New information casts doubt on claims about environmental merit and commercial viability of Collinsville station
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| A disused power station at Collinsville. Sources say carbon emissions from a new coal-fired plant would be comparable to generators built 15 to 20 years ago. Photograph: Ben Smee/The Guardian |
Guardian Australia has learned the company behind the proposal, Shine Energy, has held discussions about obtaining a concessional infrastructure loan from the federal government via the Northern Australia Infrastructure Facility.
In February the government awarded Shine $4.4m to conduct a feasibility study. The grant was broadly considered a concession to pro-coal Queensland Nationals MPs.
The new information about the proposal – obtained by sources with knowledge of Shine’s closely guarded business case and other information submitted to the federal government before it was awarded the feasibility study grant – casts doubt on key public claims about the environmental merit and commercial viability of a Collinsville plant.
Shine said it could not respond to questions, claiming that details of its proposal were confidential. The company indicated that aspects of the project might have changed since it submitted documentation to the federal government but it would not provide any detail.
The company has pitched its Collinsville coal proposal as having the potential to reduce carbon emissions by allowing the closure of higher-emitting power stations elsewhere in the state.
But a lack of available water allocation at Collinsville poses a technical challenge for the financing, design and construction of any plant that would emit a lower proportion of carbon, compared with the last generation of coal plants built in Queensland – which has the newest fleet in Australia.
Shine has submitted information that shows that by using a dry-cooling system the plant’s emissions intensity would be comparable to the last two plants built in Queensland – Kogan Creek, commissioned in 2007, and Millmerran, commissioned in 2002. Both produce emissions at a rate slightly above .80 tonnes of carbon dioxide per megawatt hour.
Sources say Shine’s studies identified it could pollute about 10% to 15% less carbon dioxide if it built a plant with a wet-cooling system, which requires large volumes of water.
Plans to build a large dam at the nearby Urannah Creek have been touted as a way to supply water to heavy industry, including a coal-fired power station. But while the Urannah Dam is backed by many of the same political and business interests as the proposed power station, it is bitterly opposed by local Indigenous traditional owners, including Shine Energy and some of its directors.
The Shine Energy chief executive, Ash Dodd, told Guardian Australia in February that the power generator proposal would not rely on the Urannah Dam.
“We as Birri and Widi traditional owners stand opposed to the [Urannah Dam] project as it will have a major environmental impact on our sacred rivers and all water rights belong to our people.”
Richie Merzian, the climate and energy director at the Australia Institute, said the federal government had spent $1.3bn attempting to improve the emissions intensity of coal since 2003.
“It is damning that the best technology they can find now has the same emissions intensity as plants built 15 years ago,” Merzian said. “If the best they can do is build another plant like Kogan Creek, it will do little for reliability, given this plant is the most unreliable on the grid per unit of energy.”
Dodd has raised the prospect that Collinsville could allow for the closure older, dirtier plants, including the privately operated Gladstone power station (.95 tonnes CO2 per MWh), though the Queensland government is firmly opposed to that suggestion and Gladstone has commercial energy supply contracts running until 2029.
The state’s opposition to the Collinsville plant could also prove problematic for Shine in its efforts to obtain finance.
In interviews, Dodd has said the company has held discussions with overseas-based investors and would apply for Naif financing. Guardian Australia understands Shine is pursuing a concessional federal loan from the Naif program, which it expects could then catalyse additional interest from private investors.
The Queensland government holds an effective veto over any Naif loan to a project in the state.
A Naif spokesman said it “cannot comment on whether or not it has been approached by particular entities in respect of particular projects”.
Shine Energy’s shares are worth $1,000 on paper and the company will require about $2bn in outside financing to build the power generator.
In addition to seeking Naif funding, Shine has applied for federal government underwriting against potential future losses. It was not named among shortlisted projects for a federal energy underwriting program.
Energy sector analysts say the extent to which Shine has asked for government subsidy should dismiss outright any suggestion that a coal-fired power station at Collinsville could be independently viable.
“Large subsidies are the only way they can get it up and running,” said Tim Buckley, the director of energy finance studies at the Institute for Energy Economics and Financial Analysis. “It’s a project that’s entirely unbankable by any private financier. It’s 100% an ideological exercise, there’s no commercial viability.”
Shine’s director of marketing and communications, Kelli Cohen, warned Guardian Australia against printing “inaccurate information” but said the company “can not respond” to any aspect of this story due to commercial confidentiality.
This is despite Dodd previously speaking about emissions intensity, potential funding sources, government subsidies and other technical details in interviews on Sky News.
“You have not been given an up to date project brief from your source,” Cohen said.
Shine did not respond to subsequent attempts to clarify what details might have changed.
Links
- Collinsville: the Queensland town on the frontline of the coal wars
- Queensland energy minister tells Angus Taylor he's 'deeply concerned' about Collinsville coal plans
- Two coal-fired and hydroelectric power projects being explored for Qld
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