The Federal Government will not proceed with funding the Dual Gas Project in Victoria after operator HRL did not meet the required conditions set out in the funding deed.
Minister for Resources and Energy, Martin Ferguson, said that payment of the proposed grant, under the Low Emissions Technology Demonstration Fund (LETDF), was subject to a funding agreement requiring a number of conditions.
“The Government made it clear in February this year that it would grant one final extension until 30 June 2012 for HRL to meet the conditions,” Ferguson said.
"It has not done so and, accordingly, the funding agreement between HRL and the Australian Government will be terminated.
"I emphasise that the Australian Government has treated all projects under the Low Emissions Technology Demonstration Fund equitably by granting projects extensions as required and administering the grants in a consistent manner that gives projects every opportunity to succeed.
“Grants from the Low Emissions Technology Demonstration Fund will demonstrate the commercial potential of new energy technologies that deliver reductions in carbon emissions.
“It is supporting initiatives like the Silex-Solar Systems project and carbon capture and storage at Chevron’s Gorgon liquefied natural gas plant.”
According to a report in The Australian, the demonstration plant was intended to produce power using coal and gas turbines, while emitting 30 per cent less greenhouse gas than a comparable coal-fired station.
Greenpeace opposed the project on the grounds it would increase carbon pollution by millions of tonnes a year, equivalent to a station powered by black coal.
In 2007, the former Howard Government announced a $100 million grant to support the construction of the 400 MW Dual Gas Project plant to demonstrate brown coal integrated drying and gasification combined cycle technology.
A funding agreement was signed between the Commonwealth and HRL in 2008. Four extensions were subsequently granted to HRL.
No funds have been paid to HRL by the Australian Government for the Dual Gas Project under the LETDF funding deed.
Of the projects selected by the Howard Government under the LETDF, the Chevron Gorgon project and the Callide oxyfuel project are underway. The Silex-Solar Systems project continues to be administered by the Australian Renewable Energy Agency.