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$50m for brown coal projects

Date

Thomas Arup

Denis Napthine and Tony Abbott. Their governments will announce the first winners of grants for projects using new technologies that process brown coal to a better quality.

Denis Napthine and Tony Abbott. Their governments will announce the first winners of grants for projects using new technologies that process brown coal to a better quality. Photo: Penny Stephens

Two new brown coal projects, backed with $50 million from the state and federal governments, are set to be unveiled in the Latrobe Valley.

On Friday, the Abbott and Napthine governments will announce the first winners of grants for projects using new technologies that process brown coal to a better quality or transform it into other products such as oil and fertilisers.

Among the grants is $30 million for Coal Energy Australia towards its plans for a $143 million plant that will produce fertiliser, char for steel making and oil from brown coal. The other project to win out is led by Ignite Energy Resources, which is proposing an $84 million plant to produce oil and improve brown coal quality so it can be used in steel making. It will receive $20 million.

The grants come just days after the federal government axed the Australia Renewable Energy Agency and cut money for carbon capture and storage development in the federal budget.

It is understood a third grant for a project led by state-owned Chinese company Shanghai Electric is also close to being signed off from the same program.

Federal Energy Minister Ian Macfarlane said the projects were ''making real progress towards clean solutions for capitalising on this rich resource and seeing a bright future for the Latrobe Valley and its community''.

Deputy Premier Peter Ryan said the investments would help develop ''smarter, cleaner and sustainable uses of this important resource''.

Brown coal has become a target of environmentalists because of its high greenhouse gas emissions when burnt, even when compared with black coal.

Development of brown coal for anything but traditional power production has also had some celebrated failures in recent years, including a 2002 coal allocation that generated no on-ground activity and the cancellation of $150 million in government grants for a new gasified brown coal power project pitched by company HRL.

Acting chief executive of Environment Victoria Mark Wakeham said governments were throwing good money after bad chasing the new brown coal industry. ''The Latrobe Valley and Gippsland need a real jobs plan based on sustainable industries, not sunset industries,'' he said.

Asked why his company would succeed where others had failed, Ignite chief executive Len Humphreys said this grant process had been much more rigorous than previous programs, and had selected projects with near-commercial ready technology.

Coal Energy Australia says it will begin construction of its plant next year.

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