Origin Energy calls for phase out of brown coal generation

Origin Energy has called for a phasing out of brown coal generation in Australia, urging the government of Victoria to adopt US-style emission standards to force the exit of the dirtiest brown coal generators in the country.

The recommendation is included in a submission to the Victorian government’s proposed climate change act, which may include state-based emission reduction targets, a state based renewable energy policy, and transition arrangements from its reliance on brown coal to renewable energy.

Origin says progressively phasing out brown coal generation in Victoria will deliver the biggest impact on reducing emissions in Victoria and Australia. “It is also in Victoria’s interest to influence the design of such policy, to minimise the impacts of structural adjustment on jobs and the economy,” it says.

But it also notes that it will pave the way for more renewable energy. In its submission, Origin Energy says it supports higher emission reduction targets and higher renewable energy targets, as long as it does not require heavy subsidies.

The removal of brown coal generators is key to this. Australia has a massive overhang of base-load capacity, but if this is removed, then wholesale prices are likely to be higher than they would otherwise be, meaning less subsidies for renewables. If new generation is required, then it is likely that wind or solar energy could easily compete with new build coal and gas.

Origin has an interest in seeing brown coal generators removed from the market place, as it will enable more generation from its own coal plant, the Eraring facility in NSW, and also provide market support for its gas plants, many of which have been sidelined by soaring gas prices and plunging wholesale market prices.

origin brown coal

Origin Energy says that “for a combination of reasons, including the very low marginal costs of existing local brown coal reserves and ownership structure, large brown coal fired generators in Victoria are still running at high capacity factors.

“Without policy intervention of some sort, this situation is not expected to change for a number of years. From a greenhouse gas perspective this is a perverse situation.”

“Whilst the Large-scale Renewable Energy Target (LRET) will underpin some new investment in renewable energy, the transition to lower emission generation would be accelerated if there was room in the market for this.” it notes.

“We suggest that standards be considered to progressively phase out brown coal-fired generation in Victoria. Standards are currently being implemented in North America with the US basing theirs on intensity and Canada on age. Either policy could be applied in Victoria. In comparison to a carbon tax or emission trading scheme, standards are simple to communicate to the public and their results more tangible.”

However, like its fellow big three “gentailers”, AGL Energy and EnergyAustralia, Origin Energy has reversed its previous position and is now calling for  government money to help this happen, either in the form of “structural adjustment packages” and/or environmental site remediation.

AGL owns Loy Yang A, while EnergyAustralia owns Yallourn. The Hazelwood generator is owned by French group Engie, which recently announced a big push into solar and a “call to arms against coal”, although it appears to be speaking in a European and global context, rather than an Australian one.

Mark Wakeham, the head of Environment Victoria, said it was now generally agreed that “policy intervention” was needed to ensure the orderly closure of the dirtiest power stations in the country, namely Hazelwood and Yallourn.

“We welcome Origin’s view that this could be achieved by the Victorian Government introducing emissions performance standards as part of the Climate Change Act Review,” he said in a statement.

“If we leave it to the market Hazelwood and Yallourn will be the last ones to close, but when they do close they’ll so abruptly with big impacts for the Latrobe Valley.

“With emissions performance standards we get the pollution reduction benefit of them closing before less polluting power stations, and we get to time their closure and plan an orderly transition for workers and the Latrobe Valley community.”

 

Comments

14 responses to “Origin Energy calls for phase out of brown coal generation”

  1. Chris Fraser Avatar
    Chris Fraser

    Ha they’re an open book. We knew they would include a request for handouts. At the end of the day they made their bed. Now go sleep in it.

    1. Steve Young Avatar
      Steve Young

      What are you talking about, they have proposed regulatory closure.

    2. Jon Avatar
      Jon

      I’m not sure what bed you think they’re sleeping in but they don’t actually own any of these power stations. As the article states, they would benefit from the higher market prices for their other generators; however , so too would the renewable projects proposed for Victoria. An orderly closure is far preferable than a protracted stalemate where the first one to blink loses!

      1. Barri Mundee Avatar
        Barri Mundee

        I agree that an orderly closure of the brown coal stations (I live in the Latrobe Valley) is important for a number of reasons, including the impact on the area- which has undergone a number of difficult job-killers such as the privatisation of the SECV, and recurring rounds of redundancies. A staged closure of Hazelwood via regulation seems to be the best way to go. If any money is put on the table to enable this the bulk of it should go to transitioning support for the workforce and the local economy.

  2. Dave Keenan Avatar
    Dave Keenan

    They want tax payers to pay them to shut down. Hilarious. Sounds like a protection racket to me.

    1. Chris Fraser Avatar
      Chris Fraser

      Yes they wanted the power stations – but maybe not the price of cleaning up !

    2. Jacob Avatar
      Jacob

      Is that what is happening in USA with Obama cracking down on mercury emissions from power stations.

  3. john Avatar
    john

    Origin were an early investor in research into PV however selling to a US company proved the death knell for that sliver technology.

    1. Giles Avatar

      It wasn’t the sale that was the death knell. Sliver was based in using less silicon, but the cost of silicon plunged anyway, removing much of their advantage. They also took technology that would have been very useful in flexible form – uniforms, shelters, etc – and pitched it at flat surface market.

      1. john Avatar
        john

        The product that was put on the market was small in Kw size and not very marketable.

  4. Robert Johnston Avatar
    Robert Johnston

    As a proud New South Welshman, I’m amused to see Origin yet again talking its book and encouraging OTHERS to be forced to close their assets. Why people (yes you Giles) keep providing an opportunity for Grant King (PR Manager at ORG) to spruik his own special brand of self interest astounds me. Sure shutting down brown coal generators provides efficient emission reduction but the incremental difference of shutting down the most polluting generators in each REGION would not be great and would not unduly penalise Victorian electricity users just because they were blessed with low quality coal. Oh but hang on, that would probably lead to some Origin generation closing. SPOTTO – SELF INTEREST from Grant King yet again. Oh and no I don’t work or own shares in one of his competitors so no self interest over here.

  5. George Michaelson Avatar
    George Michaelson

    Here we have an amazing repository of volatile organic compounds, capable of making drugs, fertilizers, explosives, plastics, even high grade fuels for those vehicles incapable of moving off combustion engines. And what do we do with it? we burn it to make electricity…

    c/f http://www.maden.org.tr/resimler/ekler/3eaa6722798a773_ek.pdf

    1. Peter Davies Avatar
      Peter Davies

      Spot on George and good link. I find it telling that the situation is pitched as an “either/or” situation with only two possibilities. We have been working in this space developing scale appropriate thermal processing technology and if it wasn’t for all the entrenched vested interests the future would be very exciting indeed. Low carbon emission with energy as a by-product of new industry development (keeping the low base power generation price), thousands more jobs through the “enabling” effects of new supporting products for agriculture and industry. “Hybrid” solid fuels dovetailing with the organic waste management and matching “smokeless” end use conversion technology with high quality soil amendments as a natural co-product. Moving forward despite government makes the going tough and the community kept in the dark about what is really being lost.

    2. Ian Avatar
      Ian

      You want to save for tomorrow when we can burn it all today. Shame on you. How is this repository of volatile organic compounds going to help us NOW? Let our kids find their own volatiles, we’ve got an atmosphere to warm and land to pollute. This reminds me of the rainforests that our forefathers removed so that we can have barren land and monoculture plantations, we have to keep up the tradition.

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