Queensland premier will neither confirm nor deny deal under which full royalties due would only be paid in later years

This article is more than 3 years old

This article is more than 3 years old

The Queensland government has reportedly offered Adani a royalties pause worth up to $320m as the company decides whether to proceed with its Carmichael mine project.

The deal, in which Adani would pay a discounted $2m a year on exported coal in the mine’s early years, could be signed this week and has concerned some senior Labor figures, the ABC has reported.

Guardian Australia understands the balance of the deferred royalties would become due in later years.

The premier, Annastacia Palaszczuk, whose government in its last election campaign vowed not to back Adani’s rail or port project with taxpayer funds, would not confirm or deny the deal, the ABC said.

But Palaszczuk, who along with the treasurer, Curtis Pitt, in negotiations reportedly rebuffed a bid by Adani to pay no royalties in the mine’s early phase, said the project was “vital for regional jobs”.

It comes after a former climate change adviser to the federal government said risks inherent in Australia’s largest proposed coalmine meant Adani could shelve its plans.

Prof Will Steffen of the Climate Council, which declares coal from the planned Carmichael mine “unburnable” in a new report canvassing environmental, economic and health factors around the project, said the odds against it would only rise over time.

“If I were a betting person, I’d say it’s better than 50-50 now that this is not going to go ahead and that [chance] will even increase,” the former climate commissioner said.

The report argues a “carbon budget” approach to a global warming limit of 2C rules out Carmichael. As a catalyst for opening up neighbouring mines, it could lead to total emissions from Galilee basin coal matching “one of the top 15 emitting countries in the world” and making up 130% of Australia’s total carbon pollution.

The carbon budget for 2C allows for less than 10% of existing Australian coal reserves to be dug up, leaving “no basis for developing any potential new coalmines, no matter where they are or what size they are”, the report says. This takes into account the “most economical” existing sources of coal worldwide.

“There are two undeniable trends – an accelerating uptake of renewable energy and coal plant closures,” the report says. “For Australia to fight these trends is economically, socially and environmentally unwise and counterproductive.”

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Australia’s second largest bank, Westpac, is the latest financier to rule out funding new coal basins such as the Galilee.

An Adani Australia spokesman has flagged a final investment decision over the next few weeks by the board of its Indian-based parent. Adani would start “preconstruction works” by November and seek to clinch finance by the end of the year.

Steffen said his key observation from the report was that rising impacts at “modest temperature rises” – such as bleaching of the Great Barrier Reef – along with more extreme events and warming of 1.1C-1.2C already “really put the pressure on getting out of fossil fuels probably faster than most people have thought”.

Coal, which gives out “a lot more CO2 per unit of energy” than oil or gas, comes out as “the biggest loser” under a carbon budget, Steffen said.

“Basically, the story is we can still burn over half the conventional oil reserves, less than half the conventional gas reserves, but very little of the coal reserves, because coal emits a lot more CO2 per unit of energy,” he said.

“The real question is how fast can we phase out our existing mines and existing power stations before their normal lifetime is up. How do we hasten the transition? So any talk of opening up a vast new area of coal is completely out of whack with what we know about what’s happening with the climate systems.”

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Asked why the carbon budget argument had not gained more traction with Australian politicians, Steffen said: “I don’t think politicians like the approach because it is so clear and it leaves you no wiggle room.”

Promising a percentage reduction from a given year “can be changed to suit a country’s political purposes” by choosing a period of unusually high carbon emissions “as we did with 2005”.

“It means that we already get some percentage point reduction simply by doing what we’re doing,” Steffen said. “The carbon budget approach cuts through all of that complication and confusion.”

The report argues Carmichael is at growing risk of becoming a “stranded asset” given the pace of growth in renewable energy in China and India, and cheaper alternative coal sources for the latter.

It says the “energy poverty” argument pushed by Adani supporters belies the fact it is cost not availability of power that puts it beyond the Indian poor. It argues the deaths of 100,000 Indians a year from coal dust pollution highlight that country’s impetus to transform its energy system while growing the economy.