There are a whole bunch of reasons why the Adani coal mine does not make sense: for the environment, the climate and on basic economics.
The latest results from Adani Power, revealing over the weekend a $US954 million loss ($A1.3 billion) for the last financial year, its fifth loss in a row, and a growing preference for domestic over imported coal, not to mention the endless delays and requests for government support, underline the fact that the project makes no financial sense.
And we know that on environmental and climate grounds, it makes no sense either. Rescuers minister Matt Canavan counts Adani’s benefits on the basis that the mine will last 60 years. That timeframe assumes that the world will not act on climate change.
Another myth that refuses to go away, and seems to be prosecuted by everyone from the Coalition, to the state Labor government and to the local councils, is that the Queensland economy depends on Adani and its Carmichael mine for jobs and investment, and that the region’s economy would be devastated if the mine didn’t go ahead.
It is simply not true. For a start, the inflated figures being pedalled by those state and federal politicians – the claim of 10,000 jobs – have been debunked by Adani itself, and its more modest investment plans now suggest maybe one-tenth of that, at best.
And perhaps those politicians should have a look around and see what else is happening in the region. It is really quite stunning: some 4,200MW of large-scale wind and solar projects, all of them in central to northern Queensland, and billions of dollars worth of other projects in the pipeline, including biofuels and even a battery gigafactory in Townsville.
The list of already committed projects, compiled by a private consortium known as Future North, include world leading solar resources, world leading solar and storage projects, a world-leading solar-wind-storage hybrid project, and a unique solar and pumped hydro plant proposed for the old Kidston gold mine.
Together, they represent investment of more than $7 billion and jobs of more than 3,200. And as a bonus, they will deliver electricity at an average cost of around $80/MWh, possibly less. Already, it is cheaper than the price of the Queensland grid in the first half of the year – and the low price will be locked in for 25 years.
Some are already going ahead, courtesy of some targeted support from the Australian Renewable Energy Agency and the Clean Energy Finance Corp, or in the case of Sun Metals’ 116MW solar plant near Townsville, in a bid to cut electricity costs and underpin the expansion of the local zinc refinery.
Another 3,000 jobs and $4 billion of investment are on the cards from half a dozen of biofuel projects that are also in the pipeline, and another 2,000 direct jobs and 5,000 indirect jobs could emerge if the consortium led by Boston Energy and Innovation, and supported by US giant Eastman Kodak, goes ahead with a battery storage gigafactory in Queensland.
‘Townsville and the region are sitting on a gold mine of opportunities,’ Oliver Yates, the former head of the Clean Energy Finance Corporation and a spokesman for Future North, told RenewEconomy on Friday in our Energy Insiders podcast.
Yates says the mixture of solar, wind, storage, hydro, biofuels and manufacturing makes the region ideally placed to be ‘the centre of action’ in Australia’s energy transition.
‘The opportunities that they have dwarf anything that they could get (from coal) … tese are sunrise industries. That town gets subject to a lot of pork barreling and nothing ever happens. And no one talked much about solar and wind …. and yet it is happening.
‘They are siting in the land of opportunity. It’s the only place in Queensland that has got wind, it’s the got best solar resources, and best water resources. Townsville should be the centre of action.’
The projects include the soon-to-be completed Lakeland solar and storage facility, the massive wind, solar and storage facility at the Kennedy Energy park, the Kidston solar and hydro hybrid plant, large wind farms such as Emerald and Forsyth and others, and a host of large-scale solar farms proposed by Pacific Hydro, Esco Pacific, Eco Energy World, FRV, Windlab, Overland, Edify and others.
Future North is proposing a North Queensland Company should be created – with a minimal amount of government seed funding – to ensure that these projects come to pass.
‘We believe there is a massive opportunity for North Queensland to become an economic powerhouse across a range of industries,’ a new document says, adding that it is not a choice between new and old industries, but recognises the abundant land, water and sun it has for the many future sunrise industries.
Still, many in the Coalition are locked into those sunset industries. The Guardian reports on Monday that Queensland MP George Christensen is still pushing for a coal-fired generator to be built in north Queensland, somehow blaming large-scale renewables (which haven’t even been completed yet) for high electricity prices this summer.
Christensen is one of the strongest advocates for the Galilee coal mine, alongside deputy prime minister Barnaby Joyce and his former chief of staff Matt Canavan, now minister for resources and northern Australia. Joyce is among many in the Coalition with strong ties to Gina Rinehart and GVK.
The economics of coal, however, is looking increasingly miserable, with the cost of electricity from new wind plants and solar plants about 50 per cent cheaper than new coal plants, based on recent bidding. ARENA boss Ivor Frischknecht has said repeatedly in recent weeks that wind and solar is cheaper than current grid prices.
Indeed, so much has changed since Adani bought the Carmichael project seven years ago, and Clive Palmer, Gina Rinehart and another Indian group GVK also invested in Galilee Basin coal deposits.
At that time, solar power cost around $400/MWh, and wind energy was roughly $150/MWh. Batteries of today’s scale were still being developed in laboratories; coal demand was rising, and was seen as critical to the economic growth of the developing world.
But what might have been considered a gutsy investment decision then would likely be seen today as daft. Solar costs are down 80 per cent, wind has fallen by two-thirds. The cost of coal is rising, renewables are cheaper and the two largest growth countries for coal imports, India and China, are reducing imports.
Indeed, as the Adani results over the weekend reveal, the company is now looking at using domestic coal supplies for its massive Mundra mega-coal plant. India is focused on reducing imports of coal, and also encouraging a domestic solar manufacturing base as part of its ambitious renewable energy targets.
Little wonder that Adani is looking for third parties, including governments, to underwrite the cost, and bear the risk, of long-dated infrastructure such as rails and ports.
‘It is an admission that (Adani Power) can’t afford expensive imported coal from Carmichael,’ IEEFA’s Tim Buckley wrote in an analysis of the results on Monday.
And there are yet more developments that point to a bleak picture for coal in Asia, including the cancellation of 14 coal projects in India, and the announced closure of coal plants in South Korea.
And that is why Future North wants to jump in now, to ensure that the pipeline of wind and solar projects gets the finance from the private sector it is looking for.
‘NQC will secure financial support from investors who understand that renewables are potentially more sustainable and cost competitive than new fossil fuel generation in this region,’ the document says. ‘These investors will fund the acceleration of the major solar projects in the region.’
It concludes: ‘Future North is a vision for a powerful and resilient for the future economy for the north Queensland region and Australia, built on industries reflecting new technology such as solar, wind, biofuels, hydro, agriculture, education, tourism and technology.’
In other words, it doesn’t need new coal mines or new coal generation. Perhaps the politicians can get excited about clean energy jobs and investment too.