Market Forces
Market Forces is a new campaign affiliated to Friends of the Earth. The campaign's premise is that banks, superannuation funds and governments that have custody of our money should use it to protect − not damage − our environment. The campaign, established by Julien Vincent, is working with grassroots groups, organisations and individuals to turn the ship around.
Each year, Australian governments spend billions of dollars of public money on programs that encourage more coal, gas and oil to be extracted and burned. Market Forces estimates that the tax-based fossil fuel subsidies amount to over $11 billion per year federally and are set to increase to over $13 billion in the coming years.
A survey commissioned by Market Forces in January 2013 showed overwhelming opposition to fossil fuel subsidies. Three times as many people believe that fossil fuel subsidies in Australia are too high than those who though they were too low, and 64% of Australians disapprove of the mining industry receiving a discount on their fuels such as petrol and diesel − a measure that costs the taxpayers $2 billion per year.
The carbon price is expected to bring in just over $4 billion in 2012-13. Yet expenditure on fossil fuel subsidies is almost triple this figure, so for every dollar spent to penalise carbon pollution, another three is being spent encouraging it. This is an enormous policy conflict and amounts to billions of dollars wasted on policies that cancel out each others objectives.
In 2009, Australia joined an agreement at the G20 in Pittsburgh to phase out inefficient fossil fuel subsidies in the medium term. Since then, Australia has tried to play down the commitment, avoiding the issue by claiming we have no subsidies that fall within the scope of the G20 commitment. Treasury disagrees, identifying 17 measures worth $8 billion that would need to be cut for Australia to meet the G20 agreement. In his 2011 climate change review update, Professor Ross Garnaut also listed the elimination of fossil fuel subsidies as a key measure for reducing carbon pollution.
Market Forces − along with other groups − is working to expose ANZ's role in financing fossil fuel pollution. Bloomberg data shows that since the middle of 2010 ANZ has been party to loans worth nearly $20 billion to companies actively driving the coal expansion in New South Wales and Queensland. ANZ is also advising GVK on project finance and are playing a lead role in arranging debt for the Indian conglomerate's massive 30 million tonne per year Alpha coal mine in the Galilee Basin. Combined, these companies are proposing 46 new coal mining projects — either new mines or extensions to existing mines — that would have an annual output of about 340 million tonnes of coal per year, more than Australia as a whole currently produces.
Not all of these loans will have been for the express purpose of enabling specific coal projects, but some clearly are, such as the Whitehaven deal and the $1 billion loan to Peabody to assist with their Macarthur Coal takeover. Nonetheless, all of these loans enable the continuing operation of companies that are gleefully taking part in a coal expansion that will render a safe climate unattainable and ravage parts of the local environment along the way. Banks that purport to believe in sustainability and a healthy environment should on principle be running a mile from companies involved in such wanton destruction.
In February, Market Forces examined the performance of 17 coal prospecting and mining companies trading in Australia and found a huge drop in their value in the past year. In the 20 months to February 2013, over one quarter of their total value disappeared. Much of the current coal prospecting in Australia is predicated on there being a hungry Asian market for coal beyond 2015. But with China now setting a coal consumption cap and uncertainty in India over their plans to increase domestic infrastructure and revise down plans for new coal growth, investing in Australian coal prospectors and small miners is looking far from a safe bet.
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