Carbon tax blamed for Australian plant closure

• 11 years ago (2012-07-04)
• Junior Isles

Europe 1061 Nuclear 640

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The New South Wales (NSW) government has partly blamed Australia’s new carbon tax for its decision to shut down Delta Electricity’s 45-year-old Munmorah coal-fired power plant in Hunter Valley.

NSW, which owns Delta Electricity, said the plant was no longer economically viable because of its age and high maintenance cost, exacerbated by the carbon tax. NSW also cited concerns over the viability of coal-fired power generators in general due to falling demand and the legislated doubling of renewable electrical capacity by 2020

Critics of the new tax have complained that the carbon tax is an obstacle to business and that the compensation package is skewed to privately owned, brown-coal generators in Latrobe Valley in Victoria and South Australia.

However, Climate Change Minister Greg Combet rejected the charge that the carbon tax was responsible for the Munmorah closure, adding that Delta Electricity had admitted the plant would have been decommissioned anyway, with or without the carbon price.

The Energy Supply Association of Australia (ESAA) also supported the minister’s position, with its research showing that stagnant demand and the renewable energy target would result in a 6 per cent fall below 2000 levels in emissions from the electricity sector by 2020.

"If overall demand isn't growing, the impact of the renewable energy target is that emissions intensity falls because of more renewable capacity. This RET effect will happen regardless of whether or not there is a price on carbon in Australia," ESAA General Manager of Corporate Affairs Andrew Dillon said.

Delta Chief Executive Greg Everett said, "The carbon price was probably the final straw, but it needs to be put in the context of falling demand in electricity... If we obtain fuel for it, it would be at a high international price. On that basis, it wouldn't have been competitive in the market," he added.