September 7, 2012
The Gillard Government has made a right mess of reducing the greenhouse gas emissions of the fossil fuel industry as part of the shifting to a low carbon economy.
The contracts for closure to secure the closure of 2000 MW of Australia’s dirtiest power stations like Hazelwood and Playford was part of the Clean Energy Future package. It was there because the carbon price agreed to by the Multi-Party Committee on Climate Change was never going to be high enough to retire our most polluting power stations; therefore an additional mechanism was required.
The Clean Energy Future package aimed to secure the closure of a handful of power stations while paying these same power stations $5.5 billion in compensation. Our dirtiest power stations were to be given a $5.5 billion compensation package for loss of asset value. $1 billion in cash payments has been paid in 2011-12.
The other compensation was handing out free permits to dirty industries like brown coal. Currently, these generators receive 94.5 per cent of their pollution permits for free — meaning they only pay one twentieth of the true price for carbon in this country.
These power stations are not going to be closed down.Thankfully Contracts for Closure is being ditched because the owners of the coal-fired power stations were asking too much for their ageing assets. They should never have been compensated in the first place. The Gillard Government has shown some sense in walking away.
On the other hand, these fossil fuel power stations are actually better off due to all the compensation. The system has been gamed by the power of vested interests in the fossil fuel industries. So why not make the coal plants pay the full price of their carbon permits? Why not invest the money in renewable energy--into large-scale solar power with thermal storage?