A ministerial intervention aimed at using Clean Energy Finance Corporation funds to support a fossil-fuel electricity generator for the struggling Alcoa aluminium smelter could be unlawful, according to the Greens.
Federal industry minister Greg Hunt and his Victorian counterpart, Wade Noonan, have left for New York to discuss with senior leaders of Alcoa how to support the struggling smelter in Portland, Victoria.
On Sunday, Hunt suggested funds from the CEFC could be used to build a new power station for the smelter, which was crippled earlier this month when it lost power for about five hours. Closure of the plant would cost up to 2,000 jobs locally.
In an interview on ABC 774 on Monday morning, Hunt repeated the suggestion.
“Well, what we’re looking at, and we have made available and indicated to the company, is what’s called the Clean Energy Finance Corporation could be available for them to establish in the medium term a lower emissions power source than the brown coal they currently have,” Hunt said.
Asked whether it would be a gas plant, Hunt said: “So it could be gas, or it could be a gas hybrid with renewables, but all of the advice I’ve got is that you would need some form of gas as a part of it.”
The Clean Energy Finance Corporation Act 2012 says it is unlawful for the minister to give a direction to the CEFC “that has the purpose, or has or is likely to have the effect, of directly or indirectly requiring the Board to, or not to, make a particular investment”.
The Greens spokesman for energy and climate change, Adam Bandt, said: “The minister should be honest with the workers at Portland that any attempt by the government to instruct the CEFC to invest in this particular project would be unlawful.”
Hunt appeared to acknowledge this, saying later in the same interview that “it’s not for us to determine”. The federal government simply made the facility available, he said.
Ariane Wilkinson, a lawyer at Environmental Justice Australia said the Turnbull government could back an application from Alcoa, but that would mean very little because of the independence of the board of the CEFC, and it would be unlawful to direct the CEFC to invest in a particular project.
Wilkinson said it would also be unlawful for the relevant ministers to give a direction that “was inconsistent with the purpose of the CEFC Act, which is to facilitate increased flows of finance into the clean energy sector”.
The CEFC must only invest in “clean energy technologies,” which means renewable energy or “low emissions technologies”.
The act and associated guidelines do not rule out fossil fuel projects, but the guidelines say that for something to be “low emissions”, it must have 50% lower emissions than the rest of the generation attached to the grid.
In 2015 the national electricity market produced 0.81 tonnes of carbon-dioxide equivalent for each megawatt hour of electricity. Guardian Australia understands that most gas plants would struggle to achieve a figure below half that, but a hybrid gas-renewable project was likely to be able to do so.
“Clean energy funding should not be going into dirty fossil fuels like gas,” Bandt said.
“Labor and Liberal are offering false hope to workers and the Portland community,” he said. “It beggars belief that they can even be considering using clean energy funding to build polluting fossil-fuel power stations that would lock in the need for expensive government subsidies and dangerous pollution for years to come.”
Bandt has raised doubts about whether such a project would be financially viable, which is also required by the CEFC.
“Building a new gas station won’t make gas-powered energy cheaper,” he said. “If the government builds a new gas power station to power Alcoa’s Portland smelter, Alcoa will be dependent on government subsidies for gas for the smelter to remain viable.
“Unless a clean energy solution can be found to power the Portland smelter, no level of government should be pouring taxpayer money into the multinational Alcoa.”
When Hunt was environment minister, he was criticised for appearing to use CEFC financing for other purposes.
The Coalition government tried unsuccessfully to axe the CEFC after it came to power in 2013.
