Hazelwood FAQs

Hazelwood was old, out of date and hadn’t been maintained. Its owner estimated it would cost $400 million just to meet basic safety standards.

Image: Gippsland Solar

On this page:

  1. What is Hazelwood?
  2. How polluting was it?
  3. Why did it close?
  4. A just transition for the community
  5. What does the energy industry say about phasing out coal?
  6. What do unions say?
  7. How will we meet our energy needs now?
  8. Power costs
  9. What needs to happen next?

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What is Hazelwood?

Hazelwood was a 1600 megawatt (MW) brown coal-burning power station in Victoria’s Latrobe Valley. When it was built, the engineers thought it would be closed by the year 2000.

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  • The supply of coal came from the adjacent Hazelwood mine – 150 metres deep and more than 3 times the size of the Melbourne CBD
  • Both the power station and mine are owned by ENGIE, a major multinational energy company, whose biggest shareholder is the French government
  • Australia’s oldest power station – construction began in 1964 and it was originally scheduled for retirement in 2005.
  • Hazelwood closed on 31 March 2017

How polluting was it?

Before it closed, Hazelwood had the highest emissions intensity of any coal power station in Australia, and possibly in the developed world.

A Latrobe Valley resident wipes toxic coal dust from their windowsill.

A Latrobe Valley resident wipes toxic coal dust from their windowsill. Source: Latrobe Valley Express.

  • Australia’s ‘dirtiest’ power station – Hazelwood produced more greenhouse gas emissions per unit of electricity than any other power source in Australia.
  • It emitted around 16 million tonnes of CO2 every year – 14 percent of Victoria’s annual greenhouse gas emissions and 3 percent of Australia’s.
  • It was the biggest source of toxic dioxin in the country.
  • It was Australia’s biggest source of toxic fine particulate matter (PM 2.5), which causes death of an estimated 18 people every year in Gippsland.
  • It used 27 billion litres of water a year – as much as Melbourne uses a month!

In 2014, the mine that supplies Hazelwood power station caught fire. It burned for 45 days, blanketing the surrounding area in toxic smoke. It was one of the worst pollution events in Victoria’s history. A government inquiry found this fire was linked to the deaths of at least 11 people.

 

Read more in our Hazelwood closure media briefing paper

Why did it close?

Hazelwood was old, out of date and hadn’t been maintained. ENGIE estimated it would have cost $400 million just to meet basic safety standards.

Out-dated? This is what computers looked like at the time Hazelwood was built.

  • Hazelwood’s owner ENGIE stated it was “making climate a priority” and committed to closing its most outdated coal plants.
  • Hazelwood’s closure is part of a broader trend in the shift from coal to renewable energy. Australia’s coal fleet is very old, with many at or close to their originally intended retirement age. The rapidly declining cost of clean energy and storage will also mean some coal power stations retire early.

Read More

Hazelwood is jointly owned by French company ENGIE (72 percent) and Japanese company Mitsui & Co. (28 percent). ENGIE decided to close Hazelwood because it committed to “making climate a priority” by signing onto the COP 21 Business and Climate Summit. In May 2016. CEO Isabelle Kocher said the company was ‘reviewing its remaining coal plants one by one and would close those with the most outdated technology.’

The largest shareholder in ENGIE is the French government, which owns 33 percent of the company, and has also committed to strong action on climate change. The French Environment Minister said ENGIE would ‘disengage’ from Hazelwood power station during a documentary that aired on French TV in May 2016. The Minister’s response came after receiving a petition about the Hazelwood mine fire from Environment Victoria. Environment Victoria has been campaigning to replace Hazelwood with clean energy like wind and solar for over a decade.

Protestors at a demonstration organised by Environment Victoria to call for the replacement of Hazelwood Power Station.

2010: Protestors closed down portions of the CBD in Melbourne at a demonstration organised by Environment Victoria to call for the replacement of Hazelwood Power Station.

International efforts to curb climate emissions and shift to renewable energy, combined with a growing realisation that coal is a technology past – is causing many coal fired power stations in Australia to shut their doors.

The transition from coal is inevitable. What Australia needs is a nationally led coal closure plan to provide more certainty and notice to communities near power stations and help drive efforts to diversify regional economies, rather than leaving it too late, which is what has happened with each closure so far.

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ABOVE: A failure to plan is a plan to fail … At the 2017 Sustainable Living Festival ex-CEO Mark Wakeham joined Mark Richards (a ex-worker at Hazelwood power station), Olivia Kember (head of Policy at The Climate Institute) and Ben Davison (Chief of Staff at the ACTU) for the ‘Beyond hazelwood’ panel discussion.

A just transition for the community

The Latrobe Valley deserves a “Just Transition” – to transform to a clean and sustainable economy in a way that is fair for workers and the community.

The Hazelwood transition deal gives my wife and me a future in our hometown

The Guardian

I was thrown a lifeline last Friday. Along with at least 150 of my work colleagues, and hopefully many more, I will be given the opportunity to continue to work in the Latrobe Valley power industry, despite the closure of the Hazelwood power station, my workplace of the last 28 years.
  • The state and federal governments have committed around $300 million to support economic diversification in the region.
  • Around 350 Hazelwood workers will be employed across other power stations and in decommissioning and rehabilitation of the site.
  • There are other economic opportunities open to the Latrobe Valley beyond coal.

Read More

The Latrobe Valley community deserves a plan for an orderly and phased transition away from coal that safeguards the future health and prosperity of the community. People in coal communities face serious economic consequences if the transition to new energy is poorly managed.

Hazelwood employed 495 people directly and around 300 contractors. A transfer scheme has been set up so some of these workers (up to 150) can continue working at Yallourn and Loy Yang B power stations, which are also in the Latrobe Valley.

Up to 200 other Hazelwood workers could be employed in the massive task of rehabilitating the mine and decommissioning the power station.

To date, federal and state governments have committed a combined sum of approximately $300 million to the Latrobe Valley in the wake of the announcement of Hazelwood’s closure.

Around 20 coal power stations around the country will need to retire in coming years, to meet our international commitments to keeping warming below 2 degrees and to avoid the worst impacts of climate change. An initial estimate of funding required to support transitions in these communities could be upwards of $6 billion.

Funding of this magnitude, over the timeframe required to achieve lasting change, will require more than one-off payments to support piecemeal projects. It will depend on an institutional framework that generates revenue which can be directed towards predictable and ongoing support for affected communities.

For the sake of climate and communities, Australia needs a national plan to manage the closure of power stations and to achieve a just transition for communities and workers.

A report from Environment Victoria, Life After Coal: Pathways to a just and sustainable transition for the Latrobe Valley, details how an effective transition could take place.

The report found that successful transitions are led by the community and supported by governments. There are a number of options for creating new and sustainable economic activity in the Latrobe Valley, including a home energy efficiency retrofit program for Gippsland, which could create up to 620 jobs and reduce the cost of living for households (see Life After Coal p.26).

What does the energy industry say about phasing out coal?

Calls for a plan to actively manage the phase-out of coal-burning power stations are coming from diverse sources.

AGL: “A planned phase-out of coal plants is needed to reduce the risk of blackouts, because it will send a signal to the market that more renewable energy should be built.” (AFR March 5 2017)

EnergyAustralia (owners of Yallourn power station): “We need an orderly, realistic transition from large, older coal-fired power stations.” (AFR, March 5 2017)

The Business Council of Australia: “Victoria needs a managed transition away from coal-fired electricity generation. Given the profile of Victoria’s coal-fired generation fleet, a more managed transition policy would seek to minimise the risks of this transition on system security and individual communities throughout Victoria.” (BCA, September 2016)

What do unions say?

Many in the labour movement are calling for a Just Transition, meaning a process to retire coal power stations and shift to a renewable economy in a way that is just and fair for workers.

At a recent Environment Victoria event Colin Long, the Just Transitions Organiser at the Victorian Trades Hall Council, said the following: “The forces that are exploiting workers are the same forces that are exploiting the environment. The relentlessness of capital accumulation and the relentlessness of the growth based economy that is killing us all. Whether it’s the environment or humans and workers. So we have a shared interest in stopping that and building a better world.”

A particularly comprehensive articulation of this vision can be found here in the Australian Council of Trade Union’s Policy Discussion Paper.

How will we meet our energy needs now?

In response to some media reports, the Australian Energy Market Operator (AEMO) confirmed “the closure of Hazelwood will not compromise the security of the Victorian electricity system nor the broader National Electricity Market (NEM) next summer”.

In fact, experience since Hazelwood’s closure has shown that the major risk to power security is breakdowns at other old coal power stations just like Hazelwood. Especially in the heat when their cooling systems are more likely to fail.

However the massive wind and solar construction boom underway in Victoria will reduce the risk posed by old and faulty coal power stations.

Victoria's coal-fired power plants the least reliable in the country

The Age

Victoria’s brown coal-fired power stations are the most unreliable in the country, breaking down far more often than power plants in the rest of Australia and putting the stability of the state’s energy supply at risk.

A flexible grid of the future

  • Renewable energy, together with storage systems, efficiency and smart demand management can provide clean power 24/7.
  • Australia’s electricity needs to move towards a more flexible grid that can better support renewable energy – where renewable energy can be transported from places it’s being generated to ones where it’s not.
  • This process is already underway with the recent completion of several new grid scale batteries in Victoria

Read More    

Australia’s electricity system is responsible for around a third of our national emissions, and also provides some of the best opportunities to cut emissions quickly. For this reason, we need to move towards a power system that can be supported by 100 percent renewable energy. A number of studies back this up – including, most recently, the CSIRO and the Institute for Sustainable Futures at the University of Technology Sydney.

People sometimes talk about whether renewable energy can provide “baseload” power. However “baseload” just means that a power station is most economical to run at a constant rate, rather than increasing and decreasing output. It is not, in itself a necessary element of an electricity system.

Renewable energy can reliably provide the electricity we need with a mix of power sources that are variable (e.g. wind) and those that can supply extra energy on demand (e.g. solar energy stored in batteries or salt towers or pumped hydro). Find out more about the concept of “baseload” here.

In simple terms this means we need infrastructure, including storage systems, to support a more flexible grid, which will allow the complete phase out of polluting coal power.

Graph of power demand/supply in a modern flexible grid

Electricity demand and supply in a large-scale system with a large contribution of variable renewable energy. Credit: energypost.eu.

Electricity demand and supply in a large-scale system with a large contribution of variable renewable energy. Credit: energypost.eu.

Graph of power demand/supply in a ‘baseload’ reliant grid

Daily electricity demand and supply in a conventional large-scale system with little renewable energy. Credit: energypost.eu.

Daily electricity demand and supply in a conventional large-scale system with little renewable energy. Credit: energypost.eu.

Power costs

The major cause of recent power bill rises is energy companies gaming the system and exploiting flaws in the market for profit.

Australian energy giant AGL 'gouged' customers after Hazelwood closure, new research shows

ABC

Some of the nation's biggest energy companies have allegedly used the closure of Australia's dirtiest coal-fired power station to price gouge customers and make an extra $3 billion in wholesale profits, according to a new report.
  • Renewable energy is now the cheapest source of new electricity generation – building anything other than renewables will push power prices higher than they need to be.
  • Power bills are also determined by how much electricity is used, not just how much each kWh costs. Energy efficiency retrofits for homes can lead to savings of around $1000 per year on power bills – more than offsetting any short-term increase in prices. Businesses also have many efficiency measures available to them to stop energy waste and cut costs.

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The wholesale electricity price – which makes up most of most residential bills – is set by the most expensive source of electricity that is needed at any given moment – this is almost always gas. Renewable energy is cheaper to produce and actually puts downward pressure on wholesale prices, causing energy bills to get cheaper, not more expensive.

You may still have noticed your bills going up in recent times. However, this has much more to do with energy companies (read: Coal and Gas generator-retailers) gaming the system and exploiting flaws in the market for profit than measures to support renewable energy.

Victorians have been particularly hard hit by this. A recent Grattan Institute report found that, since deregulation in 2009, the the profit margins of energy retailers in Victoria have risen dramatically, adding up to $400 a year to the average Victorian household power bill.

A report from the University of Technology in Sydney found that transitioning Australia to 100 percent renewable energy by 2050 would cost less than continuing on the current path.

The wind and sun are free, so once renewable energy projects are built they are very cheap to run. As coal power stations are phased out, more renewable energy will be built and storage technologies are getting cheaper and cheaper, meaning the costs will only continue to fall.

Ultimately this will push electricity prices down – which even the review of the Renewable Energy Target with a panel selected by Tony Abbott had to acknowledge.

What needs to happen next?

Hazelwood mine rehabilitation

Hazelwood mine over Melbourne CBD (to scale).

Hazelwood mine over Melbourne CBD (to scale).

  • ENGIE are under legal obligations to repair the damage caused by their mining activity, which means rehabilitating the mine to a standard acceptable to the community.
  • Proper rehabilitation of Hazelwood could create around 250 jobs in the Latrobe Valley, mostly employing current Hazelwood workers.
  • Mine rehabilitation also has the potential to help create something positive for the community, which could provide on-going sources of employment or public amenity – if done well. Poor rehabilitation could leave the community with a large industrial wasteland.

Read More

In 2014, the coal mine attached to Hazelwood Power Station caught fire. The fire burned for 45 days, covering Morwell and surrounding areas in toxic smoke and ash.

The evidence heard at the first inquiry into the Hazelwood mine fire found that mine rehabilitation is the best way of preventing coal mines from catching on fire. Unfortunately, rehabilitation works aren’t happening fast enough. Only small areas are rehabilitated each year, leaving vast expanses of open-cut coal exposed, increasing the risk of fire and increasing the amount of coal dust being blown onto nearby communities.

Mine rehabilitation across the Latrobe Valley will also create hundreds of secure jobs. Our report ‘Preventing the Preventable’ estimates it could create between 450-600 long-lasting jobs in the Latrobe Valley.

The rehabilitation bonds are paid by the mine operators to the government, to cover the full cost of rehabilitation works if the company fails to meet their obligations. Since the second Hazelwood Mine Fire Inquiry, the bonds have now been set to match the companies’ own estimates of rehabilitation costs, but actual costs could be much higher. The most recent estimates are that it will cost $439 million to rehabilitate the Hazelwood mine – significantly higher than its bond of $73 million.

This means Victorian taxpayers might be forced to foot the bill if mine operators don’t deliver on their rehabilitation obligations.

ENGIE is under a legal obligation to rehabilitate the mine site, an effort which is unprecedented in size in Australia. Mining companies need to be held to account for this essential component of their operations.

A national transition plan

  • As global temperatures continue to rise, it becomes more and more urgent to curb our climate pollution. This means the rest of the coal power stations in Australia need to be phased out soon and replaced with clean energy.
  • Australia needs a national plan to phase out power stations in a way that supports communities and workers and that meets our international commitments to keeping global warming well under two degrees.

Read More

While Australia has enough excess electricity generation capacity to cover the closure of Hazelwood, it is vital Australia has a strategy to transition away from coal, starting by closing the most polluting power stations.

‘Leaving it to the market’ is not the best option for cutting climate pollution (if the lost capacity from a less polluting plant is taken up by a more polluting plant, emissions could actually rise). Having no plan also means there is no way of knowing for sure where or when the next power station retirement will occur, fuelling speculation and anxiety. This makes it harder to plan for proper economic diversification and life after coal.

It is now widely accepted – by NGOs, unions, the energy industry, analysts – that a government-led plan is needed to manage the phase-out of coal-burning power stations, as part of a comprehensive plan to deal with global warming. Polling shows that the vast majority of Victorians support such a plan.

The Australian Energy Market Operator has estimated that meeting the current (very weak) federal climate targets will require the closure of 8700 MW of coal-burning power stations before 2030. The Climate Institute estimates that we need to close one Hazelwood-sized power station a year from now until the early 2030s.

For more details on the need for a plan to phase out coal power stations and to provide transition support for workers and communities, see our submission to the Senate Inquiry into the Retirement of Coal-Fired Power Stations.

If you also think a coordinated approach to our energy and climate challenges is preferable to economic and environmental chaos – then sign our petition calling for a national plan on coal closure. 

Header image provided courtesy of Gippsland Solar