News | 5th Sep, 2012

Business questions Labor’s carbon credibility

Wednesday, 5 September 2012
Phillip Coorie and David Wroe, Sydney Morning Herald

BIG business believes the carbon tax has become little more than a wealth distribution mechanism following the decision of the federal government to scrap plans to pay the nation's dirtiest coal-fired power plants to shut down.

One of the nation's most senior business figures, speaking on the condition of anonymity, has told the National Times that it was time to question the purpose of a carbon price if the largest and dirtiest polluters were going to continue on a business as usual basis.

''It's nothing more than a wealth redistribution system,'' the figure said.

Energy Minister Martin Ferguson announced this morning he had ended buy-out talks with the owners of five emissions-intensive power plants: Playford B in South Australia; Collinsville in Queensland; and Energy Brix, Hazelwood and Yallourn, all in Victoria.

The plants' owners were asking for more money than the government was prepared to pay. Mr Ferguson said ''there remains a material gap between the level of compensation generators have sought and what the Government is prepared to pay''.

''I have said throughout this process that we had a set envelope of funding and were not willing to enter into contracts at any cost – this is about the responsible expenditure of public funds.''

Under the planned ''contract for closure'' program, the Gillard government had earmarked an undisclosed sum of money – in the billions of dollars – to pay some or all of these plants to shut down over the second half of the decade.

The aim was to remove 2000 megawatts of emissions-intensive coal-fired power to help Australia cut its greenhouse gas output.

It has long been speculated that power generators believed their coal assets were worth more than had previously been thought, given depressed global carbon prices, the rising price of gas and other factors.

Prime Minister Julia Gillard explained that the government had not received a "value for money" proposal and stood by her resources minister. 

"Minister Ferguson went about his duties diligently but Minister Ferguson and this government was not going to accept a proposal that wasn't value for money," Ms Gillard told reporters in Perth. 

Ms Gillard also insisted that the carbon price was doing its job and Australia was on target to reduce carbon pollution….

…Mark Wakeham of Environment Victoria branded Mr Ferguson’s announcement ‘‘a devastating blow to Australia’s clean energy future’’.

‘‘You can’t have a clean energy future with power stations like Hazelwood continuing to operate indefinitely – it becomes hollow rhetoric,’’ he said.


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