2000MW of coal fired power plants - more than the total capacity of the Hazelwood power station - will be closed by 2020 under a carbon price agreement that has reduced handouts to the coal sector by about $1.8 billion and ensured that no new commercial coal fired power plants will be built in Australia.
"This carbon price package, by shutting the dirtiest coal fired stations, will deliver the first steps in Australia's important and exciting transformation from coal to renewable energy," Australian Greens Deputy Leader, Senator Christine Milne, said.
"The Greens, the government and the independents are absolutely committed to making sure workers and communities who currently rely on coal are helped through this transformation with structural adjustment support of some $200 million."
Aspects of the carbon price agreement that will drive the transformation from coal to renewable energy include:
• 'Contracts for closure' to shut down 2000MW of coal fired power generation by 2020. This represents closing the equivalent of more than Hazelwood power station;
• $1.8 billion less total free permits to coal generators, handed out over five rather than 10 years;
• Treasury modelling indicates that expected carbon prices will ensure that no new commercial scale coal fired power plants will be built in Australia unless and until carbon capture and storage can be proven;
• A substantial amount of compensation to gassy coal mines will be separate government funding - not agreed as part of, or funded by, the carbon price package;
• Australia's largest ever investment in renewable energy, restructuring of government support for renewable energy, and substantial energy efficiency programs; and
• The Australian Energy Market Operator will begin planning for 100% renewable energy.
The substantial shift from free permits to contracts for closure is a big change from the Rudd government's CPRS which was described as follows by Citi Investment Research and Analysis director Elaine Prior on ABC Inside Business, November 29 2009:
‘One of the things that the package has done is provided more surety for the coal-fired generators to keep generating until roughly 2020 or beyond ... So one might say in that sense that it's on the one hand created more stability in the electricity market, but perhaps reduced the urgency for people to look at change.'
"Where the CPRS paid coal generators to keep on polluting, this package will pay them to close in an orderly manner, providing confidence to investors in clean, renewable energy alternatives to start building new capacity.
"Partial closure of coal power plants like Hazelwood could begin immediately, with the necessary support for workers and communities.
"There is much more to be done to make sure Australia makes a fair transition from coal to renewables, and the Greens will continue to campaign to make that happen. But this package is an excellent platform to build that stronger action on in the years ahead."
