Adani’s $16bn coalmine would be left ‘stranded’, says energy institute, by India’s plan to install renewable energy plants and upgrade grids

This article is more than 5 years old

This article is more than 5 years old

Queensland’s huge Carmichael coal project, fresh from parting ways with the Standard Chartered bank, faces being left marooned with a new forecast predicting India will phase out coal imports by 2021.



Climate activists have welcomed Standard Chartered’s announcement that it is giving up its role advising the Indian mining giant Adani over its $16bn Carmichael mine, which is planned for the Galilee Basin region of central Queensland.

The beleaguered project, which would be Australia’s largest coal operation, was hit by a federal court case last week that stripped it of its environmental approval. The Commonwealth Bank has also parted ways with the project, and a dozen international banks have distanced themselves from the mine and port proposal.

Standard Chartered quits controversial Carmichael coalmine in Queensland Read more

An analysis released on Tuesday forecast that the mine, should it ever attract the finance it needed to go ahead, would be left “stranded” because of plummeting Indian coal imports.

The Institute for Energy Economics and Financial Analysis (IEEFA) says India will reduce its seaborne thermal coal imports from a peak of 192m tonnes this year to zero by 2021.

This decline would be driven by doubling India’s domestic coal production, installing 175GW of renewable energy and upgrading grid infrastructure, the IEEFA says.

In May, Piyush Goyal, India’s energy minister, said he was confident the country would be able to stop imports of thermal coal in the “next year or two”.

In contrast, the Australian prime minister, Tony Abbott, has called the Carmichael mine a “vital national project” that would “provide for decades to come for 100m people in India who currently have no power”.

Phasing out coal imports by India would be a crippling blow to Adani’s ambitions in Queensland. The Carmichael mine was initially slated to export a maximum of 60m tonnes of coal a year via a rail line and port that sits adjacent to the Great Barrier Reef.

If burned, the coal would create up to 120m tonnes of carbon dioxide a year. However, work on the mine, rail line and port has yet to start.

“India’s strategy five years ago was to import coal, but that’s no longer the strategy, so therefore Carmichael is a stranded asset,” said Tim Buckley, director of energy finance studies at IEEFA. “The world has changed. Electricity markets are transforming far faster than anyone thought possible.

“India is going for everything – solar, wind, hydro and gas production. The biggest impact on imports will be domestic coal though. Coal India will produce 50m more tonnes of coal this year than last year, which is a huge increase.

“Imported coal is now the most expensive form of electricity for India. I don’t think I’ve met anyone who thinks the Galilee projects are viable. Banks simply don’t want to underwrite projects that aren’t viable. Carmichael is unbankable.”

Approval for Adani's Carmichael coalmine overturned by federal court Read more

Adani has insisted it would press on with the Carmichael project, despite being frustrated in its attempts to progress a project now in its fifth year without any mined coal.

An Adani spokesman said the company asked for Standard Chartered to end its advisory role due to “concerns over ongoing delays”.

“As Standard Chartered has noted, the delays experienced by Adani in receipt of its project approvals informed the decision,” he said.

“In the event Australia’s federal approvals framework is not further undermined by activists seeking to exploit legal loopholes, enabling the project and the thousands of jobs and billions of dollars of investment it would bring to be delivered, Adani would happily work with the bank in future.”

GVK/Hancock Coal, which is also looking to build a mine in the Galilee Basin, has blamed environmental activists for the threats faced by the projects.

“We currently have a situation in the Galilee Basin where literally a handful of anti-mining activists from outside the area are using the courts to delay thousands of jobs for Queensland,” a GVK spokesman said.

“This is despite investments of tens of millions of dollars on environmental assessments to achieve the required environmental approvals from the relevant departments.”

Climate campaigners say Standard Chartered’s split from Adani shows that the project is economically, as well as environmentally, unviable.

“This is a victory for anyone who cares about the future of both the Great Barrier Reef and the world’s efforts to tackle climate change,” said Nikola Casule, a climate and energy campaigner with Greenpeace.

“This controversial project is now a massive reputational risk for even the world’s most powerful banks. Standard Chartered’s decision is further proof that the world’s leading political and business decision makers know that the world must move away from dirty coal.”