Victoria – home to the biggest and most polluting brown coal power stations in Australia, if not the world – is indicating that it is finally looking beyond coal to a future dominated by renewable energy.
On the same day that the UK announced it would close all “unabated” coal assets within 10 years, and as South Australia prepares for the exit of its last coal generator in just four months, Victoria’s Labor government has announced a wholesale review of the brown coal industry.
The advertised focus of the report is on previous commitments by the state conservative government to fund new brown coal projects, but it will also focus on the impacts of the notorious Hazelwood fire and a new climate change plan as it prepares to release a new coal policy, and a renewable energy action plan.
Energy minister Lily D’Amrbosio says it is clear that no new brown coal generators will be built in the state, and with all the current generators due to close in coming years, the state needs to look to other technologies, and the jobs of the future.
“The future is going to be very different, and it needs to be very different,” she told a forum hosted by the Melbourne Energy Institute on Wednesday night.
She noted in an earlier statement that major energy companies, including AGL, GDF Suez and Origin Energy have already announced they will not be investing in new coal-fired power stations.
“Victoria needs to plan for this transition and the government’s independent review of coal projects, new coal policy and Renewable Energy Action Plan will help achieve that,” she said.
At the forum, D’Ambrosio indicated she was strongly favouring renewables as the way forward – pointing to the strengths of wind, solar, as well as ocean energy, geothermal and hydro energy. She noted that there were 17 approved wind farms waiting to be built in Victoria (and some solar farms too).
“Previous governments have supported coal-related programs with limited success. Any future support for new coal technologies must be based on their viability and benefits,” she said.
The Labor government was due to release its renewable action plan this month, but it will now be released in 2016, after the outcome of the Paris climate conference is known, and its own climate plan and coal plan is formalised.
Environmental groups are pushing the government to match the ambitions of other states: the ACT has a 100 per cent renewable energy target by 2025; South Australia has a 50 per cent target by that date (but will likely meet the target a lot earlier) while Queensland has a 50 per cent renewable energy target by 2030.
“A 20 per cent renewable energy target by 2020 is a bare minimum and the Andrews government is determined to do better if this is possible,” D’Ambrosio said. The key may be in the 2025 target, given that renewable penetration will likely be guided by the federal target until then.
A decade ago, the then Labor Victorian government kept the Australian renewable energy industry afloat, when the then Howard government and its energy minister Ian Macfarlane brought the then mandatory renewable energy target to a close; in the same way that the ACT government kept the industry afloat when Macfarlane did the same thing under the Abbott government.
Victoria has pledged to tender for enough renewable energy certificates to support around 100MW of large-scale renewable development in the state. D’Ambrosio said on Wednesday that renewable energy was a clear driver of jobs and investment.
Environmental groups said the most significant development in the Victoria announcement was the collapse of a $119 million proposal to dig up brown coal and export it as briquettes to China. Despite the support of Shanghai Electric, one of the biggest energy companies in China, and a $25 million grant from the Victoria government, the project had collapsed.
Campaigners expect the Paris climate conference to send a major signal on the decline of coal-fired generation. The International Energy Agency says that if the world reaches the climate targets they have set themselves, then coal-fired generation will need to fall by more than two-thirds in coming decades.
The biggest challenge for the Victorian government has been finding a way forward for the local communities, if the mines and generators are closed down.
The other issue has been how to bring early closure to the brown coal generators, whose presence and low costs are impeding the construction of new renewable energy projects.
Most modelling shows that if Australia is to meet its long-term targets – such as the 80 per cent cut on 2000 emissions by 2050 dumped by the Abbott government – it will need to have after the Paris conference, then brown coal needs to close early.
The problem at the moment is that, because of the repeal of the carbon price, brown coal generation is actually increasing, taking emissions higher, and is also flooding neighbouring markets with excess brown coal output.
Melbourne University’s Mike Sandiford presented this graph at the forum, showing one such scenario. It shows brown coal closing early, and more than 2GW closing in the next few years.
Two ANU academics, Frank Jotzo and Salim Mazouz, on Thursday released a new report suggesting how this might be done. An auction would be held to find the lowest cost closure, and rather have the government and taxpayer fund that closure, the payments would be made by the other brown coal generators (whose profits are likely to benefit from the removal of a rival business).
Engie, the owner of Hazelwood, has made it clear that the era of coal and large centralised generators is coming to an end and will be replaced by solar and other distributed generators. AGL has also promised to close Australia’s most polluting generator, the Loy Yang A plant, but has given no indication that it will do so before the scheduled 2048 closing date.
Environment Victoria’s Safe Climate Campaign Manager Dr Nicholas Aberle said he welcomed the review of past government funding for coal projects, and the need to transition to other industries.
“For too long we’ve thrown good money after bad pursuing polluting pipedreams in the Latrobe Valley. Government support for the coal industry over decades has come at the expense of support for other industries in the region,” he said.
“After the announcement of the closure of coal power stations in Port Augusta earlier this year, the Mayor of Port Augusta was interviewed on ABC Gippsland and said the most important thing for the Latrobe Valley was to start preparing for life after coal.
“Unless we see the writing on the wall and really start preparing a vision for the Latrobe Valley after coal, we’re doing the local community no favours.”