Coal news and updates

No payment for AGL to exit coal power, says Ian Macfarlane

Federal Industry Minister Ian Macfarlane has ruled out the federal government funding the closure of dirty coal-fired power stations by 2050 saying it would cost $3 billion for one station alone.

When AGL Energy on Friday announced it was positioning itself away from coal  over the next three decades, new chief executive Andy Vesey called on the federal government to take lead in developing a "clear and equitable policy"  in taking less efficient power stations out of the nation's energy mix as they moved to more lower-emissions technology.

"It is important that older, less efficient and reliable power stations are removed from Australia's energy mix," he said.

"Decarbonisation and modernisation of Australia's electricity system are important goals requiring effective policy."

AGL is the largest holder of coal-fired power stations after last year's $1.5 billion acquisition of Macquarie Generation assets from the NSW government as well as the Loy Yan power station in Victoria in 2012. It also has gas-fired assets in Queensland and is planning two new power stations in NSW and Victoria.

The former Rudd government explored paying electricity generators to shut down older, high-polluting power stations but baulked at the cost, believed to be $3 billion for one station alone.

Mr Macfarlane said energy investments were a matter for individual companies, but ruled out using taxpayer funds to help hasten the close of coal-fired power stations.

"The government welcomes industry decisions that take a long-term view, given the importance of energy to the Australian economy and welcomes decisions to invest in lower emissions technologies and energy sources," he said.

"The government's energy white paper makes clear that the government won't pursue policies that pay for the exit of power generation, and it also states that the government will take a technology-neutral approach to ensure the market can confidently make long-term investments decisions."

Analysts were divided on whether the AGL announcement was a genuine re-positioning of the company away from fossil fuels or a statement of the obvious about the inevitable closure of coal-fired generation assets.

Energy experts predict most coal-fired power stations would significantly depreciate in value over the next few decades and would be closed by 2050 regardless of AGL's announcement.

AGL's own Liddell and Bayswater power stations in NSW were due to close in 2022 and 2035 respectively, with Loy Yang due to close in 2048, according to information provided by the company.

"But it is a statement of intent about future policy. It is more than window-dressing," said one energy analyst who did not want to be named.

AGL has also not ruled out financing or building new coal-fired power stations using carbon capture and storage technology to reduce greenhouse gas emissions.

But a spokeswoman for AGL said the company wanted to take a leadership position in the move towards a "carbon-constrained future". Renewables make up about 17 per cent of AGL's total energy portfolio.

"The federal government has made a commitment to work towards a global agreement that limits global warming to less than 2 degrees Celsius above pre-industrial levels and our new greenhouse gas policy supports this," the spokeswoman said.

The potential closure of coal-fired power stations raises questions about what would happen to the power stations, including Loy Yan, when they eventually shut down.

A spokeswoman for Victorian Industry Minister Lily D'Ambrosio said the government supported AGL's move to more renewable technology, but would want to talk to the company about what would be left behind once the power plants – which are big employers in rural Victoria – close.

"We're committed to having a rational and responsible conversation about the future of our coal resources and, importantly, what that means in terms of economic diversification in the Latrobe Valley," the spokeswoman said.

source: http://www.afr.com