Deadline on heavy polluters in danger

FEDERAL Labor is in danger of missing its deadline for a key plank of the carbon price scheme.

FEDERAL Labor is in danger of missing its own deadline for a key plank of the carbon price scheme as it faces an uphill battle to strike deals to pay for the closure of 2000 megawatts of heavy-polluting coal power stations.

The Australian understands the government is looking unlikely to have entered into contracts with enough electricity generators to meet the target of buying out 2000MW -- which is enough to power more than 2.5 million homes -- by the June 30 deadline.

It is thought a final deal is unlikely to have been struck with the "polluting dinosaur" Hazelwood power station in Victoria by June 30, and a similar deal with Victoria's Yallourn is in doubt.

Without deals to shut down capacity at either of these power stations, it would be impossible to meet the target by the deadline because of the sheer capacity that Labor wants to shut down.

The only other generators that Labor is in talks with -- South Australia's Playford B power station, Victoria's Energy Brix power station or Queensland's Collinsville -- between them have about 605MW of supply.

The contract for closure negotiations came as Grattan Institute Energy Program director Tony Wood said recent falls in electricity demand would increase the price the generators were demanding because coal plants were likely to run longer.

On Monday, Energy Minister Martin Ferguson said a switch from coal-fired to gas would take longer than had been expected because of lower electricity demand.

This would "lock in" coal-fired power for longer and the outlook for coal-fired power was brighter than it had been five years ago.

Mr Wood said the reduced growth in electricity demand meant it would be easier and cheaper to meet emissions reduction targets. "It doesn't matter to the environment if the emissions are reduced . . . from less production at coal plants or a shift to gas. One might . . . argue this provides a basis for tightening the target."

Last year a report commissioned by Mr Ferguson found that brown-coal electricity generators plan to keep their power stations operating well into the 2030s, unless the government moves to "buy out" their greenhouse-gas emissions to force them to shut down.

That report found none of the brown-coal power stations "stated any intention to retire coal plants, with the exception of Hazelwood, who are willing to shut down if the government effectively buys them out of the market".

Mr Ferguson declined to expand: "There are complex commercial negotiations currently underway as part of the contract."