Advance Australia Fair - Building Sustainability, Justice and Peace
Workshop - Jobs and the environment
Sunday 31st July 2005

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Charles Berger

Australian Conservation Foundation

The Hazelwood powerplant case

The environment cannot be a threat to jobs. The very notion is ridiculous. Jobs and industry and the economy could not exist without the environment. Similarly, protection of the environment is not a threat to jobs, and in my experience environmentalists are not a threat to jobs either. The biggest threat in this regard to specific companies and industries is a failure to react to the constraints of the environment and the changing demands and needs of the environment. The threat is not external, the threat is always with the inflexibility and the failure to adapt within particular industries. It’s very important to be clear at the outset that what is often said to be an environmental risk, or a threat from environmentalists is actually an internal threat, not an external one. I hope to demonstrate that by talking about a campaign that I’ve been very closely involved with for the last two years, and that is opposition to the proposal to expand the Hazelwood coal-fired power plant in the La Trobe Valley.

Briefly: The Hazelwood powerplant currently provides roughly a quarter of Victoria’s power needs. It is a very large brown coal fired power plant, 1600 megawatts, constructed in the 1960s and was originally slated to be closed this year before it was privatised in the 1990s. The new private owners plan to continue running the plant until at least 2031. The Hazelwood plant churns out 17 million tonnes of greenhouse pollution a year. That equates to about 34 000 tonnes per employee at the plant. It is orders of magnitude higher of greenhouse emissions per employee generated than by any of the alternative technologies available. The plant is the most polluting in Australia in terms of its Greenhouse emissions. A recent report by WWF Australia concluded that it is in fact the most polluting in the industrialised world. This is a very dubious honour for Victoria. It’s shocking to consider not only that it’s still running, but that it could still be running in 2031. The environmental case for blocking the extension of its operation is clear.

Owners of Hazelwood, the planning panel that was convened to consider the proposal and numerous other industry and government commentators have posed this as a choice between the environment and jobs. That is a completely inverted way of looking at it. In fact the closure of Hazelwood is not the biggest threat to jobs in the power sector, the biggest threat to jobs is Hazelwood itself. Far from providing any security of jobs to workers in that sector it is the biggest blocker of job creation in the energy sector. Let me explain why.

Currently Hazelwood employs 496 people. It is a major employer in the La Trobe Valley, the areas as a whole is heavily dependent on energy industry jobs. We have not and would not belittle the potential and interests of those workers at that plant. What the owners of Hazelwood and others have tried to say is that by closing the plant you lose those 500 jobs. This is pitched as a classic debate, and there are lots of reasons why this is misleading. To understand why you have to delve a little into the history of the La Trobe valley.

The power generation industry in Victoria lost 11,000 jobs in the 1990s overwhelmingly as a result of privatisation. In the lead up to the privatisation of the big power plants there the four main generators were trimming off 50-100 jobs every year. That process continued past privatisation and by the end of the decade that industry has been eviscerated in terms of employment. 68% of the jobs that existed in 1990 were gone by the end of the decade.

What does that mean for the current structure of employment in the power industry in Victoria? For one, you would have been crazy to go into the coal-fired power generation industry in the 1990s. Now there is an aging workforce in the La Trobe Valley and there is a significant gap in skilled labour at each of the power plants. They are not able to find in the existing workforce skilled labour across the range of jobs that need to be done now and into the future. If you start talking about closing one of these facilities down, not immediately, but in 5-10 years, many of these are workers that are already going to be retiring in the short to medium term. Also the plants that continue running would be able to pick up some of the skilled labour that comes from Hazelwood. Looking at the existing industrial capacity in the La Trobe Valley, to suggest that shutting one of them down is going to create hardship and disclocation is a very misleading proposition.

Beyond that there is a much bigger picture to look at as well. The Australian Services Union (ASU) recently called for the construction of a new, best practice, coal-fired power plant in the La Trobe Valley, a brown coal fired plant which would create somewhere in the vicinity of 1000 jobs in construction and another 500 in an ongoing basis. There are other proposals afoot for construction of power generation facilities in Victoria. Origin Energy proposed the construction of a major gas-fired power plant. There are also a number of proposals for wind-farms and other alternative renewable energy facilities. The Origin plant is currently on hold. They are seeking approval but there is no firm indication that they’re going to go ahead. There are various proposals for the construction of new coal-fired facilities in the Valley and none of them are proceeding right now.

Similarly the incentives to build renewables in Victoria right now are significantly constrained. There is a always going to be some demand for solar, wind, renewable energy because of the mandatory targets but the ability of those industries to become more mainstream all depends on the pricing. Currently all these job generating proposals are plants like Hazelwood, ones that do not have to factor in the environmental costs of their operation into their costs. Hazelwood does not have to take into account the cost of it’s greenhouse pollution and it’s able to offer lower prices than cleaner technology like gas, solar and other renewables, even than cleaner coal-fired generation.

There’s a glut of generation on the market currently. Industry analysts don’t expect this glut to be resolved. They don’t expect there to be a new need for base load power generation in Victoria until around 2010-11. Unless there are some strong signals from the market that cleaner energy is going to be rewarded and that dirty energy is going to have to start to take into account in its pricing the consequences of that pollution. Projects like the Origin gas-fired plant and the various proposals for wind generation and even new cleaner coal-fired generation in the La Trobe Valley are not going to go ahead.

There is 1000 construction plus 500 ongoing jobs in the Origin project, and similar numbers of jobs from new coal-fired generation in the La Trobe Valley, and from the renewable and energy efficiency industry are all being held ransom to the 500 jobs in an aging and increasingly unsatisfactory powerplant. This is a perverse jobs policy. Just taking it from the jobs perspective it’s crazy to hold up all these other proposals to keep going these 500 positions in the La Trobe Valley. And it’s even more perverse when you look at the environmental consequences.

One more example: Pacific Hydro has planned a major wind energy project down in Portland. Pacific Hydro and the government have both said that this is going to generate up to 2000 jobs for a fraction of Hazelwood’s generating capacity. If you scaled up that proposal for full replacement of energy generation that Hazelwood is currently accounting for then you are talking about many, many thousands of jobs across the Victorian economy. The reason for this is that coal-fired power generation is extremely capital-intensive. You have a huge facility and a huge plant, where the ability of those private owners to run this with a decreasing numbers of employees is increased. We have seen this with the privatisation process where they shed 68% of the workforce at the same time as they increased production. They’ve done that by investment in technology and financial capital under these plants. They’re not providing much employment while being able to provide both a large amount of power and an obscene amount of greenhouse emissions. If you put the same investment into the renewables sector, the energy efficiency sector, even in the gas-fired generation sector, those would provide many more jobs and drastically reduce greenhouse emissions.

The private investors put in about 2 billion dollars into Hazelwood when they bought the plant and many hundreds of millions of dollars subsequently for a net loss of jobs. If you’d have put that same amount of money into investments in reductions in demand, energy efficiency and renewable technologies, you would have seen much more of that going to workers rather than financial investors. That’s the hard economics of jobs in the energy generation sector.

The dichotomy between jobs and the environment is an absolute furphy in the energy generation sector in Victoria. That’s not to say that there aren’t difficulties. The major one is that the jobs growth in alternatives to Hazelwood are not necessarily in the same geographic location or in the same skill sets as the current 500 jobs being provided in the La Trobe Valley. It would be irresponsible for those opposing the expansion not to recognise that and not to recognise that there may be individuals and communities who are not immediately compensated by jobs growth in other areas.

The jobs growth in other areas across Victoria is diffuse, it’s difficult to measure. The other difficulty, and this is not just with an environmental proposal, but with any proposal, is that you are dealing with a very discreet, identifiable number of jobs at the plant and to counterbalance those we have long term economic modeling that says we are going to have jobs growth in these other areas. You can’t say there’s going to be a new plant here that’s going to employ 50 or 500 people. This needs to be recognised and the consequences are that there needs to be a transition strategy and there needs to be a long term focus. It’s not appropriate or sufficient to say that we would like to see this plant shut down tomorrow because we think that over the next 10-15 years there’s going to be jobs growth in these other areas to make up for it.

The position on the Hazelwood plant that we have consistently taken is that there has to be a transition away from it. We look at closing the plant in 2011 when it runs out of it’s current coal reserves. In particular the proposal to give it a new tranche of coal that would allow it to operate from about 2025-31 is absolutely perverse. In this the Gippsland Trades and Labour council has been very sensible, agreeing that it is preposterous to think about having this polluting plant running into the 2020’s. There are jobs there right now, and we can’t turn those people out into the streets, but we need to have a medium to long term strategy moving away from very polluting energy generation and moving to jobs creation in these other areas.

In the very short term it can be pitched as a direct conflict between jobs and the environment. But as you start to look out into the medium and long term, the interests of both increasingly converge and the necessity and possibilities of protecting the environment and protecting and growing jobs are viable. Ultimately the high environmental impact of this plant is an ongoing threat to jobs in the Valley. If it doesn’t happen this year, if it doesn’t happen in 2011, at some point the unacceptable amount of pollution is going to result in the plant being scaled back or closed down. It might not be by the current government but it will be by a government within the next two decades. Ultimately job security in the La Trobe Valley is not going to come from running 1960s assets on out to into the middle of this century, but moving into jobs growth in new areas that don’t have this environmental risk as we increasingly take measures to protect the environment.

Thank you.

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