SPECIAL REPORT: For decades Latrobe Valley's bounty of brown coal has fuelled the region and powered Victoria. But under the carbon tax, its future is uncertain.
Power stations dominate the Latrobe Valley's landscape. For decades the region's bounty of brown coal has fuelled them and powered Victoria.
But under the carbon tax, their future is uncertain, with at least one power station expected to close.
The carbon tax will push up the price of coal-fired electricity, making it less competitive than other forms of power.
It's likely to have the greatest impact on the Latrobe Valley because its brown coal emits high levels of carbon pollution.
“Over 80 per cent of our electricity is coming from burning coal," said Campaigns Director for Environment Victoria, Mark Wakeham.
“The carbon tax, as well as measures like the contracts for closures process, will see us start to bring on line more renewable energy more clean energy."
Hundreds, if not thousands of job cuts are expected.
Some say the region can bounce back like Newcastle did when its steelworks closed in 1999.
One proposal is for government departments and businesses to relocate to the valley.
TRUenergy has released plans to build a gas-fired power station next to its Yallourn power plant, which it claims will generate 70 per cent fewer emissions than those from brown coal-fired power stations.
It is estimated Latrobe Valley has 5.3 billion tonnes of coal waiting to be dug up – enough to supply Victoria's energy needs for at least 500 years. So what should be done with such a large and lucrative resource once the carbon tax is introduced?
The hope is that technology will provide the answer: Allowing the coal to be burnt, but limiting carbon emissions.
“There's no way that we can leave the coal in the ground,” said LaTrobe City Mayor, Ed Vermeulen.
“I think it will demand to be used for our mutual economic benefit but we've got to find ways of doing that with zero or near zero carbon emissions.”
But Environment Australia (sic) says the coal should stay in the ground.
“Brown coal is the most polluting large scale power source that we have in Australia,” Mr Wakeham said. "There's no way that we can burn it with current technology and economically that isn't incredibly polluting."
Another idea is to send the coal overseas.
The state government is reportedly negotiating an $11 billion dollar export deal with an Indian, Japanese and Australian consortium.
Nationals MP for Gippsland, Darren Chester said the Gillard Government is pulling in two different directions.
“We have some aspects of the government saying we're going to shut down coal-fired generators,” he said.
“Then we have the minister for industry and resources saying we can become the Pilbara of the south east; that mining coal and exporting it is going to the answer to Latrobe Valley's problems.”
He says it sends confusing messages to a region that is already suffering from tremendous uncertainty.