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World’s largest proposed Greenfield Coal Project allegedly ‘indebted’ and ‘opaque’

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Coal by Alexandre G via FLickr

Ambiguity and opaque disclosures continue to dog the world’s largest proposed new thermal coal project – the Carmichael Coal proposal of India’s Adani Enterprises in the Galilee Basin of central Queensland.

“Excessive financial leverage combines with complex offshore corporate structures, tax havens, government investigations into alleged multi-billion dollar over-invoicing plus new requests for government subsidies all suggest the path to financial close on Carmichael remains a long and difficult one,” said Tim Buckley, Director of Energy Finance Studies at the Institute for Energy Economics and Financial Analysis (IEEFA).

“IEEFA notes that ownership of the US$2bn Adani Abbot Point Coal Terminal remains opaque more than three years after the original purchaser – Adani Ports & SEZ Ltd of India announced it had sold the port to a private Adani family company.[i]

“We note that Adani Ports 2015/16 annual report (released this month) continues to clearly state the Abbot Point Port is not a subsidiary of the group. In contrast, latest records we have accessed from the ASIC[ii] states that the Abbot Point facility remains a wholly-owned subsidiary of Adani Ports.

“Aside from the obvious serious questions about continuous shareholders disclosure and ownership of a nationally significant facility there is the fact of the port having more than A$2.2bn of off-balance sheet debt secured against it,” said Buckley.

“IEEFA has also reviewed the latest financial profile lodged with ASIC for Adani Mining Pty Ltd (Australia), the proponent of the Carmichael proposal. IEEFA would suggest that with net debt of A$1.42bn as at 31 March 2016 against shareholders’ funds of negative $227m, the mine proponent is far from robust.

“Adani Mining Pty Ltd has reported combined losses of a net A$182m over the last two years. How the Australian government can ascertain how such an entity can fund a $10bn greenfield development is far from clear, particularly given the financial leverage of the listed parent entity of Adani Enterprises,” he said.

On the positive side for the Adani project, the global traded thermal coal price has lifted 20% year to date in 2016 to over US$60/t, reflective of significantly curtailed Indonesian supply and rising Chinese imports near term in the face of accelerating and unexpectedly swift domestic coal curtailments across China.

The National Bureau of Statistics reports that China’s total coal production was down 9.7% yoy YTD, and down a staggering 16.6% yoy in the month of June 2016. The result of this collapse has provided a near term recovery in China’s total coal imports, up 8.2% yoy in the six months to June 2016.

“It is confounding that the Australian government is pushing this ‘exciting project’ two years after Indian Energy Minister Piyush Goyal announced the target for India to cease thermal coal imports. Tellingly, Indian coal imports peaked in FY2015, with Platts reporting this week that imports fell 8% yoy to 200Mt in FY2016. Goyal forecasts an accelerating decline in FY2017 of down 20% yoy to 160Mt.

“Given India was the main destination for Carmichael, this data raises questions over any remaining strategic logic of why Australian taxpayers should open up the Galilee to expand global supply for a low quality export product where the global market in terminal, structural decline and stranded assets are prevalent,” said Buckley.

Six months after the global climate accord agreed at the COP21 in Paris, it would be financially reckless for the newly re-elected Australian government to contemplate any taxpayer subsidy for any aspect of, or related infrastructure associated with, the world’s largest greenfield thermal export coal mine proposal.

Despite the Australian government signing the COP21 agreement, the new Resources Minister, Matthew Canavan has questioned the impact of carbon emissions on global warming while peculiarly describing the Carmichael project as“incredibly exciting”.

IEEFA questions how the North Australia Infrastructure Fund (NAIF) could undertake full due diligence on the private family structures that appear to be involved in this project, particularly with offshore entities spanning Singaporean, Cayman Islands and Mauritius tax havens and while reports of Indian government investigations claiming alleged coal import fraud against the Indian people are open. There are conflicting reports regarding if there is any Adani associate making any application to the NAIF.

Yesterday, the Queensland State Government again reiterated its pre-election pledge to not offer any taxpayer subsidy to the company saying “as promised, the government will not contribute taxpayer money to Adani’s project,” again raising serious concerns about how the proposal could proceed.

The financial risk of stranded coal related infrastructure assets was illustrated bluntly this week with China’s Qinhuangdao Port Co (the world’s largest coal port, one that moved 230Mt of coal in 2015 alone) releasing a stock exchange announcement of a“80-90% yoy profit warning” for 1HCY2016 due to the “weakened supply and demand in the coal market.”

“All of this further raises real questions of why Australian taxpayers would support funding the construction of even more stranded coal infrastructure at a time when Australian coal ports are running at an average utilisation rate of less than 70% of existing capacity,” concluded Buckley.

 

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Economy

Will Self-Driving Cars Be Better for the Environment?

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self-driving cars for green environment
Shutterstock Licensed Photo - By Zapp2Photo | https://www.shutterstock.com/g/zapp2photo

Technologists, engineers, lawmakers, and the general public have been excitedly debating about the merits of self-driving cars for the past several years, as companies like Waymo and Uber race to get the first fully autonomous vehicles on the market. Largely, the concerns have been about safety and ethics; is a self-driving car really capable of eliminating the human errors responsible for the majority of vehicular accidents? And if so, who’s responsible for programming life-or-death decisions, and who’s held liable in the event of an accident?

But while these questions continue being debated, protecting people on an individual level, it’s worth posing a different question: how will self-driving cars impact the environment?

The Big Picture

The Department of Energy attempted to answer this question in clear terms, using scientific research and existing data sets to project the short-term and long-term environmental impact that self-driving vehicles could have. Its findings? The emergence of self-driving vehicles could essentially go either way; it could reduce energy consumption in transportation by as much as 90 percent, or increase it by more than 200 percent.

That’s a margin of error so wide it might as well be a total guess, but there are too many unknown variables to form a solid conclusion. There are many ways autonomous vehicles could influence our energy consumption and environmental impact, and they could go well or poorly, depending on how they’re adopted.

Driver Reduction?

One of the big selling points of autonomous vehicles is their capacity to reduce the total number of vehicles—and human drivers—on the road. If you’re able to carpool to work in a self-driving vehicle, or rely on autonomous public transportation, you’ll spend far less time, money, and energy on your own car. The convenience and efficiency of autonomous vehicles would therefore reduce the total miles driven, and significantly reduce carbon emissions.

There’s a flip side to this argument, however. If autonomous vehicles are far more convenient and less expensive than previous means of travel, it could be an incentive for people to travel more frequently, or drive to more destinations they’d otherwise avoid. In this case, the total miles driven could actually increase with the rise of self-driving cars.

As an added consideration, the increase or decrease in drivers on the road could result in more or fewer vehicle collisions, respectively—especially in the early days of autonomous vehicle adoption, when so many human drivers are still on the road. Car accident injury cases, therefore, would become far more complicated, and the roads could be temporarily less safe.

Deadheading

Deadheading is a term used in trucking and ridesharing to refer to miles driven with an empty load. Assume for a moment that there’s a fleet of self-driving vehicles available to pick people up and carry them to their destinations. It’s a convenient service, but by necessity, these vehicles will spend at least some of their time driving without passengers, whether it’s spent waiting to pick someone up or en route to their location. The increase in miles from deadheading could nullify the potential benefits of people driving fewer total miles, or add to the damage done by their increased mileage.

Make and Model of Car

Much will also depend on the types of cars equipped to be self-driving. For example, Waymo recently launched a wave of self-driving hybrid minivans, capable of getting far better mileage than a gas-only vehicle. If the majority of self-driving cars are electric or hybrids, the environmental impact will be much lower than if they’re converted from existing vehicles. Good emissions ratings are also important here.

On the other hand, the increased demand for autonomous vehicles could put more pressure on factory production, and make older cars obsolete. In that case, the gas mileage savings could be counteracted by the increased environmental impact of factory production.

The Bottom Line

Right now, there are too many unanswered questions to make a confident determination whether self-driving vehicles will help or harm the environment. Will we start driving more, or less? How will they handle dead time? What kind of models are going to be on the road?

Engineers and the general public are in complete control of how this develops in the near future. Hopefully, we’ll be able to see all the safety benefits of having autonomous vehicles on the road, but without any of the extra environmental impact to deal with.

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Environment

Road Trip! How to Choose the Greenest Vehicle for Your Growing Family

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Greenest Vehicle
Licensed Image by Shutterstock - By Mascha Tace -- https://www.shutterstock.com/g/maschatace

When you have a growing family, it often feels like you’re in this weird bubble that exists outside of mainstream society. Whereas everyone else seemingly has stability, your family dynamic is continuously in flux. Having said that, is it even possible to buy an eco-friendly vehicle that’s also practical?

What to Look for in a Green, Family-Friendly Vehicle?

As a single person or young couple without kids, it’s pretty easy to buy a green vehicle. Almost every leading car brand has eco-friendly options these days and you can pick from any number of options. The only problem is that most of these models don’t work if you have kids.

Whether it’s a Prius or Smart car, most green vehicles are impractical for large families. You need to look for options that are spacious, reliable, and comfortable – both for passengers and the driver.

5 Good Options

As you do your research and look for different opportunities, it’s good to have an open mind. Here are some of the greenest options for growing families:

1. 2014 Chrysler Town and Country

Vans are not only popular for the room and comfort they offer growing families, but they’re also becoming known for their fuel efficiency. For example, the 2014 Chrysler Town and Country – which was one of CarMax’s most popular minivans of 2017 – has Flex Fuel compatibility and front wheel drive. With standard features like these, you can’t do much better at this price point.

2. 2017 Chrysler Pacifica

If you’re looking for a newer van and are willing to spend a bit more, you can go with Chrysler’s other model, the Pacifica. One of the coolest features of the 2017 model is the hybrid drivetrain. It allows you to go up to 30 miles on electric, before the vehicle automatically switches over to the V6 gasoline engine. For short trips and errands, there’s nothing more eco-friendly in the minivan category.

3. 2018 Volkswagen Atlas

Who says you have to buy a minivan when you have a family? Sure, the sliding doors are nice, but there are plenty of other options that are both green and spacious. The new Volkswagen Atlas is a great choice. It’s one of the most fuel-efficient third-row vehicles on the market. The four-cylinder model gets an estimated 26 mpg highway.

4. 2015 Hyundai Sonata Hybrid

While a minivan or SUV is ideal – and necessary if you have more than two kids – you can get away with a roomy sedan when you still have a small family. And while there are plenty of eco-friendly options in this category, the 2015 Hyundai Sonata Hybrid is arguably the biggest bang for your buck. It gets 38 mpg on the highway and is incredibly affordable.

5. 2017 Land Rover Range Rover Sport Diesel

If money isn’t an object and you’re able to spend any amount to get a good vehicle that’s both comfortable and eco-friendly, the 2017 Land Rover Range Rover Sport Diesel is your car. Not only does it get 28 mpg highway, but it can also be equipped with a third row of seats and a diesel engine. And did we mention that this car looks sleek?

Putting it All Together

You have a variety of options. Whether you want something new or used, would prefer an SUV or minivan, or want something cheap or luxurious, there are plenty of choices on the market. The key is to do your research, remain patient, and take your time. Don’t get too married to a particular transaction, or you’ll lose your leverage.

You’ll know when the right deal comes along, and you can make a smart choice that’s functional, cost-effective, and eco-friendly.

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