State's clean-coal gamble - Documents admit doubt on strategy

Age
Wednesday 4/11/2009 Page: 1

VICTORIA will rely on fossil fuel for energy for decades, with leaked documents revealing the Brumby Government is set to take a multibillion-dollar gamble on "clean coal". A high-level leak to The Age indicates the Government will embark on an education campaign around carbon capture and storage aimed at a public that it say does "not understand the unique challenges facing the state" under emission trading. While the state will continue to depend on coal-fired power, confidential cabinet documents acknowledge the clean coal strategy may not work.

"A key question for Commonwealth and state governments is whether to consider long-term contingency options to deal with the risk that clean coal proves to be more costly and limited an option than currently believed," one document says. The documents spell out the rationale for a forthcoming "Future Energy" statement that will focus on the ramifications of the Rudd Government's proposed emissions trading scheme. brown coal-fired power, Australia's most greenhouse intensive form of energy generation, provides more than 90% of Victoria's electricity.

The documents, which provide a rare insight into Government thinking and policymaking, forecast that:

• Renewable energy will progressively replace fossil energy, but "we will rely on renewables and fossil energy for decades".
• The Government will not impose emissions limits on individual coal-fired plants, reasoning that this would be unnecessary under emissions trading and push electricity prices even higher.
• carbon capture and storage will only be viable with much higher power prices - in line with a Global carbon capture and storage Institute report that last week said it would increase costs by up to 78%.
• There will be "heightened risk" in future of blackouts due to generators failing and not being prepared. A national review of emergency powers is proposed to ensure states have the authority to intervene.
• The Government will help establish large-scale solar energy plants and "explore the scope" for geothermal and bioenergy. The Government will seek to reduce its reliance on brown coal for local electricity over time but "vigorously pursue" its wider exploitation, including for export for use in overseas power stations.

The documents say energy supplies will become increasingly diverse and dispersed across the eastern states. While focusing on coal, they say the Government supports "rapid expansion" of wind energy due to Canberra's 20% renewable energy target - despite there being a risk of "heightened community opposition" due to local community groups banding together. No mention is made of the role of household-level attempts to cut emissions, such as with rooftop solar panels. But the documents indicate that emissions trading will trigger a boost in energy saving by households and businesses as energy prices go up.

They quote market research that found Victorians take the energy supply for granted and have a poor understanding of how it works. The need for an education campaign to explain dramatic changes coming in the electricity sector is raised. The public was found to hold the state responsible for the reliability and price of electricity but was prepared to accept moderate price rises 'once provided with information about the costs of reducing carbon pollution'.

Part of the rationale of the Future Energy statement would be to ensure clean coal technologies were accepted so they had "a social licence to operate". As revealed by The Age last month, the statement will also urge brown coal exports despite community concerns about increasing emissions in countries without greenhouse targets.