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Report: CO2 Reduction in Victoria - Dogma or delivery?


Victorian brown coal drying technology company Environmental Clean Technologies (ASX:ESI) believe a tremendous opportunity to deliver pragmatic, cost-effective CO2 reductions while still maintaining the State's natural competitive advantage and low cost of energy is being ignored or overlooked because of dogma around how emissions reduction 'should' be achieved.

ECT has just released a report on its website titled 'Reducing CO2 Emissions in Victoria: Dogma or Delivery?' (download here) that shows how a Coldry-driven (dewatered brown coal) solution to CO2 reduction in Victoria can achieve the targets set by Labor Climate Change policy last October while maintaining the State's competitive advantage in the national electricity market.

"ECT strongly supports renewable energy deployment as part of a broad climate change strategy. What we don't support is the wool being pulled over the eyes of Victorian taxpayers and the lack of disclosure around how much their electricity bill will skyrocket under very costly, ideologically driven proposals," said ECT Chief Executive, Kos Galtos.

"This dogma will lead to unnecessarily high prices across the economy and ironically will actually erode the community's will to support the very measures needed to reduce emissions. Solutions need to be pragmatic, not dogmatic. Our Coldry based solution delivers energy security and CO2 reductions without the excessive price tag that comes with dogmatically ignoring coal in sole pursuit of wind, gas and solar."

Various 'extreme green' advocates, eager to spend billions of our hard-earned cash, present overly simplistic solutions, light on any real technical or economic detail and omitting the cost of their schemes to decarbonise the Victorian economy.

"We're tired of the hot air coming from groups claiming to want CO2 reductions but refusing to tell us how much their proposals will cost. When will they come clean and be honest about what families and businesses will pay under their proposals?"

To its credit, Victoria's Labour party has set a bar at 20% reduction by 2020 with a 4 million tonne reduction by 2014. Their policy promises to take a considered and balanced approach involving:

  • '20% by 2020' - 20% reduction in emissions (vs. year 2000 levels) by 2020
  • 0.8 tonnes per MWh - a cap on CO2 emissions per MWh delivered for new fossil fuel power generation systems
  • '4 million tonnes in the next four years'
  • Prohibition of new conventional brown coal-fired electricity generation
  • Funding for further development of the CarbonNet CCS Hub project
  • Support the Latrobe Valley to transition to a low-carbon economy
  • Global Clean-tech leader

Moreover, the approach promises to be 'open book' with the overarching principle of ensuring abatement is achieved at 'least cost to Victorians'.

'Least cost abatement' is the key to maintaining Victoria's natural competitive advantage while meeting our very reasonable emissions reduction goals, while the 'open book' approach is key to ensuring ideologically driven advocates promoting costly, economy-wrecking measures don't take Victorians for a ride.

Victoria's natural competitive advantage is our cheap electricity thanks to abundant and relatively cheap brown coal reserves.

"One of the things Victoria as a state has been able to offer major industry is cheaper power prices. Major electricity-intensive industries like Ford, Holden, Toyota and Alcoa have all maintained operations here because of this competitive advantage."

Take this away and we risk economic contraction and the resultant job losses as energy-intensive industries move their operations elsewhere over time.

To cite one example, Environment Victoria commissioned a report by Green Energy Markets into the replacement of Hazelwood power station with a combination of gas and wind. The report runs to 37 pages and focuses in great detail on how wind and gas can replace Hazelwood, but avoids the same level of investigation and detail on how much their plan would cost.

It states on page 6 "While developing a detailed cost estimate was beyond the scope of this assignment we have considered what the cost of replacing Hazelwood might amount to." The paragraph then proceeds to state it will cost an extra $6 per MWh, or $36 a year for each household in Victoria. These figures weren't referenced and didn't quite ring true based on our own investigations. So we looked to industry reports on cost to deploy and operate wind and gas power generation assets and came up with our own comparison of Environment Victoria's proposal and our Coldry-based solution.

As a State, Victoria emits around 122 million tonnes of CO2 each year of which brown coal-fired power stations account for around half that.

The target set by Labour policy of 20% by 2020 equals a reduction of around 24 million tonnes a year (based on year 2000 emissions).

Our report addresses a scenario where part of our State's conventional technology brown coal-fired power assets are retired.

However, if we look at the result of replacing all 6000 MW of existing brown-coal based capacity with our Coldry-based solution, Victoria can save up to 30 million tonnes of CO2 a year and several billion dollars, even without CCS technology. In fact, it's cheaper to avoid the emissions using our Coldry solution, than it is to capture and bury them using CCS.

We compare the outcome with gas and wind in the example scenario below:


Under the Victorian Labor policy, new brown coal-fired power stations must emit no more than 0.8 tonnes of CO2 per MWh, compared to the 1.3 to 1.5 tonnes currently emitted. Teaming Coldry with proven USC power generation ticks this box, coming in at 0.75t CO2 per MWh or less.

There are other drivers reinforcing the compelling case for Coldry deployment here in Victoria, not the least of which is the NSW Government's planned $1 billion coal subsidy deal that promises to minimise energy price rises in that State, seriously undermining any future carbon price and Victoria's current competitive advantage.

ECT argues that the proposed alternatives for Victoria's energy future - a combination of gas, wind and solar energy - could see a doubling of the generation cost.

"We've taken a look at the cost of introducing a Coldry-based solution, and it adds around 13%, to the current cost of generation, keeping the cost per MWh at less than $45 while reducing CO2 emissions by around 44%."

If Coldry ticks all the climate change policy boxes for brown coal, what is it that stops environmental advocates from discussing it? Dogma?

For Further Information Contact:

Kos Galtos - Chief Executive  +61 3 9909 7684 or [email protected]

Download the full report here: CO2 Emission Reduction in Victoria - Dogma or Delivery?