“Reclaiming our Valley” Hunter Communities Network PO Box 14 Singleton 2330 Environment and Communications References Committee Australian Senate Parliament House Thursday 10 November 2016 Canberra ACT 2600 SUBMISSION Inquiry into the retirement of coal-fired power stations The Hunter Communities Network is an alliance of community based groups and individuals impacted by the current coal industry and concerned about the ongoing rapid expansion of coal and coal seam gas exploration and mining in the region. We live in one of the most intensive coal production and combustion regions on earth. The Hunter Region is the major producer of coal-fired power in NSW with four of the five operating power stations occurring in the Upper Hunter and Lake Macquarie. The fleet of power stations in the region, Bayswater, Liddell, Eraring and Vales Point are aging infrastructure. They are also high emitters of greenhouse gasses and other health threatening pollutants. It is estimated that air pollution from the Hunter power stations costs the health system $600m per year. Hunter Communities Network thanks the Senate Environment Committee for the opportunity to provide information from our region to the Inquiry into the retirement of coal-fired power stations. Response to Terms of Reference: a) The experience of closures of electricity generators and other large industrial assets on workers and communities, both in Australia and overseas. There have been two relatively recent closures of power stations in the Hunter Region. These are Munmorah on Lake Macquarie and Redbank at Jerrys Plains. There was not a significant impact on employment in the region through these closures because of the diverse nature of the Hunter 1 economy. Workers were awarded redundancy payments and were able to move into other employment. b) the role that alternative mechanisms can play in alleviating and minimising the economic, social and community costs of large electricity generation and other industrial asset closures, drawing on experiences in Australia and overseas; Increasing diversification of the Hunter economy away from dependence on the coal industry is a specific challenge for the Upper Hunter. The size of the population in the Lower Hunter and Lake Macquarie area provides a wider range of employment opportunities. The existing power distribution infrastructure in the Upper Hunter and the scale of land owned by the power stations and coal mines provides an opportunity to expand the solar thermal industry to continue to provide base-load power. Liddell Power Station was the first site in Australia to establish a pilot solar thermal generator. There needs to be substantive investment in expanding this opportunity at the site to transition workers prior to the coal-fired closure. The owners AGL should be incentivized to adopt this transition strategy. c) Policy mechanisms to encourage the retirement of coal-fired power stations from the National Electricity Market, having regard to: i) the ‘Paris Agreement’ to keep global warming below 2 degrees Celsius, and ideally below 1.5 degrees; The coal-fired power stations in NSW (including the 5th generator, Mt Piper at Lithgow) produce 46 million tonnes of carbon each year and are the major source of NSW carbon emissions (37%). If Australia is to meet the targets of the Paris Agreement, the NSW coal-fired power generation needs to be phased out more quickly than currently planned. The true cost to community health and the increased economic burden of increasing extreme weather events needs to be taken into account when considering policy mechanisms to encourage the retirement of coal-fired power stations. The Hunter Region has experienced significant and deadly extreme weather events over the past 10 years. These have cost lives, loss of infrastructure, major disruptions to supply of power, water and sewer operations and other economic costs that have run into billions of dollars. The development of regional solar thermal power generation and distribution should supplement the variability of other sources of renewable energy and assist the orderly operation of the National Electricity Market. 2 Policy mechanisms should be in place to encourage the establishment of regional solar thermal generation with access to existing power distribution networks. ii) the state and expected life span of Australia’s coal-fired power plants; Liddell is the oldest operating power generator in the Hunter Region and has passed the 40 year technical life span of coal-fired generation. It is slated to close in 2022 when it will be 51 years old. Because of its age Liddell is the most emissions intensive power generator in NSW. It produces 0.93 tonnes of carbon for every MW power. The older power stations are, the less efficient they become and are more likely to increase environmental pollution and emissions intensity. Liddell power station is operating at very low capacity and could be closed as early as next year without impacting on NSW power supply. The closure of this power station could be used as a case study in NSW to develop best practice closure, decommissioning and transition to cleaner sources of energy such as solar thermal. Bayswater Power Station is slated to close in 2035 when it will be 50 years old. It is the highest emitter of carbon of all black coal generators in Australia and the largest source of carbon in NSW. As the power station ages beyond the 40 year technical life span, it will become more inefficient and more emissions intensive. This power station should be closed in 2025. The Eraring Power Station at Lake Macquarie is due to close at the end of its technical life in the early 2030’s. The owner, Origin, has a commitment to 100% renewable energy. Vales Point Power Station at Lake Macquarie is planned to close in 2022. iii) the increasing amount of electricity generated by renewable energy and likely future electricity demand; The renewable energy industry is likely to be the next major force of industrial revolution. The rapid technological change in battery storage means that households and business will be able to supply their own power generation needs and leave the centralized power grid altogether. This is happening rapidly with mobile phone technology where fewer people are connecting to the landline infrastructure. The National Electricity Market is highly likely to become a stranded asset, especially with wholesale prices increasing. It will soon be much cheaper for people to disconnect and provide their own power. Increased power use efficiency has already decreased the demand for electricity. This trend is ongoing and needs to be factored into decision-making about future supply requirements. 3 The aluminium industry is a large user of coal-fired power in the Hunter. It has been heavily subsidized over a long period of time with cheap wholesale rates. The smelter at Kurri Kurri has already closed due to the inability to negotiate an affordable power price. The Tomago smelter is also due to close in 2021 and could close earlier than that. This will decrease the demand for power in the Hunter Region. iv) maintenance of electricity supply, affordability and security; Maintenance and security of power supply over extended transmission infrastructure will become a higher risk as climate change intensifies. The recent storm in South Australia that damaged a significant section of transmission towers is a clear demonstration of that risk. The cost of securing supply over great distances may be greater than establishing regional and local renewable energy supply hubs. v) any other relevant matters; Bayswater and Liddell Power Stations are the largest single water users in the Hunter Regulated Water Source. The operating licence for a Major Utility has a very high priority for water allocation during drought conditions. During the Millenium Drought, towns were placed on severe water restrictions and the irrigation industry had no general security allocation and a restricted high security allocation. This was to guarantee that a 2 year water supply for the power stations remained in Glenbawn Dam. There is a high risk to water supply for the Hunter Region with more extreme weather events predicted with climate change. Water security for the power stations cannot be guaranteed without severely restricting other industries in the region. More severe droughts will test the reliability of coal-fired power generation in the Upper Hunter. Renewable energy sources are not reliant on large volumes of water to operate, except for hydro power, which is also at risk during extended drought periods. d) Policy mechanisms to give effect to a ‘just transition’ for affected workers and communities likely impacted by generator closures, as agreed in the ‘Paris Agreement’, including; i) Mechanisms to ensure minimal community and individual impact from closures, and The Hunter has already experienced power station closures with minimum economic disruption. 4 The fleet of coal-fired power stations are due to be shut down by 2035. There needs to be a clear plan in place to ensure an orderly phasing out with an associated phase in of renewable energy projects. The issue of orderly decommissioning and rehabilitation of power station sites should also be included in the transition, so that these are carried out under world’s best practice requirements with adequate employment to complete the work properly. The phasing out of coal-fired power in the Hunter should include a transition that provides: support for workers to make sure they receive good redundancy packages; time to plan and prepare for retirement or retrenchment; redeployment workers to other local power stations where possible and to site decommissioning and rehabilitation; and invest in retraining and replacement employment in the regions. The transition should include consultation and transition planning with state and local governments, local communities and workers and their unions. We note that the ACTU has just launched a transitions policy in recognition of the real threat of climate change and the employment opportunities in the renewable energy industry.