ABC News Online, Posted Sat Jul 5, 2008 11:10am AEST
Nestled between the Strzelecki Ranges and the Great Dividing Range, in south-east Victoria, the Latrobe Valley is named after the river that flows through it.
But it's what's beneath the ground that really makes the region hum - its four brown-coal power stations generate more than 90 per cent of the state's electricity.
The power stations are so much part of life that Latrobe City Council Mayor Bruce Lougheed says you hardly notice them.
He says everything is "go, go, go" in the prosperous valley, but that mightn't always be the case.
Unreleased modelling by the industry argues emissions trading could shut down three of the four brown-coal power stations in the valley by 2020.
John Boshier from the National Generators Forum says he's horrified by the Garnaut Report, which makes no mention of giving any of the revenue from the scheme to brown-coal generators.
"What Professor Garnaut is recommending is: 50 per cent of the revenue from emissions trading goes to households; 30 per cent to industry, to the business sector; and 20 per cent to research and development," he said.
"He only talks about money going to trade exposed firms like smelters, steel works, export firms, all that kind of thing. The report is silent about payments going to electricity generators. They are just not mentioned.
"So what will happen is that the generators will not be able to pass on fully the costs that they incur in buying emissions permits. So the fact is that brown-coal generators become unviable in the future."
Mr Boshier says the scheme will decimate the brown-coal industry in the Latrobe Valley.
"The reality is that we know in the long run that brown-coal generators must cease to emit the CO2 that they presently do," he said.
"That is the whole purpose of climate change policy. So we know that brown-coal generators have to close. There is no debate or question about that.
"The question is how do they do it and in what time frame, and what we want them to do is close at the same time that enough renewable energy has been brought onto the market to take its place.
"Now that whole issue has been ignored in the Garnaut Report."
Thousands of workers in the Latrobe Valley have jobs connected to the power industry.
Associate Professor Ken Coghill heads the Governance Research Unit at Monash University in Melbourne.
He says directing investment in renewable energy sources like solar and wind to regions hardest hit by emissions trading could cushion the blow.
"When it comes to areas like the Latrobe Valley and other areas where there is coal mining and generation, then it seems to me they are the ideal locations for the sort of industry support, for the development of new renewable technologies that Garnaut suggests in his report," he said.
Associate Professor Coghill says Professor Garnaut now needs to look at which areas currently dependent on coal mining are suitable for alternative energy projects such as wind and solar.
But back in the Latrobe Valley, Mayor Bruce Lougheed is pinning his hopes on the development of clean coal technologies, like carbon capture, as a way to keep the local industry alive.
The technique isn't yet economically viable but Cr Lougheed is taking heart from this week's announcement of a brand new coal-fired power station.
"The State Government and the Federal Government is funding the new power station which is modernised and being designed to burn clean coal," he said.
"The technology, the research that is going into it, the carbon capture etc, is all proactive and positive for the valley."
Based on a report by Jane Cowan for PM