Right: former Victorian Premier Jeff Kennett responded to the closure announcement with a call for nuclear power to be considered.
The closure of the Hazelwood power station has not been properly handled by State or federal governments
1. The closing of the power station was forced by state government taxes and emissions targets Those who hold the State government significantly responsible for the Hazelwood closure claim that government taxes and policies designed to discourage the use of brown coal have contributed to Engie's decision to close the power plant. Opposition Leader Matthew Guy has blamed the Andrews government, claiming decisions to triple the brown coal royalty rate and announce a 40 per cent renewable energy target had forced the plant's premature closure. In a media release issued on November 3, 2016, Matthew Guy stated, 'Labor turned its back on the workers of the Latrobe Valley and affordable power in a desperate attempt to win over Green voters in the inner suburbs of Melbourne as the Brumby government promised to partially close Hazelwood if re-elected.' Matthew Guy has further claimed that the new State Labor government has adopted policies designed to achieve the same end. Mr Guy has stated, 'Since Labor's re-election, Daniel Andrews has waged war on the Latrobe Valley and its brown coal generators. In less than two years, Daniel Andrews has tripled the brown coal royalty, ripping an extra $252 million out of our generators, to harm their viability; imposed a 40% renewable energy target designed to make our Latrobe Valley generators uncompetitive; and seen unemployment jump in Morwell from 13% at the election to 19.7% today.' In another media release issued on the same day, Matthew Guy further stated that the Andrews government had made no attempt to bring about the gradual closure of the Hazelwood power plant. Mr Guy wrote, 'The most sensible outcome was a staged closure that took years - it's clear that Daniel Andrews didn't fight for that and he didn't fight for these 1,000 jobs.' Similar claims have been made by former Liberal Premier, Jeff Kennett, who has stated, 'Let us be clear, the Victorian Government has been complicit in the decision to close Hazelwood.' Kennett went on to echo many of Guy Matthews' accusations, stating, 'The government has lifted the taxes imposed on Hazelwood's owners when they bought the royalty charge for the use of brown coal by more than $250 million; through its policy of holding to a renewalable energy target of 40 per cent wind and solar in the main by 2020, sounded the death knell for all coal-fired stations, and by banning onshore exploration for gas, it denied Hazelwood using gas to fire its generators, cutting emissions by more than 50 per cent.' In common with Guy Matthews, Kennett has also suggested that the Andrews government's motivations for taking these actions were political. Mr Kennett has stated, 'While the government greeted the closure in the name of cleaner air, the motivating factor was to ward off threats by the Greens to Labor seats in inner Melbourne.' 2. The closing of the power station will damage the Latrobe Valley and there are no adequate adjustment plans Critics of the manner in which State and federal governments have handled the closure of the Hazelwood power station have stressed the inadequacy of the provisions made for the Latrobe Valley residents who will be harmed. The plant employs about 750 people, with 450 direct employees and 300 contractors. The company has indicated that about 250 workers would remain at the power station between 2017 and 2023 to manage the site's rehabilitation; however, some 500 people will lose their jobs.. Many commentators have stressed the unfortunate plight of those in the Latrobe Valley who will be left unemployed. The Leader of the Victorian Opposition, Guy Matthews, has drawn on personal experience to stress the harm he believes will result to Latrobe Valley families with the closure of Hazelwood. Mr Matthew Guy has stated, 'My family have worked in the Latrobe Valley power industry for decades. I know that the valley will be gutted with this announcement.' Advance Morwell chair person, John Guy, has stressed the region's history of deprivation. Mr John Guy has stated, 'This region is still suffering from the ravages of electricity industry privatisation, for which we received no recompense and which left us with significant social issues and a two-speed economy... Failure to act decisively and quickly will not only leave this region in tatters, but more critically, it will leave significant social and economic scars that the rest of the Victorian community will have to bear for many years to come.' Mr Guy has highlighted the 'above market' wages paid to power industry employees, which if lost, would result in less income for many of the area's small businesses. The same point has been made by Trevor Williams, the Victorian president of CFMEU Mining and Energy. Mr Williams has stated, 'There will be a huge impact on the local economy - they are reasonably paid and they are the ones who go out for tea, have coffee, buy new cars and build new houses.' Earlier this year, the Committee for Gippsland released a report looking at the flow-on effect of power station job losses. The economic modelling found that if two power stations closed down, 3000 Gippsland jobs would be lost. Former Liberal premier of Victoria, Jeff Kennett, has stated with regard to the redundancy payments workers will receive from Engie, 'Much has been said of the average payout per employee, which will be about $330,000. Sounds a lot but invested at 3 per cent it gives the ex-worker an annual income of $9900 - not enough to pay your power bills and rates.' Mr Kennett has been equally critical of the State government's plans to assist those power plant workers who lose their jobs, suggesting that the training and redeployment programs the State government has foreshadowed will not generally result in meaningful employment. Mr Kennett has stated, 'The government's only response in the Latrobe Valley was to offer up large amounts of money and a range of initiatives, most of which will not work. Its irresponsibility has created a new group of welfare recipients. Workers and families prefer occupation and respect.' 3. The closing of the power station will damage Victoria and South Australia The closure of the Hazelwood power plant is expected to have negative consequences for all of Victoria and for South Australia. This point has been made by former Liberal Premier Jeff Kennett, who has stated, 'This abject failure will be felt in human terms when thousands lose their jobs over the next few years. First, in the Latrobe Valley, and then in the western districts where Alcoa, with no access to base-load electricity, will be forced to close and, third, in manufacturing plants where electricity is a major ingredient to production.' Kennett went on to explain further the effect he believes the closure of Hazelwood will have on Victorian electricity consumers and on Victorian industry. Mr Kennett stated, 'One result of Hazelwood shutting is that Victoria, which has been the centre of base-load energy for decades, has lost its capacity to produce that load. Worse, we will, for the first time in our history, become net importers of electricity from NSW and gas from Queensland. We will have no control over future prices for energy we consume. From March Victoria will lose the competitive pricing for electricity we have had for years.' On December 1, 2016, an ABC news report stated, 'Tens of thousands of Victorian households are facing steep hikes in their powers bills next year, partly because of the looming closure of the Hazelwood power station. Consumer advocates warn the price spike could add up to $300 extra for the average annual household electricity and gas bills...' Electricity price increases for small businesses are anticipated to range from 8 to 17 per cent. Some major industrial electricity consumers are predicted to be particularly hard hit. One instance of this is the Alcoa aluminium smelter at Portland. On October 31, 2016, Alcoa's power concession arrangement with the Victorian government came to an end. Enacted in the late 1980s by then-Labor premier John Cain, the subsidy was designed to provide electricity to both the Portland and now-defunct Point Henry smelters at a price linked to the world price of aluminium. The subsidy is said to have cost taxpayers more than $100m a year on some occasions. Commentators have expressed concern that with the expiration of the subsidy and the increased cost of power in Victoria in the wake of the closure of the Hazelwood power plant the future of Alcoa's Portland smelter is now at risk. AGL Loy Yang had been recruited to supply power to the smelter, replacing the subsidy, but Alcoa terminated its contract with the company in August to renegotiate a better price. Alcoa has claimed its strong preference was to find a 'workable solution' to secure the smelter's position, but that its future would ultimately be decided by its ability to remain internationally competitive. Alcoa provides more than 2,000 indirect jobs - almost a quarter of Portland's total population - and the company is the region's largest employer and biggest taxpayer. In an opinion piece published in The Adelaide Advertiser on November 5, 2016, Chris Kenny outlined the impact on South Australia of Victoria's reduced capacity to supply power. Kenny wrote, 'Victoria has been an exporter of electricity, sending power to SA, Tasmania and even NSW at times but now will need to import power at peak times - mainly coal-fired electricity from NSW. Instead of cheap reliable coal-fired power, Victoria is following SA with increased reliance on subsidised, unreliable wind and solar energy.' Mr Kenny foreshadowed the negative consequences that less reliable, more expensive electricity would have on South Australian industry. 4. Emissions could have been reduced if gas had been made available to the power station operators It has been suggested that the closure of the plant may not have been necessary if gas had been made available to power its turbines. Former Liberal Premier Jeff Kennett has stated, 'By banning onshore exploration for gas, it denied Hazelwood using gas to fire its generators, cutting emissions by more than 50 per cent.' Kennett went on to further state, 'The government should have worked with Engie to convert its energy source to gas...They should also have removed the tax or royalty imposed on generators. And they should have worked with Engie to replace its old boilers with efficient, cleaner ones.' In a comment published four days earlier, Mr Kennett had similarly said, 'The Victorian Government has banned all exploration for new sources of gas on shore, horizontal (fracking) or vertical. If we found more gas Hazelwood could be kept operating to allow the current boilers to be replaced over time by more efficient boilers. If Victoria is to avoid the massive price increases of the future and the risk of blackouts it must quickly allow vertical drilling for gas onshore. After all minerals are the assets of all Victorians. I personally am not opposed to fracking, but let's first allow vertical drilling to take place. And urgently. Without new gas finds and production, Victoria will very quickly price itself out of the market for industry and jobs. All of that will start to occur once Hazelwood is allowed to close.' On the question of moving to gas-fuelled power stations Kennett reiterated the point in a later comment, 'Finally, because Victoria is about to run out of our own gas, the government should have removed the prohibition of gas exploration onshore using the vertical method. (This is not fracking that some oppose.) If we don't find replacement gas in Victoria I suspect gas from Queensland will be so expensive as to rule out the economic feasibility of Hazelwood anyway.' The same point has been made more generally in a Canberra Times editorial published on November 4, 2016, which paraphrases the judgement of the Australian Energy Market Operator, claiming, 'Hazelwood's closure represents an opportunity for 'supply side options to emerge' - and, it might have added, an opportunity to reduce Australia's carbon dioxide emissions. While efforts to that end have concentrated mainly on the uptake of renewables, there is still a requirement for baseload power. In Victoria's case the start of the transition of base-load power capacity from coal to gas would seem overdue.' 5. Neither the State nor federal government has plans for establishing an alternate energy source State and federal governments have been criticised for failing adequately to secure Australia's energy future. Those who see this future as remaining with non-renewable energy sources such as coal, gas and uranium criticise governments for moving into renewables (solar and wind power), which they see as unsuitable for supplying base-load power, and for not doing sufficient to secure those power sources they claim are more reliable. Former Liberal Premier Jeff Kennett has criticised the current Victorian government for adopting policies which undermine conventional coal-fired power generation while taking no steps to secure another fuel source. Kennett has stated, 'The decision of the French owner, Engie, to close Hazelwood - aided and abetted by the State Government - is a disaster for Victoria. It's made worse because the government has no Plan B to meet the future need for base-load electricity, not only for the state but for Australia.' Mr Kennett went on to propose the following alternative, 'I would start the process to build Australia's first and maybe second nuclear plant in the Latrobe Valley. These plants can be built much quicker and cheaper than their predecessors, and are environmentally friendly. The valley could have retained its place as the home of base energy in Australia, it could have offered electricity at reasonable prices, and people could have worked in an exciting industry. That the Victorian Government played a major role in the closure of Hazelwood without a Plan B is criminal.' Similarly, those who believe that Victoria's (and indeed Australia's) energy future lies with renewables condemn both the States and federal government for not having done sufficient to guarantee that future. Giles Parkinson and Sophie Vorrath, in a report written for RenewEconomy on November 3, 2016, quoted Mark Wakeham, the CEO of Environment Victoria, who stated, 'It is hard to believe that even though Hazelwood is the oldest and most polluting power station in Australia and was first due to shut in 2000, there remains no clear, government-led plan for its closure.' Wakeham was further quoted claiming, 'Australia's distinct lack of any credible climate policy or national energy plan to phase out the old and invest in the new, has left us at the whims of the market. It's time for the Federal government and states to work together on a plan to clean up our power supply and support affected communities.' Mr Wakeham had made a similar judgement in September, 2016, in response to rooms that Engie was about to close Hazelwood. Mr Wakeham stated, 'For the past 12 months Engie has been saying that they will move away from coal and that dealing with climate change is central to their corporate strategy. This inevitably means phasing out coal-burning power stations like Hazelwood and Loy Yang B, which Engie also owns. Leaving the timing of power station closure to the market risks leaving communities in the lurch. A responsible government should have a plan to phase out our oldest and dirtiest power stations and build new clean energy.' |
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