Explainer: The rise and possible fall of Australia’s Carmichael coal mine

What links yakka skinks, Standard Chartered bank and the president of Kiribati?

They are all some of the recent obstacles to the Carmichael coal mine – a proposed project in the Galilee Basin of Queensland, Australia, that could become one of the world’s biggest sources of carbon dioxide emissions.

The A$16.5 billion coal mine was approved by the Australian government in 2014, and is being developed by Indian company Adani Mining. It is expected to start operating in 2017 and run for 90 years, producing 60 million tonnes of coal a year when operating at full capacity.

Controversy

这将使它成为澳大利亚最大的煤矿,as well as one of the largest in the world. Its production would be equivalent to around 5% of global coal exports. Burning this amount of coal wouldproduce128.4 million tonnes of carbon dioxide (MtCO2) a year – roughly equivalent to theemissions of Belgium.

The mine is an environmental double whammy. Not only would it increase CO2 emissions, but activists are concerned that it will threaten the Great Barrier Reef.

The coal produced at the Carmichael mine would be exported to India. In 2013, Australia was thesecond largest coal exporterin the world, after Indonesia. It is slated toregain the top spotby 2017.

Though Australia is the world’s second largest coal exporter, it ranks only fifth in terms of total production.

To facilitate coal exports from the Carmichael mine, Adani is building a new railway line and expanding its terminal at Abbot Point, a coal port which lies adjacent to the Great Barrier Reef.

This involves dredging the seabed. Although plans to dump the spoil into the reef itself have been abandoned, apanel of independent expertshas informed the government that the process of dredging itself can have negative impacts on marine life, both locally and possibly more broadly across the reef.

The reef is already vulnerable higher water temperature, acidification and sea level rise caused by climate change.Severe bleaching eventsoccurred in 1998, 2002 and 2006.

Tim Flannery, the former chief commissioner of the now disbanded Climate Commission, spelled out some of the other threats arising from the Carmichael coal project to the Great Barrier Reef in an article inThe Guardian. These included the possibility of a ship running aground in the sensitive area, and coal dust having a toxic effect of the corals.

There is also a risk that the improved mining infrastructure could open the floodgates for further coal exploitation in the Galilee Basin.

Adani’s Carmichael mine is just one of nine large projects that have been proposed in the Galilee Basin. This region has so far been too remote to be mined economically, but this could change with better railway links and an expanded port.

If all nine Galilee Basin mines went into operation, they would produce 330Mt of coal a year. If burnt in addition to existing coal production, this would produce 705Mt of extra CO2 emissions a year, according to a Greenpeacereport.

Anotherjoint reportby Greenpeace and Ecofys, a consultancy, listed Australian coal expansion as one of the 14 “carbon bombs” that would make it extremely difficult to avoid temperature rise of 2C above pre-industrial levels, the internationally agreedlimit.

Nonetheless, the project has the support from both sides of the political spectrum, includingPrime Minister Tony Abbottand theLabor government in Queensland.

The Australian governmentlobbied Unescoto withhold the Great Barrier Reef from its “in danger” listing – a decision which would have made it more difficult to expand the nearby coal mining.

Obstacles

Unescoannouncedin July that it would spare the reef from its “in danger” status, but this is not the only problem that has hindered progress on the beleaguered Carmichael mine.

Banks around the world have sought to distance themselves from the project. The Commonwealth Bank and UK-based bank Standard Chartered are the latest tocut their tieswith Adani.

Three French banks – Societe Generale, Credit Agricole and BNP Paribas – have distanced themselves from the Carmichael mine, as have HSBC, Barclays, Morgan Stanley and Citi. Insurance firm Aviva has warned of the“grave reputational risks”of being associated with the project.

Lack of investment is not the only financial problem to beset the company.yabo亚博体育app下载released in August by theInstitute for Energy Economics and Financial Analysissuggested that the mine could be left without a market if Indian coal imports plummet.

On the back of India’s increasing domestic coal production, Indian energy ministersaidin April that he was “confident that in the next year or two, we will be able to stop imports of thermal coal” – a prediction that could place the Carmichael project in dire straits if realised. In China – thesecond biggest marketfor Australia’s coal exports – demand for imported coal is alsofalling.

Elsewhere, the falling price of coal is taking its toll on the industry, with coal companies inNew Zealandand theUSforced into bankruptcy earlier this month.

President Barack Obama has sought to reduce emissions from the power industry through hisClean Power Plan, which is expected to lead to continuing falls in coal’s share of US electricity generation. The President of Kiribati haswritten to world leadersasking them to support a moratorium on new coal mines.

The yakka skink has also proven an unlikely stumbling block to the mine. Environment minister Greg Hunt’s approval of the mine wasoverturned联邦法院8月早些时候在悉尼- the result of a lawsuit waged by conservation groups, which claimed that the initial decision had not significantly considered the impact on this rare breed of lizard and also the ornamental snake.

Australia’s Department of the Environment has said it will take six to eight weeks to prepare new advice and for Hunt to reconsider his decision.

Adani is also facing alegal battlewith the native Wangan and Jagalingou people, who rejected an Indigenous Land Use Agreement with the Indian conglomerate.

Conclusion

None of this spells an end to coal in Australia.Thomson Reutersdata shows that banks have poured more than $3 billion into Australian coal projects in the past 18 months, despite a 28% fall in thermal coal prices over the same period. Meanwhile, Australia’s coal exports areforecastto rise this year to 202.9 million tonnes.

Yet, in June, Adani halted work on the project, pulling a team of 40 engineers off the project. This led to speculation that the company was planning to abandon the scheme,The Guardiansaid, whileThe Sydney Morning Heraldcited suggestions from industry sources that it could be an attempt to accelerate the process.

It could be that the legal battles, troublesome lizards and wary banks are beginning to take their toll on Adani and the Carmichael mine.

Main image: Conveyor belt empties coal into a pile.