Meanwhile, in the real world

John Quiggin26 Comments

Advocates of an expansion of Australian coal mining are constantly claiming that India is desperate for imported coal to supply urgently needed electricity. Leaving aside the Indian government’s stated determination to end coal imports in the next few years (at least for the large public sector), what’s happening to actual demand for coal-fired electricity. Undoubtedly, it was growing very rapidly until quite recently. The Indian government had grandiose plans for a fleet of “Ultra Mega” power plants UMPP, a couple of which actually got built. And state governments were tendering out large contracts to supply electricity, designed with coal-fired power stations in mind.

In the last few weeks, there have been two big developments. Following a string of other cancellations, the government of Gujarat has cancelled a proposed UMPP Key quote

The new decision is believed to be also in line with the Centre’s push to bring down coal import. However, the state government is willing to provide land for a UMPP if the central government wishes to initiate one, says Sapariya. Adding: “Our focus is now on renewable energy. The government will encourage solar power.”

Meanwhile, the government of Uttar Pradesh has cancelled bids conducted in 2016 to procure 3,800 MW of power from independent power producers. Adani was among the suppliers shortlisted to share in the supply contract. This isn’t an isolated event

The UP government’s move, analysts said, is symptomatic of the deeper malaise: On the one hand, hardly any power purchase agreements (PPAs) are being signed and now, the bids for new contracts are being cancelled; on the other, plans to set up large thermal power plants are either being put in abeyance or abandoned. The Gujarat government, for instance, recently dropped the plan to set up a 4,000 MW imported coal-based ultra mega power project at Gir Somnath district, apparently because it thinks that upcoming renewable energy units could meet the the power requirement.

About 33,000 MW of thermal power plants, with an approximate investment of about Rs 2 lakh crore, are left stranded across the country due to the lack of PPAs.

That’s nearly 8 GW gone in the space of a few weeks. By my calculation (a check would be much appreciated) a 1 GW thermal coal station operating at 70 per cent capacity uses about 3 million tonnes of coal a year. Multiply that by 8 and you get 24 million tonnes, the entire projected output of Adani’s first stage project.

Adani outmanoeuvres Palaszczuk

John Quiggin28 Comments

The eagerness with which the Adani board announced an indefinite deferral of the Carmichael mine project today speaks for itself. As has long been conjectured by everyone with an understanding of the hopeless economics of this project, Adani has been looking for an excuse to walk away and blame government obstruction. Not only do they get to defer writing off the billion or more they have already invested, but there is the prospect of extracting some kind of compensation. At worst, they have a story to tell the financial markets in India that’s a bit more appealing than “we bought a worthless asset at the top of the market”.

The Palaszczuk government’s mishandling of Adani’s bid for a royalties holiday gave the company the excuse it needed. Until now, the government had bent over backward to avoid appearing obstructive, while holding the line on putting in no financial support. If they had stuck to that when the holiday idea was floated, all would have been well. As it is, they are likely to bear the blame for Adani’s mistakes.

In the broader scheme of things, the outcome is, of course, a good one. There was always the remote chance that Adani might push ahead with the scheme, and now that appears to be dead. But the political cost to Queensland Labor will be huge.

Weekend reflections

John Quiggin8 Comments

After a long break, it’s time for another weekend reflections, which makes space for longer than usual comments on any topic. Side discussions to sandpits, please. Absolutely no personal criticism of other commenters.

Welcome to mailing list subscribers

John Quiggin13 Comments

Here’s the letter I’ve sent to (I hope!) everyone who’s signed up for my mailing list.

Hi everyone,
I’ve now received more than 60 requests to join the mailing list, so I thought I would send a quick note to everyone thanking them for their requests and the kind words many of you have added. I’ll be checking for messages that bounce and I’ll also post on my blog and social media pages so that people who miss out can tell me about it.
My plan at this stage is to send the email once a week on Mondays. I’ll include links to blog posts and tweets, and I have a few other ideas to try out. I’m also open to suggestions, as long as they don’t involve too much work. If you have suggestions, go to my blog johnquiggin.com and post them there, once I’ve put this message up.
Best wishes
John

House of Cards

John Quiggin23 Comments

So, we finally joined the 21st Century and got Netflix. We are watching House of Cards (US version), an episode most nights. Based on one season per year of time passed in the show, that’s about four weeks of dystopian fantasy per night. But, when we wake up in the morning, the day’s news almost always has more and crazier stuff packed into it than that, with subplots and story arcs being passed over for lack of space ( will the emoluments clause come back to bite Trump? did he suggest that Comey should imprison journalists? Who can keep track of it all).

Looking at the main plotline of Season 1, what would it take for life to imitate art and elevate Pence to the White House? There’s clearly no likelihood that the House Repubs will impeach Trump as long as they still hope to push through a big tax cut for corporations (which apparently depends, for arcane procedural reasons, on passing some kind of repeal of Obamacare). As Liam Donovan says in Politico

The criticisms may grow louder with each unforced error by the White House, but as long as the legislative dream is still alive it’s hard to imagine any sort of full-scale break. If that dream dies, however, it’s every man for himself.

But maybe this really is a house of cards. Suppose that three Republican Senators defected to the Democrats. That would kill the dream, at which point lots of Republicans might start thinking that a fresh start with Pence would offer them a better chance of survival in 2018. And, hey, they got Gorsuch. Once a dozen or so jumped, it would indeed by sauve qui peut for the rest.

It’s easy to name two Repub Senators (McCain and Collins) for whom it would make personal and political sense to switch sides. Given two, there must surely be a third. Still, I can’t see it happening any time soon. On the other hand, every day brings a new humiliation. Perhaps someone will find a hidden reserve of decency, or just frustration, and say that enough is enough.

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Mindboggled

John Quiggin39 Comments

I’ve never been a fan of Senator David Leyonjhelm, but even so, I find it hard to believe he made the mindbogglingly absurd statement attributed to him by today’s Oz. Accusing Bill Shorten of a $1.85 billion black hole in relation to his policy of keeping the levy on high-income earners,

But Liberal Democratic senator David Leyonhjelm yesterday called out the Labor costings as disingenuous. He said it was “misleading budgeting” because Labor had no way of extending the deficit levy from opposition.

Say what? On this basis, no Opposition should ever announce policy of any kind. And of course, that goes many times over for members of fringe parties that have no chance of ever forming a government. I’ll be interested to see if he claims to have been misquoted.

Regardless, Leyonjhelm is one of a stream of regrettable politicians to be drawn from the ranks of the Institute of Public Affairs (IIRC, some even worse possibilities were derailed by racist indiscretions on social media). I won’t name names, instead repeating my possibly unhelpful endorsement of Chris Berg as the only person associated with the IPA for whom I have any intellectual respect.