People across the world have been shocked by the extent and ferocity of the bushfires that rage across Australia and the devastating loss of life, property, wildlife and forests.
Many Australians were horrified
While the fires have destroyed an area a fifth the size of Germany, many have made valuable contributions to easing the burden for those who have lost everything in the maelstrom.
THE REALITY IS THAT THE WORLD NEEDS TO PREPARE FOR MORE EXTREME WEATHER, such as the long drought and record-breaking temperatures which have contributed to the catastrophe.
Scientists have been warning of hotter, more extreme weather events for decades and those warnings have now materialised in Australia’s infernos.
But the Australian Government still refuses to set a higher target for reducing carbon emissions, its 26% Paris target already discredited through the use of accounting tricks.
Large numbers of Australians turned out at rallies in January, demanding the Government take stronger action to reduce climate change and the risk of even worse fire seasons in summers to come; 30,000 people turning out in Sydney alone. They were joined by expats and supporters gathering in front of the Australian embassy in Berlin.
It is against this background that many Australians were horrified to be told by the President and CEO of Siemens AG, Joe Kaeser, that he was giving the green light for its Australian subsidiary to provide vital signalling equipment to the proposed Adani coal mine in Queensland’s Galilee Basin.
The mine is seen as way too risky for any of Australia’s banks
TO PUT IT BLUNTLY, IF THIS MINE GOES INTO OPERATION, IT WILL BE THE LARGEST CLIMATE DESTRUCTION PROJECT ON EARTH. There were real prospects that, had Siemens reversed its position and refused to be associated with the project, other potential partners of Adani would have fallen away, and the project would have been shelved. All the more since other providers had previously declined to work with Adani.
Adani’s Carmichael mine has been approved by the Federal and State Governments, despite strong representations against the mine by Australian and overseas scientists and despite widespread public opposition.
Siemens is now one of the proponents of a mine which commences the opening up of the Galilee Basin, estimated to add 30% to global seaborne traded coal capacity. This would contribute an extra 700 million tonnes of green-house gas emissions per year, or over 20 billion tonnes over the 30-year life of the mines. This is enough to consume 7% of the world’s remaining carbon budget.
The economics of the Adani mine, with its large addition to seaborne coal trade, very tenuous.
SIEMENS’ DECISION TO HELP ADANI TO BUILD THIS FACILITY IS SURPRISING, given that the mine is seen as way too risky for any of Australia’s banks to provide funding. Local companies such as Downer EDI have pulled out, refusing to supply rolling stock for Adani’s railroad. Banking and Corporate regulators in Australia and internationally have been warning Boards to take action to avoid unmitigated climate change risk, weighing on the decisions of potential Adani commercial partners. None of this seem to have swayed Siemens.
Professionals in the banking sector point to the Paris based International Energy Agency’s Sustainable Policies estimates which show a 60% drop in global coal demand over the next 20 years. This makes the economics of the Adani mine, with its large addition to seaborne coal trade, very tenuous.
SOME ANALYSTS SUGGEST THE MINE, IF IT GOES AHEAD, WILL BECOME A STRANDED ASSET.
Of course, Australian banks and finance houses are actually happy to move away from old-world fossil fuels investments, with projected declining export demand, towards new industries such as solar and wind farms. The attractiveness of investing in green energy is made more palatable by the rapidly growing green bond market, allowing lenders to free up capital by securitising green projects. A recent book by Professor Ross Garnaut, the well-known Australian academic economist, Superpower, suggests a massive rise in green energy exports, based on Australia’s comparative advantage.
Siemens associating itself with the Adani mine makes little sense.
The short-term profit from Siemens’ proposed work for Adani should surely be weighed against the enormous reputational risk Siemens would face by participating. The damage to Siemens’ brand and the consequential potential loss of respect for Siemens across the rapidly expanding renewable energy sector, where many of its leaders take strong stands on halting climate change, will no doubt have commercial consequences in the medium and even short term. Hence, even commercially, Siemens associating itself with the Adani mine makes little sense.
Siemens’ official explanation for it decision contains a lot of long-winded hot air about how they will set up a Sustainability Board to assess future projects and how “We at Siemens have started a long time ago to do our part to save our planet. I do invite everybody to work together to save it.”
EXCEPT, SIEMENS HAVE DECIDED NOT TO WORK TO SAVE OUR PLANET. Instead they will support the opening up of a coal basin that will add 700 million tonnes of carbon pollution to the atmosphere every year. Actions speak louder than words.
It is still possible to reverse this decision and claim the moral high ground. Millions of people around the world and the leaders of green firms globally would applaud the company if they did so. That would place the company with the entrepreneurs of the future, not the luddites.
IEEFA guest contributor Rob Henderson, former chief economist at the National Australia Bank and Dresdner Bank, is a senior policy advisor to the Australian Treasury and Department of Prime Ministers and the Cabinet.
This article first appeared in Sueddeutsche Zeitung.