Australia's four major banks have rejected funding a coal power plant proposed for Victoria State, raising doubts about its viability despite its controversial approval by the Environment Protection Authority (EPA), reports The Age.
The EPA has cleared the way for Melbourne coal technology company HRL to build what would be Victoria's first new coal plant in nearly 20 years.
Under the ruling, HRL can build a plant at Morwell using new gasification technology, which is claimed to reduce greenhouse gas emissions from brown coal power by about a third, to roughly the level of modern black coal stations.
The 300 MW plant approved was only half the capacity of what HRL had wanted. EPA chief executive John Merritt said the reduced plant qualified as best practice under state climate change legislation introduced by the former Brumby government last year.
''Our interpretation … is that a proposal that contemplates using brown coal and delivering a 30 per cent improvement in its emissions is within the act, and we are required to assess it against that,'' he said.
HRL said it had ''significant concerns'' about the decision, and accused the EPA of in effect approving a different project to the one it had submitted.
Internal federal government correspondence obtained by The Age suggests the plant would not be economically viable at its reduced size. The Age reported that HRL was struggling to finance the project before the EPA reduced its size. ANZ, Westpac, the Commonwealth and National Australia Bank have each stated they are not involved. Sources said there was no evidence the company had won alternative funding.
Westpac spokeswoman Jane Counsel indicated the bank did not consider it a clean coal project. ''We will continue to consider financing coal projects in the future, but our focus is very much on supporting those projects that use cleaner and more efficient technologies and are making the transition to a carbon-constrained operating environment,'' she said.
The HRL plan, initially billed as a clean project running on synthetic gas derived from coal, won A$50m ($52.8m) in state funding and A$100m in federal funding conditional on it winning commercial funding. It was supposed to start operating in 2009.
But HRL's original partner, Chinese-owned Harbin Power, withdrew its 50 per cent stake, and The Age last month revealed the cost of the proposal had blown out by more than 50 per cent - from A$750m to A$1.2bn.