State Labor and the Just Transition: good news and bad

Old Brown Coal Mine fire 1929 (SLV)

Old Brown Coal Mine Fire 1929

The State Labor government has just announced a dramatic three-fold increase in the royalties paid by the valley coal mines to bring them into line with other states. With governments of all persuasions almost always crying poor one wonders why this had not been done before. They have also dramatically increased mine restoration bonds and the Hazelwood mine fire bill from Country Fire Authority is, as far as I am aware, yet to be resolved. In short the costs and problems of the privatised Latrobe Valley generators are mounting. As well as the exhaustive enquiries and reports into the Morwell Open cut fire the government has also carried out various community consultations.

With regards the mine restoration bonds Tom Arup in the Age reported “The government will now require the owners of the three big mines in the Valley – Hazelwood, Yallourn and Loy Yang – to increase their bonds to half of the owners’ estimated costs of rehabilitation by June, and then the full cost by the start of next year. That means AGL, which owns Loy Yang, will have to increase their bond from $15 million to $112 million by January 2017. The bond for Energy Australia, which owns the Yallourn mine, will rise from $11.4 million to $68.5 million, while the bond for Hazelwood’s owners will go from $15 million to $73.4 million.”  Again this is a step in the right direction but the range of estimates of actual restoration costs vary significantly. The Latrobe Valley Express has reported that there is a wide range of estimates for the restoration of  the Hazlewood Open Cut – well over $100m and probably much higher.

Then there is the CFA bill to GDF Suez for $18 million costs for the Hazelwood mine fire-fighting effort. I have been unable to establish the current status of this claim and one suspects there will be a long struggle in the courts ahead. The real cost of fighting the fire and subsequent clean-up has been estimated at $251m.

In some ways these are all token actions by government. Increasing the revenue from the power generators may become an excuse to delay action. The too hard decisions may become harder still.  Does the increased royalty mean the government has no plans for retiring even one of the valley generators? Unlike their predecessors (the Lib/Nats) at least this government is trying. The next step, which should be taken immediately, is to relocate the SECV to Morwell or create a new organisation. The purpose of this organisation will be to plan and oversee the implementation of a just transition in the valley from brown coal generated electricity to a low carbon future.  This plan should be done in co-operation with Federation Uni engineering at Churchill and with the Energy Institute of Melbourne Uni to identify the most seamless and rapid route to the low carbon economy and establish a rigid timeline to achieve the same. The political support for this should be bipartisan and have the highest priority.