Hazelwood’s closure: 6 things we learned this week

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As the boilers cool down, here’s 6 things we’ve learnt this week from Halewood’s closure, and why we’ve reached point of no return in transition to renewables.

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The Hazelwood power station and mine are now, after 53 years of production, no longer operating. It’s a major milestone for the climate – after all how serious can we be about global warming with one of the world’s dirtiest power stations still polluting? It also a point of no return in the transition to renewable energy.

Twice previously- in 2010 and 2012- Hazelwood looked set for earlier, more orderly closures, but the politics changed and the power station (if not the climate) received a reprieve.

There’s been a lot written about Hazelwood’s closure this week. Most of it has told the important story about the impacts of Hazelwood’s belated, but then sudden closure on communities and workers in the Latrobe Valley. The Latrobe Valley, through no fault of its own, is on the receiving end of a decision made in Paris while our leaders in Canberra are asleep at the wheel on climate and energy policy.

The rest of the media coverage focussed on the implications of Hazelwood’s closure on energy security and prices. In some cases the same media outlets published front page stories raising alarm about energy shortages, only to follow up with further front page leads that dismissed any such concern.

But there hasn’t been a lot of broader reflection about what Hazelwood’s closure means for the climate, air pollution, health of people in the Latrobe Valley, or how well prepared Australia will be for the next, inevitable coal power station closure.

So as the boilers cool here’s 6 things we’ve learnt this week from Hazelwood’s closure:

The world is shifting to renewable energy and Australia will too: Hazelwood is but one of hundreds of coal-burning power stations that have been pushed out of energy markets by global responses to climate change and the rapid rise of renewable energy. That the French Government, and the company they are the major shareholder in- Engie- decided Hazelwood’s fate, rather than an Australian government,  is indicative of the shift in global markets towards renewable energy.

It also highlights the degree to which the Abbott and Turnbull governments have dealt themselves out of any influential role in terms of planning for or managing Australia’s energy systems. With no coherent policy to reduce emissions or modernise our energy system they have been reduced to bystanders blaming state governments and running scare campaigns about energy security and prices.

France’s Energy Minister Segolene Royal (pictured here on French television receiving a postcard about Hazelwood) had more say over how and when Hazelwood closed than Australia’s Energy Minister Josh Frydenberg.
France’s Energy Minister Segolene Royal (pictured here on French television receiving a postcard about Hazelwood) had more say over how and when Hazelwood closed than Australia’s Energy Minister Josh Frydenberg.

Its also been more than a little frustrating watching politicians like Victorian Opposition Leader Matthew Guy calling for the staged closure of Hazelwood when that was exactly the plan they scrapped when the Baillieu Government was elected in 2010.

Failing to plan for power station closure and leaving it to the market is damaging for local workers and communities affected by sudden closures, heightens energy security risks, and fails to provide the signal to invest in new renewable energy projects. As a Senate Inquiry which reported on Wednesday evening found, we urgently need a national plan for the orderly closure of our remaining 20-odd coal-burning power stations and transition support for coal workers and communities.

With Hazelwood’s closure we now have an example of what a ‘Just Transitions’ package looks like.

The good news is that the 5 month period between when Hazelwood’s closure was announced, and when it actually happened, was well utilised by the Andrews Government, unions like the CFMEU and their representative bodies the ACTU and the Gippsland Trades and Labour Council. One element of the transition package -relocating 150 Hazelwood workers to other power stations in the Latrobe Valley- is an Australian-first and should be a template for future closures.

The Latrobe Valley will also benefit from over $300 million to diversify and strengthen the local economy. More than 80% of that funding came from the Victorian Government, while the Federal Government also made a small contribution of $41 million.

Positive also is that Engie seems to be committed to a thorough job of mine rehabilitation and power station decommissioning- they are keeping 250 workers on site for at least 6 years to undertake this daunting task.

Mine rehabilitation and power station decommissioning is very expensive if done properly.

When the first Hazelwood Mine Fire Inquiry found that the lack of progressive mine rehabilitation contributed to Victoria’s worst ever pollution event, but then failed to make any recommendations about improved rehabilitation, Environment Victoria worked with locals in the Latrobe Valley including Voices of the Valley to have the inquiry reopened.

We were successful, and a second inquiry was initiated by the Andrews Government. We were a legal party to that inquiry (along with the 3 mine power station owners and the State Government) which ultimately recommended a steep increase in mine rehabilitation bonds. Hazelwood’s bond went from $15 million to $73 million. Earlier this year however it was revealed that Engie has increased their rehabilitation provision for Hazelwood mine and power station to the anticipated cost of $743 million.

Here are a couple of questions that the CEO’s of Australia’s electricity generators can expect at their next AGM:

  • How much money have you set aside to close your power stations and mines?
  • If you had to come up with $743 million for each power station you own would you still be profitable?
  • Power stations and mines are only ever one accident away from losing their social licence and closing. Three years ago Hazelwood looked unassailable. It was the most profitable generator in the National Electricity Market and the Coalition had given it the all-clear to keep polluting by repealing the carbon laws. It enjoyed strong local support in the Latrobe Valley. And then this happened:

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The coal seam burned for 45 days and spewed pollution over people in the Latrobe Valley. The second Hazelwood Mine Fire Inquiry found that the fire contributed to increased mortality in the Latrobe Valley, that is, it probably killed people.

As someone who has been campaigning for the replacement of Hazelwood since 2005, the mine fire was the turning point. It was the moment community sentiment turned against Hazelwood and people in the Latrobe Valley stood up and demanded a better future. From then on it was really only a matter of time before Engie’s head office dealt with the blot on their copybook that Hazelwood had become.

Power station owners lie about their closure dates

Or, if you want to be more generous in your interpretation, their plans change quickly and dramatically. Last year Engie’s public line was that Hazelwood would operate into the 2030’s. Just days before the closure announcement, Engie managers were recruiting workers with the promise that they would be operating until at least 2025.

Then the truth was revealed. There has been a similar pattern for the other 8 coal-burning power stations that have closed in the past 5 years in Australia. So when Energy Australia says they are planning to operate Yallourn until 2032, or AGL plans to keep Loy Yang A open till 2048, the best approach is to take it with a grain of salt and start planning for the future.

Mark Wakeham is CEO of Environment Victoria, who have been campaigning for the replacement of Hazelwood power station and a just transition for workers and the Latrobe Valley since 2004.

 

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15 Comments
  1. John Anderson 3 years ago

    “The world is shifting to renewable energy and Australia will too:”

    Why do you say that?

    The Japanese government is moving ahead with its plans to build up to 45 new coal fired power stations.

    World Resources Institute identifies 1,200 coal plants in planning across 59 countries, with about three-quarters in China and India

    • Giles 3 years ago

      No they are not: On March 23rd, Tonen General Sekiyu and Kanden Energy Solution Co. (KENES) announced the cancelation of plans to build a 1,000-megawatt coal-fired power plant.
      According to the release, Tonen General Sekiyu and Kanden Energy Solution Co. decided not to consider the commercialization of the project based on the “changes in the feasibility and the surrounding environment”.
      Gee, the minerals council is busy today on social media!

      • Kevan Daly 3 years ago

        What about the other 44?

        • RobSa 3 years ago

          They may not be built because they will be privately owned and uneconomic.

    • Mal Goon Chew 3 years ago

      Yes there were reports earlier this year that Japan was planning to build new coal fired power stations. But that’s an exception to what’s happening elsewhere in the world. And it remains to be seen whether they do get built, considering the high cost and long lead times for construction. Also earlier this year it was reported that China was cancelling 104 coal plants planned or already under construction: https://reneweconomy.com.au/china-suspends-104-planned-coal-power-plants-75844/ India has also cancelled some planned plants.

    • John Saint-Smith 3 years ago

      I wonder who’s paying the bills at the World Resources Institute?
      They don’t mention that China is shutting two old, dirty coal power stations for every new one. China is reducing its total consumption of thermal coal.

      According to the Indian Government’s “Central Electricity Authority National Electricity Plan” , published in December 2016, India has announced plans to increase coal domestic coal production by just 300 m t per year by 2027, thus avoiding any increase in coal imports. One reason is that coal-fired power stations consume water in a country which is in water crisis.
      At the same time it plans to install 350 GW of renewables and 15 GW of nuclear power by 2027, avoiding the burning of an additional 1.25 billion tonnes of coal annually.
      Coal is dead. Adani is flat out shifting its investments to renewables.
      Long live the people of India.

    • My_Oath 3 years ago

      Number of new coal plants end of Jan 2017 compared end of Jan 2016

      * announced : down 49%
      * pre-permit : down 49%
      * permitted : down 41%
      * started construction : down 62%
      * in construction : down 19%
      * completed : down 29%

      and

      * On Hold : up 162%

      Those 1,200 plants represent a collapse in proposals, not some golden age. There is a very good reason the Global Coal Index has fallen by over 95%.

  2. Kevan Daly 3 years ago

    On the subject of further development at Hazelwood, did anything come of Latrobe Magnesium’s proposal to extract magnesium metal from the huge volume of boiler ash held on-site?

  3. Greg Hudson 3 years ago

    ”One element of the transition package -relocating 150 Hazelwood workers to other power stations in the Latrobe Valley- is an Australian-first and should be a template for future closures”
    Those 150 workers must be the most unlucky (or stupidest) bunch of people in the Latrobe Valley, when all the ones leaving are getting golden handshakes to the tune of $300,000+

    • John Saint-Smith 3 years ago

      To be fair Greg, those ‘generous’ packages were available only to long term employees, and included accumulated leave and superannuation entitlements in addition to a term of service settlement.

  4. John Saint-Smith 3 years ago

    I waited until after the last boiler was switched off to see whether the sudden loss of what Tony Abbott assured us was 2 GW of critical power from Hazelwood would plunge Victoria into darkness.

    It was about as exciting as waiting for my microwave to blow up during the Millennium Bug crisis!

  5. John Saint-Smith 3 years ago

    From Wikipedia:
    “During 2011 and 2012, the Australian Government considered a Contract for Closure program to complement the Clean Energy Act policy. Hazelwood would likely have been closed under this program had it been pursued. However, this program was scrapped in September 2012 and no plants were closed.”

    To paraphrase Donald Trump “Nobody knew they might close Hazelwood. Nobody!”

  6. Farmer Dave 3 years ago

    Congratulations, Mark, for your campaigning for a just transition away from brown coal for the Latrobe Valley. Yours is the first campaign I can recall which put equal emphasis on the need to shut down the plants and the need to properly look after the workers, their families, and the wider communities of the Valley. This dual emphasis is essential for future campaigns; the worst of all worlds for this industry would be chaotic last-minute closures forced by the worsening economics of ageing plants admidst community division about the need to close them to reduce emissions.

  7. Mike A 3 years ago

    Great job Mark for 13 years.
    Just as the gold industry was living a fiction a few years ago until they were forced to go to full cost the energy industry is until the rehabilitation costs (realistic ones) are included in the cost of energy. This is actually a quite easy change to administer. We need to force the industry to change. If the $700m closure costs had been included from the day of Engie’s purchase we would have seen very different figures resulting ifn change. When you do new energy project economics you do include rehab in LCOE!

  8. Renew_Guru 3 years ago

    Great article. It just highlights the lack of planning and energy policy in this country. It is a disgrace that the decision to close down a power station is made by someone in a boardroom in France. This is OUR ENERGY INFRASTRUCTURE and it should be the Australian Govt that makes those decisions in consultation with industry and the people who’s livelihood is affected.by the closure. If there is anything good that came out of the mine fire, it is that burning coal, especially the brown coal at Hazelwood, is basically Medieval ! It has been impacting the health of the people in the LaTrobe valley for over half a century and the fire brought it to the attention of the Australian public. With the closure of Lake Liddell (which serves the Liddell power station) due to contamination, we are seeing the health and environmental impacts of coal becoming increasingly in the public arena. Talk to any GP in the Hunter Valley and they will tell you about the increased rates of respiratory disease in the elderly and asthma in children. The closure of Hazelwood has started a domino effect that will hopefully see more coal fired power station closures. What I fear however is that due to the criminal lack of planning by all governments we may see power shortages and of course, right on que, everyone will blame it on Renewables with that nauseating catch phrase ” Renewable cannot provide base load so we still need coal and gas ” Hopefully the $110 M loan promised by the Federal Govt for the construction of a solar thermal plant in SA, if it includes storage, will demonstrate to the Australian Public that Renewables CAN provide base load. Combined with the surge in battery storage systems, we can move confidently away from burning coal and gas which is literally killing our land, our air, our water and our people.

    Have a nice day 🙂

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