ALLAN Blood is upbeat about the prospects for Victoria's vast reserves of much-maligned brown coal. To some, his attitude will seem counter-intuitive, given mounting concerns about climate change. But the West Australian resources entrepreneur paints a rosy picture of a future in which the Victorian Government gets its policies ''right'': when it opens up its coalfields for a range of uses, not just for burning in local power stations; when it approves the use of caverns under Gippsland to store the gases that come from the ''cleaning'' of coal; and when it helps build a vast network of pipes and other infrastructure to carry with ease coal gas and products for export.
Blood describes his vision as ''utopia'', a win for the environment, the state coffers, workers and, maybe, even his own pocket.
He could well have written the state's forthcoming energy statement, because his vision is pretty much where the Government appears to be heading. For decades, Gippsland's coal reserves have been used almost exclusively for local production of power. Leaked details from a draft version of the statement show the Government now wants billions of tonnes of coal to be opened up for wider exploitation, with lower emissions, to generate investment and jobs, especially for Latrobe Valley.
But the valley's workers will no doubt be sceptical after a parade of mega-projects promised much for Gippsland but delivered little. Among them were three experimental schemes unveiled by the Bracks government in 2002 after a special but limited coal tender aimed at developing new technologies to cut greenhouse gases and creating jobs. Then energy minister Candy Broad said the trio of exploratory licences, if successful, ''could generate $7 billion in new investment and create 4000 direct jobs in the construction phase''.
They weren't successful. Not yet, anyway. They did, however, make lots of money for some people, Allan Blood included. His company, Australian Power and Energy Ltd (APEL), proposed to use new technologies to develop a lower-emissions power station while also turning coal into diesel. APEL was a project-specific company, its only interest the new $5 billion Latrobe Valley-based power and coal-to-liquid scheme. In 2004, APEL's 260 shareholders on-sold the company, the project and the coal licence to the international Anglo American.
Last week, Blood confirmed the company sold for more than $100 million. He will not reveal how much he made, but he does not deny he did well.
What of the jobs and emissions-cutting technology? A spokesman for the joint venture company currently holding the rights to the project, Monash Energy, a partnership between Anglo American and Shell, told The Age that it was now in the ''extended concept phase''. A company source was more blunt. ''It's not commercially viable.''
The second exploratory licence went to Loy Yang Power, which owns and operates the existing Loy Yang power station and the adjacent Loy Yang coalmine. It proposed to build a $1 billion, 1500-megawatt power plant using new technologies to cut emissions. But the plant was never built. Last week, the company confirmed it still held the coal licence. Confidential state cabinet documents note that Loy Yang Power is ''reviewing the status'' of its exploration licence, with Government also ''actively seeking'' non-power uses of the coal.
The third licence went to HRL Developments Ltd, which planned a commercial power station with reduced emissions fired by dried coal. The project was further backed with $150 million in federal and state funds. Last month, HRL re-announced its scheme as a dual gas demonstration project, with work to begin next year. It is the latest in a string of stop-start announcements.
Industry insiders liken the mining licences to planning permits granted to land developers for big projects never built. Though no shovels ever appear, the value of relevant site is often enhanced dramatically.
Victoria's main green lobby, Environment Victoria, is urging the State Government to learn the lessons of 2002. Campaigns director Mark Wakeham says the three schemes promised thousands of jobs and billions in investment but delivered nothing.
''The fact that the State Government seems about to make another coal allocation through a tender next year suggests they've learnt nothing from the process,'' he says.
Environmentalists believe the coal allocation process is flawed. ''If the projects go ahead, we get another polluting coal project and increase the Latrobe Valley's reliance on a polluting industry. If they don't go ahead, we've gifted a few entrepreneurs tens of millions of dollars worth of coal.''
Blood was a major beneficiary of the 2002 tender process and doesn't resile from the fact. He says that to avoid the problem of companies making money from licences without action, they should be granted on the strict ''use it or lose it'' basis. Blood is back in Victoria, this time promising investment and jobs and low emissions through his $2 billion plan to turn coal into urea or fertiliser. He is one of a growing number pushing for greater access to coal. Among other big players is Exergen, with a $1.5 billion plan to dry coal for export for use in power stations in India, and Ignite Energy Resources, through which prominent businessman John White's plans to build a plant at Yallourn to produce high-grade oil and exportable dry coal.
Environmental concerns aside, the rhetoric about the promising future of clean-coal projects in Gippsland is not necessarily reflected in the Government's own assessment. The Age has obtained government documents that rate the likely success of the power and non-power projects proposed. Schemes are rated out of five, with a zero to 20 per cent chance a one, an 80 to 100 per cent chance a five. Blood's new project is given a three, that is 40 to 60 per cent. Exergen also gets a three, Ignite Energy Resources a two. Of the major private projects pushing for access to coal, government approvals and/or investment, only HRL's scheme is rated four (60 to 80 per cent chance) or higher.