Dealing a blow, 10 of the world’s largest insurers and reinsurers, on serious environmental concerns,have refused to provide support for the development of Gautam Adani owned Adani Group’s $16.5bn Carmichael coal mine and rail project in Clermont Town, Central Queensland..
There is a spotlight on re/insurers because the mine project, which is facing plethora of stumbling blocks, cannot be built or operated without insurance
Green groups, opposing the mine claiming that it will have severe climate, social and environmental impacts, as it is expected to produce 4.6 billion tonnes of CO2 emissions over its lifetime, equivalent to more than eight years of Australia’s annual greenhouse gas emissions.
A campaign by 73 prominent environmental organizations,which collectively represent 76 million members, penned a letter to 30 global re/insurance companies earlier this month urging them to rule out any providing any services for the controversial coal mine and its associated rail project.
Five global reinsurers-AXA, SCOR, FM Global, QBE and Suncorp- have now explicitly pledged not to provide re/insurance for the project, while another five (Allianz, Munich Re, Swiss Re, Zurich and Generali) have existing climate policies that exclude support for the mine.Lloyd’s, Beazley, Hannover Re and Starr have refused to rule out support for the Carmichael mine, although Lloyd’s, Beazley and Starr noted that they are not currently involved in the project.
“The giant Carmichael coal mine is a test case which demonstrates clearly whether insurers care about managing climate risk or are more interested in profiting from climate chaos,” said Lucie Pinson, European coordinator of the Unfriend Coal campaign.
“Companies that are unwilling to rule out insuring this disastrous project are threatening the future of our climate, the unique environment of the Barrier Reef and the wellbeing of local people,” she added.
They also argue that a rail line would transport the coal to an export terminal on the Great Barrier Reef, and the resultant dredging and ship traffic threatens irreversible damage to one of the world’s most biodiverse ecosystems and a World Heritage Site. The mine would also be built on the lands of the Wangan and Jagalingou Traditional Owners, who continue to oppose the project.
Adani has already been forced to self-finance the $1.5 billion Carmichael mine project after 37 global financial institutions, including all of Australia’s major banks, rejected any involvement.
Julien Vincent, executive director of Market Forces, one of the NGOs supporting the Unfriend Coal campaign, said: “Adani has failed to secure private financial backing for this disastrous project. Insurers now have the power to stop it for good, and it’s encouraging to see global leaders rule out support. Those who have yet to commit must ask themselves, do they really want to be the company that opens up one of the world’s biggest coal basins in the middle of a climate crisis?”
Coal is the biggest source of CO2 emissions, and at least 59% of all coal power must be phased out by 2030 to meet the Paris climate target of limiting global warming to 1.5°C, according to the UN’s Intergovernmental Panel on Climate Change. There is already more coal, oil and gas in production than can be burned without breaching this target, Oil Change International has found.
Swiss Re currently has the most comprehensive policies on coal re/insurance and divestment, as the reinsurer has ended its investments and reinsurance services for companies that rely on coal for more than 30% of their mining income or power generation.
“Limiting global warming to 1.5ºC is flatly incompatible with expansion of coal via carbon bombs like Adani’s Carmichael mine, and no insurer that is serious about climate can facilitate that expansion,” said Jason Opeña Disterhoft, Climate and Energy Senior Campaigner at Rainforest Action Network.
Re/insurers with no policies on coal that have yet to respond to the letter include AIG, AXIS Capital, Berkshire Hathaway, Great American Insurance, Liberty Mutual, Markel Corporation, W.R. Berkley, Canopius, Chaucer, CNA Hardy, Chubb, Hamilton Insurance Group, HDI, Mapfre, Sompo, and Tokio Marine.
“FM Global’s not supporting the mine and railway makes it the first U.S. insurer to publicly commit to not insure any coal project,” he continued. “It’s time for AIG, Berkshire Hathaway and their US peers to follow suit.”
Data shows that over one third of the reinsurance market has now restricted its cover for the global coal industry, while at least 19 re/insurers with more than $6 trillion in assets have divested from coal, representing 20% of the industry’s global assets.
The movement has largely been led by companies in Europe, and pressure is now mounting for re/insurers in other regions to follow suit, particularly in the U.S, where none of the leading re/insurers have yet taken action on coal.
The letter to re/insurers was coordinated by Australian NGO Market Forces, US NGO Rainforest Action Network, and the international Unfriend Coal campaign, with Greenpeace, Japan Center for a Sustainable Environment and Society, Re:Common and urgewald.
The 73 signatories also included 350.org, the Australian Youth Climate Coalition, Divest Invest, and Friends of the Earth International.
Developing the mine would open up the huge reserves of Queensland's Galilee Basin to exploitation, where there are proposals for even larger mines.
Adan's quest to build a coal mine in the Australian outback faces another setback, with the Queensland state government refusing to sign off on the company’s plans before further studies into the project’s environmental impact are complete.
“Two plans are yet to be approved before any significant disturbance can commence at the Carmichael coal mine,” Queensland’s department of environment and science said in a media release on Friday.
Adani Mining CEO Lucas Dow said the state government was standing in the way of the mine’s development by changing the rules at the eleventh hour. “Signing off our remaining plans should be a standard process, which the government has completed for scores of other mines and the coal seam gas industry,” Dow said in a statement.
Adani can start work on building the rail line to connect Carmichael to Queensland’s freight network, but cannot start building the mine until the management plans are finalised..