The Victorian government has quietly reclaimed a huge brown coal allocation in the Latrobe Valley after the companies promising a low-emissions project on the site failed to meet development milestones.
The allocation, one of three released in 2002, was controlled by international resource giants Anglo American and Shell, which had proposed a clean-coal-to-liquid project under the name Monash Energy.
The Department of Primary Industries has now confirmed the 50-year coal licence was reclaimed without fanfare just before Christmas.
It is believed that the licence required Monash Energy to use new gasification technology on the coal to produce diesel while also storing carbon emissions. The licence was cancelled after Monash failed to comply with milestone conditions.
The decision to reclaim the allocation comes ahead of the Baillieu government opening up a new tender for Latrobe Valley brown coal for export and power projects later this year.
Environment Victoria's Mark Wakeham said the decision to cancel the 2002 coal licence was evidence future allocations would be folly.
''If large companies like Shell and Anglo American can't deliver on their so-called 'clean coal' projects, what hope do tiny players like Exergen [which is also seeking a new coal allocation] have?'' he asked.
The Minerals Council of Australia's Megan Davison said the cancellation in no way predetermined the outcomes of a future allocation. ''Without an allocation of coal, there will be no assessment of the resource body and Victoria will not know what potential can be realised through its development,'' she said.