own resources to finance a coal mine that <a href="https://theconversation.com/explaining-adani-why-would-a-billionaire-persist-with-a-mine-that-will-probably-lose-money-117682">banks won’t touch</a>.</p>
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Read more:
<a href="https://theconversation.com/echoes-of-2008-could-climate-change-spark-a-global-financial-crisis-112497">Echoes of 2008: Could climate change spark a global financial crisis?</a>
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<p>But without insurance, mines can’t operate. </p>
<p>(Adani claims to have insurers for the Carmichael project, but has <a href="https://ecowarriorprincess.net/2019/06/liberty-mutual-will-not-insure-adani-carmichael-coal-mine/">declined to reveal their names</a>.)</p>
<h2>Why are insurers abandoning coal?</h2>
<p>By the nature of their business, insurers cannot afford to indulge the denialist fantasies still popular in some sectors of industry. Damage caused by climate disasters is one of their biggest expenses, and insurers are fully aware that that damage is set to rise over time.</p>
<p>Even so, a sufficiently hard-headed company might choose to work both sides of the street – continuing to do business with fossil fuel companies, while also writing more expensive insurance against climate damage.</p>
<p>The bigger problem insurers face is the risk of litigation holding fossil fuel companies responsible for climate-related damage. For the moment, this is a potential rather than an immediate risk.</p>
<p>As US insurer <a href="https://www.businessinsurance.com/article/20190724/NEWS06/912329769/AIG-names-sustainability-leader-outlines-climate-exposure">AIG</a>, yet to announce a divestment policy, has observed:</p>
<blockquote>
<p>Based on our monitoring, while the overall volume of litigation activity has increased, past litigation seems to have largely been unsuccessful on numerous grounds including difficulties in determining and attributing fault and liability to a particular company, and the judiciary’s deference to the political branches of government on questions relating to climate change.</p>
</blockquote>
<p>Recent development suggest these difficulties will be overcome.</p>
<h2>It’s becoming easier to finger climate culprits…</h2>
<p>Until recently, the most immediate problem facing potential litigants has been demonstrating that an event was the result of climate change as opposed to something else, such as random fluctuations in climatic conditions.</p>
<p>Scientific progress on this “extreme event attribution problem” has been rapid.</p>
<p>It is now possible to <a href="https://www.climatecouncil.org.au/resources/cranking-intensity-report/">say with confidence</a> that climate change is causing an increase in both the frequency and intensity of extreme weather and weather-related events such as extreme heatwaves, drought, heavy rains, tropical storms and bushfires. </p>
<p>The Bulletin of the American Meteorological Society has highlighted <a href="https://www.yaleclimateconnections.org/2017/12/three-extremes-in-2016-not-possible-without-human-warming/">three extremes</a> in 2016 that would not have occurred if not for the added influence of climate change:</p>
<ul>
<li><p>a persistent area of unusually warm water that lingered off the Alaskan coast, causing reduced marine productivity and other ecological disruptions</p></li>
<li><p>the extreme heatwave that happened in Asia, killing hundreds and destroying crops</p></li>
<li><p>the overall global atmospheric heat record set that year.</p></li>
</ul>
<h2>…and to allocate liability</h2>
<p>The second line of defence against climate litigation that has held so far is the difficulty of imputing damage to the companies that burn fossil fuels.</p>
<p>While it is true that all weather events have multiple causes, in many circumstances climate change caused by the burning of fossil fuels has been a necessary condition for those events to take place.</p>
<p>Courts routinely use arguments about necessary conditions to determine liability.</p>
<p>For example, a spark from a power line might cause a bushfire on a hot, dry, windy day, but would be harmless on a wet cold day. That can be enough to establish liability on the part of the company that operates the power line.</p>
<p>These issues are playing out in California, where devastating fires in 2017 caused damage estimated at US$30 billion and drove the biggest of the power companies, PG&E, into <a href="https://www.forbes.com/sites/christopherhelman/2019/01/21/as-30b-in-wildfire-claims-bankrupt-pge-california-wonders-who-will-pay-after-the-next-conflagration/#4fa3a4c26995">bankruptcy</a>. </p>
<p>As a result there has been pressure to loosen liability laws, leaving the cost of future disasters to be borne by Californians in general, and their insurers. </p>
<p>Lawyers will be looking for someone to sue.</p>
<h2>Adani is a convenient target</h2>
<p>The question facing potential litigants is whether any single company contributes enough to climate change to make it meaningfully liable for particular disaster. </p>
<p>Adani’s Carmichael mine provides a convenient example.</p>
<p>Adani says the 10 million tonnes of coal it plans to mine will produce only <a href="https://www.australianmining.com.au/news/adani-defends-carbon-emissions-at-carmichael/">240,000 tonnes</a> of carbon dioxide, but this is semantic trickery. The firm is referring only to so-called “scope 2” emissions associated with the mining process itself. </p>
<p>When the coal is burned it might produce an extra 30 million tonnes of carbon dioxide, amounting to about 0.05% of global emissions. </p>
<p>A 0.1% share of the damage associated with the California fires is US$15 million, enough to be worth suing for. Other similarly sized mines will face similar potential liabilities.</p>
<p>Once a precedent is established, any company in the business of producing or burning fossil fuels on a large scale can expect to be named in a regular stream of suits seeking substantial damages.</p>
<h2>When governments are successfully sued…</h2>
<p>The remaining line of defence for companies responsible for emissions is the history of courts in attributing climate change to decisions by governments rather than corporations. </p>
<p>In the Netherlands, a citizen action group called Urgenda has won a case against the Dutch government arguing it has <a href="https://www.urgenda.nl/en/themas/climate-case/">breached its legal duty of care</a> by not taking appropriate steps to significantly restrain greenhouse gas emissions and prevent damage from climate change.</p>
<p>The government is appealing, but it has lost every legal round so far. Sooner or later, this kind of litigation will be successful. Then, governments will look for another party that can be sued instead of them.</p>
<h2>…they’ll look for someone else to blame</h2>
<p>Insurance companies are an easy target with deep pockets. Despite its hopeful talk quoted above, AIG would find it very difficult to avoid paying up if Californian courts found the firms it insured liable for their contributions to a climate-related wildfires or floods.</p>
<p>This is not a message coal-friendly governments in the US or Australia want to hear. </p>
<p>But the decision of Suncorp to dump coal, just a couple of months after the re-election of the Morrison government, makes it clear that businesses with a time horizon measured in decades cannot afford wishful thinking. They need to protect themselves against what they can see coming.</p>
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<em>
<strong>
Read more:
<a href="https://theconversation.com/explaining-adani-why-would-a-billionaire-persist-with-a-mine-that-will-probably-lose-money-117682">Explaining Adani: why would a billionaire persist with a mine that will probably lose money?</a>
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<img src="https://counter.theconversation.com/content/121552/count.gif" alt="The Conversation" width="1" height="1" />
<p class="fine-print"><em><span>John Quiggin is a former Member of the Climate Change Authority. He has been active in campaigns against new and expanded thermal coal mines.</span></em></p>The decision of Suncorp to dump coal, just months after the re-election of the Morrison government, makes it clear that insurers can’t afford wishful thinking.John Quiggin, Professor, School of Economics, The University of QueenslandLicensed as Creative Commons – attribution, no derivatives.tag:theconversation.com,2011:article/1204872019-07-17T05:12:02Z2019-07-17T05:12:02ZAdani has set a dangerous precedent in requesting scientists’ names<figure><img src="https://images.theconversation.com/files/284435/original/file-20190717-173370-47h9j.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=496&fit=clip" /><figcaption><span class="caption">The Galilee waterhole is part of the area potentially affected by Adani's Carmichael mine.</span> <span class="attribution"><a class="source" href="https://www.flickr.com/photos/stopadani/35457088785/in/photolist-W2dRbZ-RRgS71-Wyjvxs-TpUwSz-C92xfq-Twc5sF-C91x4q-ZccVyL-CpNCZw-CpNEiU-Z88aP7-YdU29T-VSdV66-E5FkK3-UaEcWQ-ZcfkA5-ZS8Fn2-UaEeKE-UpftVE-VVQueF-CpP6XQ-YuFC5p-Yajoj5-WyjwMw-UaEdt1-C926TJ-ZvWsra-Z86y4G-ZS8FQg-U4oQ5E-FJ4T3y-UGbuyd-YrgQsC-Vn7xeY-YRexzq-YRdTdq-WUdP79-CpNh9o-UyienF-TpTwni-Yrgriw-UU3B8y-R9cdDU-UbZozT-CpPiSw-ZvWvar-YckmjD-ZdFMmY-UGbzr9-UDrJ1v">Stop Adani</a>, <a class="license" href="http://creativecommons.org/licenses/by-sa/4.0/">CC BY-SA</a></span></figcaption></figure><p>A freedom of information request has revealed Adani sought the names of CSIRO and Geoscience Australia scientists involved in reviewing <a href="https://www.abc.net.au/news/2019-07-16/adani-requests-names-of-csiro-scientists/11308616">groundwater management plans</a> related to its proposed Carmichael mine.</p>
<p>Adani argued it required a list of people involved in the review so as to have “peace of mind” that it was being treated fairly and impartially on a scientific rather than a political basis. </p>
<p>Ten days before Adani’s request, Geoscience Australia’s acting director of groundwater advice and data <a href="https://www.abc.net.au/news/2019-07-16/adani-requests-names-of-csiro-scientists/11308616">reportedly raised concerns</a> that Adani had “actively searched/viewed” his LinkedIn profile and that of a colleague.</p>
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Read more:
<a href="https://theconversation.com/interactive-everything-you-need-to-know-about-adani-from-cost-environmental-impact-and-jobs-to-its-possible-future-116901">Interactive: Everything you need to know about Adani – from cost, environmental impact and jobs to its possible future</a>
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<p>Significantly, Adani’s request to the government was made before CSIRO and Geoscience Australia had reported their review findings back to the Queensland government. </p>
<p>While the federal Department of the Environment and Energy <a href="https://www.theguardian.com/business/2019/jul/16/adani-justified-in-demanding-names-of-csiro-scientists-deputy-pm-says">reportedly declined to hand over the names</a>, the fact the letter was sent in the first place is concerning. It fundamentally interferes with the capacity of individual scientists to provide clear and informed evaluation.</p>
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<a href="https://images.theconversation.com/files/284433/original/file-20190717-173360-d8jif6.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=1000&fit=clip"><img alt="" src="https://images.theconversation.com/files/284433/original/file-20190717-173360-d8jif6.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=754&fit=clip" srcset="https://images.theconversation.com/files/284433/original/file-20190717-173360-d8jif6.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=600&h=650&fit=crop&dpr=1 600w, https://images.theconversation.com/files/284433/original/file-20190717-173360-d8jif6.jpg?ixlib=rb-1.1.0&q=30&auto=format&w=600&h=650&fit=crop&dpr=2 1200w, https://images.theconversation.com/files/284433/original/file-20190717-173360-d8jif6.jpg?ixlib=rb-1.1.0&q=15&auto=format&w=600&h=650&fit=crop&dpr=3 1800w, https://images.theconversation.com/files/284433/original/file-20190717-173360-d8jif6.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=754&h=817&fit=crop&dpr=1 754w, https://images.theconversation.com/files/284433/original/file-20190717-173360-d8jif6.jpg?ixlib=rb-1.1.0&q=30&auto=format&w=754&h=817&fit=crop&dpr=2 1508w, https://images.theconversation.com/files/284433/original/file-20190717-173360-d8jif6.jpg?ixlib=rb-1.1.0&q=15&auto=format&w=754&h=817&fit=crop&dpr=3 2262w" sizes="(min-width: 1466px) 754px, (max-width: 599px) 100vw, (min-width: 600px) 600px, 237px"></a>
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<span class="caption">The letter obtained under freedom of information by environmental group Lock The Gate. Click to enlarge.</span>
<span class="attribution"><span class="source">Lock the Gate</span></span>
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<h2>Was Adani denied procedural fairness?</h2>
<p>In the absence of clear legislation to the contrary, government decision-makers have a general duty to accord “procedural fairness” to those affected by their decisions. While procedural fairness is protected by common law, <a href="https://www.legislation.gov.au/Details/C2017C00238">Commonwealth legislation</a> also provides some protection, and a breach of procedural fairness is a ground for judicial review.</p>
<p>What exactly constitutes procedural fairness varies from case to case. Fundamentally, the principles of procedural fairness acknowledge the power imbalance that can arise between an administrative decision-maker and an individual citizen. Traditionally, procedural fairness has two elements: the <strong>fair hearing rule</strong> and the <strong>rule against bias</strong>. </p>
<p>The <strong>fair hearing rule</strong> requires a person – or company, in this case – to have an opportunity to be heard before a decision is made affecting their interest. </p>
<p>The <strong>rule against bias</strong> ensures the decision-maker can be objectively considered to be impartial and not to have prejudged a decision. This rule is flexible, and must be determined by reference to a hypothetical observer who is fair minded and informed of the circumstances.</p>
<p>There is no indication of any breach of procedural fairness in the environmental assessment process. The review of the groundwater management plan was conducted rigorously, according to the public interest. </p>
<p>The letter sent by Adani requesting the names of scientists was allegedly grounded in concerns about the possibility of anti-Adani activism by expert reviewers. Despite this, Adani made it clear that it was not explicitly alleging bias. Its objective, the letter said, was a desire to be “treated fairly and in a manner consistent with other industry participants”.</p>
<h2>The real purpose of the letter</h2>
<p>If Adani was seriously concerned about a breach of procedural fairness in the review of their groundwater management plan, it would have sought a judicial review. It did not – because there was no breach.</p>
<p>The scientists working at CSIRO and Geoscience Australia are all experts in their disciplines. They were engaged in the important process of determining whether Adani’s plan for managing groundwater around their mine would meet the environmental conditions of their mining licence. In other words, the scientists were doing their job.</p>
<p>Deputy Prime Minister Michael McCormack has said he “understands” Adani’s actions because of the <a href="https://www.theguardian.com/business/2019/jul/16/adani-justified-in-demanding-names-of-csiro-scientists-deputy-pm-says">delays associated with the review</a>, but this is not how the system works.<br>
The delays occurred because the original plan submitted by Adani had to be <a href="http://www.environment.gov.au/system/files/pages/cb8a9e41-eba5-47a4-8b72-154d0a5a6956/files/csiro-geoscience-australia-final-advice.pdf">revised following expert review</a>, and the updated plan required detailed evaluation. The mine could potentially have a <a href="https://theconversation.com/unpacking-the-flaws-in-adanis-water-management-plan-116161">serious impact</a> on groundwater, the communities and ecosystems dependent on the water, and the nationally significant Doongmabulla Springs; this deserves careful scrutiny. </p>
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<p>As Adani has not brought an action for judicial review, the substantive purpose of the letter appears to be, as suggested by CSIRO representatives, to pressure scientists and potentially seek to discredit their work. The potentially <a href="https://www.canberratimes.com.au/story/6275692/adani-wanted-names-of-csiro-scientists/">chilling effect</a> is clear. </p>
<h2>Concern about climate change is not bias</h2>
<p>The profound concerns raised by climate change and fossil fuel emissions are shared by many scientists around the world. The reports prepared for the International Panel on Climate Change make it clear that coal fired electricity <a href="https://report.ipcc.ch/sr15/pdf/sr15_spm_final.pdf">must drop to nearly zero by 2050</a> to keep warming within 1.5°C.</p>
<p>This shared concern does not make scientists political activists. Nor does it prevent scientists from acting fairly and impartially when reviewing a groundwater management plan. </p>
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<a href="https://theconversation.com/the-uns-1-5-c-special-climate-report-at-a-glance-104547">The UN's 1.5°C special climate report at a glance</a>
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<p>An acceptance of climate science and even a belief that coal-fired energy should be decommissioned does not constitute bias. A reasonable bystander would expect most environmental scientists to be concerned about climate change.</p>
<p>It is crucial the environmental assessment process for large coal mines remains rigorously independent and absolutely free from any direct or indirect pressure from the coal industry. This is even more important when dealing with groundwater assessments, given their economic, social and ecological significance. </p>
<p>The letter, sent before the review was handed down, sets a dangerous precedent. Not because it suggests the scientists were impartial or there was any procedural unfairness involved in the process. But rather, because it jeopardises the independence of our scientists who, in seeking to ensure the longevity of our water, food and energy resources, carry a heavy responsibility to the public interest.</p><img src="https://counter.theconversation.com/content/120487/count.gif" alt="The Conversation" width="1" height="1" />
<p class="fine-print"><em><span>Samantha Hepburn does not work for, consult, own shares in or receive funding from any company or organisation that would benefit from this article, and has disclosed no relevant affiliations beyond their academic appointment.</span></em></p>Adani’s request for the names of individual scientists reviewing their groundwater management plan has chilling implications for scientific independence.Samantha Hepburn, Director of the Centre for Energy and Natural Resources Law, Deakin Law School, Deakin UniversityLicensed as Creative Commons – attribution, no derivatives.tag:theconversation.com,2011:article/1176822019-06-02T20:07:30Z2019-06-02T20:07:30ZExplaining Adani: why would a billionaire persist with a mine that will probably lose money?<p>By mid-June, if everything goes as expected, Adani Australia will receive the final environmental approvals for its proposed Carmichael coal mine and rail line development. </p>
<p>Newspaper reports based on briefings from Adani suggest that, once the approvals are in place, the company could begin digging “<a href="https://www.couriermail.com.au/news/queensland/digging-on-carmichael-mine-could-begin-within-weeks/news-story/c1ac91cd04e9bc7b792769c04457f492">within days</a>”.</p>
<p>On Friday the Queensland government <a href="https://www.afr.com/news/politics/adani-wins-vital-approval-for-qld-mine-20190531-p51t5g">approved</a> Adani’s plan to protect a rare bird, apparently leaving it with just final regulatory hurdle: approval for its plan to manage groundwater.</p>
<p>Its billboards in Brisbane read: “<a href="https://www.townsvillebulletin.com.au/news/townsville/adani-takes-carmichael-mine-plight-to-people-of-brisbane/news-story/bd3a82038db2173ec5546b89b130f913">We can start tomorrow if we get the nod today</a>”. </p>
<p>But several big obstacles remain. Even after governments are out of the way, it will have to deal with markets and companies that aren’t keen on the project.</p>
<h2>Obstacles aplenty</h2>
<p>First up, there’s the problem of access to Aurizon’s rail line. Adani originally planned to build its own 388km railway from the Galilee Basin to its coal terminal at Abbot Point. </p>
<p>However, in the <a href="https://theconversation.com/adanis-new-mini-version-of-its-mega-mine-still-faces-some-big-hurdles-108038">scaled-down version of the project</a> announced last year, Adani plans to build only 200km of track, before connecting to the existing Goonyella line owned by the rail freight company Aurizon. </p>
<p>That requires an agreement of access pricing and conditions. Aurizon is legally obliged to negotiate with Adani, but has shown itself to be in <a href="https://www.theguardian.com/environment/2018/nov/11/adani-faces-questions-over-who-will-pay-for-aurizon-rail-link-upgrade">no hurry to reach a deal</a>.</p>
<p>Then there’s insurance. Faced with rejection by every major bank in the world, Adani announced it would fund the project from its own resources. But now insurers, including nearly all the big European firms and Australia’s own QBE, are saying <a href="https://www.afr.com/news/insurers-shun-adanis-carmichael-coal-mine-says-activist-group-market-forces-20181219-h19ale">the same sort of thing</a> as the financiers. </p>
<p>Without insurance the project can’t proceed, and the pool of potential insurers is shrinking all the time.</p>
<h2>Not particularly financial</h2>
<figure class="align-right zoomable">
<a href="https://images.theconversation.com/files/277464/original/file-20190601-69067-1599l53.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=1000&fit=clip"><img alt="" src="https://images.theconversation.com/files/277464/original/file-20190601-69067-1599l53.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=237&fit=clip" srcset="https://images.theconversation.com/files/277464/original/file-20190601-69067-1599l53.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=600&h=804&fit=crop&dpr=1 600w, https://images.theconversation.com/files/277464/original/file-20190601-69067-1599l53.jpg?ixlib=rb-1.1.0&q=30&auto=format&w=600&h=804&fit=crop&dpr=2 1200w, https://images.theconversation.com/files/277464/original/file-20190601-69067-1599l53.jpg?ixlib=rb-1.1.0&q=15&auto=format&w=600&h=804&fit=crop&dpr=3 1800w, https://images.theconversation.com/files/277464/original/file-20190601-69067-1599l53.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=754&h=1010&fit=crop&dpr=1 754w, https://images.theconversation.com/files/277464/original/file-20190601-69067-1599l53.jpg?ixlib=rb-1.1.0&q=30&auto=format&w=754&h=1010&fit=crop&dpr=2 1508w, https://images.theconversation.com/files/277464/original/file-20190601-69067-1599l53.jpg?ixlib=rb-1.1.0&q=15&auto=format&w=754&h=1010&fit=crop&dpr=3 2262w" sizes="(min-width: 1466px) 754px, (max-width: 599px) 100vw, (min-width: 600px) 600px, 237px"></a>
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<span class="caption">Adani Group founder Gautam Adani.</span>
<span class="attribution"><a class="source" href="https://commons.wikimedia.org/wiki/File:Gautam_Adani.jpg">Wikimedia</a>, <a class="license" href="http://creativecommons.org/licenses/by/4.0/">CC BY</a></span>
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<p>But the most fundamental problem may lie within the Adani group itself. The US$2 billion required from the project will ultimately come, in large measure, from chairman Gautam Adani’s own pocket. </p>
<p>With an estimated wealth of <a href="https://en.wikipedia.org/wiki/Gautam_Adani">US$7 billion</a>, he can certainly afford to pay if he chooses to. But it would represent a huge bet on the long-term future of coal-fired electricity, at very bad odds.</p>
<p>In my analysis of the original Carmichael mine proposal in 2017 I concluded that the profit from operating the coal mine would be around <a href="http://www.tai.org.au/content/economic-nonviability-adani-galilee-basin-project">A$15 per tonne</a>.</p>
<p>A recent analysis of the revised project by David Fickling for Bloomberg yielded a marginally more favorable estimate of <a href="https://www.bloomberg.com/opinion/articles/2019-05-23/the-math-on-adani-s-carmichael-coal-mine-doesn-t-add-up">US$16 per tonne</a>, or US$160 million a year for the initial output of 10 million tonnes a year. </p>
<p>That’s a small return on A$2 billion, before considering overheads and depreciation.</p>
<h2>It’d need a long life…</h2>
<p>Such an investment could only be profitable on the basis of a mine with a long life and substantial potential for future expansion. How likely is that? When the start of construction was re-announced last November, it was suggested the coal might be shipped by 2021. With six months’ delay, and the insurance problem noted already, 2022 seems like the earliest possible date.</p>
<p>But by that time, the current construction pipeline for coal-fired plants in India will have been worked through, and very few new ones will be being commissioned. A mere <a href="https://numerical.co.in/numerons/collection/59e44f88250a41f81b6ef7b9">8 gigawatts</a> of new coal-fired power was commissioned in 2017-18, partly offset by 3.6GW of coal-fired power stations that closed down.</p>
<p>The Indian government has stated that no new coal plants will be needed after 2022, or 2027 at the latest.</p>
<h2>…which it might not get</h2>
<p>In these circumstances, newly opened coal mines will be able to sell coal only if they can displace existing suppliers. This suggests prices will have to fall to a level sufficient to ensure further closures of existing mines. Such a fall would erode or eliminate Adani’s already thin margins.</p>
<p>By 2030, with the project still in its relatively early stages, most developed countries will have stopped using coal-fired power. The others will be moving fast in that direction. So far under President Trump, the United States has closed 50 coal-fired power stations, and will almost certainly never build another.</p>
<p>The only glimmer of hope for coal has been in less developed countries in Asia. But over the course of this year, even these hopes have dimmed. Major banks in Japan and Singapore have withdrawn from funding new coal projects, following the lead of the global banks based in Europe and the US. </p>
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Read more:
<a href="https://theconversation.com/if-the-adani-mine-gets-built-it-will-be-thanks-to-politicians-on-two-continents-118043">If the Adani mine gets built, it will be thanks to politicians, on two continents</a>
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<p>That leaves South Korea and China as potential sources of funding. Korea is already <a href="https://www.powermag.com/south-korean-president-details-phase-out-of-coal-nuclear-power/">phasing out</a> coal-fired power domestically and its banks are being pressured to divest globally. The option of relying solely on China is problematic to say the least.</p>
<p>To sum up, unless current trends change dramatically, the economic life of the Carmichael mine is unlikely to be more than a decade – nowhere near enough to recover a A$2 billion investment.</p>
<h2>Explaining Adani</h2>
<p>So what could be going on? Perhaps Gautam Adani is willing to lose a large share of his wealth simply to show he can’t be pushed around. Alternatively, as on numerous previous occasions, his promises of an imminent start to work may prove to be baseless. </p>
<p>The third, and most worrying, possibility is that the political pressure to deliver the promised Adani jobs will lead to a large infusion of public money, all of which will be lost. </p>
<p>The A$900 million Adani sought from the Northern Australia Infrastructure Facility in 2017 would be enough to keep the project going for a couple of years, without the need for Mr Adani to risk his own money. It now appears that a similar sum <a href="https://www.michaelwest.com.au/the-fix-is-in-adani-hooks-indias-poor-and-australias-taxpayers/">might be sought from the Export Finance and Insurance Corporation</a>.</p>
<p>All this is speculation. Assuming the approvals come through by the Queensland premier’s self-imposed deadline of <a href="https://www.couriermail.com.au/news/queensland/state-government-gives-less-than-three-weeks-to-finish-environmental-approvals/news-story/e6a52f1fc2a1040bdf8e8d3f137364a9">June 13</a>, we will find out soon enough whether something happens, or whether something else will stay in the way.</p>
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Read more:
<a href="https://theconversation.com/interactive-everything-you-need-to-know-about-adani-from-cost-environmental-impact-and-jobs-to-its-possible-future-116901">Interactive: Everything you need to know about Adani – from cost, environmental impact and jobs to its possible future</a>
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<p class="fine-print"><em><span>John Quiggin is a long-standing critic of the Carmichael mine project and has worked with a number of NGOs opposed to the project, including Farmers for Climate Action.</span></em></p>Gautam Adani might be willing to lose a large share of his wealth to show that he can’t be pushed around, or he might want more public money.John Quiggin, Professor, School of Economics, The University of QueenslandLicensed as Creative Commons – attribution, no derivatives.tag:theconversation.com,2011:article/1180432019-05-30T19:54:32Z2019-05-30T19:54:32ZIf the Adani mine gets built, it will be thanks to politicians, on two continents<figure><img src="https://images.theconversation.com/files/277155/original/file-20190530-69063-1elkocc.jpg?ixlib=rb-1.1.0&rect=0%2C28%2C928%2C430&q=45&auto=format&w=496&fit=clip" /><figcaption><span class="caption">Re-elected Indian prime minister Narendra Modi might have helped the Adani mine in the Galilee Basin to get over the line. </span> <span class="attribution"><a class="source" href="http://southwind.com.au/">southwind.com.au</a>, <a class="license" href="http://creativecommons.org/licenses/by-sa/4.0/">CC BY-SA</a></span></figcaption></figure><p>With the final approval of the Adani Carmichael coal mine now <a href="https://www.abc.net.au/news/2019-05-23/macmines-abandons-mining-lease-applications/11138310">apparently imminent</a>, it is important to ask how it has seemingly defied the assessment of experts that it is not financially viable.</p>
<p>After all, it’s only a week since the Chinese owner of another mine planned for the Galilee Basin, the China Stone mine, <a href="https://www.caixinglobal.com/2018-11-26/china-stone-coal-mine-rolls-forward-and-back-on-australian-state-go-ahead-101352021.html">suspended its bid for mining leases</a> because of commercial considerations.</p>
<p>The numbers <a href="https://www.smh.com.au/business/companies/the-numbers-on-adani-simply-don-t-add-up-20190524-p51qoy.html">appear not to add up</a> because the location is remote, the coal would be expensive to transport, and the price is <a href="https://www.industry.gov.au/sites/default/files/ampla-energy-transformation-presentation-oct18.pdf">expected to fall</a>.</p>
<p>But such a purely financial analysis ignores the political forces driving the development of the coal industry in both India and Australia. </p>
<h2>Mates in India, mates in Australia</h2>
<p>In short, both are locked into what I describe as a model of <a href="https://www.newsouthbooks.com.au/books/adani-and-coal-wars/">crony capitalism</a>, in which special deals are handed out to projects such as Adani that tip the scales in favour of development. </p>
<p>The actions of China and Japan in deploying enormous state power to export their respective coal technologies to Southeast Asia strengthens the hands of those pushing such developments.</p>
<p>In my recent book, <a href="https://www.newsouthbooks.com.au/books/adani-and-coal-wars/">Adani and the war over coal</a>, I outline a network of power that for several decades has promoted the development of Australia’s coal resources in the interests of national and international corporations. </p>
<p>The mining companies, then the big four banks became part of it, lending billions in the rush to develop Australian coal mines as Asian countries sought to lock in long-term supplies. The Minerals Council of Australia, the New South Wales Minerals Council and the Queensland Resources Council, with their collective close ties to both political parties, handled public relations.</p>
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<a href="https://theconversation.com/with-the-lnp-returned-to-power-is-there-anything-left-in-adanis-way-117506">With the LNP returned to power, is there anything left in Adani's way?</a>
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<p>Yet they have faced resistance from the rise of an anti-Adani movement that links grassroots environmentalists, peak environmental lobby groups and progressive organisations such as GetUp!</p>
<p>By mid-2018, these campaigners seemed to have backed the Carmichael mine into a cul de sac by scaring off both Australian and foreign investors. They had also pressured the Queensland government to withdraw its support for a loan to the project from the Commonwealth government’s <a href="http://agriculture.gov.au/water/national/national-water-infrastructure-development-fund">Northern Australia Infrastructure Facility</a>. </p>
<p>Then Adani surprised them by announcing that it would scale back the project and <a href="https://www.afr.com/news/politics/adani-to-selffund-2b-carmichael-mine-construction-to-start-before-christmas-20181129-h18i91">fund it from its own resources</a>. On the face of it this seemed unlikely, but it had help.</p>
<h2>Adani and Modi have history</h2>
<p>The chairman and founder of the Adani group, Gautam Adani, has had a long relationship with the recently re-elected Prime Minister of India, <a href="https://www.afr.com/news/world/asia/the-stupendous-rise-of-indias-new-super-rich-20180926-h15vf4">Narendra Modi</a>. </p>
<p>Modi played a decisive role in paving the way for Adani’s latest mega deal: selling coal-fired power from a plant in the Indian state of Jharkhand <a href="https://economictimes.indiatimes.com/industry/energy/power/govt-approves-adani-powers-rs-14000-cr-jharkhand-sez-project/articleshow/68240390.cms">to nearby Bangladesh</a>. </p>
<p>The power for Bangladesh is set to be fired by Carmichael coal. Many Australians would be concerned to learn that our coal is to be used to power one of the most <a href="https://www.dw.com/en/climate-change-poses-dire-challenges-for-bangladesh/a-46740543">climate-challenged</a> countries on the planet, but we have this on the authority of Adani’s previous Australian-based chief executive, <a href="https://www.themorningbulletin.com.au/news/adani-wants-cqs-coal-to-lift-millions-out-of-pover/3371530/">Jeyakuma Janakaraj</a>. </p>
<p>Twelve days before the 2019 Indian election date was announced, the Modi government gave approval for an Adani project in Jharkhand to become the first designated power project in India to get the status and benefits of a Special Economic Zone, <a href="https://scroll.in/article/917532/in-final-days-of-modi-government-adani-project-in-jharkhand-becomes-india-s-first-power-sector-sez">saving Adani billions of dollars in taxes</a>, including clean energy taxes. </p>
<p>The Indian state will provide land, infrastructure and water for the project and shoulder the burden of pollution. The cost of the power to Bangladesh is <a href="https://scroll.in/article/917532/in-final-days-of-modi-government-adani-project-in-jharkhand-becomes-india-s-first-power-sector-sez">not expected to be cheap</a>.</p>
<h2>Will we be asked for more?</h2>
<p>Adani’s form suggests it might come back to Australia for more. Following the re-election of the Morrison government it is already being speculated that the pro-coal Minister for Resources, Matt Canavan, will revisit the original proposal for a <a href="http://www.mattcanavan.com.au/it_s_right_to_consider_adani_s_request_for_loan">billion-dollar government-sponsored loan</a> from the Northern Australia Infrastructure Facility to construct the railway from the Galilee Basin to the Abbot Point coal port.</p>
<p>The Adani saga points to a critical flaw in the <a href="https://unfccc.int/process-and-meetings/the-paris-agreement/the-paris-agreement">Paris climate agreement</a>. It is an agreement between nation states, but what those states do is often determined by arrangements between politicians and private companies that feel no particular obligation to keep global warming to less than two degrees.</p>
<p>We are pawns in a larger, climate-destroying game.</p>
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Read more:
<a href="https://theconversation.com/interactive-everything-you-need-to-know-about-adani-from-cost-environmental-impact-and-jobs-to-its-possible-future-116901">Interactive: Everything you need to know about Adani – from cost, environmental impact and jobs to its possible future</a>
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<p class="fine-print"><em><span>Quentin Beresford does not work for, consult, own shares in or receive funding from any company or organisation that would benefit from this article, and has disclosed no relevant affiliations beyond their academic appointment.</span></em></p>India’s re-elected prime minister has paved the way for Queensland coal to power Bangladesh.Quentin Beresford, Professor of Politics, Edith Cowan UniversityLicensed as Creative Commons – attribution, no derivatives.tag:theconversation.com,2011:article/911052018-02-01T11:57:01Z2018-02-01T11:57:01ZGrattan on Friday: For Bill Shorten, it will be a matter of eyes left and centre<p>In the early months of 2018 Bill Shorten will have the tough challenge of juggling his pitches to Labor’s two bases – its progressive and its traditional supporters.</p>
<p>The byelection in the inner Melbourne seat of Batman, which follows the exit of <a href="https://theconversation.com/early-byelection-test-for-shorten-after-david-feeney-quits-parliament-91073">Labor’s David Feeney on Thursday</a>, is a race that will be run on the left side of the political field.</p>
<p>The Greens have a great chance to give their one lower house MP, Adam Bandt, a colleague. Labor will be under particular pressure on awkward issues, especially the proposed Queensland Adani mine and its stance on refugees. It was notable that this week Shorten, asked about Adani, sounded more cautious and cooler than previously. The Greens, mobilised in Batman on that issue, will pursue him relentlessly.</p>
<p>There’s a good deal of pessimism in Labor about the byelection, but some see a few bright spots. Feeney dragged down Labor’s vote in 2016. There’s bad blood within the Greens. And Labor’s left-aligned candidate, ACTU president Ged Kearney, will strongly prosecute progressive and cost-of-living issues.</p>
<p>While Batman carries high stakes for Shorten – losing it would be a major setback with implications well beyond the forfeit of a Labor number – it is also something of a niche contest. The Liberals don’t even intend to turn up with a candidate.</p>
<p>The main national game is firmly on the centre ground. And if byelections come in other Labor seats as a consequence of the citizenship imbroglio, it would be mostly on that ground where Shorten would be fighting.</p>
<p>Especially worrying for Labor is the likeliest contest – in the Queensland electorate of Longman, where ALP MP Susan Lamb <a href="https://theconversation.com/high-court-to-rule-on-two-labor-mps-but-partisan-row-protects-others-88712">didn’t provide adequate documentation</a> to the British authorities and so remains a dual citizen.</p>
<p>Her argument is that she did all she reasonably could to renounce her British citizenship – a proposition which will be tested if, as expected, the government refers her to the High Court, together with two other Labor MPs and crossbencher <a href="https://theconversation.com/sharkie-told-by-turnbull-she-may-have-to-go-to-high-court-87211">Rebekha Sharkie</a>.</p>
<p>In a byelection in Longman, which Labor holds by less than 1%, Shorten would need to appeal to blue-collar and other workers who’d be more likely to register any protest by voting One Nation (whose preferences helped the ALP last time) than Green. The Liberal National Party believes the previous member, Wyatt Roy, lost it votes and that it would have a good chance of regaining the seat when it had another candidate.</p>
<p>Late last year the government was in a world of pain with byelections in New England and Bennelong (in the event, both turned out very well for it). Now the pain is all Labor’s.</p>
<p>More broadly, Shorten for a long time seemed to have the political breaks running his way, but suddenly things have turned. Beyond the citizenship crisis, the economy is looking better, and Malcolm Turnbull’s performance has lifted.</p>
<p>A nightmare scenario for Shorten would be to lose both Batman and Longman.</p>
<p>If Batman went, it would open a debate within Labor about whether it was doing enough to meet the challenge of the Green vote at the next election.</p>
<p>The timing of a Batman defeat would be in the run-up to the ALP’s July national conference. Probably it would sharpen the conference arguments, potentially making that much-publicised event look more like a battleground than the showcase Shorten needs, given the election would be at most about nine months away and possibly much closer.</p>
<p>If, in addition to a Batman loss, Longman changed hands, that would present a crisis for Shorten and Labor.</p>
<p>It would increase the government’s majority and destabilise Shorten’s leadership. Whether that destabilisation would turn into any move against him can’t be predicted, except to say Anthony Albanese retains his ambition.</p>
<p>Albanese, who slapped down a strong Green push in his Sydney electorate of Grayndler in 2016, will strut his stuff in the Batman campaign.</p>
<p>Shorten’s position is protected by Labor’s rules, which make a leadership change very difficult. He has also had the security blanket of the polls, which have seen the ALP consistently in front.</p>
<p>But within the ALP there’s concern that he is not liked by voters or fully trusted by them. Those worries would intensify if the government’s polling improved.</p>
<p>In the months ahead he has to be careful. He can’t afford the sort of exaggeration he indulged in last year when he claimed too vehemently that Labor had a foolproof vetting system to deal with dual citizenship. The crowing brought a short-term sugar hit but the legacy is the perception that he was having a lend of us.</p>
<p>On another front, he was careless this week with some loose language that invited speculation Labor might cut the health insurance rebate. This was quickly hosed down, but it allowed the government to raise a scare.</p>
<p>Ahead of parliament’s return on Monday, both Shorten and Turnbull delivered scene-setting speeches this week.</p>
<p>Turnbull <a href="https://theconversation.com/expect-2018-to-be-a-year-of-rewards-turnbull-91021">had nothing new</a> but again dangled the prospect of tax cuts for middle-income earners. The timing of these and how much they’d be worth – especially when the planned hike in the Medicare levy is taken into account – remain known unknowns.</p>
<p>While Turnbull, polls notwithstanding, does seem to be reviving politically, he is still facing a cynical and disappointed electorate that will be hard to please. It will take more than modest tax cuts to bring many voters round.</p>
<p>Turnbull has a strong case as the numbers show an improving economy and an impressive jobs record. But with flat wages and the high cost of living, Labor can exploit people’s feeling that the better times are not flowing through to their household budgets.</p>
<p>Shorten <a href="https://theconversation.com/view-from-the-hill-shorten-targets-hip-pocket-pain-but-prescriptions-yet-to-come-90959">highlighted</a> “the disconnect between wages and productivity” in his speech, and held out the prospect of addressing it, and achieving an adequate “living wage”.</p>
<p>That raises both the public’s expectations and the hackles of a business community nervous about what changes a Labor government might make to rebalance the strength of employers and workers in the industrial relations system.</p>
<p>No doubt there will be plenty of calls during the Batman campaign for some of the detail of what Labor plans.</p>
<iframe src="https://www.podbean.com/media/player/99z29-862eb3?from=site&skin=1&share=1&fonts=Helvetica&auto=0&download=0" height="100" width="100%" frameborder="0" scrolling="no" data-name="pb-iframe-player"></iframe><img src="https://counter.theconversation.com/content/91105/count.gif" alt="The Conversation" width="1" height="1" />
<p class="fine-print"><em><span>Michelle Grattan does not work for, consult, own shares in or receive funding from any company or organisation that would benefit from this article, and has disclosed no relevant affiliations beyond their academic appointment.</span></em></p>Bill Shorten for a long time seemed to have the political breaks running his way, but suddenly things have turned.Michelle Grattan, Professorial Fellow, University of CanberraLicensed as Creative Commons – attribution, no derivatives.tag:theconversation.com,2011:article/881482017-11-28T04:16:48Z2017-11-28T04:16:48ZThe Queensland election outcome is a death knell for Adani’s coal mine<p>The coal mine proposed for Queensland’s Galilee Basin by Indian mining giant Adani has been a moveable feast, with many stories about its scale, purpose, financing, job prospects, and commerciality. The prospect of a return of the Palaszczuk government in Queensland is effectively the death knell for the project.</p>
<p>Labor has so pledged to block a concessional, taxpayer-funded loan, while embracing a significantly expanded program to develop regional solar thermal power in the state.</p>
<p>It seems the proposal has been reduced in scale, with the original A$21 billion plan reined back to just its initial stage, costing about A$5 billion. Its purpose has changed from exporting coal to India’s Adani Power, to now possibly shipping coal to Bangladesh and Pakistan. Its job prospects are confusing with early estimates well in excess of 10,000, <a href="https://theconversation.com/infographic-heres-exactly-what-adanis-carmichael-mine-means-for-queensland-87684">down more recently to fewer than 1,500</a>, after Adani admitted that the mine’s operations will be heavily automated. </p>
<p>The project’s financing has been under a continuous cloud given the scale of the debts of the <a href="https://theconversation.com/unpicking-the-labyrinth-that-is-indias-adani-74552">Adani Group</a>, and the reluctance of global banks in a world transitioning to low-emission technologies. All of this is complicated by the potential for concessional finance from the Northern Australia Infrastructure Fund (NAIF) and Chinese money. As a high-cost, low-grade coal project, its commerciality has bounced around, given variations in “<a href="https://www.investopedia.com/terms/o/offtake-agreement.asp">offtake prices</a>” and expectations on coal futures prices.</p>
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<a href="https://theconversation.com/why-big-projects-like-the-adani-coal-mine-wont-transform-regional-queensland-86622">Why big projects like the Adani coal mine won't transform regional Queensland</a>
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<p>The <a href="http://ieefa.org/wp-content/uploads/2017/04/Adani-Remote-Prospects-Carmichael-Status-Update-2017_April-2017_SN.pdf">latest version</a> is that the project has been scaled down from some 60 million tonnes per year (mtpa) to about 25mtpa, requiring an extra investment of some A$2 billion for the mine development, and A$3.3 billion for the rail link to the export terminal at Abbot Point, but avoiding the need to expand Abbot Point. Adani Enterprises is already financially strapped, with net debt exceeding market capitalisation, and the Adani family needing to refinance Abbot Point. The Adani family has already spent some A$3.5 billion on acquiring the deposit and developing their Australian project to date.</p>
<p>So with virtually no capacity to inject additional equity, the focus is on whether even this scaled-down proposal can be financed by additional debt? This is why a government-sponsored concessional loan of up to A$1 billion from the NAIF to build the rail link has been seen as crucial to the project moving forward. It could be accepted by potential financiers as low-cost, high-risk “quasi equity”. It would also effectively hand Adani a monopoly position in standard gauge rail, in turn creating monopoly conditions at Abbot Point.</p>
<p>A more recent constraint on sentiment towards to the project has come from the Indian government’s rapidly changing attitudes to future power generation, accelerating the transition from coal-fired power to renewables. <a href="https://timesofindia.indiatimes.com/business/india-business/india-can-achieve-200-gw-renewable-energy-by-2022-r-k-singh/articleshow/61785144.cms">Recent statements by RK Singh</a>, India’s Minister of Power and New and Renewable Energy have confirmed that India can exceed its target of 275 gigawatts of renewable energy by 2027, a massive shift from its historic reliance on coal. </p>
<p>This accelerates the likely end to coal imports by India, which has seen the Adani project seek alternative markets in Bangladesh and Pakistan.</p>
<p>Indeed, there is now <a href="http://ieefa.org/wp-content/uploads/2017/04/Adani-Remote-Prospects-Carmichael-Status-Update-2017_April-2017_SN.pdf">documentary evidence</a> of an electricity offtake agreement with the Bangladeshi government’s power board, setting a contractual “cost plus plus” supply of low-quality imported coal delivered at prices that are likely to approach 50% above the current coal spot price. But even at the current futures price of about US$80 per tonne, the Carmichael mine could be cashflow-positive.</p>
<h2>Funding the Carmichael mine</h2>
<p>Can the Adani group hope to raise the necessary additional debt? This is a two-pronged challenge – the family needs to refinance Abbot Point requiring some A$1.5 billion over the next 12 months, and the A$5 billion-plus project itself. </p>
<p>It looks like the family had to enlist the services of second-tier investment bank Jeffries to initiate a bond refinancing for Abbot Point - to be rated just above junk bond status. However, Jefferies <a href="http://www.afr.com/street-talk/jefferies-leaps-to-adanis-aid-for-us500m-bond-issue-20171010-gyyc7j">reportedly pulled out</a> within a week, its reasoning unstated. </p>
<p>With some 20 to 30 global banks, including Australia’s big four, having ruled out financing the mine, and Indian banks strapped for capacity, the focus has shifted to Chinese group CMEC as a potential financier, against likely Bangladesh or Pakistani alternatives. However, even with such offtake agreements the project’s longer–term viability is questionable.</p>
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<a href="https://theconversation.com/the-future-of-australian-coal-an-unbankable-deposit-77021">The future of Australian coal: an unbankable deposit</a>
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<p>Obviously the Chinese Communist Party, and other Chinese authorities, will need to think carefully about the potential consequences of getting involved now that the project lacks direct financial support from state and federal governments in Australia. This is especially so when the issue of Chinese influence and involvement in Australia generally, and in our politics specifically, is becoming controversial.</p>
<p>I also suspect that the federal Labor opposition may now adopt a position against the Adani project, in light of Queensland’s state election result.</p>
<p>The bottom line for financing is an assessment of the longer-term risks with Adani Enterprises, the family, and the project. Both the company and the family are already heavily exposed financially, and the project is a high-cost, high-risk one. </p>
<p>Bearing in mind the Paris climate agreement, the rapidly falling costs of reliable renewables, and India’s shifting energy strategy, the development of any new coal mine is certainly a very big call. </p>
<p>I suspect that the Adani project is already a stranded asset, and definitely not worthy of either Australian taxpayer support or Chinese investment.</p>
<h2>Interactive: what the Adani coal mine means for Queensland</h2>
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<p><em>This article has been corrected since publication, to read million not metric tonnes per year.</em></p></iframe></p><img src="https://counter.theconversation.com/content/88148/count.gif" alt="The Conversation" width="1" height="1" />
<p class="fine-print"><em><span>John Hewson is chair of the Asset Owners Disclosure Project, and was federal leader of the Liberal Party from 1990 to 1994. John has mix of financial interests in clean coal tech, base load solar thermal and a range of alternative technologies.</span></em></p>The Adani project is already a stranded asset, and definitely not worthy of taxpayer support, or the risks to the Chinese of any involvement.John Hewson, Professor and Chair, Tax and Transfer Policy Institute, Crawford School of Public Policy, Australian National UniversityLicensed as Creative Commons – attribution, no derivatives.tag:theconversation.com,2011:article/869262017-11-06T19:21:46Z2017-11-06T19:21:46ZWhy Adani may still get its government loan<p>Even though Queensland Premier Annastacia Palaszczuk announced she would be vetoing the around <a href="http://www.abc.net.au/news/2016-12-06/adani-claim-for-government-loan-questioned-after-admission/8097666">A$1 billion</a> loan to Adani for a rail link to its proposed Carmichael coal mine, funds could still flow to the company. </p>
<p>Currently in caretaker mode for the Queensland election, the premier would need the consent of the opposition party to exercise such a right. That is very unlikely given the LNP’s longstanding support of Adani’s mine. </p>
<p>This means any veto could not be exercised until late November, or more realistically, December 2017. </p>
<p>As the Northern Australia Infrastructure Facility (NAIF) loan doesn’t need state approval (but rather explicit veto) it could also mean the money will make its way to Adani, without any direct action by the state government. </p>
<h2>How would Commonwealth money make its way to Adani?</h2>
<p>The NAIF body was established in 2016 and administers A$5 billion in Commonwealth funds. It’s been empowered to award grants to the northern states and Northern Territory for infrastructure projects. Practically, however, these jurisdictions are used as financial conduits to pass this money to large corporations operating in northern Australia. </p>
<p>The NAIF is established under the “tied-grants” provision of the Constitution, <a href="http://www8.austlii.edu.au/cgi-bin/viewdoc/au/legis/cth/consol_act/coaca430/s96.html">Section 96</a>, which states: </p>
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<p>…the [Commonwealth] parliament may grant financial assistance to any state on such terms and conditions as the [Commonwealth] parliament thinks fit.</p>
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<p>This section was intended to provide for a short-term (around ten years) mechanism for central funds to be granted to the new states affected by the restructuring of national public finances, after federation. However, the Commonwealth parliament continued to use this section well into the 20th century (and increasingly today) to grant funds to cash-strapped states.</p>
<p>Over time, the Commonwealth started to impose terms that required the states do things that were outside of the Commonwealth’s legislative power – such as education or, indeed, infrastructure development. </p>
<p>The early-20th-century High Court concluded that this was acceptable, as long as the state technically consented to the <a href="http://www.austlii.edu.au/cgi-bin/viewdoc/au/cases/cth/HCA/1939/27.html">terms and conditions of the grant</a>.</p>
<p>While the NAIF legislation does not require such consent, <a href="https://www.legislation.gov.au/Details/F2016L00654">under rules issued by the Commonwealth minister</a> the NAIF has to:</p>
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<p>… commence consultation with the relevant jurisdiction as soon as practicable after receiving an investment proposal </p>
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<p>In Adani’s case, the Investment Rules indicate that the “jurisdiction” is the “state or territory the infrastructure project is located”, namely Queensland. The state government after reviewing project and investment <em>may</em> provide:</p>
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<p>… written notification that financial assistance should not be provided to a project.</p>
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<p>If that is the case then the NAIF is not permitted to provide the grant money to the applicant (Adani). But that doesn’t mean the state hasn’t consented to the loan.</p>
<p>The problem is that the High Court has never really addressed what the word “state” means in Section 96. Specifically who should the money be paid to: the “parliament of the state”; “government of the state” or, as seems to be implied in the Palaszczuk statements the “premier of the state”? </p>
<p>Conventionally, when we talk of “state consent” to funds, we envision a complex process by which money is paid into a central state fund under the control of state parliament. However, the NAIF legislation appears to allow for merely the state government to consent in a very minimal way, simply by passing the money directly to Adani without the state parliament ever reviewing or approving the transaction. </p>
<p>The NAIF legislation also doesn’t specify who in the government might consent. To date, it is the treasurer who seems to have been most actively involved in working with the NAIF, and indeed Adani. It seems that, so long as the state has been “consulted”, unless it takes active steps to stop the loan, it will go ahead.</p>
<h2>Does Palaszczuk have a ‘veto’ power?</h2>
<p>The premier’s <a href="http://www.abc.net.au/news/2017-11-04/palaszczuks-adani-loan-veto-decision-jeopardises-mine-project/9118054">reasoning for the veto</a> is a continuation of her government’s legacy of having “no role to date in the federal government’s NAIF Loan Assessment Process for Adani” and no “role in the future”.</p>
<p>These statements seem to be contrary to earlier ones by the Queensland treasurer, Curtis Pitt, that the government would <a href="http://www.abc.net.au/news/2017-05-29/queensland-government-to-play-ball-over-adani-loan:-treasurer/8568348">“do what is required”</a> to facilitate Commonwealth funds going to Adani. In fact, as early as November 2016, Pitt <a href="http://www.parliament.qld.gov.au/documents/hansard/2016/2016_11_29_WEEKLY.pdf">declared in state parliament:</a></p>
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<p>Since we came to office, we have been working very closely with the Commonwealth government to facilitate … the NAIF – in North Queensland… It is through the NAIF facility, which the state wholeheartedly supports, that Adani can get the infrastructure support that it needs. </p>
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<p>As a result, it would seem that everything needed to pass the NAIF funds to Adani is provided for. The only thing to actively stop it is a formal, written statement by Palaszczuk to the NAIF refusing the loan (not to the prime minister as she claimed). Given <a href="http://www.abc.net.au/news/2017-11-04/palaszczuks-adani-loan-veto-decision-jeopardises-mine-project/9118054">Palaszczuk’s statement</a> that she intends to write this statement, it is clear that no formal notice has yet been issued to the NAIF.</p>
<p>However, it would seem that a “<a href="http://statements.qld.gov.au/Statement/2017/5/29/northern-australia-infrastructure-facility">Master Facility Agreement</a>” between Queensland and the NAIF has already been agreed to and set up. This agreement seems to envision the treasurer of Queensland passing the money to Adani, without it ever going into the state’s bank accounts. Hence, in May this year, the Queensland treasurer confirmed that:</p>
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<p>Our role, for constitutional reasons, is the legal financing contract, the loan agreement including the drawdown and timing, repayment of interest — all of those things have to have state involvement constitutionally. </p>
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<p>So, unless the Queensland opposition takes the very unlikely step of agreeing to a veto, Palaszczuk would appear to lack the power to issue one herself until after the election. </p>
<p>In the interim, NAIF has no legal restrictions on issuing the loan and, with the apparent agreement of the Queensland treasury, this money is likely to flow through to Adani. While Palaszczuk can say her government gave no active assistance to Adani, without active measures to block the loan, it would certainly be a silent partner in the process.</p><img src="https://counter.theconversation.com/content/86926/count.gif" alt="The Conversation" width="1" height="1" />
<p class="fine-print"><em><span>Brendan Gogarty is has provided pro bono (free) legal advice to the Australian Conversation Foundation on the constitutionality of the proposed Adani Loan. The advice was provided in a voluntary capacity in his role as a community legal practitioner.</span></em></p>Despite Premier Annastacia Palaszczuk’s veto of a loan to Adani, the company could still receive funds from a new government or via previous arrangements.Brendan Gogarty, Senior Lecturer in Law, University of TasmaniaLicensed as Creative Commons – attribution, no derivatives.tag:theconversation.com,2011:article/850772017-10-04T03:09:50Z2017-10-04T03:09:50ZAustralia’s $1 billion loan to Adani is ripe for a High Court challenge<p>Indian mining giant Adani’s proposal to build Australia’s largest coal mine in Queensland’s Galilee Basin has been the source of sharp national controversy, because of its potential <a href="https://theconversation.com/climate-council-climate-health-and-economics-are-against-carmichael-mine-77940">economic, health, environmental</a> and <a href="https://theconversation.com/the-last-line-of-defence-indigenous-rights-and-adanis-land-deal-79561">cultural</a> risks. </p>
<p>These concerns were amplified this week when India’s former environment minister Jairam Ramesh <a href="http://www.abc.net.au/4corners/digging-into-adani/9008500">told the ABC’s Four Corners</a>:</p>
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<p>My message to the Australian government would certainly be: please demonstrate that you have done more homework than has been the case so far.</p>
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<p>It’s a valid warning, considering that a Commonwealth investment board is considering loaning Adani <a href="https://theconversation.com/report-government-wont-rule-out-underwriting-adanis-carmichael-coal-mine-78127">A$1 billion</a> in federal money to assist the development of mining infrastructure. </p>
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Read more:
<a href="https://theconversation.com/adani-gives-itself-the-green-light-but-that-doesnt-change-the-economics-of-coal-78912">Adani gives itself the green light, but that doesn't change the economics of coal</a>
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<p>The loan, expected to be <a href="http://www.ntnews.com.au/subscribe/news/1/index.html?sourceCode=NTWEB_WRE170_a&mode=premium&dest=http:%2F%2Fwww.ntnews.com.au%2Fnews%2Fnorthern-territory%2Fopposition-leader-bill-shorten-believes-north-australian-infrastructure-fund-is-a-failure%2Fnews-story%2F734219149ec7df8f76ee7aa5923c781c%3Fnk%3Dfc3cce82747b979a85185dfe0362a63b-1507028438&memtype=anonymous">announced any day now</a>, will no doubt agitate further political controversy. </p>
<p>It is also likely to pave the way for yet more court challenges against Adani’s proposal. </p>
<h2>Why does Adani want Commonwealth money?</h2>
<p>One of the major questions about Adani’s mine is its financial viability, and its <a href="http://www.news.com.au/national/breaking-news/adanis-qld-megamine-gets-the-goahead/news-story/92f689555cae63a42928c011898c381f">inability to secure private sector funding</a>. Its proponents blame anti-coal campaigners, but arguably more important are the <a href="http://www.smh.com.au/business/mining-and-resources/adanis-carmichael-mine-is-unbankable-says-queensland-treasury-20150630-gi1l37.html">myriad concerns</a> about Adani’s liquidity, its corporate structure and conduct, and the ever-weakening international coal market. </p>
<p>Against this backdrop Adani has requested A$1 billion from the <a href="http://www.naif.gov.au">Northern Australia Infrastructure Facility</a> (NAIF) – a A$5 billion discretionary government fund set up in 2016 to <a href="https://industry.gov.au/industry/Northern-Australia-Infrastructure-Facility/Pages/default.aspx">promote economic development in the country’s north</a>.</p>
<p>The timing and geographical focus of the fund have raised fears it is just a government “<a href="http://www.openaustralia.org.au/senate/?id=2016-05-02.4.2">slush fund</a>”, set up with Adani’s plans specifically in mind. The federal government initially <a href="http://www.abc.net.au/news/2015-10-18/no-federal-subsidies-carmichael-mine-strong-moral-case-for-coal/6863702">denied this</a>, with Energy Minister Josh Frydenberg stressing that the mine “needs to stand on its own two feet”.</p>
<p>But shortly after the NAIF Act was passed, <a href="http://www.abc.net.au/news/2016-12-06/adani-claim-for-government-loan-questioned-after-admission/8097666">Adani’s application was made public</a>, although there remains little available detail about whether or why it will be given the money, or the exact amount.</p>
<h2>Loan procedures</h2>
<p>NAIF’s board will make the decision, not a government minister. Its processes are shielded from scrutiny by a <a href="http://www.aph.gov.au/Parliamentary_Business/Bills_Legislation/bd/bd1516a/16bd113">lack of transparency requirements</a> and consistent <a href="http://www.abc.net.au/news/2017-02-13/agency-assessing-$1b-loan-to-adani-rejects-foi-request/8259342">blocking of Freedom of Information requests</a>. </p>
<p>As the loan decisions are made by a quasi-corporate board, rather than a minister, it is much harder (if not impossible) to challenge them directly in court. Nor does the NAIF Act provide grounds for review or appeal. </p>
<p>Ultimately, this leaves those who object to Adani receiving Commonwealth money with a very limited avenue of legal challenge. The only option is to argue that the NAIF Act is itself unconstitutional. </p>
<h2>Constitutional challenge</h2>
<p>The Commonwealth has no direct power to make laws that control or support infrastructure or mining directly. Instead, the NAIF Act seeks to do this indirectly using <a href="http://www.austlii.edu.au/cgi-bin/viewdoc/au/legis/cth/consol_act/coaca430/s96.html">Section 96 of the Constitution</a>, which states: </p>
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<p>During a period of ten years after the establishment of the Commonwealth and thereafter until the Parliament otherwise provides, <strong>the Parliament may grant financial assistance to any State on such terms and conditions as the Parliament thinks fit.</strong> (emphasis added)</p>
</blockquote>
<p>There are two points to note here. </p>
<p>The first is that this granting provision was clearly meant as a transitional measure for the decade immediately following federation, to protect poorer states from bankruptcy while adjusting their economies to a federal model. Note also that the provision was clearly intended to help state governments, not corporations.</p>
<p>The second is the phrase “terms and conditions”, which clearly relates to the repayment of these loans, much like the terms and conditions applied to any banking loan today. </p>
<p>Both of these things were ignored by the early (and somewhat infamous) <a href="https://www.constitutionalcentre.wa.gov.au/ResearchAndSeminarPapers/ChangingConstitutions/Pages/DecisionsoftheHighCourt.aspx"><em>Engineers</em> High Court from the 1920s to 1950s</a>, which tended to interpret the Constitution in a way that favoured the Commonwealth over the states. </p>
<p>Perhaps most importantly, the court ruled that Section 96 allows the Commonwealth to apply any terms and conditions it likes to the loans, rather than simply setting the terms of repayment. That has meant that states can be compelled to take particular actions – such as accepting national educational standards, building roads or, indeed, infrastructure development – in return for financial assistance. States were also forced to stop collecting income tax in return for federal monies. This resulted in a “<a href="https://en.wikipedia.org/wiki/Fiscal_imbalance_in_Australia">vertical fiscal imbalance</a>” which has left the states at the financial mercy of the Commonwealth ever since. </p>
<p>This extremely liberal interpretation of Section 96 has not been legally challenged since the early days of the federation, not least because recipients or potential recipients of money are unlikely to bite the hand that feeds them. But the Adani loan might just change this.</p>
<figure class="align-center zoomable">
<a href="https://images.theconversation.com/files/188589/original/file-20171003-14213-qkzmyh.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=1000&fit=clip"><img alt="" src="https://images.theconversation.com/files/188589/original/file-20171003-14213-qkzmyh.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=754&fit=clip" srcset="https://images.theconversation.com/files/188589/original/file-20171003-14213-qkzmyh.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=600&h=359&fit=crop&dpr=1 600w, https://images.theconversation.com/files/188589/original/file-20171003-14213-qkzmyh.jpg?ixlib=rb-1.1.0&q=30&auto=format&w=600&h=359&fit=crop&dpr=2 1200w, https://images.theconversation.com/files/188589/original/file-20171003-14213-qkzmyh.jpg?ixlib=rb-1.1.0&q=15&auto=format&w=600&h=359&fit=crop&dpr=3 1800w, https://images.theconversation.com/files/188589/original/file-20171003-14213-qkzmyh.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=754&h=451&fit=crop&dpr=1 754w, https://images.theconversation.com/files/188589/original/file-20171003-14213-qkzmyh.jpg?ixlib=rb-1.1.0&q=30&auto=format&w=754&h=451&fit=crop&dpr=2 1508w, https://images.theconversation.com/files/188589/original/file-20171003-14213-qkzmyh.jpg?ixlib=rb-1.1.0&q=15&auto=format&w=754&h=451&fit=crop&dpr=3 2262w" sizes="(min-width: 1466px) 754px, (max-width: 599px) 100vw, (min-width: 600px) 600px, 237px"></a>
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<span class="caption">Critics of the use of Section 96 have long hoped for a High Court challenge to its ever-growing use to expand Commonwealth financial influence. The Adani loan may be the right vehicle.</span>
<span class="attribution"><span class="source">Thennicke/Wikicommons</span></span>
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<p>Adani’s prospective loan seems clearly inconsistent with the wording of Section 96. Any constitutional challenge against it is likely to be complex and nuanced, but two basic arguments present themselves. </p>
<p>First, the Constitution states that it is the <em>Commonwealth Parliament</em> that must determine both the loan and its conditions. However, the NAIF Act grants these powers to a corporate board, which answers only indirectly to the Parliament. </p>
<p>Second, the Constitution states that it is the <em>state</em> that must receive the loan. But the Queensland Government has <a href="http://www.parliament.qld.gov.au/documents/hansard/2016/2016_11_29_WEEKLY.pdf">stated that it will simply pass the NAIF funding straight to Adani</a>, and that:</p>
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<p>Commonwealth’s borrowings for the NAIF project will remain on the Commonwealth’s balance sheet and not on Queensland’s.</p>
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<p>This is a highly questionable use of a federal power that was conceived as a way to help states with their financing, rather than private multinational companies.</p>
<p>Note also the apparent bypassing of the Senate in this process. Senators may be likely to bring a legal challenge if they feel that federal money meant to benefit their states is being distributed improperly.</p>
<h2>More than just federal money at stake</h2>
<p>While it is impossible to second-guess the High Court on such a complex matter, its recent decisions indicate a <a href="http://www.aph.gov.au/sitecore/content/Home/About_Parliament/Senate/Powers_practice_n_procedures/pops/pop60/c07">major swing away from unsupervised Commonwealth spending</a>, especially on issues that affect the <a href="http://www.theaustralian.com.au/business/legal-affairs/government-must-learn-from-williams-chaplains-high-court-case/news-story/77ddee4e143a6b68cff639c2837c72e8">fiscal balance between the states and Commonwealth</a>. The potential Adani loan certainly seems to fall into that category.</p>
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Read more:
<a href="https://theconversation.com/why-are-we-still-pursuing-the-adani-carmichael-mine-85100">Why are we still pursuing the Adani Carmichael mine?</a>
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<p>Yet as much as Section 96 has been stretched beyond its original intention, it has also been used to support vital and important national enterprises, from education, to social welfare, and indeed national development projects. </p>
<p>With that in mind, the Commonwealth might ultimately come to doubt the wisdom of granting such a vast sum of money to a questionable company. If it leads to more restrictive reading of Section 96 by the High Court, it might significantly limit Canberra’s ability to fund valuable schemes in other areas.</p><img src="https://counter.theconversation.com/content/85077/count.gif" alt="The Conversation" width="1" height="1" />
<p class="fine-print"><em><span>Brendan Gogarty is has provided pro bono (free) legal advice to the Australian Conversation Foundation on the constitutionality of the proposed Adani Loan. The advice was provided in a voluntary capacity in his role as a community legal practitioner.</span></em></p>The proposed loan of Commonwealth money to Adani is on shaky constitutional ground, potentially paving the way for High Court challenge which could change the dynamics of federal-state funding.Brendan Gogarty, Senior Lecturer in Law, University of TasmaniaLicensed as Creative Commons – attribution, no derivatives.tag:theconversation.com,2011:article/851002017-10-04T02:58:58Z2017-10-04T02:58:58ZWhy are we still pursuing the Adani Carmichael mine?<p>Why, if Adani’s gigantic Carmichael coal project is so on-the-nose for the <a href="https://www.theguardian.com/environment/2017/apr/28/big-four-banks-all-refuse-to-fund-adani-coalmine-after-westpac-rules-out-loan">banks</a> and so <a href="https://theconversation.com/four-environmental-reasons-why-fast-tracking-the-carmichael-coal-mine-is-a-bad-idea-67449">environmentally destructive</a>, are the <a href="http://www.theaustralian.com.au/national-affairs/foreign-affairs/adani-mine-has-huge-economic-benefits-for-australia-turnbull-says/news-story/76322acfc4bed6073f1f4b6c2001676d">federal</a> and <a href="http://www.smh.com.au/business/mining-and-resources/adani-reaches-agreement-with-the-queensland-government-over-royalties-20170530-gwgl6k.html">Queensland</a> governments so avid in their support of it?</p>
<p>Once again the absurdity of building the world’s biggest new thermal coal mine was put in stark relief on Monday evening via an ABC Four Corners investigation, <a href="http://www.abc.net.au/4corners/digging-into-adani/9008500">Digging into Adani</a>.</p>
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Read more:
<a href="https://theconversation.com/adani-gives-itself-the-green-light-but-that-doesnt-change-the-economics-of-coal-78912">Adani gives itself the green light, but that doesn't change the economics of coal</a>
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<p>Where the ABC broke new ground was in exposing the sheer breadth of corruption by this Indian energy conglomerate. And its power too. The TV crew was detained and questioned in an Indian hotel for five hours by police.</p>
<p>It has long been the subject of high controversy that the Australian government, via the <a href="https://industry.gov.au/industry/Northern-Australia-Infrastructure-Facility/Pages/default.aspx">Northern Australia Infrastructure Facility (NAIF)</a>that is still <a href="https://theconversation.com/report-government-wont-rule-out-underwriting-adanis-carmichael-coal-mine-78127">contemplating</a> a A$1 billion subsidy for Adani’s rail line, a proposal to freight the coal from the Galilee Basin to Adani’s port at Abbot Point on the Great Barrier Reef.</p>
<p>But more alarming still, and Four Corners touched on this, is that the federal government is also <a href="https://www.michaelwest.com.au/report-efic-may-finance-adani-coal-mine/">considering</a> using taxpayer money to finance the mine itself, not just the railway. </p>
<h2>No investors in sight</h2>
<p>As private <a href="https://www.theguardian.com/environment/2017/apr/28/big-four-banks-all-refuse-to-fund-adani-coalmine-after-westpac-rules-out-loan">banks</a> have walked away from the project, the only way Carmichael can get finance is with the government providing guarantees to a private banking syndicate, effectively putting taxpayers on the hook for billions of dollars in project finance. </p>
<p>The prospect is met with the same incredulity in India as it is here in Australia:</p>
<blockquote>
<p>FOUR CORNERS: “Watching on from Delhi, India’s former Environment Minister can’t believe what he is seeing.”</p>
<p>JAIRAM RAMESH: “Ultimately, it’s the sovereign decision of the Australian Government, the federal government and the state government.</p>
<p>FOUR CORNERS: "But public money is involved, and more than public money, natural resources are involved.</p>
<p>JAIRAM RAMESH: "I’m very, very surprised that the Australian government, uh, for whatever reason, uh, has uh, seen it fit, uh, to all along handhold Mr Adani.”</p>
</blockquote>
<p>Here we have a project that does not stack up financially, and whose profits - should it make any - are destined for tax haven entities controlled privately by Adani family interests. Yet the <a href="http://www.abc.net.au/news/2017-05-30/adani-coal-mine-back-on-track-after-royalties-agreement/8573558">Queensland government</a> has <a href="http://www.abc.net.au/news/2017-07-07/adani-mine-water-is-too-important-to-farmers/8686890">shocked</a> local farmers and environmentalists by gifting Adani extremely generous water rights, and royalties concessions to boot.</p>
<h2>Why are Australian governments still in support?</h2>
<p>The most plausible explanation is simply politics and political donations. There is no real-time disclosure of donations and it is relatively easy to disguise them, as there is no disclosure of the financial accounts of state and federal political parties either. Payments can be routed through opaque foundations, the various state organisations, and other vehicles.</p>
<p>Many Adani observers believe there must be money involved, so strident is the support for so unfeasible a project. The rich track record of Adani bribing officials in India, as detailed by Four Corners, certainly points that way. But there is little evidence of it. </p>
<p>In the absence of proof of any significant financial incentives however, the most compelling explanation is that neither of the major parties is prepared to be “wedged” on jobs, accused of being anti-business or <a href="http://www.sbs.com.au/news/article/2017/04/30/westpac-anti-queensland-govt-minister">anti-Queensand</a>.</p>
<p>There are votes in Queensland’s north at stake. Furthermore, the fingerprints of Adani’s lobbyists are <a href="http://www.theaustralian.com.au/national-affairs/state-politics/adani-lobbyist-cameron-milner-in-palaszczuk-campaign/news-story/d185cbc368eea136ab41a3fb5b383556">everywhere</a>.</p>
<p>Adani lobbyist and Bill Shorten’s former chief of staff Cameron Milner helped run the re-election campaign of Premier Annastacia Palaszczuk. This support, according to <a href="http://www.theaustralian.com.au/national-affairs/state-politics/adani-lobbyist-cameron-milner-in-palaszczuk-campaign/news-story/d185cbc368eea136ab41a3fb5b383556">The Australian</a>, has been given free of charge:</p>
<blockquote>
<p>Mr Milner is volunteering with the ALP while keeping his day job as director and registered lobbyist at Next Level Strategic Services, which counts among its clients Indian miner Adani…</p>
<p>The former ALP state secretary held meetings in April and May with Ms Palaszczuk and her chief of staff David Barbagallo to negotiate a government royalties deal for Adani, after a cabinet factional revolt threatened the state’s largest mining project.</p>
</blockquote>
<p>Adani therefore enjoys support and influence on both sides of politics. “Next Level Strategic Services co-director David Moore — an LNP stalwart who was Mr Newman’s chief of staff during his successful 2012 election campaign — is also expected to volunteer with the LNP campaign.”</p>
<p>So it is that Premier Palaszczuk persists with <a href="https://www.brisbanetimes.com.au/national/queensland/adani-carmichael-mine-to-create-1464-jobs-not-10000-20150427-1mumbg.html">discredited</a> claims that Carmichael will produce 10,000 jobs when Adani itself conceded in a court case two years ago the real jobs number would be but a fraction of that. </p>
<h2>If the economics don’t stack up, why is Adani still pursuing the project?</h2>
<p>The Adani group totes an enormous <a href="http://economictimes.indiatimes.com/industry/indl-goods/svs/metals-mining/adanis-3-5-billion-debt-funded-investment-in-australia-at-risk-report/articleshow/60911654.cms">debt load</a>, the seaborne thermal coal market is in structural decline as new solar capacity is now cheaper to build than new coal-fired power plants and the the government of India is committed to phasing out coal imports in the next three years.</p>
<p>Why flood the market with 60 million tonnes a year in new supply and further depress the price of one of this country’s key export commodities? </p>
<p>The answer to this question lies in the byzantine structure of the Adani companies themselves. Adani already owns the terminal at Abbot Point and it needs throughput to make it financially viable.</p>
<p>Both the financial structures behind the port and the proposed railway are ultimately controlled in <a href="http://economictimes.indiatimes.com/industry/indl-goods/svs/metals-mining/adanis-australian-ventures-have-tax-haven-ties-to-british-virgin-islands-report/articleshow/60927563.cms">tax havens</a>: the Cayman Islands, the British Virgin Islands and Singapore. Even if Adani Mining and its related Indian entities upstream, Adani Enterprises and Adani Power, lose money on Carmichael, the Adani family would still benefit.</p>
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Read more:
<a href="https://theconversation.com/australias-1-billion-loan-to-adani-is-ripe-for-a-high-court-challenge-85077">Australia's $1 billion loan to Adani is ripe for a High Court challenge</a>
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<p>The port and rail facilities merely “clip the ticket” on the volume of coal which goes through them. The Adani family then still profits from the privately-controlled infrastructure, via tax havens, while shareholders on the Indian share market shoulder the likely losses from the project.</p>
<p>As the man who used to be India’s most powerful energy bureaucrat, E.A.S. Sharma, <a href="http://www.abc.net.au/4corners/digging-into-adani/9008500">told</a> the ABC: “My assessment is that by the time the Adani coal leaves the Australian coast the cost of it will be roughly about A$90 per tonne.</p>
<p>"We cannot afford that, it is so expensive.”</p>
<h2>More questions than answers remain</h2>
<p>This renders the whole project even more bizarre. Why would the government put Australian taxpayers on the hook for a project likely to lose billions of dollars when the only clear beneficiaries are the family of Indian billionaire Gautam Adani and his Caribbean tax havens.</p>
<p>My view is that this project is a white elephant and will not proceed. Given the commitment by our elected leaders however, it may be that some huge holes in the earth may still be dug before it falls apart.</p><img src="https://counter.theconversation.com/content/85100/count.gif" alt="The Conversation" width="1" height="1" />
<p class="fine-print"><em><span>Michael West has previously investigated Adani for the Australian Conservation Foundation.</span></em></p>Following the ABC’s Four Corners program ‘Digging into Adani’, the question that remains is: why is the project still being pursued at all?Michael West, Adjunct Associate Professor, School of Social and Political Sciences, University of SydneyLicensed as Creative Commons – attribution, no derivatives.tag:theconversation.com,2011:article/803942017-07-03T04:51:57Z2017-07-03T04:51:57ZPolitics podcast: Anna Krien on the climate wars<figure><img src="https://images.theconversation.com/files/176545/original/file-20170703-7063-1c6uens.jpg?ixlib=rb-1.1.0&rect=0%2C676%2C2596%2C1908&q=45&auto=format&w=496&fit=clip" /><figcaption><span class="caption">
</span> <span class="attribution"><span class="source">AAP/Black Inc Books</span></span></figcaption></figure><p>Melbourne-born author Anna Krien’s latest Quarterly Essay explores the debates on climate change policy in Australia and the ecological effects of not acting.</p>
<p>She interviewed farmers, scientists, Indigenous groups, and activists from Bowen to Port Augusta. She says climate change denialism has transformed into “climate change nihilism”.</p>
<p>Krien says the Finkel review provides another opportunity in a long line of proposals to take up the challenge of legislating clean energy. “We just need to get that foot in the door. The door has been flapping in the wind for the past decade.”</p>
<p>On a current frontline battle – the planned Adani Carmichael coalmine – she found the people who would be affected were being ignored and blindsided. </p>
<p>Meanwhile, the potential for exploitation of local Indigenous peoples through “opaque” native title legislation was high. “Outsiders are not meant to understand it and to tell you the truth you get the sense that insiders aren’t meant to understand it either.”</p><img src="https://counter.theconversation.com/content/80394/count.gif" alt="The Conversation" width="1" height="1" />
<p class="fine-print"><em><span>Michelle Grattan does not work for, consult, own shares in or receive funding from any company or organisation that would benefit from this article, and has disclosed no relevant affiliations beyond their academic appointment.</span></em></p>Anna Krien's latest Quarterly Essay explores the debates on climate change policy in Australia and the ecological effects of not acting.Michelle Grattan, Professorial Fellow, University of CanberraLicensed as Creative Commons – attribution, no derivatives.tag:theconversation.com,2011:article/795612017-06-19T07:03:37Z2017-06-19T07:03:37ZThe last line of defence: Indigenous rights and Adani’s land deal<figure><img src="https://images.theconversation.com/files/174133/original/file-20170616-493-12ma2lt.png?ixlib=rb-1.1.0&q=45&auto=format&w=496&fit=clip" /><figcaption><span class="caption">Members of the W&J Traditional Owners Council outside the Federal Court.</span> <span class="attribution"><span class="source">W&J Council</span></span></figcaption></figure><p>The Wangan and Jagalingou Traditional Owners Family Council <a href="http://wanganjagalingou.com.au/">(W&J)</a> is involved in a remarkable struggle to assert their Indigenous rights in opposition to the proposed Adani Carmichael coal mine. Despite the company’s <a href="http://www.afr.com/business/mining/adani-takes-brinkmanship-to-new-levels-20170523-gwbbhn">board-level decision to proceed</a>, the mine has not cleared all legal hurdles. </p>
<p>W&J’s efforts – recognised globally as a <a href="http://wanganjagalingou.com.au/naomi-klein-nominates-wj-youth-leader-for-inaugural-list-of-international-movers-and-shakers/">leading Indigenous rights</a> campaign – are challenging Australia’s native title system, and the notion that compliance with industrial projects is the pathway to development for Indigenous people. </p>
<p>The W&J struggle has largely focused on contesting Adani’s efforts to secure an Indigenous Land Use Agreement (Ilua) – the consent of the traditional owners for the mine to proceed. The Ilua would let Adani undertake all works associated with the project, and secure a 2,750 hectare area for critical infrastructure related to mine operations, including an airstrip, workers village, and washing plant.</p>
<p>While the National Native Title Tribunal authorised the Queensland Government to <a href="http://www.abc.net.au/news/2016-04-03/mning-leases-approved-carmichael-mine-qld-galilee-basin-adani/7295188">approve the mining leases</a> for Adani in 2016 without the consent of the W&J, this is subject to ongoing legal challenge. Without an Ilua, there is no legal basis to build the infrastructure. In this scenario, the only option would be the <a href="http://www.abc.net.au/pm/content/2015/s4361399.htm">compulsory acquisition</a> of land by the state – an unprecedented move in the history of native title that would privilege mining interests above the wishes of traditional owners.</p>
<p>We are undertaking a research project in collaboration with the W&J and Australian Lawyers for Human Rights. The W&J have provided us with access to their files, and we have conducted <a href="http://earthjustice.org/sites/default/files/files/Unfinished-Business.pdf">preliminary analysis</a> of the political, social and economic context of their campaign. </p>
<h2>Changing the rules</h2>
<p>Earlier this week both houses of Parliament <a href="http://www.afr.com/news/politics/senate-resolves-native-title-concerns-in-boost-for-adani-coal-mine-20170614-gwqonu">passed amendments</a> to annul the effects of a February 2017 <a href="http://www.abc.net.au/news/rural/2017-02-08/turmoil-over-indigenous-land-use-ruling/8250952">Federal Court full bench decision</a> that confirmed the Native Title Act required all registered native title claimants to sign an Ilua. This overturned a previous decision made by a single judge, which allowed that one signature was sufficient, as long as an Ilua had been approved by the claim group.</p>
<p>The W&J had moved quickly, on the basis of the court decision, to have Adani’s claimed deal struck out. But the Federal Government moved swiftly too, less than two weeks later placing amendments before Parliament that removed the W&J Council’s option to annul. </p>
<p>These amendments, while validating existing Iluas that could have been brought into question, are also <a href="http://www.afr.com/news/politics/malcolm-turnbull-tells-adani-native-title-issues-will-be-fixed-20170410-gvi6i3">widely acknowledged as a fix for Adani</a>. In April, Prime Minister Malcolm Turnbull reassured senior Adani executives in India that the native title situation would be fixed. </p>
<p>However, the future of the Ilua and Adani’s mine is far from secure. W&J legal action challenging Adani’s Ilua process on several grounds is set for hearing in the Federal Court in March 2018. </p>
<p>The Shadow Attorney-General Mark Dreyfus has <a href="http://parlinfo.aph.gov.au/parlInfo/download/chamber/hansardr/7acf60a0-3455-43aa-bfd0-083a6b4252db/toc_pdf/House%20of%20Representatives_2017_06_14_5147.pdf;fileType=application%2Fpdf">affirmed</a> the question mark over the agreement, saying:</p>
<blockquote>
<p>It is not my understanding that this bill will provide some kind of removal of a final legal hurdle for the Adani mine […] they [the W&J] have made clear that there are some very serious allegations of fraud that have been made against Adani.</p>
</blockquote>
<p>In a <a href="https://www.theguardian.com/environment/2017/jun/15/adani-mine-loses-majority-support-of-traditional-owner-representatives">further recent twist</a>, Wangan and Jagalingou representative Craig Dallen, who previously signed Adani’s Ilua documents, has withdrawn his support in an affidavit. He’s also raised doubts about the meeting processes that were used to construct the deal.</p>
<p>In evidence submitted to the Federal Court, the W&J <a href="http://earthjustice.org/sites/default/files/files/Unfinished-Business.pdf">argue</a> the attendance record at the meeting organised and paid for by Adani shows that many attendees were not present at prior native title group authorisation meetings, and are not Wangan and Jagalingou claimants.</p>
<h2>The lure of Iluas</h2>
<p>Iluas are very hard for Indigenous people to resist. The native title regime provides very limited protection, such that Indigenous people are often forced to take a <a href="https://theconversation.com/native-title-and-australias-resource-boom-a-lost-opportunity-2725">poor Ilua deal</a>, rather than risk ending up with nothing at the National Native Title Tribunal. </p>
<p>While Adani has filed for registration of an Ilua, the W&J calls it a “<a href="https://www.theguardian.com/australia-news/2017/feb/07/indigenous-owners-threaten-legal-action-unless-adani-abandons-land-access-deal">sham</a>”, asserting that the Wangan and Jagalingou people have rejected a deal with Adani on three separate occasions since 2012.</p>
<p>The limitations of Iluas for Indigenous people partly arise because native title is a highly contingent and weak form of title. It does not apply where Indigenous observance of custom has been disrupted. However the colonial pattern of frontier violence and policies such as assimilation sought, by design, to directly eliminate custom.</p>
<p>Native title can also be extinguished, and can only be claimed in certain areas where other legal title (such as freehold) does not exist. Rights granted under native title are also typically non-exclusive, giving little opportunity to control access to land <a href="https://theconversation.com/indigenous-australians-should-get-more-from-native-title-human-rights-commissioner-37755">or its use</a>.</p>
<p>While the W&J are making use of the legal avenues available to them through the native title process, they are also asserting their rights apart from it. Their legal strategy is a rejection of what they see as a constrained native title system, in which Indigenous peoples’ agreement or acquiescence to mining is the norm.</p>
<p>Instead, the W&J are part of a growing international Indigenous rights movement that firmly centres Indigenous peoples’ interests in struggles for restitution and a sustainable future for their people. They stand on their right to free, prior and informed consent, reflected in the <a href="https://www.un.org/development/desa/indigenouspeoples/declaration-on-the-rights-of-indigenous-peoples.html">United Nations Declaration on the Rights of Indigenous People</a>.</p>
<p>More fundamentally, though, the W&J stress that they are custodians of country, and are acting in accordance with Aboriginal law in their resistance to the Carmichael mine. This is contrary to <a href="https://www.theguardian.com/australia-news/2017/jun/07/indigenous-people-victims-of-green-fight-against-adani-mine-says-marcia-langton">Marcia Langton’s</a> recent assertion that opposition to Adani’s mine is driven by a minority of Indigenous people <a href="https://www.theguardian.com/environment/2017/jun/09/leading-indigenous-lawyer-hits-back-at-marcia-langton-over-adani">at the behest of the greens</a>. </p>
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<p><em>This article is based upon a recently released report, <a href="http://earthjustice.org/sites/default/files/files/Unfinished-Business.pdf">Unfinished Business: Adani, the State, and the Indigenous Rights Struggle of the Wangan and Jagalingou Traditional Owners Council</a>.</em></p><img src="https://counter.theconversation.com/content/79561/count.gif" alt="The Conversation" width="1" height="1" />
<p class="fine-print"><em><span>Morgan Brigg receives funding from through the Global Change Institute’s Flagship Program at The University of Queensland.</span></em></p><p class="fine-print"><em><span>John Quiggin receives funding from the Global Change Institute’s Flagship Program at The University of Queensland. He is a consultant for Farmers for Climate Action and has worked for other environmental organisations on a voluntary basis. He has received funding from the Australian Research Council, and was formerly a Member of the Climate Change Authority</span></em></p><p class="fine-print"><em><span>Kristen Lyons receives funding from the Global Change Institute’s Flagship Program at The University of Queensland. She is a research fellow with the Oakland Institute and is a member of the Australian Greens.</span></em></p>The Carmichael coal mine requires a crucial native title agreement to build key infrastructure. But an Indigenous group is bringing legal action against Adani, which may create a fatal roadblock.Morgan Brigg, Senior Lecturer, Peace and Conflict Studies, The University of QueenslandJohn Quiggin, Professor, School of Economics, The University of QueenslandKristen Lyons, Associate Professor Environment and Development Sociology, The University of QueenslandLicensed as Creative Commons – attribution, no derivatives.tag:theconversation.com,2011:article/789122017-06-06T19:23:37Z2017-06-06T19:23:37ZAdani gives itself the green light, but that doesn’t change the economics of coal<figure><img src="https://images.theconversation.com/files/172472/original/file-20170606-3686-34ecya.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=496&fit=clip" /><figcaption><span class="caption">Is it nearly the end of the road for coal?</span> <span class="attribution"><span class="source">Shutterstock.com</span></span></figcaption></figure><p>Indian mining firm Adani yesterday announced that its board had <a href="http://www.abc.net.au/news/2017-06-06/adani-board-pushes-ahead-carmichael-coal-mine-palaszczuk-says/8593042">approved plans to proceed</a> with the controversial <a href="https://theconversation.com/au/topics/carmichael-coal-mine-14433">Carmichael coal mine</a> in Queensland’s Galilee Basin. </p>
<p>But it is still far from clear whether Adani has actually obtained the finance to proceed with the A$16.5 billion project, or whether it has secured the necessary A$1.1 billion loan from the government’s <a href="https://industry.gov.au/industry/Northern-Australia-Infrastructure-Facility/Pages/default.aspx">Northern Australia Infrastructure Facility</a> needed for the mine’s railway. </p>
<p>That hasn’t stopped the state government <a href="http://www.abc.net.au/news/2017-06-06/adani-board-pushes-ahead-carmichael-coal-mine-palaszczuk-says/8593042">hailing the announcement</a> as an economic win for Queensland, on the basis of job creation and for the signals it provides to potential investors in the region. But this amounts to little more than short-sighted politics. The government appears to be steadfastly ignoring the realities of the current energy landscape. </p>
<p>Let’s recap: coal mining is <a href="https://theconversation.com/climate-council-climate-health-and-economics-are-against-carmichael-mine-77940">not economically viable</a> within the constraints of a global carbon budget, while renewable energy production is rapidly expanding as the world moves to more sustainable investments. The result is that coal projects could become stranded assets, with price tags that may <a href="https://theconversation.com/new-coal-plants-wouldnt-be-clean-and-would-cost-billions-in-taxpayer-subsidies-72362">already exceed</a> what would have been the costs of a timely implementation of climate action. Investors and lending institutions are shifting to sustainable projects that limit the risk of catastrophic environmental damage. </p>
<h2>The people own the coal</h2>
<p>The state government owns the coal resource, but it is a special type of ownership. This is “public resource” ownership, meaning that all decisions made by the state government to exploit it must be in the interest of the public as a whole. </p>
<p>Issuing resource titles that allow Adani to proceed with a vast coal mine – in defiance of the social, economic and environmental impacts of such a project within a carbon-constrained economy – arguably represents a dereliction of the state’s duty to act in the public interest. </p>
<p>It also ignores the fact that in order to have just a 50% chance of keeping global warming within 2°C, a key aim of the Paris climate agreement, 90% of Australia’s current coal reserves must <a href="https://theconversation.com/unburnable-carbon-why-we-need-to-leave-fossil-fuels-in-the-ground-40467">stay in the ground</a>. If the mine proceeds, it will contribute substantially to global warming and accelerate the destruction of one of the world’s greatest natural assets, the Great Barrier Reef. This could have huge knock-on effects for future tourism in the area, which generates <a href="https://www.environment.gov.au/system/files/resources/a3ef2e3f-37fc-4c6f-ab1b-3b54ffc3f449/files/gbr-economic-contribution.pdf">A$6 billion a year</a>.</p>
<p>The economics of the Adani coal mine <a href="https://theconversation.com/climate-council-climate-health-and-economics-are-against-carmichael-mine-77940">simply do not make sense</a>. While there may be limited short-term employment opportunities and royalty gains for the state should the project actually get financed, the longer-term projections are dire. </p>
<p>The thermal coal market is <a href="https://www.iea.org/publications/freepublications/publication/KeyCoalTrends.pdf">in decline</a>. What’s more, the Carmichael mine will produce <a href="http://www.abc.net.au/news/2017-04-03/adani-plans-to-export-low-quality-coal-to-india-report-says/8409742">low-ranking thermal coal</a> with a high ash content, making it carbon-intensive even by coal’s standards, and bringing with it considerable health risks. </p>
<p>With this in mind, it seems short-sighted to subsidise an anticipated production of between <a href="http://www.afr.com/business/mining/eyes-on-carmichael-as-turnbull-meets-with-modi-20170407-gvfvxp">25 million and 60 million tonnes of coal a year</a>. Put simply, coal is not a sustainable resource for energy production.</p>
<p>This climate perspective informs the market. India, for example, cannot be relied upon as a guaranteed market for this low-quality coal. This is particularly evident in the recent unveiling of <a href="https://www.theguardian.com/world/2016/dec/21/india-renewable-energy-paris-climate-summit-target">India’s new power plan</a>, which calls for a dramatic increase in renewable energy production. This will have a deleterious impact on all Australian coal markets, and makes the decision to pursue low-quality coal reserves all the more untenable.</p>
<p>The banks know this. <a href="https://theconversation.com/the-government-is-swimming-against-the-tide-on-westpacs-adani-decision-76950">Westpac</a>, <a href="https://www.theguardian.com/business/2016/dec/17/adani-coalmine-anz-chief-suggests-bank-would-not-finance-carmichael-project">ANZ</a>, <a href="http://www.abc.net.au/news/2015-09-03/nab-rules-out-funding-adanis-%2416bn-carmichael-coal-mine/6747298">NAB</a>, Deutsche Bank, HSBC, Barclays, Royal Bank of Scotland, Morgan Stanley, JP Morgan Chase, Goldman Sachs, Citi, BNP Paribas, Société Générale and Crédit Agricole are among the domestic and <a href="https://www.theguardian.com/business/2015/apr/08/galilee-basin-coalmines-australian-banks-under-pressure-after-french-lenders-rule-out-funding">international</a> banks that have declined to fund the project, while the Commonwealth Bank has <a href="http://www.abc.net.au/news/2015-08-05/cba-terminates-adviser-role-for-adani-carmichael-coal-mine/6675722">quit as the project’s financial adviser</a>.</p>
<p>This is why the question of financing is so fraught. The major banks understand the fact that longer term, the Adani coal mine has no future. They are also concerned about the financial impact of stranded assets. Westpac, for example, <a href="http://www.abc.net.au/news/2017-04-28/westpac-adds-coal-to-its-lending-black-list/8479600">made it very clear earlier this year</a> that it aims to shift lending to sustainable economic models, and would increase lending to this sector to A$25 billion by 2030. It also made it clear that any funding for coal projects would henceforth be limited to existing coal projects with high-quality coal. Other major banks have adopted similar stances.</p>
<h2>Where next?</h2>
<p>So what happens now? The government may decide to fund Adani’s railway, but that does not necessarily mean the mine itself will ever actually move forward.</p>
<p>If and when Adani’s project does fall over, consideration should be given to whether the government should be held accountable for breaching public interest responsibilities in issuing the resource titles in the first place. Of course, this necessarily presumes the financing for the Adani mine will actually proceed.</p>
<p>To reiterate, there is no evidence that this has actually occurred. Getting government approval, and a green light from one’s own board, does not mean that Adani actually has the funding required to go ahead and dig the coal. </p>
<p>In the end, the real question is whether any lending institution will seriously take a risk on this vast and irresponsible project, which ignores both the safety of the Great Barrier Reef and the fundamentals of carbon-constrained economics.</p><img src="https://counter.theconversation.com/content/78912/count.gif" alt="The Conversation" width="1" height="1" />
<p class="fine-print"><em><span>Samantha Hepburn does not work for, consult, own shares in or receive funding from any company or organisation that would benefit from this article, and has disclosed no relevant affiliations beyond their academic appointment.</span></em></p>The board of Indian mining firm Adani has approved its A$16 billion Carmichael coal mine. But has the Queensland government failed in its duty to be responsible with publicly owned resources such as coal?Samantha Hepburn, Director of the Centre for Energy and Natural Resources Law, Deakin Law School, Deakin UniversityLicensed as Creative Commons – attribution, no derivatives.tag:theconversation.com,2011:article/787662017-06-02T06:14:55Z2017-06-02T06:14:55ZVIDEO: Michelle Grattan on the Paris Agreement and national security<figure><img src="https://images.theconversation.com/files/171980/original/file-20170602-8008-1iq4jce.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=496&fit=clip" /><figcaption><span class="caption">
</span> <span class="attribution"><span class="source">Shawn Thew/EPA</span></span></figcaption></figure><figure>
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<p>The University of Canberra’s vice-chancellor and president, professor Deep Saini, and professorial fellow Michelle Grattan discuss the week in politics – including the US withdrawing from the Paris climate agreement, the controversy surrounding ASIO chief Duncan Lewis’ response to Pauline Hanson, the government under pressure with the release of the latest Newspoll, and Scott Morrison’s hint that we could expect a slowdown in the economy.</p><img src="https://counter.theconversation.com/content/78766/count.gif" alt="The Conversation" width="1" height="1" />
<p class="fine-print"><em><span>The authors do not work for, consult, own shares in or receive funding from any company or organisation that would benefit from this article, and have disclosed no relevant affiliations beyond their academic appointment.</span></em></p>The University of Canberra’s Deep Saini and Michelle Grattan discuss the week in politics.Michelle Grattan, Professorial Fellow, University of CanberraPaddy Nixon, Vice-Chancellor and President, University of CanberraLicensed as Creative Commons – attribution, no derivatives.tag:theconversation.com,2011:article/786742017-06-01T05:10:28Z2017-06-01T05:10:28ZPolitics podcast: Matt Canavan on Adani<figure><img src="https://images.theconversation.com/files/171758/original/file-20170601-25676-9i6npp.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=496&fit=clip" /><figcaption><span class="caption">
</span> <span class="attribution"><span class="source">Mick Tsikas/AAP</span></span></figcaption></figure><p>The Coalition has backed the Adani Carmichael coal mine but there’s debate about assistance for the project, and argument about the jobs it would create in the region. </p>
<p>Resources Minister Matt Canavan argues there’s a role for the government to invest in large-scale infrastructure. He tells The Conversation this mine is only one part of a plan for “opening up the Galilee Basin” to provide investment opportunities, exports, and employment. “This coal is not for Australia, it’s for our region.”</p>
<p>On last week’s Uluru statement calling for an Indigenous body to be enshrined in the Constitution, Canavan says he’s concerned about creating another organisation, especially if it were to be based on different racial definitions. </p>
<p>He says options should be explored for greater recognition of Indigenous people in the political process without “necessarily making changes to the Constitution”.</p>
<p>On the coming Queensland election – with polling close – he says either side’s for the taking. “The Queensland Labor government has had a pretty rough time in the last week but I pick up a lot of frustration in North Quensland and I think they’ve got a lot of work to do to pick up trust.”</p><img src="https://counter.theconversation.com/content/78674/count.gif" alt="The Conversation" width="1" height="1" />
<p class="fine-print"><em><span>Michelle Grattan does not work for, consult, own shares in or receive funding from any company or organisation that would benefit from this article, and has disclosed no relevant affiliations beyond their academic appointment.</span></em></p>Matt Canavan tells The Conversation this mine is only one part of a plan for 'opening up the Galilee Basin' to provide investment opportunities, exports, and employment.Michelle Grattan, Professorial Fellow, University of CanberraLicensed as Creative Commons – attribution, no derivatives.tag:theconversation.com,2011:article/781272017-05-22T23:00:25Z2017-05-22T23:00:25ZReport: government won’t rule out underwriting Adani’s Carmichael coal mine<p>Is the government secretly planning to put taxpayers on the hook to build the world’s biggest new thermal coal mine? It is refusing to rule it out.</p>
<p>Until now, speculation has centred on a A$1 billion discount loan from the Northern Australia Infrastructure Facility (NAIF) to Indian billionaire Gautam Adani to build a rail line from the Galilee Basin to Abbot Point on the Queensland coast. This is a “cart before the horse” proposition, however. There can be no rail line without a mining project, and Adani is yet to attract project finance from commercial banks to build its mine.</p>
<p>A <a href="https://www.acf.org.au/dirty_deeds">new report</a> by the Australian Conservation Foundation notes that a number of approaches were made to the federal government and its credit agency, Export Finance and Insurance Corporation (EFIC), asking whether the agency was considering supporting the Carmichael thermal coal project. EFIC already has a team working with NAIF on project evaluation.</p>
<p>Detailed questions were put to the minister for trade, tourism and investment, Stephen Ciobo, whose portfolio oversees EFIC, and the Department of Foreign Affairs and Trade (DFAT). There was no response.</p>
<p>EFIC and NAIF were also contacted by the author, who conducted an investigation for the ACF into the NAIF board. NAIF did not respond at all. EFIC directed questions to NAIF and DFAT, both of which declined to respond. </p>
<p>It is within EFIC’s legal framework to finance export projects – either by guaranteeing or insuring their loans. Adani Mining, the local offshoot of an Indian conglomerate, is eligible under the EFIC legislation for government assistance.</p>
<p>EFIC acts at the instruction of the minister, in this case the Queenslander Stephen Ciobo. Adani Mining is registered in Australia. It is an exporter and EFIC has a track record of financing large fossil fuel projects.</p>
<p>The ACF report, <a href="https://www.acf.org.au/dirty_deeds">Dirty Deeds, Done for Cheap Dirt</a>, notes that EFIC – despite its mandate to support small and medium-sized exporters – has a track record in making sizeable investments in large fossil fuel projects: </p>
<blockquote>
<p>It is currently considering a deal to finance the 12 million tonnes per annum Boikarabelo coal mine and railway in South Africa, ironically a project closer by ship to India than Adani’s Carmichael and one that will directly compete with Australian exports in a declining Indian market for seaborne coal imports.</p>
</blockquote>
<p>In 2014, more than three-quarters of the $576.7 million worth of transactions signed by EFIC went to just three parties: a Chilean company that runs the biggest copper mine in the world, a construction giant listed on the Johannesburg Stock Exchange, and a billion-dollar Belgian smelting group.</p>
<p>Even with the support of EFIC, though, Adani requires project finance to develop its Carmichael mine. Adani’s lead banker, <a href="https://www.michaelwest.com.au/adani-and-commonwealth-bank-part-ways-casting-further-doubt-on-carmichael-coal-project/">Commonwealth Bank, parted ways with Adani</a> in 2015.</p>
<p>Due to public pressure from environment groups and the poor financial prospects for the project, Adani has had trouble attracting interest from commercial banks internationally. The world market for seaborne thermal coal exports is in decline and India is on target to phase out imports by 2021, so the project does not appear to make commercial sense. Futures prices for Newcastle thermal coal, generally of superior quality to Carmichael coal, languish at $US68 per metric tonne, a level at which the mine is unprofitable.</p>
<p>But if the federal government were to provide loan insurance or loan guarantees to a commercial banking syndicate, the banks might be more inclined to fund Adani. Australian taxpayers, however, would then be at risk for the estimated $10 billion in project finance. That’s on top of the concessional loan from NAIF, which is yet to be approved, of $1 billion for the rail line.</p>
<p>ACF chief executive Kelly O'Shanassy said yesterday that it was an outrageous idea that “public money could be put on the line to protect private profit from the Adani coal mine that will help destroy the [Great Barrier] Reef and Australian tourism jobs”.</p>
<p>The report also found the NAIF board is stacked with resource industry directors, past and present. Despite its mandate to invest in a wide range of infrastructure, including communications, transport, airports, education and renewable energy, the board’s expertise is heavily skewed towards mining and coal.</p>
<p>The NAIF investment mandate is also vague and its operations are shrouded in secrecy compared with other government financiers such as EFIC and the Clean Energy Finance Corporation (CEFC). Yet is has $5 billion of taxpayers’ money at its disposal.</p>
<p>The minister in charge of NAIF is Matt Canavan who, as minister for resources and northern Australia, is a vocal advocate for coal-fired power plants. He has announced that coal projects are also eligible for NAIF funding.</p>
<p>Even with the enthusiastic support of both the Australian and Queensland governments, the Carmichael project is highly unpopular. Nonetheless, the Queensland government has granted the project an unlimited water licence. </p>
<p>Adani has also been negotiating with the Queensland government for a royalties break. The company <a href="http://www.abc.net.au/news/2017-05-22/adani-indefinitely-postpones-final-carmichael-coal-mine-decision/8548164">announced this week</a> that it would be postponing its final investment decision on Carmichael until the state provided “clarity” on lower or deferred royalties. </p>
<hr>
<p><em>This column, co-published by The Conversation with <a href="http://www.michaelwest.com.au/">michaelwest.com.au</a>, is part of the <a href="https://theconversation.com/au/topics/democracy-futures">Democracy Futures</a> series, a <a href="http://sydneydemocracynetwork.org/democracy-futures/">joint global initiative</a> between The Conversation and the <a href="http://sydneydemocracynetwork.org/">Sydney Democracy Network</a>. The project aims to stimulate fresh thinking about the many challenges facing democracies in the 21st century.</em></p><img src="https://counter.theconversation.com/content/78127/count.gif" alt="The Conversation" width="1" height="1" />
<h4 class="border">Disclosure</h4><p class="fine-print"><em><span>The author has based this column on an investigation conducted for the Australian Conservation Foundation, ACF. The author's company, Westpub Ptd Ltd, was paid by ACF for this work. This column includes a link to the relevant report.</span></em></p>If the government were to provide loan insurance or loan guarantees, the banks might be more inclined to fund Adani. Taxpayers would then be at risk for the estimated $10 billion in project finance.Michael West, Adjunct Associate Professor, School of Social and Political Sciences, University of SydneyLicensed as Creative Commons – attribution, no derivatives.tag:theconversation.com,2011:article/779402017-05-18T20:15:37Z2017-05-18T20:15:37ZClimate Council: climate, health and economics are against Carmichael mine<figure><img src="https://images.theconversation.com/files/169902/original/file-20170518-12226-108eqzi.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=496&fit=clip" /><figcaption><span class="caption">Many banks are worried that coal investments could be left stranded on their asset books.</span> <span class="attribution"><span class="source">Rasta777/Shutterstock.com</span></span></figcaption></figure><p>Despite the overwhelming evidence that fossil fuels are <a href="https://theconversation.com/great-barrier-reef-bleaching-would-be-almost-impossible-without-climate-change-58408">killing the Great Barrier Reef</a> and making many <a href="https://theconversation.com/climate-changes-signature-was-writ-large-on-australias-crazy-summer-of-2017-73854">extreme weather events worse</a>; despite the <a href="https://theconversation.com/the-government-is-swimming-against-the-tide-on-westpacs-adani-decision-76950">emphatic thumbs-down</a> from the finance sector; and despite the growing awareness of the serious health impacts of coal, the proposed Carmichael coal mine staggers on, zombie-like, amid <a href="http://www.abc.net.au/news/2017-05-18/queensland-government-gives-adani-royalties-holiday/8536560">reports it has been offered a deferment of A$320 million in royalty payments</a>.</p>
<p>A new Climate Council report, <a href="http://www.climatecouncil.org.au/carmichael-coal-report?vid=4617">Risky Business: Health, Climate and Economic Risks of the Carmichael Coalmine</a>, makes an emphatic case against development of the proposed mine, or of any other coal deposits in Queensland’s Galilee Basin, or indeed elsewhere around the world.</p>
<p>Burning coal is a major contributor to climate change. Australia is already reeling from the escalating impacts of a warming climate. Heatwaves and other extreme weather events are worsening. The Great Barrier Reef has suffered consecutive mass bleaching events in 2016 and 2017. Climate change is likely making <a href="https://www.climatecouncil.org.au/foodsecurityreport2015">drought conditions worse in the agricultural belts of southwest and southeast Australia</a>. Our coastal regions are increasingly exposed to <a href="https://www.climatecouncil.org.au/coastalflooding">erosion and flooding as sea level rises</a>.</p>
<p>If we are to slow these disturbing trends and stabilise the climate at a level with which we might be able to cope, only a relatively small amount of the world’s remaining coal, oil and gas reserves can actually be used.</p>
<p>The majority must be left unburned in the ground, without developing vast new coal deposits such as those in the Galilee Basin.</p>
<h2>On budget</h2>
<p>The amount of fossil fuels we can burn for a given temperature target (such as the 1.5°C and 2°C targets of the <a href="https://theconversation.com/the-paris-climate-agreement-at-a-glance-50465">Paris climate agreement</a>) is known as the “<a href="https://www.climatecouncil.org.au/unburnable-carbon-why-we-need-to-leave-fossil-fuels-in-the-ground">carbon budget</a>”. </p>
<p>To give ourselves just a 50% chance of staying within the 2°C Paris target, we can burn only 38% of the world’s existing fossil fuel reserves. When this budget is apportioned among the various types of fossil fuels, coal is the big loser, because it is more emissions-intensive than other fuels. <a href="https://www.nature.com/nature/journal/v517/n7533/full/nature14016.html">Nearly 90%</a> of the world’s existing coal reserves must be left in the ground to stay within the 2°C budget.</p>
<p>When the carbon budget is apportioned by region to maximise the economic benefit of the remaining budget, <a href="https://www.nature.com/nature/journal/v517/n7533/full/nature14016.html">Australian coal in particular is a big loser</a>. More than 95% of Australia’s existing coal reserves cannot be burned, and the development of new deposits, such as the Galilee Basin, is ruled out.</p>
<h2>The health case</h2>
<p>Exploiting coal is very harmful to human health, with serious impacts all the way through the process from mining to combustion. Recently the life-threatening “black lung” (coal workers’ pneumoconiosis) has <a href="https://theconversation.com/black-lungs-back-how-we-became-complacent-with-coal-miners-pneumoconiosis-57718">re-emerged in Queensland</a>, with 21 reported cases. Across Australia, the estimated costs of health damages associated with the combustion of coal amount to <a href="http://www.atse.org.au/Documents/Publications/Reports/Energy/ATSE%20Hidden%20Costs%20Electricity%202009.pdf">A$2.6 billion per year</a>.</p>
<p>In India, the country to which coal from the proposed Carmichael mine would likely be exported, coal combustion already takes a heavy toll. An <a href="http://www.sciencedirect.com/science/article/pii/S135223101400329X">estimated 80,000-115,000 deaths</a>, as well as 20 million cases of asthma, were attributed to pollutants emitted from coal-fired power stations in 2010-11. Up to 10,000 children under the age of five died because of coal pollution in 2012 alone.</p>
<p>Compared with the domestic coal resources in India, Carmichael coal will not reduce these health risks much at all. Galilee Basin coal is of poorer quality than that from other regions of Australia. Its <a href="https://theconversation.com/black-lungs-back-how-we-became-complacent-with-coal-miners-pneumoconiosis-57718">estimated ash content of about 26%</a> is double the Australian benchmark.</p>
<p>This is bad news for children in India or in any other country that ends up burning it.</p>
<h2>The economics</h2>
<p>The economic case for the Carmichael mine doesn’t stack up either. Converging global trends all point to rapidly reducing demand for coal. </p>
<p>The cost of renewable energy is <a href="https://www.climatecouncil.org.au/uploads/6b17494f8d727a073e349badd5ac6a7f.pdf">plummeting</a>, and efficient and increasingly affordable storage technologies are emerging. Coal demand in China is <a href="https://www.climatecouncil.org.au/uploads/6b17494f8d727a073e349badd5ac6a7f.pdf">dropping</a> as it ramps up the rollout of renewables. India is <a href="https://theconversation.com/india-wants-to-become-a-solar-superpower-but-its-plans-dont-add-up-68011">moving towards energy independence</a>, and is eyeing its northern neighbour’s push towards renewables.</p>
<p>All of these trends greatly increase the risk that any new coal developments will become <a href="https://theconversation.com/the-danger-of-stranded-assets-lurks-for-unwary-coal-producers-48733">stranded assets</a>. It’s little wonder that the financial sector has turned a cold shoulder to the Carmichael mine, and Galilee Basin coal development in general. Some 17 banks worldwide, including the “big four” in Australia, have ruled out any investment in the Carmichael mine.</p>
<p>From any perspective – climate, health, economy – the proposed mine is hard to justify. And yet the project <a href="https://theconversation.com/why-does-the-carmichael-coal-mine-need-to-use-so-much-water-75923">keeps on keeping on</a>.</p><img src="https://counter.theconversation.com/content/77940/count.gif" alt="The Conversation" width="1" height="1" />
<p class="fine-print"><em><span>Hilary Bambrick has previously received funding from the National Health and Medical Research Council, the Victorian and NSW Governments, the United Nations Development Programme, and the World Health Organization. She sits on the research committee of The Australia Institute. </span></em></p><p class="fine-print"><em><span>Will Steffen does not work for, consult, own shares in or receive funding from any company or organisation that would benefit from this article, and has disclosed no relevant affiliations beyond their academic appointment.</span></em></p>A new Climate Council report points out that the Paris Agreement’s carbon budget leaves no room for the development of massive new coal reserves such as the proposed Carmichael mine.Will Steffen, Emeritus professor, Fenner School of Environment and Society, Australian National UniversityHilary Bambrick, Head of School, School of Public Health and Social Work, Queensland University of TechnologyLicensed as Creative Commons – attribution, no derivatives.tag:theconversation.com,2011:article/771592017-05-09T14:16:17Z2017-05-09T14:16:17ZTo get the ‘good debt’ tick, infrastructure needs to be fit for the future<p>In distinguishing between “good” and “bad” debt, federal Treasurer Scott Morrison equates good debt with infrastructure investment. However, not all infrastructure investment announced in the budget is necessarily “good”. </p>
<p>We are now in the <a href="https://theconversation.com/the-anthropocene-belongs-to-earth-system-science-64105">Anthropocene</a> – a new geological age defined by the global scale of humanity’s impact on the Earth – which <a href="https://theconversation.com/stumbling-into-the-future-living-with-the-legacy-of-the-great-infrastructure-sell-off-73850">places new requirements on our infrastructures</a>. We need to move beyond the AAA ratings mindset, and instead aim for net-positive outcomes in social, economic and ecological terms from the outset.</p>
<p>Infrastructure (such as transport, water, energy, communications) underpins our ability to live in cities and our quality of life. And most infrastructure is very, very long-lived. Therefore, our infrastructure investment decisions matter enormously, <a href="https://theconversation.com/whats-critical-about-critical-infrastructure-73849">especially for tomorrow</a>. </p>
<p>More than half of the world’s people <a href="https://esa.un.org/unpd/wup/Publications/Files/WUP2014-Highlights.pdf">live in cities</a>, and have just one planet’s worth of material resources <a href="https://theconversation.com/after-25-years-of-trying-why-arent-we-environmentally-sustainable-yet-73911">to share around</a>. This means we must define a new set of expectations and performance criteria for infrastructure. </p>
<p>Rather than settling for doing less bad, such as less environmental destruction or social disruption, we must aim from the outset to do more good. This net-positive approach requires us to restore, regenerate and increase social, cultural, natural and economic capital.</p>
<h2>What sort of change is needed?</h2>
<p>Examples of this kind of thinking are, as yet, rare or small. </p>
<p><a href="https://www.pub.gov.sg/abcwaters/explore/bishanangmokiopark">Bishan Park</a> on the Kallang River in Singapore gets close. Formerly a channelled stormwater drain, this collaboration between the national parks and public utility agencies has recreated significant habitat while providing flood protection and an exceptional recreational space. All this has been done in an <a href="http://data.worldbank.org/indicator/EN.POP.DNST?locations=SG">extremely dense city</a>. </p>
<figure>
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<figcaption><span class="caption">Singapore’s Bishan Park is an example of a new approach to urban infrastructure.</span></figcaption>
</figure>
<p>Looking further into the future, in transport, a net-positive motorway might prioritise <a href="https://infrastructure.gov.au/infrastructure/pab/active_transport/">active transport</a> and make public transport central by design. It might send price signals based on the number of passengers, vehicle type (such as autonomous) and vehicle ownership (shared, for instance).</p>
<p>Net-positive thinking aligns with a groundbreaking <a href="http://www.apra.gov.au/Speeches/Pages/Australias-new-horizon.aspx">speech</a> by Geoff Summerhayes, executive board member of Australia’s Prudential Regulation Authority (APRA), earlier this year. He identified climate change risk as a core fiduciary concern, and therefore central to directors’ duties. </p>
<p>This shift raises significant questions for the financial and operational validity of major infrastructure projects. </p>
<p>For example, in assessing the WestConnex motorway project, <a href="http://www.afr.com/business/infrastructure/roads/westconnex-what-could-go-wrong-20160919-grjtlo">Infrastructure Australia queried</a> why a broader set of (potentially less energy-intensive) transport options was not considered. Similar questions arise for the Northern Australia Infrastructure Fund’s <a href="http://www.afr.com/business/mining/coal/northern-australia-fund-board-risks-legal-action-over-adani-loan-20170411-gvipjp">support for Adani’s giant Carmichael coal mine</a> and associated water and transport infrastructure.</p>
<p>A core part of the switch to net-positive infrastructure is the realisation that resilience and robustness are different things. Historically, robustness has been central to infrastructure planning. However, robustness relies on assuming that the future is more or less predictable. In the Anthropocene, that assumption no longer holds.</p>
<h2>How do we build in resilience?</h2>
<p>So, the best we can do is <a href="https://theconversation.com/building-climate-resilience-in-cities-lessons-from-new-york-52363">set ourselves up for a resilient future</a>. This is one where our infrastructure is at its core flexible and adaptable. </p>
<p>This could include, for example, phasing infrastructure investment and development over time. Current analysis is biased toward building big projects because we assume our projected demand is correct. Therefore, we expect to reduce the overall cost by building the big project now.</p>
<p>However, in a more uncertain future, investing incrementally reduces risk and builds resilience, while spreading the cost and impact over time. This approach allows us to monitor and amend our planning as appropriate. It has been shown to save water utilities in Melbourne <a href="http://www.inderscience.com/offer.php?id=65797">as much as A$2 billion</a>.</p>
<p>Maybe the fact that we can be criticised for not having enough capacity ready in time has influenced our decision-making. We should really be challenged over investing too much, too soon, thereby eliminating the opportunity to adapt our thinking.</p>
<p>Or maybe we are so concerned about the need to build certainty into our planning that we are missing the opportunity to build learning through feedback loops into our strategies.</p>
<p>Surely there is a balance to be struck between providing enough certainty for investment without pretending we know with absolute certainty what we need to invest for the next 30 years.</p>
<p>We need long-term plans alongside learning and adaptation to respond to the imminent <a href="https://www.ice.org.uk/eventarchive/unwin-lecture-2016-london">challenges facing infrastructure</a> everywhere. These include:</p>
<ul>
<li><p>major unregulated growth in interdependencies between infrastructures;</p></li>
<li><p>lack of systems thinking in planning and design;</p></li>
<li><p>radical shifts in the structure of cities and how we live and work;</p></li>
<li><p>increasingly fragmented provision;</p></li>
<li><p>no central governance of infrastructure as a system; and</p></li>
<li><p>much existing infrastructure approaching or past its end of life.</p></li>
</ul>
<p>Regulatory reform is part of what’s required to enable public and private investment in better outcomes. Here too we need to learn our way forward. </p>
<p>Sydney’s emerging, world-leading <a href="http://www.sciencedirect.com/science/article/pii/S0959652617301968">market in recycled water</a> is an example of a successful niche development that delivers more liveable and productive pockets in our cities through innovative <a href="https://network.wsp-pb.com/article/central-park-sustainable-liveable-resilient-and-future-ready">integrated</a> infrastructure.</p>
<p>Ultimately, doing infrastructure differently will also require investment in research on infrastructure. The UK is investing £280 million in this through the <a href="http://www.ukcric.com">Collaboratium for Research on Infrastructure and Cities</a>. But in Australia’s recent <a href="https://docs.education.gov.au/node/42216">draft roadmap</a> for major research investment, infrastructure is largely absent. We overlook infrastructure research at our peril.</p><img src="https://counter.theconversation.com/content/77159/count.gif" alt="The Conversation" width="1" height="1" />
<p class="fine-print"><em><span>Cynthia Mitchell is Chair of Sydney's Local Water Solutions Forum, and a Member of the NSW Government's Independent Water Advisory Panel. She consults widely to the water sector.</span></em></p><p class="fine-print"><em><span>David Singleton is Chair of the Infrastructure Sustainability Council of Australia and a Swinburne University Council member. </span></em></p><p class="fine-print"><em><span>Jim Bentley is Managing Director of Hunter Water Corporation.</span></em></p>If infrastructure is to meet the needs and challenges of an uncertain future, we need to move beyond the AAA ratings mindset and aim for net-positive social and ecological outcomes as well.Cynthia Mitchell, Professor of Sustainability, Institute for Sustainable Futures, University of Technology SydneyDavid Singleton, Chair, Smart Cities Research Institute, Swinburne University of TechnologyJim Bentley, Honorary Director, Centre for Infrastructure Research, University of Auckland, Waipapa Taumata RauLicensed as Creative Commons – attribution, no derivatives.tag:theconversation.com,2011:article/769502017-05-03T03:54:46Z2017-05-03T03:54:46ZThe government is swimming against the tide on Westpac’s Adani decision<p>The Australian government’s <a href="http://www.afr.com/business/mining/canavan-slams-westpac-wimps-over-adani-loan-ban-20170428-gvuzbz">strident</a> <a href="http://www.skynews.com.au/news/politics/federal/2017/05/01/pm--disappointed--by-westpac-s-adani-decision.html">criticism</a> of Westpac for not financing the <a href="http://www.abc.net.au/news/2016-12-05/what-we-know-about-adani-and-the-carmichael-mine-project/8094244">Adani Carmichael coal mine</a> is out of step with the economics. As the cost of renewable energy falls and its adoption increases, fossil fuels are becoming a riskier investment. </p>
<p>It’s not just Westpac. This shift is reflected right across the finance industry. The big four Australian banks have all declined to finance this mine, as have many large international financial institutions.</p>
<p>The Commonwealth Bank quit as the project’s financial adviser in <a href="http://www.smh.com.au/business/mining-and-resources/adani-and-commonwealth-bank-part-ways-casting-further-doubt-on-carmichael-coal-project-20150805-gisd1l.html">August 2015</a>. NAB ruled out financing the mine in <a href="http://www.abc.net.au/news/2015-09-03/nab-rules-out-funding-adanis-$16bn-carmichael-coal-mine/6747298">September 2015</a>. ANZ effectively ruled out financing in <a href="https://www.theguardian.com/business/2015/oct/06/anz-will-not-finance-dirty-coal-plants-and-pledges-10bn-for-clean-energy">October 2015</a> and again, more firmly, in <a href="http://www.theaustralian.com.au/business/financial-services/anz-effectively-rules-out-funding-adanis-carmichael-coalmine/news-story/59b2a756082a5cd2c61cf9959debff95">December 2016</a>. </p>
<p>Big overseas financiers <a href="https://www.theguardian.com/business/2015/aug/10/standard-chartered-quits-controversial-queensland-coal-mining-project">Standard Chartered</a>, <a href="https://www.theguardian.com/business/2015/apr/08/galilee-basin-coalmines-australian-banks-under-pressure-after-french-lenders-rule-out-funding">Barclays, Royal Bank of Scotland, Citi, HSBC, Morgan Stanley, Société Générale, Crédit Agricole</a>, <a href="https://www.theguardian.com/environment/2014/oct/28/us-banks-vow-not-to-fund-great-barrier-reef-coal-port-say-activists">JP Morgan Chase, Deutche Bank</a> and <a href="http://www.abc.net.au/news/2015-04-09/french-banks-rule-out-fund-adani-galilee-basin-coal-mine/6380172">BNP Baripas</a> have also already abandoned or made clear their lack of support for the mine. </p>
<p>Adani’s coal was to be used to generate electricity in India, recently seen as the future for the product given <a href="https://www.nytimes.com/2017/01/18/world/asia/china-coal-power-plants-pollution.html?_r=1">China’s shift away from coal</a>. But Indian demand for coal is slipping. Its <a href="http://www.cea.nic.in/reports/committee/nep/nep_dec.pdf">new National Electricity Plan</a> has non-fossil fuels rising from the current 30% to 56% of installed power capacity by 2027. </p>
<p>The Indian government itself now thinks it may not need any new coal power plants <a href="http://onlinelibrary.wiley.com/store/10.1002/2017EF000542/asset/eft2201.pdf;jsessionid=294A469AFBC1E042B4CB83CE5D97E52A.f01t02?v=1&t=j288d2to&s=9efd828b5d2e187fd1327b157472a19ea4668a29">for at least a decade</a>.</p>
<p>As mines require a huge initial investment that pays itself off over many years, this increases the risk that the Carmichael mine will become a “<a href="https://theconversation.com/why-stranded-assets-matter-and-should-not-be-dismissed-51939">stranded asset</a>”.</p>
<h2>Shifting economics of coal</h2>
<p>Sure, financial institutions are under pressure from customers and activists to avoid investments that damage the climate. But for these institutions, such pressures only make a difference at the margin. For them it is the poor economics of coal that is fundamental. </p>
<p>The long-term prospects of coal are weakened by the rapid changes in technology and the deterioration of the climate outlook. </p>
<p><a href="http://reneweconomy.com.au/solar-price-hits-record-low-of-2-42ckwh-and-may-fall-further-32358/">Solar energy prices</a> have fallen more rapidly than most expected, and battery <a href="http://www.nature.com/nclimate/journal/v5/n4/full/nclimate2523.html#affil-auth">technology</a> and <a href="http://www.abc.net.au/news/2017-02-14/solar-batteries-like-tesla-exploding-in-popularity/8259830">use</a> is rapidly improving. </p>
<p>A <a href="http://science.sciencemag.org/content/356/6334/141.full">recent study</a> found that solar energy is on a trajectory to supply at least 3 terawatts (TW) of power globally by 2030, and potentially up to 10TW if certain barriers to installation can be overcome. For comparison, the world’s total electricity capacity from all sources as of 2014 was <a href="https://www.cia.gov/library/publications/the-world-factbook/fields/2236.html#xx">just 6TW</a>.</p>
<p>Financiers’ minds may be focused still further by the fact that, if anything, scientists appear to have <a href="http://geology.rutgers.edu/images/Hayhoe2016_-_ERL_-_Climate_Surprises.pdf">underestimated</a> the effects of climate change on sea levels, polar ice caps, and <a href="https://www.nacarbon.org/nacp/documents/WWR_Nov_2015_Hope.pdf">methane emissions from thawing permafrost</a> and <a href="http://onlinelibrary.wiley.com/store/10.1002/2015GL066501/asset/grl53907.pdf;jsessionid=1126736F4242800F91496F22646FF501.f01t03?v=1&t=j273adlr&s=45da540e654d47f87f10354091c6b201d48cda44">lakes</a>. </p>
<h2>From short- to long-term thinking</h2>
<p>The fact that the financial industry is reluctant to fund the Carmichael mine is just one example of the phenomenon described in a <a href="http://aodproject.net/active-ownership/">report by the Asset Owners Disclosure Project (AODP)</a> as “a fundamental power shift … from short-termers to long-termers”. </p>
<p>There are several reasons for this, besides the changing economics of renewable technology, the worsening climate outlook, and the shifting policies in countries like China and India.</p>
<p><a href="https://books.google.com.au/books?id=PdCOCgAAQBAJ&pg=PA176&dq=peetz+murray+climate+tools&hl=en&sa=X&ved=0ahUKEwjn4e_MttDTAhXGi5QKHZofBSYQ6AEILDAB#v=onepage&q=peetz%20murray%20climate%20tools&f=false">New tools are being developed</a> to enable investors to quantify the impact of climate on their investments. In financial circles, the more things can be counted, the more they count.</p>
<p>Superannuation funds and overseas pension funds need to invest over long periods of time, and so are now forced to <a href="http://booksandjournals.brillonline.com/content/journals/10.1163/15691497-12341402">invest with climate change in mind</a>. They can’t afford to have a stranded asset on their books. </p>
<p>Reinsurers - essentially large firms that provide insurance for insurance companies - <a href="http://iopscience.iop.org/article/10.1088/1755-1307/6/39/392021/pdf">face the same issue</a>. They need to minimise exposure to <a href="http://www.preventionweb.net/news/view/51176">extreme weather events</a>, which are increasingly influenced by climate change.</p>
<p>Fund managers are <a href="http://nordsip.com/2017/03/06/lombard-odier-launches-climate-bond-fund-with-aim/">creating financial products</a> to enable investment in climate change adaptation. And some investors are <a href="http://aodproject.net/active-ownership/">taking more control</a> over their investments, rather than leaving them in the hands of fund managers, so they can give appropriate priority to climate issues. </p>
<p>This is not to say that financiers around the world are uniformly reacting to climate issues. The <a href="http://aodproject.net/country-index/">AODP report</a> shows that, on average, European and Australian asset owners and fund managers have done well in acting on climate risk, whereas American, Middle Eastern and (until now) Chinese ones have done poorly. </p>
<p>It’s also <a href="http://www.emeraldinsight.com/doi/full/10.1108/S2043-9059%282013%290000005013">not true that finance has uniformly abandoned short-termism</a>. “Climate-interested investors” currently account for just a third of the ownership of the world’s very large corporations.</p>
<p>But no one is going to make even short-term profits out of the Adani coal mine, with its huge upfront capital investment, unless they get a substantial subsidy from the taxpayer. And the long-term prospects look grim.</p>
<p>Those who <a href="http://www.theaustralian.com.au/national-affairs/climate/resources-minister-matthew-canavan-says-westpacs-decision-on-coal-is-illogical/news-story/8069414de846ed7725a343e7b20abcac">argue</a> that Westpac’s decision was “illogical” are swimming against both the financial and technological tides.</p><img src="https://counter.theconversation.com/content/76950/count.gif" alt="The Conversation" width="1" height="1" />
<p class="fine-print"><em><span>David Peetz receives funding from the Australian Research Council and, as a university employee, has undertaken research over many years with occasional financial support from governments from both sides of politics, employers and unions, including the Mining and Energy Division of the Construction, Forestry, Mining and Energy Union. The research for the project behind this article, on finance and climate change, was funded within the university.</span></em></p><p class="fine-print"><em><span>Georgina Murray has received funding from the Australian Research Council and, as a university employee, has undertaken research over many years with occasional financial support from others, including the Mining and Energy Division of the Construction, Forestry, Mining and Energy Union. The research for the project behind this article, on finance and climate change, was funded within the university.</span></em></p>As the cost of renewable energy falls, funding a new mine is a risky investment.David Peetz, Professor of Employment Relations, Griffith UniversityGeorgina Murray, Associate Professor in Humanities, Griffith UniversityLicensed as Creative Commons – attribution, no derivatives.tag:theconversation.com,2011:article/770212017-05-03T02:04:51Z2017-05-03T02:04:51ZThe future of Australian coal: an unbankable deposit<figure><img src="https://images.theconversation.com/files/167609/original/file-20170502-17263-10ykrtv.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=496&fit=clip" /><figcaption><span class="caption"></span> <span class="attribution"><span class="source">AAP/Paul Miller</span></span></figcaption></figure><p>The news last week that Australia’s oldest bank, Westpac, has withdrawn from any prospect of financing Adani’s Carmichael coal mine may well be the death knell for the controversial project.</p>
<p>Westpac is the last of the big four Australian banks to have ruled out investing in Adani. ANZ declared its move away from mining in December 2016. The Commonwealth Bank and NAB dissociated themselves from Adani in August and September 2015.</p>
<p>The move means that, even if the Northern Australia Infrastructure Fund proceeds with a A$1 billion subsidy for the mine in the form of a dedicated, “private” railroad for Adani to export the coal, the mine is unlikely to proceed. The timing of Westpac’s decision may be a response to the multiple campaigns being launched against Adani, including consumer activism targeting the bank itself.</p>
<p>Westpac may have perceived these campaigns could have an impact on its customer base, and the savings accounts that underwrite its lending revenue stream. It responded with an update to its <a href="https://www.westpac.com.au/content/dam/public/wbc/documents/pdf/aw/sustainability/WestpacCCEActionPlan.pdf">position statement on climate change</a>. The statement specifies terminating financing mines with coal quality of less than 6,300 calories per kilo – which rules out Adani’s lower-quality coal from funding.</p>
<p>This is significant beyond just ruling out Adani. Westpac is the first of the big four banks to put restrictions on new thermal coal mines. This signals the largest financial players in Australia are accelerating the transition away from coal, and – as the position statement outlines – toward increasing lending to renewables and energy efficiency projects by two-thirds. </p>
<p>Climate solutions finance group Market Forces’ executive director <a href="https://www.investordaily.com.au/markets/41178-westpac-rules-out-funding-adani-coal-mine">Julien Vincent</a> said Westpac has “raised the bar” on climate change for the other banks. Whereas banks used to watch each other for who was going to pass on interest rate cuts, it seems now they are also mindful of who is doing the most for climate change.</p>
<p>But even without its new position statement, Westpac could not expose itself to the obvious risks of funding a project that will so rapidly devolve from a global climate pariah to a fossilised stranded asset.</p>
<p>According to a <a href="http://envlaw.com.au/wp-content/uploads/carmichael14.pdf">report</a> from 2011 on climate-change issues for the Land Court of Queensland’s hearing of objections to the grant of Adani’s mining lease:</p>
<blockquote>
<p>The cumulative emissions related to this mine … are amongst the highest in the world for any individual project, and – to the knowledge of the authors – the highest in the Southern Hemisphere.</p>
</blockquote>
<p>Given our current atmospheric CO₂ is 407.5ppm, this gives us 43ppm left to keep warming under 1.5°C, according to IPCC trajectories. Even at Adani’s <a href="http://envlaw.com.au/carmichael-coal-mine-case/">own conservative estimates</a> that it will emit 4.7 billion tonnes of greenhouse gases, which is almost 11% of the remaining global carbon budget.</p>
<p>1.5°C of committed warming presents an adaptation nightmare for coastal communities around the world. This level is almost approaching the Emian period of 120,000 years ago, when sea levels were <a href="https://www.nature.com/nature/journal/v462/n7275/full/nature08686.html%20OR%20full%20article%20at">six-to-nine metres higher</a> than they are today.</p>
<p>So, while Westpac still has a way to go before it gets off the <a href="https://www.marketforces.org.au/banks/compare">Market Forces</a> watch-list of fossil-fuel-friendly banks, it has managed to avoid an investment and PR disaster.</p>
<p>Westpac would have studied India’s electricity plan, released in December, which abandoned building any new coal-fired power stations in the next decade in favour of 350 gigawatts of new solar and wind power. Over the weekend, Shadow Environment Minister Mark Butler <a href="http://www.theaustralian.com.au/national-affairs/climate/resources-minister-matthew-canavan-says-westpacs-decision-on-coal-is-illogical/news-story/8069414de846ed7725a343e7b20abcac">pointed out</a> that the Modi government has said it intends to phase out thermal coal imports entirely by 2020.</p>
<p>But this did not stop Barnaby Joyce, on Q&A on Monday night, wheeling out the much-discredited argument that Australia has a “moral obligation” to help India keep its lights on. This is actually morally bankrupt when you consider that India is planning to look after itself with renewables.</p>
<p>The turning tide has not stopped The Australian newspaper from doing all it can to support the mine. This has included giving plenty of airtime to Resources Minister Matt Canavan, who last week labelled Westpac <a href="http://www.theaustralian.com.au/national-affairs/westpac-wimps-lashed-for-adani-coal-mine-loan-ban/news-story/e6bee3dcebb9c9b0b3f4cba523f4370d">“wimps”</a> for abandoning the mine. The Australian <a href="http://www.theaustralian.com.au/national-affairs/climate/resources-minister-matthew-canavan-says-westpacs-decision-on-coal-is-illogical/news-story/8069414de846ed7725a343e7b20abcac">reported</a> over the weekend that Canavan met with Guatam Adani in Brisbane, and was “confident the project would get the finance it needed from other lenders”.</p>
<p>But The Australian has been doing the heavy lifting for Adani’s PR campaign for some time now. Post-Cyclone-Debbie articles in April talked up the mine’s declared “huge economic benefits”. One front page headline declared:</p>
<blockquote>
<p><a href="https://twitter.com/ukpapers/status/852066475846377472">Shorten isolated over Adani mine opposition</a> (Unions, mayors, ALP premier unite to back coal project) (April 12)</p>
</blockquote>
<p>And there was a blatant editorial promotion of the mine on April 18, entitled: </p>
<blockquote>
<p><a href="http://www.theaustralian.com.au/opinion/editorials/adani-project-offers-fresh-hope/news-story/0ab7f4fd5eac23dce5b70346291c41d2">Adani project offers fresh hope</a></p>
</blockquote>
<p>The April 12 edition even included a <a href="http://www.theaustralian.com.au/opinion/bill-shortens-retreat-into-leftist-fanaticism/news-story/9874767399d0a30fd846151e562e29b9">front page comment</a> by Simon Benson, that:</p>
<blockquote>
<p>Bill Shorten’s repositioning on the Adani coalmine in north Queensland appears to be yet another political retreat into the inner-city streets of leftist fanaticism.</p>
</blockquote>
<p>What such a campaign tells us is it seems to be crunch-time for the mine – and the future of the entire Galilee Basin, whose coal deposits will be made to look a little more viable if that railway gets built.</p>
<p>But opposition to the railway subsidy has surfaced in the most unlikely of quarters. Sydney shockjock Alan Jones has <a href="http://www.theage.com.au/video/video-news/video-national-news/government-should-get-smashed-jones-20170417-4t0bc">weighed in</a>, denouncing the subsidy as a case of taxpayers funding a private venture that is not in the national interest.</p>
<p>Paradoxically, Jones ended his outrage by comparing funding Adani with subsidising windfarms, for which Australians – both present and future – are direct beneficiaries in so many ways. But both The Australian and Jones have ignored the the big story on investment into renewables.</p>
<p>Whereas a giant coal-mining company has taken seven long years to realise no-one is listening – except for major political parties, perhaps <a href="https://theconversation.com/the-fossil-fuelled-political-economy-of-australian-elections-61394">eager for political donations</a> they are accustomed to from the mining industry – investors <a href="http://www.abc.net.au/news/2017-04-30/community-energy-projects-selling-out-within-minutes/8476794?WT.mc_id=newsmail&WT.tsrc=Newsmail">can’t get enough of renewables</a>. Investment opportunities for community projects have been selling out within minutes.</p>
<p>Grassroots solar projects are in high demand for investors. Fifty such projects have been established across Australia and are backed by $24 million. But the ABC reports Australia lags behind Scotland, Denmark and Germany, which all have extensive energy co-operatives that are promoting wind more than solar. </p>
<p>With an average of 7% return on investment, the appetite for such projects in Australia is obviously strong. And it will only take local communities and small businesses to be better organised to take advantage of the renewables investment revolution. At the very least, the remarkable appetite for renewables investment will drive the large banks and lending institutions to service this growing market.</p>
<hr>
<p><em>With thanks to Tahnee Burgess for research assistance on this article.</em></p><img src="https://counter.theconversation.com/content/77021/count.gif" alt="The Conversation" width="1" height="1" />
The news last week that Australia’s oldest bank, Westpac, has withdrawn from any prospect of financing Adani’s Carmichael coal mine may well be the death knell for the controversial project. Westpac is…David Holmes, Senior Lecturer, Communications and Media Studies, Monash UniversityLicensed as Creative Commons – attribution, no derivatives.tag:theconversation.com,2011:article/759232017-04-12T23:09:02Z2017-04-12T23:09:02ZWhy does the Carmichael coal mine need to use so much water?<figure><img src="https://images.theconversation.com/files/164791/original/image-20170411-31886-15euxo.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=496&fit=clip" /><figcaption><span class="caption">Coal mines, such as this one near Bowen, use water for everything from equipment cooling to dust management.</span> <span class="attribution"><a class="source" href="https://commons.wikimedia.org/wiki/File%3ACSIRO_ScienceImage_1801_Water_storage_at_a_mine.jpg">CSIRO</a>, <a class="license" href="http://creativecommons.org/licenses/by/4.0/">CC BY</a></span></figcaption></figure><p>From <a href="http://www.smh.com.au/environment/abbot-point-coal-terminal-water-spill-to-cause-significant-damage-20170410-gvht8u.html">accidental water spills</a> into coastal wetlands, to <a href="http://www.theaustralian.com.au/business/barnaby-joyce-defends-great-investment-in-adani/news-story/d71bec3fbb8394b930ccf17b7363b085">proposed taxpayer-funded loans</a>, Adani’s planned Carmichael coal mine and the associated Abbot Point coal terminal can’t keep out of the news at the moment.</p>
<p>Last week, the granting of an <a href="http://www.smh.com.au/cqstatic/gvdane/adaniawl.PDF">unlimited 60-year water licence</a> to the Carmichael mine, in Queensland’s Galilee Basin, rattled environmentalists, farmers and community groups alike. </p>
<p>In a region experiencing <a href="https://www.longpaddock.qld.gov.au/queenslanddroughtmonitor/queenslanddroughtreport/index.php">prolonged drought conditions</a>, the provision of unlimited water for one of the largest mining operations in the Southern Hemisphere seems like a commitment at odds with current climate predictions. The decision has also prompted a raft of wider questions about the industry’s water use.</p>
<p><strong>Why do coal mines need so much water?</strong></p>
<p>Underground coal mines rely on water to <a href="https://energy.gov/eere/amo/downloads/itp-mining-water-use-industries-future-mining-industry">reduce the hazard</a> of fires or explosion, by using it to cool the cutting surfaces of mining equipment and prevent coal dust from catching fire.</p>
<p>Water also helps to <a href="http://www.sciencedirect.com/science/article/pii/S1364815214001935">manage dust</a> produced during the processing stage, when coal is crushed and ground. Coal is then transported through pipelines as a water-based slurry for further processing.</p>
<p>Mines also need water for things like equipment maintenance, and for consumption by the mining communities themselves.</p>
<p>In total, about <a href="http://www.sciencedirect.com/science/article/pii/S136481521000201X">250 litres of freshwater</a> are required per tonne of coal produced. This freshwater makes up around <a href="http://www.sciencedirect.com/science/article/pii/S136481521000201X">a quarter of the total water</a> demand during coal production, the rest being “worked” (recycled) water.</p>
<p><strong>What other industries use lots of water?</strong></p>
<p>The Great Artesian Basin is one of the largest underground water reservoirs in the world. It underlies <a href="http://www.gabcc.gov.au/sitecollectionimages/resources/66540f98-c828-4268-8b8b-b37f8193cde7/files/resource-study-2016.pdf">22% of Australia’s land area</a>, beneath the arid and semi-arid parts of Queensland, New South Wales, South Australia and the Northern Territory.</p>
<p>Its aquifers supply water to around 200 towns or settlements, most of which are <a href="http://www.agriculture.gov.au/SiteCollectionDocuments/water/gab-economics-report.pdf">allowed to draw</a> between 100 and 500 million litres (ML) per year.</p>
<figure class="align-center zoomable">
<a href="https://images.theconversation.com/files/164789/original/image-20170411-31902-1b82bdh.png?ixlib=rb-1.1.0&q=45&auto=format&w=1000&fit=clip"><img alt="" src="https://images.theconversation.com/files/164789/original/image-20170411-31902-1b82bdh.png?ixlib=rb-1.1.0&q=45&auto=format&w=754&fit=clip" srcset="https://images.theconversation.com/files/164789/original/image-20170411-31902-1b82bdh.png?ixlib=rb-1.1.0&q=45&auto=format&w=600&h=520&fit=crop&dpr=1 600w, https://images.theconversation.com/files/164789/original/image-20170411-31902-1b82bdh.png?ixlib=rb-1.1.0&q=30&auto=format&w=600&h=520&fit=crop&dpr=2 1200w, https://images.theconversation.com/files/164789/original/image-20170411-31902-1b82bdh.png?ixlib=rb-1.1.0&q=15&auto=format&w=600&h=520&fit=crop&dpr=3 1800w, https://images.theconversation.com/files/164789/original/image-20170411-31902-1b82bdh.png?ixlib=rb-1.1.0&q=45&auto=format&w=754&h=653&fit=crop&dpr=1 754w, https://images.theconversation.com/files/164789/original/image-20170411-31902-1b82bdh.png?ixlib=rb-1.1.0&q=30&auto=format&w=754&h=653&fit=crop&dpr=2 1508w, https://images.theconversation.com/files/164789/original/image-20170411-31902-1b82bdh.png?ixlib=rb-1.1.0&q=15&auto=format&w=754&h=653&fit=crop&dpr=3 2262w" sizes="(min-width: 1466px) 754px, (max-width: 599px) 100vw, (min-width: 600px) 600px, 237px"></a>
<figcaption>
<span class="caption">The Great Artesian Basin covers almost a quarter of Australia.</span>
<span class="attribution"><span class="source">Tentotwo/Wikimedia Commons</span>, <a class="license" href="http://creativecommons.org/licenses/by-sa/4.0/">CC BY-SA</a></span>
</figcaption>
</figure>
<p>The Great Artesian Basin underpins A$12.8 billion of economic activity annually, according to a <a href="http://www.agriculture.gov.au/SiteCollectionDocuments/water/gab-economics-report.pdf">2016 report commissioned by the federal government</a>. Almost all of this is from mining and coal seam gas (A$8 billion) and livestock farming (A$4.7 billion).</p>
<p><a href="http://www.agriculture.gov.au/SiteCollectionDocuments/water/gab-economics-report.pdf">In Queensland</a>, mining and industry hold just over 1% (by number) of the water licences linked to the Great Artesian Basin but account for 10% of the water extracted. Coal seam gas accounts for a further 22% of water, with no licensing required. In contrast, livestock production accounts for 88% of water licences but just 46% of the extracted water.</p>
<p>The Carmichael mine’s <a href="http://eisdocs.dsdip.qld.gov.au/Carmichael%20Coal%20Mine%20and%20Rail/EIS/EIS/Mine%20Chapters/06-water-resources-mine.pdf">12,000ML forecasted use</a> (equivalent to <a href="http://www.agriculture.gov.au/SiteCollectionDocuments/water/gab-economics-report.pdf">4% of the water</a> extracted from the Great Artesian Basin in Queensland last year) would put it alongside the biggest annual users of Great Artesian Basin water, such as the Olympic Dam copper and uranium mine in South Australia, which currently <a href="http://www.epa.sa.gov.au/files/4771574_odxassessmentreport.pdf">draws 10,000ML</a> each year.</p>
<p><strong>Why does Adani need unlimited water anyway?</strong></p>
<p>According to the company’s own modelling, the Carmichael mine’s annual freshwater use is projected to peak at just over <a href="http://eisdocs.dsdip.qld.gov.au/Carmichael%20Coal%20Mine%20and%20Rail/EIS/EIS/Mine%20Chapters/06-water-resources-mine.pdf">12,000ML</a> – or roughly 13 Olympic swimming pools per day.</p>
<p>Despite these estimates, the <a href="http://www.smh.com.au/cqstatic/gvdane/adaniawl.PDF">water licence</a> granted to Adani puts no limit on the water it can take from the Great Artesian Basin. However, it calls for regular monitoring of water levels, quality and flow in each aquifer that is tapped. </p>
<p>Unlike other controversial Queensland mining projects, such as the New Acland coal mine, Adani’s water licence application was exempted from <a href="https://www.business.qld.gov.au/industries/mining-energy-water/water/authorisations/licences/public-notices">public scrutiny</a>, courtesy of a <a href="https://www.legislation.qld.gov.au/Bills/55PDF/2016/B16_0114_EnvironmentalProUWMOLAB16.pdf">November 2016 amendment</a> to the <a href="https://www.legislation.qld.gov.au/Bills/55PDF/2015/WaterLAB15.pdf">existing laws</a>.</p>
<p>Water licences usually specify the total amount, and/or the daily rate, of groundwater that can be taken. Changes to a water licence to increase the amount of water must be <a href="https://www.legislation.qld.gov.au/Bills/55PDF/2016/B16_0114_EnvironmentalProUWMOLAB16.pdf">assessed like a new application</a> and pass public scrutiny. But with an unlimited licence, there is no need for Adani to apply for a new licence if they need more water than originally predicted.</p>
<p><strong>What are the environmental effects of industrial-scale water usage on the basin?</strong></p>
<p>Despite a net yearly <a href="https://publications.csiro.au/rpr/download?pid=csiro:EP132693&dsid=DS5">decrease of 286,000ML</a> in the water stored within the Great Artesian Basin, it is in no danger of running dry. The past 120 years of exploitation have used up <a href="https://www.environment.gov.au/system/files/resources/6405b0fb-1956-4790-9ca4-b138ed810717/files/great-artesian-basin-managing.pdf">less than 0.1%</a> of the water stored. </p>
<p>The real issue is water pressure. Flows from artesian bores are now <a href="https://www.environment.gov.au/system/files/resources/6405b0fb-1956-4790-9ca4-b138ed810717/files/great-artesian-basin-managing.pdf">roughly half</a> what they were in 1915. Since then, the water level in some bores has fallen by as much as 80 metres, and a third of bores have stopped flowing altogether. This directly affects the human, plant and animal communities that rely on artesian water.</p>
<p>Because of their isolation, the natural springs of the Great Artesian Basin are home to <a href="http://www.gabcc.gov.au/sitecollectionimages/resources/66540f98-c828-4268-8b8b-b37f8193cde7/files/resource-study-2016.pdf">many unique plant and animal species</a>. Desert springs are particularly vulnerable to declining water pressure, and many spring habitats have been <a href="https://www.environment.gov.au/system/files/resources/6405b0fb-1956-4790-9ca4-b138ed810717/files/great-artesian-basin-managing.pdf">irreversibly damaged</a> by invasive species, excavation, livestock, industrial activity and even tourists. </p>
<figure class="align-center zoomable">
<a href="https://images.theconversation.com/files/164790/original/image-20170411-31914-z3xyr4.JPG?ixlib=rb-1.1.0&q=45&auto=format&w=1000&fit=clip"><img alt="" src="https://images.theconversation.com/files/164790/original/image-20170411-31914-z3xyr4.JPG?ixlib=rb-1.1.0&q=45&auto=format&w=754&fit=clip" srcset="https://images.theconversation.com/files/164790/original/image-20170411-31914-z3xyr4.JPG?ixlib=rb-1.1.0&q=45&auto=format&w=600&h=399&fit=crop&dpr=1 600w, https://images.theconversation.com/files/164790/original/image-20170411-31914-z3xyr4.JPG?ixlib=rb-1.1.0&q=30&auto=format&w=600&h=399&fit=crop&dpr=2 1200w, https://images.theconversation.com/files/164790/original/image-20170411-31914-z3xyr4.JPG?ixlib=rb-1.1.0&q=15&auto=format&w=600&h=399&fit=crop&dpr=3 1800w, https://images.theconversation.com/files/164790/original/image-20170411-31914-z3xyr4.JPG?ixlib=rb-1.1.0&q=45&auto=format&w=754&h=501&fit=crop&dpr=1 754w, https://images.theconversation.com/files/164790/original/image-20170411-31914-z3xyr4.JPG?ixlib=rb-1.1.0&q=30&auto=format&w=754&h=501&fit=crop&dpr=2 1508w, https://images.theconversation.com/files/164790/original/image-20170411-31914-z3xyr4.JPG?ixlib=rb-1.1.0&q=15&auto=format&w=754&h=501&fit=crop&dpr=3 2262w" sizes="(min-width: 1466px) 754px, (max-width: 599px) 100vw, (min-width: 600px) 600px, 237px"></a>
<figcaption>
<span class="caption">An oasis in South Australia’s arid interior.</span>
<span class="attribution"><a class="source" href="https://commons.wikimedia.org/wiki/File%3ABubbling_Mound_Spring_at_Wabma_Kadarbu_Conservation_Park.JPG">Tandrew/Wikimedia Commons</a>, <a class="license" href="http://creativecommons.org/licenses/by-sa/4.0/">CC BY-SA</a></span>
</figcaption>
</figure>
<p><strong>Can mining industries be more water-wise?</strong></p>
<p>Recycled water is an integral part of coal mining, but it contains salt, added in the dust-management stage, which can leave the water unusable for certain processes. Nevertheless, a <a href="http://www.sciencedirect.com/science/article/pii/S136481521000201X">recent study</a> suggests that Queensland coal mines could cut their freshwater use by 62% simply by using recycled water for processes that are not sensitive to salt levels. Diluting salty recycled water could also <a href="http://www.sciencedirect.com/science/article/pii/S1364815214001935">reduce freshwater</a> use by 50%, and cut water costs by 40%.</p>
<p>Untreated seawater is perhaps the most sustainable water of all, although transporting it from coast to mine costs energy and therefore money. Its saltiness also creates chemical challenges during <a href="http://www.tandfonline.com/doi/abs/10.1179/1743285514Y.0000000077">coal</a> and <a href="http://www.sciencedirect.com/science/article/pii/S1226086X17301144">uranium</a> processing.</p>
<p>Another option to address climate-induced water challenges might be for <a href="http://www.sciencedirect.com/science/article/pii/S095965261630525X">mines to share water allocations</a>.</p>
<p><strong>Where do we go from here?</strong> </p>
<p>Understandably, there is significant concern that Adani’s unlimited licence will allow the mine to draw more water than predicted. Should the mine go ahead, it is important that the research community continues to scrutinise the regular water quality and usage reports that Adani is required to provide. Water licences can, after all, be revoked. </p>
<p>We should also be concerned about industries like coal seam gas that currently do not require water licensing, but nevertheless use huge amounts of artesian water. </p>
<p>Although water is an important issue, it is vital not to lose sight of the numerous other environmental impacts of the Carmichael mine. For example, an estimated <a href="https://www.environment.gov.au/system/files/pages/cb8a9e41-eba5-47a4-8b72-154d0a5a6956/files/carmichael-statement-reasons.pdf">4.7 billion tonnes</a> of greenhouse gas emissions will result from the mining and burning of Carmichael coal. Climate warming will impact Australia on multiple fronts, including bleaching of the <a href="http://www.ehp.qld.gov.au/assets/documents/climate/advancing-climate-action.pdf">Great Barrier Reef</a>, increasing the intensity of <a href="http://www.environment.gov.au/system/files/resources/fa553e97-2ead-47bb-ac80-c12adffea944/files/cc-risks-full-report.pdf">tropical cyclones</a>, causing more heat-related <a href="http://www.climatecouncil.org.au/uploads/b7e53b20a7d6573e1ab269d36bb9b07c.pdf">deaths, diseases and droughts</a>.</p><img src="https://counter.theconversation.com/content/75923/count.gif" alt="The Conversation" width="1" height="1" />
<p class="fine-print"><em><span>Ellen Moon works on a project funded by the Cooperative Research Centre for Contamination Assessment and Remediation of the Environment.</span></em></p>Adani’s controversial Carmichael coal mine in Queensland’s Galilee Basin has been granted an unlimited 60-year water licence. But a range of measures could help the industry use less freshwater.Ellen Moon, Researcher in Geochemistry, Southern Cross UniversityLicensed as Creative Commons – attribution, no derivatives.tag:theconversation.com,2011:article/745522017-03-17T05:24:49Z2017-03-17T05:24:49ZUnpicking the labyrinth that is India’s Adani<p>Indian multinational <a href="http://www.adani.com/">Adani Group</a> is becoming a more familiar name in Australia, as the company’s interest in its proposed Carmichael coal mine <a href="https://theconversation.com/india-is-hedging-its-bets-on-coal-to-bring-power-to-the-people-54657">in Queensland grows</a>. At the same time, there’s concerns the arrangement <a href="http://www.abc.net.au/news/2017-03-14/adani-carmichael-coalmine-to-shift-millions-to-cayman-islands/8350704">may shift some of its likely revenue</a>, even if it does deliver on all of <a href="http://statements.qld.gov.au/Statement/2016/10/9/queensland-government-steps-up-to-progress-adani-mine-project">the promised business and job opportunities</a> for Australia.</p>
<p>Profit shifting has been tied to the labyrinth of financial structures and ownership, related to different companies within the publicly listed Adani Group and/or family members. Even though this setup draws scrutiny in developed countries like Australia, it’s common and makes sense in the context of emerging markets like India.</p>
<p>Since 2013, Adani’s growing interest in the Carmichael mine has been tied to volatility of global coal prices and sea-borne freight rates. However <a href="http://www.reuters.com/article/adani-ent-australia-coal-idUSL3N0T126820141112">the financial viability</a> of the project has remained questionable. Most Indian companies’ overseas interests and large investments, barring that of Tata Motor’s acquisition of Jaguar Land Rover, during the 2008 crisis, have not yet been <a href="http://blogs.economictimes.indiatimes.com/Swaminomics/why-foreign-acquisitions-need-opportunism-not-gigantism/">financially rewarding</a>.</p>
<h2>Why Adani is structured the way it is</h2>
<p>Family-run diversified conglomerates are the norms of many developing nations. In India, older family-run business conglomerates like <a href="http://www.tata.com/company/index/Tata-companies">Tata</a> and <a href="http://www.adityabirla.com/businesses/companies">Birla</a> have lately seen others joining the club – from <a href="http://fortuneindia.com/2016/april/mukesh-ambani-s-big-balancing-act-1.3310">Mukesh Ambani</a> (and his brother’s <a href="http://www.relianceada.com/ada/rgroup_businesses.html">ADAG part</a>) to Adanis, <a href="http://www.mahindra.com/investors">to Mahindras</a>. In Japan, such structures are known as <a href="https://hbr.org/2013/09/the-new-improved-keiretsu">Keiretsu</a> and in South Korea, as <a href="https://www.cnet.com/news/the-chaebols-the-rise-of-south-koreas-mighty-conglomerates/">Chaebol</a>.</p>
<p>While this might seem like organised chaos in the context of developed countries, studies have shown that centralised and <a href="https://hbr.org/1997/07/why-focused-strategies-may-be-wrong-for-emerging-markets">focused, core competency driven strategies</a> in businesses may not be the best choice in emerging markets like India. This is because of uncertainty around government policy and the need to “manage” government expectations. </p>
<p>Many emerging countries like India have seen a rise in <a href="https://www.forbes.com/sites/forbesasia/2013/03/13/what-the-billionaires-list-tells-us-about-asian-emerging-markets/#5ffc5d346328">industrial billionaires</a> from businesses that rely on government policies that allocate natural resources. The rise of the Adani’s private individual or publicly-listed companies in the group are historically linked with coal trade - starting with when it was private back in the 1980s.</p>
<p>Doing business in developing nations or with companies in developing nations has never been easy. Some businesses like, Adani Group, have mastered that art well by creating a series of connections with the government. </p>
<p>The key man behind all of Adani’s business interests and fortunes is <a href="https://theconversation.com/does-gautam-adani-really-need-galilee-basin-coal-45759">Gautam Adani</a>. Many view the rise of the group as interwined with the <a href="http://www.thecitizen.in/index.php/NewsDetail/index/1/3375/The-Incredible-Rise-and-Rise-of-Gautam-Adani-Part-One">rise of the political career</a> of India’s Prime Minister, Narendra Modi, starting with the days when he was the Chief Minister of Gujarat.</p>
<p>In businesses controlled and founded by a family there’s usually a haze of subsidiary companies, with opaque corporate governance and structures. However there are exceptions in some of these diversified groups, like the <a href="http://auto.economictimes.indiatimes.com/news/industry/mahindra-group-chairman-anand-mahindra-among-barrons-2016-top-30-global-ceos-list/51513830">Mahindras</a>, who exhibit exemplary corporate governance and transparency. </p>
<p>Conservative accounting norms suggest businesses should factor in the worst possibilities, both in terms of liabilities as well as assets. But the discretion on what exactly is reported has always remained opaque. </p>
<p>Accounting standards allow listed companies to merely disclose, without recognising, <a href="http://www.investopedia.com/terms/c/contingentliability.asp">contingent liabilities</a>. These standards also don’t require disclosure nor recognition of <a href="http://www.investopedia.com/terms/c/contingentasset.asp">contingent assets</a>, where potential economic benefit is dependent solely on future events that can’t be controlled by the company. This can lead to accounting and legal complexities. </p>
<p>More importantly, there is a need for transparency on what all business interests top management may have, whether those business interests are privately held (and onshore or offshore), or listed. Business leaders should also report any potential conflicts arising from the same person representing multiple boards, or taking key decisions in different companies. </p>
<h2>The success of the group</h2>
<p>The rise of the Adani group over the last three decades has been phenomenal. It now has <a href="http://www.adani.com/businesses">keen interests and operations</a> in three equally vital components, namely resources, logistics and energy.</p>
<p>Indian media have scrutinised <a href="https://thewire.in/58640/black-money-investigation-a-feast-of-vultures/">Adani Group</a> from obvious and visible allegations of cronyism, to accounting malpractices related to <a href="https://thewire.in/27907/from-adani-to-ambani-how-alleged-over-invoicing-of-imported-coal-has-increased-power-tariffs/">under-invoicing or over-invoicing</a>. </p>
<p>The group also remains one of <a href="https://doc.research-and-analytics.csfb.com/docView?language=ENG&source=emfromsendlink&format=PDF&document_id=1021449371&extdocid=1021449371_1_eng_pdf&serialid=9IEtj9tC9wxAGa5r2NuYSCyQ3AtHVhY88a0%2bhKfpy3E%3d">the most leveraged groups in India</a>, meaning it borrows a lot of capital for investment, expecting the profits made to be greater than the interest payable. This is at a time when India’s state-owned banks have been suffering from <a href="https://scroll.in/article/829895/the-daily-fix-indias-npa-crisis-points-to-the-crony-capitalist-rot-at-the-heart-of-the-economy">chronic non-performing loans or assets</a>, usually funded by the government, with taxpayers’ money. </p>
<p><a href="http://www.business-standard.com/article/companies/lower-demand-widens-adani-power-s-q3-standalone-loss-16-fold-to-rs-478-cr-117012000961_1.html">Adani’s key listed companies</a> are Adani Power, Adani Ports and Adani Enterprises (other one being Adani Transmissions Ltd).</p>
<p>Adani Enterprises, the arm of the group involved with Carmichael coal project, had <a href="http://in.reuters.com/article/adani-ent-restructuring-idINKBN0L30W620150130">a demerger back in 2015</a> from a more complex holding structure. The demerger created shareholder value in the other listed group companies, because of a loss of the risk of uncertainties related to the big Carmichael mine’s liabilities. Naturally, Adani Enterprises’ stock <a href="http://www.business-standard.com/article/markets/why-the-80-per-cent-drop-in-adani-enterprises-is-justified-115060300653_1.html">tanked 80%</a> with that demerger.</p>
<p>Adani Power’s problems are twofold – the <a href="http://www.business-standard.com/article/companies/lower-demand-widens-adani-power-s-q3-standalone-loss-16-fold-to-rs-478-cr-117012000961_1.html">unavailability of domestic fuel</a> and local demand for power in the power-surplus Gujarat state of India. This means the company’s plants are underutilised, leading to low financial performances. </p>
<p>Even though Indian business houses might have similar structures, they don’t all act the same. Some have matured after burning their fingers; and follow best accounting and corporate governance practices. </p>
<p>Adani group is comparatively a new kid in the block. So the question remains on whether the Adanis would help improve perceptions of Indian business and investment overseas in the years to come. Developments so far in the Carmichael mine do not indicate an easy ride.</p><img src="https://counter.theconversation.com/content/74552/count.gif" alt="The Conversation" width="1" height="1" />
<p class="fine-print"><em><span>Ranjit Goswami does not work for, consult, own shares in or receive funding from any company or organisation that would benefit from this article, and has disclosed no relevant affiliations beyond their academic appointment.</span></em></p>Even though the setup of the Indian Adani Group draws scrutiny in developed countries like Australia, it’s common and makes sense in the context of emerging markets like India.Ranjit Goswami, Vice-Chancelllor, RK UniversityLicensed as Creative Commons – attribution, no derivatives.tag:theconversation.com,2011:article/736622017-02-28T21:55:32Z2017-02-28T21:55:32ZCoal comfort: Pacific islands on collision course with Australia over emissions<p>Uniquely vulnerable to the impacts of a warming world, Pacific island countries have long been considered the front-line of climate change, so it’s not surprising that they are also leading the fight to tackle the problem. </p>
<p>These tiny nations have vowed to challenge major polluters to cut emissions and, this year, they have coal exports from their biggest neighbour firmly in their sights. </p>
<p>For the first time, a Pacific island country is head of global negotiations aiming to limit “dangerous interference” with the Earth’s climate system. Fiji, which last week marked the first <a href="http://www.sbs.com.au/news/article/2017/02/20/year-after-cyclone-winston-fiji-calls-global-action-climate-change">anniversary of the devastation caused by the strongest cyclone ever recorded in the southern hemisphere</a>, has vowed to use its presidency of the United Nations Framework Convention on Climate Change (UNFCCC) to make the world <a href="http://newsroom.unfccc.int/unfccc-newsroom/world-needs-to-sit-up-and-take-notice-of-climate-change/">sit up and take notice</a>.</p>
<p>This must be a matter of concern in Australia’s capital, Canberra; Fiji’s Prime Minister Voreqe Bainimarama is an outspoken critic of his neighbour’s climate policy. He has labelled Australia a prominent member of the “<a href="http://www.theaustralian.com.au/news/world/fijis-bainimarama-blasts-australias-coalition-of-the-selfish/news-story/a49a7be2d33585cea3bb48174a006424">coalition of the selfish</a>” – a group of industrialised nations that put the welfare of their carbon-polluting industries before the environment, and even the survival of Pacific island countries.</p>
<p>It’s difficult to deny that Bainimarama has a point. Australia is <a href="https://www.theguardian.com/business/grogonomics/2013/oct/14/australia-wealth-top-world">one of the wealthiest nations on earth</a>, and the world’s largest coal exporter. The country <a href="http://minister.industry.gov.au/ministers/frydenberg/speeches/opportunities-and-challenges-australias-resources-and-energy-sectors">has doubled exports of coal</a> – the dirtiest of fossil fuels – over the past decade. </p>
<p>Far from scaling back on coal as part of global efforts to reduce emissions, Australia is currently planning <a href="https://www.ft.com/content/603226ec-bb7f-11e6-8b45-b8b81dd5d080">public subsidies for new coal mines</a> and considering financing new <a href="http://www.abc.net.au/news/2017-02-02/clean-energy-money-could-fund-coal-power-stations-morrison-says/8234118">coal-fired power plants</a>.</p>
<h2>A diplomatic challenge</h2>
<p>Abroad, Australian diplomats are tasked with improving coal’s reputation. Late last year, for example, they <a href="https://www.ft.com/content/68ed504a-c110-11e6-9bca-2b93a6856354">lobbied the newly established Asian Infrastructure Investment Bank</a> to ensure multilateral finance would be directed toward so-called “clean coal” power plants in the region.</p>
<p>Australia’s aggressive promotion of coal has angered Pacific island governments, who have repeatedly <a href="http://www.radionz.co.nz/international/pacific-news/283565/small-islands-call-for-global-moratorium-on-coal-mines">called for a global moratorium on the development of new coal mines</a>. In October 2015, Bainimarama issued a special plea for Prime Minister Malcolm Turnbull to “<a href="http://www.fiji.gov.fj/Media-Center/Speeches/HON-PM-BAINIMARAMA-SPEECH-AT-THE-CLOSING-OF-PACIFI.aspx">impose a moratorium on the development of further reserves of Australian coal</a>.”</p>
<p>Australia’s continued promotion of coal is also firmly at odds with the <a href="http://unfccc.int/paris_agreement/items/9485.php">2015 Paris Agreement</a>, which aims to limit global warming to well below 2°C above the pre-industrial average. To have a reasonable chance of achieving that goal, <a href="http://newsroom.unfccc.int/unfccc-newsroom/most-fossil-fuels-must-stay-in-the-ground-new-study/">there’s little doubt the vast majority of the world’s coal reserves must stay in the ground</a>.</p>
<p>Wary that Fiji and other Pacific island countries will <a href="http://www.abc.net.au/news/2015-08-11/marshall-islands-slams-australias-carbon-emissions-targets/6688974?pfmredir=sm">again target Australia</a> at the COP23 climate negotiations in December 2017, Australian ambassador for the environment Patrick Suckling was dispatched to island capitals in February 2017 <a href="http://samoaobserver.ws/en/09_02_2017/local/16685/Ambassador-assures-Samoa.htm">to promote Australia’s climate change “credentials”</a>.</p>
<p>Having been set the task of promoting carbon emissions to people on low-lying atolls – surely the 21st century equivalent of selling ice to Eskimos – Ambassador Suckling visited Tuvalu, Samoa and Fiji to explain that “clean coal” would be <a href="http://www.fijitimes.com/story.aspx?id=388360">part of the world’s energy mix for decades</a>.</p>
<p>Perhaps it’s not surprising that he was happy to promote the benefits of coal; in his previous role as ambassador to India, Suckling encouraged the Indian firm Adani to invest in a new coal mine in the Australian state of Queensland. In July 2014, he described the proposed Carmichael mine, which, if completed, will be the largest coal mine in the southern hemisphere, as an “<a href="http://india.highcommission.gov.au/ndli/pa2314.html">outstanding project</a>”.</p>
<p>Suckling’s island tour, and his support for coal, <a href="http://www.radionz.co.nz/international/programmes/datelinepacific/audio/201833311/pican-says-australian-climate-claim-not-rational">sparked outrage</a> from Pacific island civil society and church groups, who penned an <a href="http://www.huffingtonpost.com/entry/an-open-letter-from-the-pacific-islands-climate-action_us_5897a1dfe4b061551b3e0049">open letter to the ambassador</a> calling on the Australian government to do more to reduce emissions.</p>
<h2>Wolves and sheep</h2>
<p>While in Fiji, Ambassador Suckling suggested Australia would <a href="http://www.fijitimes.com/story.aspx?id=388207">work closely with the country</a> to ensure the 2017 global climate negotiations would be a success. He also made much of Australia’s role as co-chair of the UN’s Green Climate Fund, <a href="http://www.fijitimes.com/story.aspx?id=387422">suggesting new finance would help Pacific communities</a> build resilience to a changing climate.</p>
<p>This year, Australia co-chairs the Green Climate Fund with another nation that has the dubious honour of being a leading exporter of carbon: Saudi Arabia. By 2020, Australia is expected become <a href="http://minister.industry.gov.au/ministers/frydenberg/speeches/opportunities-and-challenges-australias-resources-and-energy-sectors">the world’s largest exporter</a> of both coal and natural gas. </p>
<p>When that happens, Australia’s total carbon exports look <a href="https://www.thesaturdaypaper.com.au/opinion/topic/2016/07/23/truth-about-australias-coal-industry-and-climate-policy/14691960003525">set to exceed that of Saudi Arabia</a> – the world’s largest oil exporter.</p>
<p>Pacific island states are no doubt wary of wolves in sheep’s clothing. They are well aware that both Australia and Saudi Arabia have a history of dragging their feet on global efforts to reduce carbon emissions. In the lead up to negotiations for the 1997 Kyoto Protocol, for example, Australia was isolated with Saudi Arabia (and other OPEC members) and Russia as <a href="https://books.google.com.au/books?id=W8vyCAAAQBAJ&printsec=frontcover&dq=Sebastian+Oberthur+and+Hermann+Ott+springer+the+kyoto+protocol+international+climate+change+policy&hl=en&sa=X&ved=0CB0Q6AEwAGoVChMIuueGlM_exgIVw12mCh2hxgpM#v=onepage&q=Sebastian%20Oberthur%20and%20Hermann%20Ott%20springer%20the%20kyoto%20protocol%20international%20climate%20change%20policy&f=false">the minority of laggard states</a>. </p>
<p>At the climate negotiations that followed, the country insisted on special exemptions - subsequently known as “the Australia clause” - that <a href="https://theconversation.com/australia-hit-its-kyoto-target-but-it-was-more-a-three-inch-putt-than-a-hole-in-one-44731">allowed it to meet international commitments</a> even while domestic emissions from burning fossil fuels increased. Concerned with safeguarding its oil exports, Saudi Arabia has long been <a href="http://muse.jhu.edu/article/252606">accused of outright obstruction</a> in climate negotiations. </p>
<p>Pacific island governments are familiar with <a href="https://theconversation.com/pacific-pariah-how-australias-love-of-coal-has-left-it-out-in-the-diplomatic-cold-64963">Australia’s repeated attempts to weaken their position</a> at UN climate negotiations. Indeed, at each major milestone in the global talks, Australia has exercised an effective veto power at the Pacific Islands Forum (PIF) - the region’s premier annual political meeting - to water down positions put forward by its small, impoverished neighbours. </p>
<p>In 1997, for example, island leaders wanted to issue a declaration calling for a global agreement that included legally binding commitments to reduce emissions. But they were “<a href="http://edition.cnn.com/WORLD/9709/20/pacific.forum/index.html?eref=sitesearch">bullied into submission</a>” by then Australian prime minister John Howard, who secured a <a href="http://www.forumsec.org/resources/uploads/attachments/documents/1997%20Communique-Rarotonga%2017-19%20Sep1.pdf">toned-down declaration</a>.</p>
<p>In the lead-up to negotiations for the 2015 Paris Agreement, Australian officials again worked hard to ensure the <a href="http://www.forumsec.org/resources/uploads/attachments/documents/Annex1_PIF_Leaders_Declaration_on_Climate_Change_Action,%2010Sept2015.pdf">Pacific Islands Forum leaders’ statement</a> accommodated Australia’s position in the global talks. </p>
<p>Most pointedly, the 2015 Forum leaders’ declaration on Climate Change Action failed to repeat earlier <a href="https://www.aspistrategist.org.au/the-pacific-islands-forum-declaration-on-climate-change-consensus-at-the-cost-of-strategy-on-the-road-to-paris/">calls by Pacific island leaders</a> for a global agreement to limit warming to below 1.5°C above the pre-industrial average. </p>
<p>Pacific island states insist that warming beyond this 1.5 degrees threshold would <a href="http://www.radionz.co.nz/international/pacific-news/317697/pacific-pushing-for-1-point-5-degree-commitment-at-cop-22">threaten the very survival of low-lying states</a> in the region, such as
Kiribati, Tuvalu and the Marshall Islands.</p>
<h2>A vital role</h2>
<p>Fiji has vowed to use its UNFCCC presidency <a href="http://newsroom.unfccc.int/cop-23-bonn/how-fiji-is-impacted-by-climate-change/">to maintain the momentum</a> that was established by the 2015 Paris Agreement. Widely seen as a diplomatic breakthrough, that agreement represents a shared political commitment to reducing carbon emissions. </p>
<p>But global climate talks now stand at an important crossroads. Officials are still finalising the rule book to accompany the agreement, even as the first global stocktake of pledges made under it is planned for next year. </p>
<p>It’s crucial that ambitious and transparent pledges are made. Polluting nations must reduce greenhouse gas emissions quickly, before catastrophic rates of warming are locked in.</p>
<p>Pacific island countries have a special role to play in convincing the international community to start the needed shift to a zero emissions global economy. With the world’s eyes on them at COP23, which is already being labelled the “Pacific COP”, island leaders have the opportunity to highlight what must be done to give low-lying Pacific countries a fighting chance at a future.</p>
<p>But first they must continue to shine the spotlight on their recalcitrant neighbour, and take care to avoid being muzzled by Australia’s “climate diplomacy”.</p><img src="https://counter.theconversation.com/content/73662/count.gif" alt="The Conversation" width="1" height="1" />
<p class="fine-print"><em><span>Wesley Morgan does not work for, consult, own shares in or receive funding from any company or organisation that would benefit from this article, and has disclosed no relevant affiliations beyond their academic appointment.</span></em></p>As Australia looks to expand the coal industry at home, it’s also ramping up regional diplomacy aimed at avoiding condemnation by those at the front line of climate change.Wesley Morgan, Lecturer in Politics and International Affairs, The University of the South PacificLicensed as Creative Commons – attribution, no derivatives.tag:theconversation.com,2011:article/694232016-11-26T03:01:47Z2016-11-26T03:01:47ZCarmichael mine jumps another legal hurdle, but litigants are making headway<p>The Carmichael coal mine planned for Queensland’s Galilee Basin has cleared another legal hurdle, with the state’s Supreme Court dismissing a legal challenge to the validity of the Queensland government’s decision to approve the project.</p>
<p>The court found in favour of the Queensland Department of Environment and Heritage Protection, ruling that its approval of Indian firm Adani’s proposal was within the rules.</p>
<p>The decision is another setback for environmentalists’ bid to stop the controversial project. But Adani does not yet have a green light to break ground on the project, and legal questions still remain, both about this project and about climate change litigation more generally.</p>
<h2>The Supreme Court ruling</h2>
<p>It is important to note that this was a judicial review proceeding – a narrow type of review in which the court is not permitted to consider whether or not the decision to approve the mine was “correct”. The court could only rule on whether correct procedures were followed, while accepting that the decision was at the government’s discretion.</p>
<p>Within this already narrow context, the argument on which the legal challenge hinged was even more constrained. It was brought by an environmental campaign group called Land Services of Coast and Country (LSCC), and was focused on a particular point of Queensland environmental law.</p>
<p>Queensland’s <a href="https://www.legislation.qld.gov.au/LEGISLTN/CURRENT/E/EnvProtA94.pdf">Environmental Protection Act 1994</a> requires that decisions are made in accordance with the Act’s objective, which is to deliver “ecologically sustainable developent”. LSCC argued that the government failed to do this in approving the coalmine.</p>
<p>The Supreme Court disagreed, finding that the government had considered all matters that it were obliged to consider. So in this respect, the Supreme Court’s decision is an endorsement of the process, but not necessarily the ultimate decision.</p>
<p><strong>Is this the final hurdle overcome for Adani?</strong></p>
<p>In short, no. The decision can be referred to Queensland’s Court of Appeal. There is also ongoing litigation against Adani in the Federal Court of Australia under federal environmental and native title laws. There are also some approvals yet to be obtained by Adani, including a <a href="http://www.abc.net.au/news/2016-11-10/parliament-qld-laws-water-licence-requirements-mining-companies/8011634">groundwater licence</a>.</p>
<p><strong>Is this ruling a rejection of climate change arguments against the coal mine?</strong></p>
<p>No. This case dealt specifically with the question of whether the Queensland government had complied with a particular aspect of the law. The Supreme Court did not (and was not able to) address the potential climate change impacts of the proposed mine.</p>
<p>These climate issues were addressed more fully by Queensland’s Land Court in the case of <a href="http://archive.sclqld.org.au/qjudgment/2015/QLC15-048.pdf">Adani Mining Pty Ltd v Land Services of Coast and Country Inc & Ors (2015) QLC 48</a>.</p>
<p>Importantly, the Land Court in this case accepted the scientific basis for climate change, and agreed that “scope 3 emissions” (that is, the emissions produced when the coal is burned overseas) are indeed a relevant consideration in whether or not to approve the mine.</p>
<p>However, Adani successfully used a “market substitution” defence, arguing that if the mine is refused, coal would simply be mined elsewhere and burned regardless.</p>
<p><strong>What does this case say about climate change litigation more generally?</strong></p>
<p>The latest judgement was handed down amid a series of fresh attacks on the rights of environmental groups to use Australia’s environmental laws to hold companies and governments to account. Federal Environment and Energy Minister Josh Frydenberg has <a href="http://www.theaustralian.com.au/business/mining-energy/foreignfunded-anticoal-activists-risk-driving-india-away/news-story/832acdae706c0f042c03158c18dde7ac">raised concerns</a> about “activists … seeking to frustrate” projects with “vexatious litigation”, while Prime Minister Malcolm Turnbull has revived plans to <a href="https://theconversation.com/turnbull-wants-to-change-australias-environment-act-heres-what-we-stand-to-lose-67696">amend federal environmental legislation</a> so as to <a href="https://theconversation.com/brandis-changes-to-environmental-%20laws-will-defang-the-watchdogs-46267">restrict standing to apply for judicial review</a> – the so-called “lawfare” amendments. </p>
<p>In the wake of the new ruling, the head of the Queensland Resources Council has <a href="http://www.afr.com/news/politics/adanis-165b-carmichael-mine-stuck-in-twoyear-legal-backlog-20161124-gsx9bt">criticised the delays caused by litigation against mining projects</a>.</p>
<p>This begs the question: is climate change litigation “vexatious”? A close analysis of Queensland court decisions would suggest the opposite. Climate change issues have been considered in a series of three key Queensland Land Court cases: <a href="http://archive.sclqld.org.au/qjudgment/2012/QLC12-013.pdf">Wandoan Mine in 2012</a>, <a href="http://archive.sclqld.org.au/qjudgment/2014/QLC14-012.pdf">Alpha Coal Project in 2014</a>, and the <a href="http://archive.sclqld.org.au/qjudgment/2015/QLC15-048.pdf">Carmichael Mine (Adani) in 2015</a>. </p>
<p>The Alpha Coal matter has <a href="http://archive.sclqld.org.au/qjudgment/2015/QSC15-260.pdf">proceeded to the Supreme Court</a>, the <a href="http://archive.sclqld.org.au/qjudgment/2016/QCA16-242.pdf">Court of Appeal</a>, and leave has been sought to appeal to the High Court of Australia. Importantly, none of these cases has been dismissed as vexatious; each resulted in a lengthy judgement analysing the complex legal issues raised by the objector.</p>
<p>Furthermore, although objectors have not yet succeeded in stopping a mining project on the basis of climate concerns, they have nevertheless made modest strides. Most recently, President McMurdo of Queensland’s Court of Appeal found that the Land Court <a href="http://archive.sclqld.org.au/qjudgment/2016/QCA16-242.pdf">must consider scope 3 emissions</a> in deciding whether a mine should be granted environmental approval. This represents significant progress, given that climate science was <a href="http://www.austlii.edu.au/au/cases/qld/QLRT/2007/33.html">questioned by Queensland Courts less than ten years ago</a>. </p>
<p>The only significant barrier remaining to a successful climate change case is the market substitution defence, which will be considered by the High Court if special leave is granted in the Alpha Coal matter.</p>
<p>Climate change litigation has also clarified other environmental and economic impacts. In the Carmichael Mine case, it was discovered that the mine site was a critical habitat for the endangered black-throated finch – evidence that was not previously available. The Land Court ordered strict conditions aimed at protecting this species. The litigation also served to clarify the significantly overstated economic benefits of the mine – particularly Adani’s estimate that it would generate more than 10,000 jobs. It was revealed in court that this figure was more likely to be 1,206 jobs in Queensland, as part of a total of 1,464 jobs in Australia.</p>
<p><strong>Where to for climate change litigation?</strong></p>
<p>Although the latest judgement is another setback for environmental groups, it is part of a bigger body of case law that is making real and discernible progress in ensuring that climate change is considered by decision-makers and courts.</p>
<p>Given that several courts have agreed on the validity of climate litigants’ arguments, it seems perverse for the federal government to try and restrict environmental groups’ right to continue raising these concerns.</p><img src="https://counter.theconversation.com/content/69423/count.gif" alt="The Conversation" width="1" height="1" />
<p class="fine-print"><em><span>Justine Bell-James has previously received funding from the Australian Research Council. She has previously assisted EDO Qld with policy advice.</span></em></p>Queensland’s Supreme Court has backed the state government’s decision to approve the proposed Carmichael coal mine. But environmental groups have scored some key legal points on climate considerations.Justine Bell-James, Lecturer in Law, The University of QueenslandLicensed as Creative Commons – attribution, no derivatives.tag:theconversation.com,2011:article/674492016-11-01T19:07:00Z2016-11-01T19:07:00ZFour environmental reasons why fast-tracking the Carmichael coal mine is a bad idea<p>Pressure is mounting for Adani’s Carmichael coal mine to proceed in inland Queensland. Recently the state government quietly gave the project <a href="http://statements.qld.gov.au/Statement/2016/10/9/queensland-government-steps-up-to-progress-adani-mine-project">“critical infrastructure” status</a> to prioritise its development. </p>
<p>Providing this level of government status to a private enterprise is unusual – the last time it happened was in the early <a href="http://statements.qld.gov.au/Statement/2016/10/9/queensland-government-steps-up-to-progress-adani-mine-project">2000s</a>, and it is usually reserved for projects associated with national security, public education and health. </p>
<p>In response to delays and finance issues, Adani has also reportedly scaled back its <a href="http://www.afr.com/opinion/columnists/adani-prepares-for-an-end-to-lawfare-with-a-smaller-cheaper-carmichael-20160921-grla4o">initial proposal</a> to increase the mine’s viability. There are also <a href="http://www.theaustralian.com.au/national-affairs/12bn-economic-cost-of-environmental-lawfare/news-story/2fd02e9c4a79548666d3c5b30c5254ab">growing political calls</a> to weaken the ability of environmental groups to challenge infrastructure projects. </p>
<p>Others have commented on the mine’s issues around <a href="http://www.brisbanetimes.com.au/queensland/adani-carmichael-mine-to-create-1464-jobs-not-10000-20150427-1mumbg.html">employment</a>, <a href="http://www.brisbanetimes.com.au/queensland/adani-must-prove-financial-viabiltiy-for-carmichael-mine-minister-20161009-gryd3p.html">finance</a>, and <a href="http://www.abc.net.au/news/2016-08-19/indigenous-challenge-to-adani-carmichael-coal-mine-dismissed/7765466">indigenous</a> and rural communities. But as ecologists, there are four good reasons why we believe the mine should not go ahead. </p>
<h2>Climate change</h2>
<p>To meet the obligations under the <a href="https://theconversation.com/the-paris-climate-agreement-at-a-glance-50465">Paris climate agreement</a> to limit warming to well below 2°C, it is widely accepted that 90% of Australia’s coal will need to <a href="https://theconversation.com/unburnable-carbon-why-we-need-to-leave-fossil-fuels-in-the-ground-40467">stay in the ground</a>. </p>
<p>The proposed extraction of <a href="http://envlaw.com.au/carmichael-coal-mine-case/">2.3 billion tonnes</a> of coal from the Carmichael mine flies in the face of global efforts to stop climate change. The emissions from the coal from this one mine would exceed <a href="http://envlaw.com.au/carmichael-coal-mine-case/">0.5% of the entire global carbon budget</a> – the <a href="https://theconversation.com/setting-a-carbon-budget-to-keep-below-two-degrees-18841">total amount of carbon</a> than can be emitted without exceeding 2°C warming. </p>
<p>Put another way, the <a href="https://www.environment.gov.au/system/files/pages/cb8a9e41-eba5-47a4-8b72-154d0a5a6956/files/carmichael-statement-reasons.pdf">4.7 billion tonnes of greenhouse gas emissions</a> associated with the mine will be equivalent to nine times Australia’s <a href="http://ageis.climatechange.gov.au">overall emissions in 2014</a>.</p>
<p>Yet these emissions have been given little consideration in the mine’s approval process. Adani’s <a href="http://eisdocs.dsdip.qld.gov.au/Carmichael%20Coal%20Mine%20and%20Rail/EIS/Appendices/T-Mine-Greenhouse-Gas-Report.pdf">Environmental Impact Statement</a> makes little reference to the mine’s “downstream” emissions, and Australia’s former environment minister Greg Hunt, in his <a href="https://www.environment.gov.au/system/files/pages/cb8a9e41-eba5-47a4-8b72-154d0a5a6956/files/carmichael-statement-reasons.pdf">reasons</a> for approving the mine, said the emissions would be “managed and mitigated through national and international emissions control frameworks”, including in those countries that import the coal. </p>
<p>Following an appeal challenging Hunt’s assertion that these emissions would have no directly quantifiable impact on the Great Barrier Reef, the Federal Court found that the minister was entitled to find that the burning of the coal will have <a href="http://www.judgments.fedcourt.gov.au/judgments/Judgments/fca/single/2016/2016fca1042">no relevant impact</a> on the reef. </p>
<h2>The Great Barrier Reef</h2>
<p>The shipping of coal from the Carmichael mine is contingent upon redeveloping the shipping port at Abbot Point, which requires dredging the seabed. </p>
<p>Following public opposition to dumping dredge spoil at sea, the most recently approved proposal is to dredge 1.1 million cubic metres of the seabed and <a href="http://www.environment.gov.au/system/files/pages/cb8a9e41-eba5-47a4-8b72-154d0a5a6956/files/factsheet-abbot-point.pdf">dump the spoil on land</a> next to the Caley Valley Wetlands. </p>
<p>The wetlands are important habitat for at least <a href="http://fightforthereef.org.au/wp-content/uploads/2014/09/140911-Caley-Valley-values-report1.pdf">22 migratory shore birds</a> listed under the national environmental legislation, so the current plan is still contentious. </p>
<p>The current plan to dump the dredge spoil on land still <a href="https://theconversation.com/dumping-abbot-point-dredge-spoil-on-land-wont-save-the-reef-38716">won’t save the reef</a> because the actual dredging process removes the seabed, along with the seagrass and animals that survive there. </p>
<p>Dredging also releases fine <a href="https://theconversation.com/what-can-we-say-for-certain-about-dredging-and-the-great-barrier-reef-39181">sediments</a>, reducing water quality while smothering surrounding seagrass beds and coral reefs, with some <a href="http://www.sciencedirect.com/science/article/pii/S0272771414000894">models predicting the spread of fine sediments</a> up to 200km from where the activity took place, within 90 days. </p>
<p>Corals exposed to dredge material are twice as prone to suffer <a href="https://theconversation.com/dredge-spoil-linked-to-coral-disease-wa-study-shows-29265">disease</a>. Improving water quality is a key factor for <a href="https://theconversation.com/how-will-the-barrier-reef-recover-from-the-death-of-one-third-of-its-northern-corals-60186">increasing the resilience</a> of coral reefs to major bleaching events.</p>
<h2>Water</h2>
<p>The Carmichael Mine as currently proposed would extract <a href="http://eisdocs.dsdip.qld.gov.au/Carmichael%20Coal%20Mine%20and%20Rail/SEIS/Appendices/Appendix%20K/Appendix-K2-Water-Balance-Report.pdf">12 billion litres</a> of water each year. Removing this water to access the coal seam will reduce water pressure in the aquifer (rock that stores water underground), with knock-on effects. The mine is situated close to <a href="https://theconversation.com/water-in-water-out-assessing-the-future-of-the-great-artesian-basin-13104">the Great Artesian Basin</a>, a <a href="http://www.agforceqld.org.au/index.php?page_id=170">key resource for agriculture</a> across inland Australia</p>
<p>For instance, this drawdown could reduce water reaching the Mellaluka and Doongmabulla Springs Complexes, which have exceedingly high <a href="https://d3n8a8pro7vhmx.cloudfront.net/auscon/pages/1330/attachments/original/1473390616/Carmichael_conditions_report.pdf?1473390616">conservation value</a>. These springs are some of the largest examples remaining and provide habitat for many species of specialised plants that are only known from spring-fed wetlands. </p>
<p>If the springs go dry, even temporarily, endemic species will not survive and will become extinct at the site.</p>
<p>Removing groundwater is expected to increase the duration of <a href="http://www.iesc.environment.gov.au/system/files/resources/fc3719de-55c6-4bac-abaa-409733668f3d/files/iiesc-advice-carmichael.pdf">zero- or low-flow periods</a> in the Carmichael River system. The communities and ecosystems in the region are already highly <a href="https://theconversation.com/queensland-risks-running-the-well-dry-by-gifting-water-to-coal-34752">reliant on groundwater</a>, due to variable surface waters. This could also affect the acidity and salinity of soils. </p>
<p>Clearing the land for the mine itself – <a href="https://theconversation.com/approval-of-australias-largest-coal-mine-ignores-climate-and-water-29780">an area</a> equivalent to Queensland’s Moreton Island - will likely <a href="http://www.tandfonline.com/doi/abs/10.1080/13504509.2013.850752">reduce local rainfall</a> considerably.</p>
<p>Due to the high uncertainty surrounding groundwater, the independent scientific committee <a href="http://www.iesc.environment.gov.au/system/files/resources/fc3719de-55c6-4bac-abaa-409733668f3d/files/iiesc-advice-carmichael.pdf">recommended improvements in groundwater modelling and monitoring</a> before proceeding with the project. The high degree of uncertainty and inadequate treatment of groundwater impacts in the Environmental Impact Statement were the subject of legal proceedings in the <a href="http://envlaw.com.au/wp-content/uploads/carmichael2.pdf%22%22">Land Court in 2015</a>. </p>
<h2>Threatened species</h2>
<p>The Carmichael mine site is home to the <a href="http://www.birdlife.org.au/documents/NEWS-Black-throated_Finch_Recovery_Team_Position_Statement_Galilee_Basin.pdf">largest known population</a> of the endangered southern Black-throated finch (<em>Poephila cincta cincta</em>), which has lost <a href="http://www.environment.gov.au/system/files/resources/f164f090-6c72-4e29-a91b-0037b82f4250/files/p-cincta.pdf">80% of its former habitat</a>.</p>
<p>The intact areas of continuous habitat in this region - such as that at the mine site - have so far remained in good condition and relatively free of the invasive weed species that are contributing to the finch’s decline in other parts of its range. </p>
<p>The <a href="http://www.birdlife.org.au/documents/NEWS-Black-throated_Finch_Recovery_Team_Position_Statement_Galilee_Basin.pdf">Black-throated Finch Recovery Team highlighted</a> their concern over the Carmichael development with state and federal agencies. </p>
<figure class="align-center zoomable">
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<figcaption>
<span class="caption">Conservationists have expressed concerns over the mine’s impact on the black-throated finch.</span>
<span class="attribution"><span class="source">Eric Vanderduys</span>, <span class="license">Author provided</span></span>
</figcaption>
</figure>
<p>Adani has proposed to offset the loss of finch habitat resulting from the mine by protecting alternative, nearby habitat. But losing the best remaining habitat means the most viable population will be compromised. Experts have warned that <a href="http://journals.plos.org/plosone/article?id=10.1371/journal.pone.0148485">offseting</a> the loss of habitat from mine development will not avoid serious detrimental impacts on the finch. </p>
<p>Keeping this habitat <a href="http://uqld.csiro.patron.eb20.com.ezproxy.library.uq.edu.au/Collections/ViewBook/bef97dee-fd37-4e71-ab9d-59691867c665">intact</a>, continuous and unfragmented will be key to maintaining its suitability for the finch. The only way to avoid severely impacting the finch is to avoid destroying its high-quality habitat – which would mean not digging the mine in these areas. </p>
<h2>A brighter future</h2>
<p>Giving the mine “critical infrastructure” status allows special dispensations to ignore normal approval processes. And this decision sends a signal to the wider community that this type of short-term thinking is front and centre in the state government’s mind. </p>
<p>Given the clear environmental impacts this mine will have, not just for the region but for the whole planet, we question the effectiveness of Australia’s current environmental laws that have allowed it to be approved. We believe it is time to place the entire social and environmental costs and benefits of this mine on the public table, and ask the question of the politicians who are meant to make decisions in our best interest: is the short-term profit of selling some coal worth it?</p>
<hr>
<p><em>This article was written with the help of Claire Stewart and Courtney Jackson, students in the Masters of Conservation Science program and members of the <a href="http://greenfirescience.wixsite.com/home">Green Fire Science Lab</a> at the University of Queensland.</em></p><img src="https://counter.theconversation.com/content/67449/count.gif" alt="The Conversation" width="1" height="1" />
<p class="fine-print"><em><span>April Reside receives funding from NESP Threatened Species Recovery Hub. She is a scientific advisor for the Black-throated Finch Recovery Team and is on Birdlife Australia's Research and Conservation Committee. </span></em></p><p class="fine-print"><em><span>Bonnie Mappin receives funding from the University of Queensland Research Scholarship.</span></em></p><p class="fine-print"><em><span>James Watson receives funding from the Australian Research Council. He is the Director of Science and Research Initiative of the Wildlife Conservation Society. </span></em></p><p class="fine-print"><em><span>Sarah Chapman is supported by an APA Scholarship. She is a PhD candidate at the University of Queensland.</span></em></p><p class="fine-print"><em><span>Stephen Kearney is supported by an APA Scholarship and has received funding from NESP Threatened Species Recovery Hub. </span></em></p>Queensland’s planned new coal mine could impact the climate, the Great Barrier Reef, water, and local species. Yet still it has been declared as ‘critical infrastructure’ by the state government.April Reside, Researcher, Centre for Biodiversity and Conservation Science, The University of QueenslandBonnie Mappin, PhD Candidate, Conservation Science, The University of QueenslandJames Watson, Associate professor, The University of QueenslandSarah Chapman, PhD Candidate, The University of QueenslandStephen Kearney, PhD Candidate , The University of QueenslandLicensed as Creative Commons – attribution, no derivatives.