News | 22nd Mar, 2012

The dirt on brown coal’s grubby history

Thursday, 22 March 2012
Josh Gordon, The Age

There is good reason to doubt Baillieu's 'energy hub' plans for Victoria.

Billions of investment dollars may be flowing to the resource states of Western Australia and Queensland, but the Baillieu government reckons Victoria is the real ''energy hub'' of the nation. Why? Because within the Latrobe Valley lies at least 430 billion tonnes of brown coal. It represents, as Energy Minister Michael O'Brien points out, potentially more energy than that within the entire north-west shelf.

However, in the hierarchy of resources, brown coal is regarded as only one step above peat. It is a sludge-like substance containing almost two-thirds water, almost one-third carbon, and some ash.

Because it is so wet, brown coal was initially ignored in Victoria. In the 1920s the State Electricity Commission set up a plant at Yallourn, with a second opening at Morwell in the 1940s, using German technology to crush, dry and press the stuff into briquettes sufficiently hard and fast-burning to fire the Latrobe Valley power stations.

If carbon dioxide were not such a problem, Victoria would now be in an enviable position. Yet brown coal is about three times more greenhouse intensive per kilowatt hour of electricity than, say, natural gas. Abundant it may be, but clean it is not.

The state government – under increasing political and financial pressure as our economy slips – hopes that the private sector will stump up the investment and technology needed to convert brown coal into a commercially and environmentally viable form.

''We want to see those jobs, we want to see those opportunities flow to this state,'' O'Brien says.
Hence the government's announcement this week that it is preparing a competitive tender to allocate the rights to dig up billions of extra tonnes.

Business interests are already jockeying. One coal technology company, Exergen, has signalled its intention to bid for up to 1 billion tonnes to export to Japan and India. Another company, Australian Energy Company Ltd, also wants to bid for up to a billion tonnes to produce briquettes and fertiliser for export, also using low emissions technology.

AEC chairman Allan Blood says low-emissions centrifuge technology to extract moisture like a clothes dryer is already available, while a port in South Gippsland could be upgraded relatively quickly to export the coal products, relying entirely on private sector investment.

Such schemes seem impressive. If the state's vast reserves of brown coal could be transformed into an exportable form (such as diesel, gas or briquettes) after considering the costs of building the infrastructure, the federal carbon price, world prices and export requirements, the benefits for the state could be huge.
But before popping the champaign corks and declaring that thousands of jobs and billions of dollars in investment are imminent, some history is instructive.

In October 2001, the Bracks government announced a tender process to allocate an extra 15 billion tonnes of brown coal. If the Baillieu government wanted to recycle Labor's press release at the time, it might need to change little other than names and dates.

The then energy minister, Candy Broad, declared the deal would open up ''massive new investment'', helping the state transition to a fully sustainable future using ''leading edge technologies''. The next year three companies were awarded allocations.

Allan Blood's former company, Australian Power and Energy Ltd (APEL), proposed a $6 billion power station to turn brown coal into gas and diesel, while Exergen lobbied Labor for an extra $1.5 billion to mine, dry and export 12 million tonnes of coal a year to India.

None of these plans amounted to anything. APEL was sold, while the Exergen scheme was shelved. A subsequent study commissioned by Labor in 2007 concluded that there should be no further allocations, given ''private companies already have allocations well above their medium-term requirements''.

According to Labor, the Baillieu government is now being lobbied by the very same businessmen who ''spent most of the last decade'' lobbying it.

The best case scenario for the people of the Latrobe Valley is that the private sector will find a commercially viable method of transforming one of the world's dirtiest energy sources into a clean form. But if past experience is any guide, they would be unwise to count on it.

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