The Carmichael coal mining project in Australia has been a thorn in the side of Indian conglomerate Adani Group, considering it turned out to be both an economic and a PR disaster.
The world's "most bitterly contested coal mine," received official approval in June, by the coal-friendly government in Australia. However, according to a Bloomberg analysis, the Carmichael project is neither profitable, nor clean.
However, all hope is not lost for Adani as coal from this mining station will be transported to Jharkhand, India, where the group is building a 1,600-megawatt (MW) coal-fired power station to sell expensive electricity to Bangladesh.
Earlier in 2010, Adani bought the resources in Australia's Galilee Basin, considering the forecast of increasing demand for coal. However, as the price of coal began to rapidly fall over the years, Adani's initial estimated $16.5 billion investment fell through when the conglomerate failed to secure funding from any major banks.
Adani could now lose $220 million per year, as its low-quality coal would cost about $88 to produce per ton, but sell for only $66 a ton on the open market, reports Bloomberg.
These "challenging numbers" jeopardize Adani's self-financed $2 billion project and will bring about added environmental costs.
According to The Conversation, Adani's emissions from this coal mine would exceed 0.5% of the entire global carbon budget. It also poses a threat to the Great Barrier Reef as dredging spoils on land would erode the seabed, and remove seagrass and animal diversity. Exposed to dredging, corals are also twice as prone to suffer from disease.
Furthermore, a 60-year lease granted in 2017 on using unlimited volume of water from the Great Artesian Basin, Carmichael is supposed to consume 4.6 billion litres per year. This will endanger river systems, along with the Mellaluka and Doongmabulla Springs Complexes — habitats for many species of "specialized plants that are only known from spring-fed wetlands," writes The Conversation.
Considering the environmental cost of burning coal and falling prices of alternative sources like natural gas, wind and solar energy, the US and wealthier Western European countries are gradually reducing their dependence on coal.
In Asia, however, the story is quite different. South Asian countries like India and Bangladesh's energy sectors are still largely dependent on coal.
These countries lag behind in utilizing environment-friendly energy sources, partly because alternative sources are scarce and coal is plentiful, and partly because powerful coal-based conglomerates like Adani Group are constantly lobbying for influence over the governments' energy policies.
This explains why as coal is struggling to survive elsewhere in the world, Adani is thriving.
Through business acumen and political maneuvering of chairman and founder, Gautam Adani — an ally to the current Indian PM Narendra Modi — the $14 billion company has successfully managed to secure many subsidies and privileges from the Indian government to expand its already massive business empire.
Adani's low-quality Carmichael coal to feed Bangladesh
Originally intended for South Korea and Japan, Adani's inferior Carmichael coal is now targeting Bangladesh's market, and in that pursuit, they invested $2 billion to build a coal-fired power station in Jharkhand. Power generated by this station will be sold to Bangladesh.
Bangladesh Power Development Board (BPDB) and India's Adani and Reliance inked an agreement on June 6, 2015 where the two companies expressed their interest to install some coal and gas-based power plants with a combined capacity of 6,400MW.
Institute for Energy Economics and Financial Analysis (IEEFA) released a study titled "Adani Godda Power Project: Too Expensive, Too Late, and Too Risky for Bangladesh" last year, that said the Jharkhand project of Adani was an effort to assist itself at the expense of Bangladesh.
According to experts Bangladesh will lose at least Tk70,000 crores to Adani in 25 years.
Adani is also planning to construct its second power plant somewhere in Bangladesh, the site of which is yet to be fixed. If the project gets the final nod, then Adani will begin importing coal to generate electricity. About 16,000 tons of coal will be needed daily to run this proposed power plant in full swing.
Does Bangladesh have an alternative?
Of the 22,000MW total electricity generated in Bangladesh, 500MW is generated from green energy sources.
However, energy experts state that the government is emphasizing and heavily investing in oil-based power plants, holding back usage of renewable sources. On the other hand, neighboring India has increased its renewable energy capacity to 124,000MW — of which solar and wind energy account for 80,000MW.
In 2016, the power sector revised and prepared a master plan by the Japan International Cooperation Agency (JICA). According to JICA, it is possible to generate a total 3.6GW electricity from renewable energy sectors — 2.6 GW utilizing solar energy only. JICA also predicted that Bangladesh can generate another 0.637 GW from wind energy.
Despite its potential, the government's tendency to overlook green sources are preventing Bangladesh from shifting to green energy.
Anant Sudharshan, an economist at the University of Chicago put it best, when he told The New York Times: "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."
Adani, however, will not stop at anything to recuperate its losses, even at Bangladesh's expense.