Dual Gas HRL decision: what VCAT said and what we think about it

On 29 March 2012, VCAT handed down its decision on whether Dual Gas should be allowed to go ahead with a new brown-coal fired power station in the Latrobe Valley.

VCAT’s decision was disappointing: it disagreed with environment groups and the Environment Protection Authority, and gave approval for Dual Gas to go ahead with a new 600 MW brown-coal fired power station.

What is the Dual Gas proposal, and why was it in VCAT?

The Dual Gas proposal uses drying technology to gasify the coal, and then burns the gas in a conventional cycle gas turbine. This means that the power station produces power at about the same level of efficiency as a black coal fired power station, depending on how much natural gas is being used.

Dual Gas applied for approval from the EPA for a 600 MW power station.  The EPA decided to only approve 300MW, on the basis that it was an appropriate precautionary approach to the new technology and that the gas turbines proposed to be used by Dual Gas were not best practice.

Dual Gas, environment groups and an individual, Martin Shield, appealed the EPA’s decision to VCAT.

What was the VCAT case all about?

The crucial issues in the case were whether the power station could be said to be ‘best practice’.  The parties also argued about whether the proposal was consistent with the principles of environmental protection, including the precautionary principle and the principle of intergenerational equity.

VCAT found that the power station was best practice.

VCAT also found that in order to be consistent with the principles of environment protection, the power station had to replace or displace existing, less efficient brown coal. To this end, VCAT placed a condition on the approval stating that the power station could only go ahead once the Federal Government had signed ‘contracts for closure’ for the closure of existing power stations in Victoria, which is part of the government’s Clean Energy Package.

The Tribunal found that the Dual gas proposal would only be acceptable if it displaced or replaced existing brown coal technology. The evidence was that the Dual Gas proposal would not displace or replace existing brown coal technology in the market, because existing brown coal technology can produce power more cheaply. Therefore, the only way existing brown coal technology could be displaced or replaced was by virtue of the contract for closure scheme. However, this scheme was going ahead anyway. The net result of the VCAT decision is that, at best, the contracts for closure scheme will result in 1400MW of brown coal fired power being shut down.

What do we think?

Despite our disappointment with the result, there is no doubt that our participation in the proceedings was worthwhile.

The finding by VCAT that the proposal was only acceptable because it would replace or displace existing brown coal was in part based on submissions by us about the importance of the environment protection principles.

In addition, VCAT agreed with the argument by us and the EPA that the market alone was insufficient to regulate greenhouse gas emissions and imposed an emissions efficiency limit of 0.8 0.8tCO2-e/MWh ‘as generated’ on the proposal.

Finally, the decision on standing (ie the right to bring proceedings in VCAT) was an improvement on past case law, which means it is now a little bit easier for community groups and environmentalists to challenge the EPA decisions in VCAT.

We are now considering what to do next, including whether we will appeal.

The EDO would like to thank Adrain Finanzio, Rupert Watters and Emma Peppler, the barristers in the case. They acted completely pro bono and did an amazing job.

The full VCAT decision can be read on austlii.

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