Advanced Lignite Demonstration Program

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The Advanced Lignite Demonstration Program is a $90 million federal and Victorian state program which was announced in early August 2012. The program was established to "develop and deploy emerging technology to reduce the greenhouse gas emissions intensity of lignite (brown coal), improve the economically recoverable return from lignite and provide employment opportunities in the Latrobe Valley and broader region."

Program announcement

In early August 2012 Martin Ferguson, the then Federal Minister for Resources and Energy and Michael O'Brien, the Victorian Minister for Energy and Resources, announced that the state and federal government's would each contribute $45 million towards the establishment of the fund. In a media release announcing the fund, Ferguson stated that "the Gippsland region contains more than 20 per cent of the world’s low rank coal reserves, with an estimated economic life of about 490 years and it is important we look for improvements in the way we harness this valuable resource.” Ferguson also held out the prospect of the establishment of a brown coal export industry "which would not be possible without the technological innovation that may also assist in meeting the Government’s emissions reductions targets of five per cent fewer emissions than 2000 levels by 2020.”

O'Brien "said the funding was part of a drive to find new ways of developing Victoria’s massive brown coal resource."

Program objectives

The ministers announced that the program would "pursue development of more efficient and less emissions-intensive coal upgrading technologies including direct conversion, drying or dewatering of coal and conversion to higher value energy products. Possible end products from these projects could include transport fuels, hydrogen, liquefied natural gas, briquettes, fertiliser, fine chemicals, char and feedstock for more efficient power plants."

The Ministers stated that "projects will need to demonstrate a commercial pathway from coal upgrading to utilisation through a range of conversion processes."

Funding decision timetable

At the time of the announcement, the Minister stated that the timetable for funding decisions was:

• Expressions of Interest to be submitted by November 19, 2012;

• Expressions of Interest will be assessed by an Independent Assessment Panel which will shortlist projects. The shortlisted projects will be invited to submit a Request for Proposal in December 2012.

• The Ministers expect funding to be initially allocated in the 2013-14 financial year with project funding "typically" provided over "a four-year period."

On its website, which was updated in July 2013, the Victorian Department of Environment and Primary Industries states that "the ALDP program is proceeding to schedule and the selection phase is expected to be finalised shortly. Following the initial EOI phase last year shortlisted applicants submitted ALDP funding proposals in March 2013. Since then proposals have been evaluated by an Independent Assessment Panel. The program remains aligned with the broad timetable."

Reaction to the announcement

Environment Victoria's Campaigns Director, Mark Wakeham expressed disappointment with the government's announcement of the program. "Both governments," he said, "were refusing to learn any lessons from recent experience and are obsessed with the coal resource at the expense of other industries."

"Both governments are proposing a new $90 million fund which will once again raise false hopes in the Latrobe Valley and waste taxpayers' money and valuable time in the fight to halt climate change. This new fund is on top of existing funds to support the coal industry such as the Federal Government’s $1.68 billion CCS flagships program and the State Government’s $430 million ETIS program. It's not as though we’re not already throwing enough taxpayers' money at the coal industry,” Wakeham said.

Short-listed contenders emerging from the shadows

In August 2013 The Age revealed that Shanghai Electric Australia Power & Energy Development was one of three companies which are leading contenders for funding under the $90 million federal and Victorian government Advanced Lignite Demonstration Program. It was reported that the company is proposing the construction of a $250 million demonstration plant in the Latrobe Valley "to process 3 million tonnes of brown coal a year using technology it claims improves its quality and also makes briquettes. There are suggestions the coal could then be exported to China, initially out of Geelong."

It was also reported that "multiple sources connected to the brown coal industry in the Latrobe Valley also believe projects put forward by Coal Energy Australia and Ignite Energy Resources are now favoured under the $90 million fund."

Initial grants

In May 2014 the Federal Minister for Industry Ian Macfarlane, Deputy Premier Peter Ryan and Victorian Minister for Energy and Resources Russell Northe announced that $50 million of the $90 million fund had been allocated to two projects. The ministers announced that:

• $30 million had been granted to Coal Energy Australia “for the development of a $143 million demonstration plant producing fertiliser, pyrolysis oil and high value coal used in steelmaking”; and

• $20 million had been granted to Ignite Energy Resources “for the development of an $84.3 million pre-commercial plant producing upgraded coal products and synthetic oil.”

In mid-June Macfarlane and Northe announced that $25 million had been awarded to Shanghai Electric Australia Power & Energy Development SEAPED “for the development of a $119 million demonstration plant at the AGL-owned Loy Yang A Power Station in the Latrobe Valley. It was reported in The Age that SEAPED is proposing to process one million tonnes of coal a year into 580,000 tonnes of briquettes.

Federal Government Budget allocations

The Federal Government's allocation of $45 million for its half-share of the project was originally to be allocated across four financial years: $1.0 million in 2012‑13, $7.0 million in 2013‑14, $18.0 million in 2014‑15 and $19.0 million in 2015‑16 with funding from the existing allocations of the National Low Emissions Coal Initiative.

However, by the 2014 Mid-Year and Economic Financial Outlook report in December 2013 the Government flagged $19 million had been "deferred from 2014‑15 to 2015‑16."

Articles and resources

Related SourceWatch articles

• Coal seam gas in Victoria
• Fracking in Victoria
• 2002 Victorian coal allocation
• 2010 Victorian election and coal
• Quotable quotes on Victorian coal issues
• Researching coal in Victoria

• Australia and coal
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• New South Wales and coal
• Queensland and coal
• South Australia and coal
• Western Australia and coal
• Coal terminals

External resources

• Martin Ferguson, Federal Minister for Resources and Energy, "Joint Announcement of the Advanced Lignite Development Project", Speech at Powerworks Morwell, Victoria, August 3, 2012.
• Department of Primary Industries, Victoria, Australia, "Advanced Lignite Demonstration Program Prospectus", Department of Primary Industries, Victoria, Australia website, accessed August 2012. (Pdf here).
• Department of Primary Industries, Victoria, Australia, Advanced Lignite Demonstration Program: Application and Guidelines", Department of Primary Industries, Victoria, Australia website, accessed August 2012. (Pdf) here.