Greenhouse showdown over smelter - National - theage.com.au


VICTORIA'S key environment groups are set for a pre-election showdown with the State Government over what they say is its appalling record on greenhouse gas emissions.
Dismayed by the Government's decision to prolong the life of one of the world's dirtiest power stations — Hazelwood in the Latrobe Valley — green groups are focusing on Alcoa's proposed $1 billion Portland aluminium smelter expansion.
Environment group leaders have met Premier Steve Bracks, Treasurer John Brumby, Environment Minister John Thwaites, Energy and Resources Minister Theo Theophanous and backbenchers to express their concerns.
Marcus Godinho, from Environment Victoria, said the groups would campaign in the lead-up to the November election over the Government's environment record.
The Alcoa decision was the "No. 1 environmental test for the Government", he said.
Alcoa's smelters at Portland, in western Victoria, and Point Henry, in Geelong, use 18 to 25 per cent of Victoria's electricity production. Brown coal, which creates greenhouse gases, fires most of the state's power plants. Alcoa and the Government have discussed the Portland smelter expansion for more than two years. If approved, significant extra power would be required.
Mr Godinho said the Government's environment credibility would be discredited if brown coal generated the extra power.
The Australian Conservation Foundation's Erwin Jackson said: "We … have said very clearly to the Government that if Alcoa expands, they need to make sure the state's greenhouse emissions don't increase."
In 2004, the Government established a subcommittee to examine Alcoa's expansion. Environmentalists fear the Government wants to delay the decision until after the poll.
Mr Brumby said the Government had been moving things along "expeditiously".
Alcoa spokesman Patrick Gibbons said: "Discussions are ongoing and we expect them to continue for some time."
The expansion would create up to 1500 construction jobs and a further 200 ongoing jobs. Aluminium output would rise from 360,000 tonnes a year to 500,000.
Mr Theophanous told The Sunday Age dealing with greenhouse gas emissions would be a significant issue for the Government if the project proceeded.
The Government had told Alcoa to examine coal, gas and renewable energy options. "We … would expect significant reductions in the greenhouse gas intensity for each megawatt of power that is produced," he said.

Alcoa is Australia's largest aluminium producer and Victoria's biggest export earner, bringing in about $3 billion a year. The coal-fired Loy Yang B power station in the Latrobe Valley meets most of its power needs. Under a 1984 contract that expires in 2016, the Government subsidises Alcoa's power costs by $100 million to $200 million a year.
Gas is an alternative to coal. It produces half the greenhouse emissions, but Federal Government royalties make it more expensive.
Exxon Mobil spokesman Rob Young said the company had discussed with Alcoa the use of gas for the expansion.
The price difference between coal and gas could also be partly offset if a carbon trading market were set up. Under carbon trading, polluters have to buy carbon credits to offset their emissions.
Green groups favour gas as the power source for the expansion.
Labor's environment platform commits it to cutting greenhouse emissions to 60 per cent of 1990 levels by 2050. But the Government is yet to commit this to policy.
Mr Bracks said energy and greenhouse emissions would be critical issues at the Council of Australian Governments meeting in July. Victoria supported a carbon trading scheme and it would be discussed, he said.
■In the late 1970s, Alcoa announced it would build an aluminium smelter near Portland.
■In 1984 the State Government entered a deal with Alcoa, which provides for subsidised electricity until 2016 at a price linked to the world price of aluminium. It is believed to have cost the state more than $2 billion over 20 years.
■Alcoa's aluminium operations are believed to use between 18 and 25 per cent of the state's electricity — most from brown coal in the Latrobe Valley.
■In October 1986, Portland smelter operations began.
■Alcoa employs about 650 people at Portland.
■The Portland smelter, producing about 360,000 tonnes of aluminium a year, is Victoria's largest single exporter, about 7 per cent of its exports.