Labor scraps plan to close dirty power stations

5 Sep 2012, 12:01 pm   -   Source: AAP
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The government had been negotiating possible closures with Hazelwood, Yallourn and Energy Brix power stations in Victoria as well as Playford in South Australia and Collinsville in Queensland. (AAP)

The government had been negotiating possible closures with Hazelwood, Yallourn and Energy Brix power stations in Victoria as well as Playford in South Australia and Collinsville in Queensland. (AAP)

The federal government has abandoned plans to pay some of Australia's dirtiest coal-fired power generators to shut down under its co-called contract for closure program.

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The federal government has abandoned plans to pay some of Australia's dirtiest coal-fired power generators to shut down under its co-called contract for closure program.

Energy Minister Martin Ferguson said the government could not be satisfied that entering into such arrangements would achieve value for money against the program's objectives.

"The contract for closure negotiations have taken place constructively and in good faith but there remains a material gap between the level of compensation generators have sought and what the government is prepared to pay," Mr Ferguson said in a statement on Wednesday.

The program had sought to support the closure of around 2000 megawatts of highly emissions-intensive generation capacity by 2020.

But a June 30 deadline for locking in a deal has already been and gone.

Mr Ferguson said forecasts for lower energy demand in Australia "presented serious questions around the value-for-money evaluation of proposals".

He insisted last week's decision to scrap a proposed $15-per-tonne floor price for Labor's emissions trading scheme - which starts in mid-2015 - and instead link the ETS with Europe's scheme was not a factor.

The government had been negotiating possible closures with Hazelwood, Yallourn and Energy Brix power stations in Victoria as well as Playford in South Australia and Collinsville in Queensland.

The federal energy minister said the $200 million regional structural adjustment assistance program would still be available to support communities significantly affected by the government's carbon price regime.

A $23-a-tonne carbon tax was introduced on July 1 this year.

Environment groups on Wednesday said if the dirtiest coal-fired power stations didn't accept payments to close down generation they shouldn't receive any other carbon tax compensation.

"If these facilities now claim they have a profitable future and their asset values remain high, then there is no public policy justification for the compensation payments that are coming at great cost to Australian taxpayers," Environment Victoria campaign director Mark Wakeham said in a statement.

Four stations in Victoria's Latrobe Valley received the lion's share of $1 billion delivered mid-year to help coal-fired generators cope with the carbon tax.

Hazelwood received $266 million, Yallourn pocketed $257 million, Loy Yang Power got $240 million and Loy Yang B received $117 million.

The cash was the first tranche of assistance from the federal government's $5.5 billion energy security fund.

It will be followed by annual allocations of 42 million free carbon permits from 2013/14 to 2016/17 to assist highly emissions-intensive power stations.

'BREACH OF FAITH'

Australian Greens leader Christine Milne says the federal government was never really committed to closing down the nation's dirtiest power stations.

Senator Milne told reporters in Hobart on Wednesday the decision was a "breach of faith".

"It's a breach of faith with the Australian community, a breach of faith with the multi-party climate committee and it really goes against the spirit of everything we have been trying to do," she said.

Labor had put the "fox in charge of the hen house" by getting the energy minister to lead the contract for closure process.

"Martin Ferguson, I don't believe, has tried very hard at all to achieve an outcome on contracts for closure and I don't believe that in terms of the coal companies that they have tried very hard either," Senator Milne said.

"They have been through the motions."

ELECTORAL BACKLASH

Senator Milne, who has led the Greens' talks with Labor on carbon pricing, said the government would face an electoral backlash.

"Labor can't be trusted on the environment - it's as simple as that," she said.

The Greens have called for the Productivity Commission to review compensation to coal-fired power generators, with a view to reducing it.

"The whole point of addressing global warming through an emissions trading scheme is to accelerate the transition away from fossil fuel and to renewable energy," Senator Milne said.

"Shutting down some of the dirtiest coal-fired power stations was at the heart of what we are trying to do.

"(Mr Ferguson) is clearly the minister for fossil fuels."

Senator Milne said there would also be now be a "dislocation" in communities where the power stations were based.

As carbon pricing made the power stations less viable, rather than there being an "orderly transition" the communities were likely to get a shock as the plants faced commercial reality and suddenly closed.

"Instead you've got a minister who will be smiling all the way to the next coal pit," Senator Milne said.

'BUDGET PATCH-UP'

Opposition Leader Tony Abbott says the government's ditching of its plan to close down the dirtiest coal-fired power stations is an attempt to patch up the budget.

Mr Abbott told reporters in Bendigo it was always going to be a bad policy.

"But what we are seeing now is a government that is making it up as it goes," he said.

"I think what we have seen today from the government is a desperate attempt to patch up the budget ... to preserve the microscopic budget surplus."

He said Prime Minister Julia Gillard was showing a "general inability to manage the economy", especially the mining and energy sector.

"She just can't be trusted to manage the resources sector properly, particularly now that it's clear that the easy money days are over when it comes to the resources boom," Mr Abbott said.

Mr Abbott said his direct action plan to achieve carbon emission cuts would not involve shutting down power stations.

"We've always wanted to clean them up, not shut them down," he said.

"We've never wanted to shut down perfectly good businesses that are employing hundreds, in some cases thousands, of people."

 

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Your Comments

food

mark - from moonta, 9 months ago

The last time i checked you could not eat coal but i suppose once we destroy the place we could allways give it a taste test.Clever lot us humans.As for renewables the technology has been available for base load power for decades but vested intrests who control most western governments will not allow it to happen while there is money to be made you know big oil e.t.c. Still the public will continue to beleive there propoganda for another decade or more then the penny will drop.

What comes around, goes around

robb - from geelong, 9 months ago

A wannabe PM knifes the PM and made 3 main policy initiatives to justify it. Having now decided to go parity with EU carbon price means the govt wont get anywhere near as much revenue to fund clean energy initiatives. i.e. caved in on the carbon neutral philosophy. Caved in on the refugee issue too. (Yoo hoo Nauroo) The third 'plank' that was meant to justify the knifing was the super profits resources tax, watered down to MMRT. Most will sack her for applying the CO2tax, the rest, for hypocrisy

MONEY

mark - from moonta, 9 months ago

Yes saving the planet and slowing global warming is irrelevent when it comes to the almighty dollar. Pathetic governments globally and that includes the future p. m. abbott

Australia is heading back to the dark ages.Tanks to the greens

Benson Kane - from Melbourne, 9 months ago

The lower electricity demand is mostt likley the reason that many can't afford to pay their electricity bills anylonger because of the high price of electricity . Many elderly people are going cold in winter because they can't afford the heathing bills, and hot in summer because they cant afford to run their cooling apliences. This is a shamfull thing for a country like Australia.The government and the greens have a lot to answear for.

more coal fired power stations should be built, Renewables are just expensieve duds

Benson Kane - from Melbourne , 9 months ago

At last common sense has prevailed.There is a huge coal reserve in the latobe valley and it should be used as it always have been, the cheap and reliable electricity coal has produced made vic rich until this madness of the Global warming scare campain by the Greens and other raddical enviromental groups, and scientists bought out by governments. More coal fired power stations should be built, the technology for clean coal does exist, and then we can all afford to use electricity ones more

Heh?

DavidSG - from Melbourne, 9 months ago

WTF is the purpose of a carbon tax when it's paid straight back to the largest emitters??????

whats the point?

Cameron - from Darwin, 9 months ago

what is the point of initiating a tax on carbon if you're just going to give coal fired power stations free permits? I was under the impression the carbon tax was meant to fund renewable energy while making carbon heavy power generation less profitable.

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