Bligh's clean coal dream a nightmare

Sunday Mail Brisbane
2 January 2011 Page: 42

WHEN Chris Greig spoke at a clean coal industry forum in Melbourne in June, one of the chiefs of the Bligh Government's ZeroGen business let slip a juicy piece of news that went unnoticed back home in Queensland. "ZeroGen has proven the Denison Trough to be unsuitable for large-scale commercial storage", Greig told the carbon capture and storage World Australia Forum June 22. It didn't look like much but the meaning of the comment would have raised the alarm if anyone had noticed: the state-owned company's prospects were floundering.

After committing $150 million in taxpayer funds to the Bowen Basin project, ZeroGen had discovered the underground reservoirs for CO₂ emissions from its planned $4.3 billion clean coal power plant were not big enough. Yet no one noticed Greig's comment, a startling omission showing how little scrutiny ZeroGen has undergone in its four years as a corporation under state control with little of the accountability mechanisms required of normal government operations.

While the Weller review of government assets in April 2009 described ZeroGen as "speculative" and sparked the first questions about the business, the Sunday Mail today reveals the Government was told it was considered "very high risk" back in 2006. None of this was mentioned at the time while a conga line of ministers described the project as "world-first", a coup for jobs and "groundbreaking".

The Opposition now wants an inquiry into ZeroGen while the Government appears to be adopting the mantra of "moving right along now, nothing to see here". Premier Anna Bligh has quietly slashed her commitment to clean coal in favour of solar power said to be her climate-change bureaucrat husband's favourite area. It is a move that has exposed an administration flipping and flopping on energy policy.

In 2008 at the Coaltrans Australia Conference in Brisbane, Deputy Premier Paul Lucas warned that the failure to develop viable clean coal technologies would have a major impact on the state Budget and the profits of mining companies. Yet Bligh has pinched $100 million from her original $300 million clean coal fund to put into proposed solar power plants, all without announcing the cash raid and only a month after a Commonwealth report found solar cost between $300/MW and $750/MW to generate.

In comparison, the IGCC Black CCS type ZeroGen was dealing with and deemed to be too expensive was found to cost between $150/MW and $275/MW. Worse still, the clean coal fund that bankrolled the ZeroGen gamble is the same state cash from the 2006 privatisation of the state's electricity assets, a bad look when you are promising to use the proceeds from the current privatisation program wisely.

For her part, Bligh now insists the ZeroGen dream is not dead, though she doesn't want to be a part of it. Some insiders say Queensland Treasury chiefs have long been against the ZeroGen idea over its costs to the Budget bottom line and describe the Government's relations with potential Japanese investor in the project, Mitsubishi, as rude.

With its best friend, the state, now leaving the party as an owner and plenty of fuel for critics spouting the clean coal oxymoron line, some wonder what can become of ZeroGen when it returns to the drawing board after canning its major plant. ZeroGen's own financial outlook appears far from rosy. Its Brisbane office has suffered a staff exodus, with insiders saying there are about 15 left after originally hiring as many as 120 people. According to Auditor-General Glenn Poole, the company's ability to keep operating past November 30 last year was dependent on state support.

Not that we would have known because Poole's comments were in ZeroGen's recent financial year report not tabled in State Parliament nor on its website, as he noted was normal practice. Back in Melbourne in June, Greig was well aware of the risks involved with ZeroGen and others, noting that the new technology would bring some undone. We might expect to see some commercial disasters!" he joked at the end of his presentation. He didn't realise how close to home that comment may prove to be.