We are delighted to read in the news today that the NSW government is pulling out of the Cobbora Coal project, proposed for near Dunedoo.  The original idea was that the government would own and operate the mine (yes, we’re in NSW, not North Korea) and sell the coal at “cost recovery” (ie a loss) to selected power generators.  Rod has ranted about this project in person to the Planning and Assessment Commission in Dunedoo, on ABC radio Dubbo, in the SMH and on our blog.

From the media and brief discussion with people in the region, we understand that the project is still in the assessment process and if approved the government will try to sell or lease the mine, but has, at a cost of $75m, terminated contracts to supply cheap coal to generators.  Thats $75m well spent if it gets NSW taxpayers out of paying for a loss making mine with capital costs estimated in the original economic assessment at over $1b and later revised upward.

In the original economic assessment, by Gillespie Economics, a net present benefit of $1.9b was estimated.  Responding to our submission pointing out the loss that taxpayers would incur, Gillespie Economics said:

There is no requirement for the [economic assessment] to consider the financial implications of the Project for the proponent. (response to submissions p274)

We argue that financial viability is important to major project assessment, as if the project is marginal it may not go ahead in the form or timing being assessed by planners.  Particularly when the proponent is the NSW government and Gillespie Economic’s calculation of net benefit relied on the subsidy from “cost recovery” coal being passed through to NSW electricity consumers, surely financial viability is a relevant consideration.

Other issues in the original assessment:

• Assumption that “in a competitive market, all of this benefit would be passed through to electricity customers”
• Assumption that other generators are not crowded out by subsidised generators
• Approach to greenhouse emissions, assessing only those from mine operations
• Inclusion of a “social value of employment” based on studies recently rejected by the Land and Environment Court
• Flawed analysis of noise, dust, vibration and amenity impacts
• Assumption that ecological offsets perfectly offset destruction of ecosystems, against the opinion of nearly all ecologists
• No consideration of health impacts of open cut coal mining and coal-fired power generation

Depending on politics and coal prices there is still a chance that this project may go ahead.  This would bring negative effects for the local and global environment, but at least NSW taxpayers have been spared the indignity of funding it.