Westpac's new climate change policy is bad news for Adani's Carmichael mine in Queensland

Westpac's new climate change policy is bad news for Adani's Carmichael mine in Queensland

Westpac's new climate change policy is bad news for Adani's Carmichael mine in Queensland

Updated 28 April 2017, 14:30 AEST

One of the big four banks is labelled "a pack of wimps" over its new climate change policy, which prohibits financing low-quality coal projects such as Adani's planned Carmichael mine in north Queensland.

Westpac has effectively ruled out financing Adani Group's controversial, giant coal mine in Queensland's Galilee Basin under a new climate change policy.

The bank's "new climate change position statement and action plan" restricts lending to projects which use "the highest quality coal in advanced power generation technologies".

"Our lending to customers in the thermal coal sector is limited to those that have a calorific value which ranks in the top quartile globally," the new position statement said.

That effectively would prohibit lending to ventures using coal from Australia's last untapped resource in Queensland's Galilee Basin.

Westpac is restricting finance for new mines to those using resources in the top 15 per cent of coal quality globally.

"We define the top 15 per cent as having a specific energy content of at least 6,300 kCal/kg gross as received," Westpac's policy noted.

"This value is referred to as the Newcastle high energy coal benchmark."

Westpac are wimps, Resources Minister says

The decision angered Federal Resources Minister Matt Canavan, who described Westpac as a pack of "wimps".

"Corporations are wimps these days in standing up up these (environmental) activists," Senator Canavan told a press conference shortly after Westpac released its policy..

"It is disappointing Westpac has made this decision without consultation with the people of northern Queensland," Senator Canavan, who also is the Minister for Northern Australia, added.

"(Westpac is) more interested in listening to Sydney activists than job-hungry Queenslanders."

The policy also commits Westpac to actively reduce the emissions of the power generation sector and to support a price on carbon, as well as a transition to a "net zero-emissions economy."

Green activists claim victory but say more needs to be done

The Newcastle coal quality benchmark cited by Westpac is far above the quality of the deposits in Queensland's Galilee Basin and the coal at the Adani mine, which has an average energy content of 4,950 kCal/kg.

Adani is an existing client of Westpac, having part-financed its purchase of the Abbott Point Coal Terminal in Queensland, adding weight to its decision to block lending for the planned Carmichael mine.

"The fact that an existing lender to Adani has now ruled out financing the proposed Carmichael mine makes this announcement even more significant," Julien Vincent, executive director of Market Forces, which supports renewable energy, said.

"With such a toxic political debate on coal at the moment, and a government falling over themselves to throw money at this dirty fuel, statements like these send a powerful message that coal is rapidly going out of fashion in the business and finance community."

Institute for Energy Economics and Financial Analytics' director of finance studies Tim Buckley described the policy change as "absolutely pathbreaking."

"It in effect rules out funding for Adani and any new coal regions in Australia," he said.

"Limiting lending to the Newcastle benchmark ensures that funding is restricted to the highest quality coal. Westpac's now set the standard for all other banks to follow."

Although Westpac has not named Adani in the document, the policy is a major win for environmental groups and other critics who have been pressuring the bank to rule out lending for the Adani mine, which, if it goes ahead, will be Australia's largest coal mine and the biggest export coal venture in the world.

Anti-Adani mine protesters disrupted Westpac's 200th anniversary celebrations earlier this month, with one protester chaining himself to scaffolding above the venue for a dinner marking the anniversary.

More coal mines in Galilee Basin waiting for approval and funding

Senator Canavan said there were still another five coal mines in the Galilee Basin that were expected to go ahead and be funded, with or without Westpac's support.

"In all due respect to Westpac, they are a small player (on the world stage) and there are plenty of other lenders around the world who would be prepared to finance Adani," Senator Canavan said.

Adani's power stations in India would also rule out Westpac finance for the proposed Carmichael mine.

Most of the coal would be destined for Indian plants that fall short of the high-energy, low-emission technology standard that would qualify as "advanced power generation technology" under Westpac's policy.

The policy will not satisfy conservationists opposed to any new lending for coal-fired power.

It leaves the door open to funding for so-called "ultra-supercritical" coal-fired power stations that operate at higher temperatures and produce fewer carbon emissions than conventional power stations.

The new policy commits Westpac to advocating for "policies that stimulate investment in climate change solutions".

Westpac is the 19th bank globally to either specifically, or by way of policy, commit to not funding the Adani project and other new coal mines in the Galilee Basin region.