energy
25 Jan 2012
Why We Shouldn't Bankroll Coal
Should taxpayers finance a brown coal power station in Victoria? No, says Julien Vincent, and not just because it's dirty power. There are plenty of reasons why the grant to HRL should be cancelled
On 1 February, Victorians will turn out in their hundreds to call for the cancellation of a federal taxpayer-funded grant allocated to a new brown coal power station in Victoria. It’s a call that may soon be answered. One of the federal Energy Department’s first tasks of the year is to decide whether or not to cancel this grant, or be the biggest financiers of Australia’s next dirty coal-fired power station.
In case they need any more convincing, here’s the case for cancelling the grant.
A company called HRL want to build a commercial-scale coal-fired power station at Morwell, Victoria, using their coal-gasification technology which makes a brown coal power station as clean as black coal (that is, dirty). In 2006 they were awarded a $100 million grant by the Howard government but in over five years have failed to meet the conditions of the grant. That means so far, none of this money has been given to HRL by the Commonwealth.
In comes Prime Minister Gillard in 2010, committing that "no more dirty coal-fired power stations will be built in this country". Then the Clean Energy Future legislation passes, finally invoking the principle that generating carbon pollution is wrong and should be penalised. The Prime Minister issues a deadline to HRL, giving them until 31 December 2011 to meet the conditions of the grant. That deadline has now passed and HRL have still failed to satisfy their conditions.
Those conditions included locking in private funding, developing a plan for how they would achieve carbon capture and storage, and obtaining all legal approvals. With no evidence of the first two being presented and HRL’s partial EPA approval being contested in court (by various parties including HRL themselves), it is safe to say that HRL have failed to meet their deadline and their grant must now be cancelled.
If that’s not compelling enough, there’s a swag of other great reasons why HRL should not retain its $100 million grant.
Firstly, HRL wasn’t supposed to be awarded the grant in the first place! An expert panel reviewing HRL’s application back in 2006 found that due to technical and financial risks the project was not recommended for funding.
Furthermore, HRL’s works approval from the EPA is for a 300 Megawatt plant (i.e. half of what was applied for). The expert panel assessing HRL’s application in 2006 knew that it would not be economically viable at a scale less than 400 Megawatts.
When the grant was awarded it was for a 400 Megawatt power station that was due to be operating in 2009. The current proposal is for a 600 Megawatts — and clearly we weren’t able to rely on HRL delivering their project by 2009.
And even if HRL built their plant at full scale, EPA advice is that it still would not be economically viable.
The funding deed for HRL’s grant was signed on 9 May 2008. It was a condition of the deed that the project commence within three months of the funding deed being executed. However, by 9 August 2008 there was no evidence to suggest that the project had commenced. HRL have failed to meet deadlines for their project milestones in the past, relying on extensions directly from the Minister.
While the project costs have ballooned in recent years, out from $750 million to $1.3 billion, financial support for HRL has dried up. The most significant financial development over the past four years is HRL’s joint venture partner, Harbin, pulling out of the project and taking $500 million with them. A number of domestic and international banks have gone on record as stating they have no interest in the project, including the big four of ANZ, Westpac, Commonwealth and National Bank.
Finally, there’s considerable opposition to the project. Last September, a poll of 600 Victorians showed that 67 per cent supported the government removing the grant and redirecting it towards renewable energy. Over 6000 people have so far signed a petition to Parliament calling for the grant to be withdrawn and invested instead in a clean, renewable energy future for Victoria.
There’s no shortage of substantial reasons to cancel HRL’s grant in other words.
And here’s one more: it’s 2012. We’re supposed to be moving towards a clean energy future. We’re not supposed to be allowing — let alone making the Australian taxpayer pay for — a project that would be both economically and environmentally disastrous. Retaining HRL’s grant would be wrong, pure and simple.
Over to you, Energy Department.
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Posted Wednesday, 25 January 12 at 2:21PM
Building a brown coal power station! I wonder what genius in HRL came up with that idea and worse, what kind of Government official or Department considered it?
Australia is well-served by private industry which, history tells us, will do anything to make a buck regardless of the damage it causes.
Australia is also well-served by myriad, mindless politicians who wouldn’t know the difference between their A*** and a hole in the ground.
All candidates for political office should have to sit for an intelligence test and a commonsense test. The latter test would knock most of them out!
Dangerous Creation
Posted Wednesday, 25 January 12 at 4:17PM
This from a local newspaper:
“FUNDING for a proposed demonstration power plant near Morwell is currently under assessment by the Federal Government, after a deadline for project milestones passed on New Year’s eve.
HRL’s proposed dual-gas fired plant received a grant of $100 million in Federal Government funding in 2007 by the Howard Government, on the condition certain “project milestones” were met by 31 December 2011.
Required milestones are believed to include proof of financial backing, works approval and demonstration of utilisation of carbon capture and storage technology.
Works approval is subject to challenges of Environment Protection Agency’s approval of the project, currently under review in the Victorian Civil and Administration Tribunal.
A spokesperson for Federal Industry and Resources Minister Martin Ferguson said the Department of Energy and Tourism was currently assessing HRL’s progress against milestone schedules.
The Express understands it would be a number of weeks before Minister Ferguson received the departmental advice.
HRL declined to comment on the issue.
HRL’s VCAT proceedings are due to recommence on Monday, 6 February for closing submissions from all parties.”
It defies logic that a new power station can be built when our governmment fully acknowledges risk to the environment and has introduced a carbon tax. On one side the power stations in this region will be closing and much unemployment will probably follow in an area already suffering some of the worst social issues in Victoria, but why not be putting all thses funds into developing new technologies and industries????? Sustainable and long term????
This would be too much commonsense for them!! And probably the “right people” would not be benefitting from the funds and retaining power and wealth…
Posted Thursday, 26 January 12 at 2:36PM
There is not going to be another coal fired power station built in VIC for the very reasons stated earlier. It would certainly be politically, economically and environmentally untenable.
To paraphrase:
Australia is certainly well-served by myriad, mindless punters who wouldn’t know the difference between their A*** and a hole in the ground.
and
If some comments would be subjected to an intelligence / commonsense test I am afraid many would definitely be knocked out. Yep, agreed, some pretty dangerous creations around indeed!
Posted Thursday, 26 January 12 at 5:14PM
Causa, there is nothing in your silly comment which is either relevant or clever.
My advice: Try to match your writing ambition with the paucity of your talent!
Posted Friday, 27 January 12 at 2:32PM
Leave the toxic fossil fuels in the ground, people!
Every new AUS station must run with low emissions.
2 suggestions:
1)Set the pollution tolerance level for new stations lower each year,
until the pollution from power stations is negligent.
There will be a financial cost, but it is well worth it.
At some stage the cleaner stations will be economically competitive,
but until then we must regulate better standards.
2)Increase mandatory % of clean, safe energy produced P/A.
I suggest the reason the coal industry will not fund all its own development of
“clean coal” research is because they don’t really believe in their CCS (or any other) tech.
Why should we subsidize Coal pipe dreams, when subsidizing Renewable pipe dreams can uniquely provide potential renewable returns?
Even better, lets learn to live without polluting concentrated power,
let’s return to practicing energy and resource efficiency,
like our ancestors did for millenia.
Posted Friday, 27 January 12 at 3:12PM
well said Olivier!
In answer to your rhetorical question - because a financial dictatorship needs polluting concentraated power…to power…its power.
Posted Friday, 27 January 12 at 4:52PM
A tale of two stupidities: (i) a government willing (then, at least) to throw money at an uneconomic technology for a cause it supports half-heartedly at most (the AGW hypothesis)
(ii) The inevitable NM solution: throw even more money at uneconomic/unproven/failed renewable technologies- which will have to be backed up by…fossil fuel powergen. Pure, unadulterated Camberwell.
The essential idiocy of this “debate” is dawning on people worldwide.
The politics become ever more difficult, as AGW slides down the agenda and out of the news.
There is little state or private capital directed at renewables R and D. Without that, nothing much will change. Especially given the global gas glut. In the US, gas is down to a couple of dollars per million BTU, from $12 just a few years ago.