Coal and punishment

by Mark Ogge

This Budget continues the Federal Government’s retreat from the dream that coal has a long-term future through so-called ‘clean coal’. Of the $18 billion that the Government intends to spend on energy and climate tech innovation over the 2020s, there is a mere $50 million earmarked for the new Commonwealth Carbon Capture Use and Storage Development Fund. That’s not even a down-payment on a get-out-of-jail card for coal. What will $50 million get you that $1.3 billion of public funding spent to date on carbon capture and storage could not?

There is even some confusion about whether the Fund is for capturing CO2 emissions from burning fossil fuels for electricity or from industrial processes. Minister Taylor’s media release says the Fund is for industrial sources. Budget Paper No 2 (p.119) says, confusingly, the Fund is for “research into reducing the abatement of energy generators”. Given abatement is a reduction, would this funding reduce our emissions reduction!?

The Government is also funding an upgrade to a highly polluting old NSW coal power station owned by Brian Flannery and former National Party candidate and Liberal National Party donor, Trevor St Baker.

The 42-year-old Vales Point coal power station on Lake Macquarie in NSW pumps around 7 million tonnes of greenhouse gas emissions into the atmosphere every year and is due to close in 2029. In 2015 the NSW Government sold it to a company owned by Trevor St Baker for $1 million. Two years later it was valued at $730 million.

Not content with such a windfall gain, Trevor St Baker’s company Delta Energy then sought funding from the Emissions Reduction Fund (ERF) to upgrade Vales Point by replacing dome turbine blades. They argued the upgrade would increase the efficiency of the power station which would reduce emissions. While the emissions reductions were minor, estimated by Delta Energy to be just 1.1 per cent, the upgrade would also be likely to extend the life of the power station. This would result in far greater emissions than would be saved by the minor improvement in efficiency.

Delta Energy failed to secure climate funding because the Clean Energy Regulator (CER) stood firm, disallowing it on the basis that the replacement of turbine blades was the replacement of an essential component that is “necessary for the generating unit to generate electricity.” The reason for that rule is to safeguard against upgrades that allow emissions intensive facilities to operate longer, resulting in more emissions – not less.

Failing that, Delta Energy lobbied then Environment Minister Melissa Price to review (and water down) the methodology required to access climate finance. The review was instigated but not successful for Delta. The Australia Institute and others argued strongly against the changes and the Emissions Reduction Assurance Committee (ERAC) agreed.

Third time lucky, in this Budget the Government has allocated an unspecified amount of taxpayer’s money to upgrade Vales Point. While the budget papers on the night did not reveal the exact figure, we know now it is $8.7 million. At the same time, the Government is cutting funding to the CER by $86.3 million over the next four years.

It is deeply disturbing that money taken from the CER could now go to upgrading the coal power station it refused to fund.

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