Financing for new thermal coal projects will be strictly limited to “existing coal producing basins” where the coal produced would have to clear a high efficiency hurdle of at least 6300 kilocalories per kilogram.
Westpac CEO Brian Hartzer said the bank would limit lending to new thermal coal projects where the energy content of the coal ranked in the top 15% globally.
“Westpac recognises that climate change is an economic issue as well as an environmental issue, and banks have an important role to play in assisting the Australian economy to transition to a net zero emissions economy,” he said.
“As a major lender Westpac is committed to supporting climate change solutions that will drive the transition to a more sustainable economic model.”
The quality of coal from Carmichael will be below Australia’s benchmark Newcastle coal in both energy efficiency and in ash content, with Newcastle coal having a kilocalorie count of just over 6000kcal/kg. Coal from the Carmichael Basin is below 5000kcal/kg.
The ash content of the Carmichael coal is also almost double that of NSW thermal coal.
Minerals Council of Australia CEO Brendan Pearson said the decision by Westpac to rule out lending to new coal basin developments was a textbook case of “cynical virtue signaling”.
“The decision appears to have been carefully crafted to rule out support for new projects in Queensland’s Galilee Basin, including the Adani Carmichael project,” he said.
“The fact is that Australian coal exports from the Galilee Basin will support the provision of low emissions energy to hundreds of millions of people in Asia, including tens of millions in India who will have access to electricity for the first time.
“This coal will displace lower quality local coal in new high efficiency low emissions power generation. The opening up of the basin will also provide opportunities for thousands of Australians in well-paid jobs, with consequent flow on benefits for regional areas between Rockhampton and Townsville.
“The bottom line is that one bank, with very limited exposure to the resources industry, is not going to lend to a mine project that it wasn’t asked to support in the first place. Observers will draw their own conclusions about the motivations for this announcement.”
Federal resources minister Matt Canavan said the Westpac decision is “against the interests of Queensland, against the interests of developing Northern Australia and it demonstrates that Westpac have, in this decision, turned their back on Queenslanders and the development of Queensland”.
“We have an enormous opportunity in the Galilee Basin, an enormous opportunity as a country and as a state to develop the third major coal basin in Australia.
“We haven’t developed a coal basin for 50 years, nearly 50 years, in Australia. The last one was the Bowen Basin here in Central Queensland.
“The Galilee Basin alone could generate 16,000 jobs, they are the jobs figures submitted by six coal mines that have received approval by the Queensland government and those job figures are modelled on their environmental impact statements.”
Canavan said coal remained Australia’s second largest export and it seemed “nonsensical that an Australian bank, a bank that purports to be a proud Australian, would turn its back on our second biggest export as a nation, and the nearly 50,000 Australians that work in that industry.
“Apparently, under this decision that Westpac have made, a mine in the Hunter Valley in New South Wales will be good, a mine in North Queensland, in the Galilee, will be bad,” he said.
“I can only conclude from this decision by Westpac that they are seeking to revert back to their original name, as the Bank of New South Wales because they are turning their back on Queensland as a result of this decision."
A study by the IEA Clean Coal Centre showed the top 20 global commercial banks invested US$100 billion in coal-related investments – both power generation and mining and infrastructure projects) in 2014.
A further $50 billion of investment was sourced from smaller commercial banks and state banks, with about $9 billion in funding sourced from export credit agencies.
Separate data shows that in 2015, funding of coal generation alone rose by one-third to $80 billion, with coal generation investment accounting for nearly three-quarters of all fossil fuel generation.
Since 2010, 526 gigawatts of coal fired plants have been commissioned around the world, with more than one-third of the global coal fleet built in the last 10 years.
An estimated 280 GW of coal generation is under construction in 37 countries – all of these plants are already committed and funded through to 2022. A further 660GW is planned, 80% of which is in Asia.
