Adani mirage fading

John Quiggin28 Comments

Adani Mining has just received the final approval from the Queensland government for the Carmichael mine in the Galilee Basin. According to this report from February, citing a “top Adani Group executive”, operations should start in August 2016, which would be a disaster for the global environment.

But wait! Now it seems yet more “secondary approvals” are needed (it appears this refers to a bond for cleaning up the mess afterwards), and “we hope that construction would start any time in 2017”.

There’s more interesting stuff in the report.

He said the price of coal was not the main issue in determining the viability of the project, but rather the cost at which the coal could be mined as the company already had a price agreement with the Indian government.Adani Mining CEO Jeyakumar Janakaraj claims there’s no need to worry about the price of the coal they produce “We are an integrated player. We have sold electricity in India on a long-term price.

‘‘It is not about the price point of coal, it is about the cost point, at what cost can we produce coal so that we will always be able to make a profit with the electricity price that we have already sold,”

The reference to the Indian government is pretty cheeky, given the government policy of eliminating coal imports over the next few years, which looks to be on track to succeed. (it’s currently a little behind its targets for increased production, but that’s because of weak demand).

More importantly, Janakaraj’s claim that “We are an integrated player” suggests he does not know much about his own business. Adani was an integrated enterprise when the project began. But the restructuring of the Adani Group in 2015 separated Adani Power (the electricity producer with a diversified portfolio of coal-fired power and renewables) from Adani Mining, which holds the stranded assets like Carmichael. This analysis from IEEFA spells it all out. Adani Power would be breaching its fiduciary obligations to shareholders if it paid an above market price for coal from Adani Mining.

I found a response from Adani, which illustrates one of my favorite points. When you have no answer to a damning report, say that it is “flawed“. That’s true of just about anything, and saves you the trouble of an actual response.

Good and bad news on climate

John Quiggin32 Comments

Although China has been moving away from coal-fired power for some time, provincial governments didn’t get the memo. They’ve been approving new plants at a cracking pace, with as many as 250 on the books, through a combination of inertia and desire to keep construction going. Now the national government has started pulling them into line, banning new coal plants in 15 provinces.

As this report shows there’s a similar tendency in many developing countries, with a long-standing push for coal running into the reality that it’s economically and environmentally disastrous. The result is a potential trillion dollars in stranded assets.

Still, progress in reducing carbon emissions has been much greater than seemed possible even five years ago. The problem is that the news from the scientists keeps getting worse. I haven’t had time to digest the discussion around the Hansen et al paper on sea level rise, but it’s certainly alarming. Closer to home and undoubted is the disastrous coral bleaching in the Great Barrier Reef.

And of course, while the world is moving to cut emissions, Australia is going backwards under the Abbott government (now notionally led by Malcolm Turnbull). The defeat of this government would be an important step towards saving the planet.

Weekend reflections

John Quiggin12 Comments

I’ve been on a very pleasant family holiday, so I haven’t posted for quite a while. I’ll take a little while to get back up to speed. In the meantime, I’m reviving an old regular. 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.

Abbott is right

John Quiggin45 Comments

The LNP, with Turnbull as frontman, will be campaigning on the Abbott government’s record and policies. Apart from a few symbolic and rhetorical shifts (the re-abolition of Knights and Dames, for example), Turnbull has neither deviated from, nor added to, Abbott’s policy program.

There’s a notion being pushed in the media that a big win for the LNP would constitute a mandate to “let Malcolm be Malcolm”. This is nonsense. A mandate isn’t a free pass. It is, literally, a command, to implement the policies on which you have campaigned [1]

Turnbull can’t campaign on Abbott’s policies, then say he has been commanded to implement his own (whatever they might be). So, unless he breaks with Abbott before the election, he might as hand back the job to someone who really believes in the program he is proposing.

Update 25/3 Turnbull has obviously been stung by Abbott’s attack, and is spinning some minor course adjustments (explicitly dumping some policies from which Abbott had already resiled) as a major break

fn1. The mandate idea is most powerful in a bicameral system with an unelected or highly unrepresentative upper house. In Australia, the unrepresentative aspects of the Senate (equal state representation and long terms) are matched by the spurious lower house majority produced by single-member constituencies. So, senators have just as much a mandate to block legislation they have campaigned against as the government has to push it forward. The Double Dissolution is, of course, the way we can resolve this.

Double dissolution

John Quiggin30 Comments

Apparently, we are likely to have one, unless the Senate passes the legislation to reinstate the Australian Building and Construction Commission. I predicted a month ago that the Turnbull government will lose office, and I’m more confident now (though far from 100 per cent) than I was when I made the prediction. So, I’ll leave it at that, and open the topic up for discussion.

Keeping Sea Lanes Open: A Benefit Cost Analysis

John Quiggin21 Comments

Whenever I raise the observation that navies are essentially obsolete, someone is bound to raise the cry “What about the sea lanes”. The claim that navies play a vital role in protecting trade routes is taken so much for granted that it might seem untestable. But it turns out that most of the information needed for a benefit cost analysis is available. Unsurprisingly (to me at least), the claimed benefit of keeping sea lanes open doesn’t stand up to scrutiny. I’ve spelt this out in my latest article in Inside Story, reprinted over the fold.

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A better system of voting for the Senate

John Quiggin30 Comments

After a fractious debate, the LNP and Greens have combined to push through changes to the system of voting in the Senate. The primary change is to introduce something like optional preferential voting above the line, replacing the system where party apparatchiks got to allocate preferences. While not perfect, this is an improvement on the old system.

It points the way to a much simpler system. I suggest scrapping the below/above distinction, and moving to a standard optional preferential system, except that we would vote for named party lists. Independents could pick a party name describing their objectives, or just run under their own names.

The main objection to this system is that it rules out the option of voting for (say) Labor candidates in an order different to that of the party ticket, which is currently possible below the line. But, as far as I know, in nearly 100 years with the current system, no candidate has ever been elected ahead of someone higher up their own party list.

Against that, it would be simple, familiar and easy to count, with a greatly reduced risk of accidental informal votes.

Political Bourbonism

John Quiggin23 Comments

Laura Tingle had an interesting piece on political memory. in Quarterly Essay recently, and my response (over the fold) was published in the latest issue (paywalled)>. Tingle is the most insightful observer of Australian politics writing in the mass media, but she has always taken the inevitability and desirability of market liberal reform for a granted. I detect a bit of a shift in the latest piece, but that may be wishful thinking on my part.

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