Some coal-fired plants will fold by 2020: assessors

Age
Tuesday 16/12/2008 Page: 6

SOME Victorian brown coal power generators could be shut down by 2020 under the Federal Government's planned emissions trading scheme, according to modelling detailed in the white paper. In determining the impact of the carbon pollution reduction scheme on coal-fired generators. the Rudd Government commissioned McLennan Magasanik Associates, ACIL Tasman and ROAM Consulting to provide separate assessments of 5% and 15% cuts in emissions on generators.

The ACIL Tasman analysis provides the bleakest view for Australia's 30 major coal-fired generators, in the Latrobe Valley and across Australia, suggesting a 15% cut would lead three brown coal and four black coal generators to "retire in their entirety" by 2020. With a minimum cut of 5%, ACIL Tasman says two brown coal and one black coal generator would fold as a result of the scheme.

McLennan's results point to one fewer generator by 2020, while ROAM Consulting says no generators will shut down due to the carbon pollution reduction scheme by 2020. The Government's white paper outlines plans to provide $3.9 billion in permits to help the coal-fired generators over the first five years. But those that pull through are set to experience a sharp decline in power generation.

McLennan predicts that three brown coal and six black coal generators will lose more than a quarter of their generation volume over the first decade of the scheme if Australia cuts emissions by 5%. Only one additional brown coal generator would reach that 25% threshold if a cut of 15% were achieved.

The white paper does not name the affected generators. Victoria has four major brown coal power plants in the Latrobe Valley - Hazelwood, Yallourn power station, Loy Yang A and Loy Yang B - providing more than 90% of the state's power. You don't have to be Einstein to work out that Victoria is the state which will be most affected if that modelling is correct," a senior energy source told The Age.

National Generators Forum executive director John Boshier said the generators felt the Government's compensation package was inadequate. "The NGF has always advocated a smooth transition to a low-carbon economy. To that end, the NGF is pleased that the Federal Government has recognised the need for transitional assistance ... However, the quantum of assistance is insufficient to deliver the outcomes the Government is seeking." Victorian Energy Minister Peter Batchelor said he would consult the state's brown-coal generators to see if the proposed scheme delivered a viable, secure long-term supply.

Kate Shea, spokeswoman for TRUEnergy, which operates Yallourn power station. said the future of the power station was unclear. "It's impossible to be definitive about the impact of the CPRS white paper on Yallourn power station past 2015 because of the lack of clarity surrounding the emissions targets," she said. "However, we don't expect Yallourn power station to be operating in its current form from 2020 onwards and have already been assessing technology options to continue operating the power station with a lower emissions profile."