Brumby's dirty secret: brown coal for export

The Age

Wednesday October 14, 2009

By ROYCE MILLAR and ADAM MORTON

VICTORIA'S massive brown coal reserves look set to be opened up to export for the first time €” prompting claims the state is putting commercial opportunity ahead of its responsibility to curb greenhouse gas emissions.Confidential cabinet documents obtained by The Age show the Brumby Government is considering offering billions of tonnes of Latrobe Valley coal for tender next year.The tender process would be preceded by a green light for a $1.5 billion scheme by the company Exergen to mine, dry and export 12 million tonnes of brown coal a year to be burned in Indian power stations.Exergen wants to build a 150-kilometre underground pipe to carry the dried coal from the Latrobe Valley to an expanded port at Hastings on Western Port.The cabinet documents acknowledge that community concerns could be raised by the export of brown coal, a relatively "dirty" fuel that emits far more greenhouse emissions to generate power than most alternatives.But the documents say exports can be justified on three grounds: Victoria cannot unilaterally limit global emissions, the coal products could help developing countries overcome poverty, and emissions may be even higher if countries are denied Victorian coal and use dirtier fuels.Environment Victoria, the state's main green lobby, said it was stunned the Government would want to expand an industry that needed to be phased out to tackle climate change.Campaigns director Mark Wakeham said Victoria justifying coal exports on the grounds that the state was not responsible for a global climate deal would be "like saying we can't single-handedly deliver world peace so let's go on a killing spree".The Victorian Employers Chamber of Commerce and Industry welcomed the prospect, saying it could be good for jobs in Gippsland. "It is positive from the point of view of diversification in Latrobe Valley, and the pressure likely faced by the valley from emissions trading," said spokesman Chris James. "We also hope it is part of cleaner coal solution."The Gippsland Trades and Labour Council also supported mining for coal exports, but was sceptical about whether proposals such as Exergen's would go ahead. Secretary John Parker also said he was concerned the focus would move to digging up coal and selling it, rather than investing to address climate change.The cabinet documents put Gippsland's coal reserves at 33 billion tonnes €” enough to power Victoria for about 500 years at current rates of consumption. Thirteen billion tonnes remain unallocated and potentially available for export.Brown coal's high water content, flammability and low energy content have discouraged exports, with only a small amount shipped as briquettes.But drying, gasification and other technologies are said to have the potential to produce exportable commodities including dry coal, diesel, liquid fuels and fertilisers. Proponents say drying will reduce Gippsland coal's moisture content from more than 60 per cent to about 25 per cent and cut its emissions when burned by about 30 per cent.Exergen wants to build a demonstration drying plant capable of processing 50 tonnes an hour and making fuel of similar quality to low-grade black coal. If successful, a much larger plant would be developed with exports to flow in 2014.The scheme would also leave about 16 billion litres of water requiring treatment for re-use.As revealed last month in The Sunday Age, ministers have sought more information on the Exergen project, which is strongly backed by Energy and Resources Minister Peter Batchelor. A senior Labor source said it was expected Exergen's proposal would be similar to previous schemes that had been awarded obligation-free coal allocations with little more than a promise to develop technology to slash emissions.Exergen chief executive Jack Hamilton said his company continued "constructive discussions" with the Government. But it was "very early days" for the proposal.Port of Hastings Corporation chief executive Ralph Kenyon said there were no definite plans for coal exports although strategic planning for the port would allow for the possibility.A spokeswoman for Mr Batchelor said any application for a brown coal allocation would be assessed against strict environmental and economic criteria. But she noted that no Australian state or territory had conditions on export resources.

© 2009 The Age

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