Time is running out for energy company HRL to secure its $100 million federal government grant for a proposed coal-fuelled power plant in the Latrobe Valley, as it emerged the funding will expire at the end of the year if the project does not progress.
In a September 26 letter to a Greenpeace supporter following a community cabinet meeting, Prime Minister Julia Gillard said HRL's funding was contingent on the company meeting several milestones, none of which have been met so far.
''The company that is undertaking the project, Dual Gas Pty Ltd [a wholly owned subsidiary of HRL Limited], has until December 31, 2011, to meet the conditions for the release of the grant funds,'' the letter says.
The letter adds that the federal government is continuing discussions with HRL and the Victorian government about the project, but cannot disclose the milestones for release of the $100 million because of commercial confidentiality.
HRL wants to build a new 600 megawatt power plant in the Latrobe Valley using gasification technology that lowers the greenhouse gas emissions from dirtier brown coal to that of an efficient black coal power plant. Read all about it here
HRL won the $100 million grant under the Howard government's Low Emissions Technology Demonstration Fund in 2007. It also has a $50 million grant from the Victorian government. But the $750 million project received a setback in May when the Victorian Environment Protection Authority only approved 300 megawatts of generation. Under the EPA decision the second 300 megawatts of generation capacity can only go ahead if the technology proves itself in the first phase.
HRL is now appealing against the decision, with a hearing in the Victorian Civil and Administrative Tribunal slated to begin on October 24 and expected to run for several weeks.
HRL's case will be heard alongside an appeal by Environment Victoria against the EPA's approval of the first 300 megawatts of generation capacity.
A spokeswoman for Dual Gas/HRL said the company ''is continuing to work towards realising the demonstration project in Victoria. The company is currently focused on its appeal of the EPA Victoria Works Approval decision on the project which is before the Victorian Civil and Administrative Tribunal''.
A spokeswoman for federal Energy Minister Martin Ferguson confirmed the December 31 deadline.
''The government cannot comment on what may eventuate as a result of the EPA processes and will not speculate on what it may or may not decide to do in some future circumstances as regards the HRL funding deed,'' she said.
Greenpeace climate and energy campaigner Julien Vincent said
''it's mind-blowing that while the government moves to introduce a carbon price, there's $100 million of Australian taxpayer's money sitting there to support a new dirty coal-fired power station''.
While Treasury modelling on the carbon price plans found no new commercial-scale power plants would be built under the scheme, the HRL project was still commercially viable as it is a demonstration project.