Media Releases | 5th Sep, 2012

Contracts for closure is key test of need for coal compensation

Wednesday, 5 September 2012

If owners of the nation’s dirtiest power stations don’t accept contracts for closure, the Federal Government should withdraw the $5.5 billion in carbon price compensation set aside for closing coal-fired power stations, the Australian Conservation Foundation and Environment Victoria said today.

The call from environment groups comes as media reports suggest the Federal Government may walk away from its commitment on contracts for closure this morning.

Tony Mohr, ACF’s Climate Change Program Manager, said contracts for closure was a key commitment of the Federal Government’s carbon price and agreement was long overdue on which power stations would be retired.

“Closing 2000 MW of coal-fired power is a key plank of the Federal Government’s Clean Energy Future package and is now the only part of that package that hasn’t been delivered. With last week’s announcement linking Australia’s carbon price to the European scheme and removing the proposed floor price the Government should be finalising negotiations, not backing away from a key promise.”

Mark Wakeham, Environment Victoria’s Campaigns Director, said contracts for closure was a key test of the need for any compensation for coal generators as part of the carbon price package.

“At the moment it looks as though neither the Federal Government nor the coal generators are trying very hard to reach agreement.

“Any decision to rule out contracts for closure for Hazelwood or Yallourn would make achieving the 2000 MW commitment impossible, with the other 3 power stations in the process totalling around 600 MW in capacity.”

“In deciding to pay coal generators $5.5 billion compensation over five years in the form of cash and free permits the Federal Government went against the advice of Professor Ross Garnuat and many other experts. The rationale for these payments was to compensate generators for loss of asset value.

“In 2012-13 Australian taxpayers wrote cheques totalling $1 billion to the owners of nine polluting power stations.  Hazelwood alone received $266 million to keep polluting while the Port Augusta power stations received nearly $60 million this year.  If these facilities now claim they have a profitable future and their asset values remain high, then there is no public policy justification for the compensation payments that are coming at great cost to Australian taxpayers. Owners of dirty power stations like Hazelwood cannot have their cake and eat it too. It is time for the Federal Government to deliver on its contracts for closure promise.”


Contact: Tony Mohr (ACF) 0408 806 206 and Mark Wakeham (EV)  0439 700 501