* Australia scraps plan to buy dirty power production
* PM Gillard says change won't hurt emissions target
* Greens condemn policy shift as a breach of faith
By James Grubel
CANBERRA, Sept 5 Australia on Wednesday
abandoned plans to pay the country's dirtiest power generators
billions of dollars to shut down production after failing to
agree a price, but the government said the move would not derail
its carbon reduction policy.
Resources Minister Martin Ferguson said the government and
generators could not agree on a price after more than a year of
negotiations with five power companies to close down 2,000
megawatts of pollution-intensive power by 2020.
Australia wants to cut carbon emissions by 5 percent of year
2000 levels by 2020.
"The minus 5 percent target is being reached by the work of
the carbon price," Prime Minister Julia Gillard told reporters
in Perth, adding that the government was not prepared to pay the
high prices asked by the generators.
"We always said we would aim for value for money. We didn't
get a value-for-money proposal," she said.
The decision is the second big change to Australia's
emissions reduction scheme, after the government last week said
it would link its emissions trade scheme, due to start in 2015,
with the European emissions trade scheme.
On July 1, Australia imposed a carbon tax on polluters,
starting at A$23 per tonne of carbon dioxide.
The companies involved in the latest negotiations were
Alinta Energy, HRL, Hazelwood Power Partnership, RATCH-Australia
"BREACH OF FAITH"
International Power GDF Suez Australia owns the
majority of the 1,740 megawatt brown-coal fired Hazelwood power
station in southern state Victoria, which belches out 16 million
tonnes of carbon pollution a year, or about 3 percent of
Australia's total emissions.
TRUenergy, a wholly owned unit of Hong Kong's CLP Holdings
, owns the 1,480 MW Yallourn power station in Victoria
and had planned to float its Australian unit in November.
Sources familiar with CLP's plan told Reuters last month
that the initial public offering could be pushed back to the
first quarter of 2013, and that the company was also weighing
other options to finance its operations in Australia.
TRUenergy said it had a realistic assessment of the value of
its power assets. Yallourn provides about 20 percent of the
electricity needs of southern Victoria state.
"With the conclusion of the contract for closure process we
will continue to focus on operating Yallourn to provide
competitive and reliable electricity to the national electricity
market," a spokeswoman said.
The Australian Greens, who support Gillard's minority
government, were angered by the policy shift and said the
decision was a breach of faith on climate policy.
"It really goes against the spirit of everything we've been
trying to do, and that is close down the dirtiest power stations
in Australia," Greens leader Christine Milne told reporters.
Australia's Energy Supply Association said Wednesday's
decision was inevitable, given uncertainty over climate policy
and opposition promises to abandon the price on carbon if it
wins an election, due in the second half of 2013.
"Without bipartisan agreement on Australia' climate change
policies, it was always going to be hard for power station
owners and the government to come to terms," association chief
executive Matthew Warren said.
Australia introduced a carbon tax on July 1 and plans to
move to a floating carbon price from July 2015, linked to the
European emissions trading scheme, as part of its efforts to
fight carbon emissions and combat global warming.
Australia accounts for just 1.5 percent of global emissions
but is the developed world's biggest per-capita carbon emitter,
due to a reliance on burning coal to generate about 80 percent
of the country's electricity.
($1 = 0.9778 Australian dollars)
(Aditional reporting by Mantik Kusjanto in Wellington; Editing
by Daniel Magnowski)