MARK COLVIN: Environmentalists are accusing the Federal Government of hypocrisy because of its decision to keep money on the table for a new Victorian coal and gas-fired power station.
Earlier this week the Government reopened its solar flagships funding program, because of problems with solar power projects in New South Wales and Queensland. Today the Energy and Resources Minister, Martin Ferguson travelled to Victoria's brown-coal rich Latrobe Valley.
He revealed that the Government would extend a $100 million funding pledge for a controversial new power station project in the valley. Green groups are furious.
Gus Goswell reports.
GUS GOSWELL: When Victorians turn on a light, chances are they're relying on Latrobe Valley brown coal. The Latrobe Valley, south-east of Melbourne, is home to some of Australia's most well-known and controversial power stations, including Hazelwood.
But it's the Federal Government's stance on a proposed new power station that's got green groups riled up today.
MARK WAKEHAM: It doesn't make any sense for the Federal Government to be introducing a price on carbon and then at the same time bankrolling a polluting new power station.
GUS GOSWELL: Mark Wakeham from Environment Victoria has been heavily involved in the Stop HRL Campaign.
The energy company, HRL, wants to build a 600 megawatt power station fired by brown coal and gas derived from coal at Morwell in the Latrobe Valley. Victoria's Environment Protection Authority has only approved a 300 megawatt station. Both green groups and the projects proponents are currently challenging that decision in Victoria's Planning Tribunal.
The former Howard government pledged $100 million to the HRL Dual Gas project. Green groups have been urging the current government to walk away from the project.
But the Energy and Resources Minister, Martin Ferguson, is standing his ground for now.
MARTIN FERGUSON: HRL's timeline for meeting the necessary Government requirements will be extended six months. Obviously because of the legal process that's currently underway but this will be the last extension by the Commonwealth Government.
GUS GOSWELL: HRL has welcomed that decision and says it's working towards making the project a reality.
Mark Wakeham from Environment Victoria has accused the Federal Government of hypocrisy. Just days ago the Federal Government backed away from solar projects in New South Wales and Queensland that failed to meet project milestones. Mark Wakeham says HRL has failed the same test.
MARK WAKEHAM: HRL is an extremely polluting power station. It's missed all its grant milestones. And we've recently seen the Federal Government withdraw grants from solar and geothermal projects for failing to meet grant deadlines. It seems that there is a double standard at play here.
GUS GOSWELL: Martin Ferguson has rejected that accusation.
MARTIN FERGUSON: I've been consistent in the handling of all these legacy grants, be it HRL or Solar Systems which is now Silex, both under the same programme.
GUS GOSWELL: It's not only green groups that are urging Mr Ferguson to ditch the project. One of the Energy Minister's federal colleagues, the Victorian MP Kelvin Thomson says that governments that are serious about reducing emissions shouldn't invest in coal-fired power.
KEVIN THOMSON: Governments certainly should be supporting technologies which reduce emissions but that is not the case with this proposal. This proposal would increase our carbon emissions by four million tonnes every year.
GUS GOSWELL: The Opposition's Environment spokesman, Greg Hunt says the Government's energy policy is in disarray.
GREG HUNT: When you look at just the last two weeks, the solar flagships program with $770 million of allocated money is collapsing. The phantom credit scheme has created a $280 million solar panel crisis. We've got the legacy of the green loans and pink batts programs continuing.
GUS GOSWELL: Another keen observer of the Government's energy policy is Frank Jotzo, the director of the Centre for Climate Economics and Policy at the Australian National University's Crawford School.
FRANK JOTZO: Really what we are seeing here is kind of a glaring contradiction between quite efficient macro policy settings, such as the carbon pricing schemes on the one hand, and on the other hand the old-style pick and choose approach of subsidies lavished on one kind of project but not the other and then one region but then not the other.
GUS GOSWELL: Today the Federal Government also pledged an initial $100 million to a carbon capture and storage research project in the Latrobe Valley. Frank Jotzo says that's the wrong move.
FRANK JOTZO: If we want to see a transformation of Australia's energy supply, then finding marginally better ways of combusting brown coal is most certainly not the answer.
If you look decades ahead, and you've got to look decades ahead when you are thinking about electricity supply, then we really will need to be in a very different space from where we are now.
gus goswell: the energy Program Director at the Grattan Institute in Melbourne, Tony Wood, says the Government is in an awkward position.
TONY WOOD: Government is trying to make appropriate decisions in a period of great uncertainty in relation to these technologies. And so on the one hand I can understand the Greens are not very happy that the solar flagship programs don't seem to be going ahead as rapidly as they liked. But equally, this decision reflects that the Government is trying to keep options alive, which is what you do when the future is very uncertain.
MARK COLVIN: Tony Wood from the Grattan Institute, ending that report by Gus Goswell.