Government takes a hit for brown coal in MYEFO

The Mid-Year Economic Fiscal Outlook has little of interest to the clean energy sector. It did show however, that the owners of the Energy Brix have been quite shrewd in getting $160m cash in hand for a generator on the verge of retirement.

From what we’ve been able to gather, there is surprisingly little to report in changes on clean energy and climate change programs out of the Mid-Year Economic Fiscal Outlook.

The main thing of interest is that Energy Brix, the oldest Australian brown coal generator and a producer of brown coal briquettes, manages to pop-up several times throughout the MYEFO account line items. 

As announced in June this year, the government agreed to prop-up Energy Brix for two years so it could continue to supply briquette fuel to a number of rural companies who used it for their boilers and seemed to be living under a rock and were unaware they should have organised alternative fuel supplies.

At the time, the government said it would provide $50 million in assistance. Now the MYEFO accounts reveal it has essentially swapped the free permit entitlement for cash, with this cash given earlier than the free permits. 

The flows of money are detailed in the table below, with extra money flowing from Department of Industry and Department of Resources, Energy and Tourism in the form of cash in 2011-12 to 2014-15. The government gains in 2013-14 to 2015-16 through giving away less permits for free. It also gains a further $35.3 million in 2016-17 not listed in the table below.

Assistance for Energy Brix – transfer of funds between programs

All up, Energy Brix receives $160.3 million, while the government estimates it gains $126.1 million through being able to sell permits it would otherwise have given away for free.

However in the end it’s likely the government won’t get $126 million for its permits because in 2015-16 the carbon price is likely to be closer to $15 than the $29 the government estimates. And in 2016-17 its possible there won’t even be a carbon price if Tony Abbott does what he promises and calls a double dissolution election.

Overall Energy Brix has been relatively shrewd. It was a generator already on the verge of retirement and with this deal it has got cash in the hand and got it sooner rather than receiving free permits of highly uncertain value.

The one thing taxpayers can console themselves about is that at least the government has finally withdrawn the $100 million promised to the owner of Energy Brix for a new brown coal power plant under the Low Emissions Technology Demonstration Fund.

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