September 30 was a busy day. It was the day that ANZ signed off on secret loan for the refurbishment of the highly polluting Muja A&B power stations in Western Australia, citing reputation risk as the reason for the confidentiality clause.

Thanks to some more snooping by the AFR yesterday, it turns out that National Australia Bank (NAB) was also in on the deal.  Coincidentally, September 30 was the day that NAB achieved its goal of becoming ‘carbon neutral’.

It must have a been a great day for NAB. According to their carbon neutral report, “over 800 employees belong to Green Teams and many more are doing their part to improve our environmental performance”.  It’s a shame nobody told the guys who manage the loan book.

While the rest of the staff were no doubt celebrating in their 5 star green building with organic carrot juice and celery sticks, the blokes in the project finance team were signing off on a loan to help refurbish a 40 year old polluting monstrosity. When up and running, Muja A&B power station will have an emissions intensity of around 1.3 tonnes of greenhouse pollution per MWh of energy produced – making it one of the dirtiest power stations in the country after Hazelwood.

The refurbishment of Muja raises serious questions about the ongoing vacuum in federal climate policy and the value of Julia Gillard’s pre-election commitment that “no more polluting coal plants will be built in Australia.” Refurbishing a mothballed old plant to bring it back on line is effectively the same as building a new plant – except that it is generally cheaper to do, and the plant is likely to be far more polluting – as in the case of Muja.

If we were serious about cutting emissions and transforming the energy sector, we’d just prohibit new coal power stations and refurbishments like Muja. With sensible energy efficiency and renewable energy policies we would not only avoid the need for new coal plants, but could begin to rapidly replace the existing ones with renewables.

Coming back to the banks, NAB is on the Prime Ministers roundtable to discuss the introduction of a carbon price and it will be interesting to see how their advocacy is influenced by their investments. The ‘adjustment’ for coal generators is likely to be a contentious issue with banks having a direct financial stake in the outcome.

NAB also signed onto the Copenhagen Communique at the end of last year, calling for global warming to be limited to two degrees. In order to achieve this objective, Ross Garnaut mapped out a trajectory for Australia’s electricity generators in terms of pollution intensity. The problem for NAB is that Muja’s doesn’t fit the picture at all. Far from moving towards a low carbon future, it is dragging us back to the 1970s in terms of pollution intensity.

It’s yet another chapter in the amazing double life of Australia’s banks. Carbon neutral on one hand, financing pollution on the other.

The NAB website proclaims that “becoming carbon neutral means our business operations has zero net emissions of greenhouse gas emissions.” With a loan book that is chocked to the rafters with finance deals for coal power stations, it is clear that either their lending practices are not part of their business operations, or somebody ought to have a word with the ACCC about misleading and deceptive conduct.

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