A new brown coal and gas power plant will be built in Victoria but with only half the capacity its developers wanted after being granted partial approval by the Environment Protection Authority (EPA).
The EPA on Friday allowed HRL Dual Gas to go ahead with its dual brown coal and gas demonstration plant at Morwell in the Latrobe Valley, with only one gasifier and turbine to be run on syngas.
The second gasifier and turbine, which were planned to be operated on natural gas, were not approved.
HRL had proposed a 600MW (megawatt) plant with two gasifiers and turbines but has been granted an EPA Works Approval to construct a 300MW plant.
EPA chief executive John Merritt said the first gasifier and turbine met best practice.
The second gasifier will not be installed until the first one is demonstrated to work.
"This is the outcome of a rigorous process in applying the law to a unique demonstration project," Mr Merrit said in a statement.
"The demonstration project is best practice for this type of brown coal technology and will produce electricity with around a 30 per cent improvement on current greenhouse gas emissions from coal-fired power stations.
"This is a significantly better environmental outcome than other plants currently producing electricity from brown coal in Victoria."
Environment Victoria chief executive Kelly O'Shanassy said the plant would still damage the environment even though only part of it has been given the green light.
"Even with this part approval the new plant will pump millions of tonnes of pollution into our environment every year," she said in a statement," she said.
"How is this protecting the environment or Victorians?"
Ms O'Shanassy said the decision showed how out of touch the EPA is with the community, given the 4000 objections submitted.
She said Environment Victoria would consider legal action against the decision.
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