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Australia Could Limit Use of Dirtiest Coal-Burning Plants to Peak Demand

Australia can shutter carbon intensive coal-fired power plants in Victoria state, limiting operations to when demand for electricity surges during summer, government climate change adviser Ross Garnaut said.

There are “no known technical reasons,” which would prevent the Hazelwood and Yallourn plants from operating in a non-baseload capacity, Garnaut said in a report today, citing research from engineering firm Sinclair Knight Merz. The stations can be completely shut down for “a number of months a year,” and restarted in periods of high demand, he said.

Prime Minister Julia Gillard wants to set a carbon price for Australia, the world’s biggest coal exporter, starting in July 2012 in preparation for a trading system that could begin as early as 2015. The Hazelwood coal-fired plant, operated by International Power Plc (IPR), is the most-polluting power station in the world, according to conservation group WWF.

“As new generators enter the market, supply from more emissions-intensive” plants will be gradually reduced, Garnaut said. Analysis shows that “even for older brown coal facilities such as Hazelwood and Yallourn in the Latrobe Valley, it is possible for generators to operate intermittently in the summer months to meet demand on hot days with high prices,” he said.

Australia has set a target of generating 20 percent of its power from renewable sources like wind and solar by 2020. The introduction of a carbon price will lower profitability of the most emission intensive electricity generators, like brown coal- fired plants, Garnaut said.

The Yallourn plant is operated by TRUenergy Holdings Pty, the Australian unit of Hong Kong-based CLP Holdings Ltd. (2)

To contact the reporter on this story: Ben Sharples in Melbourne at bsharples@bloomberg.net

To contact the editor responsible for this story: Clyde Russell at crussell7@bloomberg.net

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