NAIF’s first loan is a new fossil fuel subsidy
10 October 2017
Lawyers have described the Northern Australia Infrastructure Fund’s first investment – a loan for a port upgrade in Western Australia – as a new fossil fuel subsidy, questioning whether it is consistent with commercial finance best practice requirements and Australia’s climate commitments.
NAIF has reportedly recommended a $16.8 million loan to the company building the Onslow Marine Support Base to facilitate oil and gas exports from WA.
Environmental Justice Australia lawyer David Barnden said the use of public funds to facilitate fossil fuel extraction flies in the face of analysis that recommends no new infrastructure and extractive projects be built if the world is to meet the climate goals of the Paris Agreement.
“Australians have a right to know whether NAIF considered climate change risks and whether the loan is consistent with the goals of the Paris Agreement,” Mr Barnden said.
“Commercial banks would most likely have found the Onslow project, which services fossil fuel extraction projects, too risky to support, but NAIF’s investment mandate is very weak and loose.
“The fund’s ‘public benefit’ test is limited to two virtually meaningless considerations that could be satisfied by almost any proposal.
“NAIF’s first loan is effectively a new subsidy to support the fossil fuel industry in Australia.
“It joins other subsidies like the notorious Fuel Tax Credit scheme, which allows mining companies like Rio Tinto and Xstrata to get diesel tax free, costing Australian taxpayers $6.3 billion a year.
“The taxpayers who stump up NAIF’s $5 billion should be told whether NAIF considered climate change risk, commercial finance best practice and Australia’s Paris commitments when making a decision to lend to this project.
“If NAIF’s board acts reasonably, there is no way it would give another fossil fuel subsidy to Adani’s coal-carting railway line.
“With all that is known about Adani’s activities and how much the coal from Adani’s Carmichael project would add to the world’s global warming problem, it is inconceivable that a loan for a coal railway would satisfy NAIF’s requirement not to damage government reputations.
“NAIF should invest in proposals that secure a long-term future for northern Australia, like renewable energy projects and infrastructure that benefits communities in the north, not unbankable projects that will contribute to killing the Great Barrier Reef and tens of thousands of tourism jobs.”
Links to media stories:
WA port to get $16.8m government loan to support oil and gas (Guardian Australia)
First NAIF loan slammed by green groups (RenewEconomy)