The approval by the Victorian EPA on Friday of a new coal power station is set to create yet another headache for Julia Gillard. In the leadup to the election, she promised that “We will never allow a highly inefficent and dirty power station to be built again in Australia”.

With a projected emissions intensity of 0.8tonnes of CO2/MWh (almost double the OECD average), the HRL power station in the Latrobe Valley is clearly a highly inefficient and dirty power station. So presumably, either there will be some kind of federal intervention to block it, or Gillard will break an election promise.

But even if the political system fails, as it so commonly does, the plant may not go ahead for purely financial reasons. The front page of Saturday’s The Age ran the headline “Big banks ‘no’ to coal plant”, revealing that all four of the major banks have stated that they are not involved in the project. This means that HRL is likely to struggle to arrange finance, even with $150million in direct government handouts.

The fact that none of the big four banks is involved in HRL is no doubt partly a reflection of the individual project, which is highly speculative and financially marginal, but also reflects the wider sentiment that coal is slowly but surely having it’s social license withdrawn. While none of the big four banks have categorically ruled out financing new coal power stations, they know that they face significant reputation risks from being associated with the coal sector.

So, while HRL has received at least partial approval, there is still a long road to travel before they can obtain finance and start construction. Even then, it is likely that the plant would be the focus of a sustained campaign of direct action to physically stop it from being built.

As usual, regulators are running to catch up to community expectations.

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