Massive new stocks of Victorian coal will be exported to China, India and Japan in a multi-billion dollar plan that is expected to create thousands of new jobs and kick-start the economy.
The Baillieu Government is planning to unlock vast resources of brown coal in the Latrobe Valley in a controversial plan to fire overseas power stations and bring the resources boom to Victoria.
Energy Minister Michael O'Brien yesterday confirmed the Coalition was seeking expressions of interest for new allocations of coal that were hoped to deliver hundreds of millions of dollars in royalties, as well as billions of dollars of investment in mines, processing and infrastructure.
The move flies in the face of the Gillard Government's efforts to slow greenhouse gas emissions through the carbon tax and will inflame environmental groups and the Greens.
But Mr O'Brien said the Baillieu Government was determined to make the most of one of the world's biggest deposits of brown coal.
"The Government believes that brown coal can and should play a key role in our energy future," Mr O'Brien said.
"Encouraging new investors and the right technologies could deliver a new generation of industry in the Latrobe Valley, boosting the local economy and creating new jobs."
Victoria is sitting on an estimated 430 billion tonnes of brown coal, of which 33 billion tonnes could be unlocked from the Latrobe Valley.
But there are doubts about whether the technology needed to dry brown coal – which has a high water content – is advanced enough.
About 65 million tonnes of brown coal is mined in the Latrobe Valley for domestic use each year, but none is exported.
The Government yesterday said it would not speculate on how much additional coal it would allow to be mined until the outcome of the allocation tender process was completed.
But the Coalition claims interests from China, India and Japan are already lining up to buy the coal for low-emission activities including conversion to diesel oil and drying it for export.
The new arrangements are not expected to affect allocations already in place, including coal for the Hazelwood power station.
Victorian Greens MP Greg Barber said exporting Victorian coal would lead to onshore and offshore environmental damage as well as driving up the price for domestic power stations.
He also raised doubts about how interested overseas markets were in brown coal, which would be difficult to transport and provides less energy than black coal.
"Whether the pollution is in another country or Australia, it is doing great damage to the environment and it is quite likely to push up our own power prices in the process," he said.
"If they are exporting it dry there will be huge emissions in Victoria – just associated with getting it ready for export."
Environment Victoria spokesman Mark Wakeham said the Government had "failed to grasp the problem of climate change".
"It seems that the Government refuses to accept that coal causes climate change because if they accepted that they wouldn’t be taking this course of action," he said.
"They're clearly not interested in a clean energy future and it looks like they're doing the mining companies' dirty work for them by running a PR campaign for the coal industry."
Mr Wakeham said mining companies could be behind the push for exporting coal.
"The 13 billion tones that are yet to be allocated in the Latrobe Valley would be equivalent of 100 years of Victoria’s current greenhouse pollution," he said.