Back to All News

Low Emissions Technology Demonstration Fund

Estimates & Committees
Scott Ludlam 26 Oct 2009

Senator LUDLAM-I have questions on the Low Emissions Technology Demonstration Fund.

Mr Clarke-The $75 million that Senate Farrell was asking about is part of that LETDF.

Senator LUDLAM-That broader package-okay. I have a couple of overarching questions on that fund. Can you update us as to the current status of the fund, apart from what you have already described?

Mr Morling-Mr Clarke has just given you an outline of where Solar Systems is at. CS energy is an oxy firing demonstration and carbon sequestration project. That grant was announced on 30 October 2006. The contract was signed on 4 April 2008. That is a $50 million grant and to date $20.8 million has been paid
against contract milestones. Chevron Australia has a Gorgon CO2 injection project. That is a $60 million grant towards a commercial scale demonstration of the capture and storage of CO2 from reservoir gas as part of the Gorgon development in Western Australia. That grant was announced on 23 November 2006 and the contract was signed on 15 October 2008. No payments have been made under the LETDF program for that project, because that project has not commenced. The start of that project was contingent on the final investment decision being made on the Gorgon project.

HRL Ltd are running an integrated drying and gasification combined cycle project. That is a $100 million grant towards the demonstration of a new technology to produce power from brown coal at a higher efficiency while reducing CO2 emissions by 30 per cent and water consumption by 50 per cent. That grant was
announced on 12 March 2007. The contract was signed on 9 May 2008. That project has not yet commenced, so no payments have been made under the LETDF program for that project. International Power at Hazelwood has a project using dried coal for ultra-supercritical pathways. That is a $50 million grant towards a demonstration of drying brown coal for the Latrobe Valley in Victoria to significantly reduce the CO2 emitted by the generating plant. The project also includes a smaller carbon capture and sequestration facility as part of it. The grant was announced on 25 October 2006. The contract was  signed on 7 September 2007. So far, $3 million have been paid against milestones under that project. The final one is Solar Systems, which was outlined by Mr Clarke.

Senator LUDLAM-I might come back to that one if I can, because it seems that, so far as genuine renewable energy technology is concerned, that is the interesting one. What support has the government provided to Solar Systems to prevent them from going into receivership? Are you confident that that project will actually get to scale?

Mr Clarke-The funding agreements, the $5 million and the $75 million, and the back-to-back arrangements from the Victorian government remain on the table. As I said in the previous answer, we are waiting for the administration process to work its way through and then, hopefully, the company will trade again, find a way to be able to continue operating. We would be delighted if that were the outcome and those projects were able to be executed, but at this stage it is a commercial matter that is being dealt with by the company and its administrator.

Senator LUDLAM-Have the company or its administrators approached you about adjusting the forms of assistance that the Commonwealth has put on the table to get them back into a position where they can trade?

Mr Clarke-We have had continuing discussions with all of the companies that Mr Morling has outlined, including Solar Systems. With Solar Systems we have had discussions through this year in particular about their financial state, yes.

Senator LUDLAM-How are those negotiations progressing?

Mr Clarke-We were not negotiating anything with them. They were keeping us advised of the state of the company. We also sought independent advice on the state of the company in order to be fully informed as to where the program was at. We have never entered into negotiation over changes to the current funding agreements.

Senator LUDLAM-That is fine. Are you confident that that project will go ahead or is it simply too early to tell?

Mr Clarke-I am not in a position to express any degree of optimism or pessimism. We are monitoring the administration process and awaiting the outcome.

Senator LUDLAM-Are you looking for alternative ways of allocating the grant, or a grant of a similar size, to another baseload solar plant in the event that Solar Systems cannot trade again?

Mr Clarke-There are three programs that are relevant to the renewal energy, solar energy space. The LETDF had the renewable grant to Solar Systems, as you have identified. The Renewable Energy Demonstration Program may also lead, through the Australian Centre for Renewable Energy, to further grants in that area, and of course there are the Solar Flagships. In terms of the actual $75 million that is held against Solar Systems, no, we are not looking at any reallocation at this stage. The offer is still valid. It is on the table and we are waiting for the administration process to work its way.

Senator LUDLAM-I will leave it there. You have probably given us most of the information already but, just to be sure, could you provide for us on paper the amount of money that has been spent to date as opposed to allocated?

Mr Clarke-With regard to which-

Senator LUDLAM-To each of the five streams. You may have given us all of that already.

Mr Clarke-To each of the LETDF projects?

Senator LUDLAM-Yes.

Mr Clarke-Certainly.

Mr Morling-I think I gave it as part of my answer.

Senator LUDLAM-I am just not sure if we got all of it.

Mr Morling-If not, we will provide it as a follow-up.

Senator LUDLAM-Much appreciated

Back to All News