Coal Is Not Getting Any Cheaper


It won’t be long before the owners of Australia’s dirtiest power stations look back in regret at how they handled the "Contracts for Closure" negotiations. Announced alongside the Clean Energy Future package last year, Contracts for Closure aimed to facilitate the closure of 2000 Megawatts of highly polluting coal-fired electricity by paying out the generators to shut up shop between 2016 and 2020.

Yesterday, Energy Minister Martin Ferguson announced that negotiations with generators had ceased after the power station owners held out for unreasonably high payments. Like we should be surprised.

These are the same coal-fired power stations which, despite being long-time contributors to climate change, managed to secure $5.5 billion of taxpayer’s money as "compensation" from the carbon price package. Their attempt to cash in on a policy measure that was acknowledged to be inevitable by many was entirely expected. Now that negotiations have ended and they no longer have the option of being paid to shut down, greedy polluters will have to shut down for more rational reasons: to prevent greenhouse pollution, protect public health and waterways and make an orderly transition to clean, healthy renewable energy.

When Contracts for Closure was announced, many of us swallowed the ghastly medicine of paying public money to the generators in order to receive the ultimate healthy benefit of having less polluting coal power in Australia’s energy mix. After all, that’s what this is all about — less polluting power, more renewable energy.

But let’s not forget, well before Contracts for Closure came along there was a community campaign building in Victoria to replace Hazelwood (the dirtiest of the lot) with renewable energy.

Coal is still well behind renewable energy in the popularity stakes. As climate change impacts continue to take their toll, coal isn’t going to win over any new friends. If the coal-fired electricity generators think the only way to get them shut is with a massive golden handshake, they should have a look at the United States, which has managed to close about one fifth of that country’s coal fired power station fleet without costing taxpayers. It might get them thinking they should have just taken the money while they had the chance.

There is already a recent history of coal power stations closing in Australia just because they should.

In 2010, Swanbank B announced that it was going to close. Munmorah power station in New South Wales was set to be refurbished but in July announced that they too would close. Falling energy demand combined with high maintenance costs and aging infrastructure made Munmorah uneconomic.

It’s a story that applies across all of the coal-fired generators, no matter how old or dirty they are. Coal is not getting any cheaper: increasing costs, compounded by the carbon price, are juxtaposed against the plummeting costs of renewable energy.

With Big Coal’s greedy cash-grab resulting in Contracts for Closure being ditched, many in the environment movement are now calling for the $5.5 billion on carbon price compensation to coal power to also be scrapped. That’s a proposition well worth a look from a "value for money" perspective. After all, while we’re not always in the habit of agreeing with Greg Hunt, it’s hard to escape the inconsistency he identified in a government using one pot of money to keep coal power stations running, and another to pay for them to close.

$5.5 billion can buy a lot of renewable energy. In fact, if the IEA’s figures are to be believed, it could get us about 3000 MW of wind power, which would be a damn sight more productive than using as compensation to power stations that are supposed to be penalised as the country’s heaviest polluters by the carbon price. It would generate more jobs, as well as create replacement power for the grid, making old dirty coal even more redundant.

Alternatively, the coal industry’s compo could be used to build 1000 MW of large-scale solar power with thermal storage 

— a technology that is ready to deploy now and provides electricity around the clock.

While Contracts for Closure didn’t have a pre-determined cost to the taxpayer, compensating Big Coal for a carbon price that was supposed to hurt them does. It’s about time both of these contradictory pots of cash were reconsidered and instead put into the renewable energy power stations we’ll need to replace coal.

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