Media Releases | 16th Jul, 2013

Moves to reduce coal compensation as part of shift to emissions trading welcome

16 July 2013
Environment Victoria has welcomed a decision today by the Rudd Government to reduce compensation payments to brown coal generators. Announcing plans to link to the European Union’s emissions trading scheme one year early, the Prime Minister outlined that the final two years of Energy Security Fund compensation payments to our dirtiest power stations will be scrapped, saving $770 million.
Environment Victoria has long argued that compensation payments to brown coal generators undermine the price on carbon and are excessive. In February this year Environment Victoria released a report by Carbon and Energy Markets1 which showed that Australia’s dirtiest power stations like Hazelwood are actually profiting from compensation arrangements under the carbon price.
 Environment Victoria Campaigns Director Mark Wakeham said today:
 “We’re pleased the government has recognised that coal generators were profiting at taxpayers’ expense and have reduced Energy Security Fund Payments.
 “Cancelling the final two years of payments to our dirtiest power stations is a step towards levelling the playing field and reducing fossil fuel subsidies.
 “The total value of generator compensation is now $2.5 billion instead of the original $5.5 billion proposed. However there is still another billion dollar payment to our dirtiest power stations on September 1 that is unnecessary and should be cancelled.”
 On the ALP’s proposal to shift to emissions trading one year early Mr Wakeham said:
 “The earlier shift to emissions trading won’t have a significant environmental impact – the same amount of pollution reduction will happen, though perhaps less of it will happen in Australia.
 “The budget shortfall from moving to emissions trading sooner has largely come from sensible places, with reductions to coal generator and coal mine compensation, carbon capture and storage programs and the removal of Fringe Benefits Tax for private car use. It is sensible for governments to reign in spending by removing fossil fuel subsidies.
 “We’re also pleased there have been no cuts to renewable energy programs.
 “However cuts to the biodiversity fund and carbon farming initiative are very disappointing and would reduce environment protection and regional investment if they are approved by Parliament.”