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July 5, 2011
An official leak from the Gillard Government says that, as a result of the deliberations of it the multi-party climate change committee, it is putting together a $3 billion energy package. This aims to promote clean energy, pay for the closure of Australia's dirtiest brown coal-fired power plants in Victoria (Hazelwood?) and South Australia (Playford?) and avoid systemic failure of electricity supply in southeast Australia.

Gary Sauer-Thompson, Electricity Pylons, Port Adelaide, 2010
This energy package is the initial step away from the the political failure of 2009 to 2011 and is the beginning of an ongoing attempt to address the consequences of the market failure to price greenhouse gas emissions in order to reduce our reliance on fossil-energy based technologies. The energy package is a positive when the exclusion of petrol from a carbon price is a big negative.
It appears that there will be a clean energy finance corporation with a fund of $2bn to invest in renewables? Clean coal? There will an energy security package that will provide coal-fired power generators with a line of credit and loan guarantees to continue operating, since coal-fired power generators are faced with devaluation of assets, losses of equity for shareholders and an inability to borrow because of the carbon tax.
A large part of the debate has been about the main problems of electricity generators in losing asset values, being unable to borrow funds and avoiding financial risks and market failures (ie., limit the risks of power disruption).
Like the Greens I baulk at paying funds raised from the carbon tax to allow the brown coal industries to continue. They are the polluters and they should pay for their greenhouse gas emissions. The electricity market can handle the adjustments that have to be made without big handouts of taxpayers' money. However, the Latrobe Valley is under particular threat, with unemployment likely to rise significantly.
Rather than scarce funds being spent on compensating the shareholders (in Sydney or Hong Kong or Paris) it should be spent on supporting innovation to build the economy of the future, and providing tax cuts and improved benefits for Australian households.
If geosequestration, the capture and storage of carbon in geological structures, doesn't work and so brown coal cannot become a low emission energy source, then it will lead over time to reduction of brown coal in energy production. Will that lead to a closure of the coal -fired power stations?
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The great hope for the Gillard Government is that the pricing of greenhouse emissions, which has done so much to bring Labor down, will also be the mechanism for restoring the Government through a carbon tax.