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How the Adanis could keep three countries hooked on coal for decades

In June, Australian authorities granted the Adani Group access to coal from an untapped reserve, helping ensure that coal will remain woven into the economy and lives of people in Australia, India and Bangladesh, despite urgent warnings against coal burning by climate change scientists

By Somini Sengupta, Jacqueline Williams and Aruna Chandrasekhar
Published: Aug 16, 2019

How the Adanis could keep three countries hooked on coal for decadesWorkers arrive for the start of a shift at Adani's power station in Mundra, India, June 22, 2019. The story of the company's coal mining project in Australia, which would supply a new power plant in India, helps to explain why the world keeps burning coal despite the profound risk it poses to the future. (Rebecca Conway/The New York Times)

SYDNEY — The vast, untapped coal reserve in northeastern Australia had for years been the object of desire for Indian industrial giant Adani.

In June, when Australian authorities granted the company approval to extract coal from the reserve, they weren’t just rewarding its lobbying and politicking, they were also opening the door for Adani to realize its grand plan for a coal supply chain that stretches across three countries.

Coal from the Australian operation, known as the Carmichael project, would be transported to India, where the company is building a new power plant for nearly $2 billion to produce electricity. That power would be sold next door in Bangladesh.

Adani’s victory in Australia helped to ensure that coal will remain woven into the economy and lives of those three countries, which together have a quarter of the planet’s population, for years, if not decades. This, despite warnings by scientists that reducing coal burning is key to staving off the most disastrous effects of climate change.

The story of Adani and its Australian project illustrates why the world keeps burning coal despite its profound danger — and despite falling prices for options like natural gas, wind and solar.

Coal is in steep decline in wealthier countries, including the United States and across Western Europe, mostly because of competition from those alternative energy sources. But in Asia, demand for coal, the main source of energy, is growing. That’s because it is plentiful, the appetite is huge, and the alternatives are fewer.

Government support is also key to coal’s survival. Subsidies for coal-fired power plants have nearly tripled in recent years in the Group of 20 countries, according to a study by the Overseas Development Institute and two other groups. In rich countries, that’s helped to keep coal on life support. In developing countries, it means coal continues to thrive.

The $14 billion Adani Group — a sprawling conglomerate with interests in energy, agribusiness, real estate and defense, among other sectors — leveraged both business acumen and politics to realize its plan, securing generous support from the Indian government to build its latest coal-fired power plant.

The company’s founder, Gautam Adani, says criticism of coal use is unfair. “India doesn’t have a choice,” he said in a recent interview at company headquarters in Ahmadabad, India. Citing the affordability and reliability of coal, he said it was indispensable to feeding the energy demands of big developing countries.

“This is the last gasp of the fossil fuel industry, and they’re taking advantage of all the political capital they have to dig in,” said Rachel Cleetus, public policy director for the Union of Concerned Scientists. “Meanwhile, we are seeing climate impacts now.”

A ‘tremendous opportunity’ for Australia
From his headquarters in Ahmadabad, Adani schooled himself in the politics of Queensland, Australia’s second-largest state, 6,000 miles away. Then, when a national election was called in Australia for May this year, his team went into action.

Company representatives made the case to rural Queenslanders that they could gain from opening up the Galilee Basin, the vast coal seam that the Adani Group wanted to exploit.

Coal mining has enriched Australia for decades. Ready markets in the fast-growing, energy-hungry economies of Asia have made it one of Australia’s biggest exports, and it has traditionally enjoyed the backing of most major political parties. Rising concern about climate change, though, has made coal a contentious issue in Australian politics over the last decade.

In the run-up to these elections, the country was battered by heat waves, drought and bush fires increasingly linked to climate change, and public opinion polls found that a majority of voters wanted tougher government action. Conservative politicians, in response, repeatedly warned that turning away from coal too abruptly would cost the Australian economy dearly — and that coal country, in Australia’s northeast, would hemorrhage jobs.

The Carmichael project became a symbol of that divide.

Yet before the election was called in April, the federal government sent a signal to those on the side of coal. It approved Adani’s groundwater plan for the Carmichael site, even though Australia’s national science agency had described the proposal as “not sufficiently robust.” The Australian Broadcasting Corp. reported that the government had leaned on the science agency to hasten its review of the plan.

When the vote came May 18, it was not, as some had predicted, a watershed climate change election. Australians, especially in coal country, voted to keep the incumbent conservative coalition in power.

A last hurdle was Queensland’s approval for the company’s plan to monitor the fragile ecosystems that depend on multiple aquifers near the coal seam. Independent experts warned state officials that the mine could permanently dry one natural spring, the Doongmabulla, held sacred by the area’s indigenous people. As recently as June 6, they had urged the state not to rush into a decision. The effect, they said, could be “irreversible.” But a week later, Queensland approved the plan. The Carmichael mine could now be built.

Adani used Twitter to thank lawmakers in Australia “for believing in Adani’s vision to fortify India’s energy security & create opportunities for Australians.”

‘Throw enough subsidies and anything can be viable’
At the global level, coal faces powerful headwinds. Renewable energy is getting cheaper as it expands. Private investors around the world are shying away from new projects. At the same time, public health officials are increasingly alarmed that air pollution, including the dangerous particles that come from coal plants, is shaving years off people’s lives.

“If you just looked at the social costs of air pollution, coal is so bad that, if those are added in as a tax, no coal plant would make economic sense,” said Anant Sudarshan, an economist at the University of Chicago who studies energy policy.

While Adani leveraged local politics to beat those headwinds in Australia, the key to success in India was different. There, his company has demonstrated an unusual ability to extract good deals for itself and has thrived with the help of generous state backing.

On many levels, those good deals have come at the expense of some of the poorest people in the world, who inhale the pollution that coal-fired power plants produce, drink water tainted by ash, and, often, support those coal projects with their tax money.

The company also built a close relationship to Narendra Modi, the man who, in 2001, became the top elected official in Gujarat, and, in 2014, the prime minister of India. The Adani Group went on to build a necklace of ports along the Indian coastline, enabling it to deliver coal to virtually any part of the country. The company bought an Indonesian coal mine, and, in India, it acquired coal mining contracts across thousands of hectares in a vast and previously off-limits forest.

When coal prices rose a few years ago, causing deep pain for power producers, the company secured an unusual reprieve from Indian regulators: the ability to charge its electricity customers more than it had originally contracted with the government.

The company, for its part, argued that without the higher tariff, it could not operate the plant.

Separately, the Indian Directorate of Revenue Intelligence has accused the company of overcharging taxpayers for imported equipment and coal. The agency lost its case in a customs tribunal and is now appealing in a higher court, where it accuses the company of impeding the case.

One of the biggest boons for the company has been the government benefits associated with the huge new coal-fired power plant under construction in India, near the town of Godda. The coal from the Carmichael mine could be burned there, company executives say.

The land for the plant, acquired by the government from a swath of lush paddy fields, was home to some of India’s poorest farmers.

The earthmovers arrived to begin construction during the last monsoon, accompanied by police. Coconut palms were uprooted. Paddy fields and a mango orchard were removed. A cellphone video taken at the time shows local women screaming, pulling their saris over their heads in deference and falling at the feet of a company representative, begging him to spare their land.

Soon, a concrete boundary wall went up. Then, makeshift offices. Then, a chilling message went out to locals who dared protest: Police charged five men, who did not want to give up their land, with criminal trespassing.

“They’ve got the plot surrounded,” said Balis Pandit, one of the accused, who has migrated to another part of the country to find work. “There’s no way we can enter the land.”

This plant, though, is not meant to electrify a single Indian village. As Indian news site Scroll first reported last year, power generated in Godda would be exported to Bangladesh, a low-lying delta nation threatened by a rising sea. The people who live near the site would receive none of the electricity, just the pollution.

The power export deal was announced by Modi on a visit to Bangladesh in 2015. Adani was part of his business delegation.

It was the final link in a long, sooty — and, for Adani, lucrative — chain, one that critics say could only be made possible by government assistance.

“Throw enough subsidies and anything can be viable,” said Tim Buckley, an analyst at the Institute for Energy Economics and Financial Analysis. “If they did not have special treatment back in India they wouldn’t be able to use expensive Australian sourced coal viably.”

©2019 New York Times News Service

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