Victorian government announces coal review

The failure of a new demonstration power plant to attract private investment has led the Victorian Government to withdraw funding and announce an independent review of past development projects.

The proposal by Shanghai Electric Australia to build a $119 million plant, which would process brown coal into briquettes, has now been shelved as the project did not meet its first milestone for private funding.

As a result $25 million worth of state and federal funding was withdrawn from the project.

The Andrews Government has now announced a review of "previous government programs for coal development" with promises to release a new coal policy in 2016.

State industry minister Lily D'Ambrosio said the new policy would incorporate findings from the new review, the climate change review, and the Hazelwood Mine Fire Inquiry recommendations.

“Major energy companies, including AGL, GDF Suez and Origin Energy, have already announced they will not be investing in new coal-fired power stations,” D’Ambrosio said.

“Victoria needs to plan for this transition, and the government’s independent review of coal projects will help achieve that.”

 Opposition resources spokesman David Southwick questioned the motives behind the review, suggesting the Andrews Government only sought to “pull the plug on Victoria’s cheap energy resource and the thousands of jobs it creates”.

However, the move was welcomed by both Environment Victoria and the Minerals Council of Australia (MCA).

Environment Victoria’s Nicholas Aberle said he expected the government would use the withdrawn funding for other projects in the Latrobe Valley.

A statement from the MCA indicated that the previous government’s coal allocation process had not been completed before the November 2014 election.

“It therefore is pleasing that the Andrews Government is now looking to develop a new coal policy to consider the economic, social and environmental factors of future brown coal projects in Victoria,” the statement read.

“This important initiative will give both the industry and the people of the Latrobe Valley certainty about the future of brown coal in Victoria.”

MCA executive director Greg Evans highlighted a new OECD arrangement to encourage export credit agencies in developed economies to direct financing support to new coal fired technologies such as High Efficiency Low Emissions (HELE) coal plants.

“The agreement is good news for Australia, not least because these ‘HELE’ plants require higher quality coal which is Australia’s speciality,” Evans said.

“The nature of Australia’s high energy coal means that it further reduces emissions by 10 to 20 per cent.

“This is why the 2015 IEA World Energy Outlook released earlier this month predicted that Australian coal exports would grow by 37 per cent by 2040.”

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