Federal funding of a controversial new coal-fuelled power plant in Victoria is under review.
The EPA last week approved Melbourne coal technology company HRL's plan to build a 300 megawatt plant at Morwell – half the size originally proposed – using new gasification technology said to reduce greenhouse emissions from brown coal. If built, it would be Victoria's first new coal plant in nearly 20 years.
But doubts have been raised about whether the plant would be viable at the approved size.
Energy Minister Martin Ferguson said the federal funding was a was a "legacy grant".
The Saturday Age last week revealed that Australia's four major banks had rejected funding the plant, and that advice to the Howard government in 2006 indicated HRL believed a plant smaller than 400 megawatts would not be cost effective.
Energy Minister Martin Ferguson yesterday distanced himself from the $100 million in federal funding awarded to the project under the Howard government, describing it as a ''legacy grant''.
He said the funding implications of the EPA decision were being considered by federal officials.
But Mr Ferguson said the government supported cleaner energy technologies, and the HRL project was consistent with that.
The Victorian government remains committed to giving the project $50 million if it proves viable. Both HRL and environment groups are considering legal appeals against the EPA decision.