Today’s announcement of the closure of the Hazelwood power station should provide the impetus for federal and state governments to reset the energy policy settings that have seen Australia lose its long-held competitive advantage in low cost electricity over the last decade.

If federal and state governments take a technology-neutral approach to Australia’s energy needs, the Latrobe Valley still has a big future.

But if federal and state governments continue to pick winners, preferring one energy source over another, then the economic damage will not be limited to the Latrobe Valley.

The bottom line is simple – brown coal generation and sharply lower CO2 emissions are not mutually exclusive. Brown coal should not be written off.

Deploying new technologies, brown coal can deliver low cost, reliable energy with up to 50 per cent reduction in CO2 emissions. 

These are not blue sky technologies.  New super-efficient brown coal plants are planned or already delivering low cost, baseload energy around the world, including in Germany, Poland, the United States and Thailand.

If the federal and state governments close the door on new brown coal generation replacing aging plants then electricity prices will be higher than necessary and supply more unreliable than it should be.

Households and industrial users in Victoria and interstate (such as South Australia) will be affected and future investment plans put at risk.  Modelling conducted for the Victorian Government already shows that Victorian households can expect an annual price increase of up to $100 with larger increases for small businesses.

And Australia will be wasting the talent of skills of thousands of workers from the Latrobe Valley as well as the rich resource that lies beneath it.

The last decade of energy policy interventions has yielded a grim dividend for energy intensive industries, especially the manufacturing sector. 

A decade ago Australia had the lowest cost energy in the OECD. Now it has the 27th lowest. The consequences for energy intensive sectors have been as inevitable as they were predictable. 

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