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SEI Weighs In on Westpac’s Climate Change Policy and the Uncertain Future of the Carmichael Mine

SEI Key Researcher Christopher Wright and Honours Research Fellow Andrew Brodzeli comment on Westpac’s updated climate change policy and the uncertain future of the proposed Carmichael mine.

On 28th of April, Westpac released an updated climate change policy, which states that the bank “will limit lending to any new thermal coal mines or projects (including those of existing customers) to only existing coal producing basins and where the calorific value for that mine ranks in at least the top 15% globally.”

The new climate change policy rules out Westpac’s involvement in the Carmichael Mine and is a major success for the campaign to stop Adani, as is the news that National Australia Bank and ANZ have ruled out funding the Carmichael mine. However, there is still a long way to go.

In response to the recent news, Christopher Wright said:

Westpac Banking Corporation’s release last week of an updated climate change policy marks a significant development in the long political battle over one of the world’s largest fossil fuel frontiers, Queensland’s Galilee Basin. Indian energy company Adani has for some years sought to build one of the world’s biggest coal mines as the first of nine so-called ‘mega-mines’ in the Galilee. Together the proposed Galilee mine complex would produce around 700 million tonnes of CO2 emissions per annum (making it the seventh largest greenhouse gas emitter on the planet). This carbon bomb would on its own basically ensure the world exceeds the boundary of 2 degrees Celsius warming above pre-industrial levels. Despite the catastrophic implications of this development for the world, both Federal and Queensland governments have been keen promoters of the Adani mine, citing the purported jobs and economic development that would be created. They are now advocating a $1 billion loan of public funds to assist Adani in building a rail link from the mine to the Abbot Point coal terminal. However, a range of financial analysts have questioned the viability of the mine and highlighted the global trend away from coal-based power. Added to this, a spirited social movement of resistance of environmental NGOs and large numbers of concerned citizens has also quickly developed, targeting large financial institutions which might fund the project. The Westpac announcement follows commitments from other major Australian and international banks that they will not fund the Adani mine. While the battle is far from won, the proposed Adani mine is now looking much more uncertain. For all our sakes, let’s hope it never goes ahead.

Andrew Brodzeli suggests that:

It is illustrative to see the public clash between the federal resources minister Matthew Canavan and Westpac in the context of the state’s reorientation around the rise of financialised capitalism. Today, the financial sector plays a critical role in determining domestic macro-economic and micro-economic outcomes, noticeable during crises and times of structural industry change, respectively. This has put the state, whose role is to orchestrate social cohesion, in an increasingly contradictory position about responding to the footloose movement of financial capital. On the one hand, since Keating’s financial deregulations, the state has invited financiers to operate freely within the national economy in the hope of attracting foreign investment. On the other hand, the state must also represent the interests of the industrial manufacturing and mining sectors that have historically played the more economically and culturally significant role. Most pertinently, Australia’s strong performance during the global financial crisis is often attributed to the then-booming mining sector, now threatened by the flight of the very same financial capital. 

We witnessed the decline of manufacturing during the 1980s-1990s, replete with the awkwardness of government back-and-forth about overseeing its dismantlement. It is also the case that, as it struggles to secure finances amidst uncertainty about future profitability, we are witnessing the decline of fossil fuel mining in Australia. Divorcing the state from manufacturing was complex due to its importance for organised labour, which found parliamentary expression in the Labor Party. As the Canavan-Westpac episode suggests, divorcing the state from its commitment to fossil-fuel mining is also proving complex, but for different reasons. It may be due to the protective role that the sector is perceived to play in a time of global instability. However, its impending unprofitability – as attested to by numerous analysts and experts – suggests that this role is over. Instead, it may be that neither major political party can find sufficient advantageousness in demonstrating allegiance with financial capital, the ‘vulture’ of the global economy. 

Because the welfare of relatively few Australians is directly tied to the fortunes of the fossil-fuel industry, there should be far less equivocation on the part of either party in facilitating this transition. It is up to us to apply political pressure to ensure that this transition does occur – and quickly – whilst affirming that the renewable energies that do supersede it are run by and for the public welfare, not for the profitability of financial capital. Such a strategy demonstrates the false choice of domestic prosperity vs. globalised financial interests that populist economic nationalism maintains, to the detriment of our ecosystem and our economy. 

Christopher Wright has recently produced a podcast interview for the Sydney Business Insights called Coral or coal? Business divided, which discusses the Adani coal mine and the impacts it would have on the coral of the Great Barrier Reef. Listen to the podcast below.