Radical plan for coal

Power generators would be forced to pay for the closure of a competitor’s dirty brown-coal fired plant under a radical plan that could help Australia slow the continued increase in electricity sector greenhouse emissions without a carbon price or expensive government subsidies.

The idea – from Australian National University academics Frank Jotzo and Salim Mazouz – offers the government hope of meeting the long-term emission reduction targets it will promise in Paris and provides the energy sector with a solution to the problem of oversupply that has forced the mothballing or under-use of less polluting types of generation.

Old high-polluting brown coal-fired plants, particularly in Victoria’s La Trobe Valley, were the biggest winners after the carbon price was abolished with coal generation hitting a three-year high of 75.6% of the east coast market in October, a trend that makes it almost impossible for Australia to meet its promises of long-term cuts in greenhouse emissions even with increased renewable generation from the renewable energy target.

Under the plan the big brown-coal generators, near the end of their operational life, would submit bids for how much money they would need to receive in order to shut straight away. The cost of the winning bid would not be paid by the government but would be spread across all the other generators, in proportion to their own carbon dioxide emissions.