The move came as Future Fund chairman Peter Costello on Wednesday said Australia's $117 billion sovereign wealth fund would not join the global fossil fuel divestment push and would continue to be a big shareholder in mining giants BHP Billiton and Rio Tinto and the Australian banks that fund them. "Unless parliament passes a law so that we are in breach of statute, we'll continue to invest in companies where there is an investment case, whether they are banks or fossil fuel companies or banks lending to fossil fuel companies," Mr Costello said. When NAB was asked whether its position on Carmichael was a signal that the bank was backing away from funding coal or fossil fuel projects, a spokesperson said: "We have a role to play in transitioning to a low carbon economy, we also believe we have the responsibility to fund projects that will secure Australia's energy needs now and into the future and coal has an important role to play in this." NAB said it was the the largest arranger of project finance to the Australian renewable sector, having arranged $1.87 billion in loans to projects in the sector over the last eight years. Adani's Carmichael project has been stuck in the approvals process for the past five years and the Indian giant has spent about $2 billion on it. Adani suffered a huge, unexpected blow last month when its federal environmental approval was set aside by the Federal Court. Adani could be burying Carmichael and seeking more certain alternatives.

Minerals Council of Australia chief executive Brendan Pearson said "the fact that one bank has decided – for whatever reason – not to invest in a particular mine that they were not asked to support is hardly news". An Adani spokesman said it had not sought funding from NAB and "emphatically rejects every aspect of Fairfax's characterisation of either the company's position or indeed that of NAB". A spokesperson said it was wrong to represent that NAB had ruled out funding for the project going forward. But anti-coal activist group Market Forces' lead campaigner Julien Vincent has called on "the rest of the big Australian banks – ANZ, Commonwealth Bank and Westpac – to also publicly rule out finance for the Carmichael coal project". "The news also shows just how out of touch Prime Minister Tony Abbott is on the issue of the Carmichael mega mine," Mr Vincent said.

"After recently calling for businesses to support the project, NAB have taken exactly the opposite step." Former NAB chief executive Cameron Clyne told Fairfax Media on Wednesday that "NAB ruling out involvement with the Adani Carmichael coal megamine seems proper" and "prudent" for shareholders. "You would be hard pressed to find a financial institution that would make a different call to NAB's today." "This project, by all accounts, doesn't seem to stack up economically and appears unlikely to ever turn a profit," Mr Clyne, who stepped down from the helm last year, said. "NAB's statement today [Wednesday] seems an entirely sensible decision and prudent for NAB's shareholders."

Mr Clyne stepped down a year ago as NAB's managing director and group CEO, to be replaced by Andrew Thorburn. NAB would not comment on the economic viability of the Carmichael project but said it looks at "all financing project proposals on a case by case basis and assess a potential borrower's capacity to repay, management, reputation, industry fundamentals, legal, tax, insurance and environmental, social and governance (ESG) risks". Market Forces' Mr Vincent said NAB's position was "a devastating blow to Adani's plans especially because it is an Australian bank ruling out support for the project". NAB was the 14th bank globally to distance itself from proposed Galilee Basin coal export projects such as Adani's, he said. "It takes a pretty toxic combination of financial unviability, public opposition and environmental and social risk to amass a list this big of unwilling funders."

Market Forces, 350.org and Greenpeace are among the key groups campaigning against Adani's project, and the broader development of a coal hub in the Galilee Basin. But Mr Pearson said global interest in the coal sector remained "very strong", with financing for coal mining increasing to $US66 billion in 2014, up from $US55 billion in 2013 and a 360 per cent increase from 2005. NAB, along with ANZ, Westpac and the Bank of Tokyo underwrote a $1.4 billion refinancing deal in March for Whitehaven Coal, Australia's biggest independent coal miner. An ANZ spokesperson said any involvement in Carmichael "would depend on all approvals required being granted, as well as our own social and environmental policies and standards being met". However, sources told Fairfax Media that the Carmichael project is not on ANZ's radar, and the bank has not been approached on funding.

CBA "has not been asked to fund the Carmichael mine or the expansion of the Abbot Point port", a spokesperson said. Westpac would not comment on the project but said "we do want to emphasise that we take care to ensure that any projects we support within the natural resources sector comply with appropriate environmental controls". "We commission independent due diligence on high impact projects and work with our customers to ensure that any environmental risks are identified and mitigated," a Westpac spokesperson said. But former NAB chief Mr Clyne said "Australia's lack of diversification of its economy and energy sources "is just economically reckless – this is a basic truth". "From an economic point of view, it simply does not make sense to be so heavily addicted to coal as Australia is, this is at odds with what we see everywhere around the globe," Mr Clyne told Fairfax Media on Wednesday.

"And right now we are seeing in the market real competition from a far better product than coal. This quiet energy revolution has been gathering pace, with the average cost of solar and wind power (and battery technologies) plummeting as technologies develop and deploy. Few have grasped quite how revolutionary that will prove to be for energy markets." The City of Newcastle last week passed a motion to switch its $270 million cash pile out of the big four Australian banks and into banks that did not lend to the coal industry so long as their security was in the same range.