Large numbers of school students have gone on strike today to protest about global inaction on climate change. This action has been met with a lot of huffing and puffing to the effect that students should stay in school and leave politics to adults.

Ideally, this would be the correct view. Part of the social compact of democracy is that the adult voting population should take account not only of their own interests but those of children who currently can’t vote and of future generations.

For those who have dependent children of their own, this isn’t a very demanding requirement. There’s no sharp distinction between your children’s interests and your own.

For older voters, the social compact is a bit more demanding. They cannot benefit directly from policies that make the world better for today’s and tomorrow’s children (a group that may or may not include their grandchildren). But they are morally obliged not to vote selfishly, taking advantage of the fact that they are enfranchised, while the young are not.

Sadly, the last few years have seen numerous instances where a majority of the old have violated this social compact. They have voted against the interests of the young out of a mixture of self-interest and cantankerous dislike of change, on climate change, Brexit and support for reactionary demagogues like Trump.

Having been let down by their elders, young people are fully justified in protesting against them, and ignoring their hypocritical expressions of concern about missing out on education.

It now looks possible that the fate of the Adani Carmichael mine will be sealed by an adverse assessment of the mine’s impact on the black-throated finch.

That’s a far less satisfactory outcome than if the Queensland Land and Environment Court had accepted, as its NSW counterpart has done, that the climate (and health) damage from burning the coal produced by the mine was relevant in assessing the costs and benefits. That reasoning leads to the conclusion that no new mines should be started, let alone marginal projects like Carmichael.

But even disregarding the main issue, the Galilee Basin has all the problems associated with large mining projects, and on a huge scale: disturbance of a large land area, heavy demands for water use, and the problems of shipping through the Great Barrier Reef, and conflict with indigenous owners. Even if these aren’t the biggest reason to reject a project that would open the entire Basin to mining, they are big enough.

This is, of course, a fairly common pattern in political and legal decisionmaking. It may be impossible, for procedural reasons, to reach a determination on the central issues that are at stake, so some less central but more definite point ends up getting to the necessary outcome.

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The market price of Bitcoin and other cryptocurrencies is plummeting, having dropped by 10 per cent just today, and 50 per cent over the past month. The bubble that reached maximum expansion a year ago is gradually deflating.

The good news is that a lower Bitcoin price makes the energy-wasting process of Bitcoin mining unprofitable for many, so lots of miners are turning off their servers.  Most estimates of the marginal cost of mining are around $4500 per coin, but the market price has just fallen to $3500.

That situation won’t last long. Every couple of weeks (more precisely, every 2016 blocks) Bitcoin adjusts the difficulty of the pointless algorithm used to mine coins, so as to ensure a steady flow of around one every 10 minutes. As mining effort has declined, the difficulty is reduced, which means less electricity wasted per Bitcoin.[1]

The rapidity with which Bitcoin prices are falling give some hope that the entire disastrous episode will soon be over. If the current rate of decline (50 per cent per month) is maintained, Bitcoins will be worth less than dollar coins in a year’s time, and their impact on electricity demand will be negligible. That’s equivalent to taking a small country like New Zealand off-grid.

In this context, it doesn’t matter whether Bitcoin miners are using renewable energy or coal. The opportunity cost of the electricity they use is the coal-fired electricity that would otherwise be displaced by renewables.

 

fn1. As shown here, mining difficulty leveled out in September and started declining in November. Since electricity consumption depends on both mining difficulty and the speed of the machines being used, which is increasing over time, the energy wasted on Bitcoin probably started declining modestly as soon as mining difficulty leveled out.

A week ago, I was speaking at a Royal Society of NSW Forum on the topic “Getting climate policy back on track” when the news came through that Adani had announced a start to the Carmichael mine “before Christmas”, funded from the company’s own reserves.  With Christmas now less than three weeks away, where do things stand?

It’s evident that, as with previous construction starts, this one won’t be on a large scale. Adani has just posted its first job opening for a year, on the portal it set up with great fanfare in mid-2017. It’s for a Senior Mine Planning Engineer a “newly changed and developed role reporting to the Head Mine Operations”.  Given that Adani has announced a proposal that’s radically different from the one they were running last year, you might have expected that a Senior Mine Planning Engineer would have been on the job for some time, heading a substantial team. Still, it’s likely that some kind of activity will take place, even if it’s only symbolic.

The big question is how Labor will respond, since it’s highly likely to be in office by the time any serious mining activity starts. So far the signs have been mixed. Queensland Premier Palaszczuk has said, correctly, that this is effectively a new proposal, and will need new approvals. On the other hand, Penny Wong has suggested that, once contracts are signed, the dreaded spectre of “sovereign risk” will mean that the government cannot intervene.  This is a bogus argument in the specific case of Adani, but the whole idea needs to be challenged. Governments routinely break their promises to voters, and corporations regularly renege on their commitments to governments, but, in the era of neoliberalism, promises made by governments to corporation have come to be held sacred.

Adani Mining announced today that its scaled-down Carmichael mine project would proceed without any external funding. Before considering reactions, it’s important to recall causes for scepticism.

First, Adani has repeatedly announced the imminent start of the project, while doing little or nothing. It is possible that this announcement will be followed by months, or even years, of “pre-construction activity” during which the project is kept alive with minimal expenditure from Adani.

Second, the economics of the project are as bad as they have ever been. Thermal coal prices have declined in recent months, especially following China’s decision to freeze imports. If China gets through the winter without significant problems, it is likely that the decline will be permanent. Even if it isn’t, the discount on low-quality coal =of the kind found in the Galilee Basin is rising all the time.

Third, the failure to secure any external finance for the project is significant. Most of the big lenders have now sworn off thermal coal altogether, but if there were real money to be made here, some second-tier institution would probably have gone for it.

So, it would make sense to wait for a while to see what develops. Still, we need to be prepared for a decision on whether Australia is going to back a future for coal, and destruction for the global environment or a moratorium on new mines. Labor under Bill Shorten has been surprisingly brave on issues like tax, and our Trumpist government is in a complete mess. A strong stand would be a huge step towards a better future.

Adani has just announced another scaled down version of its proposed Carmichael mine, bringing the initial capital cost down to $2 billion, and the estimated  initial output to 10-15 million tonnes a year. As usual, the claim is that financing will close in the near future.

Unfortunately, it is possible that this time the project will go ahead. The Indian Supreme Court has reopened the possibility that Adani may be able to pass on to customers the costs of imported coal for its Mundra power station.

That doesn’t change the fact that the project is economically unsustainable in the long run, as well as being an environmental disaster (though not as big a disaster as in its original version).  But the cost is now low enough that, if Gautam Adani is willing to put in enough of his money, he may find lenders willing to finance the rest.

At this point, it looks as if Labor will have to get off the fence, on which has perched for so long. The world needs to stop opening new coal mines, and Carmichael is a good place to start.