Latrobe Valley (Traralgon) & the Carbon Tax

Hey guys,

Am thinking of buying some property in Traralgon (Latrobe Valley), 2 hours east of Melbourne. This area is one of Terry Ryder's property hotspots due to the upcoming energy projects there.

However with the incoming carbon tax, there is talk of closing the Hazlewood power station. Also there is a focus in the future on less coal-based power stations, and more renewable power generation eg wind, solar etc...

Does anyone have any idea of the likelihood the impact of the carbon tax will have on the Latrobe Valley? And if so, does the future for the Gippsland area look positive, negative or unclear?

Any thoughts appreciated :)
"Brown Coal" from the Latrobe Valley for Hazlewood, Yallourn and Loy Yang power stations is closer to peat than anthracite. It has a 60% water content, so you can imagine it isn't the most efficient stuff around to burn. Combine that with the age of the power stations and you can see some reasons as to why their greenhouse gas intensity is so bad - there are few power stations in the world that emit more CO2 more unit of electricity produced. I've seen figures as high as 1.5kg/kWh CO2e for some of those units, particularly when operating on partial load as they often have to (so much for that "base load" myth!). That compares to circa 1kg/kWh CO2e for black coal, 0.6kg/kWh CO2e for gas and (nearly) 0kg/kWh CO2e for wind.

Certainly if Australia ever actually does anything to reduce its emissions the Latrobe Valley would have to be "first cab off the rank" in shutting down its power stations. Relying on carbon capture and storage technologies to save the day would be to take an extremely rosy view of the world. At this stage it is most likely the capacity will be replaced by gas, of which we seem to suddenly have quite a lot of on the east coast. More jobs would be created elsewhere than currently exist in the Latrobe Valley so you may want to target those regions instead. You can see the likes of AGL and Origin hedging their bets in the gas direction more and more every day. It's highly doubtful that any carbon tax will be sufficient to push renewables in a meaningful way, especially with the pathetic state of the current debate. Possible yes - and certainly more than possible if designed properly - just highly unlikely!

Of course, whether the mooted carbon tax will be sufficient to actually reduce our emissions at all remains to be seen. That all depends on the price, the structure and the design of the compensation package. The jury (or the MPCCC at least!) is still out on that... if it turns out to be a package of symbolism (more than just a possibility!), then the Latrobe Valley power stations will chug along unaffected.

As for the region's prospects outside of carbon risk, I have no idea...

Hope this helps.
Thanks for the insight Equity...

Does anyone else have any thoughts on the Latrobe region?

I lived (and grew up) in the area for quite a while. I see 3 (or 4) distinct zones in the region.

1 - West Gippsland, being the Warragul/Drouin area. Growth going on in the area due to the (now) relative proximity to Melb (~1hr by train) with a potentially more relaxed lifestyle that appeals to some. Good growing land, with plenty of rainfall, etc, so these towns support a broad area.

2 - Central Latrobe Valley, being Moe/Morwell. Stuffed. Has been since the SEC was privatised. Closing Hazelwood would impact further on these towns, IMO, but Loy Yang is mainly serviced by Traralgon population. Very low socio-economic area with not much in the way of supporting industries; the paper mill does support Morwell to a certain extent, but if one could choose between Morwell and Traralgon to live in, Traralgon would usually win!

3 - East, being Traralgon (just) through to Sale. Traralgon is the economic and retail hub of the area. And because of the strong business and retail presence, it's where the investment is going. Sale also supports a large area, with good grazing and dairy industries out that way. Not sure about how the milk factory at Maffra is going, but that was always a good employer (in my memory).

(4 - South Gippsland, Phillip Island along the coast to Wilson's Prom and inland to Leongatha/Korumburra - south of the Strzlecki's, anyway. Don't know much about this...)

Purely my perspective, and happy to be corrected if I've missed anything or my observations aren't considered accurate.

FWIW, I have family in Warragul and near Traralgon, so I regularly visit and travel through the region.
Traralgon is going forwards. Hazelwood will be shut down, exactly when is the question. There are two other major power stations, Yallourn and Loy Yang. When Hazelwood goes something else will have to be built, either coal fired or gas. There is also talk of a 'coal to oil' plant and a urea plant.

At the end of the day
* victorians need energy
* Latrobe Valley has a lot of coal
* coal is a cheap source of energy
* energy is difficult to transport
* electricity is an efficient energy transport and distribution system
* infrastructure is in place to move electricity from LV to the rest of Victoria
* when the price of electricity rises to a point where alternatives become a viable enough option (without subsidies) to shut down coal fired power plants, there will be anarchy.
* when the price of electricity rises to a point where alternatives become a viable enough option (without subsidies) to shut down coal fired power plants, there will be anarchy.

Rubbish. The price of power for residential customers across Australia is around 20c/kWh. For an extra 5-6c/kWh (very conservatively - that is actually the premium required for wind while the premium for gas is significantly less) you could run the entire power system on a combination of gas turbines and wind turbines and shut down all the coal power stations in the country.

Yes it's more expensive but it's hardly anarchy material. Plenty of countries pay far more for their electricity already.