Australia's 600MW brown coal project gets 'frozen'

A $1.23 billion brown coal-gas hybrid power plant in Australia has been frozen after a tribunal imposed difficult conditions.

Energy technology firm HRL, one of a number of companies trying to develop clean-coal power plants, said it had frozen design and pre-construction work on a proposed 600-megawatt plant in the southern state of Victoria.

Last month, the tribunal ruled in favour of the HRL plant but added a condition that construction could not proceed until the federal government had reached agreement with other generators to shut down at least 600 MW of coal-fired generation in Victoria.

The programme is termed as "contract for closure".

HRL has won pledged funding of $100 million from the Australian government and $50 million from the state government in Victoria, which has the world's second-largest reserves of brown coal. However, the latest delay means it could miss out on the $100 million federal grant.

It has set a June 30 deadline for negotiations, the same date for HRL to meet key project milestones, including bank financing, before it can receive the A$100 million grant.

"As a consequence of the imposition of the condition, there is considerable uncertainty as to the date on which construction of the project could commence, if at all if there is no contracts for closure," HRL said in a statement.

HRL aims to cut greenhouse gas emissions from using brown coal for power generation, but its plant has been criticised by green groups who say emissions would still be higher than more efficient gas-fired power plants. They also favour greater use of renewable energy such as wind and solar.

Brown coal power plants in Victoria generate between 1.25 and 1.4 tonnes of CO2 per megawatt/hour, versus 0.90 for black coal and 0.4 to 0.5 for new-build gas-fired power plants.

According to project documents, HRL's hybrid plant would be the first of its type in Australia at a commercial scale and emit about 40 percent less CO2 than existing brown coal plants.

The HRL design first dries out the brown coal, then gasifies it before mixing it with piped-in natural gas.

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