Victorian emissions targets would almost certainly force the early closure of the Yallourn Power Station, according to the station’s owner, EnergyAustralia.
The company made the claim in a strongly-worded response, published on Friday, to the Final Report of the Independent Expert Panel: Interim Emissions Reduction Targets for Victoria (2021-2030). However, the document also reiterated EnergyAustralia’s commitment to keep the power station open until 2032.
EnergyAustralia’s Executive-Markets Ross Edwards said the key messages in the submission were “Yallourn is playing a vital role in the community, providing good jobs, and protecting the stability of the state’s energy system”.
However, the submission also said “the hand of government will heavily determine the fate of Yallourn” because the panel’s emissions reduction targets “imply a decarbonisation rate that unambiguously suggests the closure of Yallourn well before its 2032 end-of-life and would likely require the closure of other brown coal power stations”.
EnergyAustralia said the energy sector was being called on to “do more than its pro rata share of the effort” in meeting the recommended targets and it was “vital that the government first establishes its social licence” by assessing the risks of power outages and price increases.
EnergyAustralia said it accepted its responsibility, “as a big emitter of carbon to lead an orderly and fair transition to cleaner forms of energy”.
“The closure of Yallourn must only occur where careful planning ensures there is replacement capacity and impacted employees and the community are given new opportunities to prosper,” the company said.
“Without a bottom-up assessment of this nature and careful planning, it is a leap of faith, the risks of which will be borne by all Victorians, but most acutely the residents of the Latrobe Valley.”
The Independent Expert Panel, chaired by Greg Combet, was appointed to advise the Victorian government on the first two interim targets for 2121-2025 and 2026-2030 as part of the statewide target of net zero greenhouse gas emissions by 2050. The zero target was established in law under the Climate Change Act 2017.
The panel’s final report was completed in March this year and interim emissions reduction targets must be determined by March 31, 2020.
EnergyAustralia urged the Department of Environment, Land, Water and Planning to undertake a comprehensive bottom-up analysis “to understand and respond to the implications of the emissions reduction targets proposed by the panel, before (sic) the government legislates the targets in March 2020.”
The submission said leaving this work to be completed in August 2020 as part of a “sector pledge”, as outlined in the Act, was “too late and would suggest the government will not know the relative costs and risks of implementing its emissions reduction target when setting them”.
EnergyAustralia also called for a national bipartisan approach as the most effective means of reducing emissions, rather than state-based schemes.
“In the absence of a national policy, we support the transition of Victoria’s emission intensive energy mix to cleaner forms of energy in a way that minimises costs to households and business and ensures reliability is maintained.”
Government and industry should work together to provide new sources of employment and support services for affected services, it said.
Mr Edwards said Yallourn Power Station would close eventually “but that shouldn’t be until new, reliable power is ready to take over and the transition has been properly planned”.
He said the task ahead was clear.
“It’s finding ways to replace Yallourn’s capacity with cleaner power and create new jobs in the Valley.”
EnergyAustralia said it was exploring pumped-hydro and gas-fired options in the Latrobe Valley and wider-Gippsland region and would continue to invest to keep Yallourn operating because new generation sources took years to plan for and build.
“Without it [Yallourn Power Station] we cannot see how we deliver on our commitment to keep electricity affordable and reliable for our customers.”
The company said it and all stakeholders, including the Victorian government, had “a moral obligation to ensure a just transition occurs” by providing plenty of time and preparation to ensure energy reliability and affordability while delivering good outcomes for workers and the broader community.
Member for Morwell Russell Northe’s response to the panel report described the Latrobe Valley as “a proud regional area who is facing a complete transition away from its major industry as a result of our need to address greenhouse emissions”.