Lignite's role investigated

A COALITION government program that could have provided $75 million in funding to three brown coal projects in the Latrobe Valley is under the spotlight of an independent investigation after one of three projects collapsed.

Haydn Black

The Andrews Labor government says it wants to assess the options for the Advanced Lignite Demonstration Program projects, which were designed to assess innovative options for the state’s large resources of low-rank brown coal and lignite.

Victoria has the second largest brown coal deposits in the world, but in a carbon constrained world they are far from the best energy source for power generation, so a range of companies have been looking at ways of making better use of the coal, by creating higher value coal products such as briquettes, fertiliser and synthetic oils.

But the program could be scaled back, with the appointment of public servant Rhys Edwards appointed to lead review, after one of the participants withdrew from the ALDP less than 12 months after funding was awarded.

Shanghai Electric Australia Power & Energy Development was granted $25 million for the development of a $119 million demonstration plant at the AGL Energy-owned Loy Yang A Power Station involving the production of briquettes for export to China.

Despite the backing of its ultimate owner, China Power Investment Corporation, one of China’s largest state-owned power companies, the SEAPED project fell over because of a lack of market demand.

"This particular project was not able to attract any private investment at all, so you do have to wonder how viable it was in the first place," Victorian energy minister Lily D’Ambrosio said, although she stressed that no funds had been handed over.

SEAPAD’s planned to turn one million tonnes of brown coal per annum into 580,000t of briquettes, however the company never even finalised a transportation plan, and The Age reported that the full scale project would require a new port, most likely at 90 Mile Beach in Gippsland.

D’Ambrosio said the independent review would ensure there was a strong decision making framework around coal projects.

“Major energy companies, including AGL, GDF Suez and Origin Energy have already announced they will not be investing in new coal-fired power stations. Victoria needs to plan for this transition and the Government’s independent review of coal projects, new coal policy and Renewable Energy Action Plan will help achieve that,” she said.

“Previous governments have supported coal-related programs with limited success. Any future support for new coal technologies must be based on their viability and benefits.”

The ALDP was announced as a $90 million fund with the Commonwealth in 2012, with the grants awarded in early 2014 to three of 21 applicants, but D’Ambrosio said there were major questions over the use of the funds, and whether the ALDP they should have been considered viable.

Coal Energy Australia was granted $30 million for the development of a $143 million demonstration plant producing fertiliser, oil and high value coal used in steelmaking, while Ignite Energy Resources was granted $20 million for the development of an $84.3 million pre-commercial plant producing upgraded coal products for local or export markets and synthetic oil which can be refined into fuel sources such as diesel and petrol.

There have been numerous attempts to make something useful out of Victoria’s brown coal, supported by majors such as ExxonMobil and Shell, but to date none have succeed.

CEA is continuing to seek all approvals for a 16-month build of its plant, while Ignite continues to plan for the construction of its 142,000tpa plant to begin next year at EnergyAustralia’s site south of the Yallourn open cut mine, building on its pilot plant at Somersby in NSW.

The plant will then operate for less than two years, to assess the commercial viability of the technology.

Victoria’s new coal policy will be released in 2016 in order to incorporate findings from the ALDP review, the government’s climate change review and the Hazelwood mine fire inquiry recommendations.

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