Adani beware: coal is on the road to becoming completely uninsurable

That’s the headline for my latest piece in The Conversation. Although I use Adani as a convenient example, it’s about the bigger issue of whether insurers will flee from the potential litigation liability of insuring fossil fuel producers. Of these, thermal coal miners and generators are the most vulnerable because they are already marginal in economic terms.

8 thoughts on “Adani beware: coal is on the road to becoming completely uninsurable

  1. Excellent article. Nothing to add as it sums up all the key points. Keep the pressure on them, J.Q. – ikonoclast

  2. Technical question – I really don’t know the answer. Do tort liabilities survive bankruptcy? I know the OP is about insurance not stockholder liability, but perhaps insurance companies insist that shareholders retain some of the risk, since they knowingly created it. It’s not like insurance against wildfires or kidnapping.

  3. Fingers crossed. Coal is a dead man walking, but any fan of horror movies can tell you a zombie can cause a hell of a lot of damage before it’s put down for good. I hope the lack of insurance helps finish it quickly.

    Some good news. Tesla Model 3 electric cars were 3.6% of US passenger car sales last quarter.

  4. One correction to yout article – WE JQ imho, not “They need to protect ourselves [themselves] against what they can see coming.”

    JQ, the lead para in your linked article re Adani / insurance contains 2 of the insurers and 2 engineering consultants sucking on the teat of the great barrier reef foundation / IPA / us taxpayers. 

    Let’s say we have to coff $2B compensation to Adani or ‘the common wealth insure’ Adani. Either way JQ, it is about 0.8% of gdp. 

    Or as you state in the article “When the coal is burned it might produce an extra 30 million tonnes of carbon dioxide, amounting to about 0.05% of global emissions.

    “A 0.1% share of the damage associated with the California fires is US$15 million, enough to be worth suing for. Other similarly sized mines will face similar potential liabilities.”

    Come on JQ – 0.1% of a disaster cost – 30B or a 100B or 0.1 or 5%! To recoup this it is just a a rounding error on everyone’s home and contents increase. Paid for by us again.

    IMO someone will insure – and it looks like ‘us’ – before compensation. Do you have any other  strategy or suggestions to stop Adani or coal mining? Because I’m not seeing it even though I’m in furious agreement with the points you raise.

    “Comparisons have been made with Adani, and opponents of reef regulations appear intent on following Adani’s aggressive campaign strategy, which sought to undermine the Queensland Labor government’s standing in regional areas.”…

    …”The local News Corp-owned paper, the Bundaberg News-Mail, last week published a full page of Ridd’s claims without critique or context.”…(see 1. below)

    Ridd has a pulpit now. The name of the church is the Australian Environment Foundation, a charity set up by the rightwing thinktank the Institute of Public Affairs,

    JQ you said in  Freedom and the Commissioner “the question, raised by the cases of Peter Ridd and Israel Folau of whether employers can discipline or sack workers for their views on a range of issues.”

    No chance of sacking Ridd now as he is funded by the IPA, and opinion promoted propadanda style – not jouralism – by news corp outpost in bundaberg.

    …”to help cane growers reduce pollution flowing onto the Great Barrier Reef are promoting lectures by a controversial scientist who argues farm runoff is no threat to the reef.”…

    …”His lectures – which dispute the overwhelming consensus of reef scientists – argue that pollution from farmland is not seriously damaging the reef.

    “The events are hosted by regional branches of the sugar cane growers peak body, Canegrowers, and the Australian Environment Foundation, a charity set up by the rightwing thinktank the Institute of Public Affairs, and with strong links to the agriculture and fossil fuel industries.”

    Who is now responsible for stacking and sacking and “the  other side of the debate” ( <1% science)? The IPA & The Great Barrier Reef Foundation, in colusion with our federal environment department who have NOT set ANY targets providing the proverbial infinite sized loophole.

    Here is the parsec sized loophole… (One parsec is equal to about 3.26 light-years or 31 trillion kilometres)
    "Setting of quantitative targets in the guidelines would have given an unrealistic impression" says our federal environment department who are supposed to be charged with responsibility of protectingTHE REEF.

    $450M and NO quatative target?! Yet …
    "Government rules require that a program receiving a grant must be given clear and specific objectives for the funding.

    "In a response provided to the Auditor, the Department of Environment and Energy said it did not agree the targets were not detailed enough.

    "It wrote: "Setting of quantitative targets in the guidelines would have given an unrealistic impression of the precision with which outcomes can be predicted in the very early stages of this intervention in a highly dynamic and complex biophysical and socio-economic system."

    GHD / Worley Parsons have ALL the numbers. Quatified to the last significant digit. I worked for one of their subsidiaries for 4 years. In fact for the engineer who did original Adani scoping study (no he won't speak). Everything is quantified. And Adani initially used Worley Parsons (last partner below) then GHD. I'm old enough (!) to remember Guteridge Haskings and Davies.
    Your tax money to save The Reef is overseen by;
    Affirmative Investment Management
    Amcor Limited 
    Ausenco Limited
    Australian Institute of Marine Science
    Bank of Queensland – 
    Boeing Australia & South Pacific
    Boral Limited
    Brisbane Airport Corporation – 
    ConocoPhillips Australia 
    Commonwealth Bank
    CSIRO – Dr Larry Marshall
    Deutsche Bank
    Google Australia & New Zealand 
    Dr Paul Greenfield AO
    Jacques Nasser AC
    James Cook University – 
    J.P. Morgan
    Leo Burnett Australia – 
    Macquarie Group – 
    Morgans Financial Limited – 
    Mulpha Australia Limited – 
    Orica Limited
    Port of Brisbane 
    PwC Strategy
    Qantas Airways Limited
    Rio Tinto
    The Star Entertainment Group
    Worley Parsons
    Distressing, depressing and wholly unsurprising. Imho, WE – not THEY – need to protect ourselves against what we can see coming.

  5. It seems such a shame that we have foreign businessmen owning and digging up all our coal. Some people say the energy imbedded in the trace Uranium in coal is more than the energy from the coal itself. Thats why I think we should try and get away with exporting as little coal as is diplomatic and humane to do so. It would be better to actually add H2 and concentrated solar power heat to it, and export a higher energy product in liquid form, then what we are doing now. Higher energy with the fissionable material and the mercury taken out of it.

    Does Mr Adani have contacts with the aspirational Indian nuclear industry? If so that might bridge the gap as to why he would shell out so much of his own wealth. This coal is going out the door for a song in my view. How is it with all the security challenges we will face over the next three decades, that we are letting our strategic assets go so easily? It doesn’t feel like we make our decisions locally.

    If we can break our contracts for a reasonable payout I think we ought to do that. Lets close down departments by the bakers dozen, get in surplus, and start buying our assets back. Slow down our coal exports and develop our local energy capacities.

  6. In other bad news for Adani, CoalWire has an update on the rough water hitting the Mundra bailout (******

    “Gujarat Urja Vikas Nigam (GUVNL), the power utility owned by the Gujarat Government, has petitioned the Central Electricity Regulatory Commission (CERC) to rescind the April 12 order authorising Adani Power’s Mundra coal plant to pass the costs of imported Indonesian coal on to consumers.”

    Two comments. One, GUVNL is a public corporation owned by Gujarat state. There is no way it would have taken this very high-profile step without a formal or informal go-ahead from the state government. Adani clearly has enemies there as well as friends, enemies willing to take on one of the richest and best-connected plutocrats in India.
    Two, will Modi come to the rescue? I don’t see how Adani, or other members of the Gujarati Cauliflower Trust*, can be at all confident. The appalling Kashmir intervention shows Modi is his true colours of a rabid Hindu nationalist, willing to trash the Indian constitution and create a significant risk of conventional and nuclear war, not to mention economic damage, to advance a key plank of the radical Hindu nationalist agenda. This is real RSS stuff. Now the coal bailout pits plutocrat cronies (Adani, Tata, etc) against BJP-voting Hindu peasants who want cheap electricity for irrigation. Does it look to you – will it look to Gautam Adani – as if the new unleashed Modi will pick the plutocrats?
    * The Trust is from Brecht’s play “The Resistible Rise of Arturo Ui,” translating Hitler as Al Capone. “Cauliflower” is “Phūlakōbī” in Gujarati.

    In other bad news from the same source, Fitch has thoughts on Chinese coal imports:
    “Fitch Ratings, a financial services company, estimates that Chinese thermal coal imports will decline by 2023 to 40 million tonnes a year less than the 210 million tonnes imported in 2018. The decline is expected to follow a decline in power generation and heavy industry in the coastal regions mostly served by imported coal. Fitch Ratings estimates Indonesian coal companies are the most exposed to a decline in Chinese demand. It also warns that competition for growing regional markets such as Vietnam, Pakistan and India could be “intense” which could see prices driven down “if demand is lower than anticipated.” Fitch Ratings also warns that the growth markets for coal exporters “have less stable operating environments and potentially weaker counterparty credit quality.” ”

    I don’t know where Fitch are getting their rosy scenario for import growth in India, but their very plausible Chinese tertiarisation analysis points the same way as what we’ve been reading about opening of new inland coal mines and upgrades to railways transporting coal. The prospective export markets for Carmichael coal continue to shrink. In any case, Fitch’s view would be bad news for Adani even if they are wrong, as credit ratings from the major houses are taken seriously by banks and other lenders.

  7. I don’t know how insurance of major projects goes ie if it’s an annual thing or life of project, but I do wonder how the insurers of contractors eg GHD would view their risk if Adani can’t raise proper legitimate cover.

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