In June 2012, on the verge of the carbon price coming into effect, the Labor government handed HRL Limited a $50 million dollar bribe to not close one of the most carbon pollution-intensive power stations in the developed world, along with its associated coal briquette plant, for at least two years.
Well, sure enough, with this agreement just expiring HRL has announced that the well past its used-by date 170MW Energy Brix power plant and associated coal briquette plant in Morwell will be laying off 70 of its workers and ceasing operations next month – although the company paints the closure as temporary.
According to a statement from the company, it is undertaking a feasibility study to “repower” the briquette factory with a “new steam supply”. If the results of the study are favourable then it would lead to restablishment of the briquette operation servicing new product markets as well as current customers.
However, for some reason, a spokeswoman for the company was unable to provide Climate Spectator with any detail whatsoever on what form the repowering and new steam supply might take. When asked specially about the fate of the power station and whether ‘repowering’ could involve refurbishing the existing power station, she said she wasn’t at liberty to say.
Some members of the environmental movement have suggested to Climate Spectator that that this claim of ‘temporary’ closure may be part of a ploy by the company to defer the costs of environmental remediation that are required if the plant is permanently closed. Exxon, for example, played precisely this trick of pretending its Port Stanvac oil refinery in South Australia was “mothballed” rather than closed and managed to delay site clean-up for several years.
If the power plant and briquette factory really do continue operation it would be an incredible tale of how to drag out the life of an asset which is the very definition of an anachronism. The beginnings of the plant go way back to 1949 and power production commenced in 1956. It was a time before the discovery of large deposits of gas in the Bass Strait (indeed next to it was a facility to convert coal into town gas for use in Melbourne). Its briquette factory allowed for the conversion of brown coal into a source of energy that could be readily transported and also provided a more easily burned fuel for the start-up of the subsequent larger brown coal power plants built in the Latrobe Valley.
Figure: The Morwell Energy Brix power plant and briquette plant
The reality is that the company has actually been incrementally closing down sections of its power plant for some time now. Back in 2011, the Australian Energy Market Operator listed it as a 164MW facility, then it was downgraded to 104MW in 2012 and further downgraded to 75MW in December that year. Then in May this year it was downgraded to 65MW, due to the Morwell mine fire. According to the company, the depressed demand for electricity meant the power plant was only operating at a level sufficient to supply the steam needs of the briquette factory.
As was always intended, three of the biggest customers for the briquette plant have switched to new fuel sources. Given the loss of much of its customer base, the incredible age of the facility and the carbon pollution-intensive nature of the operation and its briquette product, you really have to wonder whether its revival is a good idea.
There is a view among some experienced players in the electricity sector that the whole operation would have been closed some time ago were it not for the prospect of a large free permit cash bonanza from the possible introduction of a carbon price (mischievously referred to as “compensation”). In the end, the owners would be glad they didn’t shut it because they managed to squeeze tens of millions of dollars out of the government for an operation that was already on its last legs.
The fact that the carbon price has been freshly repealed and they’ve still gone ahead with closure (I’ll believe its temporary when they restart the operation) just goes to show how badly duped a range of government officials were by the demands by coal generators for “compensation” and payments to ensure “energy security” as part of introduction of the carbon price.
Looking forward, since carbon pricing became official government policy in 2007, more than 20,000 MW of fossil fuel power generating capacity has been acquired or built – this is almost the entirety of power generating capacity owned by the private sector in this country.
Let’s hope government officials have now learnt to never again fall for ridiculous threats by power companies that they deserve compensation for moves to regulate a pollutant which we’ve known for several decades represents a serious threat to human welfare.