Coal program wraps up

A government program to support new uses for brown coal has wrapped up after the last of three projects included in the scheme was abandoned.

Coal Energy Australia's plan to develop a $143 million demonstration plant to produce oil, fertiliser and coal for steel manufacturing was one of three projects awarded grants in 2012 as part of the state and federal government's Advanced Lignite Demonstration Program.

Yesterday, it was announced the project and the scheme would not go ahead after key project milestones were missed.

CEA's project was awarded a $30 million grant as part of the scheme, but no payments were ever made to the company.

The two other projects which had been earmarked for grants from the scheme failed in 2016.

A CEA spokesman said the company would continue to invest in other coal projects.

"We have decided that we will not be able to meet the stringent requirements under the ALDP program. They are very stringent requirements," the spokesman said.

"We continue to invest in other projects that target innovative uses of coal to seek other low-emissions opportunities for the Latrobe Valley."

The spokesman said despite the fact the demonstration plant was not built, the project had generated "valuable knowledge" for the company and had resulted in investment in the local economy.

CEA had been set to develop the CarbonTech project at the site of the former Morwell power station and briquette factory, pending the demolition of the power station and sale of the site.

The Express understands a new company, Gippsland Innovation, has been created with former CEA staff and will now oversee the project.

Brown Coal Innovation Australia chief executive Brian Davey said the project had evolved beyond CEA's original vision.

"I've been aware for a while that the project as envisaged under the ALDP has evolved past what the objectives were originally. This is normal in these sorts of projects," Mr Davey said.

He said the fact the $30 million had not been spent meant it could potentially be invested in other projects.

Environment Victoria campaigns manager Nick Aberle said the program's demise should "be a signal that it is time to move beyond this polluting and outdated resource".

"The history of failed brown coal projects should tell us that it's time to focus on the real resources in the Latrobe Valley - the people and their skills - not what's under the ground," Dr Aberle said.

"Every time a proposed coal project is announced, it creates a distraction from the real task of creating a truly diverse and sustainable economy in the region."

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